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1976/08/03 HR3295 Housing Authorities Act of 1976 (2)
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1976/08/03 HR3295 Housing Authorities Act of 1976 (2)
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The original documents are located in Box 52, folder "8/3/76 HR3295 Housing Authorities
Act of 1976 (2)" of the White House Records Office: Legislation Case Files at the Gerald R.
Ford Presidential Library
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Exact duplicates within this folder were not digitized.
Digitized from Box 52 of the White House Records Office Legislation Case Files at the Gerald R. Ford Presidential Library
S. 3295
Ainety-fourth Congress of the United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Monday, the nineteenth day of January,
one thousand nine hundred and seventy-six
An Act
To amend and extend laws relating to housing and community development.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SHORT TITLE
SECTION 1. This Act may be cited as the "Housing Authorization
Act of 1976".
AMENDMENTS TO THE UNITED STATES HOUSING ACT OF 1937
SEC. 2. (a) Section 5(c) of the United States Housing Act of 1937
is amended-
(1) by striking out the first sentence and inserting in lieu
thereof the following new sentence: "The Secretary is authorized
to enter into contracts for annual contributions aggregating not
more than $1,524,000,000 per annum, which limit shall be increased
by $965,000,000 on July 1, 1974, by $662,300,000 on July 1, 1975,
and by $850,000,000 on October 1, 1976, except that the additional
authority to enter into contracts for annual contributions pro-
vided on or after July 1, 1975, shall be effective only in such
amounts as may be approved in appropriation Acts."; and
(2) by inserting immediately after "on July 1, 1975," in the
fourth sentence thereof the following: "and by not less than
$17,000,000 per annum on October 1, 1976,".
(b) (1) Effective on October 1, 1976, the second and third sentences
of section 5(c) of such Act are amended to read as follows: "Of the
additional authority to enter into contracts for annual contributions
provided on October 1, 1976, and approved in appropriation Acts, the
Secretary shall (A) make available at least $60,000,000 for the
modernization of low-income housing projects, and (B) make avail-
able at least $140,000,000 to assist in financing low-income housing
projects for ownership by public housing agencies other than under
section 8, of which not less than $100,000,000 shall be available only
for the purpose of financing the construction or substantial rehabilita-
tion of low-income housing projects. The Secretary, in utilizing the
additional authority to enter into contracts for annual contributions
provided on October 1, 1976, shall administer the programs authorized
by this Act to provide assistance for new, substantially rehabilitated,
and existing units, to the maximum extent practicable and consistent
with section 213(d) of the Housing and Community Development Act
of 1974, in accordance with the goals of units of general local govern-
ment for such types of housing as reflected in their housing assistance
plans prepared pursuant to section 104(a) (4) of such Act.".
(2) Effective on October 1, 1976, the fourth sentence of section 5(c)
of such Act is amended by striking out "to the amount of contracts
for annual contributions required to be entered into by the Secretary
under the second sentence of this subsection".
S. 3295-2
(c) Section 9(c) of such Act is amended to read as follows:
(c) There are authorized to be appropriated, for the purpose of
providing annual contributions pursuant to this section not to exceed
$535,000,000 on or after July 1, 1975, not to exceed $80,000,000 on or
after July 1, 1976, and not to exceed $576,000,000 on or after October 1,
1976.".
(d) Section 8(c) (4) of such Act is amended by striking out the
period at the end thereof and inserting in lieu thereof the following:
" and, subject to the provisions of the following sentence, such pay-
ments may be made, in the case of a newly constructed or substantially
rehabilitated project, after such sixty-day period in an amount equal
to the debt service attributable to such an unoccupied dwelling unit
for a period not to exceed one year, if a good faith effort is being made
to fill the unit and the unit provides decent, safe, and sanitary housing.
No such payment may be made after such sixty-day period (i) if the
unoccupied unit is in a project insured under the National Housing
Act, except pursuant to section 244 of such Act, or (ii) if the Secretary
determines that the dwelling unit is in a project which provides the
owner with revenues exceeding the costs incurred by such owner with
respect to such project.".
(e) Section 8(f) of such Act is amended by striking out "and" at
the end of paragraph (4), by striking out the period at the end of
paragraph (5) and inserting in lieu thereof "; and", and by adding
the following new paragraph at the end thereof:
(6) the term 'debt service' means the required payments for
principal and interest made with respect to a mortgage secured
by housing assisted under this Act.".
(f) The third sentence of section 3(2) of such Act is amended by
striking out the word "and" before "(C)" and inserting before the
semicolon the following: "and (D) other single persons in circum-
stances described in regulations of the Secretary: Provided, That in
no event shall more than 10 percent of the units under the jurisdiction
of any public housing agency be occupied by single persons under this
clause (D) : Provided further, That in determining priority for
admission to housing under this Act the Secretary shall give preference
to those single persons who are elderly, handicapped, or displaced
before those eligible under this clause (D)".
(g) Section 8(e) (1) of such Act is amended by inserting after
"State or local agency" the following: "or the Farmers' Home
Administration".
(h) Notwithstanding any other provision of law, the value of any
assistance paid with respect to a dwelling unit under the United States
Housing Act of 1937, the National Housing Act, section 101 of the
Housing and Urban Development Act of 1965, or title V of the
Housing Act of 1949 may not be considered as income or a resource
for the purpose of determining the eligibility of, or the amount of
the benefits payable to, any person living in such unit for assistance
under title XVI of the Social Security Act. This subsection shall
become effective on October 1, 1976.
SECTION 235 HOMEOWNERSHIP PROGRAM
SEC. 3. (a) Section 235 (m) of the National Housing Act is amended
by striking out "June 30, 1976" and inserting in lieu thereof "Septem-
ber 30, 1977".
S. 3295-3
(b) The last proviso in section 235(b) (2) of such Act is amended
by striking out "$21,600", "$25,200", "$25,200", and "$28,800" and
inserting in lieu thereof "$25,000", "$29,000", "$29,000", and "$33,000",
respectively.
(c) Section 235 (i) (3) (B) of such Act is amended by striking out
"$21,600", "$25,200", "$25,200", and "$28,800" and inserting in lieu
thereof "$25,000", "$29,000", "$29,000", and "$33,000", respectively.
(d) Section 221 (d) (2) (A) of such Act is amended-
(1) by striking out "$21,600" and "$25,200" in the matter
preceding the first proviso and inserting in lieu thereof "$25,000"
and "$29,000", respectively; and
(2) by striking out "$25,200" and "$28,800" in the second
proviso and inserting in lieu thereof "$29,000" and "$33,000",
respectively.
(e) Section 235(h) (2) of such Act is amended by striking out "80
per centum" wherever it appears and inserting in lieu thereof "95
per centum".
(f) (1) Section 235 of such Act is amended-
(A) by inserting "(1)" immediately after "(a)"; and
(B) by adding at the end thereof the following:
(2) (A) Notwithstanding any other provision of this section, the
Secretary is authorized to make periodic assistance payments under
this section on behalf of families whose incomes do not exceed the
maximum income limits prescribed pursuant to subsection (h) (2)
of this section for the purpose of assisting such families in acquiring
ownership of a mobile home consisting of two or more modules and
a lot on which such mobile home is or will be situated, except that
periodic assistance payments pursuant to this paragraph shall not be
made with respect to more than 20 per centum of the total number of
units with respect to which assistance is approved under this section
after January 1, 1976. Assistance payments under this section pursuant
to this paragraph shall be accomplished through payments on behalf
of an owner of lower-income of a mobile home as described in the
preceding sentence to the financial institution which makes the loan,
advance of credit, or purchase of an obligation representing the loan
or advance of credit to finance the purchase of the mobile home and
the lot on which such mobile home is or will be situated, but only if
insurance under section 2 of this Act covering such loan, advance of
credit, or obligation has been granted to such institution.
((B) Notwithstanding the provisions of subsection (c) of this sec-
tion, assistance payments provided pursuant to this paragraph shall
be in an amount not exceeding the lesser of-
"(i) the balance of the monthly payment for principal, interest,
real and personal property taxes, insurance, and insurance pre-
mium chargeable under section 2 of this Act due under the loan
or advance of credit remaining unpaid after applying 20 per
centum of the mobile homeowner's income; or
"(ii) the difference between the amount of the monthly pay-
ment for principal, interest, and insurance premium chargeable
under section 2 of this Act which the mobile homeowner is obli-
gated to pay under the loan or advance of credit and the monthly
payment of principal and interest which the owner would be
obligated to pay if the loan or advance of credit were to bear
interest at a rate derived by subtracting from the interest rate
applicable to such loan or advance of credit the interest rate dif-
ferential between the maximum interest rate plus mortgage insur-
ance premium applicable to mortgages insured under subsection
S. 3295-4
(i) of this section at the time such loan or advance of credit is
made and the interest rate which such mortgages are presumed,
under regulations prescribed by the Secretary, to bear for pur-
poses of subsection (c) (2) of this section."
(2) Section 235(e) of such Act is amended by inserting "(a) (2)
(B),' immediately before "(c)".
SECTION 236 AMENDMENTS
SEC. 4. (a) Section 236(n) of the National Housing Act is amended
by striking out "June 30, 1976" and inserting in lieu thereof "Septem-
ber 30, 1977".
(b) Section 236 (f) (2) of such Act is amended-
(1) by inserting '(including the amount allowed for utilities
in the case of a project with separate utility metering)" imme-
diately after "basic rentals" in the first sentence thereof and by
striking out everything in such sentence which follows "of their
income" and inserting in lieu thereof a period; and
(2) by inserting "(including the amount allowed for utilities
in the case of a project with separate utility metering)' imme-
diately after "rental payment" in the second sentence thereof and
by striking out everything in such sentence which follows "ten-
ant's income" and inserting in lieu thereof a period.
FHA SUPPLEMENTAL LOANS FOR HOSPITALS
SEC. 5. Section 241 (a) of the National Housing Act is
amended—
(1) by inserting ", hospital," immediately after "multifamily
project" in the first sentence thereof;
(2) by inserting ", hospital," immediately after "such project"
in the material preceding the proviso in the second sentence there-
of and
(3) by inserting ", hospital," immediately before "or a group
practice facility" and immediately before "or facility" in the
proviso in the second sentence thereof.
CO-INSURANCE
SEC. 6. (a) Section 244 of the National Housing Act is amended by
inserting at the end thereof the following new subsection:
"(g) (1) Where the mortgagee is a public housing agency or an
insured depository institution and the mortgage covers a multifamily
housing project, the co-insurance contract may provide that the mort-
gagee assume (i) the full amount of any loss on the insured mortgage
up to an amount equal to a fixed percentage of the outstanding prin-
cipal balance of the mortgage at the time of claim for insurance
benefits, or (ii) the full amount of any losses on insured mortgages in
a portfolio of mortgages approved by the Secretary up to an amount
equal to a fixed percentage of the outstanding principal balance of all
mortgages in such portfolio at the time of claim for insurance benefits
on a mortgage in the portfolio, plus a share of any loss in excess of the
amount under clause (i) or (ii), whichever is applicable.
(2) The second sentence of subsection (d) shall not apply to mort-
gages made to public housing agencies, but for purposes of such second
sentence such mortgages shall not be counted in the aggregate prin-
cipal amount of all mortgages insured under this title.
S. 3295-5
"(3) The Secretary may make loans, from the applicable insurance
fund, to public housing agencies in connection with mortgages which
have been insured pursuant to this subsection and which are in default.
"(4) The Secretary may insure and make a commitment to insure
in connection with a co-insurance contract pursuant to this subsection
(A) a mortgage on a project assisted under the second proviso in the
first sentence of section 236(b) of this Act, and (B) a mortgage or
advance on a mortgage made to a public housing agency on a project
under construction which is not approved for insurance prior to
construction.
"(5) As used in this subsection, the term 'public housing agency' has
the same meaning as in section 3(6) of the United States Housing Act
of 1937, and the term 'insured depository institution' means any sav-
ings bank, savings and loan association, commercial bank or other such
depository institution whose deposits are insured by the Federal
Deposit Insurance Corporation, by the Federal Savings and Loan
Insurance Corporation, or by an agency or instrumentality of a State.
"(6) Notwithstanding any other provision of this Act, the Secre-
tary may include in the determination of replacement cost of a project
to be covered by a mortgage made to a public housing agency and
insured pursuant to this subsection, such reserves and development
costs, not to exceed 5 per centum of the amount otherwise allowable,
as may be established or authorized by the public housing agency
consistent with such agency's procedures and underwriting standards.".
(b) Section 244(a) of such Act is amended by adding the following
new sentence at the end thereof "A mortgagee which enters into a con-
tract of co-insurance under this section shall not by reason of such
contract, or its adherence to such contract or applicable regulations of
the Secretary, including provisions relating to the retention of risks in
the event of sale or assignment of a mortgage, be made subject to any
State law regulating the business of insurance.".
EXPERIMENTAL FINANCING
SEC. 7. Section 245 of the National Housing Act is amended by strik-
ing out "June 30, 1976" and inserting in lieu thereof "September 30,
1977".
