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        "logicalDate": "1976-08-31",
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    "ocrText": "The original documents are located in Box 17, folder \"Housing (3)\" of the James M.\nCannon 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 Gerald Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain.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.\nDigitized from Box 17 of the James M. Cannon Files at the Gerald R. Ford Presidential Library\nTHE WHITE HOUSE\nWASHINGTON\nP\nM\na Detroit\nDEPARTMENT\nOF\nU.S.\nHOUSING\nTHE SECRETARY OF HOUSING AND URBAN DEVELOPMENT\nAND\nWASHINGTON, D. C.. 20410\nURBAN\nJune 9, 1975\nMEMORANDUM FOR: James Cannon\nDomestic Council\nThe White House\nSubject: Proposal for Domestic Council Hearings on National\nGrowth Issues\nThe attached work plan specifies a process for creating the\nPresident's 1976 Growth Report, through combining HUD funded research\nand the proceedings of a series of public hearings on \"growth issues.\"\nThis work plan, in effect, amends the March 4, 1975 working paper\nsent to you that calls for some form of public involvement in producing\nthe next report as well as relating it more directly to the annual\nbudget and legislative deliberations of the President.\nI am aware of a number of concurrent activities under White House\nauspices which deal with the search for directions that future domes-\ntic policies may take. The recent Conference on Domestic and Economic\nAffairs, in San Diego, is one example. Recently, we responded to the\nCouncil's February survey of Cabinet agency views on \"national needs\nand policy issues.\" The attached work plan is yet another means to\nFORD LIBRARY s GERALD\nengender discussion on future policies. I believe the work plan we\nhave developed is a concrete, achievable program that the Council can\nuse, during this year, in discharging its assignment from the President\nto assess national needs.\nSo that we have a clear agreement on the respective roles that the\nCouncil and HUD will play, in preparing for the hearings and the next\ngrowth report, I draw your attention to Part V of the work plan. This\npart identifies several decision points on which there must be explicit\nunderstanding and guidance from the Council on how to proceed.\nI would like to meet with you, the third week of June, to discuss\nthis plan and agree on how to proceed. Mr. David Meeker, Assistant\nSecretary for Community Planning and Development will also be in\nattendance.\nCarla A. Hills\nAttachment\nRECEIVED\nJAN291976\nCENTRAL FILES\nHUD/CPD-UPC\nApril 17, 1975\nPROPOSAL FOR DOMESTIC COUNCIL HEARINGS ON NATIONAL GROWTH ISSUES\nI. BACKGROUND. On March 4, 1975, the Department of Housing and Urban\nDevelopment submitted to James Cannon, Director of the Domestic\nCouncil, a working paper on options for development of the 1976\nGrowth Report. This report is required pursuant to Title VII,\nSection 703 of the 1970 Housing and Urban Development Act which\nmandates the President, through an identifiable unit of the\nDomestic Council to send to Congress in every even-numbered year\na major statement on Federal policy regarding national growth and\ndevelopment. The major recommendation of the options paper is that\nthe 1976 biennial report should result from a process of free\ninterchange and deliberation between the White House, working\nthrough the Domestic Council, and major representative groups of\nbusiness, industry, consumers and State and local governments.\nThis recommendation reflects the President's style for \"going to\nthe public\" on domestic policy matters.\nThe Domestic Council subsequently endorsed the concept of public\nFORD i LIBRARY 076830\nparticipation and indicated that a series of open hearings could\nbe held instead of the conferences originally proposed in the\nMarch 4 working paper.\nThis paper sets forth a general plan of action for conducting such\nhearings, relating testimony to be acquired at the hearings with\nHUD funded research on growth topics, and utilizing both the\ntestimony and the research as the basis for substantive develop-\nment of the 1976 Growth Report.\n2\nII. SUMMARY OF PLAN OF ACTION. The Domestic Council and HUD would\nembark upon a joint course of action leading to development of\na draft 1976 report in late December 1975.\nThe Council would establish a core staff to schedule and manage\n(with contract assistance) public hearings to be held in October\nand early November. Seven hearings would be held in Washington\non transportation, shelter, natural resources, community develop-\nment, social services, manpower development, and government in\nthe 1970's. Four regional conferences would be held simultaneously,\neach on the joint topic of energy needs/economic growth and change.\nAfter the hearings, the Domestic Council would arrange for a\nPresidential briefing to transmit the basic findings and insights\npresented by witnesses at the hearings.\nHUD would fund and manage growth research studies and commissioned\npapers on four subjects:\n1. National Growth Issues\n2. The Impact of Federal Activities on Growth\n3. State Experiences in Managing Growth\n4. City and County Experiences\nThe HUD-funded issue papers would be particularly important, as they\nwould be utilized as the organizing frame work for the hearings.\nWitnesses would be invited to present testimony in the context of\nthe issue papers. After the hearings HUD would revise the papers,\nthen assemble them with other HUD-funded research and the proceedings\nof the hearings, into a draft 1976 Growth Report.\n3\nDuring January 1976, HUD would revise the growth report, as the\nPresident may direct, to reinforce or strengthen policy positions\nthat may be set forth in the 1977 budget and State of the Union\naddresses. The final growth report will also be submitted to the\nUnited Nations as the U.S. country report for the June 1976\nConference on Human Settlements.\nIII. PLAN OF ACTION. Following is a description of the essential\nprocess by which the 1976 report can be developed, through a\ncombination of HUD funded research papers and a series of open\nhearings, to assist the President in formulating legislative and\nbudgetary proposals.\nA. Roles and Responsibilities\nThe Domestic Council would sponsor a series of open hearings to\nelicit voluntary testimony from public and private groups on\nvarious \"growth issues.\" After the hearings, the Council would\narrange to brief the President on summary findings and conclu-\nsions of the witnesses and their views on national growth.\nBasic protocol, and the underlying purpose of the Title VII\nstatute, indicate the need for Domestic Council visibility and\nsponsorship of the hearings.\nA Domestic Council Core Staff (assembled most efficiently by\ndetail of senior personnel from Federal agencies) would handle\nall operations and logistics necessary to conduct the hearings\nand develop proceedings. The core staff would contract for\n4\nmanagement and reporting services for the hearings, utilizing\nfor example, the National Academy of Public Administration.\nContract funds would be provided by HUD.\nHUD would continue with its responsibility to organize a program\nof research studies for the 1976 report (completed) select and\napprove contractors (starting) and oversee their work. The\nDepartment would also arrange for distribution of draft research\npapers to invited witnesses, so that all testimony received would\nbe organized around common themes and subject matter. HUD would\nalso assemble the research papers and conference proceedings into\nthe growth report.\nHUD contractors would develop 1) nine study papers on \"growth\nissues\" 2) analyses of Federal impacts on growth 3) inventory of\nStates experience with growth management and 4) selected summary\nof local government experiences.\nThe Federal interagency task force assembled for the 1974 report\nwould be reconvened to function in a review capacity for the 1976\nreport, and to provide data and information to the HUD contractors\nwho will undertake the research studies.\nB. Research Program\nHUD funded research will provide the basic substance both for\nthe Report and the hearings. Particularly important will be the\n\"growth issues\" studies which will concentrate on nine topical\nareas.\n5\nEnergy Needs and Resources\nEconomic Growth and Change\nNatural Resources (non-energy)\nTransportation\nShelter\nCommunity Development\nSocial Services\nManpower Development\nGovernment in the 1970's (Federal/\nState/local)\nThese issue papers are designed to assist the President to\nimplement Title VII through the assessment of current and\nforeseeable growth trends and the identification of policy\nissues related to those trends. The papers are to assess\npublic policy issues likely to arise in the mid-range\nfuture (3-5 years) within the areas of assigned responsibility\nfor each of the Cabinet agencies, thereby facilitating the\ntranslation of issues into understandable public policy options\nwhich in turn can be translated back to specific Cabinet agency FORD\nresponsibilities.\nGERALD LIBRARY\nAppendix A presents the scope of work for the issue papers\nproject.\nThe issues paper will serve the critical function of providing\na structured agenda for the hearings. The papers would be\ncirculated to appropriate public and private groups with a\n6\nrequest that their testimony respond directly to the issues\nposed and to the policy options, if any, they would support.\nAfter the open hearings, the issue papers would be revised\nto include insights gained from the hearings and a summary\nreport on consensus and dissenting views of the witnesses\nwould be prepared for the Domestic Council and the President.\nIt is anticipated that the summary report and the revised\nissue papers would be incorporated, substantially without\nchange, in the 1976 report, as documentation of the views of\nmajor interest groups which have been presented to the Domestic\nCouncil and the President for consideration in domestic policy-\nmaking.\nFORD in LIBRARY 018830\nC. Hearings\nIndividual hearings would be conducted on each of the nine growth\nissue topics.\nFor efficiency and to reduce travel costs, seven of the hearings\nshould be in Washington. Regional hearings (four simultaneously)\nwould be held only for the economy and energy topics, to secure\nvisibility elsewhere in the country and to learn about regional\nviews on these two topics in particular.\nIn regard to timing, the hearings should be held in October and\nearly November, the earliest practicable period by which HUD\ncontractors would have draft issue papers prepared and circulated\nfor pre-hearing review by invited witnesses.\n7\nGroups invited to submit voluntary testimony would represent\na balance of public and private and national, state and local\nviews. A cross section of groups would be invited to testify\non each topic, e.g., the transportation hearing would receive\ncommentary not only from \"transportation\" groups also from\nthose concerned with housing, access to social services and\neconomic growth.\nAs suggested by William Baroody's office, appearances by the\nPresident or Vice President at one or more of the hearings\nshould be strongly considered.\nD. Formulation of Report for the President\nGERALD LIDDRA FORD\nAs indicated in the calendar of events, the hearings would be\ncompleted about mid-November. Immediately thereafter the\nDomestic Council core staff, in cooperation with its management\ncontractors and HUD support staff, would summarize the consensus\nand dissenting views of witnesses, prepare a written report and\nschedule a briefing for the President.\nThe purpose of the briefing would be to ensure timely and useful\ncontributions, from the effort of producing the 1976 Report, to\nthe President as the 1977 Budget and legislative programs are\nbeing considered.\nHUD meanwhile would provide its contractors with guidance on\nrevisions to the draft issue papers, to ensure that the insights\ngained and range of policy issues are fully representative of\nthe positions presented at the hearings.\n8\nDuring December, after revision of the issue papers, HUD will\nassemble both its contracted research studies and proceedings\nof the hearings into a draft of the 1976 Growth Report, and\ninitiate the required review cycles within the Executive\nBranch.\nDuring January 1976, the draft report can be reworked, as the\nPresident may direct, so that it reinforces and elaborates upon\npolicy positions contained in the 1977 budget and State of the\nUnion messages.\nIV. CALENDAR OF EVENTS\nThe table following relates the roles of the Council, its core staff,\nHUD and its contractors, and the Federal interagency task force, to\nthe major actions that need to be accomplished in order to conduct\nthe hearings, brief the President by December 1975, and publish the\nnext growth report by February 1976.\nV. DECISION POINTS ON PLAN OF ACTION\nIt is essential that there be immediate and firm agreement, by\nprincipals in the Domestic Council and HUD, on the following points,\nin order to carry out. this plan of action.