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The original documents are located in Box 17, folder "Home Ownership (1)" of the James
M. Cannon Files at the Gerald R. Ford Presidential Library.
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[sept 1976/
Home owners Two two
My goal is homeownership for every American family
be
that wants to own its own home and is willing to work
for it.
There are three principal barriers to the
got new
achieve
ment of this goal, and I intend to deal with each of
them. The most important barrier, of course, is high
interest rates. My economic policies, including tight
control of unnecessary Federal spending will bring
have
interest rates down.
new
The second important barrier to home ownership
downpayment requirements which often require
for years um of working
saving. For those families who have proved (fow they can
hold a job and pay their bills, I shall ask Congress
next year to change the FHA law to reduce downpayments
by about one-third of what they are now.
The third important barrier to homeownership, is
the size of the monthly payments. To deal with this
problem, I will order expanded use of existing authorities
to lower payments in the early years of homeownership and
gradually increase them as family income goes up.
address Both
pm / mh a on
an a m your can
FORD & LIBRARY GERALD
Digitized from Box 17 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
My goal is a home for every American who wants to
own his own house, and is willing to work for it.
For the American families who want to own a home --
where the downpayment has been the principal barrier --
for those who have proved they can hold a job and pay
their bills, I shall ask Congress next year to change the
FHA law to reduce downpayment requirements.
(Optional Descriptive Paragraph)
Under my proposal, if you make $275 a
downpayment for a good house would be lowered
from about $1,750 to about $1,250.
present
Nutwork
FORD & LIBRARY GERALD
my
du Christma tow wt w TA mm widd m
was
an when ww AM T
78
FAM.
My goal is a home for every American who wants to
own his own house, and is willing to work for it.
For the American families who want to own a home --
where the downpayment has been the principal barrier ---
for those who have proved they can hold a job and pay
their bills, I shall ask Congress next year to change the
FHA law to reduce downpayment requirements.
(Optional Descriptive Paragraph)
Under my proposal, if you make $275 a week, your
downpayment for a good house would be lowered one-third,
from about $1,750 to about $1,250.
FORD & LIBRARY 934839
My goal is a home for every American who wants to
own his own house, and is willing to work for it.
For the American families who want to own a home --
where the downpayment has been the principal barrier --
for those who have proved they can hold a job and pay
their bills, I shall ask Congress next year to change the
FHA law to reduce downpayment requirements.
(Optional Descriptive Paragraph)
Under my proposal, if you make $275 a week, your
downpayment for a good house would be lowered one-third,
from about $1,750 to about $1,250.
[sept.1976]
INSERT PAGE 8
We must set goals and keep after them.
My first goal is 2 million new permanent jobs every
year. Can we do it?
Yes. In the last 18 months we created more than
4 million new jobs. Today, there are more Americans at
work -- 88 million of them -- than every before in our
history.
But there are still too many Americans out of work,
and in particular, too many young Americans in our urban
areas who cannot find a good job or get the training and
experience they need to find a good job.
Americans have long since recognized the wisdom of
assuring that every high school graduate who is willing, able and
qualified be provided the means of going to college. We
have done so through grants, loans and scholarships.
I am convinced that we can create a job scholarship
program which will enable young people who choose not to
go to college to get a job at which they can learn a trade,
a skill, a craft or just plain good business sense. Such
a program would make available a one-time veweher, not for
salary costs, but for costs of on-the-job training.
FORD & LIBRARY GERALD
HOD indues Enat nt is the to
AND
None
Booth
1.
FORMAT:
HOMEOWNERSHIP OPPORTUNITIES FOR MIDDLE AMERICA (HOMA)
BROCK-ASHLEY
GRADUATED PAYMENT/FIX
This program would provide a tax credit to purchasers of first homes.
GNMA would pay 2% interest on the mortgage initially, and any
Initial mortgage paym
Both new and existing homes would be eligible. There would be a maximum
additional interest due to the variable rate provisions. This
increased at a set ra
mortgage limit of $38,000. The amount of the tax credit would be the
would accumulate with interest in the borrower's GNMA loan
payments should bette
lesser of (1) the difference between payments to principal and interest
account which is to be repaid when the house is sold or by
initial income constr
at the current market rate (9% assumed in this analysis) and payments to
arrangement with GNMA.
principal and interest at 6% or (2) the difference between principal and
interest at 9% and 20% of the family's income. This program would phase
out at about the $18,000 income level.
2.
Number of
1.33 million
1.7 million
1.5 million
Families
Assisted:
3.
Subsidy per
The average subsidy per family in the first year of about $500 and of
There is no direct subsidy involved in the program. There
NONE
Family:
about $650 over the life of the loan.
are, however, indirect costs involved in all direct loan
programs.
4.
Number of
230,000
The GNMA loan would reduce monthly payments enough such that
80,000 (under constra:
Incremental
250,000 to 300,000 additional families would be able to afford
exceed 100%)
Purchaser
a $35,000 house without spending more than 25% of their income
per Year:
on housing. The GNMA loan would reduce current costs but
increase total costs because the GNMA loan must be repaid
with accumulated interest. Thus, there may be market resistance
to this program, since it substantially reduces or eliminates
a homeownership equity accumulation, one of the primary perceived
benefits of homeownership.
5.
First Year
About $665 million
The average GNMA loan would be about $500 after one year. If
NONE
Outlays:
1.7 million loans were issued, total lending under the program
would reach $850 million.
6.
Total Costs:
$1.7 billion over the period of subsidy for each year's assisted families.
Total lending for the first year participants will reach about
NONE
Assuming a 7% growth rate in normal income, the $14,000 family would
$5 billion after 5 years. Lending to participants entering
phase out in 5 years and higher income families would phase out sooner.
in years 2-5 will be about $10 billion. As currently conceived,
total lending under the program will increast at an exponential
rate. In theory, however, all of these outlays would be
recovered as recipients ultimately repaid their GNMA loans.
7.
Cost per
(First Year) - $2,900 ($665 million divided by 230,000)
(First Year) -
There are no direct costs to the government,
(First Year) - NONE
Incremental
but in terms of budget impact, total lending
Purchaser:
(Total)
- $7,391 ($1.7 billion divided by 230,000 incremental purchasers)
(Total)
-
would be about $2,800 per incremental purchaser
(Total)
- NONE
in the first year. After 25 years, GNMA would
have lent about $250,000 per incremental first
year purchaser.
8.
Risk to the
Essentially no default risk since FHA insurance is not required.
There is a particularly high risk of default associated with
Increased FHA default
Government:
second mortgages such as the GNMA loans which may be higher
than the original principal of the first mortgage, by the
time it becomes due.
4.
Number of
230,000
The GNMA loan would reduce monthly payments enough such that
80,000 (under constraint tha
Incremental
250,000 to 300,000 additional families would be able to afford
exceed 100%)
Purchaser
a $35,000 house without spending more than 25% of their income
per Year:
on housing. The GNMA loan would reduce current costs but
increase total costs because the GNMA loan must be repaid
with accumulated interest. Thus, there may be market resistance
to this program, since it substantially reduces or eliminates
a homeownership equity accumulation, one of the primary perceived
benefits of hameownership.
5.
First Year
About $665 million
The average GNMA loan would be about $500 after one year. If
NONE
Outlays:
1.7 million loans were issued, total lending under the program
would reach $850 million.
6.
Total Costs:
$1.7 billion over the period of subsidy for each year's assisted families.
Total lending for the first year participants will reach about
NONE
Assuming a 7% growth rate in normal income, the $14,000 family would
$5 billion after 5 years. Lending to participants entering
phase out in 5 years and higher income families would phase out sooner.
in years 2-5 will be about $10 billion. As currently conceived,
total lending under the program will increast at an exponential
rate. In theory, however, all of these outlays would be
recovered as recipients ultimately repaid their GNMA loans.
7.
Cost per
(First Year) - $2,900 ($665 million divided by 230,000)
(First Year) - There are no direct costs to the government,
(First Year) - NONE
Incremental
but in terms of budget impact, total lending
Purchaser:
(Total)
- $7,391 ($1.7 billion divided by 230,000 incremental purchasers)
(Total)
-
would be about $2,800 per incremental purchaser
(Total)
- NONE
in the first year. After 25 years, GNMA would
have lent about $250,000 per incremental first
year purchaser.
8.
Risk to the
Essentially no default risk since FHA insurance is not required.
There is a particularly high risk of default associated with
Increased FHA default risk
Government:
second mortgages such as the GNMA loans which may be higher
than the original principal of the first mortgage, by the
time it becomes due.
9.
Ease of
If assistance is provided as a tax credit, administration is extremely
GNMA would have to become a mortgage originator, and servicer
FHA underwriting. FHA will
Administration:
inexpensive but costs uncontrollable. If the assistance is provided by
or would have to pay mortgage bankers to provide this service.
direct subsidies, administration is complex, but the number of recipients,
hence costs, can be controlled.
10. Other
The homeowner's real equity in the home is substantially reduced
Lender resistance due to inc
Problems:
by the GNMA second lien. His mobility also is reduced because
reduced cash flow.
he must repay the loan if he sells his home. Given the potential
exponential growth rate of total lending under the program, the
indirect cost of additional interest on all Treasury borrowing
is likely to be substantial. Finally, GNMA could become a large
holder of single family homes if default rates are as high as may
be reasonably expected.
IMPACT on Typical
Monthly mortgage payment reduced by $36, from $286 to $250, in first year;
Monthly mortgage payment reduced by $44, from $286 to $242, in
Monthly mortgage payment re
$15,000 Income
reduced by $15 in second year. No impact after second year.
each year. Total mortgage debt increases continually, by over
first year; payment rises b
Family Buying a
$5,500 per year.
term.
$37,000 House with
$35,000 Mortgage:
Sevatu Brooke HUD
ompore
Acu (HUD) Broke oppose
T/FIXED RATE MORTGAGE
TAX EXEMPT SAVINGS
DOWNPAYMENT VOUCHER/GRANT
FEDERA
payments would be reduced and later payments
Contribution made to, and interest earned on, a savings account
$1,000 cash payment to buyer
Federa
rate of increase. Increasing mortgage
would be deductible from taxable income if the savings in that
second
better match rising incomes. This mitigates
account are used for a downpayment by first time home purchasers.
onstraints on homeownership.
Limits would be $20,000 income, $10,000 total savings, $2,500
per year in addition to savings.
1.5 million families
1.46 million
1.55 m:
$2,500
$1,000
NONE
straint than loan to value ration cannot
75 100,000
60,000
90,000
Raises loan-to-value from .86 to .89 based on in-house
Lowers
research, this would increase housing demand by 60,000
home if
units per year.
be in e:
$938 million
$1.4 billion
NONE
Year 1:
$938M a year
All costs are borne in the first year a family is a
NONE
Year 2:
$1.88B a year
subsidy recipient.
Year 3:
$2.86B a year
Years 4-8:
$3.75B
E
(First Year) - $37,500 to 50,000
(First Year) - $23,000
(First Y
E
(Total)
- $37,500 to 50,000
(Total)
- $23,000
(Total)
ult risk
NONE
NONE
A signif
increasi
rate wou
constraint than loan to value ration cannot
75 100,000
60,000
Raises loan-to-value from .86 to .89 based on in-house
research, this would increase housing demand by 60,000
units per year.
$938 million
$1.4 billion
Year 1:
$938M a year
All costs are borne in the first year a family is a
Year 2:
$1.88B a year
subsidy recipient.
Year 3:
$2.86B a year
Years 4-8:
$3.75B
NONE
(First Year) - $37,500 to 50,000
(First Year) - $23,000
NONE
(Total)
- $37,500 to 50,000
(Total)
- $23,000
default risk
NONE
NONE
A r i
riting. FHA will finance same this year (Section 245)
Run through tax system; SO minimal administrative cost
Would impose significant operational capacity to administer
R
the program (e.g., would have to certify incomes of participants
et
($20,000 income limit, and if constraints such as requiring
purchase of decent safe and sanitary housing were imposed,
would have to verify that constraints were met.)
istance due to increased default risk and
Creation of a new tax loophole with a large constituency.
Equal subsidy would be paid to families of different wealth.
A
sh flow.
Slow implementation, most recipients will take several years
to
to accumulate enough in their downpayment account to make
May have slight inflationary impact on price of housing since
h
a purchase. Also, deduction amount need not correlate with
subsidy reduces purchase price.
housing expenditures.
tgage payment reduced by $75, from $286 to $211, in
Downpayment effectively reduced by $1,000, from $4,000 to
Lowers downpayment by $1,000 from $4,000 to $3,000.
Re
payment rises by 3 percent per year over the mortgage
$3,000, through tax saving.
mc
our
FEDERAL GUARANTEE OF DOWNPAYMENT
REDUCE FHA DOWNPAYMENT REQUIREMENT
Federal guarantee of loan for one half of downpayment. This
Legislative change to reduce downpayment required for FHA insurance
second loan would be secured by a second lien.
Current
Option
3% for up to $25,000
3% for up to $25,000
10% for $25,000 - $35,000
5% for $25,000 - $40,000
20% for $35,000 - $45,000
10% for $40,000 - $50,000
20% for $50,000 - $60,000
1.55 million
275,000 (expected FHA volume plus incremental purchases)
NONE
NONE
90,000 - 140,000
20,000
Lowers downpayment required at purchase but raises total price of
Reduces downpayment requirement for FHA only by an average of 3%.
home if the second lien is amortized at mortgage rate which will
be in excess of rate of inflation.
NONE
NONE
NONE
NONE
(First Year) - NONE
(First Year ) - NONE
(Total)
NONE
(Total)
- NONE
A significant increase in foreclosure rates. For example, by
An increase in foreclosure rate. Losses should be covered by the
increasing loan-value ratio by 8 percent (.86 to .93) foreclosure
.5% premium.
rate would be increased by 11 percent. (elasticity of 1.4).