MULTIFAMILY MORTGAGE LIMITS
SEC. 8. (a) The National Housing Act is amended by striking out
"by not to exceed 75 per centum in any geographical area" where it
appears in sections 207(c) (3), 213 (b) (2), 220(d) (3) (B) (iii), 221
(d) (3) (ii), (4) (ii), 231 (c) (2), and 234(e) (3) and inserting
in lieu thereof in each such section "by not to exceed 50 per centum in
any geographical area".
(b) (1) (A) Section 207(c) (3) of the National Housing Act is
amended by striking out "$13,000", "$18,000", "$21,500", "$26,500",
"$30,000", and "$3,250" in the matter preceding the first semicolon
and inserting in lieu thereof "$19,500", "$21,600", "$25,800", "$31,800",
"$36,000", and "$3,900", respectively.
(B) Section 207(c) (3) of such Act is further amended by striking
out "$15,000", "$21,000", "$25,750", "$32,250", and "$36,465" in the
matter following the first semicolon and inserting in lieu thereof
"$22,500", "$25,200", "$30,900", "$38,700", and "$43,758", respectively.
(2) (A) Section 213 (b) (2) of such Act is amended by striking out
"$13,000", "$18,000", "$21,500", "$26,500", and "$30,000" in the
matter preceding the first proviso and inserting in lieu thereof
"$19,500", "$21,600", "$25,800", "$31,800", and "$36,000", respectively.
3295-6
(B) Section 213(b) (2) of such Act is further amended by striking
out "$15,000", "$21,000", "$25,750", "$32,250", and "$36,465" in the
first proviso and inserting in lieu thereof "$22,500", "$25,200",
"$30,900", "$38,700", and "$43,758", respectively.
(3) (A) Section 220(d) (3) (B) (iii) of such Act is amended by
striking out "$13,000", "$18,000", "$21,500", "$26,500", and "$30,000"
in the matter preceding "except" where it first appears and inserting
in lieu thereof "$19,500", "$21,600", "$25,800", "$31,800", and "$36,000",
respectively.
(B) Section 220(d) (3) (B) (iii) of such Act is further amended by
striking out "$15,000", "$21,000", "$25,750", "$32,250", and "$36,465"
in the matter following "except" where it first appears and inserting
in lieu thereof "$22,500", "$25,200", "$30,900", "$38,700", and "$43,758",
respectively.
(4) Section 221 (d) (3) (ii) of such Act is amended-
(A) by striking out "$11,240", "$15,540", "$18,630", "$23,460",
and "$26,570" and inserting in lieu thereof "$16,860", "$18,648",
"$22,356". "$28,152". and "$31,884", respectively; and
(B) by striking out "$13,120", "$18,630", "$22,080", "$27,600",
and "$32,000" and inserting in lieu thereof "$19,680", "$22,356",
"$26,496", "$33.120", and "$38,400", respectively.
(5) (A) Section 221 (d) (4) (ii) of such Act is amended by striking
out "$12,300", "$17,188", "$20,525", "$24,700", and "$29,038" in the
matter preceding the first semicolon and inserting in lieu thereof
"$18,450", "$20,625", "$24,630", "$29,640", and "$34,846", respectively.
(B) Section 221 (d) (4) (ii) of such Act is further amended by strik-
ing out "$13,975", "$20,025", "$24,350", "$31,500", and "$34,578" in the
matter following the first semicolon and inserting in lieu thereof
"$20,962", "$24,030", "$29,220", "$37,800", and "$41,494", respectively.
(6) (A) Section 231(c) (2) of such Act is amended by striking out
"$12,300", "$17,188", "$20,525", "$24,700", and "$29,038" in the matter
preceding the first semicolon and inserting in lieu thereof "$18,450",
"$20,625", "$24,630", "$29,640", and "$34,846", respectively.
(B) Section 231(c) (2) of such Act is further amended by striking
out "$13,975", "$20,025", "$24,350", "$31,500", and "$34,578" in the
matter following the first semicolon and inserting in lieu thereof
"$20,962", "$24,030", "$29,220", "$37,800", and "$41,494", respectively.
(7) (A) Section 234(c) (3) of such Act is amended by striking out
"$13,000", "$18,000", "$21,500", "$26,500", and "$30,000" in the matter
preceding the first semicolon and inserting in lieu thereof "$19,500",
"$21,600", "$25,800", "$31,800", and "$36,000", respectively.
(B) Section 234(e) (3) of such Act is further amended by striking
out "$15,000", "$21,000", "$25,750", "$32,250", and "$36,465" in the
matter following the first semicolon and inserting in lieu thereof
"$22,500", "$25,200", "$30,900", "$38,700", and "$43,758", respectively.
CORRECTION OF DEFECTS
SEC. 9. (a) (1) Section 518(b) of the National Housing Act is
amended by striking out "not more than nineteen months after the
date of enactment of the Housing and Community Development Act
of 1974" in the first sentence thereof and inserting in lieu thereof "not
more than four months after the date of enactment of the Housing
Authorization Act of 1976".
S. 3295-7
(2) Section 518(b) of such Act is amended by striking out the last
sentence and inserting in lieu thereof the following: "Expenditures
pursuant to this subsection shall be made from the insurance fund
chargeable for insurance benefits on the mortgage covering the struc-
ture to which the expenditures relate. There are hereby authorized to
be appropriated such sums as may be necessary to cover the costs of
such expenditures not otherwise provided for.".
(b) Section 518 of the National Housing Act is amended by adding
at the end thereof the following new subsections:
(d) The Secretary is authorized to make expenditures to correct or
to reimburse the owner for the correction of structural or other major
defects which SO seriously affect use and liveability as to create a serious
danger to the life or safety of inhabitants of any one-, two-, three-,
or four-family dwelling which is more than one year old on the date
of issuance of the insurance commitment, is located in an older, declin-
ing urban area, and is covered by a mortgage insured under section
203 or 221 on or after January 1, 1973, but prior to the date of enact-
ment of this subsection if (1) the owner requests assistance from the
Secretary not more than one year after the date of enactment of this
subsection, and (2) the defect is one that existed on the date of the
issuance of the insurance commitment and is one that a proper inspec-
tion could reasonably have been expected to have disclosed. The Secre-
tary may require from the seller of any such dwelling an agreement to
reimburse him for any payments made pursuant to this subsection
with respect to such dwelling. Expenditures pursuant to this subsection
shall be made from the insurance fund chargeable for insurance bene-
fits on the mortgage covering the structure to which the expenditures
relate. There are hereby authorized to be appropriated such sums as
may be necessary to cover the costs of such expenditures not otherwise
provided for.
(e) The Secretary of Housing and Urban Development is author-
ized and directed to conduct a full and complete investigation and
study and report to Congress, with recommendations, not later than
March 1, 1977, with respect to an effective program for protecting
home buyers from hidden or undisclosed defects seriously affecting
the use and livability of the home, which would be applicable to exist-
ing homes financed with mortgages insured under this Act. In the
study and report the Secretary shall particularly investigate the need
for, cost and feasible structure of, a national home inspection and
warranty program, with respect to such homes, to be operated by the
Federal Government out of fees assessed on the home buyer and
amortized over a period of two years. The Secretary's report shall also
present an analysis of alternative Federal programs to meet these
needs, and the cost and means of financing such programs. In the
report the Secretary shall also outline administrative steps which can
be taken to provide disclosure to purchasers of existing homes financed
with mortgages insured under this Act of the actual condition of the
home and the types of repairs or replacements likely to be needed
within a period of two years, such as repairs or replacement of fur-
nace, roof or major appliances, based on age and useful life expectancy
of such appurtenances.".
GENERAL INSURANCE FUND AUTHORIZATION
SEC. 10. Section 519 of the National Housing Act is amended by
adding at the end thereof the following new subsection
(f) There are authorized to be appropriated to cover losses sus-
tained by the General Insurance Fund not to exceed $500,000,000.".
S. 3295-8
HOUSING FOR THE ELDERLY
SEC. 11. (a) Section 202(a) (4) (B) (i) of the Housing Act of 1959
is amended-
(1) by striking out "$800,000,000" in the first sentence and
inserting in lieu thereof "$1,475,000,000, which amount shall be
increased to $2,387,500,000 on October 1, 1977, and to $3,300,000,000
on October 1, 1978"; and
(2) by inserting the following new sentence at the end thereof:
"The Secretary may not issue notes or other obligations to the
Secretary of the Treasury pursuant to this section in an aggre-
gate amount exceeding $800,000,000 except as approved in appro-
priation Acts.".
(b) Section 202 (d) (4) of such Act is amended by adding the fol-
lowing new sentence at the end thereof: "Notwithstanding the preced-
ing provisions of this paragraph, the term 'elderly or handicapped
families' includes two or more elderly or handicapped persons living
together, one or more such persons living with another person who is
determined (under regulations prescribed by the Secretary) to be
essential to their care or well-being, and the surviving member or mem-
bers of any family described in the first sentence of this paragraph who
were living, in a unit assisted under this section, with the deceased
member of the family at the time of his or her death."
(c) (1) Section 202(a) (3) of such Act is amended by striking out
"current average market yield on outstanding marketable obligations
of the United States with remaining periods to maturity comparable
to the average maturities of such loans" and inserting in lieu thereof
the following: "average interest rate on all interest bearing obliga-
tions of the United States then forming a part of the public debt,
computed at the end of the fiscal year next preceding the date on which
the loan is made".
(2) The second sentence of section 202 (4) (B) (i) of such Act is
amended by striking out "the current average market yield on out-
standing marketable obligations of the United States of comparable
maturities during the month preceding the issuance of the notes or
other obligations", and inserting in lieu thereof the following: "the
average interest rate on all interest bearing obligations of the United
States then forming a part of the public debt, computed at the end of
the fiscal year next preceding the date on which the loan is made".
REHABILITATION LOAN PROGRAM
SEC. 12. (a) Section 312(d) of the Housing Act of 1964 is amended-
(1) by striking out "and not to exceed $100,000,000 for the fiscal
year beginning on July 1, 1975" and inserting in lieu thereof "not
to exceed $100,000,000 for the fiscal year beginning on July 1, 1975,
and not to exceed $100,000,000 for the fiscal year beginning on
October 1, 1976"; and
(2) by adding at the end thereof the following new sentence:
"The amount of commitments to make loans pursuant to this sec-
tion entered into after August 22, 1976, shall not exceed amounts
approved in appropriation Acts.".
(b) Section 312(h) of such Act is amended to read as follows:
(h) No loan shall be made under this section after September 30,
1977, except pursuant to a contract, commitment, or other obligation
entered into pursuant to this section prior to October 1, 1977.".
S. 3295-9
EMERGENCY HOUSING
SEC. 13. (a) Section 109(b) of the Emergency Homeowners' Relief
Act is amended by striking out "June 30, 1976" and inserting in lieu
thereof "September 30, 1977".
(b) The first sentence of section 110(a) of such Act is amended—
(1) by striking out "Until one year from the date of enactment
of this title, each" and inserting in lieu thereof "Each";
(2) by inserting "prior to October 1, 1977," immediately after
"(1)"; and
(3) by inserting "until one year from the date of enactment
of this title," immediately after "(2)".
(c) Section 111 of such Act is amended by striking out "July 1,
1976" and inserting in lieu thereof "October 1, 1977".
(d) Section 3(b) of the Emergency Home Purchase Assistance Act
of 1974 is amended by striking out "July 1, 1976" and inserting in
lieu thereof "October 1, 1977".
(e) (1) Section 313 (b) of the National Housing Act is amended by
striking out the period at the end thereof and inserting in lieu thereof
; and", and by inserting the following at the end thereof:
(D) such mortgage involves a principal residence the sales
price of which does not exceed $48,000 ($52,000 in high-cost areas
as determined by the Secretary) per family residence or dwelling
unit, except that such sales price in Alaska, Hawaii, and Guam
may not exceed $65,000."
(2) The amendment made by paragraph (1) shall apply only with
respect to mortgages purchased pursuant to commitments made after
the date of the enactment of this Act.
FLOOD INSURANCE
SEC. 14. (a) Section 202 (b) of the Flood Disaster Protection Act of
1973 is amended by striking out all that follows "shall not apply to"
and inserting in lieu thereof the following: "(1) any loan made to
finance the acquisition of a residential dwelling occupied as a residence
prior to March 1, 1976, or one year following identification of the area
within which such dwelling is located as an area containing special
flood hazards, whichever is later, or made to extend, renew, or increase
the financing or refinancing in connection with such a dwelling, (2)
any loan, which does not exceed an amount prescribed by the Secretary,
to finance the acquisition of a building or structure completed and
occupied by a small business concern, as defined by the Secretary, prior
to January 1, 1976, (3) any loan or loans, which in the aggregate do
not exceed $5,000, to finance improvements to or rehabilitation of a
building or structure occupied as a residence prior to January 1, 1976,
or (4) any loan or loans, which in the aggregate do not exceed an
amount prescribed by the Secretary, to finance nonresidential addi-
tions or improvements to be used solely for agricultural purposes on
a farm.".
(b) Section 1336(a) of the National Flood Insurance Act of 1968
is amended by striking out "December 31, 1976" and inserting in lieu
thereof "September 30, 1977".