\nProcess of Report Development and Presidential Involvement\n1. For 1976, a public approach will be taken to preparing the\ngrowth report. Operationally, this will be accomplished by\nconducting open hearings to elicit voluntary testimony from\npublic interest groups, state and local officials, and\nbusiness leaders on what are the important national growth\nissues and appropriate Federal policy responses.\nCALLMAR 01 EVENTS\n1976 NATIONAL GROWTH REPORT\nTIME\nDOMESTIC COUNCIL\nDOMESTIC COUNCIL CORE STAFF\nHUD\nHUD CONTRACTORS\nFEDERAL TASK FORCE\nApril\nApprove this proposal\ndevelop research\n1975\nprojects\nMay\nAssomble core staff\ndevelop management plan\nadvertize/select/\nfor hearings\napprove contractors\nJune\nAnnounce hearings\nselect/approve contractor\nmanage research\ncontract start-up\nreview research programs\nto manage hearings\ncontracts\nand provide data and\ninformation to contractors\nJuly\nprepare invitational\nmail-out\nAugust\nSend invitations to\nsupervise contractor\n50-60 groups to testify\npreparations for hearings\nto include:\nSeptember\nSend draft papers or growth\nspace arrangements\nprepare distribution\ncomplete draft papers\nreview draft growth\nissues to invited witnesses\nscheduling\nof issue papers to\non growth issues\nissue papers\npublicity\ninvited witnesses\ntranscribing\npreparation of\nproceedings\nOctober\nConduct 7 hearings in\ncoordinate with\nWashington. plus 4 regional\ncontractor in manag-\nhearings\ning the hearings\nNovember\nConclude hearings by\nsubmit proceedings to\narrange Executive\nrevise issue papers;\nmid-month\nDomestic Council\nBranch review of\ncomplete summary report\nissue papers and\ndraft on issues\nother research\nwork\nDecember\nAdvise President on principal\nassemble research\nrevise summary report;\nreview draft 1976 report\nfindings of hearings, as input\nwork into draft\nall other research\nto 1977 Budget and\n1976 report;\nstudies due for\nlegislation; review draft\nsubmit draft report\ncompletion\n1976 report\nto President\nJanuary\nreview final 1976 report\nassemble final 1976\nreview final 1976 report\n1976\nreport\n9\n2. The Domestic Council will sponsor the hearings, rather than\nany Cabinet agency, as a matter of basic protocol and to lend\nvisibility to the White House in fulfilling the requirements\nof Title VII.\n3. A core staff, necessary for effective management of the hearings,\nwill be assembled by directive of the Council and report directly\nto it.\n4. The President should receive a major briefing and summary of the\noutcome of the hearings, the issues discussed and policy options\nconsidered. The purpose of the briefing would be to provide an\norganized means for transmitting public and private sector views\non national growth to the President at a major decision stage of\nthe annual budget and legislative cycles.\nSubstance of the Hearings\n1. The hearings will be structured around the nine topical growth\nissues for which HUD is contracting study papers.\n2. The issues will be cast in functional terms, such as housing and\neconomic development, and oriented to the short term future (3-5\nyears), in order to assist the Domestic Council in fulfilling\nthe February 13, 1975 Presidential directive regarding \"assessment\nof national needs and policy issues,\" in a pragmatic fashion.\n10\nFOLLOW-UP\nAs soon as agreement is reached on these decision points, the\nCouncil's core staff should be identified, assembled and charged\nwith formulation of a management plan for the hearings. HUD\nsupport staff will be made available to coordinate the develop-\nment of HUD funded research work with the management plan and\nthe scheduling of the hearings.\nAppendix A\nWORK STATEMENT\nFOR\nANALYSIS OF SELECTED NATIONAL GROWTH\nISSUES/PUBLIC POLICY CHOICES\n1. BACKGROUND. This statement proposes a limited solicitation of a cost\nreimbursable contract as part of the HUD research program in support\nof Title VII, Section 703(a) of the 1970 Housing Act requiring prepara-\ntion of a biennial report on national growth.\nSpecific provisions of Section 703(a) call for the Report to include:\na summary of significant problems facing the United States\nas a result of urban growth trends and developments.\ncurrent and foreseeable needs in the areas served by\npolicies plans and programs designed to carry out national\ngrowth policy.\nrecommendations for programs and policies for carrying out\nsuch national growth policy.\nThe Domestic Council on February 13, 1975 was charged by the President\nwith the following responsibilities, among others:\n-- assess national needs and identifying alternative ways of\nmeeting them;\n-- identify major policy problem areas requiring Administration\nattention and actions;\n-- coordinate the formulation of policy options in the domestic\narea;\n-- initiate fact finding analysis;\n-- develop policy options and recommendations for Presidential\ndecision, administration action and legislation.\nThe 1974 Growth Report covered a broad range of issues affecting national\ngrowth under the topical headings of population, housing, regional growth,\nmetropolitan change, quality of life, and rural development. The treat-\nment of these issues was general, broad and cursory. The issues were\nnot ranked in order of importance nor translated specifically into publicly\ndebateable options for possible Federal policy and action.\nThe principal conclusion of the 1974 report was that the capacity of\ngovernment (including the Federal government) to identify, analyze and\ndeal effectively in a coordinated manner with growth issues needs to be\nstrengthened.\n2\nThe purposes of this project therefore include:\n1. Assist the Domestic Council in its policy analysis and review\nresponsibilities for the identification and analysis of selected\nissues, directly relatable to the topic of growth, i.e., economic\nchange and physical development.\n2. Conduct the work necessary to fulfill the intent of Section (a)\nmandating a biennial review and summary of significant growth\nproblems, current and foreseeable needs related to growth, and\nrecommendations for programs and policies to carry out national\ngrowth policy as a response to those needs.\nOn March 4, 1975 Domestic Council Director James Cannon received from\nHUD support staff a set of recommendations on how to develop the 1976\nreport. These recommendations were premised on the need and desirability\nto involve non-Federal, public and private sector groups in the formula-\ntion of the report.\nThe Domestic Council subsequently endorsed the concept of public\nparticipation, and indicated that a series of \"open\" hearings could be\nheld. The hearings are tentatively scheduled for the early fall of\n1975, and will be designed to elicit voluntary testimony from public\ninterest groups, State and local officials, and business leaders on\nFORD\nwhat are the important national growth issues and appropriate Federal MORRAL\npolicy responses.\nLIBRARY\nThe working papers to be prepared under this proposal will serve the\ncritical function of providing a structured agenda for the hearings.\nIt is HUD's intention to circulate the issue papers. to appropriate public\nand private groups and to request that their testimony respond directly\nto the issues posed and to the policy options, if any, they would support.\nAfter the open hearings, the issue papers would be revised to include\ninsights gained from the hearings and a summary report on consensus and\ndissenting views of the witnesses would be prepared for the Domestic\nCouncil and the President. It is anticipated that the summary report\nand the revised issue papers would be incorporated, substantially with-\nout change, in the 1976 report, as documentation of the views of major\ninterest groups which have been presented to the Domestic Council and\nthe President for consideration in domestic policy-making.\nIt should be noted that, as the United States approaches the Bicentennial\nYear of Celebration, there are several public and private initiatives\nunder way to develop reports that assess the Nation's past and reflect\nupon its future. The coincidence of the requirement for a Presidential\nreport on national growth and development to be published in the same\nyear as the Bicentennial provides impetus for and lends importance to\na fresh and systematic attempt to define major growth issues that the\ncountry is likely to face, particularly under the conditions of economic\nchange which the country is now experiencing. The 1976 Growth Report\nwill function as a major White House statement exploring such issues.\n3\nSCOPE OF WORK\nThe contractor shall perform all tasks, as specified following, in order to\nproduce 9 issue papers, each about 20-30 pages, on these topical areas.\nEnergy Needs and Resources\nEconomic Growth and Change\nNatural Resources (non-energy)\nTransportation\nShelter\nCommunity Development\nSocial Services\nManpower Development\nGovernment in the 1970's (Federal, State, local)\nProfessional services necessary to carry out the work tasks shall be furnished\nby the contractor. Particular emphasis is placed upon the management capacity\nof the contractor to adhere to the performance schedule, because the completion\nof initial drafts of the issue papers are critical to the success of the open\nhearings.\nThe final issue papers and summary reports shall be in a style and format\nsuitable for direct inclusion into the 1976 growth report.\nTASK 1. Establish review committees. The contractor shall establish, with\nHUD concurrence, a review committee of 3 persons for each of the\nissue papers. Each committee shall consist of individuals with\nrecognized professional credentials and specialized experience in\nthe topical area represented by each issue paper. To the extent\npractical, each review committee shall include at least one\nrepresentative of the Federal executive branch. The committees\nshall review their respective issue papers. One member of each\ncommittee shall be designated by the contractor to participate in\na review of the summary report to be prepared by the contractor.\nTASK 2. Identify candidate subcontractors. Subject to HUD concurrence the\ncontractor shall identify potential subcontractors with known\nexpertise to serve as authors for each of the issue papers. Sub-\ncontractors may be private consultants, university faculty, or\nindividual staff within Federal agencies. Contractors shall\ndetermine subject to HUD concurrence the need for such subcontractors\nfor each of the issue papers over and beyond the staff under the\nimmediate employ of the contractor. In the event, that Federal\nemployees are identified as potential subcontractors, HUD shall\narrange for the availability of such personnel through interagency\nfund transfer or administrative detail.\nTASK 3. Develop frame of reference for issue papers. The contractor subject\nto HUD review shall develop a frame of reference and set of specifica-\ntions regarding the scope of treatment of subject matter for each of\nthe 9 issue papers. This frame of reference shall serve to provide\na uniform treatment and depth of analysis for each of the 9 topical\nareas. Within each topical area, the contractor shall specify with\nHUD concurrence, the minimum number and the nature of specific\n4\nissues to be addressed. The subcontractor may consider additional\nissues as approved by the contractor and HUD\nThe frame of reference shall include but not be limited to these criteria\nfor the analysis of growth issues and policy choices.\n1. Functional orientation. The subject matter shall be treated in functional\nterms so as to be relatable to appropriate cabinet agencies. For example,\nthe issue paper on transportation shall treat the functional modes of\nhighways, airways, waterways, railroads and mass transit. The purpose\nof this criterion is to insure that the analysis of the growth issues is\ncast in pragmatic and realistic terms, thereby facilitating the transla-\ntion of the issue into understandable public policy choices, which in\nturn can be translated back to mission responsibilities of specific\nCabinet agencies.\n2. Three to five year outlook. The issue paper shall identify key problems\nand issues that can be reasonably anticipated over the mid-range future,\ni.e., the next three to five years. For example, the concern with the\nfuture of the Nation's railways now centered on abandonment in the\nNortheast and Northcentral portions of the country should include\nanticipation of further abandonment problems in the rest of the Nation's\nrail network. The intent of this criterion is to assist the Domestic\nCouncil in taking a forward look at public policy beyond the standard\none year time frame of the annual Federal budget cycle and state of the\nunion and Presidential message, and to help provide the executive branch\nwith an expanded capability for future oriented policy analysis, consis-\ntent with the five year forward analysis required by the Congress under\nBudget Improvement Act of 1974.