90,000 140,000
20,000
Lowers downpayment required at purchase but raises total price of
Reduces downpayment requirement for FHA only by an average of 3%.
home if the second lien is amortized at mortgage rate which will
be in excess of rate of inflation.
NONE
NONE
NONE
NONE
(First Year) - NONE
(First Year ) - NONE
(Total)
NONE
(Total)
NONE
A significant increase in foreclosure rates. For example, by
An increase in foreclosure rate. Losses should be covered by the
increasing loan-value ratio by 8 percent (.86 to .93) foreclosure
.5% premium.
rate would be increased by 11 percent. (elasticity of 1.4).
Requires HUD processing at time of guarantee and management in
Simple change in FHA processing. Larger volume of FHA insurance
the event of foreclosure.
would increase work load.
pants
Amortizing second life of mortgage will require a higher income
Requires legislative change. Has greatest effect on homes in excess
to support loan (e.g., a higher monthly payment because of the
of $30,000. Could result in FHA becoming more competitive with
higher mortgage amount).
private mortgage insurance.
Reduces downpayment by $2,000, from $4,000 to $2,000; raises
Could lower downpayment by up to $2,500, from $4,000 to $1,500.
monthly payment by $20, from $282 to $302.
1. FORMAT:
HOMEOWNERSHIP OPPORTUNITIES FOR MIDDLE AMERICA (HOMA)
GRADUATED PAYMENT/FIXED RATE MORTGAGE
FEDERAL GUARANTEE OF DOWN
Initial mortgage payments would be reduced and later payments
Federal guarantee of loan
This program would provide a tax credit to purchasers of first homes.
Both new and existing homes would be eligible. There would be a maximum
increased at a set rate of increase. Increasing mortgage
second loan would be secu
mortgage limit of $38,000. The amount of the tax credit would be the
payments should better match rising incomes. This mitigates
lesser of (1) the difference between payments to principal and interest
initial income constraints on homeownership.
305
22.83
at the current market rate (9% assumed in this analysis) and payments to
principal and interest at 6% or (2) the difference between principal and
interest at 9% and 20% of the family's income. This program would phase
out at about the $18,000 income level.
305
1.55 million
2.
Number of
1.33 million
1.5 million
Families
Assisted:
NONE
3.
Subsidy per
The average subsidy per family in the first year of about $500 and of
NONE
Family:
about $650 over the life of the loan.
1150
1280
average income assumed 15,800
4.
Number of
40 $0,000 (under constraint than loan to value ration cannot
90,000 - 140,000
Incremental
250,000
HUD estimate
exceed 100%) in first year, (with HUD changes.)
Lowers downpayment requir
Purchaser
100,000 in later years
home if the second lien
L.
per Year:
103 2,000 OMB estimate for comparable subsidy under5.5% income Svowth.
be in excess of rate of
L.
52,000 OMB estimate for comparable subsidy under 7% income growth.
80,000 under eat earlier estimate,
670
NONE
5.
First Year
About $655 million
NONE
Outlays:
5.5%
NONE
6.
Total Costs:
$1.8 billion over the period of subsidy for each year's assisted families.
NONE
Assuming a growth rate in normal income, the $14,000 family would
phase out in 5 years and higher income families would phase out sooner.
HUD estimate
700
670
5
7.
Cost per
(First Year) - $2,500 ($665 million divided by 230,000)
(First Year) - NONE
(First Year) - NONE
Incremental
200
5
Purchaser:
(Total)
- $7,31 ($1.8 billion divided by 2$0,000 incremental purchaser
NONE
(Total)
NONE
(Total)
OMB estimate
(First Year) 12,300 6,500 ($680 million divided by 103,000) 12,800 for 52,000 units
(Total)
$17,400
($1.8 billion divided by 103,000)
32,700 for 52,000 units
8.
Risk to the
Essentially no default risk since FHA insurance is not required.
Increased FHA default risk
A significant increase i
Government:
increasing loan-value ra
rate would be increased
(Section
245)
4.
Number of
$0,000 40 (under constraint than loan to value ration cannot
90,000 140,000
Incremental
250,000
HUID estimate
exceed 100%) in First year, (with HUD changes.)
Lowers downpayment required
Purchaser
103
home if the second lien is
per Year:
2,000 OMB estimate for comparable subsidy under5.5% income growth.
100,000 in later years
be in excess of rate of ini
52,000 OMB estimate for comparable subsidy under 7% income Svonth,
80,000 under ed earlier estimate,
670
NONE
5. First Year
About $655 million
NONE
Outlays:
5.5%
NONE
6. Total Costs:
$1.8 billion over the period of subsidy for each year's assisted families.
NONE
Assuming a growth rate in normal income, the $14,000 family would
phase out in 5 years and higher income families would phase out sooner.
HUD estimate
700
670
5
(First Year) - NONE
7. Cost per
(First Year) - $2,800 ($665 million divided by 230,000)
(First Year) NONE
Incremental
200
5
(Total)
NONE
(Total)
NONE
Purchaser:
(Total)
- $7,391 ($1.8 billion divided by 2$0,000 incremental purchaser
OMB estimate
(First
year) $16,500 ($685 million divided by 103,000) $ 12,800 for 52,000 units
(Total)
$17,480
($1.8 billion divided by 103,000)
32,700 for 52,000 units
$200
8.
Risk to the
Essentially no default risk since FHA insurance is not required.
Increased FHA default risk
A significant increase in
increasing loan-value rati
Government:
rate would be increased by
9. Ease of
If assistance is provided as a tax credit, administration is extremely
FHA underwriting. FHA will finance same this year (Section 245)
Requires HUD processing at
the event of foreclosure.
Administration:
inexpensive but costs uncontrollable. If the assistance is provided by
direct subsidies, administration is complex, but the number of recipients,
hence costs, can be controlled.
10. Other
Lender resistance due to increased default risk and
Amortizing second life of
Problems:
to support loan (e.g., a h
reduced cash flow.
higher mortgage amount).
IMPACT on Typical
Monthly mortgage payment reduced by 836, from $ 306 to $250, in first year;
$56
mortgage payment reduced by $75, from $286 to the $211, in
Reduces downpayment by $2
$15,000 Income
reduced by $15 in second year. No impact after second year.
Monthly first year; payment rises by 3 percent per year over mortgage
monthly payment by $20, f:
Family Buying a
$ 42
$28 in third year and $13 in fourth
term.
40,000 000 House with
$35,000 Mortgage:
Year for a total tax credit oT $1,668 over four years
with HUD changes, Monthly mortsase payment reduced by $37 from $284 to
38
$247 in first year. and by $30 to $254 in second year,
(assumes, 6% PMI premium instead of usual 25%
FEDERAL GUARANTEE OF DOWNPAYMENT
REDUCE FHA DOWNPAYMENT REQUIREMENT
Federal guarantee of loan for one half of downpayment. This
Legislative change to reduce downpayment required for FHA insurance
second loan would be secured by a second lien.
Current
Option
3% for up to $25,000
3% for up to 25,000
10% for $25,000 - $35,000
5% for $25,00 , - $40,000
20% for $35,000 - $45,000
10% for $40,0 0 - $50,000
20% for $50,000 - $60,000
1.55 million
275,000 (expected FHA volume plus incremental purchases)
NONE
NONE
90,000 - 140,000
20,000
Lowers downpayment required at purchase but raises total price of
Reduces downpayment requirement for FHA only by an average of 3%.
home if the second lien is amortized at mortgage rate which will
be in excess of rate of inflation.
NONE
NONE
NONE
NONE
(First Year) - NONE
(First Year ) - NONE
(Total)
NONE
(Total)
NONE
A significant increase in foreclosure rates. For example, by
An increase in foreclosure rate. Losses should be covered by the
increasing loan-value ratio by 8 percent (.86 to .93) foreclosure
.5% premium.
rate would be increased by 11 percent. (elasticity of 1.4).
20,000
Lowers downpayment required at purchase but raises total price of
Reduces downpayment requirement for FHA only by an average of 3%.
home if the second lien is amortized at mortgage rate which will
be in excess of rate of inflation.
NONE
NONE
NONE
NONE
(First Year) - NONE
(First Year ) - NONE
(Total)
- NONE
(Total)
- NONE
A significant increase in foreclosure rates. For example, by
An increase in foreclosure rate. Losses should be covered by the
increasing loan-value ratio by 8 percent (.86 to .93) foreclosure
.5% premium.
rate would be increased by 11 percent. (elasticity of 1.4).
245)
Requires HUD processing at time of guarantee and management in
Simple change in FHA processing. Larger volume of FHA insurance
the event of foreclosure.
would increase work load.
Amortizing second life of mortgage will require a higher income
Requires legislative change. Has greatest effect on homes in excess
to support loan (e.g., a higher monthly payment because of the
of $30,000. Could result in FHA becoming more competitive with
higher mortgage amount).
private mortgage insurance.
in
Reduces downpayment by $2,000, from $4,000 to $2,000; raises
Could lower downpayment by up to $2,500, from $4,000 to $1,500.
rtgage
monthly payment by $20, from $282 to $302.
to
[sept. 1976]
My goal is homeownership for every American family
that wants to own its own home and is willing to work
for it.
There are three principal barriers to the achieve-
ment of this goal, and I intend to deal with each of
them. The most important barrier, of course, is high
interest rates. My economic policies, including tight
control of unnecessary Federal spending, will bring
interest rates down.
The second important barrier to homeownership is
downpayment requirements which often require years of
saving. For those families who have proved they can
hold a job and pay their bills, I shall ask Congress
next year to change the FHA law to reduce downpayments
by about one-third of what they are now.
The third important barrier to homeownership, is
the size of the monthly payments. To deal with this
problem, I will order expanded use of existing authorities
to lower payments in the early years of homeownership and
gradually increase them as family income goes up.
FORD is LIBRARY GERALD
U
{ Sept. 1976]
For the American families who want to own a home --
where the downpayment has been the principal barrier --
for those who have proved they can hold a job and pay
their bills, I shall ask Congress next year to change the
FHA law to reduce downpayment requirements.
(Optional Descriptive Paragraph)
Under my proposal, if you make $275 a week, your
downpayment for a good house would be lowered one-third,
from about $1,750 to about $1,250.
FORD i LIBRARY GERALD
[sept.1976]
THE WHITE HOUSE
WASHINGTON
MEMORANDUM FOR:
THE PRESIDENT
FROM:
JIM LYNN/JIM CANNON
SUBJECT:
Accelerated Homeownership Program
ISSUE
on August 27, you stated that one of the prime issues of the
campaign that you intenoed to emphasize is an accelerated
homeownership program. The purpose of this memoranaum is to
brief you on tne options available to you. You snould know
that there is some question about the need for a Government
program to promote nomeownership. Home purchases are at a
record level, and single-family starts are at longrun
equilibrium.
DISCUSSION
An indivioual's decision to buy a nouse is affected by two
iinancial consioerations:
1. Ability to save enough capital to aftoro a downpayment.
2. Ability to make monthly payments on interest ano principale
Any expansion ot nomeownership would necessitate lowering
HALD
one of these two costs. Various Federal programs like FHA
LIBRARY
mortgage insurance, VA housing benefits, mortgage purchase by
GNMA and FNMA, as well as others, currently serve to requce
these costs. They serve either a nonoifterentiated group cf
recipients like FHA programs or a special group like veterans.
An ad-hoc task force comprised of HUD, OMB, and the Domestic
Council nas reviewed the various possibilities of reaucing
both downpayments and monthly mortgage payments, through
such aevices as tax incentives, direct subsidies, and
rederal underwriting ana guarantees. Much consigeration was
given to limiting benefits to first homebuyers. The task force
has aeterminea rour options (two affecting monthly mortgage
payments and two aftecting downpayment) to be worthy of furtner
consideration.
because or many unknowns, the precise effects ot these policies
1S aifficult to predict. In the past, we have undertaken
L
some policies that have had dramatically different outcomes
tnan expectea.
This paper brietly describes four viable initiative options
selected by the ad-noc task force with their advantages
and disadvantages. It you aecide to go forward with one or
more of these proposals, or a variant of them , the next
question is our timing. The last section of this paper indi-
cates tne advantages and disaovantages of timing options.
PROGRAM OPTIONS
Monthly Mortgage Payments
1. Tax creait (or airect subsidy) to reduce monthly payments
of tirst nomebuyers to a 6 percent effective interest rate
or to 20 percent of a persons income (wnich ever is nigher).
This program would:
-- have a maximum mortgage limit of $30,000.
-- Phase out above the $18, UUU income level.
-- Benefit 1.33 million families.
-- Increase rirst nome purchases by between 50,000
and 250, UUU per year.
-- Cost about 4665 million the first year, 31.3 million
the secona year, and $1.9 billion per year for the
lite of the program thereafter.
--- Cost 36, 100 to $30, UUU per incremental purchaser.
L. Graquated payments to reduce initial mortgage payments.
Later payments would increase at a graouated rate to match
rising incomes. (This program is already a demonstration
program in some parts of the country.) The program would:
--- Require acceptance by lending institutions and FHA
unoerwriting.
-- Benefit 1.5 million families.
-- would require little or no budget outlays.
-- Increase tirst nome purchases by between 20,000 ana
250, UUU per year.
3
DOWNPAYMENT
3. regeral guarantee of secona loan for one-halt of the down-
payment on any mortgage, up to a maximum guarantee of 7-1/2
percent and $5,000. The program would:
--- Require acceptance by lending institutions.
-- Benetit 1.5 million families.
-- Result in outlays for default of $300-500 million.
-- Assist 40,000 to 140, 000 home purchasers.
-- Cost $2,000 to $12,000 per incremental purchaser.