(c) Section 1376 of the National Flood Insurance Act of 1968 is
amended by adding at the end thereof the following new subsection
"(c) There are authorized to be appropriated for studies under this
title not to exceed $100,000,000 for the fiscal year 1977.".
S. 3295-10
COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
Sec. 15. (a) Section 103(a) (2) of the Housing and Community
Development Act of 1974 is amended by inserting and $200,000,000
for the fiscal year 1977, not more than 50 per centum of which amount
may be used under section 106 (d) (1), immediately after "1976".
(b) Paragraph (2) of section 105(a) of such Act is amended by
inserting immediately after "neighborhood facilities," the following:
"centers for the handicapped,".
(c) Section 107 (a) (1) of such Act is amended by inserting the
following immediately before the semicolon at the end thereof: "or in
behalf of new community projects assisted under title X of the National
Housing Act which meet the eligibility standards set forth in title VII
of the Housing and Urban Development Act of 1970 and which were
the subject of an application or preapplication under such title prior
to January 14, 1975".
(d) Section 116 of such Act is amended by adding at the end thereof
the following new subsection:
" (h) In the event that the total amount available for distribution in
fiscal year 1977 in metropolitan areas is insufficient to meet all basic
grant and hold-harmless entitlement needs, as provided by section
106 (a), and funds are not otherwise appropriated to meet such
deficiency, the Secretary shall meet the deficiency, first, from amounts
available for use under section 107 and, if such amounts are exhausted,
through a ratable reduction of all entitlements under section 106(a).".
COMPREHENSIVE PLANNING
SEC. 16. (a) The first sentence of section 701 (e) of the Housing Act
of 1954 is amended by striking out "and not to exceed $150,000,000
for the fiscal year 1976" and inserting in lieu threof "not to exceed
$150,000,000 for the fiscal year 1976, and not to exceed $100,000,000
for the fiscal year 1977".
(b) No eligible recipient under section 701 of the Housing Act of
1954 may be excluded from qualifying for funds under such section
solely on the basis of participation or nonparticipation under such
section prior to fiscal year 1977.
CONFIRMATION OF GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
PRESIDENT
SEC. 17. (a) The National Housing Act is amended by striking out
the third sentence of section 308(a) and inserting in lieu thereof the
following: "There is hereby established in the Department of Housing
and Urban Development the position of President, Government
National Mortgage Association, who shall be appointed by the Presi-
dent, by and with the advice and consent of the Senate. The Secretary
shall select and effect the appointment of qualified persons to fill the
offices of vice president, and such other offices as may be provided for
in the bylaws. Persons appointed under the preceding sentence shall
perform such executive functions, powers, and duties as may be pre-
scribed by the bylaws or by the Secretary, and such persons shall be
executive officers of the Association and shall discharge all such execu-
tive functions, powers, and duties.".
(b) Section 309 (d) of such Act is amended by striking out the word
"The" immediately preceding "Secretary" in the first sentence and
inserting in lieu thereof "Subject to the provisions of section 308(a),
the".
S. 3295-11
(c) Section 5315 of title 5, United States Code, is amended by add-
ing at the ending thereof the following new paragraph:
(108) President, Government National Mortgage Association,
Department of Housing and Urban Development.".
(d) Section 7(c) of the Department of Housing and Urban
Development Act is amended by striking out "seven" in the proviso and
substituting in lieu thereof "six".
(e) Notwithstanding the amendment made by subsection (a), the
rights, powers, and duties of the position of President, Government
National Mortgage Association, as in effect on the day preceding the
date of enactment of this Act shall remain in effect until the position
established hereunder has been filled in accordance with the terms
of this Act.
SPECIAL ASSISTANT FOR COOPERATIVE HOUSING
SEC. 18. The first sentence of section 102(h) of the Housing Amend-
ments of 1955 is amended-
(1) by inserting after "section 221 (d) (3) a comma and the
following: "section 235, section 236, section 241, section 243, sec-
tion 246, and section 203 (n)";
(2) by inserting after "Housing and Urban Development Act
of 1965" the following: "or section 8 of the United State Hous-
ing Act of 1937"; and
(3) by inserting before the period the following: "and Assist-
ant Secretary for Housing Management".
NEW COMMUNITIES
SEC. 19. Section 720 (a) of the Housing and Urban Development Act
of 1970 is amended by striking out "June 30, 1975" and inserting in lieu
thereof "October 1, 1977".
URBAN HOMESTEADING
SEC. 20. Section 810(g) of the Housing and Community Develop-
ment Act of 1974 is amended by striking out "and not to exceed
$5,000,000 for the fiscal year 1976" and inserting in lieu thereof "not
to exceed $6,250,000 for the fiscal year 1976, and for the transition
quarter, not to exceed $5,000,000 for fiscal year 1977, and not to exceed
$5,000,000 for the fiscal year 1978".
DAY CARE
SEC. 21. Section 7 of the Department of Housing and Urban Devel-
opment Act is amended by adding at the end thereof the following
new subsection:
"(n) Notwithstanding any other provision of law, the Secretary is
authorized by contract or otherwise to establish, equip and operate a
day care center facility for the purpose of serving children who are
members of households of employees of the Department. The Secretary
is authorized to establish or provide for the establishment of appropri-
ate fees and charges to be chargeable against the Department of
Housing and Urban Development employees or others who are bene-
ficiaries of services provided by such a day care center.".
S. 3295-12
HOME OWNER'S LOAN ACT
SEC. 22. The twelfth undesignated paragraph of section 5(c) of
the Home Owner's Loan Act of 1933 (12 U.S.C. 1464(c)) is amended
by adding in the first sentence, immediately after the words "made
pursuant to either of such sections" and before the period the follow-
ing language: "and in the share capital and capital reserve of the
Inter-American Savings and Loan Bank".
RESEARCH AUTHORIZATION
SEC. 23. (a) Section 501 of the Housing and Urban Development
Act of 1970 is amended by striking out the second sentence and insert-
ing in lieu thereof the following: "There are authorized to be appro-
priated for activities under this title not to exceed $65,000,000 for the
fiscal year 1977.".
(b) Section 504(b) of such Act is amended by striking out the
first, third, and fourth sentences.
(c) Section 502(f) of such Act is amended by striking out the
period at the end of the second sentence and inserting in lieu thereof
the following: "and such departments and agencies are hereby author-
ized to execute such contracts and grants.".
NATIONAL INSTITUTE OF BUILDING SCIENCES
SEC. 24. Section 809 (h) of the Housing and Community Develop-
ment Act of 1974 is amended by inserting ", and $5,000,000 for each
of the fiscal years 1977 and 1978" immediately after "fiscal year 1976".
RURAL HOUSING
SEC. 25. (a) Section 521 (a) (1) of the Housing Act of 1949 is
amended by striking out "rate determined annually by the Secretary
of the Treasury" and inserting in lieu thereof "rate determined by
the Secretary of the Treasury upon the request of the Secretary".
(b) Section 520(3) (B) of such Act is amended by inserting "for
lower and moderate-income families" immediately after "has a seri-
ous lack of mortgage credit".
(c) Section 510 of such Act is amended by redesignating subsections
(f) and (g) as subsections (h) and (i), respectively, and by insert-
ing the following new subsections immediately after subsection (e) :
"(f) continue processing as expeditiously as possible applica-
tions on hand received prior to the time an area has been deter-
mined by the Secretary not to be 'rural' or a 'rural area', as those
terms are defined in section 520, and make loans or grants to such
applicants who are found to be eligible on the same basis as
though the area were still rural;
"(g) notwithstanding that an area ceases, or has ceased, to
be 'rural', in a 'rural area', or an eligible area, make assistance
under this title available in connection with transfers and assump-
tions of property securing any loan made, insured, or held by the
Secretary or in connection with any property held by the Secre-
tary under this title on the same basis as though the area were
still rural;".
COUNSELING
SEC. 26. Title V of the Housing and Urban Development Act of
1970 is amended by adding at the end thereof the following new
section:
S. 3295-13
"COUNSELING TO MORTGAGORS
"SEC. 508. (a) In carrying out activities under section 501, the
Secretary is directed to undertake programs of studies and demon-
strations within at least three standard metropolitan statistical areas
to determine the extent of need for and cost effectiveness of providing
pre-purchase, default and delinquency counseling and related services
to owners and purchasers of single-family dwellings insured or to be
insured under the unsubsidized mortgage insurance programs of the
National Housing Act.
"(b) Within one year from enactment of this section, the Secretary
shall submit an interim report to the Congress with respect to the
progress made under such studies and demonstrations, including an
estimate as to the date when a final report on the results of such
demonstrations will be made available to the Congress.".
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.
Calendar No. 714
94TH CONGRESS
2d Session
}
{
REPORT
SENATE
No. 94-749
HOUSING AMENDMENTS OF 1976
REPORT
OF THE
COMMITTEE ON BANKING, HOUSING
AND URBAN AFFAIRS
UNITED STATES SENATE
TO ACCOMPANY
S. 3295
TOGETHER WITH
MINORITY AND ADDITIONAL VIEWS
APRIL 12, 1976.-Ordered to be printed
U.S. GOVERNMENT PRINTING OFFICE
57-010
WASHINGTON : 1976
Calendar No. 714
94TH CONGRESS
SENATE
REPORT
2d Session
No. 94-749
HOUSING AMENDMENTS OF 1976
APRIL 12, 1976.-Ordered to be printed
COMMITTEE ON BANKING, HOUSING AND URBAN AFFAIRS
WILLIAM PROXMIRE, Wisconsin, Chairman
Mr. PROXMIRE, from the Committee on Banking, Housing and Urban
Affairs, submitted the following
JOHN SPARKMAN, Alabama
JOHN TOWER, Texas
HARRISON A. WILLIAMS, JR., New Jersey
EDWARD W. BROOKE, Massachusetts
THOMAS J. McINTYRE, New Hampshire
BOB PACKWOOD, Oregon
REPORT
ALAN CRANSTON, California
JESSE HELMS, North Carolina
ADLAI E. STEVENSON, Illinois
JAKE GARN, Utah
JOSEPH R. BIDEN, JR., Delaware
together with
ROBERT MORGAN, North Carolina
KENNETH A. MCLEAN, Staff Director
MINORITY AND ADDITIONAL VIEWS
ANTHONY T. CLUFF, Minority Staff Director
[To accompany S. 3295]
SUBCOMMITTEE ON HOUSING AND URBAN AFFAIRS
The Committee on Banking, Housing and Urban Affairs, having
JOHN SPARKMAN, Alabama, Chairman
considered the same, reports favorably a Committee bill (S. 3295)
WILLIAM PROXMIRE, Wisconsin
EDWARD W. BROOKE, Massachusetts
to extend the authorization for annual contributions under the United
HARRISON A. WILLIAMS, JR., New Jersey JOHN TOWER, Texas
States Housing Act of 1937, to extend certain housing programs
THOMAS J. MCINTYRE, New Hampshire
BOB PACKWOOD, Oregon
under the National Housing Act, and for other purposes, and recom-
ALAN CRANSTON, California
JAKE GARN, Utah
JOSEPH R. BIDEN, JR., Delaware
mends that the bill do pass.
CARL A. S. COAN, Staff Director
INTRODUCTION
JEREMIAH S. BUCKLEY, Minority Counsel
(II)
The primary purpose of this bill is to provide for the continuation
of a number of current housing programs, either by extending the
dates on which they expire or by increasing their funding authoriza-
tions, usually through September 30, 1977. The bill contains no sig-
nificant new program proposals, but amends several existing
programs.
The bill's new program authorizations may be summarized as
follows:
(1)
2
3
Authorization
Program :
conditions, this change would bring the rate paid by the sponsor down
(dollars in millions)
Sec. 8 housing assistance for low- and moderate-income people
from about 9 percent to approximately 71/2 percent. These action reflect
New construction
$265. 00
the Committee's strong support for the Section 202 program, which
Existing unit assistance
171. 00
has been popular and workable and which has helped to meet the
Conventional public housing :
New construction
needs of the constantly growing elderly portion of the population.
200. 00
Operating subsidies
576. 00
The second highly significant feature of the bill is its revised and
Modernization
60. 00
tightened framework for governing HUD's use of funds for Section
Loans for elderly and handicapped (Sec. 202) (No expiration date
8 and conventional public housing, the two major assistance programs
on authorization)
2, 500. 00
for low-income families. These changes include earmarking of funds
Homeownership assistance (Sec. 235)
200. 00
Rehabilitation loans (Sec. 312)
for new construction under Section 8 and an increase in the funds
150. 00
Assistance to FHA-insured multifamily projects in or faced with
authorized and earmarked for construction of public housing.
foreclosure
154. 00
This increased restrictiveness has become necessary because HUD
Comprehensive planning assistance to communities (Sec. 701)
100. 00
has used, and in some cases over-stepped, its current discretionary
A primary objective of the above funding allocation is to increase
authority to administer housing assistance programs in a way which
the concentration of current HUD programs on new housing construc-
has distorted the Congressional intent. In particular, HUD has con-
tion, with the intent of increasing the housing supply and of creating
tinually displayed a preference for channeling program activity into
jobs in the construction industry, one of the most highly depressed
existing rather than new housing. The result has been an extremely
sectors of the economy. If these funds, plus the existing authorization
low level of assisted housing starts, far below the level needed by low
of $7 billion for the Government National Mortgage Association
and moderate income families, and far below the amount of construc-
tandem plan, were fully and promptly used, the Committee estimates
tion and substantial rehabilitation intended by the Congress as clear-
that they would produce housing starts and substantially rehabilitated
ly stated in the housing goals provision of the Housing and Urban
units by the end of fiscal year 1977 at the following levels:
Development Act of 1968 and the policy objectives of the Housing
Program :
Number of units
and Community Development Act of 1974.