\n3. Derivation from current conditions and trends. The growth issues\nidentified and discussed should be plausible and realistic interpretations\nof problems likely to arise from current conditions and trends. For\nexample, the current increase in the population group of the household\nformation age is bound to generate continuing demands for new household\nunits over the next three to five years. The nature of this demand is\nmore diverse than for the past generations, and ranges from elderly\ncouples desiring to return intown from suburbs to an increasing number\nof households consisting of unrelated individuals. The mid-range housing\nissues therefore becomes a matter of identifying as precisely as possible\nthe relative demands of these household types and appropriate private and\npublic sector responses. The purpose of this criterion is to anticipate\nrealistically future problems that can be expected to arise from current\nnational conditions.\n4. Geographic orientation. In order to meet the Congressional concerns for\ngrowth problems and issues in urban and rural America, the authors of\neach issue paper must demonstrate how the mid-term issues are manifested\nalong a geographic continuum consisting of at a minimum central cities,\nolder suburban areas, developing suburban areas, and rural areas. The\npurpose of this criterion is to provide a geographic frame of reference\naround which interrelationships can be drawn from the functionally stated\nissues.\n5\n5. Policy choices. Each author shall outline and develop possible\nstrategies for dealing with the identified issues, indicating whether\nsuch issues can appropriately be solved by private action or public\naction, and if through public action, which level cf government can\nbest handle, in order to promote professional, technical, and ultimately\npolicy debate. The authors for each issue paper shall present optional\nstrategies cast in non-partisan terms for addressing the issues. Such\noptions should represent a wide range of choices. Each author shall\nto the extent plausible and feasible develop options which represent\na range of choice of public policies for responding to the identified\ngrowth problems. This range should vary from policies of acceptance,\nto mitigation, acceleration, or reversal of the problem.\nTASK 4. Develop draft issue papers. The contractor shall manage and direct\nthe preparation of draft growth issue papers pursuant to the frame of\nreference. The contractor will also provide specific guidance on\nparticular issues to be addressed within each of the nine topical\nareas. Additional issues suggested by the subcontractor in the course\nof developing the draft may also be addressed, subject to HUD concur-\nrence. The contractor, in the course of developing the initial draft shall\nconsult with appropriate Federal agencies for purposes of securing a\ncontinuing technical review, agency insights and available supporting\nor informative data such as completed research, budget documents,\nand policy studies. The draft working papers shall include executive\nsummaries of the key issues identified and the policy options\npresented, to facilitate review by public and private organizations\ninvited to testify at open hearings.\nTASK 5. Revise issue papers. The contractor shall revise each issue paper\nsubsequent to review by the technical advisory committees and the\noutcome of the proposed open hearings on growth. The purpose of the\nrevision is to add insights on issues acquired and to ensure that\nthe range of policy options is broadly representative of the positions\npresented at the hearings.\nTASK 6. Preparation of summary report. The contractor shall assemble a report\nwhich highlights and describes the basic issues and the range of\npolicy options identified in each of the nine papers along the\ngeographical continuum identified in the frame of reference. The\nessential feature of the summary report will be identification and\ndiscussion of the interrelationships of such issues and policies as\ntransportation, housing, energy requirements, as they are manifested\nin urban areas and in metropolitan areas and within the various\nsectors of metropolitan areas.\nTASK 7. Revision of summary report. Subsequent to review by the advisory\ncommittee and HUD, the contractor shall revise the summary report.\n6\nPERFORMANCE SCHEDULE\nAssuming project start up on June 1, 1975, the contractor shall complete\nthe work itemized under the above tasks as follows:\nTask 1: Within 4 weeks after the effective date of the contract (June 30).\nTask 2: Within 4 weeks after the effective date of the contract (June 30).\nTask 3: Within 4 weeks after the effective date of the contract (June 30).\nTask 4: Within 15 weeks after the effective date of the contract (Sept 13).\nTask 5: Within 25 weeks after the effective date of the contract (Nov 22).\nTask 6: Within 25 weeks after the effective date of the contract (Nov 22).\nTask 7: Within 28 weeks after the effective date of the contract,\nbut no later than December 15, 1975.\nPROGRESS REPORTS\nContractor shall submit five copies of monthly narrative progress reports\nwhich shall provide a brief factual summary of work accomplished on each\ntask during the reporting period. Progress reports will identify current\nproblems and proposed corrective actions in terms of schedules, cost and\nmanpower utilization in order to adhere to the firm deadline of December 15,\n1975 for completion of the project. Attached to the progress reports shall\nbe fully executed:\n1. Financial management report (HUD Form 533)\n2. Scheduled performance report (HUD Form 534)\n3. Manpower use report (HUD Form 535)\nFINAL REPORTS\nThe contractor shall submit five copies of a final report not later than\nthree months after completion of the contract. This report shall summarize\nthe contractor's experience and problems with conduct of the project and\nrecommendations if any for furhter policy relevant research which may be\nappropriate for Domestic Council consideration for the 1978 report.\nPRODUCT REPORTS\nThe contractor shall submit 200 copies of the draft issue papers with\nexecutive summaries not later than September 13, 1975; 100 copies of the\nrevised issue papers not later than November 22, 1975; 100 copies of the\ndraft summary report not later than November 22, 1975; and 100 copies of\nthe final summary report not later than December 15, 1975.\nGERALD 9. FORD\nACTION\nTHE WHITE HOUSE\nWASHINGTON\nJune 17, 1975\nMEMORANDUM FOR\nFROM\nJIM CANNON\nTHE PRESIDENT Jan\nSUBJECT\nEMERGENCY HOUSING ACT OF 1975\n(HR 4485)\nI.\nBACKGROUND\nThe Congress has forwarded to you the Emergency Housing\nAct of 1975 (HR 4485). The last day for action is\nTuesday, June 24, 1975.\nThe most objectionable features of this legislation\ninclude two mortgage interest subsidies programs, a\n$1000 home purchase incentive payment plan, a fore-\nclosure relief program, and an extension of two\nundesirable housing programs. A more detailed summary\nis attached at Tab A. The outlay effect for FY '76 is\nestimated at well over $1 billion and the total cost\nis estimated at over $2.2 billion. HUD, OMB and the\nDomestic Council are in agreement that this bill\nshould be vetoed.\nII. CONGRESSIONAL SITUATION\nIn the House, Congressman Lud Ashley (D-Ohio) and\nCongressman Garry Brown (R-Mich) led a strong attack\nagainst the Conference Report. The House approved the\nConference Report by a vote of 253-155, more than enough\nopposition votes to sustain a veto. However, a number of\nthe members voting in opposition, including Congressman\nBrown, are counting on the Administration to propose some\nconstructive alternatives. The Senate approved the\nConference Report by a vote of 72-24.\nUntil recently, the National Association of Home Builders\nhad been the major force behind this legislation with tacit\nsupport from the AFL-CIO. However, the AFL-CIO has decided\nto make a strong battle to override the anticipated veto.\nCongressman Ashley narrowly won re-election last year and\nis sensitive to labor pressure. His continued opposition\nto HR 4485 is critical in that many Democrats follow his\nlead on housing legislation.\nFORD is LIBRARY\n-2-\nAs reported in this morning's Leadership meeting, to\nincrease the probability of sustaining the anticipated\nveto, Congressman Ashley and Congressman Brown have urged\nthe Administration to:\n-- propose an acceptable foreclosure program as\nan alternative to the Congress' foreclosure\napproach, and\n-- support legislation expanding activity under\nthe Tandem Plan as an alternative to the\nCongress' interest subsidy programs.\nCongressman Reuss, Chairman of the House Banking, Currency\nand Housing Committee, is seeking a vote to override the\nveto prior to the June 27 recess. Given the strong support\nof organized labor, Congressman Reuss believes that he can\npersuade the leadership to try to override. It is\nanticipated that Speaker Albert will try to bring strong\npressure to bear on other Democrats in support of an override.\nIII. PROPOSAL\nSecretary Hills believes that in order to sustain a veto,\nthe Administration will have to propose positive\nalternatives to the Congress' foreclosure plan and\ninterest subsidy programs.\nHUD, OMB and the Domestic Council have reached agreement\non an alternative foreclosure relief program which would\nbe operated on the principle of co-insurance in lieu of the\ndirect Federal loan approach proposed by the Congress.\nThe remaining issue is whether or not the President should\npropose an alternative to the interest subsidy programs\nproposed by the Congress. Secretary Hills believes that\nthe Tandem Plan approach authorized in the Emergency Home\nPurchase Assistance Act of 1974 (Brooke/Cranston Act) is\nthe most immediate, responsible and workable alternative.\nShe proposes that you:\n-- allow release of the remaining Tandem Plan authority;\n-- support legislation extending the Tandem Plan for\na year;\n-- support legislation expanding HUD's Tandem Plan\nto cover multi-family dwellings and condominiums,\nas well as adding additional mortgage purchase\nauthority.\nFORD LIBRARY is 03RALD\n-3-\nIV. OPTIONS\n1.\nDo nothing at this time\nPROS\n-- No increased outlays or additional Treasury borrowing\nwill be necessitated.\n-- Improved credit conditions and increase in new home\nsales do not support the need for additional subsidies.\n-- Highlights Administration's determination to maintain\nbudgetary control.\nCONS\n-- Increases probability of a veto override.\n-- By failing to provide an alternative, undercuts\nfriends of the Administration who have opposed the\nbill.\n-- Postures the Administration as insensitive to the\ncrisis in the ailing housing industry.\nThis option not recommended by anyone\nApprove\nDisapprove\n2.\nRelease the remaining Brooke-Cranston Act tandem authority\nto purchase up to $2 billion in residential mortgages\nPROS\n-- This does NOT cause a $2 billion outlay in that the\npurchased mortgages are later resold. The program could\ncost very little or actually run at a profit, as occurred\nin 1971, if massive savings inflows substantially decrease\ninterest rates between the purchase and resale, as\npredicted by the Administration's economists. HUD\nhas administrative devices, such as charging discount\npoints, to minimize costs. Estimated maximum outlay for\nFY '76 approximately $60 million and up to $125 million\nin FY. '77.\n-4-\n-- Is less expensive and intrusive on private market\noperations than the Congressionally posed alternatives.\n(Estimated outlays for FY 76 in excess of $1 billion).\n--- Mitigates, somewhat, the danger of a veto override.\n-- Demonstrates the willingness of the Administration to\nuse its existing authority to assist housing, which is\nperceived as a crucial element to an overall economic\nrecovery.\n--- Utilizes an existing rather than a new program.\nCONS\n-- Although costs are speculative, could increase Treasury\nborrowing and have a maximum outlay impact of from\n$60 to $125 million in FY 76 and FY 77. The ultimate\nbudget cost depends on the differential between the\npurchase price and sale price.\n-- Could be interpreted as a weakness in the\nAdministration's resolve to control spending.\nLeaves the Administration with no other resources to\nassist housing should another downturn occur.\n-- Does not provide an Administration legislative\nalternative to the interest subsidy provisions of\nthe Emergency Housing bill.\nRecommended by Jack Marsh.\nApprove\nDisapprove\n3.\nRelease the remaining tandem authority to purchase and\nFORD\nresell $2 billion in residential mortgages and support\nlegislation to extend and expand the standby tandem\nauthority\nGERALD\nLIBRARY\nPROS\n-- This does NOT cause a $2 billion outlay in that the\npurchased mortgages are later resold. The program could\ncost very little or actually run at a profit, as occurred\nin 1971, if massive savings inflows substantially decrease\ninterest rates between the purchase and resale, as pre-\ndicted by the Administration's economists. HUD has\nadministrative devices, such as charging discount points,\nto minimize costs. Estimated maximum outlay for FY 76\napproximately $60 million and up to $125 million in FY 77.\n-5-\n-- Provides the greatest potential for ensuring that a\nveto of the Emergency Housing bill is sustained.\n-- Is less expensive and intrusive on private market\noperations than the Congressional posed alternatives.\n(Estimated outlays for FY 76 in excess of $1 billion).\n-- Demonstrates the Administration's commitment to a\nrecovery in the housing sector, which is perceived as\na crucial element to an overall economic recovery.