4. Reduce FHA downpayment requirement from -u- ($25,00
mortgage) to 50 percent ($50, UUU mortgage), and increase
FHA mortgage limit to $60,000. This program would:
-- Assist 275, UUU to 1.0 million families.
-- Increase nomeownership by 10,000 to 140, UUU per year.
-- Have no outlay effect.
The rollowing are the most important auvantages ano disaovant-
ages of each of the options:
1.
monthly payment subsidy (tax credit or airect).
Pros
Accelerates homeownership for first nomebuyers,
usually young moderate-income families with
growing incomes.
Assures recipients continuea capacity to support
mortgages until they reach an $18, 000 income
level.
Phases out the subsidy with normal income growth,
with tew families as subsidy recipients for more
than 3 to 5 years.
Aios a lower income level than other alternatives.
FORD i LIBRARY GENALD
Cons
Substantial outlays will be required.
Some tamilies may not experience income growth and
thus coula be recipients of the program for a
consiueraple period of time.
May be criticized as welfare for the well-to-ao
($14, 000 to $18, UUU income).
There are many unknowns as to the number of home-
buyers benefited (estimated range of 52, UUU to
250, 000 for the first year) with implied costs
ranging irom >6, 100 to $30, 000 per incremental
purchaser.
will either warp the tax system or require
considerable aoministration.
Coula be viewea as inequitable by recent first
nome purchasers and by renters who pay full taxes
while new nome buyers have up to luu% tax reduction.
2.
Graquated payment/tixed-rate mortgage.
Pros
Accelerates opportunity for homeownership for those
with expectations ot rising income by providing
lower payments in early years of the mortgage.
Involves no direct subsiaies.
FHA is already tinancing some graquated payment
mortgages.
Cons
Requires higher (at least i percent) downpayment to
avoia outstanding balance exceeding house price
(negative equity), so cannot be combined with a
downpayment option.
Increased default risk since, auring early years of
mortgage, amount owea could exceed original principal
amount.
Requires agreement with and cooperation from lenders.
5
Some consumers will be wary if uncertain about their
tuture income growtn.
will probably require FHA insurance, another
impeaiment to lender and consumer acceptance,
as well as an aaditional workload buraen and
risk to HUD.
3.
Federal guarantee of downpayment.
Pros
Suostantially reduces equity required.
Does not depend on FHA.
Can be compinea with other subsidies.
Can be limited to first home purchasers.
Cons
Requires higher monthly payment.
Requires cooperation/agreement with traditional
lengers.
can Le criticized as favoring midale-income
families.
4.
Reduce FHA downpayment and extena mortgage limit.
Pros
Substantially reauces equity required for homes
over $40, 000.
Can be combinea with other subsidies.
FMA may aemonstrate viability of lower downpayment
to private mortgage insurers.
Lowest cost and lowest risk to the Government
compared with other options.
cons
will not reach many tamilies unless FHA processing
1S substantially improved.
FORD is LIBRARY GERALD
Can be criticized tor benefiting mainly micale-
income tamilies.
will partially compete with private mortgage insurers.
OTHER CONSIDERATIONS
Another question to be considered is the timing of the
release of your accelerated homeownership program. Congress
goes out of session on October 2. It is conceivable that
submission of new legislation by your Administration or even
a concrete proposal might be seized upon by the Congress to
quickly pass a nousing bill that would embarrass your Auministra-
tion. Even if this aoes not happen, there is sure to be
criticism of your proposal, outlining its inconsistency with
past Auministration opposition to congressional proposals for
accelerated homeownership.
Another consideration is that there are several contingent
questions regarding tne above options that will require some
time to aevelop answers. They include:
1. Acquiring more data from polling on whetner monthly
payments and/or downpayments are the most signiticant
impeaiments to homebuying.
2. Determining if FHA underwriting can De improved ano made
more eiticient to make it acceptable to builders.
S. Retining estimates of the number of incremental purchasers
Lor each program.
4.
Determining what terms lengers will require for non-FHA
mortgages.
These questions snoula be resolved by the end of September.
Rie: Home Ownership
OFFICE OF MANAGEMENT AND BUDGET
ROUTE SLIP
Mr. Lynn May
Take necessary action
TO
Approval or signature
Comment
Prepare reply
Discuss with me
For your information
See remarks below
FROM Dan L. McGurk
Sept. 7, 1976
DATE
REMARKS
OMB proposal:
would innean ceiling
FORD i LIBRARY GERALD
on FHA loan and
lower the downpayment.
Hills has not seen this
but will be buifed
on it this afternoon.
We don't want to disun
this specific document the A.M. p.m. OMB REV
FORM 4
AUG 70
090718
Lyun May
President Ford and Home Ownership
Background
The biggest impediment to more Americans owning their
own home today is inflation. Inflation not only drives up
the cost of building new homes, but also increases the
interest rates that all new homebuyers must pay on their
mortgages, and reduces the availability of mortgage credit.
President Ford has sought to reduce inflation through
sound economic policies and by resisting -- and vetoing, where
necessary -- Congressional legislation that would have re-
quired large increases in Federal spending. As the rate of
inflation has declined, funds available for home purchases
have soared: net savings flows into thrift institutions have
risen from less than $2 billion in all of 1974 to over $22
billion in the first six months of 1976.
In addition, President Ford's leadership has brought this
country out of the worst recession in forty years. The
recovery has increased personal income substantially, thereby
adding to the number of American families who qualify as
worthy credit risks to buy a home. In the long run, increased
disposable income is fundamental to increased home ownership.
As a result, the rate of housing starts for single family
homes have increased 57% between December 1974 and July 1976;
and the index of home sales volume has increased 44% in about
the same period.
FORD is LIBRARY GERALD
2
Direct Assistance
Since President Ford took office, his Administration:
Released tandem authority of $8 billion to assist
the purchase of over 225,000 homes at below market
interest rates.
Released budget authority of $7.9 billion to assist
over 200,000 homebuyers through homeownership subsidy
(section 235).
Assisted in $130 billion of mortgage acquisition for
over 1.1 million homes through insurance and mortgage
guarantees.
Signed several bills extending and expanding mortgage
insurance, mortgage purchase authority, mortgage
limits and reducing downpayment requirements for insured
loans.
Proposed the Financial Institutions Act, which would
improve the financial mechanisms to make more mortgage
funds available and smooth out credit cycles.
Expanded Homeownership Plan
America is much more a country of homeowners than any
other nation in the world. One of the reasons for that is the
Federal Housing Authority which has for years facilitated home-
ownership through mortgage insurance. The time has come to
take another forward step in helping more Americans own their
own home.
FORD i LIBRARY GERALD
3
NO
The President is submitting legislation to increase
the
size of mortgages that the FHA will guarantee, and to
drastically sharphy, reduce the downpayment required to qualify for
FHA insurance. The downpayment will be reduced by between
20 and 50%, thereby expanding significantly drastically the number of
Americans who can utilize FHA insurance to buy a home.
It is estimated that under this bold program about
additional families will be able to qualify for FHA home
insurance for appropriate quality of houses where they have
the income stability but have been unable to save up a down-
payment in these inflationary times. Coupled with continued
pressure to moderate inflation, this plan will permit a
greatly expanded segment of lower and middle America to enjoy
the benefits of homeownership.
Reducing downpayment requirements under section 203 (b)
of the Housing Act could increase the number of defaults
significantly, and thereby be costly to the Treasury. On
the other hand, President Ford has great faith in America, and
in the recovery and anti-inflation policies of his Administration.
In conjunction with these sound economic programs, he is con-
fident that the mortgage insurance premium charged by FHA will
adequantly cover the anticipated losses. Only if he is
unsuccessful in convincing Congress to assist him in reducing
FORD & LIBRARY GERALD
4
inflation and aiding a strong and long-lasting recovery will
there be any increased losses. The advantage of extending
the benefits of homeownership to millions more Americans is
worth the risk.
MARKET OPINION RESEARCH
September 8, 1976
MEMORANDUM TO:
Alan Greenspan
FROM:
Bob Teeter
SUBJECT:
ISSUE PROPOSALS
My suggestion that we look at a program to make homeownership easier comes
from the following conclusions:
First of all, there are no overriding issues that are affecting the President'
support. Virtually all voting decisions are related to the voter's perception
of the candidate, and the issues the President chooses to talk about and what
he says about them are the means by which he can affect his perception. I have
suggested that we take three or four of his past proposals, re-package them in
more political terms, and then try to focus on them. Crime, catastrophic health
insurance and national defense should be included on this list along with foreig
affairs.
for
Secondly, the President is currently seen as being strongly
reducing
inflation by holding down government spending. This is a key element of his
current support and whatever we do with any other issue should not contradict
or diminish this. Moreover, I think we should consider using vetoes aggressive}
as a major plus and we are testing this possibility in a national poll this week
end.
Thirdly, I think there is a need for us to come up with at least one major
proposal where the President is seen as being for something that will help peopl
not just opposed to other proposals. It should be something designed to appeal
to younger (18-34) and younger middle-aged (35-44) non-college educated voters,
particularly those with family incomes between $7,500 and $20,000. Almost none
of these people are Republicans, but well over half are available to a given
Republican candidate in any election. If we aim at the under 35 group, the issu
should not be one that deals with taxes or government spending as this group pa)
few taxes, are not very aware of those they do pay, and don't see inflation as 1
major problem older voters do.
Two possibilities I think we should look at are a program to promote homeowner-
ship among young families and/or a program to assist families in providing
college, or some type of post secondary education, for their children.
GERALD FORD (IBRAR)
MARKET OPINION RESEARCH
Alan Greenspan
Page 2
September 8, 1976
A homeownership proposal should be aimed at the 18-30 year olds with
family incomes under $15,000, most of whom have no post secondary education.
This type of proposal also would have an advantage in that it could be sold
as a job creation program and one that would help to stimulate an important
segment of the economy. The evidence available seems to indicate that the
down payment, rather than the monthly payment, is the problem for most of
these people. We are addressing this question in our national poll this week-
end.
A proposal to help middle income families send their children to college (possi-
bly a tax deduction for college tuition) would have the advantage of appealing
to a group that is somewhat older, more sure to vote, and of appealing to what
always has been a strong middle class value. Education appears to be re-emergin
as an important priority for families after several years of being down in the
polls. Most people think that education is the means for upward social mobility
in our society.
Attached is some background data on homeownership and attitudes toward it as
measured in surveys of registered voters. Please note the difference between
voters under 30 to 35 and the rest of the electorate in terms of current home-
ownership, its importance as a goal, and the government's responsibility to do
something about it. In each case, this group's interest is about double that of
the total electorate.
I realize that you have some severe budget and policy restrictions but I still
think we need to explore these two and possibly some other ideas that would appe
to this younger, non-Republican segment of the electorate. I think we need some
thing of this type to go with in the September 20 to October 5 period. Also, it
is important to remember that we are not looking at issues where there is any
tremendous demand in the polls, but rather something that can affect the Preside
perception.
FORD
GERALD
MARKET OPINION RESEARCH
Profile of Home Ownership
Nearly three-fourths (73%) of the American electorate own their own homes.
As might well expect, there is a trend of increasing home ownership by age
with this pattern tending to level out above the age of thirty-five. Among
voters of the 18-24 age range, their housing pattern is nearly evenly divided
between owning a home (48%) and renting (46%). Voters aged 25-34 are
somewhat more often home-owners (65%) although they have not yet reached the
average level of home ownership.
The distribution of home ownership across all age groups is fairly even
at 17% or 18% with the exception of the 18-24 year old voters who comprise
a lower 12% of all homeowners. Over half (58%) of all renters are between the
age of 18 and 35, with renting declining as one grows older although it takes
a slight jump up beyond the age of sixty-five.
Other differences in home ownership patterns are worth noting. Whites (75%
own homes) are more often home-owners than blacks (51%) and voters who are
Jewish (62% home ownership) are less likely to own homes than their Protestant
(75% home ownership) or Catholic (74% home ownership) counterparts.
The most important variable to defining a profile of the home owner is total
family income. Below $10,000 yearly family income, only slightly more than
one-half of the voters own their own homes while over $10,000, the home
ownership rate jumps quickly, to 73% for voters whose total family income range
from $10,000 to $15,000 and 88% for voters whose family income exceeds $15,000
a year.
GERALD FORD
MARKET OPINION RESEARCH
Are you a home-owner or do you rent?
December 1975 U.S. National
Home-owner
Renter
Don't Know
Total
100%
100%
100%
Age
18-24 years
12
33
64
25-34 years
17
25
5
35-44 years
18
13
9
45-54 years
18
10
--
55-64 years
17
8
---
Over 65
18
11
18
Income
0-$4,999
11
23
50
$5,000-$9,999
21
41
33
$10,000-$14,999
27
20
--
Over $15,000
39
14
16
Education
Less than high school
28
33
22
High school
37
36
33
Some college
18
18
44
College graduate/Post-
graduate
17
12
--
Religion
Catholic
29
27
32
Protestant
60
54
55
Jewish
3
5
--
Union Membership
Union household
32
27
18
Non-union household
67
71
77
Race
White
92
79
100
Black
8
21
--
Sex
Male
51
47
50
Female
49
53
50
Number of Cases
(1090)
(390)
( 22)
FORD & GERALO LIBRARY
MARKET OPINION RESEARCH
Are you a home-owner or do you rent?