Section 8 construction
66, 250
The year 1975 was, in fact, one of the worst for housing production
Public housing construction
75, 800
since World War II, with new starts totalling just 1.2 million units.
Elderly and handicapped
83, 330
Even when mobile homes are added to this record, 1975 production
Section 235 homeownership assistance
200, 000
ran at more than a million units less than the 2.6 million level
Rehabilitation loans
18, 750
GNMA tandem plan
200, 000
which Congress determined to be necessary when it enacted the Hous-
ing and Urban Development Act of 1968. Furthermore, the 10-year,
Total
644, 130
26-million target level set in that Act specifically included a goal of
The potential to produce 644,000 assisted housing starts or sub-
6 million units for low and moderate income families. Eight years
stantially rehabilitated units in turn has the capacity to generate over
later, however, it is clear that these lower income production needs
a million jobs for construction workers in the next fiscal year. Beyond
will not be met, largely because of the Administration's 1973 mora-
this, the bill will create additional employment through programs
torium on housing subsidy programs and recent years of problems in
such as the $60 million in modernization funds for public housing,
the housing market at large. Now that the moratorium programs have
which will produce approximately $645 million in capital, and pay-
been replaced with new ones proposed and structured by the Admin-
ments available to correct structural defects in homes with FHA-
istration, assisted housing production should be set at levels higher
insured mortgages. On the other hand, the number of jobs generated
than the 10-year average, in order to offset the accumulated deficit.
by the bill will fall below the million-plus estimate if the funds are
HUD's record on low-income housing programs, however, has been
not fully appropriated. If HUD fails to use its discretion to fund the
precisely the opposite. The Department's Section 8 program, which
GNMA tandem plan fully, if the Section 202 elderly housing funds
was enacted more than one and a half years ago with the understand-
are released over a period longer than the next fiscal year, and for
ing that it would be the Nation's major tool for assisting the con-
similar reasons.
struction of lower income housing, as of February 27, 1976 had
The bill's allocation of housing program funds has two features
produced a total of just 2,600 units-most of which are merely con-
which are significant departures from past practice. The first is the
versions from an earlier HUD program. The combined total for all
high level of funding for the Section 202 direct loan program for
government subsidized production in calendar year 1975 was just
elderly and handicapped housing. The Committee authorized $2.5
124,000 units-86,000 of which were attributable to the Department of
billion for this program over an unspecified time period, an amount
Agriculture.
approximately sufficient to accommodate the level of applications
The slow progress in the implementation of Section 8 is very dif-
which HUD received for this program last year. In addition, the bill
ficult to understand. The claim made by HUD that the pace of new
amends the program's interest rate formula, to tie it to the average
construction under the Section 8 program is no different than the
rate on all outstanding Treasury obligations. Under current market
experience under previous subsidy programs does not hold up with
the facts. In 1969, the first full calendar year of operation for the
4
5
Sec. 235 and Sec. 236 programs, 24,400 mortgages were insured under
1977. Many of these rental units were built more than 20 years ago and,
Sec. 235 and mortgages for 77 projects with 11,800 units were insured
while soundly built, reflect the wear and tear of having been lived in
under Sec. 236. These facts compare with the record of only 2600
for that length of time. To replace these buildings would be extremely
units started under Section 8 during the entire year of 1975 and
expensive and, in fact, unnecessary since a moderate investment in
through February 27, 1976.
modernization can restore these structures to good condition.
While the reasons for the poor construction record under Section
The Committee received testimony that HUD has an estimated back-
8 and other programs are complex, there is no question that one of
log of some $2.8 billion in capital cost requirements for public housing
the problems is HUD's continual tendency to use all available discre-
projects. A survey of 19 housing authorities by one witness before the
tion to channel funds into the Section 8 assistance mechanism, and
Committee found an immediate need for $747 million in modernization
then to use these funds for purposes other than new construction or
in those 19 cities alone. However, over the last few years HUD has
substantial rehabilitation. This pattern is carried further by HUD's
allocated only $20 million per year in ACC authority for moderniza-
recent proposal to use a major portion of the Section 8 funds-$154
tion, thus keeping the level of modernization at $215 million per year.
million-to "bail out" existing FHA apartment projects which are
The Committee believes that this level is far short of the amount needed
facing financial insolvency.
to maintain our Nation's stock of public housing units. Accordingly,
This bill, accordingly, has been drafted to provide a partial response
the Committee is directing the Secretary of HUD to increase the use
to the housing start problem by breaking HUD's requested figure for
of ACC authority for modernization of public housing to the level
total housing assistance into broad but clear-cut categories. This break-
of $60 million per year. The Committee believes that this is a sensible
down includes separate authorization amounts to be used for new and
investment needed to preserve thousands of basically sound public
existing Section 8 and public housing, and a special and distinct au-
housing units.
thorization for bailing out the troubled FHA apartments. In addition,
Section 2(b) of the bill would also require that of the $696 million
the funding categories have been structured to reflect the Committee's
new contract authority, not less than $200 million would be used for
dissatisfaction with the Section 8 record by increasing the authoriza-
new construction or substantial rehabilitation in projects to be owned
tion for conventional public housing construction, on the grounds that
by public housing agencies other than under the Section 8 program,
the latter has proved itself to be, on the whole, a sound and economical
and not less than $265 million for newly constructed or substantially
program.
rehabilitated units financed under Section 8 of the act. In addition,
The Committee believes that this authorization framework, along
this section requires that of the balance of authority to enter into an-
with the bill's program extensions and in some cases amendments, will
nual contributions contracts which is available on and after October 1,
give the housing assistance programs a greater opportunity to gener-
1976, (other than the $696 million referred to above), the Secretary
ate new housing and meet housing needs in fiscal year 1977.
shall make available for new construction or substantial rehabilitation
and for ownership by public housing agencies other than under Sec-
EXPLANATION OF THE BILL
tion 8, respectively, amounts which bear the same ratios to the
total amount of such authority as the amounts required under this bill
Section 8 and Public Housing Authority
to be made available for new construction or substantial rehabilitation
Section (a) of the bill would increase the authorization for annual
and for ownership by public housing agencies other than under Sec-
contributions contracts by $696 million on July 1, 1976. It would also
tion 8, respectively, bear to $696 million. The Committee intends that
provide that additional contract authority authorized on or after July
all funds which have not been committed in accordance with HUD's
1, 1975, shall be available only as provided for in appropriations acts.
"Annual Contributions Contract (HAP) List Approved" shall be con-
The increased amount is $154 million less than that requested by the
sidered as "balance of authority" for purposes of this Act.
Administration. The Committee adjusted the amount downward in
The purpose of these designations is to assure that the Congressional
order to keep within the President's budget and provide contract au-
intent is carried out with respect to the funds appropriated under the
thority amounting to $154 million to make payments to reduce the
Housing Act of 1937, which Act is primarily to provide additional
rents for lower income families occupying financially troubled FHA
housing to meet the needs of low and lower income families at rents
projects (described in Section 8 of the bill). This amount of contract
they can afford. The Committee believes that the Congressional intent
authority is the amount in the President's budget which is estimated
of the Housing and Community Development Act of 1974 was sound,
for fiscal year 1977 as needed to assist in making these projects eco-
namely that until such time that the Section 8 program is operational,
nomically sound.
HUD should continue the old programs. HUD has not done this, and,
Section 2(b) would set aside at least $60 million in annual contri-
as a result, we have no effective housing production program for low-
butions contract (ACC) authority for the modernization of existing
income families at this time. The mandatory allocation is intended to
public housing projects in fiscal year 1977. It is estimated that this
reduce the completely discretionary use of contract authority under
contract authority will permit public housing agencies to undertake
the act for leased housing, and to direct more of the funds into new and
modernization projects in the amount of $645 million in fiscal year
rehabilitated projects and into public housing ownership projects,
1977.
which for the most part have proven successful over the years.
Some 1,235,000 units of low-rent housing will be eligible for annual
Section 2(c) of the bill would increase the level of operating sub-
contribution payments in the public housing program in fiscal year
sidies for public housing to $576 million in fiscal year 1977.
7
6
housing. The Committee expects HUD to implement this provision as
This figure corresponds to HUD's estimate of the need for operating
required by law.
subsidies. When the President submitted his budget for fiscal year
aximum Rents for Multi-family Projects under Section 8
1977, he requested operating subsidies for local housing authorities in
The Committee believes that HUD may be overly restrictive in
the amount of $463.6 million, although the Budget recognized the
establishing contract rents for certain kinds of new construction and
need for some $576 million over expected rental receipts to finance
rehabilitation projects under the Section 8 program. HUD is basing
the operations of public housing agencies in fiscal year 1977. The
these rents upon a "comparability" standard which appears to be
$112.4 million difference between the $576 million needed and the
discouraging otherwise acceptable projects. This is particularly true in
$463.6 million requested was to be made up by increasing the minimum
the case of new construction and rehabilitation in older cities where
rents payable by low-income families living in public housing.
comparability involves use of locational considerations that may result
The Committee received testimony that the rent increases proposed
in rents that are unrealistically low in view of costs of construction
by the Administration would mean an immediate rent increase of at
and operation. It is also a major problem in rural areas and smaller
least 10 percent per month for each elderly person living in public
communities where there are no comparables and where the Farmers
housing (approximately 43 percent of public housing units are
Home Administration has determined maximum rents on a cost basis.
occupied by elderly and handicapped). The HUD proposal would also
However, problems with HUD's comparability test are not restricted
cause substantial rent increases for low income families living in public
to older cities or rural areas. The projects affected may meet HUD
housing.
site selection criteria and provide desperately needed housing for
At Oversight Hearings on HUD programs in February of this year,
families who wish to live in such areas. The areas themselves may be
the Committee raised questions regarding the severe impact these
the focus of local community development activities. In view of the
proposed rent increases would have on public housing tenants, many
great need for conservation and rehabilitation of sound existing
of whom are on fixed incomes and are finding it difficult to meet their
neighborhoods and housing, we would expect HUD to encourage the
current expenses. In response to the Committee's questions, HUD
use of Section 8 as a part of neighborhood improvement efforts under-
stated that it had not determined the range and percentage of rent
taken by local authorities. In doing so, HUD should take into account
increases for public housing tenants before proposing these increases.
reasonably expected increased market demand in such areas.
The Department has agreed to withdraw its proposal for rent increases
Since housing market areas may be large, the Committee believes
pending the development of data regarding the impact of these in-
that HUD may permit different maximum rents for different projects
creases on public housing tenants. The Committee approves of HUD's
in the area, but it should show much greater sensitivity to program
decision in this regard and directs the Department to submit any
purposes, housing needs within market areas, present and projected
new proposals for increasing rents in public housing to the Committee
development, financing and interest costs, and neighborhood conserva-
for approval.
tion and community development objectives.
While the Committee has received testimony from housing officials
The Committee recognizes that low contract rents may be a reflection
indicating the need for as much as $600 million in operating subsidies
of HUD's determination that an area or neighborhood may not have
for fiscal year 1977, it has accepted HUD's estimate of $576 million
adequate services, facilities and amenities to provide a strong enough
in setting the level of operating subsidies for the next fiscal year and
market to justify rents obtainable in other parts of a large market area.
has included that figure in the bill.
The Committee would expect HUD not to use comparability as a back-
The Committee notes that HUD testified that. in calculating the
door method of discouraging development in such areas because of
need for $576 million in operating subsidies, the Department has pre-
these factors.
sumed implementation of a revised and improved Performance Fund-
Further, the Committee is concerned that the comparability test for
ing Formula developed for HUD by the Urban Institute. The Commit-
Section 202 projects utilizing Section 8 assistance may prove to be a
tee expects the Department to implement this revised formula as soon
major and unintended stumbling block that could kill the program be-
as possible.
fore it gets off the ground. The Committee urges the Secretary to use
Section 2(d) of the bill would increase the authorization for ear-
the broad authority granted in Section 8(g) of the Housing Act of
marked funds to be set aside to assist in financing low income housing
1937 to issue regulations that will ensure that Section 8 subsidy levels
for families who are member of Indian Tribes by $17,500,000 on
are high enough to make the construction and operation of 202 projects
July 1, 1976.
feasible.