\n-- Gives the Administration an alternative legislative\nprogram to the Congressional package.\n--- The new authority would be discretionary.\n-- Provides additional standby authority, in case there\nis another severe downturn in housing.\n-- Permits tandem authority to be used to assist the\nmulti-family sector which is the most seriously depressed.\nCONS\n-- Although costs are speculative, could increase Treasury\nborrowing and have a maximum outlay impact of from\n$60 to $125 million in FY 76 and FY 77. The ultimate\nbudget cost depends on the differential between the\npurchase price and sale price.\n-- Could be interpreted as a weakness in the\nAdministration's resolve to control spending.\n-- May ultimately result in pressure being brought to\nbear on the Administration to release some of the\nadditional standby tandem authority.\nRecommended by Secretary Hills, Max Friedersdorf,\nPhil Buchen, Robert Hartmann, Jim Cannon.\nSecretary Hills: Even if the veto is sustained, the\nSecretary believes that in absence of the actions she\nrecommends, the Congress will quickly pass legislation\ncombining foreclosure relief and a mortgage interest\nsubsidy which will be extremely difficult to\nBERAL FORD VIBRARY\nsuccessfully veto.\n- -6-\nRobert Hartmann: It is crucial that the President's next\nveto be sustained, and that when and if he gets overridden,\nthat the AFL-CIO NOT be the agent that tamed the\nPresident when the veto-proof Congress failed. I therefore\nfavor Option 3 if, indeed, it offers the best way to\navoid an override.\nApprove\nDisapprove\nNOTE:\nDirector Lynn recommends that you indicate your\nwillingness to support legislation expanding and\nextending the Tandem Plan BUT that a determination on\nreleasing the remaining Tandem authority be withheld\nat least until the latest housing starts and housing\npermits figures are released later this week.\nApprove\nDisapprove\nFOR IMMEDIATE RELEASE\nJULY 2, 1975\nOFFICE OF THE WHITE HOUSE PRESS SECRETARY\nTHE WHITE HOUSE\nREMARKS OF THE PRESIDENT\nUPON SIGNING OF\n706\nH.R. CS\nTHE EMERGENCY HOUSING ACT OF 1975\nTHE ROSE GARDEN\n1:55 P.M. EDT\nLet me make a comment or two.\nFirst, distinguished Members of the Congress,\nSecretary Hills, distinguished members of labor and\nindustry, and particularly the housing industry:\nObviously, I am very, very pleased to sign\ninto law H.R. 5398, the Emergency Housing Act of 1975.\nThis proposed legislation which I will sign into law\nembodies basically the compromise provisions which\nwe worked out with the House and the Senate.\nI commend the Members of the Congress on\nboth sides of the aisle and at both ends of the Capitol\nfor quickly enacting this meaningful and I think\neffective housing legislation. This is an excellent\nexample of the way in which the Congress and the\nExecutive Branch can and should work together in the\nbest interest of the American people.\nThis Administration is committed to a prompt\nrecovery of the housing industry and to getting\nconstruction workers back on the job. Both of these\nobjectives and actions are crucial to our overall\nFORD\neconomic recovery.\nThis legislation provides an additional $10\nbillion of mortgage purchase authority to the Government\nNational Mortgage Association, which will be available,\nif required, to sustain the housing recovery presently\nunderway. It also expands other types of housing\nconstruction, including condominiums.\nThe bill also meets the problem of mortgage\nforeclosures head-on. It provides standby authority\nfor the Secretary of Housing and Urban Development to\nco-insure loans made by lending institutions to preclude\nmortgage foreclosures on homes whose owners are in\ntemporary financial difficulty.\nI hope and trust that the cooperation between\nthe Congress and the Executive Branch shown by the\neffective action in this legislation, will continue\nin the future on other badly needed legislative proposals.\nEND\n(AT 1:57 P.M. EDT)\n1mc\nSTATEMENT BY THE PRESIDENT\nI am pleased to sign into law H.R. 5398, the\nEmergency Housing Act of 1975. This Act embodies\nsayot. may\nthe alternative approach which I urged at the time\nof my veto of H.R. 4485 last Tuesday.\nI commend Members of Congress of both parties for\nquickly enacting meaningful and effective housing\nlegislation. This is an excellent example of the\nway in which the Congress and the Executive Branch\ncan--and should work together in the best\ninterests of the American people.\nThis Administration is committed to a prompt\nrecovery of the housing industry and to getting\nconstruction workers back on the job. Both of\nthese actions are crucial to our overall economic\nrecovery.\nThis legislation provides an additional $10 billion\nof mortgage purchase authority to the Government\nNational Mortgage Association which will be\navailable if required to sustain the housing\n-2-\nrecovery presently under way. It also expands\ncoverage to other types of housing construction,\nincluding condominiums.\nLast week I directed Secretary Hills to release\n$2 billion in GNMA mortgage purchase funds. As a\nresult of the swift enactment of this new housing\nbill by the Congress, those funds will be released\nat an interest rate of 7-1/2 percent. Condominium\nmortgages will also be eligible, thus assisting\na hard-pressed sector of the housing industry.\nThese funds will finance an estimated 65,000 units\nof housing and provide jobs for the building trades.\nThe bill meets the problem of mortgage foreclosures\nhead on. It provides standby authority for the\nSecretary of Housing and Urban Development to\nco-insure loans made by lending institutions or to\nmake mortgage relief payments to other lenders to\npreclude mortgage foreclosures. Presently, mortgage\nforeclosures and defaults have remained level,\nat rates less than those which prevailed during\nthe mid-1960s, indicating that private lenders are\ncooperating with homeowners. However, if foreclosure\n-3-\nrates rise significantly, this legislation will\nenable us to act quickly to keep owners from losing\ntheir homes.\nI hope the cooperation between the Congress and\nthe Executive Branch shown in this legislation will\ncontinue in other badly-needed measures.\nEMBARGOED FOR RELEASE\nJULY 2, 1975\nUNTIL 1:45 PM EDT\nWednesday, July 2, 1975\nOffice of the White House Press Secretary\nTHE WHITE HOUSE\n7 1'll\nSTATEMENT BY THE PRESIDENT\nI am pleased to sign into law H.R. 5398, the Emergency Housing\nAct of 1975. This Act embodies the alternative approach which\n1\nurged at the time of my veto of H.R. 4485 last Tuesday.\nI commend Members of Congress of both parties for quickly enacting\nmeaningful and effective housing legislation. This is an excellent\nexample of the way in which the Congress and the Executive Branch can--\nand should--work together in the best interests of the American people.\nThis Administration is committed to a prompt recovery of the housing\nindustry and to getting construction workers back on the job. Both of\nthese actions are crucial to our overall economic recovery.\nThis legislation provi des an additional $10 billion of mortgage purchase\nauthority to the Government National Mortgage Association which will\nbe available if required to sustain the housing recovery presently\nunder way. It also expands coverage to other types of housing con-\nstruction including condominiums.\nLast week I directed Secretary Hills to release $2 billion in GNMA\nmortgage purchase funds. As a result of the swift enactment of this\nnew housing bill by the Congress, those funds will be released at an\ninterest rate of 7-1/2 percent. Condominium mortgages will also be\neligible, thus assisting a hard-pressed sector of the housing industry.\nThese funds will finance an estimated 65,000 units of housing and\nprovide jobs for the building trades.\nThe bill meets the problem of mortgage foreclosures head on. It\nprovides standby authority for the Secretary of Housing and Urban\nDevelopment to co-insure loans made by lending institutions or to make\nmortgage relief payments to other lenders to preclude mortgage fore-\nclosures. Presently, mortgage foreclosures and defaults have remained\nlevel, at rates less than those which prevailed during the mid-1960's,\nindicating that private lenders are cooperating with homeowners. How-\never, if foreclosure rates rise significantly, this legislation will enable\nus to act quickly to keep owners from losing their homes.\nI hope the cooperation between the Congress and the Executive Branch\nshown in this legislation will continue in other badly-needed measures.\n# # #\nFOR IMMEDIATE RELEASE\nJuly 2, 1975\nOffice of the White House Press Secretary\nTHE WHITE HOUSE\n700\nFACT SHEET\nTHE EMERGENCY HOUSING ACT OF 1975 (H.R. 5398)\nPresident Ford today signed the Emergency Housing Act of 1975.\nWhen he vetoed H.R. 4485, an action sustained by the House of\nRepresentatives, the President urged enactment of alternative\nhousing legislation.\nThis Act includes provisions addressing mortgage foreclosure,\nand expands the mortgage purchase programs of the Government\nNational Mortgage Association (GNMA or Ginnie Mae), as recom-\nmended by the President at the time of his veto.\nBACKGROUND\nA housing recovery is now clearly under way from the depressed\nlevels of the last year. During this period, $15.5 billion,\nincluding $2.0 billion released last week, has been committed\nby the Federal government -- an unprecedented level of financial\nsupport to the housing industry. H.R. 5398 continues this\neffective program.\nFEATURES OF THE EMERGENCY HOUSING ACT OF 1975\n1. Extension of the GNMA Mortgage Purchase Program\nH.R. 5398 expands the Emergency Home Purchase Assistance Act\nof 1974, enacted at the President's urging in October. This\nbill:\n-- increases the GNMA mortgage purchase authority by $10\nbillion and extends the 1974 Act's expiration date to\nJuly 1, 1976;\n-- fixes a mortgage interest rate ceiling of 7-1/2% under\nthis program;\n--- expands coverage to include condominium mortgages.\n2. Mortgage Foreclosure Relief\nThe Act provides the Secretary of Housing and Urban Development\nwith standby authority to assist homeowners facing foreclosure\nby:\n--- co-insuring loans or credits advanced by lending\ninstitutions;\n-- making mortgage relief payments to lenders on behalf\nof eligible homeowners.\nmore\n2\nMortgage foreclosures and defaults have remained level demon-\nstrating that private lenders are cooperating with homeowners\nduring this temporary economic situation, indicating no present\nneed for mortgage foreclosure relief assistance. Foreclosure\nrates are less than the rates which prevailed during the\nmid-1960s.\n3. Other Provisions of the Act\nIn addition to the foregoing, the Emergency Housing Act of\n1975 includes several provisions added by the Congress:\n-- extending the low interest rehabilitation loan program\nto July 1, 1976 and providing a $100 million authori-\nzation, subject to the appropriation process;\n--- extending for seven months the deadline for applications\nfor financial assistance to correct defects in certain\nhomes insured under the National Housing Act;\n--- deferring until January 1, 1976, a prohibition against\nmortgage loans on certain properties located in flood\nprone areas of communities not participating in the\nFederal Flood Insurance Program.\n# # # #\nMr. Cannon\nSTATEMENT ON HOUSE ACTION SUSTAINING THE\nHOUSING VETO\nPRESIDENTIAL PRESS CONFERENCE\nWednesday, June 25, 1975\n- 1 -\nI COMMEND THE HOUSE OF REPRESENTATIVES FOR ITS VOTE TO\nSUSTAIN MY VETO OF THE HOUS ING LEGISLATION.\nTHIS VOTE DEMONSTRATES A GROWING SENSE OF FISCAL\nRESPONSIBILITY IN THE CONGRESS AND THE REALIZATION BY AN\nINCREASING NUMBER OF CONGRESSMEN THAT ECONOMIC RECOVERY NEED NOT\nBE BOUGHT AT THE PRICE OF UNWISE LEGISLATION AND COSTLY INFLATION.\n- 2 -\nI AM PREPARED TO WORK WITH THE CONGRESS IN REACHING\nOUR COMMON OBJECTIVES: A REVITALIZED HOUSING INDUSTRY, MORE\nJOBS IN CONSTRUCTION, AND A SOUND ECONOMY.\nI AGAIN URGE\nTHE CONGRESS TO EXTEND FOR ANOTHER YEAR THE EMERGENCY HOME PURCHASE\nASSISTANCE ACT OF 1974 AND TO EXPAND IT BY ANOTHER 7.75 BILLION\nDOLLARS AS QUICKLY AS POSSIBLE.\n- 3 -\nTO HEAD OFF POSSIBLE FORECLOSURES OF HOMES WHOSE OWNERS\nARE TEMPORARILY OUT OF WORK, I AGAIN ASK THE CONGRESS TO ACT\nEXPEDITIOUSLY ON LEGISLATION INTRODUCED BY CONGRESSMEN LUD ASHLEY\nOF OHIO AND GARRY BROWN OF MICHIGAN AND OTHERS TO PROVIDE\nMORTGAGE PAYMENT RELIEF LOANS AND CO-INSURANCE FOR LENDERS WHO\nREFRAIN FROM SUCH FORECLOSURES.\n- 4 -\nTOGETHER, WE WILL MEET AND SOLVE THESE PROBLEMS.\nEND OF TEXT\nFOR IMMEDIATE RELEASE\nJUNE 24, 1975\nOFFICE OF THE WHITE HOUSE PRESS SECRETARY\nTHE WHITE HOUSE\nREMARKS OF THE PRESIDENT\nUPON VETOING H.R. 4485\nTHE EMERGENCY HOUSING ACT OF 1975\nTHE BRIEFING ROOM\n3:05 P.M. EDT\nI would like to make a relatively short state-\nment, and then Secretary Hills will follow with an\nextensive briefing.\nTo help speed the recovery already underway in\nthe housing industry, whose health is absolutely vital\nto our overall economic recovery, I have today directed\nSecretary Hills, head of Housing and Urban Development,\nto release $2 billion in previously authorized Federal\nfunds to assist in the purchase of home mortgages.