December 1975
U.S. National
Home
Total
Owner
Renter
Total
100%
73
26
1
Age
T8-24 years
100%
48
46
5
25-34 years
100%
65
35
:
35-44 years
100%
78
21
1
45-54 years
100%
83
17
--
55-64 years
100%
86
14
--
65 and Over
100%
81
17
2
Income
0-$4,999
100%
54
42
2
$5,000-$9,999
100%
57
71
1
$10,000-$14,999
100%
73
27
--
Over $15,000
100%
88
11
:
Education
Less Than High School
100%
69
30
1
High School
100%
73
26
1
Some College
100%
71
26
2
College Grad/Post-Graduate
100%
79
21
:
Religion
Catholic
100%
74
24
2
Protestant
100%
75
24
1
Jewish
100%
62
36
-
Union Membership
Union household
100%
76
23
1
Non-union household
100%
71
27
2
Race
White
100%
75
23
2
Black
100%
51
49
-
Sex
Male
100%
74
25
1
Female
FOR
100%
71
27
1
&
GERALD
MARKET OPINION RESEARCH
When held constant for levels of income, age loses much of its power
as a main determinant of home ownership. Voters under the age of thirty-
five whose family income exceeds $15,000 own homes nearly as often as
those voters from thirty-five to fifty-four. Above the age of fifty-four,
the distribution of home ownership is more evenly balanced across income
levels. Age is an important predictor of home ownership in serving as a
surrogate for the availability of sufficient funds to purchase one's own
home. Young people, in trying to establish themselves usually do not enjoy
sufficient yearly income so that they may immediately purchase a home.
Rather, the years between 18 and 35 are most often spent saving money for
a home and building one's income to a level which would make the purchase
of a home financially feasible.
Education, in being highly correlated as the income displays a similar
pattern of home ownership. Renters more often have less than a high school
education which can keep them constrained to the lower income levels.
FORD LIBRARY & GERALD
MARKET OPINION RESEARCH
Profile of Home-owners and Renters by Age, Income and Education
Home-owners
Renters
Under
$5,000-
$10,000-
Over
# of
Under
$5,000-
$10,000-
Over
# of
Total
$5,000
$9,999
$14,999
$15,000
Cases
$5,000
$9,999
$14,999
$15,000
Cases
Age
18-24 years
100%
7
20
24
40
(117)
22
51
16
11
(120)
25-34
years
100%
1
12
37
49
(164)
7
36
38
17
( 88)
35-44
years
100%
1
13
34
51
(175)
20
41
16
23
( 44)
45-54 years
100%
4
16
30
50
(170)
23
37
27
13
( 30)
55-64 years
100%
16
30
19
32
(165)
39
39
4
18
( 28)
Over 65
100%
38
36
16
10
(160)
67
22
5
8
( 36)
Home-owners
Renters
Less
Less
Than
Than
High
High
Some
Gra-
# of
High
High
Some
Gra-
# of
Total
School
School
College
duate
Cases
School
School
College
duate
Cases
Age
18-24 years
100%
17
38
38
5
(134)
83
40
21
5
(129)
25-34 years
100%
8
40
24
29
(177)
12
40
24
25
( 95)
35-44 years
100%
16
42
20
22
(189)
33
42
12
13
( 52)
45-54 years
100%
26
42
15
15
(194)
33
41
21
3
( 39)
55-64 years
100%
40
36
8
14
(185)
58
16
6
19
( 31)
GERAL
Over 65
100%
53
24
10
13
(190)
61
20
12
7
( 41)
LIBRARY
MARKET OPINION RESEARCH
Importance of Owning Your Own Home
When presented with a list of ten personal needs and goals, having
your own home/buying a new home" is mentioned by 11% of the electorate
as one of the three most important to the, following "personal health"
and "having a closer relationship to God." It was more often indicated
by those under the age of thirty-five who are also less likely to own
their own homes. This goal is nearly equally often mentioned by voters
of all educational strata, all religions of union membership and non-
union membership status and of both sexes. The only other difference
exists in the racial variable as 18% of the blacks designate "owning
your own home/buying a new home" as important to 11% of the whites.
MARKET OPINION RESEARCH
December, 1974 #4796 U.S. National
Here's a list of some personal needs, hopes and goals that other people
have mentioned to us. Which is most important, second most important,
third most important?*
Having Your Own Home/
Buying a New Home
Second
Third
Most
Most
Most
Com-
Im-
Im-
Im-
Number
Total
bined
portant
portant
portant
of Cases
Total
100%
11%
2%
4%
5%
(2010)
Age
17-20 years
100%
22
8
5
9
( 114)
21-24 years
100%
18
4
7
7
( 190)
25-29 years
100%
22
2
10
9
( 230)
30-34 years
100%
11
3
2
7
( 213)
35-44 years
100%
9
2
5
2
( 303)
45-54 years
100%
5
1
3
2
( 322)
55-64 years
100%
7
2
4
2
( 281)
Over 65
100%
9
1
2
6
( 347)
Education
Less than high school
100%
11
3
4
5
( 607)
High school
100%
13
2
5
5
( 718)
Some college
100%
11
3
4
5
( 385)
College graduate/Post-
graduate
100%
10
1
5
4
( 290)
Union Membership
Union household
100%
12
2
4
6
( 657)
Non-union household
100%
11
2
4
4
(1319)
Religion
Catholic
100%
10
1
4
5
( 471)
Protestant
100%
12
2
4
5
(1222)
Jewish
100%
1
--
1
--
( 80)
Race
White
100%
11
2
4
5
(1752)
Black
100%
18
5
7
5
( 228)
Sex
Male
100%
13
2
5
BALD
6
(1002)
Female
100%
10
2
4
A
(1008)
*The list included ten items of which "having your own home/buying a new
home" ranked number nine in importance.
MARKET OPINION RESEARCH
Importance of Committing Government Action to the Goal of "Helping Young
People Buy Their Own Homes"
The goal of "helping young people buy their own homes" is one of some
importance to the American voters, but not an immediate priority for
government action. Voters over the age of thirty-five believe this to
be nearly as important as those under thirty-five do. This fact indi-
cating that while home ownership is more important as a personal goal to
younger voters, the concept of government action to help those younger
people reach their goal of owning a home is one which is just as well
accepted by voters of all age levels.
However, the importance of government action to the achievement of home
ownership by young people varies by several major demographic groups.
A patterned difference is revealed among educational levels such that
voters who have less than a high school education are most likely to see
this as a more important priority for the government than the voter who
has completed a college education. This relationship may well be a func-
tion of the differing income levels of the educational groups with the
lower educated voters having fewer available funds to devote to the
purchase of a home, thereby having greater need for government assistance.
Blacks view this problem as a more important priority for government action
which again should be related to the different income levels of these two
groups. Unlike their Protestant and Jewish counterparts, Catholics exceed
the average in the importance they assign to government action on this
problem.
GERALD
December 1974 U.S. National
How would you rate the importance of the following problem on a scale
where 0 means the problem has very little importance and the government
should work on many other problems first and 10 means the problem is of
greatest importance and the government should take immediate action.
Help Young People
Buy Their First Home
Little
Greatest
Importance/
Importance/
No
Immediate
Government
Average*
Number
Action
Action
Ranking
of Cases
Total
15%
9%
6.28
(2010)
Age
17-20 years
11
9
6.37
( 114)
21-24 years
21
7
6.69
( 190)
25-29 years
18
10
6.52
( 230)
30-34 years
14
8
6.08
( 213)
35-44 years
11
12
5.63
( 303)
45-54 years
16
7
6.35
( 322)
55-64 years
16
9
6.37
(281)
Over 65
16
7
6.39
( 347)
Education
Less than high school
20
7
6.88
( 607)
High school
19
8
6.52
( 718)
Some college
11
12
5.60
( 385)
College graduate/Post-
graduate
4
9
5.35
( 290)
Union Membership
Union household
19
7
6.57
( 657)
Non-union household
14
10
6.12
(1319)
Religion
Catholic
18
6
6.69
( 471)
Protestant
13
11
5.96
(1222)
Jewish
5
10
5.73
( 80)
Race
White
14
9
6.25
(1752)
Black
27
6
7.28
( 228)
Sex
Male
16
8
6.40
(1002)
Female
15
10
6.16
(1008)
*The list included thirteen problems of which "help young people buy their
first home" ranked twelfth in importance.
MARKET OPINION RESEARCH
The Responsibility to Provide Better Housing
By a slight plurality (32%), the voters of the United States designate
the responsibility of providing better housing to the federal government.
Other agencies which should take a major role include the state government
(28%), the local government (21%) and private enterprise (15%). Although
the assignment of responsibility for the solution of the problem is rela-
tively even across the various institutions, that it should be a government
rather than private enterprise function is abundantly clear.
However for the voters under the age of thirty-five to whom "better housing"
may well mean their own home and for the college-educated voters, the state
government is designated as the one to maintain the major role in solving
the problem. Again, the differences between the assignment of responsibility
to the various institutions are slight. These young voters will need to
be convinced that the federal government is the appropriate agency to help
them with these problems, although a well-defined program should be able to
accomplish that task as the selection of the state government as the helping
agency was only slightly the more popular choice.
MARKET OPINION RESEARCH
U.S. National December, 1975
Who should have the major role in solving this problem -- the
federal government, your state government, your local government,
or a private agency or private enterprise?
Provide Better Housing
Private
Agency/
Private
Federal
State
Local
En-
Don't
Numbe
Total
Govt.
Govt.
Govt.
terprise
Know
of Cas
Total
100%
32%
28%
21%
15%
6%
(749)
Age
18-24 years
100%
25
35
25
10
5
(140)
25-34 years
100%
28
38
13
14
4
(127)
35-44 years
100%
39
24
24
17
2
(128)
45-54 years
100%
34
25
18
18
5
(125)
55-64 years
100%
31
23
20
18
7
(109)
65 and over
100%
31
21
21
17
12
(121)
Education
Non-college
100%
34
27
20
13
7
(491)
College
100%
26
30
23
21
4
(251)
Union Membership
Union
100%
34
26
25
12
4
(230)
Non-union
100%
30
30
19
17
6
(507)
Religion
Protestant
100%
32
26
21
17
6
(452)
Catholic
100%
33
32
19
13
4
(199)
Jewish
100%
22
26
41
11
--
( 27)
Race
White
100%
29
29
23
17
6
(668)
Black
100%
56
20
11
17
5
( 81,
Sex
Male
100%
35
28
19
17
3
(401)
Female
100%
27
28
23
13
9
(349)
Document source description
This file contains material relating to President Ford's housing proposal.