It has been brought to the attention of the Committee that HUD
The Committee has been assured by the Secretary that she is making
has failed to implement the provision of the Housing and Community
modification in HUD's contract rent procedures that will correct these
Development Act of 1974 which excludes Indian public housing from
deficiencies. It is obviously desirable that changes be made in a manner
the regular requirement of eligibility for operating subsidies. This
that will minimize disruptions in processing and attainment of Sec-
provision in section 5(c) was intended to resolve the special problems
tion 8 goals.
faced by Indians, which include very low incomes and extremes in
The Committee expects, however, to receive a full report on the
climatic conditions. That provision of the law was not permissive, it
actions taken within 30 days after enactment of this act, and will con-
was mandatory. The Committee feels that HUD's failure to implement
the amendment dooms many poor Indian families to continue in bad
S. Rept. 94-749-2
8
9
tinue to follow this aspect of the program closely to determine
The new authority of $200 million would be added to the current
whether HUD is being more restrictive than can be justified in light of
outstanding authority under the program of $264 million to provide
Congressional intent.
assistance for approximately 450,000 home ownership units under the
omeownership assistance
terms and regulations now in effect.
The Committee believes this is the most effective subsidy program
Section 3 of the bill would extend the authority for insurance under
for a segment of the population whose incomes are too low to afford
Section 235 of the National Housing Act until September 30, 1977. It
the cost of decent housing at today's prices, but who, with a little
would also increase the contract authority by $200 million on July 1,
financial assistance, can become responsible home owners. The cost is
1976. In addition, it would establish a maximum mortgage insurance
relatively cheap compared with other subsidy programs. The initial
premium under the program at a level not in excess of that required
subsidy under current regulations averages about $850 per unit per
to be paid under Section 203 (b).
year, but past experience indicates the subsidy will average $550 per
The original Section 235 program, authorized by the Housing and
unit after a few years, and the average number of years for the sub-
Urban Development Act of 1968, as amended, provided for homeowner-
sidy is expected to be 10 years. Under the new underwriting rules
ship assistance for lower income famílies. Eligible families paid 20
issued by the Secretary, which tightened up the eligibility require-
percent of their adjusted monthly income toward the monthly mort-
ments for the program, the ayerage subsidy cost will be probably less
gage payment. The balance was made up by Federal assistance pay-
in the future than in the past.
ments, which could not exceed the difference between the required
The Committee feels that Section 235 assistance has many advan-
mortgage payment and the amount that would be required on a mort-
tages over other subsidy programs. It is relatively inexpensive when
gage bearing an interest rate of one percent. This program was sus-
compared, for example, to the Section 8 program, which will require
pended on January 5, 1973, as part of the President's general
an estimated subsidy of $3200 a unit for the term of the lease, which in
moratorium on all HUD housing assistance programs.
some cases is 40 years. Beyond this, it has the tremendous benefit of
As a result of litigation regarding the suspension, the Department
providing recipients with the opportunity to own their own homes.
obligated, pursuant to a court order of August 20, 1975, $264 million in
Despite the fact that the program is suitable only for a limited num-
order to avoid a statutory lapse of this amount on August 22, 1975. On
ber of families and can generally not be used to provide housing for
October 17, 1975, the Secretary announced the reactivation of a Sec-
low-income families, it is a highly important form of housing assist-
tion 235 Homeownership subsidy program, but exercised her preroga-
tives to place restrictions on the program, which she claims will en-
ance. The Committee is concerned, however, about the administration of
sure a significant financial commitment on the part of the borrowers to
the program. In the first place, it objects to the slow pace with which
the property. The major features of the revised program are sum-
the program is being put into place. Even though the Administration
marized below:
announced the reactivation the program last October, the Committee
Any family with an adjusted gross income of up to 80 percent of
has been advised that there are only a few Section 235 starts under the
the area median income (higher in certain circumstances) is eligible
new program as of this time.
for participation.
Furthermore, the Administration's program would call for spend-
The subsidy is available to the purchaser of a newly constructed or
ing the available authority over a period of 3 years. The Committee
substantially rehabilitated home with a mortgage amount not exceed-
would like to see a much accelerated program with the expectation
ing $21,600 ($25,200 for a family of five or more) or in designated
that the new authority, plus the existing authority, will be committed
high-cost areas, $25,200 ($28,800 for a family of five or more). The
over the next 2 years.
house can be a single family detached, townhouse, condominium, or
There is also a concern that the regulations issued by the Adminis-
cooperative unit.
tration with respect to the program may be too strict, having the effect
The home owner must provide a downpayment that is the greater
of making the program inoperable. The Committee is sympathetic with
of the amount which would be required in the basic Section 203 un-
HUD requirements that are intended to reduce defaults, but cautions
subsidized program or 6 percent of the total acquisition cost. However,
the Administration that the purposes of the program will hardly be
the downpayment may include prepaid expenses.
served if the effect is to make it impossible for eligible applicants to
Not more than 40 percent of the homes in any subdivision will be
qualify. In 1974, the Congress approved an increase in the down pay-
eligible for subsidy payments.
ment requirement up to 3 percent of the acquisition cost of the home in
The home owner must contribute at least 20 percent of adjusted
order to assure a more sound purchase than permitted by the original
gross income toward monthly mortgage, insurance, and tax payments
legislation. The Administration has doubled this amount by regula-
on the house. If this payment by the home owner is not enough to
tion, and there is a serious question whether this is SO severe that it
meet the monthly charges, direct cash subsidy payments will be made
will exclude most of the lower income families otherwise eligible.
by HUD to reduce mortgage interest costs to as low as 5 percent.
The Committee is also concerned about the Administration's failure
Subsidy payments can continue throughout the term of the mort-
to implement fully the mandatory counseling requirement for pur-
gage, until the property is sold, or until the home owner, with 20 per-
chases of Section 235 homes. The counseling provision written into the
cent of adjusted gross income, can pay monthly mortgage payment,
Housing and Community Development Act of 1974 was intended to be
including interest, insurance and taxes.
10
11
effective in reducing losses under the program. HUD itself has con-
law with respect to the coinsurance terms applicable to public housing
ducted studies showing that counseling is cost effective. The average
agencies. The amended language is nearly identical to that approved
cost of a foreclosure to HUD is approximately $6,200, whereas the
as Section 5 of H.R. 9852 which passed the Senate on January 23, 1976.
average cost of counseling a family in default on its mortgage is esti-
The Committee has received representations from State Housing
mated at $500. This would be a cheap cost to pay to reduce foreclosures
Finance Agencies that they are concerned that HUD's proposed multi-
under the program. Such results will not be obtained, however, unless
family coinsurance program will overregulate the activity of the
counseling is properly performed by trained personnel who spend the
agencies by requiring the agencies to alter their underwriting and
necessary time with the family before the purchase and after occu-
processing procedures SO that they are the same as existing procedures
pancy, particularly when the first signs of financial difficulty begin to
used by the HUD field offices, and by requiring HUD approval of cer-
show.
tain agency personnel.
In view of the fact that under coinsurance the agencies will be
Section 236 Rental Housing Assistance
Section 4 of the bill would extend the termination date of Section
assuming a significant share of any loss, the Committee wishes to
236 of the National Housing Act from June 30, 1976, until Septem-
emphasize that implementation of this program should not involve
sweeping alterations of state agencies' underwriting and processing
ber 30, 1977.
No additional authorization is provided in the bill. The Committee
procedures and requirements SO that they conform to existing HUD
was informed that there is approximately $125 million in unused
procedures or requirements or involve HUD in approving State
authority available to provide interest subsidies and operating assist-
Agency personnel. The Committee believes the agencies should be al-
lowed to follow their own procedures and requirements established in
ance and, in addition, approximately $44 million in reserve as a result
of the collection of excess rental charges. The reserve is required under
underwriting, processing, and managing projects under the coinsur-
Section 236(g) of the Act to be used for additional operating assist-
ance program, except to the extent that express provisions of the Na-
ance payments under the terms specified in Section (3). The
tional Housing Act require modification of those procedures or require-
ments, or except to the extent that the Secretary determines on the
Committee is concerned that HUD has not yet implemented this
basis of substantial cause that such procedures or requirements are
provision of the 1974 Act.
unsound.
Supplemental loan insurance for hospitals
A primary intent of the coinsurance program should be avoidance
Section 5 of the bill would amend section 241 of the National Hous-
of excessive insurance risk. For this reason, the Committee believes
ing Act to permit the FHA to insure supplemental loans to FHA-
HUD's emphasis in reviewing a state agency's program should be
insured hospitals, for the purpose of making necessary additions and
upon the capacity of the agency to evaluate the prospective financial
improvements.
soundness of projects rather than upon the particular procedures
At present, the section 241 program provides for FHA insurance
employed by the agency.
of supplemental expansion and improvement loans to FHA-insured
Experimental financing
nursing homes, group practice facilities and multifamily projects.
Section 7 of the bill would extend the Experimental Financing
However, FHA-insured hospitals, which number about 90 nationwide,
are currently not eligible for the program. As a result, these hospitals
Program under Section 245 of the National Housing Act from
find it necessary to refinance or secure conventional secondary loans
June 30, 1976 until September 30, 1977.
Under this authority, the FHA may insure loans which use flexible
in order to undertake urgently needed modernization and expansion
projects or to replace obsolete equipment. These alternatives to loan
amortization plans corresponding to variations in family income. An
extension is necessary because HUD has only recently begun to ap-
insurance are expensive and often mean higher debt service cost for
hospitals, which, in turn, means higher charges to their patients at a
prove proposals for these experimental loans and needs this additional
time when medical costs are already soaring. Increasing demands for
time to carry out other experiments which are only on the "drawing
board."
medical care, rapid advances in medicine and technology, and federal
and state health and safety standards make it important that a mech-
No funding authorization is necessary for this program.
anism exist to encourage the supply of supplemental loans at reason-
Assistance payments with respect to projects in critical default
able interest rates.
Section 8(a) of the bill would add a new section 247 to the National
The Committee believes that, by facilitating the financing of
Housing Act to provide rental assistance payments with respect to
required hospital additions and improvements, this section would con-
projects in foreclosure or threatened with foreclosure. The assistance
tribute to better medical care for the nation's citizens, while protecting
payments would be made to lower income families in a project which
HUD's interest in the economic viability of FHA-insured hospitals.
is (1) financed by a mortgage insured under the National Housing
Coinsurance
Act. and threatened with foreclosure (2) subject to a mortgage held
Section 6 of the bill would amend the FHA loan coinsurance pro-
by the Secretary, or (3) owned by the Secretary. All three of these
vision of Section 244 of the National Housing Act. The amendment
categories represent FHA projects which are in serious financial diffi-
would authorize the Secretary to make special exceptions to existing
culty, the last of the three being those in which the mortgages have
been foreclosed and the property is now owned by HUD. The phrase
12
13
"threatened with foreclosure" is intended to apply only to those proj-
tially eligible home owners be notified of the provisions of this amend-
ects in serious financial difficulty which will end up in foreclosure
ment within 30 days of the enactment of the Act.
unless remedial action is taken by HUD under this section.
Section 518 (a) provides that the Secretary shall have the authority
This new section was added to carry out the plan of the Administra-
to take remedial action where structural defects are found in an FHA-
tion that certain financially depressed FHA-insured projects could
insured home approved for insurance prior to construction.
be made financially viable by providing rental assistance to some or
A structural defect is a serious flaw affecting the livability of the
all of the lower income tenants in the project. In addition, it would
home. It does not include normal wear and tear, but does cover such
enable those tenants to remain in the project by benefit of the rental
problems as cracked foundations and faulty septic systems. To obtain
assistance payments.
relief, an owner must apply within 4 years from the date of his mort-
The Committee recognized the merits of HUD's plan to help these
gage insurance contract, and a determination is then made by HUD as
projects, but disagreed with HUD's use of Section 8 funds for this
to whether the problem qualifies as a structural defect.
purpose because it detracts from the basic intent of Congress that
Experience has shown, however, that this program has not been well
such funds be used to provide additional housing units for low and
publicized and many eligible homeowners have not been able to meet
moderate income families.
the application deadline. Homeowners had no information about the
Recognizing the problem, but wanting to avoid mixing housing
program, the proper procedures for filing, or their rights in obtaining
assistance funds appropriated for additional housing with funds
a final determination from HUD on the merits of their particular
needed to reduce FHA foreclosure losses, the Committee agreed to set
complaint.
up a new program under the National Housing Act which would have
its own housing assistance funds appropriated for the purpose
Compensation for defects in existing housing
specified.