\nThis action will immediately make new mortgage\nmoney available to home buyers. To help put more workers\nin the building trades back to work, I am requesting the\nCongress to authorize an additional $7 billion 750 million\nfor this program and to extend it for another year until\nJuly 1, 1976.\nTo prevent the possibility of foreclosures on\nhomes whose owners are temporarily out of work, I am also\nrequesting the Congress to move as rapidly as possible on\nlegislation introduced by Congressman Lud Ashley of Ohio\nand Congressman Garry Brown of Michigan, and others, to\nprovide mortgage payment relief loans and co-insurance\nfor lenders who refrain from such foreclosures.\nThis legislation will protect home owners and\nhead off needless foreclosures. The steps I have\nannounced today are the best way to meet the problems of\nhousing in this country at the present time.\nI am, therefore, vetoing H.R. 4485 because it\nwill hamper the recovery now underway and will add to the\noversize Federal deficit.\nNow, let me introduce Secretary Hills, who will\nfill you in on my proposals to protect home owners,\nstimulate home building and provide more jobs for the\nbuilding trades.\nSecretary Hills?\nEND (AT 3:09 P.M. EDT)\nEMBARGOED FOR RELEASE\nJUNE 24, 1975\nUNTIL 3:30 p.m.\nOffice of the White House Press Secretary\nTHE WHITE HOUSE\nTHE EMERGENCY HOUSING ACT OF 1975 (H.R. 4485)\nFACT SHEET\nPresident Ford today vetoed the Emergency Housing Act of 1975.\nSimultaneously, the President directed the Secretary of the\nDepartment of Housing and Urban Development to release the\nremaining $2.0 billion in mortgage purchase authority available\nto the Government National Mortgate Association (Ginnie Mae or\nGNMA).\nThe President adivsed Congress that he would support alternative\nhousing legislation to extend and expand the Emergency Home\nPurchase Assistance Act, enacted at his request in October 1974.\nBACKGROUND - HOUSING INDUSTRY NOW IMPROVING\nDuring 1974 housing starts declined markedly. To help stem\nthis decline, GNMA has committed to purchase federally-insured\nmortgages at below market interest rates down to 7-3/4%. In\nOctober a bipartisan majority of Congress enacted the Emergency\nHome Purchase Assistance Act which extended the GNMA mortgage\npurchase authority to include home loans which are not federally\ninsured -- so-called \"conventional\" mortgages. In all, GNMA has\ncommitted $13.5 billion to purchase mòrtgages with below market\ninterest rates. To date, $3 billion of these mortgages have\nactually been purchased; $1 billion in commitments have been\ncancelled by the recipients; and the other $10 billion in\ncommitments remain in the hands of mortgage lenders and is\navailable to support the sale of new homes.\nThe unprecedented level of mortgage purchase support activity --\n$13.5 billion over the past year, $9.0 billion since October --\nis contributing to the housing recovery which is now clearly\nunder way.\nIn addition, the President's 1976 Budget proposes Federal support\nfor 400, 000 units of housing under the new Lower Income Housing\nAssistance Program.\nAlso, Congress recently enacted a tax credit for buyers of\nunsold housing, at a cost of $750 million.\nSigns of the housing recovery include:\n--\nas the rate of inflation has declined markedly, savings\ndeposits in the nation's thrift institutions have\nsoared to record levels during 1975 --- up $19.7 billion\nin the first five months, nearly four times the increase\nduring the comparable 1974 period and a third higher\nthan in the previous record year (1972)\n--\nnew home sales increased 25% in April -- the largest\nincrease in 12 years\n--- home building permits jumped 24% in April and an\nadditional 9% in May\nmore\n2\nhousing construction starts gained 14% in May\nmortgage interest rates have dropped significantly\nfrom record highs of last summer.\nNonetheless, further improvement will be necessary to return\nhousing to a strong, healthy state. The President's release\nof the additional $2.0 billion in GNMA funds will supplement\nthe forces of recovery.\nOBJECTIONABLE FEATURES OF THE HOUSING ACT OF 1975\nThe President advised the Congress that H.R. 4485 would increase\nthe Federal deficit by over $1.0 billion in Fiscal Year 1976\nand increase Federal expenditures by more than $2.0 billion over\nthe life of the program. In addition to the budget impact, the\nPresident cited other specific defects:\nHousing Construction Subsidy\nThe bill contains three new housing subsidies: (1) $1,000\nhomeownership grants, (2) subsidy payments, to be phased out\nover six years, which could reduce mortgage interest rates to\n6%, (3) a mortgage purchase assistance program with interest\nrates set at 7%. Depending upon the choice a buyer made, sub--\nsidies would be worth up to $3,000, or in some situations as\nhigh as $6,500.\nThis approach is unsound and misguided because\nthe legislation could not be immediately implemented\ndue to time needed for appropriations, regulations,\nand training --- many families would postpone purchases\nwaiting for new subsidies;\neven when finally implemented, the bill would not have\nthe impact predicted, since most of those assisted would\nhave purchased without assistance additional starts\nwould number 50,000-80,000, not 400,000 as claimed by\nproponents;\nthe legislation would prescribe interest rates well\nbelow the level needed for a sound and healthy housing\nindustry; mortgage interest rates have not been as low\nas 6% in 10 years in 1973, starts exceeded 2 million\nwhen interest rates were in excess of 7-1/2%;\nthe 6% subsidy would be difficult to terminate; despite\nthe phase out provisions in the bill, intense pressures\nwould develop for extending the subsidy once purchasers\nwere faced with higher mortgage payments\nthe bill would create enormous inequity among citizens\nof different regions of the country - benefitting\npersons with incomes in excess of $25,000 in some areas\nwhile precluding persons with incomes as low as $6,000\nin other areas.\nOther Objectionable Provisions\nOther provisions of the bill would reverse decisions made last\nyear in the Housing and Community Development Act of 1974 after\nthe most comprehensive review of Federal housing policy ever\nconducted. These provisions would\nextend the deep homeowner interest subsidies\n(Section 235) which Congress last year decided\nto phase out;\nmore\n3\nextend and expand the rehabilitation loan program\nwhich was consolidated last year into the community\ndevelopment block grant program;\ndivert rental assistance funds from the newly-\nauthorized program of lower income rental housing\n(Section 8).\nAlso, the President indicated that the bill's mortgage fore-\nclosure relief provision relied unnecessarily upon government\nfunding and administration.\nALTERNATIVE HOUSING APPROACH\nInstead of the scattergun approach embodied in H.R. 4485, the\nPresident recommended other approaches to stimulate housing\nrecovery and to deal with mortgage foreclosures.\nEXTENSION OF THE GNMA MORTGAGE PURCHASE PROGRAM\nThe release of the $2 billion in mortgage purchase assistance\nfunds exhausts the statutory amount authorized in the Emergency\nHome Purchase Assistance Act of 1974. The President supports\nlegislation which would\n--\nextend the mortgage purchase act, scheduled to expire\non October 18, 1975,\n--\nincrease the GNMA mortgage purchase authority by\n$7.75 billion,\n-- extend coverage to include multi-family apartment\nand condominium mortgages, the area of the housing\nindustry that is most depressed;\nmodify the statutory language which mandates a\nfluctuating mortgage interest rate that has caused\nconfusion and uncertainty in the housing industry.\nMORTGAGE RELIEF LEGISLATION\nDuring the recent period of economic recession, mortgage\ndelinquencies -- i.e., late submission of monthly payments -\nhave risen. However, mortgage foreclosures and defaults\nhave remained level confirming survey reports that private\nlenders are cooperating with homeowners during this temporary\neconomic situation, indicating no present need for mortgage\nforeclosure relief assistance.\nwhile delinquencies have increased during the past\nyear at the nation's thrift institutions, the level\nis still significantly below that which prevailed\nduring the early 60's,\nforeclosure rates have held steady at about one-half\nof one percent -- less than the rates prevailing\nduring the mid-1960's.\nThe President would support appropriate standby legislation\nof a temporary nature that could be quickly implemented should\nforeclosure rates rise significantly. Such legislation would\nco-insure lenders who forebear against losses they might\nsustain because of eventual non-payment. Legislation which\nincludes authority for a co-insurance program has already\nbeen introduced in the Congress.\nmore\n4\nBUDGETARY IMPACT\nFull implementation of the bill would result in the following\noutlays:\nFY\nTransition\nTotal Thru\nFY 1976\nQuarter\nFY 1977\nFY 1977\n(millions of dollars)\nTitle I\nHome Purchase\nAssistance\n714\n180\n534\n1,428\nTitle II\nForeclosure Relief\n250\n125\n125\n500\nTitle III\nRehabilitation Loans 60\n5\n60\n125\nTotal\n1,024\n310\n719\n2,053\n1/ Assumes recipients select the home purchase assistance option\ncarrying the largest subsidy\n# # # #\nfile\nPRESIDENTIAL STATEMENT OPENING PRESS BRIEFING, TUESDAY,\nJUNE 24, 1975\nTo help speed the recovery already underway in the housing\nindustry, whose health is vital to our overall economic recovery,\nI have today directed the Secretary of Housing and Urban Development,\nCarla Hills, to release $2 billion in previously-authorized Federal\nfunds to assist in the purchase of home mortgages. This action will\nimmediately make new mortgage money available to home buyers.\nTo help put workers in the building trades back to work, I am\nrequesting the Congress today to authorize an additional $7.75 billion\nuntil July = 1976.\nfor this program and to extend it for another year past its October\nexpiration date.\nTo prevent the possibility of foreclosures on homes whose\nowners are temporarily out of work, I am also requesting the Congress\nto move as rapidly as possible on legislation introduced by Congressman\nLud Ashley of Ohio and Congressman Garry Brown of Michigan and\n- 2 -\nothers to provide mortgage payment relief loans and co-insurance\nfor lenders who refrain from such foreclosures. This legislation will\nprotect homeowners and head off needless foreclosures.\nLbelieve Th the steps I have announced today are the best way to\nmeet the problems of housing in this country. I am therefore, vetoing\nhangerhout the economic\n*\nH.R. 4485 becuase it will damage the recovery now underway.\nNow I want to introduce Secretary Hills who will fill you in\nproposables to fairer Streenlate\non the details and be available for your questions.\nthe Haming\nIndustry\nThank you.\nInto Lome\nbrieding and\n###\nprovide Guilding + rade\njobs\n* and subtanially boost the\nEMBARGOED FOR RELEASE\nUNTIL 3:30 P.M. EDT\nJUNE 24, 1975\nOffice of the White House Press Secretary\nTHE WHITE HOUSE\nTO THE HOUSE OF REPRESENTATIVES:\nI am today returning, without my approval, H.R. 4485,\nthe proposed Emergency Housing Act of 1975.\nAfter careful examination of this bill and its provisions,\nit is my considered judgment that H.R. 4485, due to its cost,\nineffectiveness, and delayed stimulus, would damage the housing\nindustry and damage the economy.\nThis Administration is committed to a prompt recovery of\nthe housing industry and to getting the construction workers\nback to work -- which are crucial elements in our overall\neconomic recovery.\nTo reaffirm my commitment to such prompt recovery and my\nsupport of the existing Federal mortgage assistance program,\nI am today directing the release of the remaining $2 billion\nin these funds and requesting Congress to authorize another\n$7.75 billion in this assistance for housing. I will also\nsupport a workable plan to prevent mortgage foreclosures for\nhome-owners who are out of work.\nBut H.R. 4485 is not acceptable for these reasons:\nIt could not be implemented without substantial\ndelay, and probably would actually provide a\ndisincentive to some home purchases. Consequently\nit would delay for months putting construction workers\nback to work.\nIt is in some respects inequitable. In some areas\nof the country, families with $25,000 of income\ncould qualify for benefits, while in other areas\nof the country, families with $6,000 of income\ncould not qualify.\nThe levels of mortgage subsidies (down to 6% in\nsome cases) would give some buyers an excessive\nbenefit at the taxpayers' expense.\nFor the modest benefits that might come in housing,\nthis bill is too expensive - over $1 billion in\nadditional Federal expenditures in FY 76, and more\nin years to come.\nThis bill's provisions for the protection of home-owners\nwho are presently unemployed or under-employed due to our economic\nconditions and who face foreclosure on their homes, though well\nintentioned, unnecessarily place the Federal government in the\nretail loan-making business as a sole means of relief. Depository\ninstitutions have a stake in avoiding foreclosures and should be\nactive participants in any such mortgage payment relief program.