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"ocrText": "The original documents are located in Box 17, folder \"Home Ownership (1)\" of the James\nM. Cannon Files at the Gerald R. Ford Presidential Library.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain. The copyrights to materials written by other individuals or organizations are presumed to\nremain with them. If you think any of the information displayed in the PDF is subject to a valid\ncopyright claim, please contact the Gerald R. Ford Presidential Library.\n[sept 1976/\nHome owners Two two\nMy goal is homeownership for every American family\nbe\nthat wants to own its own home and is willing to work\nfor it.\nThere are three principal barriers to the\ngot new\nachieve\nment of this goal, and I intend to deal with each of\nthem. The most important barrier, of course, is high\ninterest rates. My economic policies, including tight\ncontrol of unnecessary Federal spending will bring\nhave\ninterest rates down.\nnew\nThe second important barrier to home ownership\ndownpayment requirements which often require\nfor years um of working\nsaving. For those families who have proved (fow they can\nhold a job and pay their bills, I shall ask Congress\nnext year to change the FHA law to reduce downpayments\nby about one-third of what they are now.\nThe third important barrier to homeownership, is\nthe size of the monthly payments. To deal with this\nproblem, I will order expanded use of existing authorities\nto lower payments in the early years of homeownership and\ngradually increase them as family income goes up.\naddress Both\npm / mh a on\nan a m your can\nFORD & LIBRARY GERALD\nDigitized from Box 17 of the James M. Cannon Files at the Gerald R. Ford Presidential Library\nMy goal is a home for every American who wants to\nown his own house, and is willing to work for it.\nFor the American families who want to own a home --\nwhere the downpayment has been the principal barrier --\nfor those who have proved they can hold a job and pay\ntheir bills, I shall ask Congress next year to change the\nFHA law to reduce downpayment requirements.\n(Optional Descriptive Paragraph)\nUnder my proposal, if you make $275 a\ndownpayment for a good house would be lowered\nfrom about $1,750 to about $1,250.\npresent\nNutwork\nFORD & LIBRARY GERALD\nmy\ndu Christma tow wt w TA mm widd m\nwas\nan when ww AM T\n78\nFAM.\nMy goal is a home for every American who wants to\nown his own house, and is willing to work for it.\nFor the American families who want to own a home --\nwhere the downpayment has been the principal barrier ---\nfor those who have proved they can hold a job and pay\ntheir bills, I shall ask Congress next year to change the\nFHA law to reduce downpayment requirements.\n(Optional Descriptive Paragraph)\nUnder my proposal, if you make $275 a week, your\ndownpayment for a good house would be lowered one-third,\nfrom about $1,750 to about $1,250.\nFORD & LIBRARY 934839\nMy goal is a home for every American who wants to\nown his own house, and is willing to work for it.\nFor the American families who want to own a home --\nwhere the downpayment has been the principal barrier --\nfor those who have proved they can hold a job and pay\ntheir bills, I shall ask Congress next year to change the\nFHA law to reduce downpayment requirements.\n(Optional Descriptive Paragraph)\nUnder my proposal, if you make $275 a week, your\ndownpayment for a good house would be lowered one-third,\nfrom about $1,750 to about $1,250.\n[sept.1976]\nINSERT PAGE 8\nWe must set goals and keep after them.\nMy first goal is 2 million new permanent jobs every\nyear. Can we do it?\nYes. In the last 18 months we created more than\n4 million new jobs. Today, there are more Americans at\nwork -- 88 million of them -- than every before in our\nhistory.\nBut there are still too many Americans out of work,\nand in particular, too many young Americans in our urban\nareas who cannot find a good job or get the training and\nexperience they need to find a good job.\nAmericans have long since recognized the wisdom of\nassuring that every high school graduate who is willing, able and\nqualified be provided the means of going to college. We\nhave done so through grants, loans and scholarships.\nI am convinced that we can create a job scholarship\nprogram which will enable young people who choose not to\ngo to college to get a job at which they can learn a trade,\na skill, a craft or just plain good business sense. Such\na program would make available a one-time veweher, not for\nsalary costs, but for costs of on-the-job training.\nFORD & LIBRARY GERALD\nHOD indues Enat nt is the to\nAND\nNone\nBooth\n1.\nFORMAT:\nHOMEOWNERSHIP OPPORTUNITIES FOR MIDDLE AMERICA (HOMA)\nBROCK-ASHLEY\nGRADUATED PAYMENT/FIX\nThis program would provide a tax credit to purchasers of first homes.\nGNMA would pay 2% interest on the mortgage initially, and any\nInitial mortgage paym\nBoth new and existing homes would be eligible. There would be a maximum\nadditional interest due to the variable rate provisions. This\nincreased at a set ra\nmortgage limit of $38,000. The amount of the tax credit would be the\nwould accumulate with interest in the borrower's GNMA loan\npayments should bette\nlesser of (1) the difference between payments to principal and interest\naccount which is to be repaid when the house is sold or by\ninitial income constr\nat the current market rate (9% assumed in this analysis) and payments to\narrangement with GNMA.\nprincipal and interest at 6% or (2) the difference between principal and\ninterest at 9% and 20% of the family's income. This program would phase\nout at about the $18,000 income level.\n2.\nNumber of\n1.33 million\n1.7 million\n1.5 million\nFamilies\nAssisted:\n3.\nSubsidy per\nThe average subsidy per family in the first year of about $500 and of\nThere is no direct subsidy involved in the program. There\nNONE\nFamily:\nabout $650 over the life of the loan.\nare, however, indirect costs involved in all direct loan\nprograms.\n4.\nNumber of\n230,000\nThe GNMA loan would reduce monthly payments enough such that\n80,000 (under constra:\nIncremental\n250,000 to 300,000 additional families would be able to afford\nexceed 100%)\nPurchaser\na $35,000 house without spending more than 25% of their income\nper Year:\non housing. The GNMA loan would reduce current costs but\nincrease total costs because the GNMA loan must be repaid\nwith accumulated interest. Thus, there may be market resistance\nto this program, since it substantially reduces or eliminates\na homeownership equity accumulation, one of the primary perceived\nbenefits of homeownership.\n5.\nFirst Year\nAbout $665 million\nThe average GNMA loan would be about $500 after one year. If\nNONE\nOutlays:\n1.7 million loans were issued, total lending under the program\nwould reach $850 million.\n6.\nTotal Costs:\n$1.7 billion over the period of subsidy for each year's assisted families.\nTotal lending for the first year participants will reach about\nNONE\nAssuming a 7% growth rate in normal income, the $14,000 family would\n$5 billion after 5 years. Lending to participants entering\nphase out in 5 years and higher income families would phase out sooner.\nin years 2-5 will be about $10 billion. As currently conceived,\ntotal lending under the program will increast at an exponential\nrate. In theory, however, all of these outlays would be\nrecovered as recipients ultimately repaid their GNMA loans.\n7.\nCost per\n(First Year) - $2,900 ($665 million divided by 230,000)\n(First Year) -\nThere are no direct costs to the government,\n(First Year) - NONE\nIncremental\nbut in terms of budget impact, total lending\nPurchaser:\n(Total)\n- $7,391 ($1.7 billion divided by 230,000 incremental purchasers)\n(Total)\n-\nwould be about $2,800 per incremental purchaser\n(Total)\n- NONE\nin the first year. After 25 years, GNMA would\nhave lent about $250,000 per incremental first\nyear purchaser.\n8.\nRisk to the\nEssentially no default risk since FHA insurance is not required.\nThere is a particularly high risk of default associated with\nIncreased FHA default\nGovernment:\nsecond mortgages such as the GNMA loans which may be higher\nthan the original principal of the first mortgage, by the\ntime it becomes due.\n4.\nNumber of\n230,000\nThe GNMA loan would reduce monthly payments enough such that\n80,000 (under constraint tha\nIncremental\n250,000 to 300,000 additional families would be able to afford\nexceed 100%)\nPurchaser\na $35,000 house without spending more than 25% of their income\nper Year:\non housing. The GNMA loan would reduce current costs but\nincrease total costs because the GNMA loan must be repaid\nwith accumulated interest. Thus, there may be market resistance\nto this program, since it substantially reduces or eliminates\na homeownership equity accumulation, one of the primary perceived\nbenefits of hameownership.\n5.\nFirst Year\nAbout $665 million\nThe average GNMA loan would be about $500 after one year. If\nNONE\nOutlays:\n1.7 million loans were issued, total lending under the program\nwould reach $850 million.\n6.\nTotal Costs:\n$1.7 billion over the period of subsidy for each year's assisted families.\nTotal lending for the first year participants will reach about\nNONE\nAssuming a 7% growth rate in normal income, the $14,000 family would\n$5 billion after 5 years. Lending to participants entering\nphase out in 5 years and higher income families would phase out sooner.\nin years 2-5 will be about $10 billion. As currently conceived,\ntotal lending under the program will increast at an exponential\nrate. In theory, however, all of these outlays would be\nrecovered as recipients ultimately repaid their GNMA loans.\n7.\nCost per\n(First Year) - $2,900 ($665 million divided by 230,000)\n(First Year) - There are no direct costs to the government,\n(First Year) - NONE\nIncremental\nbut in terms of budget impact, total lending\nPurchaser:\n(Total)\n- $7,391 ($1.7 billion divided by 230,000 incremental purchasers)\n(Total)\n-\nwould be about $2,800 per incremental purchaser\n(Total)\n- NONE\nin the first year. After 25 years, GNMA would\nhave lent about $250,000 per incremental first\nyear purchaser.\n8.\nRisk to the\nEssentially no default risk since FHA insurance is not required.\nThere is a particularly high risk of default associated with\nIncreased FHA default risk\nGovernment:\nsecond mortgages such as the GNMA loans which may be higher\nthan the original principal of the first mortgage, by the\ntime it becomes due.\n9.\nEase of\nIf assistance is provided as a tax credit, administration is extremely\nGNMA would have to become a mortgage originator, and servicer\nFHA underwriting. FHA will\nAdministration:\ninexpensive but costs uncontrollable. If the assistance is provided by\nor would have to pay mortgage bankers to provide this service.\ndirect subsidies, administration is complex, but the number of recipients,\nhence costs, can be controlled.\n10. Other\nThe homeowner's real equity in the home is substantially reduced\nLender resistance due to inc\nProblems:\nby the GNMA second lien. His mobility also is reduced because\nreduced cash flow.\nhe must repay the loan if he sells his home. Given the potential\nexponential growth rate of total lending under the program, the\nindirect cost of additional interest on all Treasury borrowing\nis likely to be substantial. Finally, GNMA could become a large\nholder of single family homes if default rates are as high as may\nbe reasonably expected.\nIMPACT on Typical\nMonthly mortgage payment reduced by $36, from $286 to $250, in first year;\nMonthly mortgage payment reduced by $44, from $286 to $242, in\nMonthly mortgage payment re\n$15,000 Income\nreduced by $15 in second year. No impact after second year.\neach year. Total mortgage debt increases continually, by over\nfirst year; payment rises b\nFamily Buying a\n$5,500 per year.\nterm.\n$37,000 House with\n$35,000 Mortgage:\nSevatu Brooke HUD\nompore\nAcu (HUD) Broke oppose\nT/FIXED RATE MORTGAGE\nTAX EXEMPT SAVINGS\nDOWNPAYMENT VOUCHER/GRANT\nFEDERA\npayments would be reduced and later payments\nContribution made to, and interest earned on, a savings account\n$1,000 cash payment to buyer\nFedera\nrate of increase. Increasing mortgage\nwould be deductible from taxable income if the savings in that\nsecond\nbetter match rising incomes. This mitigates\naccount are used for a downpayment by first time home purchasers.\nonstraints on homeownership.\nLimits would be $20,000 income, $10,000 total savings, $2,500\nper year in addition to savings.\n1.5 million families\n1.46 million\n1.55 m:\n$2,500\n$1,000\nNONE\nstraint than loan to value ration cannot\n75 100,000\n60,000\n90,000\nRaises loan-to-value from .86 to .89 based on in-house\nLowers\nresearch, this would increase housing demand by 60,000\nhome if\nunits per year.\nbe in e:\n$938 million\n$1.4 billion\nNONE\nYear 1:\n$938M a year\nAll costs are borne in the first year a family is a\nNONE\nYear 2:\n$1.88B a year\nsubsidy recipient.\nYear 3:\n$2.86B a year\nYears 4-8:\n$3.75B\nE\n(First Year) - $37,500 to 50,000\n(First Year) - $23,000\n(First Y\nE\n(Total)\n- $37,500 to 50,000\n(Total)\n- $23,000\n(Total)\nult risk\nNONE\nNONE\nA signif\nincreasi\nrate wou\nconstraint than loan to value ration cannot\n75 100,000\n60,000\nRaises loan-to-value from .86 to .89 based on in-house\nresearch, this would increase housing demand by 60,000\nunits per year.\n$938 million\n$1.4 billion\nYear 1:\n$938M a year\nAll costs are borne in the first year a family is a\nYear 2:\n$1.88B a year\nsubsidy recipient.\nYear 3:\n$2.86B a year\nYears 4-8:\n$3.75B\nNONE\n(First Year) - $37,500 to 50,000\n(First Year) - $23,000\nNONE\n(Total)\n- $37,500 to 50,000\n(Total)\n- $23,000\ndefault risk\nNONE\nNONE\nA r i\nriting. FHA will finance same this year (Section 245)\nRun through tax system; SO minimal administrative cost\nWould impose significant operational capacity to administer\nR\nthe program (e.g., would have to certify incomes of participants\net\n($20,000 income limit, and if constraints such as requiring\npurchase of decent safe and sanitary housing were imposed,\nwould have to verify that constraints were met.)\nistance due to increased default risk and\nCreation of a new tax loophole with a large constituency.\nEqual subsidy would be paid to families of different wealth.