Section 10 of the bill would broaden the existing housing coverage
Subsection (b) of the new section would establish a statutory proce-
of Section 518 of the National Housing Act and would create a per-
dure for processing these rental assistance payments. While the Com-
manent compensation program for existing, 1-4 family properties
mittee wants to keep separate the two funds it believes it would be
purchased with mortgages insured by FHA under the National Hous-
simpler for everyone concerned to process the rental assistance pay-
ing Act.
ments for bail-out purposes by following the same procedures and
Section 518 (b) currently provides owners of existing homes pur-
requirements as to eligibility, amount of payments, and other details
chased with certain FHA-insured mortgages the opportunity to be
contained in the provision under section 8 of the Housing Act of 1937.
reimbursed for serious structural defects present in the home when
Subsection (c) of the new section would place certain requirements
purchased. The defect must be one that a proper inspection by FHA
on the Secretary of HUD with respect to assistance payments under
in its appraisal process-which includes an inspection to determine
this provision. The Secretary would be required to make a finding of
whether the property is consistent with FHA's minimum property
fact as to the causes of the unsatisfactory financial condition of the
standards-could reasonably have been expected to disclose. The pro-
project, and also to make a determination that there is a reasonable
gram presently covers houses purchased with FHA section 235 mort-
probability that with such assistance provided by this section, the proj-
gages and houses purchased between 1968 and 1973 with mortgages
ect can be restored to economic feasibility and can contribute to the
insured under FHA sections 203 or 221.
housing supply in the community in which it is located, particularly in
The Committee amended section 518 to do the following:
relation to meeting the needs of the low and moderate income families
(1) Extend the deadline for Section 518(b) applications for sec-
of that community.
tions 203 and 221 houses purchased between 1968 and 1973 by an addi-
Subsection (d) of the new section would authorize an appropriation
tional 4 months. The application deadline under present law was
of $154 million for the fiscal year ending September 30. 1977. This is
March 22, and applications fell short of the expectations of both local
the amount estimated in the President's budget intended by the Secre-
community groups and HUD. More time is necessary in order to assure
tary to meet the needs of these projects, 20,000 units of which are in
that eligible homeowners are aware of the program and receive an
the "property disposition" category and 90,000 units of which are in
adequate opportunity to apply.
the "loan management" category for fiscal year 1977.
(2) Extend the program to cover FHA sections 203 and 221 hous-
Section 8(b) of the bill would bar the Secretary from using con-
ing purchased after 1973 but prior to date of passage of this bill,
tracts authorized under the Housing Act of 1937 for the purpose for
giving applicants one year from date of passage to apply.
which the new section 247 is intended to provide. This is to emphasize
(3) Set forth a permanent program covering all FHA-insured
the Committee's intention that appropriations for production should
existing one to four family housing purchased after passage of this
not be mixed with appropriations to meet FHA losses.
provision, and giving applicants one year from the date of purchase
to apply for reimbursement.
Compensation for defects in newly constructed housing
For housing purchased after 1973 as defined in (2) and (3) above,
Section 9 would extend the deadline for the application period under
eligibility criteria in the existing Section 518(b) limiting coverage to
Section 518 (a) of the National Housing Act from the current limit of
housing located in older and declining urban areas would be elimi-
4 years to 4 years and 7 months. It would also require that all poten-
nated, since the geographic location of the house has nothing to do
14
15
with its structural condition or the homeowner's problems in coping
This section changes the law to provide an interest rate based on
with the defects. At the same time, the standard for a reimbursable
the average interest rate on all outstanding interest-bearing obliga-
defect would be changed from "structural or other major defects which
tions of the United States. This should lower the effective interest
SO seriously affect use and livability as to create a serious danger to
rate for the project to approximately 71/2 percent, assuming HUD con-
the life or safety of inhabitants," to the less restrictive standard of
tinues to charge a 1 percent administrative fee. This will in turn result
"structural or other major defects which seriously affect use and
in lower rental costs to the consumers-the elderly and handicapped.
livability."
In addition, the lower rate more closely represents the actual cost to
Another Committee amendment would charge the cost of reimburse-
the government of providing the 202 loan funds.
ments under Section 518(b), the interim program for Sections 203
Rehabilitation loan program
and 221, and the new, permanent program to the appropriate Insur-
Section 12 of the bill would extend the Section 312 rehabilitation
ance Fund chargeable for insurance benefits on the mortgage covering
loan program from August 22, 1976 until September 30, 1977, and
the structure for which the reimbursement is paid. To assure that
increase the authorization for Fiscal Year 1977 by $150 million. The
sufficient monies are present in the appropriate fund to cover the dis-
Section 312 program provides for 3 percent loans from HUD to
bursements charged to it, the Committee authorized an appropriation
owners and renters of properties needing rehabilitation, with financing
of such sums as may be necessary to cover the cost. However, the
through a revolving fund.
Committee does not expect the Department to await appropriations
The Committee strongly supports rehabilitation programs as one of
before undertaking this program.
the most important tools to help preserve neighborhoods within the
Housing for the elderly and handicapped
nation's cities. Section 312 loans, at a below-market interest rate, have
Section 11 of the bill would increase the authorization for the
made it possible for communities to carry out comprehensive neigh-
Section 202 program by $2.5 billion to an aggregate of $3.3 billion.
borhood renewal programs. The Federal Assistance Code Enforcement
The Section 202 program provides long-term direct government loans
Program (FACE) has been one of our most successful programs to
to non-profit sponsors of housing for elderly and handicapped persons.
upgrade and restore neighborhoods which otherwise could become
As an estimated one-third of the Nation's elderly live in substandard
slums. Three percent loans to property owners in the area have been
units and/or pay beyond their means for housing, the need for higher
the key to success in this program.
production is well documented. It is estimated that the additional $2.5
The Administration has proposed that this program not be extended
billion in lending authority can provide more than 83,000 additional
on the grounds that community development block grants are now
housing starts and twice as many jobs in construction and related
meeting rehabilitation needs. The Committee feels, however, that the
industries.
community development program is not adequate for this purpose
The $2.5 billion would approximately accommodate the initial level
because the high competition for block grant funds leaves an insuf-
of response to the revised Section 202 program which has been over-
ficient priority for rehabilitation of occupied housing. The latter need
whelming. In the 3 months during which applications were accepted,
is a critical one, particularly since HUD's current major housing
more than 1,500 proposals were made for more than 231,000 units.
programs are rental-oriented and do little to help moderate income
One reason for such interest is the high success rate of the old Section
homeowners.
202 program-only one default was reported in 330 projects.
The block grant program is further limited by constitutional restric-
The Committee expects that Section 8 rental assistance will be avail-
tions in some states which prohibit the use of community development
able to many of the occupants of Section 202 housing in order to keep
funds for housing rehabilitation loans, and by the fact that many
the rent at levels affordable by lower income elderly and handicapped
communities in the nation do not participate in the block grant
program at all.
persons.
This section of the bill would also change the method for computing
The Committee understands that many block-grant recipient com-
interest rates chargeable by HUD to sponsors under the Section 202
munities are using their grants to establish revolving loan funds sim-
program. Under the existing law, interest rates are based on the
ilar to Section 312 at the local level. This mechanism could in time
current average market yield on outstanding marketable obligations
replace some of the need for the Federal loan program. At present,
of the United States of comparable maturities, which rate, when in-
however, the critical need for rehabilitation makes it necessary to
creased by administrative fees, results in an interest rate charge to
extend the program.
the project of around 9 percent. This high interest rate is a serious
The bill does, nevertheless, amend the Section 312 program to re-
impediment to the program, and the Committee was told in testimony
quire that HUD set an interest rate above 3 percent for higher income
that it would cause most proposed projects not to meet the feasibility
borrowers up to a maximum reflecting the Treasury's long-term bor-
test imposed by HUD. According to Sec. 202 sponsors, rents required
rowing rate plus the administrative costs of processing the loans. The
to amortize a 9 percent mortgage and to pay reasonable operating
Committee felt that these more affluent borrowers should not be sub-
costs would be in excess of market rents for comparable projects in
sidized with the program's basic 3 percent rate, but that they should
the area, and the project would therefore fail to meet HUD's feasi-
continue to be encouraged to undertake rehabilitation through the
bility test. A lower interest rate is essential to make these projects
availability of a loan rate which is still below market levels. Through
meet HUD's standards.
this two-tiered system of interest rates, the 312 program can make
16
17
rehabilitation possible for homeowners who otherwise could not afford
However, the 701 program provides comprehensive planning of all
it while at the same time efficiently tapping the private resources of
activities, not simply planning for community development. Com-
inner-city property owners who can afford to rehabilitate but may not
munity development funds cannot be used for the wide variety of
do SO in the absence of an incentive.
purposes 701 now supports, including A-95, planning for functions
Comprehensive planning grants
other than community development (land use, health, criminal justice,
Section 13 of the bill provides a $100 million authorization for the
employment, transportation, etc.) and, perhaps most importantly,
Section 701 Comprehensive Planning Grant Program in fiscal year
planning which coordinates and relates various functional plans to
1977. This represents a cut of $50 million from the fiscal year 1976
each other.
authorization. It would, if fully funded, permit by fiscal year 1978 a
Furthermore, most of the eligible recipients of Section 701 funds
return to the stable funding level which characterized the program
are not eligible or do not have an entitlement for community develop-
during fiscal years 1974-76 when its outlays were between $100-110
ment block grant funds. Section 701 funds go to states for their own
million per year. Outlays for fiscal year 1977 will be only $75 million
use, for distribution to communities under 50,000 in population, or for
as a result of a fiscal year 1976 appropriation of $75 million (outlays
distribution to non-metropolitan areawide organizations. They also
are intended to lag behind appropriations by one year in the 701
go to areawide organizations in metropolitan areas charged with A-95
program).
responsibilities (usually COGs), cities over 50,000 in population, In-
The 701 program, as revised in the 1974 Housing and Community
dian tribes, and interstate regional planning commissions and other
Development Act, requires State and local governments and areawide
government units with special planning needs. Of these, only cities
agencies receiving grants to carry out a comprehensive planning proc-
over 50,000 in population and some urban counties receive community
ess including, as a minimum, the preparation of housing and land use
development entitlement funds. which, as already noted do not serve
elements. The 1974 amendments also permit recipients to use funds for
the same purpose as Section 701 funds.
management and evaluation activities in order to direct the program
Emergency Homeowners' Relief Act
toward the implementation of plans, and toward building govern-
Section 14 of the bill extends through September 30, 1977, the
ment management capacity.
Emergency Homeowners' Relief Act, a standby program for HUD
The interest of the Federal Government in this program is two-fold.
assistance to homeowners who are faced with foreclosure because of
First, it assists State and local jurisdictions in dealing with the com-
temporary unemployment or income reductions caused by adverse
plex problems of growth; second, it enables them to make more ef-
conditions in the general economy. HUD would provide or insure
fective use of Federal programs and financial assistance. Improving
repayable loans to cover the amount needed by these homeowners to
state and local planning and management takes on increasing impor-
meet their mortgage payments, up to $250 a month for up to two
tance from the federal perspective as federal programs move toward
years.
revenue sharing and block grants with relatively few federal plan-
The program was enacted as part of the Emergency Housing Act
ning requirements. The potential for waste of these federal funds is
of 1975, and has not been implemented because HUD has considered
great if states and localities do not have the capability for adequately
national foreclosure rates too low to warrant its use. However, the
applying them to their real needs. Section 701 provides this capability,
Committee considers it advisable to extend the Act through fiscal
particularly through the required housing and land use elements. The
year 1977. Financing would continue to be authorized through a re-
housing element, as administered, requires that states, areawide plan-
volving fund at the Treasury Department, allowing up to $500 million
ning agencies, and localities devise housing goals, set forth housing
for HUD assistance payments and $1,500 million in outstanding
needs, and, where appropriate, provide for the best distribution of
HUD-insured loans and advances. All of these sums would be repaid
housing resources (including federal subsidies) in terms of the loca-
by the homeowners at interest rates and terms prescribed by HUD.
tion of existing and planned governmental services and public facili-
ties (such as highways, mass transit, sewer lines, etc.).
Emergency Home Purchase Assistance Act
Second, the program provides these jurisdictions with the ability to
Section 15 of the bill extends from June 30, 1976 until September
coordinate their various activities, including the large number of func-
30, 1977 the Emergency Home Purchase Assistance Act of 1974 as
tional Federal grant programs, SO that these activities are consistent
amended by the Emergency Housing Act of 1975. The program pro-
both with each other and, where desirable, with the activities of neigh-
vides emergency assistance to the housing market during periods of
boring jurisdictions. The A-95 mechanism, the primary device by
credit shortages by subsidizing interest rates. As revised in 1975, it pro-
which localities within a metropolitan area or nonmetropolitan re-
vides for 71/2 percent loans on moderately priced single-family and
gion coordinate the various Federal programs they are engaged in,
multifamily properties with FHA or conventional financing. Under
is funded primarily through the 701 comprehensive planning assist-
HUD regulations, over 90 percent of the funds have been used for new-
tance program, at both the areawide and state levels.
ly constructed housing.