\nI believe there is a better way both to stimulate jobs in\nconstruction and to provide standby protection for homeowners who\nmay be threatened by foreclosure:\nmore\n2\n1.\nTo add impetus to the industry's recovery and to put\nthe building trades back to work, I am today directing\nthe Secretary of Housing and Urban Development to make\navailable, immediately, under existing law, $2 billion\npreviously authorized for mortgage purchase assistance.\nWe know this program works, and this action will make\nnew mortgage money available immediately from thrift\ninstitutions and other lenders. But since the mortgages\nthe Federal government purchases can be later resold,\nthe cost to the Federal government is relatively low\n$60 million for FY 76.\n2.\nTo continue this effective tandem authority program, I\npropose that Congress extend this program beyond its\nexpiration date in October, and to expand it to cover\nconventionally financed multi-family housing, including\ncondominiums. In addition, I request authorization\nfrom Congress to put $7.75 billion more into this\nprogram to insure financing is available if needed to\nsustain the recovery of the housing industry.\n3.\nTo protect home-owners against foreclosure, I\ncommend the efforts of the sponsors of legislation\nrecently introduced in the Congress that would\nconfer standby authority on the Secretary of Housing\nand Urban Development to make mortgage payment relief\nloans or to co-insure lenders who refrain from fore\nclosing on home-owners who are temporarily out of\nwork. We want to preserve the good relationship\nbetween the home-owner and the bank or other insti-\ntution which holds his mortgage and at the same\ntime provide some fiscal protection to the lender who\nassists a home-owner.\nWhile there continue to be many problems in the housing\nindustry, and while there is far too much unemployment among\nhousing construction workers, there are clear signs of recovery\nin this vital part of the American economy.\nDuring the current calendar year, funds needed for mortgage\nloans have been flowing into savings institutions at record\nlevels --- $19.7 billion net during the first five months of\nthis year alone, nearly quadruple the level of the same period\nlast year. With this flow of funds, interest rates have fallen\nsubstantially from their peaks of last summer.\nMeanwhile, the government has been providing unprecedented\nsupport to the housing industry. Since last October, the\nGovernment National Mortgage Association has committed to\npurchase nearly $9 billion in conventional, FHA and VA mort\ngages with interest rates down to 7-3/4 percent. And this\nMarch, a tax credit for unsold new homes was enacted into law.\nThere are now strong indications that new home construction\nand sales are responding to these actions. New home sales in--\ncreased 25 percent in April, the largest increase in 12 years.\nHome building permits climbed 24 percent in April and an\nadditional 9 percent in May. Also in May, housing starts\nwhich represent not only new homes but new jobs rose sharply.\nThese favorable trends, however, do not mean that we\nhave overcome our problem in housing. To the contrary, the\nlevel of home construction is still too low, and I fully\nagree with those who believe that a swift recovery in housing\nis a prime objective of national economic policy.\nmore\n3\nWe must accelerate the improvement in housing that now\nappears to be coming about.\nMy action today to commit $2 billion for mortgage purchase\nassistance under the Emergency Home Purchase Assistance Act of\n1974 will exhaust the current authorization under that Act.\nIn proposing that this Act be extended, broadened to multi-\nfamily housing, and expanded by $7.75 billion, I am affirming\nthat we have a tried and tested mechanism for supplementing\nand reinforcing housing construction.\nUnfortunately, while H.R. 4485 does contain the multi-\nfamily amendment I have recommended, it fails to extend the\ncurrent law, increase its authorization or effect any other\nimprovements. Worse, it would authorize a variety of new and\nuntried subsidies, including provisions for mortgages with\nmandated 6 and 7 percent interest rates and $1,000 down-payment\ngrants. Since there appears to have been no consensus in\nfavor of any one of these new subsidies, the bill adopts all\nof them in the hope that something will work.\nThe full implementation of these new subsidies, together\nwith other provisions of the bill, would add over $1 billion\nto the fiscal 1976 deficit and ultimately cost more than\n$2 billion. An addition to the budget of this magnitude to\nbenefit a few home-buyers is inequitable as well as costly.\nIt is most important to housing that we maintain a firm\nline against ill-considered spending that adds to the growing\ndeficit and necessitates Federal government borrowing which\ntends to drive up interest rates and depress housing construction.\nI believe that budgetary restraint is a key element in our effort\nto instill the kind of consumer confidence in the future that\nis essential to a vigorous housing market.\nProponents of H.R. 4485 have argued that the budgetary\ncosts of this bill would be outweighed by stimulating an\nupturn in housing starts, jobs and tax revenues. But critical\ndefects in the bill concerning its relative cost, impact,\ntiming and long-term implications will prevent it from\nachieving these objectives.\nFirst, the levels of subsidy provided are excessively\ndeep and costly. Under H.R. 4485, mortgages would be heavily\nsubsidized so that they could bear lower interest rates than\nany previously available to other home-owners during the last\nten years. These deep subsidies would require substantial\nFederal outlays. Moreover, experience demonstrates that a\nstrong and healthy housing industry can be maintained with-\nout the deep subsidies contained in this bill.\nSecond, the bill would not work as intended even if\nit could be immediately implemented. Although supporters of\nH.R. 4485 have claimed that it would produce hundreds of\nthousands of additional housing units, evaluation by HUD\nand OMB does not suggest that the bill would have any impact\nof this magnitude or that the units produced would necessarily\nbe additional to those that would be produced in the absence\nof such large subsidies. Those most likely to be influenced\nto buy under the bill would be families near the top of the\neligibility range. These same families would be most apt to\nbuy even without subsidy assistance on the scale proposed.\nThird, because the bill could not be immediately\nimplemented, it would actually impede an early recovery in\nhousing starts. The subsidies which would be authorized in-\nclude new approaches that have never been tried before. To\nmore\n4\nmake this assistance available, it would not only be necessary\nto secure appropriations and write regulations, but also to\nprepare a variety of new forms, establish procedures and\nfamiliarize government, lender and builder personnel throughout\nthe country with them. Even given top priority, months could\nbe required before implementation is completed. Thus, H.R. 4485\nfar from helping during the coming months -- would actually\ninhibit home purchases among those eligible for assistance,\nsince these families would understandably want to wait until\nthe subsidies become available.\nFourth, the bill has long-term impacts and implications\nthat are inappropriate and undesirable for an \"emergency\"\nmeasure. One of the subsidy options included in the bill\nwould require home-owners with 6 percent interest rate mort-\ngages to make increasing monthly payments in the future, up\nto the full payments that would be required at current market\ninterest rates. I believe there will almost certainly be in-\ntense pressures for relief against these phase-up provisions\nin years to come -- and thus for a continuation of the deep\nsubsidies this option involves. Moreover, even if this\napproach works as intended, it would require substantial\ngovernment outlays in future years when the economy may be\noperating at full capacity with inflationary forces at or\napproaching their peaks.\nFifth, the subsidy provisions of H.R. 4485 pose\nsubstantial problems of equity among those who would and would\nnot be eligible for the relatively large subsidies provided.\nAs the bill is written, substantial subsidies would be made\navailable to families within a given income group. Other\nfamilies with similar or even less income would receive no\nsubsidy at all and would be expected to pay full market rate\nmortgages. These discrepancies would be very sharp and hard\nto justify. In some areas, it would permit families with\nincomes well over $25,000 to qualify while, in other areas,\nfamilies with incomes as low as $6,000 would be ineligible.\nSixth, H.R. 4485 would make a number of undesirable\nchanges in our housing and community development laws. For\nexample, the bill would extend the homeownership program\nauthorized under Section 235 of the National Housing Act.\nIt would also extend and expand the program of subsidized\ngovernment rehabilitation loans authorized under Section\n312 of the Housing Act of 1964. These provisions would\nreverse decisions the Congress itself enacted last year\nafter one of the most extensive reviews of Federal housing\npolicy ever conducted. Also objectionable are the pro-\nvisions which would divert funds from the new leased\nhousing program, and establish special rules for certain\nState agency housing projects assisted under Section 236\nof the National Housing Act.\nFinally, the foreclosure provision of H.R. 4485 is too\nlimited in its mechanism for providing relief. This provision\nreflects the concern that mortgage foreclosures may soar during\nthe recession. To date, no such trend has developed because\nprivate lenders have been cooperating with home--owners through\nforebearance and common sense arrangements. In fact, fore-\nclosures rates have remained stable ---- actually, at a level\nlower than that experienced during the mid-1960s.\nNonetheless, I can appreciate the desire of Congress to\nenact legislation, and I will support legislation which would\nmore\n5\nprotect home-owners from loss of their homes due to temporary\neconomic hardship and which recognizes the provisions of such\nrelief is both a matter of concern for the federal government\nand the depository institutions or other mortgagees involved.\nGood housing is one of our greatest national assets, and\nour objective was and is to assist in the recovery of the\nhousing construction industry and to help get the building\ntrades workers back to their productive and meaningful skills.\nI shall be glad to work with the Congress toward this objective.\nGERALD R. FORD\nTHE WHITE HOUSE,\nJune 24, 1975.\n#####\nTO THE HOUSE OF REPRESENTATIVES:\nJune\nI am today returning, without my approval, H.R. 4485,\nthe proposed Emergency Housing Act of 1975.\nAfter careful examination of this bill and its provisions,\ndue to its cost, tneffectiveness, and delayed stimulus,\nit is my considered judgment that H.R. 4485 'A would damage the\nhousing industry and damage the economy.\nThis Administration is committed to a prompt recovery\nconstruction workers\nof the housing industry and to getting the 1 building trades\nback to work --- which are crucial elements in our overall\neconomic recovery.\nTo reaffirm my commitment to such prompt recovery and my support of\nHH support the existing Federal mortgage assistance program,\nthe remaining\nand I am today directing the release of ^ $2 billion in these\nfunds and requesting Congress to authorize another $7.75 billion\nwill\nin this assistance for housing. I also support a workable plan\nto prevent mortgage foreclosures for home-owners who are out of\nwork.\nBut H.R. 4485 is not acceptable for these reasons:\nwithout substantive delay,\n-- It could not be implemented immediately, and\nprovide a disincentive to\nprobably would actually, delay some home purchases,\nConsequently it would delay for months putting\nconstruction workers\n^ the building trades back to work.\n-- It is in some respects inequitable. In some\nareas of the country, families with $25,000 of\nincome could qualify for benefits, while in\nother areas of the country, families with $6,000\nof income could not qualify.\n-- The levels of mortgage subsidies (down to 6% in\nsome cases) would give some buyers an excessive\nbenefit at the taxpayers' expense/ while providing better\nstimulus to the industry.\n-- For the modest benefits that might come in housing,\nover\nin additional Federal expenditures\nthis bill is too expensive ^ $1 billion in FY 76,\n^\nand more in years to come.\n-2-\nMASTER\nThis bill's provisions for the protection of home-owners\nwho are presently unemployed or under-employed due to\nour economic conditions and who face foreclosure, on their\nhomes, though well intentioned, unnecessarily place the\nfederal government in the retail loan-making business as\na sole means of relief. Depository institutions have a\nstake in avoiding foreclosures and should be active\nparticipants in any such mortgage payment relief program.\nI believe there is a better way both to stimulate jobs\nprovide standby protection for homeowners who\nin construction and to protect home owners who are worried\nmay be threatened by\n1 about losing their homes through foreclosure:\nTo add impetus to the industry's recovery and to\n1.