\nA\nsh flow.\nSlow implementation, most recipients will take several years\nto\nto accumulate enough in their downpayment account to make\nMay have slight inflationary impact on price of housing since\nh\na purchase. Also, deduction amount need not correlate with\nsubsidy reduces purchase price.\nhousing expenditures.\ntgage payment reduced by $75, from $286 to $211, in\nDownpayment effectively reduced by $1,000, from $4,000 to\nLowers downpayment by $1,000 from $4,000 to $3,000.\nRe\npayment rises by 3 percent per year over the mortgage\n$3,000, through tax saving.\nmc\nour\nFEDERAL GUARANTEE OF DOWNPAYMENT\nREDUCE FHA DOWNPAYMENT REQUIREMENT\nFederal guarantee of loan for one half of downpayment. This\nLegislative change to reduce downpayment required for FHA insurance\nsecond loan would be secured by a second lien.\nCurrent\nOption\n3% for up to $25,000\n3% for up to $25,000\n10% for $25,000 - $35,000\n5% for $25,000 - $40,000\n20% for $35,000 - $45,000\n10% for $40,000 - $50,000\n20% for $50,000 - $60,000\n1.55 million\n275,000 (expected FHA volume plus incremental purchases)\nNONE\nNONE\n90,000 - 140,000\n20,000\nLowers downpayment required at purchase but raises total price of\nReduces downpayment requirement for FHA only by an average of 3%.\nhome if the second lien is amortized at mortgage rate which will\nbe in excess of rate of inflation.\nNONE\nNONE\nNONE\nNONE\n(First Year) - NONE\n(First Year ) - NONE\n(Total)\nNONE\n(Total)\n- NONE\nA significant increase in foreclosure rates. For example, by\nAn increase in foreclosure rate. Losses should be covered by the\nincreasing loan-value ratio by 8 percent (.86 to .93) foreclosure\n.5% premium.\nrate would be increased by 11 percent. (elasticity of 1.4).\n90,000 140,000\n20,000\nLowers downpayment required at purchase but raises total price of\nReduces downpayment requirement for FHA only by an average of 3%.\nhome if the second lien is amortized at mortgage rate which will\nbe in excess of rate of inflation.\nNONE\nNONE\nNONE\nNONE\n(First Year) - NONE\n(First Year ) - NONE\n(Total)\nNONE\n(Total)\nNONE\nA significant increase in foreclosure rates. For example, by\nAn increase in foreclosure rate. Losses should be covered by the\nincreasing loan-value ratio by 8 percent (.86 to .93) foreclosure\n.5% premium.\nrate would be increased by 11 percent. (elasticity of 1.4).\nRequires HUD processing at time of guarantee and management in\nSimple change in FHA processing. Larger volume of FHA insurance\nthe event of foreclosure.\nwould increase work load.\npants\nAmortizing second life of mortgage will require a higher income\nRequires legislative change. Has greatest effect on homes in excess\nto support loan (e.g., a higher monthly payment because of the\nof $30,000. Could result in FHA becoming more competitive with\nhigher mortgage amount).\nprivate mortgage insurance.\nReduces downpayment by $2,000, from $4,000 to $2,000; raises\nCould lower downpayment by up to $2,500, from $4,000 to $1,500.\nmonthly payment by $20, from $282 to $302.\n1. FORMAT:\nHOMEOWNERSHIP OPPORTUNITIES FOR MIDDLE AMERICA (HOMA)\nGRADUATED PAYMENT/FIXED RATE MORTGAGE\nFEDERAL GUARANTEE OF DOWN\nInitial mortgage payments would be reduced and later payments\nFederal guarantee of loan\nThis program would provide a tax credit to purchasers of first homes.\nBoth new and existing homes would be eligible. There would be a maximum\nincreased at a set rate of increase. Increasing mortgage\nsecond loan would be secu\nmortgage limit of $38,000. The amount of the tax credit would be the\npayments should better match rising incomes. This mitigates\nlesser of (1) the difference between payments to principal and interest\ninitial income constraints on homeownership.\n305\n22.83\nat the current market rate (9% assumed in this analysis) and payments to\nprincipal and interest at 6% or (2) the difference between principal and\ninterest at 9% and 20% of the family's income. This program would phase\nout at about the $18,000 income level.\n305\n1.55 million\n2.\nNumber of\n1.33 million\n1.5 million\nFamilies\nAssisted:\nNONE\n3.\nSubsidy per\nThe average subsidy per family in the first year of about $500 and of\nNONE\nFamily:\nabout $650 over the life of the loan.\n1150\n1280\naverage income assumed 15,800\n4.\nNumber of\n40 $0,000 (under constraint than loan to value ration cannot\n90,000 - 140,000\nIncremental\n250,000\nHUD estimate\nexceed 100%) in first year, (with HUD changes.)\nLowers downpayment requir\nPurchaser\n100,000 in later years\nhome if the second lien\nL.\nper Year:\n103 2,000 OMB estimate for comparable subsidy under5.5% income Svowth.\nbe in excess of rate of\nL.\n52,000 OMB estimate for comparable subsidy under 7% income growth.\n80,000 under eat earlier estimate,\n670\nNONE\n5.\nFirst Year\nAbout $655 million\nNONE\nOutlays:\n5.5%\nNONE\n6.\nTotal Costs:\n$1.8 billion over the period of subsidy for each year's assisted families.\nNONE\nAssuming a growth rate in normal income, the $14,000 family would\nphase out in 5 years and higher income families would phase out sooner.\nHUD estimate\n700\n670\n5\n7.\nCost per\n(First Year) - $2,500 ($665 million divided by 230,000)\n(First Year) - NONE\n(First Year) - NONE\nIncremental\n200\n5\nPurchaser:\n(Total)\n- $7,31 ($1.8 billion divided by 2$0,000 incremental purchaser\nNONE\n(Total)\nNONE\n(Total)\nOMB estimate\n(First Year) 12,300 6,500 ($680 million divided by 103,000) 12,800 for 52,000 units\n(Total)\n$17,400\n($1.8 billion divided by 103,000)\n32,700 for 52,000 units\n8.\nRisk to the\nEssentially no default risk since FHA insurance is not required.\nIncreased FHA default risk\nA significant increase i\nGovernment:\nincreasing loan-value ra\nrate would be increased\n(Section\n245)\n4.\nNumber of\n$0,000 40 (under constraint than loan to value ration cannot\n90,000 140,000\nIncremental\n250,000\nHUID estimate\nexceed 100%) in First year, (with HUD changes.)\nLowers downpayment required\nPurchaser\n103\nhome if the second lien is\nper Year:\n2,000 OMB estimate for comparable subsidy under5.5% income growth.\n100,000 in later years\nbe in excess of rate of ini\n52,000 OMB estimate for comparable subsidy under 7% income Svonth,\n80,000 under ed earlier estimate,\n670\nNONE\n5. First Year\nAbout $655 million\nNONE\nOutlays:\n5.5%\nNONE\n6. Total Costs:\n$1.8 billion over the period of subsidy for each year's assisted families.\nNONE\nAssuming a growth rate in normal income, the $14,000 family would\nphase out in 5 years and higher income families would phase out sooner.\nHUD estimate\n700\n670\n5\n(First Year) - NONE\n7. Cost per\n(First Year) - $2,800 ($665 million divided by 230,000)\n(First Year) NONE\nIncremental\n200\n5\n(Total)\nNONE\n(Total)\nNONE\nPurchaser:\n(Total)\n- $7,391 ($1.8 billion divided by 2$0,000 incremental purchaser\nOMB estimate\n(First\nyear) $16,500 ($685 million divided by 103,000) $ 12,800 for 52,000 units\n(Total)\n$17,480\n($1.8 billion divided by 103,000)\n32,700 for 52,000 units\n$200\n8.\nRisk to the\nEssentially no default risk since FHA insurance is not required.\nIncreased FHA default risk\nA significant increase in\nincreasing loan-value rati\nGovernment:\nrate would be increased by\n9. Ease of\nIf assistance is provided as a tax credit, administration is extremely\nFHA underwriting. FHA will finance same this year (Section 245)\nRequires HUD processing at\nthe event of foreclosure.\nAdministration:\ninexpensive but costs uncontrollable. If the assistance is provided by\ndirect subsidies, administration is complex, but the number of recipients,\nhence costs, can be controlled.\n10. Other\nLender resistance due to increased default risk and\nAmortizing second life of\nProblems:\nto support loan (e.g., a h\nreduced cash flow.\nhigher mortgage amount).\nIMPACT on Typical\nMonthly mortgage payment reduced by 836, from $ 306 to $250, in first year;\n$56\nmortgage payment reduced by $75, from $286 to the $211, in\nReduces downpayment by $2\n$15,000 Income\nreduced by $15 in second year. No impact after second year.\nMonthly first year; payment rises by 3 percent per year over mortgage\nmonthly payment by $20, f:\nFamily Buying a\n$ 42\n$28 in third year and $13 in fourth\nterm.\n40,000 000 House with\n$35,000 Mortgage:\nYear for a total tax credit oT $1,668 over four years\nwith HUD changes, Monthly mortsase payment reduced by $37 from $284 to\n38\n$247 in first year. and by $30 to $254 in second year,\n(assumes, 6% PMI premium instead of usual 25%\nFEDERAL GUARANTEE OF DOWNPAYMENT\nREDUCE FHA DOWNPAYMENT REQUIREMENT\nFederal guarantee of loan for one half of downpayment. This\nLegislative change to reduce downpayment required for FHA insurance\nsecond loan would be secured by a second lien.\nCurrent\nOption\n3% for up to $25,000\n3% for up to 25,000\n10% for $25,000 - $35,000\n5% for $25,00 , - $40,000\n20% for $35,000 - $45,000\n10% for $40,0 0 - $50,000\n20% for $50,000 - $60,000\n1.55 million\n275,000 (expected FHA volume plus incremental purchases)\nNONE\nNONE\n90,000 - 140,000\n20,000\nLowers downpayment required at purchase but raises total price of\nReduces downpayment requirement for FHA only by an average of 3%.\nhome if the second lien is amortized at mortgage rate which will\nbe in excess of rate of inflation.\nNONE\nNONE\nNONE\nNONE\n(First Year) - NONE\n(First Year ) - NONE\n(Total)\nNONE\n(Total)\nNONE\nA significant increase in foreclosure rates. For example, by\nAn increase in foreclosure rate. Losses should be covered by the\nincreasing loan-value ratio by 8 percent (.86 to .93) foreclosure\n.5% premium.\nrate would be increased by 11 percent. (elasticity of 1.4).\n20,000\nLowers downpayment required at purchase but raises total price of\nReduces downpayment requirement for FHA only by an average of 3%.\nhome if the second lien is amortized at mortgage rate which will\nbe in excess of rate of inflation.\nNONE\nNONE\nNONE\nNONE\n(First Year) - NONE\n(First Year ) - NONE\n(Total)\n- NONE\n(Total)\n- NONE\nA significant increase in foreclosure rates. For example, by\nAn increase in foreclosure rate. Losses should be covered by the\nincreasing loan-value ratio by 8 percent (.86 to .93) foreclosure\n.5% premium.\nrate would be increased by 11 percent. (elasticity of 1.4).\n245)\nRequires HUD processing at time of guarantee and management in\nSimple change in FHA processing. Larger volume of FHA insurance\nthe event of foreclosure.\nwould increase work load.\nAmortizing second life of mortgage will require a higher income\nRequires legislative change. Has greatest effect on homes in excess\nto support loan (e.g., a higher monthly payment because of the\nof $30,000. Could result in FHA becoming more competitive with\nhigher mortgage amount).\nprivate mortgage insurance.\nin\nReduces downpayment by $2,000, from $4,000 to $2,000; raises\nCould lower downpayment by up to $2,500, from $4,000 to $1,500.\nrtgage\nmonthly payment by $20, from $282 to $302.\nto\n[sept. 1976]\nMy goal is homeownership for every American family\nthat wants to own its own home and is willing to work\nfor it.\nThere are three principal barriers to the achieve-\nment of this goal, and I intend to deal with each of\nthem. The most important barrier, of course, is high\ninterest rates. My economic policies, including tight\ncontrol of unnecessary Federal spending, will bring\ninterest rates down.\nThe second important barrier to homeownership is\ndownpayment requirements which often require years of\nsaving. For those families who have proved they can\nhold a job and pay their bills, I shall ask Congress\nnext year to change the FHA law to reduce downpayments\nby about one-third of what they are now.\nThe third important barrier to homeownership, is\nthe size of the monthly payments. To deal with this\nproblem, I will order expanded use of existing authorities\nto lower payments in the early years of homeownership and\ngradually increase them as family income goes up.\nFORD is LIBRARY GERALD\nU\n{ Sept. 1976]\nFor the American families who want to own a home --\nwhere the downpayment has been the principal barrier --\nfor those who have proved they can hold a job and pay\ntheir bills, I shall ask Congress next year to change the\nFHA law to reduce downpayment requirements.\n(Optional Descriptive Paragraph)\nUnder my proposal, if you make $275 a week, your\ndownpayment for a good house would be lowered one-third,\nfrom about $1,750 to about $1,250.\nFORD i LIBRARY GERALD\n[sept.1976]\nTHE WHITE HOUSE\nWASHINGTON\nMEMORANDUM FOR:\nTHE PRESIDENT\nFROM:\nJIM LYNN/JIM CANNON\nSUBJECT:\nAccelerated Homeownership Program\nISSUE\non August 27, you stated that one of the prime issues of the\ncampaign that you intenoed to emphasize is an accelerated\nhomeownership program. The purpose of this memoranaum is to\nbrief you on tne options available to you. You snould know\nthat there is some question about the need for a Government\nprogram to promote nomeownership. Home purchases are at a\nrecord level, and single-family starts are at longrun\nequilibrium.\nDISCUSSION\nAn indivioual's decision to buy a nouse is affected by two\niinancial consioerations:\n1. Ability to save enough capital to aftoro a downpayment.\n2. Ability to make monthly payments on interest ano principale\nAny expansion ot nomeownership would necessitate lowering\nHALD\none of these two costs. Various Federal programs like FHA\nLIBRARY\nmortgage insurance, VA housing benefits, mortgage purchase by\nGNMA and FNMA, as well as others, currently serve to requce\nthese costs. They serve either a nonoifterentiated group cf\nrecipients like FHA programs or a special group like veterans.\nAn ad-hoc task force comprised of HUD, OMB, and the Domestic\nCouncil nas reviewed the various possibilities of reaucing\nboth downpayments and monthly mortgage payments, through\nsuch aevices as tax incentives, direct subsidies, and\nrederal underwriting ana guarantees. Much consigeration was\ngiven to limiting benefits to first homebuyers. The task force\nhas aeterminea rour options (two affecting monthly mortgage\npayments and two aftecting downpayment) to be worthy of furtner\nconsideration.\nbecause or many unknowns, the precise effects ot these policies\n1S aifficult to predict. In the past, we have undertaken\nL\nsome policies that have had dramatically different outcomes\ntnan expectea.