It has been argued that 701 funds can be cut substantially because
The program is financed through the "tandem plan" vehicle under
recipients will be able to use the community development block grant
which the originating lender sells the low-rate loan to the Govern-
program to fund activities now being undertaken through 701.
ment National Mortgage Association at market prices. The loans are
then resold by GNMA either directly as mortgages or securities, or
18
19
indirectly through the Federal Financing Bank, with the government
Section 2(b) would provide that $60 million of the contract author-
recouping all but a small portion of its outlay. The amount of subsidy
ity shall be for modernization of existing low-rent public housing pro-
depends upon market interest rates when the loans are made and sold.
jects. It would also require that at least $200 million of the amount
The program has been implemented in stages since enactment in
authorized shall be for ownership by public housing agencies involving
1974. The 1975 Emergency Housing Act authorized increased assist-
new construction or substantial rehabilitation other than under Sec-
ance for up to $10 billion in mortgages. Of this amount, $5 billion has
tion 8, and that at least $265 million of the amount authorized be made
been appropriated, and $3 billion has been offered by GNMA exclu-
available for new construction or substantial rehabilitation under Sec-
sively for new multifamily, FHA insured mortgages. Most of the $3
tion 8. This subsection also requires that of the balance of authority to
billion is not yet committed, and release of the other appropriated $2
enter into annual contributions contracts which is available on and
billion rests with the discretion of HUD. No new authorization is
after October 1, 1976 (other than the $696 million referred to above),
required.
the Secretary shall make available for new construction or substantial
rehabilitation and for ownership by public housing agencies other
Senate confirmation of Federal Insurance Administrator
than under Section 8, respectively, amounts which bear the same ratios
Section 16 of the bill would require Senate confirmation of the Fed-
to the total amount of such authority as the amounts required under
eral Insurance Administrator effective on January 1, 1977.
this bill to be made available for new construction or substantial re-
The Committee received documentation from both the Library of
habilitation and for ownership by public housing agencies other than
Congress and the Comptroller General that this position should be sub-
under Section 8, respectively, bear to $696 million.
ject to confirmation by the Senate and would automatically be so con-
Section 2(c) would authorize for appropriations $576 million on or
sidered unless the law specifically indicates otherwise. Failure to in-
after October 1, 1976, for the purpose of providing operating subsidies
clude the requirement in the statute was apparently an oversight, and
to public housing agencies.
rather than depending completely upon the opinion by the Library of
Section 2(d) would increase the annual contributions contracts for
Congress and the Comptroller General, it was agreed by the Com-
low-income housing for members of Indian tribes by $17.5 million per
mittee to clarify the issue by a statutory change.
year on July 1, 1976.
Senate confirmation of GNMA President
Section 3 of the bill would extend the Section 235 Homeownership
Section 17 of the bill would require that the President of the Gov-
Assistance Program until September 30, 1977, and would increase the
ernment National Mortgage Association be appointed by the Presi-
authorization by $200 million on July 1, 1976. It would also establish
dent and confirmed by the Senate.
a maximum mortgage insurance premium for Section 235 at a level
The Committee notes the tremendous growth in the operations of
not higher than the Section 203 (b) premium.
GNMA in recent years to the point that its responsibilities, including
Section 4 would extend Section 236 Rental Assistance until Sep-
the volume of securities insured and the portfolio of mortgages held,
tember 30, 1977.
now exceeds $20 billion.
Section 5 would broaden the program of FHA insurance for sup-
The President of GNMA carries a great responsibility in manag-
plemental loans under Section 241 of the National Housing Act to
ing an operation of this magnitude. Decisions on purchases and sales
cover hospitals.
of mortgages and mortgage-backed securities could result in serious
Section 6 would amend Section 244 of the National Housing Act to
losses to the Federal Government. Last year, the cost of the GNMA
provide co-insurance authority to the Secretary for multifamily proj-
operation was well over $700 million. Most of this was losses incurred
ects sponsored by public housing agencies. The purpose of the amend-
due to the difference between the price GNMA paid for mortgages and
ment is to allow somewhat more flexibility in the assumption of risk
the price GNMA received for mortgages when sold at auction or at
for projects sponsored by public housing agencies than for those spon-
established prices to recoup funds borrowed from the Treasury to con-
sored by other mortgagees as provided in existing law.
duct the program of special assistance required under the law.
Section 7 would amend the experimental financing provision under
The decision to require confirmation by the Senate of the GNMA
Section 245 of the National Housing Act by extending the expiration
President indicates the degree of importance the Committee attaches
date until September 30, 1977.
to this very responsible position. The Committee expects the President
Section 8 would add a new section, Section 247. to the National
to act forthwith in making the appointment and sending the name to
Housing Act which would provide contract authority to the Secre-
the Senate for confirmation.
tary to make rental assistance payments in FHA-insured projects of
the following three types: (a) projects threatened with foreclosure,
SECTION-BY-SECTION SUMMARY
(b) projects on which the mortgage has been assigned to the Secre-
tary, and (c) projects owned by the Secretary. The rental assistance
Section (a) would increase the authorization for housing assist-
shall be made under the same terms provided under authority of Sec-
ance annual contributions contracts by $696 million on July 1, 1976.
tion 8 of the Housing Act of 1937. This subsection authorizes $154
It would also provide that additional contract authority authorized on
million for this program for the Fiscal Year ending September 30,
or after July 1, 1975, shall be available only as provided for in appro-
1977. This subsection also bars assistance for the above listed projects
priations acts.
20
21
under Section 8 of the U.S. Housing Act of 1937 for all assistance
under HUD regulations for occupancy in projects financed with be-
approved after September 30, 1976.
low market interest rate mortgages insured under Section 221 (d) (3)
Section 9 would amend Section (a) of the National Housing Act,
of the National Housing Act. The rate for such borrowers shall not
which provides for compensation to correct defects in new housing with
exceed the current average market yield on outstanding long-term
FHA-insured mortgages, by extending the deadline for filing applica-
marketable obligations of the U.S., plus an allowance for administra-
tions by an additional 7 months. This section would also require the
tive costs.
Secretary to notify eligible home owners of the provisions of the new
Section 13 would amend Section 701 of the Housing Act of 1954 by
amendments within 30 days after enactment of this bill.
increasing the authorization by $100 million prior to October 1, 1977.
Section 10(a) would amend Section 518(b) of the National Hous-
Section 14 would extend the termination date for the Emergency
ing Act, which provides compensation to correct defects in existing
Home Owners Relief Act from June 30, 1976, to September 30, 1977.
properties with mortgages insured by FHA between 1968 and 1973
Section 15 would extend the termination date of the Emergency
under Sections 203 and 221 or at any time under Section 235 of the
Home Purchase Assistance Act from July 1, 1976, to October 1, 1977.
National Housing Act, to extend the time limit for applying for as-
Section 16 would require Senate confirmation of the Federal Insur-
sistance on mortgages under Sections 203 and 221 to a date not more
ance Administrator effective January 1, 1977.
than 4 months after the date of enactment of this bill. It would also
Section 17 would require Senate confirmation of the President of
charge expenditures under Section 518(b) to the FHA insurance fund
the Government National Mortgage Association effective as of the
covering the mortgage on the property.
date of enactment of the bill.
Section 10(b) would amend Section 518 of the National Housing
Act by adding a new subsection (d) which does two things. First, it
COST OF LEGISLATION
would create an interim program for compensation for defects in hous-
ing with 203 and 221 mortgages purchased between 1973 and enact-
In accordance with Section 252 of the Legislative Reorganization
ment of this bill giving mortgagors one year from enactment to apply.
Act, the Committee reports that the bill would authorize $27.2 billion
Second, it would create a permanent compensation program appli-
in new budget authority, with anticipated outlays of $420.7 million in
cable to existing 1-4 family properties with mortgages insured under
fiscal year 1977, $888.4 million in fiscal year 1978, $587.6 in fiscal year
the National Housing Act. (A permanent program already exists in
1979, $776.3 in Fiscal Year 1980, and $920.9 million in fiscal year 1981.
Section 518(b) with respect to properties insured under Section 235
These estimates are identical to those prepared by the Congressional
of the National Housing Act.) The programs created by the new sub-
Budget Office.
section would be broader than the current temporary program in Sec-
CORDON RULE
tion 518 (b) for compensation on properties with Section 203 and 221
In the opinion of the Committee, it is necessary to dispense with the
loans, in that they would not be subject to the existing restriction to
requirements of subsection 4 of Rule XXIX of the Standing Rules of
properties in older, declining urban areas, and in that they would be
the Senate in order to expedite the business of the Senate in connection
eligible for reimbursement for defects which "seriously affect use and
with the report.
livability of properties," rather than only for "structural or other
major defects which SO seriously affect use and livability as to create
a serious danger to the life or safety of inhabitants." The new subsec-
tion would also require that any expenditures for such corrections shall
be chargeable to the insurance funds applicable to the mortgage cov-
ering the structure, and authority is given for necessary sums to reim-
burse the insurance funds through appropriations acts.
Section 11 would increase the authorization for Section 202 loans
for housing for the elderly and handicapped by $2.5 billion. It would
also amend the interest rate formula with respect to this program to
require that the maximum rate shall not exceed the average interest
rates on all outstanding interest-bearing obligations of the U.S. Gov-
ernment, computed at the end of the fiscal year preceding the date on
which the loan is made.
Section 12(a) would amend Section 312 of the Housing Act of 1964
by increasing the authorization by $150 million for the period be-
ginning July 1, 1976, and ending on September 30, 1977.
Section 12 (b) would amend Section 312 of the Housing Act of
1964 by authorizing a higher interest rate to be charged for Section
312 borrowers whose incomes exceed the maximum income permitted
MINORITY VIEWS OF MESSRS. TOWER AND GARN
There are two basic objections which we have to this bill. One
objection is that we do not agree that the life of some of these pro-
grams should be extended. The bill does not merely extend the dollar
authorization of some programs, but it also significantly alters some
existing programs and certain functions of HUD. The other objec-
tion we have is more general in scope, but equally, if not more
important. The basis for this objection is that the Committee and
the Congress have failed to adequately analyze and evaluate existing
housing programs, which has resulted in not having a comprehensive
view as to how to effectively provide for this nation's housing needs.
We continue to take a shotgun approach when we enact "piecemeal"
housing legislation. It is time we broadened our perspective and
realistically looked at our housing needs and developed a long-range
program for meeting them.
COMMENTS ON PARTICULAR SECTIONS
Section 2.-HUD had requested $850 million to be used in the Sec-
tion 8 lower income public housing program. Of this amount, about
$154 million was intended to be used to assist FHA-insured (non-
public housing) projects that were in financial trouble. The Com-
mittee transferred these funds to a newly created Section 247
program, however, leaving $696 million in new contract authority
for public housing programs.
Instead of giving HUD flexibility in the use of these funds, we
mandated that $465 million or 64 percent of these funds be used for
new construction. Additionally, at least $200 million of this amount
must be used for conventional, turnkey, or public housing programs
other than that which is provided in Section 8. We do not quarrel
with the need to use newly constructed units to provide housing under
the Section 8 housing program. We do think, however, that where
there are perfectly good units in a city, which are vacant, Federal
funds should be used to fill the vacancies rather than used to build
new units. The latter could result in overbuilding in a community
which would result in losses to HUD and owners of already vacant
units.
Our concern with Section 2 is that it mandates that well over half
of the funds be used for new construction. Our first and foremost
concern should be to provide decent housing for people who cannot
afford it. It should make little difference whether the housing is new
or existing. HUD should be able to determine for each community,
whether the local markets can support new construction, or whether
there is an adequate supply of existing units. Mandating new con-
struction can reduce the flexibility, and perhaps the efficiency of
HUD's effort to provide adequate housing to lower-income families.
(23)
24
25
We would also note that mandating use of $200 million for new
There are many FHA-insured multifamily projects, both subsidized
construction under the traditional public housing programs (turnkey
and unsubsidized, that are in financial trouble. Other projects are in
and conventional) could result in significant delays in providing
some condition of default or foreclosure, and others are owned by
housing for lower-income families. HUD advises that the average
HUD. The question is: What should be done with them? HUD has
time from application to occupancy in conventional public housing
proposed making Section 8 public housing assistance available to
projects is almost 4 years (46 months) and for turnkey projects, the
eligible families who reside in these units. This would resolve many
time is 33 months. HUD estimates the average time from application
of the financial problems of these projects and still provide adequate
to occupancy in Section 8 new construction projects will be 21-24
housing for lower-income families. There is a specific line item in the
months. We would also expect significant delays in HUD's imple-
budget for this request.
mentation of the traditional programs. It must be remembered that
Proponents of Section 247 argue that Section 8 public housing
a major retraining of HUD personnel would have to occur before
funds should not be used to "bail out" FHA-insured projects. Con-
applications could be received and processed. The total cost over the
sequently, the amount of Section 8 funds that HUD wanted to use for
40 year life of these traditional projects will be about $8 billion.
this purpose, $154 million, was deleted from their $850 million authori-
Section 2 also authorizes $575 million for operating subsidies for
zation request and transferred to Section 247. This left $696 million
public housing projects that were built without Section 8 funding.
in Section 8 anthorization to be used for new construction and existing
It must be remembered that when these conventional and turnkey
units. At the same time the money was transferred, however, the
projects were built, they were designed to be financially sound, based
proponents stated that Section 247 funds ".
shall be subject to the
on rental revenues and HUD annual contributions. Each year, how-
terms and conditions which are applicable to contracts under Section
ever, the amount expended for operating subsidies for conventional
8.
"
and turnkey projects increases. These are the same kind of projects
This does not seem to make sense. If Section 247 is to be administered
for which we mandate HUD funding in Section 2(b). HUD figures
and implemented in accordance with the provisions of the Section 8
show that for every traditional public housing unit, over $54,000
public housing program, why create Section 247 as an exactly identical
is paid in operating subsidies over the life of the annual contribu-
program? If one is concerned about knowing precisely how many
tions contract. We can only expect that because we will be building
dollars will be used to "bail out" existing FHA-insured projects that
more of these units they will also need millions of dollars in operat-
are in financial trouble, all one has to do is look at the figures in the
ing subsidies in the years to come.
budget for the Section 8 program. By doing so, the public can de-
Section 2 also requires that $60 million in new contract authority
termine just how many Federal dollars are going into this area. If
for modernization assistance be committed in fiscal year 1977. This
the authorizing or appropriations committees disagree with the Ad-
figure is deceptive because, in reality, the total cost of this provision
ministration's figures for this program, they can act accordingly. The
approaches $1.26 billion! This includes the principal and interest on
better approach would be to not create another identical program.