\n1 put the building trades back to work, I am\ntoday directing the Secretary of Housing and Urban\nimmediately,\nDevelopment immediately to make available X under\nexisting law, $2 billion previously authorized for\nmortgage purchase assistance.\nWe know this program works, and this action will\nmake new mortgage money available immediately from\nthrift institutions and other lenders.\nbanks and others wao finance housing But since\nthe mortgages the Federal government purchases are can be\nlater resold, the cost to the Federal government\nis relatively low -- $60 million for FY 76. and up\nto $125 million for FY 77.\n2. To continue this effective tandem authority program,\nI propose that Congress extend this program for\nanother year beyond its expiration date in October,\nexpand\nand to ^ extend it to cover conventionally financed\nmulti-family housing, including condominiums. In\naddition, I request authorization from Congress to\nto insure\nput $7.75 billion more into this program A we should\nfinancing is available\nto keep the building trades at work and to\nsustain the recovery of the housing industry.\nbelley my recommendation with respect to this additional\nauthorization is CATTA, 1\\will be g ad to carefully and\nsympathetical initiative\nin this regatos\n3\n3. To protect home-owners against foreclosure, I will\ncommend the efforts of the sponsors of\nsupports legislation recently introduced in the\nCongress that would confer standby authority on\nthe Secretary of Housing and Urban Development to make\nmortgage payment relief loans or\nA to co-insure lenders who refrain from foreclosing\non home-owners who are temporarily out of work.\nWe want to preserve the good relationship between\nor other institution\nthe home-owner and the bank ^ which holds his\nmortgage -- and at the same time provide some\nfiscal protection to the lender who assists a\nhome-owner. whose payments may be delinquent until\ngoas back to work.\nWhile there continue to be many problems in the housing\nindustry, and while there is far too much unemployment among\nhousing construction workers, there are clear signs of recovery\nin this vital part of the American economy.\nDuring the current calendar year, funds needed for mortgage\nloans have been flowing into savings institutions at record\nlevels -- $19.7 billion net during. the first five months of\nthis year alone, nearly quadruple the level of the same period\nlast year. With this flow of funds, interest rates have fallen\nsubstantially from their peaks of last summer.\nMeanwhile, the government has been providing unprecedented\nsupport to the housing industry. Since last October, the\nGovernment National Mortgage Association has committed to\npurchase nearly $9 billion in conventional, FHA and VA mort-\ngages with interest rates down to 7-3/4 percent. And this\nMarch, a tax credit for unsold new homes was enacted into law.\nThere are now strong indications that new home construction\nand sales are responding to these actions. New home sales in-\ncreased 25 percent in April, the largest increase in 12 years.\nHome building permits climbed 24 percent in April and an\nadditional 9 percent in May. Also in May, housing starts --\nwhich represent not only new homes but new jobs -- rose sharply.\n4\nThese favorable trends, however, do not mean that we\nhave overcome our problem in housing. To the contrary, the\nlevel of home construction is still too low, and I fully\nagree with those who believe that a swift recovery in housing\nis a prime objective of national economic policy.\nWe must accelerate the improvement in housing that now\nappears to be coming about.\nMy action today to commit $2 billion for mortgage purchase\nassistance under the Emergency Home Purchase Assistance Act of\nI974 will exhaust the current authorization under that Act.\nIn proposing that this Act be extended, broadened to multi-\nfamily housing, and expanded by $7.75 billion, I am affirming\nthat we have a tried and tested mechanism for supplementing\nand reinforcing housing construction.\nUnfortunately, while H.R. 4485 does contain the multi-\nfamily amendment I have recommended, it fails to extend the\ncurrent law, increase its authorization or effect any other\nimprovements. Worse, it would authorize a variety of new and\nuntried subsidies, including provisions for mortgages with\nmandated 6 and 7 percent interest rates and $1,000 down-payment\ngrants. Since there appears to have been no consensus in\nfavor of any one of these new subsidies, the bill adopts all\nof them in the hope that something will work.\nThe full implementation of these new subsidies, together\nLIBRARY\nover\nwith other provisions of the bill, would add approximately $1\nbillion to the fiscal 1976 deficit and ultimately cost approxi- more\nthan mately $2 billion. An addition to the budget of this magnitude\nto benefit a few home-buyers is inequitable as well as costly.\nIt is most important to housing that we maintain a firm\nline against ill-considered spending that adds to the growing\ndeficit and necessitates Federal government borrowing which\ntends to drive up interest rates and depress housing construction.\nI believe that budgetary restraint is a key element in our effort\nto instill the kind of consumer confidence in the future that is\nessential to a vigorous housing market.\n5\nProponents of H.R. 4485 have argued that the budgetary\ncosts of this bill would be outweighed by stimulating an\nupturn in housing starts, jobs and tax revenues. But critical\ndefects in the bill concerning its relative cost, impact,\ntiming and long-term implications will prevent it from\nachieving these objectives.\nFirst, the levels of subsidy provided are excessively\ndeep and costly. Under H.R. 4485, mortgages would be heavily\nsubsidized so that they could bear lower interest rates than\nany previously available to other home-owners during the last\nten years. These deep subsidies would require substantial\nFederal outlays. Moreover, experience demonstrates that a\nstrong and healthy housing industry can be maintained with-\nout the deep subsidies contained in this bill.\nSecond, the bill would not work as intended even if\nit could be immediately implemented. Although supporters of\nH.R. 4485 have claimed that it would produce hundreds of\nthousands of additional housing units, evaluation by HUD\nand OMB does not suggest that the bill would have any impact\nof this magnitude or that the units produced would necessarily\nbe additional to those that would be produced in the absence\nof such large subsidies. Those most likely to be influenced\nto buy under the bill would be families near the top of the\neligibility range. These same families would be most apt to\nbuy even without subsidy assistance on the scale proposed.\nThird, because the bill could not be immediately\nimplemented, it would actually impede an early recovery in\nhousing starts. The subsidies which would be authorized in-\nclude new approaches that have never been tried before. To\nmake this assistance available, it would not only be necessary\nto secure appropriations and write regulations, but also to\nprepare a variety of new forms, establish procedures and\nfamiliarize government, lender and builder personnel throughout\n7\nauthorized under Section 235 of the National Housing Act.\nIt would also extend and expand the program of subsidized\ngovernment rehabilitation loans authorized under Section\n312 of the Housing Act of 1964. These provisions would\nreverse decisions the Congress itself enacted last year\nafter one of the most extensive reviews of Federal housing\npolicy ever conducted. Also objectionable are the pro-\nvisions which would divert funds from the new leased\nhousing program, and establish special rules for certain\nState agency housing projects assisted under Section 236\nof the National Housing Act.\nis too limited\nFinally, the foreclosure provision of H.R. 4485A would\nin its mechanism for providing relief.\nalmost security cause more foreclosures than it provented\nThis provision reflects the concern that mortgage foreclosures\nmay soar during the recession. To date, no such trend has\ndeveloped because private lenders have been cooperating with\nhome-owners through forebearance and common sense arrangements.\nIn fact, foreclosures rates have remained stable -- actually,\nat a level lower than that experienced during the mid-1960s.\nNonetheless, I can appreciate the desire of Congress to\nenact legislation, and I will support legislation which would\nconfer standby authority on the Secretary of Housing and Urban\nBeyelopment to co-insure lenders who withhold foreclosures.\nGood housing is one of our greatest national assets, and\nour objective was and is to assist in the recovery of the\nhousing construction industry and to help get the building\ntrades workers back to their productive and meaningful skills.\nI shall be glad to work with the Congress toward this objective.\nNonetheless, I can appreciate the desire of Congress to\nenact legislation, and I will support legislation which\nwould protect home-owners from loss of their homes due to\ntemporary economic hardship and which recognizes the\nTHE WHI'\nprovisions of such relief is both a matter of concern for\nthe federal government and the depository institutions\non other mortgages involved.\nTHE WHITE HOUSE\nWASHINGTON\nJune 18, 1975\nADMINISTRATIVELY CONFIDENTIAL\nMEMORANDUM FOR: - JIM CANNON\nFROM:\nJAMES CONNOR of\nSUBJECT:\nEMERGENCY HOUSING ACT OF 1975\n(HR 4485)\nYour memorandum of June 17, 1975 to the President on the above\nsubject has been reviewed and the following was noted:\nOption 1 - Do Nothing at this time - Disapproved\nOption 2 - Release the remaining Brooke-Cranston\nAct tandem authority to purchase up to\n$2 billion in residential mortgages -\nDisapproved.\nOption 3 - Release the remaining tandem authority to\npurchase and resell $2 billion in residential\nmortgages and support legislation to extend\nand expand the standby tandem authority -\nApproved.\nPlease follow-up with appropriate action.\ncc. Don Rumsfeld\n10RD LIBRARY is GERALD\nDunhan\nSentio Hullin\nTHE WHITE HOUSE\nWASHINGTON\nJune 18, 1975\nADMINISTRATIVELY CONFIDENTIAL\nMEMORANDUM FOR:\nJIM CANNON\nFROM:\nJAMES CONNOR of\nSUBJECT:\nEMERGENCY HOUSING ACT OF 1975\n(HR 4485)\nYour memorandum of June 17, 1975 to the President on the above\nsubject has been reviewed and the following was noted:\nOption 1 - Do Nothing at this time - Disapp roved\nOption 2 - Release the remaining Brooke-Cranston\nAct tandem authority to purchase up to\n$2 billion in residential mortgages -\nDisapproved.\nOption 3 - Release the remaining tandem authority to\npurchase and resell $2 billion in residential\nmortgages and support legislation to extend\nand expand the standby tandem authority -\nApproved.\nPlease follow-up with appropriate action.\nCC. Don Rumsfeld\n10\nBERALD FORD LIBRARY\nTHE WHITE HOUSE\nWASHINGTON\nJune 17, 1975\nMEMORANDUM FOR\nFROM\nTHE PRESIDENT Jan\nJIM CANNON\nSUBJECT\nEMERGENCY HOUSING ACT OF 1975\n(HR 4485)\nI.\nBACKGROUND\nThe Congress has forwarded to you the Emergency Housing\nAct of 1975 (HR 4485). The last day for action is\nTuesday, June 24, 1975.\nThe most objectionable features of this legislation\ninclude two mortgage interest subsidies programs, a\n$1000 home purchase incentive payment plan, a fore-\nclosure relief program, and an extension of two\nundesirable housing programs. A more detailed summary\nis attached at Tab A. The outlay effect for FY '76 is\nestimated at well over $1 billion and the total cost\nis estimated at over $2.2 billion. HUD, OMB and the\nDomestic Council are in agreement that this bill\nshould be vetoed.\nII. CONGRESSIONAL SITUATION\nIn the House, Congressman Lud Ashley (D-Ohio) and\nCongressman Garry Brown (R-Mich) led a strong attack\nagainst the Conference Report. The House approved the\nConference Report by a vote of 253-155, more than enough\nopposition votes to sustain a veto. However, a number of\nthe members voting in opposition, including Congressman\nBrown, are counting on the Administration to propose some\nconstructive alternatives. The Senate approved the\nConference Report by a vote of 72-24.\nUntil recently, the National Association of Home Builders\nhad been the major force behind this legislation with tacit\nsupport from the AFL-CIO. However, the AFL-CIO has decided\nto make a strong battle to override the anticipated veto.\nCongressman Ashley narrowly won re-election last year and\nis sensitive to labor pressure. His continued opposition\nto HR 4485 is critical in that many Democrats follow his\nlead on housing legislation.\nGERALD FORD\nAs reported in this morning's Leadership meeting, to\nincrease the probability of sustaining the anticipated\nveto, Congressman Ashley and Congressman Brown have urged\nthe Administration to:\n-- propose an acceptable foreclosure program as\nan alternative to the Congress' foreclosure\napproach, and\nsupport legislation expanding activity under\nthe Tandem Plan as an alternative to the\nCongress' interest subsidy programs.