\nThis paper brietly describes four viable initiative options\nselected by the ad-noc task force with their advantages\nand disadvantages. It you aecide to go forward with one or\nmore of these proposals, or a variant of them , the next\nquestion is our timing. The last section of this paper indi-\ncates tne advantages and disaovantages of timing options.\nPROGRAM OPTIONS\nMonthly Mortgage Payments\n1. Tax creait (or airect subsidy) to reduce monthly payments\nof tirst nomebuyers to a 6 percent effective interest rate\nor to 20 percent of a persons income (wnich ever is nigher).\nThis program would:\n-- have a maximum mortgage limit of $30,000.\n-- Phase out above the $18, UUU income level.\n-- Benefit 1.33 million families.\n-- Increase rirst nome purchases by between 50,000\nand 250, UUU per year.\n-- Cost about 4665 million the first year, 31.3 million\nthe secona year, and $1.9 billion per year for the\nlite of the program thereafter.\n--- Cost 36, 100 to $30, UUU per incremental purchaser.\nL. Graquated payments to reduce initial mortgage payments.\nLater payments would increase at a graouated rate to match\nrising incomes. (This program is already a demonstration\nprogram in some parts of the country.) The program would:\n--- Require acceptance by lending institutions and FHA\nunoerwriting.\n-- Benefit 1.5 million families.\n-- would require little or no budget outlays.\n-- Increase tirst nome purchases by between 20,000 ana\n250, UUU per year.\n3\nDOWNPAYMENT\n3. regeral guarantee of secona loan for one-halt of the down-\npayment on any mortgage, up to a maximum guarantee of 7-1/2\npercent and $5,000. The program would:\n--- Require acceptance by lending institutions.\n-- Benetit 1.5 million families.\n-- Result in outlays for default of $300-500 million.\n-- Assist 40,000 to 140, 000 home purchasers.\n-- Cost $2,000 to $12,000 per incremental purchaser.\n4. Reduce FHA downpayment requirement from -u- ($25,00\nmortgage) to 50 percent ($50, UUU mortgage), and increase\nFHA mortgage limit to $60,000. This program would:\n-- Assist 275, UUU to 1.0 million families.\n-- Increase nomeownership by 10,000 to 140, UUU per year.\n-- Have no outlay effect.\nThe rollowing are the most important auvantages ano disaovant-\nages of each of the options:\n1.\nmonthly payment subsidy (tax credit or airect).\nPros\nAccelerates homeownership for first nomebuyers,\nusually young moderate-income families with\ngrowing incomes.\nAssures recipients continuea capacity to support\nmortgages until they reach an $18, 000 income\nlevel.\nPhases out the subsidy with normal income growth,\nwith tew families as subsidy recipients for more\nthan 3 to 5 years.\nAios a lower income level than other alternatives.\nFORD i LIBRARY GENALD\nCons\nSubstantial outlays will be required.\nSome tamilies may not experience income growth and\nthus coula be recipients of the program for a\nconsiueraple period of time.\nMay be criticized as welfare for the well-to-ao\n($14, 000 to $18, UUU income).\nThere are many unknowns as to the number of home-\nbuyers benefited (estimated range of 52, UUU to\n250, 000 for the first year) with implied costs\nranging irom >6, 100 to $30, 000 per incremental\npurchaser.\nwill either warp the tax system or require\nconsiderable aoministration.\nCoula be viewea as inequitable by recent first\nnome purchasers and by renters who pay full taxes\nwhile new nome buyers have up to luu% tax reduction.\n2.\nGraquated payment/tixed-rate mortgage.\nPros\nAccelerates opportunity for homeownership for those\nwith expectations ot rising income by providing\nlower payments in early years of the mortgage.\nInvolves no direct subsiaies.\nFHA is already tinancing some graquated payment\nmortgages.\nCons\nRequires higher (at least i percent) downpayment to\navoia outstanding balance exceeding house price\n(negative equity), so cannot be combined with a\ndownpayment option.\nIncreased default risk since, auring early years of\nmortgage, amount owea could exceed original principal\namount.\nRequires agreement with and cooperation from lenders.\n5\nSome consumers will be wary if uncertain about their\ntuture income growtn.\nwill probably require FHA insurance, another\nimpeaiment to lender and consumer acceptance,\nas well as an aaditional workload buraen and\nrisk to HUD.\n3.\nFederal guarantee of downpayment.\nPros\nSuostantially reduces equity required.\nDoes not depend on FHA.\nCan be compinea with other subsidies.\nCan be limited to first home purchasers.\nCons\nRequires higher monthly payment.\nRequires cooperation/agreement with traditional\nlengers.\ncan Le criticized as favoring midale-income\nfamilies.\n4.\nReduce FHA downpayment and extena mortgage limit.\nPros\nSubstantially reauces equity required for homes\nover $40, 000.\nCan be combinea with other subsidies.\nFMA may aemonstrate viability of lower downpayment\nto private mortgage insurers.\nLowest cost and lowest risk to the Government\ncompared with other options.\ncons\nwill not reach many tamilies unless FHA processing\n1S substantially improved.\nFORD is LIBRARY GERALD\nCan be criticized tor benefiting mainly micale-\nincome tamilies.\nwill partially compete with private mortgage insurers.\nOTHER CONSIDERATIONS\nAnother question to be considered is the timing of the\nrelease of your accelerated homeownership program. Congress\ngoes out of session on October 2. It is conceivable that\nsubmission of new legislation by your Administration or even\na concrete proposal might be seized upon by the Congress to\nquickly pass a nousing bill that would embarrass your Auministra-\ntion. Even if this aoes not happen, there is sure to be\ncriticism of your proposal, outlining its inconsistency with\npast Auministration opposition to congressional proposals for\naccelerated homeownership.\nAnother consideration is that there are several contingent\nquestions regarding tne above options that will require some\ntime to aevelop answers. They include:\n1. Acquiring more data from polling on whetner monthly\npayments and/or downpayments are the most signiticant\nimpeaiments to homebuying.\n2. Determining if FHA underwriting can De improved ano made\nmore eiticient to make it acceptable to builders.\nS. Retining estimates of the number of incremental purchasers\nLor each program.\n4.\nDetermining what terms lengers will require for non-FHA\nmortgages.\nThese questions snoula be resolved by the end of September.\nRie: Home Ownership\nOFFICE OF MANAGEMENT AND BUDGET\nROUTE SLIP\nMr. Lynn May\nTake necessary action\nTO\nApproval or signature\nComment\nPrepare reply\nDiscuss with me\nFor your information\nSee remarks below\nFROM Dan L. McGurk\nSept. 7, 1976\nDATE\nREMARKS\nOMB proposal:\nwould innean ceiling\nFORD i LIBRARY GERALD\non FHA loan and\nlower the downpayment.\nHills has not seen this\nbut will be buifed\non it this afternoon.\nWe don't want to disun\nthis specific document the A.M. p.m. OMB REV\nFORM 4\nAUG 70\n090718\nLyun May\nPresident Ford and Home Ownership\nBackground\nThe biggest impediment to more Americans owning their\nown home today is inflation. Inflation not only drives up\nthe cost of building new homes, but also increases the\ninterest rates that all new homebuyers must pay on their\nmortgages, and reduces the availability of mortgage credit.\nPresident Ford has sought to reduce inflation through\nsound economic policies and by resisting -- and vetoing, where\nnecessary -- Congressional legislation that would have re-\nquired large increases in Federal spending. As the rate of\ninflation has declined, funds available for home purchases\nhave soared: net savings flows into thrift institutions have\nrisen from less than $2 billion in all of 1974 to over $22\nbillion in the first six months of 1976.\nIn addition, President Ford's leadership has brought this\ncountry out of the worst recession in forty years. The\nrecovery has increased personal income substantially, thereby\nadding to the number of American families who qualify as\nworthy credit risks to buy a home. In the long run, increased\ndisposable income is fundamental to increased home ownership.\nAs a result, the rate of housing starts for single family\nhomes have increased 57% between December 1974 and July 1976;\nand the index of home sales volume has increased 44% in about\nthe same period.\nFORD is LIBRARY GERALD\n2\nDirect Assistance\nSince President Ford took office, his Administration:\nReleased tandem authority of $8 billion to assist\nthe purchase of over 225,000 homes at below market\ninterest rates.\nReleased budget authority of $7.9 billion to assist\nover 200,000 homebuyers through homeownership subsidy\n(section 235).\nAssisted in $130 billion of mortgage acquisition for\nover 1.1 million homes through insurance and mortgage\nguarantees.\nSigned several bills extending and expanding mortgage\ninsurance, mortgage purchase authority, mortgage\nlimits and reducing downpayment requirements for insured\nloans.\nProposed the Financial Institutions Act, which would\nimprove the financial mechanisms to make more mortgage\nfunds available and smooth out credit cycles.\nExpanded Homeownership Plan\nAmerica is much more a country of homeowners than any\nother nation in the world. One of the reasons for that is the\nFederal Housing Authority which has for years facilitated home-\nownership through mortgage insurance. The time has come to\ntake another forward step in helping more Americans own their\nown home.\nFORD i LIBRARY GERALD\n3\nNO\nThe President is submitting legislation to increase\nthe\nsize of mortgages that the FHA will guarantee, and to\ndrastically sharphy, reduce the downpayment required to qualify for\nFHA insurance. The downpayment will be reduced by between\n20 and 50%, thereby expanding significantly drastically the number of\nAmericans who can utilize FHA insurance to buy a home.\nIt is estimated that under this bold program about\nadditional families will be able to qualify for FHA home\ninsurance for appropriate quality of houses where they have\nthe income stability but have been unable to save up a down-\npayment in these inflationary times. Coupled with continued\npressure to moderate inflation, this plan will permit a\ngreatly expanded segment of lower and middle America to enjoy\nthe benefits of homeownership.\nReducing downpayment requirements under section 203 (b)\nof the Housing Act could increase the number of defaults\nsignificantly, and thereby be costly to the Treasury. On\nthe other hand, President Ford has great faith in America, and\nin the recovery and anti-inflation policies of his Administration.\nIn conjunction with these sound economic programs, he is con-\nfident that the mortgage insurance premium charged by FHA will\nadequantly cover the anticipated losses. Only if he is\nunsuccessful in convincing Congress to assist him in reducing\nFORD & LIBRARY GERALD\n4\ninflation and aiding a strong and long-lasting recovery will\nthere be any increased losses. The advantage of extending\nthe benefits of homeownership to millions more Americans is\nworth the risk.\nMARKET OPINION RESEARCH\nSeptember 8, 1976\nMEMORANDUM TO:\nAlan Greenspan\nFROM:\nBob Teeter\nSUBJECT:\nISSUE PROPOSALS\nMy suggestion that we look at a program to make homeownership easier comes\nfrom the following conclusions:\nFirst of all, there are no overriding issues that are affecting the President'\nsupport. Virtually all voting decisions are related to the voter's perception\nof the candidate, and the issues the President chooses to talk about and what\nhe says about them are the means by which he can affect his perception. I have\nsuggested that we take three or four of his past proposals, re-package them in\nmore political terms, and then try to focus on them. Crime, catastrophic health\ninsurance and national defense should be included on this list along with foreig\naffairs.\nfor\nSecondly, the President is currently seen as being strongly\nreducing\ninflation by holding down government spending. This is a key element of his\ncurrent support and whatever we do with any other issue should not contradict\nor diminish this. Moreover, I think we should consider using vetoes aggressive}\nas a major plus and we are testing this possibility in a national poll this week\nend.\nThirdly, I think there is a need for us to come up with at least one major\nproposal where the President is seen as being for something that will help peopl\nnot just opposed to other proposals. It should be something designed to appeal\nto younger (18-34) and younger middle-aged (35-44) non-college educated voters,\nparticularly those with family incomes between $7,500 and $20,000. Almost none\nof these people are Republicans, but well over half are available to a given\nRepublican candidate in any election. If we aim at the under 35 group, the issu\nshould not be one that deals with taxes or government spending as this group pa)\nfew taxes, are not very aware of those they do pay, and don't see inflation as 1\nmajor problem older voters do.\nTwo possibilities I think we should look at are a program to promote homeowner-\nship among young families and/or a program to assist families in providing\ncollege, or some type of post secondary education, for their children.\nGERALD FORD (IBRAR)\nMARKET OPINION RESEARCH\nAlan Greenspan\nPage 2\nSeptember 8, 1976\nA homeownership proposal should be aimed at the 18-30 year olds with\nfamily incomes under $15,000, most of whom have no post secondary education.\nThis type of proposal also would have an advantage in that it could be sold\nas a job creation program and one that would help to stimulate an important\nsegment of the economy. The evidence available seems to indicate that the\ndown payment, rather than the monthly payment, is the problem for most of\nthese people. We are addressing this question in our national poll this week-\nend.\nA proposal to help middle income families send their children to college (possi-\nbly a tax deduction for college tuition) would have the advantage of appealing\nto a group that is somewhat older, more sure to vote, and of appealing to what\nalways has been a strong middle class value. Education appears to be re-emergin\nas an important priority for families after several years of being down in the\npolls. Most people think that education is the means for upward social mobility\nin our society.