\nCongressman Reuss, Chairman of the House Banking, Currency\nand Housing Committee, is seeking a vote to override the\nveto prior to the June 27 recess. Given the strong support\nof organized labor, Congressman Reuss believes that he can\npersuade the leadership to try to override. It is\nanticipated that Speaker Albert will try to bring strong\npressure to bear on other Democrats in support of an override.\nIII. PROPOSAL\nSecretary Hills believes that in order to sustain a veto,\nthe Administration will have to propose positive\nalternatives to the Congress' foreclósure plan and\ninterest subsidy programs.\nHUD, OMB and the Domestic Council have reached agreement\non an alternative foreclosure relief program which would\nbe operated on the principle of co-insurance in lieu of the\ndirect Federal loan approach proposed by the Congress.\nThe remaining issue is whether or not the President should\npropose an alternative to the interest subsidy programs\nproposed by the Congress. Secretary Hills believes that\nthe Tandem Plan approach authorized in the Emergency Home\nPurchase Assistance Act of 1974 (Brooke/Cranston Act) is\nthe most immediate, responsible and workable alternative.\nShe proposes that you:\n-- allow release of the remaining Tandem Plan authority;\n-- support legislation extending the Tandem Plan for\na year;\n-- support legislation expanding HUD's Tandem Plan\nto cover multi-family dwellings and condominiums,\nas well as adding additional mortgage purchase\nauthority.\nGERALD LIBRARY ? FORD\n-3- -\nIV. OPTIONS\n1.\nDo nothing at this time\nPROS\n--- No increased outlays or additional Treasury borrowing\nwill be necessitated.\n-- Improved credit conditions and increase in new home\nsales do not support the need for additional subsidies.\n-- Highlights Administration's determination to maintain\nbudgetary control.\nCONS\n--- Increases probability of a veto override.\n--- By failing to provide an alternative, undercuts\nfriends of the Administration who have opposed the\nbill.\n-- Postures the Administration as insensitive to the\ncrisis in the ailing housing industry.\nThis option not recommended by anyone.\nApprove\nDisapprove\n2.\nRelease the remaining Brooke-Cranston Act tandem authority\nto purchase up to $2 billion in residential mortgages\nPROS\n-- This does NOT cause a $2 billion outlay in that the\npurchased mortgages are later resold. The program could\ncost very little or actually run at a profit, as occurred\nin 1971, if massive savings inflows substantially decrease\ninterest rates between the purchase and resale, as\npredicted by the Administration's economists. HUD\nhas administrative devices, such as charging discount\npoints, to minimize costs. Estimated maximum outlay for\nFY '76 approximately $60 million and up to $125 million\nin FY '77.\nFORD LIBRARY 07V839\n- -4-\nIs less expensive and intrusive on private market\noperations than the Congressionally posed alternatives.\n(Estimated outlays for FY '76 in excess of $1 billion)\nMitigates, somewhat, the danger of a veto override.\n-- Demonstrates the willingness of the Administration to\nuse its existing authority to assist housing, which is\nperceived as a crucial element to an overall economic\nrecovery.\n-- Utilizes an existing rather than a new program.\nCONS\n-- Although costs are speculative, could increase Treasury\nborrowing and have a maximum outlay impact of from\n$60 to $125 million in FY 76 and FY 77. The ultimate\nbudget cost depends on the differential between the\npurchase price and sale price.\n-- Could be interpreted as a weakness in the\nAdministration's resolve to control spending.\n-- Leaves the Administration with no other resources to\nassist housing should another downturn occur.\n-- Does not provide an Administration legislative\nalternative to the interest subsidy provisions of\nthe Emergency Housing bill.\nRecommended by Jack Marsh.\nApprove\nDisapprove\n3.\nRelease the remaining tandem authority to purchase and\nresell $2 billion in residential mortgages and support\nlegislation to extend and expand the standby tandem\nauthority\nPROS\n-- This does NOT cause a $2 billion outlay in that the\npurchased mortgages are later resold. The program could\ncost very little or actually run at a profit, as occurred\nin 1971, if massive savings inflows substantially decrease\ninterest rates between the purchase and resale, as pre-\ndicted by the Administration's economists. HUD has\nadministrative devices, such as charging discount points,\nto minimize costs. Estimated maximum outlay for FY 76\napproximately $60 million and up to $125 million in FY 77.\nFORD & LIBRAR 07883\n-5-\n-- Provides the greatest potential for ensuring that a\nveto of the Emergency Housing bill is sustained.\n-- Is less expensive and intrusive on private market\noperations than the Congressional posed alternatives.\n(Estimated outlays for FY 76 in excess of $1 billion).\n-- Demonstrates the Administration's commitment to a\nrecovery in the housing sector, which is perceived as\na crucial element to an overall economic recovery.\n-- Gives the Administration an alternative legislative\nprogram to the Congressional package.\n-- The new authority would be discretionary.\n-- Provides additional standby authority, in case there\nis another severe downturn in housing.\n-- Permits tandem authority to be used to assist the\nmulti-family sector which is the most seriously depressed.\nCONS\n-- Although costs are speculative, could increase Treasury\nborrowing and have a maximum outlay impact of from\n$60 to $125 million in FY 76 and FY 77. The ultimate\nbudget cost depends on the differential between the\npurchase price and sale price.\n-- Could be interpreted as a weakness in the\nAdministration's resolve to control spending.\n-- May ultimately result in pressure being brought to\nbear on the Administration to release some of the\nadditional standby tandem authority.\nRecommended by Secretary Hills, Max Friedersdorf,\nPhil Buchen, Robert Hartmann, Jim Cannon.\nSecretary Hills: Even if the veto is sustained, the\nSecretary believes that in absence of the actions she\nrecommends, the Congress will quickly pass legislation\ncombining foreclosure relief and a mortgage interest\nsubsidy which will be extremely difficult to\nsuccessfully veto.\nFORD is LIBRARY GERALD\n- -6-\nRobert Hartmann: It is crucial that the President's next\nveto be sustained, and that when and if he gets overridden,\nthat the AFL-CIO NOT be the agent that tamed the\nPresident when the veto-proof Congress failed. I therefore\nfavor Option 3 if, indeed, it offers the best way to\navoid an override.\nApprove\nDisapprove\nNOTE:\nDirector Lynn recommends that you indicate your\nwillingness to support legislation expanding and\nextending the Tandem Plan BUT that a determination on\nreleasing the remaining Tandem authority be withheld\nat least until the latest housing starts and housing\npermits figures are released later this week.\nApprove\nDisapprove\nFORD is LIBRARY GERALD\nSome items in this folder were not digitized because it contains copyrighted\nmaterials. Please contact the Gerald R. Ford Presidential Library for access to\nthese materials.\n710 Housing\nprogram\nrington Post\nREAL ESTATE\nHomes\nFORD LIBRARY & CERALD\nSATURDAY, AUGUST 2, 1975\nChipping Away at America's Dream\nBy Kenneth R. Harney\niest Americans because in-\nby 57 per cent, property\nfloor of a suburban condo-\nsubstantially at the 63 per\ncomes in the U.S. haven't\ntaxes by 64 per cent, and\nminium.\ncent American Dream. Al-\nSecond of two articles\nkept pace with the sharp\nfuel and utilities by 62 per\nClearly, If rises in the cost\nready real estate brokers\nTwenty five years ago, two\nrises in costs of land, mate-\nrials, labor, mortgage credit\ncent.\nof housing continue to out-\nacross the country are\nout of three families could\nstrip rises in income, we\nworrying about softness in\nafford to buy a median-\nand energy. The costs asso-\nBefore 1965, only 6 per\ncan't remain a nation of\nthe \"move up\" resale mar-\npriced new home. Today,\nciated with buying a typical\ncent of all new houses con-\nhome owners in the tradi-\nket; people who have owned\nfewer than one out of five\nnew home, in fact, have\nstructed sold for more than\ntional sense. Sixty three per\ntheir homes and would like\nrisen twice as fast as the\n$35,000. In the Washington\ncent of all American fami-\na newer one are now staving\nTHE WHITE HOUSE\nWASHINGTON\nAugust 12, 1975\nMEMORANDUM FOR\nJACK MARSH\nFROM\nJIM CANNON Due\nSUBJECT\nOLD DOMINION SAVINGS AND LOAN:\nFEDERAL HOME LOAN MORTGAGE CORPORATION\nCAPITAL REQUIREMENTS\nPURPOSE: You forwarded for our review the attached\ncorrespondence from Old Dominion Savings and Loan (Tab A)\ncomplaining that the Federal Home Loan Mortgage Corporation's\n(FHLMC) $5 million capital requirement for participating\nprivate mortgage insurance companies is arbitrary and restricts\nthe entry of smaller companies into the industry. This\nmemorandum provides brief background to the capital\nrequirement issue and attaches a response for your\nsignature (Tab B).\nBACKGROUND: FHLMC purchases mortgages insured by private\nmortgage insurance companies (PMIs). By statute, FHLMC is\nrequired to establish eligibility requirements for\nparticipating PMIs. Under the FHLMC regulations, eligible\nPMIs must meet capital requirements of $5 million. The\nmortgage insurance industry at large has, according to FHLMC,\nviewed the $5 million as a minimum which should be raised.\nRecent entries into the national mortgage insurance business\nhave been capitalized at multiples of the FHLMC requirement.\nThree small PMIs capitalized at well under $5 million are\ncomplaining that the requirement is discriminatory. These\ncompanies are Secura Insurance, Mid Atlantic and Home\nGuaranty (the subject of the attached request).\nRECOMMENDATION: FHLMC is a quasi regulatory agency under the\nFederal Home Loan Bank Board. The issue is a regulatory\nmatter which has been brought to the attention of the\nCounsel's office. I suggest you sign the attached\nacknowledgement. Counsel's office (Chapman) concurs.\nACTION: The attached response is for your signature (Tab B).\nFORD LIBRARY & BERALD\nTHE WHITE HOUSE\nWASHINGTON\nAugust 30, 1975\nDear Fred:\nThank you very much for your letter of July 17 regarding\nthe Federal Home Loan Mortgage Corporation's capital\nrequirements for private mortgage insurance companies.\nIt seems to me that your comments have great merit, and\nI am hopeful that an appropriate resolution of the\nproblem can be found.\nAs you know, the Federal Home Loan Banking Board and the\nFederal Home Loan Mortgage Corporation are quasi-regulatory\nagencies, and it is our policy to work through the office\nof Philip Buchen, Counsel to the President, in resolving\nmatters relating to them. I have talked with Phil about\nyour letter, and I am sure he will look into the matter.\nI very much appreciate your bringing this matter to my\nattention.\nWith best wishes and warm personal regards,\nSincerely,\nJohn O. Marsh, Jr.\nCounsellor to the President\nMr. Fred L. Glaize, Jr.\nOld Dominion Savings and Loan Association\nPost Office Box 826\n202 West Boscawen Street\nWinchester, Virginia 22601\nLOG NO. 7501228\nTHE WHITE HOUSE\nREQUEST\nWASHINGTON\nNovember 28, 1975\nHousing\nMEMORANDUM FOR:\nJIM CANNON\nfile\nFROM:\nTOD HULLIN\nSUBJECT:\nDetroit\nFORD & LIBRARY GERALD\nISSUE: Will HUD insure the mortgage for a proposed develop-\nment called International Towers?\nBACKGROUND: The proposed development of International Towers\nwould be located on the Detroit River, west of Cobo Hall and\nsouth of Jefferson in downtown Detroit. The proposal under\nconsideration is the first phase of a larger development\npotentially totalling up to 3,000 units. All of the buildings\nin subsequent phases, as well as the first phase, would be\nhigh-rise construction. The phase under consideration at this\ntime would have 915 units in two buildings.\nAt the present time, a proposal to insure the International\nTowers project has not been officially submitted. However,\nin preliminary discussions with the developer, HUD has ten-\ntatively concluded that the stability and depth of the luxury\nhigh-rise market in the area in which this project is to be\nlocated is at best tenuous. Over 3,000 apartments in this\narea have been analyzed. More than 60% are HUD insured devel-\nopments. Almost all of the HUD insured apartments are in some\nform of financial distress with several of the mortgages in\ndefault and others actually owned by HUD.\nA final decision on this proposal cannot be made until an\nofficial proposal is submitted. However, HUD's preliminary\neconomic analysis seems to indicate that the market will have\na difficult time supporting a project as large as International\nTowers.\nRecently, Secretary Hills had an interview with Storer Broad-\ncasting in which she was asked about the International Towers\nproject. At that time, she indicated that HUD had some eco-\nnomic problems with the project in that the luxury high-rise\nmarket in the Detroit area was \"soft.\" Detroit Mayor Coleman\nYoung is a supporter of this project and has asked for a\nmeeting with Secretary Hills to discuss it.\nThis is not an issue in which we should become involved. It\nshould be worked out between the developer and HUD."
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