\nAttached is some background data on homeownership and attitudes toward it as\nmeasured in surveys of registered voters. Please note the difference between\nvoters under 30 to 35 and the rest of the electorate in terms of current home-\nownership, its importance as a goal, and the government's responsibility to do\nsomething about it. In each case, this group's interest is about double that of\nthe total electorate.\nI realize that you have some severe budget and policy restrictions but I still\nthink we need to explore these two and possibly some other ideas that would appe\nto this younger, non-Republican segment of the electorate. I think we need some\nthing of this type to go with in the September 20 to October 5 period. Also, it\nis important to remember that we are not looking at issues where there is any\ntremendous demand in the polls, but rather something that can affect the Preside\nperception.\nFORD\nGERALD\nMARKET OPINION RESEARCH\nProfile of Home Ownership\nNearly three-fourths (73%) of the American electorate own their own homes.\nAs might well expect, there is a trend of increasing home ownership by age\nwith this pattern tending to level out above the age of thirty-five. Among\nvoters of the 18-24 age range, their housing pattern is nearly evenly divided\nbetween owning a home (48%) and renting (46%). Voters aged 25-34 are\nsomewhat more often home-owners (65%) although they have not yet reached the\naverage level of home ownership.\nThe distribution of home ownership across all age groups is fairly even\nat 17% or 18% with the exception of the 18-24 year old voters who comprise\na lower 12% of all homeowners. Over half (58%) of all renters are between the\nage of 18 and 35, with renting declining as one grows older although it takes\na slight jump up beyond the age of sixty-five.\nOther differences in home ownership patterns are worth noting. Whites (75%\nown homes) are more often home-owners than blacks (51%) and voters who are\nJewish (62% home ownership) are less likely to own homes than their Protestant\n(75% home ownership) or Catholic (74% home ownership) counterparts.\nThe most important variable to defining a profile of the home owner is total\nfamily income. Below $10,000 yearly family income, only slightly more than\none-half of the voters own their own homes while over $10,000, the home\nownership rate jumps quickly, to 73% for voters whose total family income range\nfrom $10,000 to $15,000 and 88% for voters whose family income exceeds $15,000\na year.\nGERALD FORD\nMARKET OPINION RESEARCH\nAre you a home-owner or do you rent?\nDecember 1975 U.S. National\nHome-owner\nRenter\nDon't Know\nTotal\n100%\n100%\n100%\nAge\n18-24 years\n12\n33\n64\n25-34 years\n17\n25\n5\n35-44 years\n18\n13\n9\n45-54 years\n18\n10\n--\n55-64 years\n17\n8\n---\nOver 65\n18\n11\n18\nIncome\n0-$4,999\n11\n23\n50\n$5,000-$9,999\n21\n41\n33\n$10,000-$14,999\n27\n20\n--\nOver $15,000\n39\n14\n16\nEducation\nLess than high school\n28\n33\n22\nHigh school\n37\n36\n33\nSome college\n18\n18\n44\nCollege graduate/Post-\ngraduate\n17\n12\n--\nReligion\nCatholic\n29\n27\n32\nProtestant\n60\n54\n55\nJewish\n3\n5\n--\nUnion Membership\nUnion household\n32\n27\n18\nNon-union household\n67\n71\n77\nRace\nWhite\n92\n79\n100\nBlack\n8\n21\n--\nSex\nMale\n51\n47\n50\nFemale\n49\n53\n50\nNumber of Cases\n(1090)\n(390)\n( 22)\nFORD & GERALO LIBRARY\nMARKET OPINION RESEARCH\nAre you a home-owner or do you rent?\nDecember 1975\nU.S. National\nHome\nTotal\nOwner\nRenter\nTotal\n100%\n73\n26\n1\nAge\nT8-24 years\n100%\n48\n46\n5\n25-34 years\n100%\n65\n35\n:\n35-44 years\n100%\n78\n21\n1\n45-54 years\n100%\n83\n17\n--\n55-64 years\n100%\n86\n14\n--\n65 and Over\n100%\n81\n17\n2\nIncome\n0-$4,999\n100%\n54\n42\n2\n$5,000-$9,999\n100%\n57\n71\n1\n$10,000-$14,999\n100%\n73\n27\n--\nOver $15,000\n100%\n88\n11\n:\nEducation\nLess Than High School\n100%\n69\n30\n1\nHigh School\n100%\n73\n26\n1\nSome College\n100%\n71\n26\n2\nCollege Grad/Post-Graduate\n100%\n79\n21\n:\nReligion\nCatholic\n100%\n74\n24\n2\nProtestant\n100%\n75\n24\n1\nJewish\n100%\n62\n36\n-\nUnion Membership\nUnion household\n100%\n76\n23\n1\nNon-union household\n100%\n71\n27\n2\nRace\nWhite\n100%\n75\n23\n2\nBlack\n100%\n51\n49\n-\nSex\nMale\n100%\n74\n25\n1\nFemale\nFOR\n100%\n71\n27\n1\n&\nGERALD\nMARKET OPINION RESEARCH\nWhen held constant for levels of income, age loses much of its power\nas a main determinant of home ownership. Voters under the age of thirty-\nfive whose family income exceeds $15,000 own homes nearly as often as\nthose voters from thirty-five to fifty-four. Above the age of fifty-four,\nthe distribution of home ownership is more evenly balanced across income\nlevels. Age is an important predictor of home ownership in serving as a\nsurrogate for the availability of sufficient funds to purchase one's own\nhome. Young people, in trying to establish themselves usually do not enjoy\nsufficient yearly income so that they may immediately purchase a home.\nRather, the years between 18 and 35 are most often spent saving money for\na home and building one's income to a level which would make the purchase\nof a home financially feasible.\nEducation, in being highly correlated as the income displays a similar\npattern of home ownership. Renters more often have less than a high school\neducation which can keep them constrained to the lower income levels.\nFORD LIBRARY & GERALD\nMARKET OPINION RESEARCH\nProfile of Home-owners and Renters by Age, Income and Education\nHome-owners\nRenters\nUnder\n$5,000-\n$10,000-\nOver\n# of\nUnder\n$5,000-\n$10,000-\nOver\n# of\nTotal\n$5,000\n$9,999\n$14,999\n$15,000\nCases\n$5,000\n$9,999\n$14,999\n$15,000\nCases\nAge\n18-24 years\n100%\n7\n20\n24\n40\n(117)\n22\n51\n16\n11\n(120)\n25-34\nyears\n100%\n1\n12\n37\n49\n(164)\n7\n36\n38\n17\n( 88)\n35-44\nyears\n100%\n1\n13\n34\n51\n(175)\n20\n41\n16\n23\n( 44)\n45-54 years\n100%\n4\n16\n30\n50\n(170)\n23\n37\n27\n13\n( 30)\n55-64 years\n100%\n16\n30\n19\n32\n(165)\n39\n39\n4\n18\n( 28)\nOver 65\n100%\n38\n36\n16\n10\n(160)\n67\n22\n5\n8\n( 36)\nHome-owners\nRenters\nLess\nLess\nThan\nThan\nHigh\nHigh\nSome\nGra-\n# of\nHigh\nHigh\nSome\nGra-\n# of\nTotal\nSchool\nSchool\nCollege\nduate\nCases\nSchool\nSchool\nCollege\nduate\nCases\nAge\n18-24 years\n100%\n17\n38\n38\n5\n(134)\n83\n40\n21\n5\n(129)\n25-34 years\n100%\n8\n40\n24\n29\n(177)\n12\n40\n24\n25\n( 95)\n35-44 years\n100%\n16\n42\n20\n22\n(189)\n33\n42\n12\n13\n( 52)\n45-54 years\n100%\n26\n42\n15\n15\n(194)\n33\n41\n21\n3\n( 39)\n55-64 years\n100%\n40\n36\n8\n14\n(185)\n58\n16\n6\n19\n( 31)\nGERAL\nOver 65\n100%\n53\n24\n10\n13\n(190)\n61\n20\n12\n7\n( 41)\nLIBRARY\nMARKET OPINION RESEARCH\nImportance of Owning Your Own Home\nWhen presented with a list of ten personal needs and goals, having\nyour own home/buying a new home\" is mentioned by 11% of the electorate\nas one of the three most important to the, following \"personal health\"\nand \"having a closer relationship to God.\" It was more often indicated\nby those under the age of thirty-five who are also less likely to own\ntheir own homes. This goal is nearly equally often mentioned by voters\nof all educational strata, all religions of union membership and non-\nunion membership status and of both sexes. The only other difference\nexists in the racial variable as 18% of the blacks designate \"owning\nyour own home/buying a new home\" as important to 11% of the whites.\nMARKET OPINION RESEARCH\nDecember, 1974 #4796 U.S. National\nHere's a list of some personal needs, hopes and goals that other people\nhave mentioned to us. Which is most important, second most important,\nthird most important?*\nHaving Your Own Home/\nBuying a New Home\nSecond\nThird\nMost\nMost\nMost\nCom-\nIm-\nIm-\nIm-\nNumber\nTotal\nbined\nportant\nportant\nportant\nof Cases\nTotal\n100%\n11%\n2%\n4%\n5%\n(2010)\nAge\n17-20 years\n100%\n22\n8\n5\n9\n( 114)\n21-24 years\n100%\n18\n4\n7\n7\n( 190)\n25-29 years\n100%\n22\n2\n10\n9\n( 230)\n30-34 years\n100%\n11\n3\n2\n7\n( 213)\n35-44 years\n100%\n9\n2\n5\n2\n( 303)\n45-54 years\n100%\n5\n1\n3\n2\n( 322)\n55-64 years\n100%\n7\n2\n4\n2\n( 281)\nOver 65\n100%\n9\n1\n2\n6\n( 347)\nEducation\nLess than high school\n100%\n11\n3\n4\n5\n( 607)\nHigh school\n100%\n13\n2\n5\n5\n( 718)\nSome college\n100%\n11\n3\n4\n5\n( 385)\nCollege graduate/Post-\ngraduate\n100%\n10\n1\n5\n4\n( 290)\nUnion Membership\nUnion household\n100%\n12\n2\n4\n6\n( 657)\nNon-union household\n100%\n11\n2\n4\n4\n(1319)\nReligion\nCatholic\n100%\n10\n1\n4\n5\n( 471)\nProtestant\n100%\n12\n2\n4\n5\n(1222)\nJewish\n100%\n1\n--\n1\n--\n( 80)\nRace\nWhite\n100%\n11\n2\n4\n5\n(1752)\nBlack\n100%\n18\n5\n7\n5\n( 228)\nSex\nMale\n100%\n13\n2\n5\nBALD\n6\n(1002)\nFemale\n100%\n10\n2\n4\nA\n(1008)\n*The list included ten items of which \"having your own home/buying a new\nhome\" ranked number nine in importance.\nMARKET OPINION RESEARCH\nImportance of Committing Government Action to the Goal of \"Helping Young\nPeople Buy Their Own Homes\"\nThe goal of \"helping young people buy their own homes\" is one of some\nimportance to the American voters, but not an immediate priority for\ngovernment action. Voters over the age of thirty-five believe this to\nbe nearly as important as those under thirty-five do. This fact indi-\ncating that while home ownership is more important as a personal goal to\nyounger voters, the concept of government action to help those younger\npeople reach their goal of owning a home is one which is just as well\naccepted by voters of all age levels.\nHowever, the importance of government action to the achievement of home\nownership by young people varies by several major demographic groups.\nA patterned difference is revealed among educational levels such that\nvoters who have less than a high school education are most likely to see\nthis as a more important priority for the government than the voter who\nhas completed a college education. This relationship may well be a func-\ntion of the differing income levels of the educational groups with the\nlower educated voters having fewer available funds to devote to the\npurchase of a home, thereby having greater need for government assistance.\nBlacks view this problem as a more important priority for government action\nwhich again should be related to the different income levels of these two\ngroups. Unlike their Protestant and Jewish counterparts, Catholics exceed\nthe average in the importance they assign to government action on this\nproblem.\nGERALD\nDecember 1974 U.S. National\nHow would you rate the importance of the following problem on a scale\nwhere 0 means the problem has very little importance and the government\nshould work on many other problems first and 10 means the problem is of\ngreatest importance and the government should take immediate action.\nHelp Young People\nBuy Their First Home\nLittle\nGreatest\nImportance/\nImportance/\nNo\nImmediate\nGovernment\nAverage*\nNumber\nAction\nAction\nRanking\nof Cases\nTotal\n15%\n9%\n6.28\n(2010)\nAge\n17-20 years\n11\n9\n6.37\n( 114)\n21-24 years\n21\n7\n6.69\n( 190)\n25-29 years\n18\n10\n6.52\n( 230)\n30-34 years\n14\n8\n6.08\n( 213)\n35-44 years\n11\n12\n5.63\n( 303)\n45-54 years\n16\n7\n6.35\n( 322)\n55-64 years\n16\n9\n6.37\n(281)\nOver 65\n16\n7\n6.39\n( 347)\nEducation\nLess than high school\n20\n7\n6.88\n( 607)\nHigh school\n19\n8\n6.52\n( 718)\nSome college\n11\n12\n5.60\n( 385)\nCollege graduate/Post-\ngraduate\n4\n9\n5.35\n( 290)\nUnion Membership\nUnion household\n19\n7\n6.57\n( 657)\nNon-union household\n14\n10\n6.12\n(1319)\nReligion\nCatholic\n18\n6\n6.69\n( 471)\nProtestant\n13\n11\n5.96\n(1222)\nJewish\n5\n10\n5.73\n( 80)\nRace\nWhite\n14\n9\n6.25\n(1752)\nBlack\n27\n6\n7.28\n( 228)\nSex\nMale\n16\n8\n6.40\n(1002)\nFemale\n15\n10\n6.16\n(1008)\n*The list included thirteen problems of which \"help young people buy their\nfirst home\" ranked twelfth in importance.\nMARKET OPINION RESEARCH\nThe Responsibility to Provide Better Housing\nBy a slight plurality (32%), the voters of the United States designate\nthe responsibility of providing better housing to the federal government.\nOther agencies which should take a major role include the state government\n(28%), the local government (21%) and private enterprise (15%). Although\nthe assignment of responsibility for the solution of the problem is rela-\ntively even across the various institutions, that it should be a government\nrather than private enterprise function is abundantly clear.\nHowever for the voters under the age of thirty-five to whom \"better housing\"\nmay well mean their own home and for the college-educated voters, the state\ngovernment is designated as the one to maintain the major role in solving\nthe problem. Again, the differences between the assignment of responsibility\nto the various institutions are slight. These young voters will need to\nbe convinced that the federal government is the appropriate agency to help\nthem with these problems, although a well-defined program should be able to\naccomplish that task as the selection of the state government as the helping\nagency was only slightly the more popular choice.\nMARKET OPINION RESEARCH\nU.S. National December, 1975\nWho should have the major role in solving this problem -- the\nfederal government, your state government, your local government,\nor a private agency or private enterprise?\nProvide Better Housing\nPrivate\nAgency/\nPrivate\nFederal\nState\nLocal\nEn-\nDon't\nNumbe\nTotal\nGovt.\nGovt.\nGovt.\nterprise\nKnow\nof Cas\nTotal\n100%\n32%\n28%\n21%\n15%\n6%\n(749)\nAge\n18-24 years\n100%\n25\n35\n25\n10\n5\n(140)\n25-34 years\n100%\n28\n38\n13\n14\n4\n(127)\n35-44 years\n100%\n39\n24\n24\n17\n2\n(128)\n45-54 years\n100%\n34\n25\n18\n18\n5\n(125)\n55-64 years\n100%\n31\n23\n20\n18\n7\n(109)\n65 and over\n100%\n31\n21\n21\n17\n12\n(121)\nEducation\nNon-college\n100%\n34\n27\n20\n13\n7\n(491)\nCollege\n100%\n26\n30\n23\n21\n4\n(251)\nUnion Membership\nUnion\n100%\n34\n26\n25\n12\n4\n(230)\nNon-union\n100%\n30\n30\n19\n17\n6\n(507)\nReligion\nProtestant\n100%\n32\n26\n21\n17\n6\n(452)\nCatholic\n100%\n33\n32\n19\n13\n4\n(199)\nJewish\n100%\n22\n26\n41\n11\n--\n( 27)\nRace\nWhite\n100%\n29\n29\n23\n17\n6\n(668)\nBlack\n100%\n56\n20\n11\n17\n5\n( 81,\nSex\nMale\n100%\n35\n28\n19\n17\n3\n(401)\nFemale\n100%\n27\n28\n23\n13\n9\n(349)"
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