$645 million in capital expenditures. This amount is three times as
Section 9.-This section was intended to amend Section 518 of
great as that provided in the current fiscal year. While we agree that
the National Housing Act, to extend the application deadline for this
modernization funds are needed, we question the wisdom of mandating
program from the current limit of four years to four years and seven
that HUD spend this large amount in fiscal year 1977.
months. In fact, however, this provision does something quite differ-
Section 4.-This part of the bill extends the life of the Section 236
ent. It allows a person, within seven months of enactment, to apply
subsidized housing program. Currently, there exists about $125 million
for Section 518 (a) assistance, regardless of how old his home is, as
in unused authority in the program. We question the continuation of
long as it was purchased when it was new and FHA insured the mort-
this program. If the $125 million is to be used for operating subsidies,
gage at that time. For example, Section benefits could be avail-
would it not be better to utilize the newly created Section 247 program
able to a homeowner who purchased a new house 12 years ago under
instead Section 247 was designed to provide assistance to FHA-
an FHA program.
insured multifamily projects that were suffering financial difficulty.
We think this completely distorts the program, and even a seven
Using Section 236 and Section 247 for the same purposes can only serve
month extension of the application time limit is not justifiable. As we
to confuse and complicate matters.
understand it, this amendment resulted from a particular problem in
We also question the need to produce additional Section 236 units.
a particular community. We do not think a Federal law should be
This program has been plagued with many failures. Many projects
changed just because of a single set of circumstances.
have been foreclosed upon and HUD owns several of these projects.
Section 10.-This section also makes major changes in Section 518
Additionally, many are in severe financial difficulties and are in need
(b), and, consequently, alters the basic role of the FHA in insuring
of additional Federal support in the form of operating subsidies under
mortgages. Since its inception, the role of the FHA was to insure that
Section 236 or Section 247 or through the Section 8 program. Given
the mortgage would be paid should the mortgagor default on his mort-
these facts, additional new construction should be curtailed until there
gage payment. It appraised and inspected the house solely for the
has been a proper investigation and evaluation of this program.
purposes of determining the value of the home. Once the value was
Section 8.-This part of the bill creates a new Section 247 to the
determined, FHA could then decide whether it should or should not
National Housing Act. We think it will create another level of bu-
insure the mortgage.
reaucracy which can only result in greater costs and more red-tape.
27
26
This section completely changes the role of the FHA. From enact-
programs for the elderly. The Section 202 program is not restricted
to families with low incomes. There are no income limits applicable to
ment forward, FHA will not only be responsible for appraising the
home for its value, but it will now have to warrant that the house is
this program, and families with low, moderate, and high incomes are
free from any structural defect that would "
seriously affect use
eligible. As is made clear elsewhere in this report, about 43 percent of
dwelling which is more than one year old
all public housing tenants are elderly and/or handicapped. It is ex-
and liveability of any
on the date of issuance of the insurance commitment.
"
pected that the majority of the tenants in the Section 8 program will
be low-income elderly.
The importance of this provision cannot be overstated. FHA process-
If sufficient funds are appropriated, nothing would prevent the en-
ing of applications will now take infinitely longer because it will now
tire $2.5 billion being used in Fiscal Year 1977. We think this would
have to examine houses to see if there are any structural defects that
be excessive, especially since this figure represents a direct Federal
affect its use and liveability. To examine an existing house for struc-
outlay. Much of the housing needs for elderly citizens can be provided
tural defects is extremely difficult and will, therefore, increase process-
ing time. Furthermore, nowhere in the legislation is "use and live-
through new construction or existing units under public housing pro-
grams. Since there are no income limits applicable to Section 202 ten-
ability" defined. This can only cause complications and confusion.
ants, we question whether the Federal government should directly
What is useable and liveable to one inspector might not mean the same
finance housing which could be used by some higher income tenants.
to another, even if regulations could be drafted SO as to offer a guide
We think that Federal dollars should be used primarily to provide
to the inspectors in making their inspection.
housing for families who can least afford decent shelter. Such is not
Furthermore, this program will cover unsubsidized as well as sub-
sidized homes. Originally, this program was designed to protect pur-
always the case with Section 202.
chasers of existing Section 235 subsidized houses. These purchasers
SOLVING HOUSING NEEDS
were often low-income urban dwellers who were not familiar with
the problems of homeownership. Often, they were sold housing of
We have another concern about this bill which is less specific than
questionable condition and value. Because of these circumstances, Con-
the above mentioned objections. This concern goes basically to the
gress decided that HUD should provide a greater service in the Sec-
problem of how we approach solutions to our housing needs. We think
tion 235 program. In addition to appraising the value of the house, they
that by many of our actions in Congress, we often thwart many of our
should also, based on a reasonable inspection, make sure it is struc-
well-intentioned efforts before they get off the ground.
turally sound. If it is later found to suffer structural defects, and these
For example, during the past 18 months, the housing industry has
defects
"
so seriously affect the use and liveability as to create
suffered tremendously, as have other industries. In response to this
a serious danger to the life or safety of inhabitants
" then HUD
downturn, the Congress, HUD, the Federal Home Loan Bank Board,
must provide compensation to correct the defects. It should be noted
the Fed, VA, and the Farmers Home Administration offered literally
that this standard in existing law is stronger than that proposed in
dozens of programs to aid housing. We do not question the intent of
Sec. 10(b).
these institutions in formulating these programs, nor do we deny that
The effect of this amendment would extend this benefit to all owners
they had some positive effect. We would not deny, however, that SO
of 1-4 family properties where the mortgages thereto are insured.
many programs, which were constantly changing, caused great con-
These could be individuals with greater incomes who can purchase
fusion among builders, lenders, realtors, and purchasers. Additionally,
$50,000 houses. We do not agree that these mortgagors should be SO
many of these programs had limited funds and this caused expecta-
protected. If a person makes a major investment in a home, he should
tions among consumers which could not be fulfilled.
make a very small expenditure, if he desires, to have a qualified person
We have talked with several in the industry which revealed the fol-
in the private sector inspect it in order to determine its condition.
lowing about these programs. Builders who obtained commitments
When FHA was established, it was not envisioned that it would per-
under a program that offered 83/4 percent money often lost the com-
form these services. We do not think its original role and purpose
mitment fee because a month later, 8 percent money was made avail-
should be changed at this time.
able under another program. This made his 83/4 percent money un-
If the role of the FHA is to be changed, we think change should
attractive to prospective purchasers, and, consequently, he was forced
come after careful review bv this Committee. There are many other as-
to purchase commitments at the lower rate. Lenders often complained
pects of FHA programs which could be analyzed and evaluated at the
that they had to hire persons just to keep track of the ever-changing
same time.
housing programs. They had to keep abreast of the changing interest
Section 11-This section provides for an increased authorization
rates applicable to the dozens of different programs. Additionally,
of $2.5 billion for the Sec. 202 Elderly housing program. The Admin-
while under some programs they could make commitments to builders
istration has proposed using $375 million for this direct loan program
as they saw fit, under other programs they had to dole out funds based
for Fiscal Year 1977. The authorized amount represents over a 650
on precise allocation guidelines. In addition to varying interest rates,
percent increase in the current program level.
the many programs contained different mortgage limits and income
No one can argue the need for providing decent housing for our
limits.
elderly citizens. Many are on fixed incomes and housing costs are ris-
ing rapidly. We would note, however, the following about housing
28
29
The results of these many efforts are mixed. Yes, housing was pro-
exist because there has been a lack of objective evaluation after they
duced because of these programs. However, the overlap, duplication,
have been created.
volatility, and limitations of these programs, we submit, caused much
It is incredible to us that we should adopt the amendments to Section
unneeded hardship, and, in many cases, hindered housing production.
518(b) without more analysis. Should we not ask ourselves why par-
We think this bill has characteristics of the approach we have taken
ticipation in the FHA programs has decreased SO markedly in the
these past several months. We think there should be a better approach
last few years? It is too simplistic to say the reason is increased red-
to solving our housing needs.
tape and more Federal bureaucracy. If there is more red-tape, we
For example, this bill contains at least four methods to provide addi-
must ask why. Is it because we require FHA to insure higher-risk
tional Federal assistance to ailing multifamily projects. Section 236
loans, which might cause greater analysis by the underwriters? Is it
has about $125 million of unused contract authority, all or part of
because we require them to inspect homes, not just to determine value,
which can be used for operating subsidies for Section 236 projects.
but to determine how habitable it is? Would it not be beneficial to
Section 247 has $154 million to assist FHA-insured projects. Addi-
determine why the VA programs seem not to be plagued with the
tionally, we authorize $576 million for operating subsidies for public
allegations that have been made against FHA?
housing. Section 8 funds can also be used to assist Section 202 proj-
These examples are just a few of many that cause us sincere concern.
ects, and FHA-insured projects until September 30, 1976.
For every problem, we seem to adopt a new housing program without
In addition to this operating assistance, we authorize new funds and
really evaluating the problem to determine if, in fact, what is needed
extend the life of several production programs. We add funds to Sec-
is a new program. As previously stated, we often think this approach
tion 235 and extend the life of Section 236. We provide additional
can serve to be counterproductive. We think the Committee should
funds for Section 8 and mandate the use of the turnkey and conven-
seriously look at our housing programs to determine if, in fact, they
tional public housing programs. We enlarge and extend the Section
represent our best thinking as to how to meet the housing needs of
312 Rehabilitation program and do the same for the Section 202 elderly
this country. We would propose that the Committee work with the
housing program. We extend the life of the Emergency Home Pur-
several Federal agencies, as well as those in the private sector who are
chase Assistance Act and we enlarge the public housing modernization
involved in housing, in making this determination. We would also
program. We also set aside additional funds for Indian housing
encourage the use of professional analysts who might not be closely
programs.
tied to the housing industry, but who might be able to provide objec-
In addition to the above, it must be remembered that there are dozens
tive solutions to this problem.
of other subsidized and non-subsidized housing programs in HUD,
No one can deny that new housing must be built and existing hous-
Farmers Home Administration and the VA. Because of the sheer
ing must be revitalized. Our concern is that we clearly identify the
numbers involved, we think that the time and energy expended by
needs, that we recognize the time and cost elements involved, and that
agencies in attempting to implement these programs is not very pro-
we, the Congress, the Administration and the private sector partici-
ductive. There are a finite number of people who do the processing, and
pants, work together to fulfill the identified needs. We think this bill
every change we make in these programs requires additional delays in
does little to foster this objective.
implementation and red-tape. We shudder at the delays we envision at
JOHN TOWER.
HUD when they have to retrain personnel to process conventional
JAKE GARN.
and turnkey public housing applications, after having spent the bet-
ter part of a year preparing them to process Section 8 applications.
Because of the numbers of programs, consumers of these programs are
terribly confused. Should they purchase before a certain deadline to
take advantage of a tax credit? Is it better to buy under Section 235
or under the GNMA program offering 71/2 percent mortgages? How do
I know whether one program still has funds or not ? Why is one builder
advertising 71/2 percent money, another 5 percent, and another 8 per-
cent? The frustrations potential homeowners encounter should not be
overlooked.
What disturbs us about this bill is that we have extended, enlarged,
and created new programs without the benefit of any analysis or evalua-
tion. Should we mandate the construction of conventional and turnkey
units without first examining not only the direct costs, but the poten-
tial operating costs as well as potential management problems? Should
we continue the Section 235 program in its present form without really
knowing how it might work, or whether further changes might be
needed Should we just have one operating subsidy program instead
of several We think that many of the faults of the present programs
ADDITIONAL VIEWS OF SENATOR HELMS
I have read the minority views of Senator Tower and Garn and I
am in basic agreement with them. Certainly, they are closer to my
own views than are those agreed to by the majority of the Committee
members. However, I seriously question the appropriateness of the
Federal Government's role in our Nation's housing market. It is ob-
vious to me that this legislation only represents more tinkering with
housing by the Federal Government. This Bill will do little to help
solve our Nation's housing problems. A much better solution would be
to let the virtually unlimited ingenuity and energy of free enterprise,
unsmothered by government interference, solve our Nation's housing
problems-problems which, to a large extent, have been created by
government interference with the marketplace.
JESSE HELMS.
(30)
94TH CONGRESS
HOUSE OF REPRESENTATIVES
REPORT
2d Session
No. 94-1304
HOUSING ACT AMENDMENTS OF 1976
JUNE 25, 1976.-Ordered to be printed
Mr. REUSS, from the committee of conference,
submitted the following
CONFERENCE REPORT
[To accompany S. 3295]
The committee of conference on the disagreeing votes of the two
Houses on the amendments of the House to the bill (S. 3295) to ex-
tend the authorization for annual contributions under the United
States Housing Act of 1937, to extend certain housing programs under
the National Housing Act, and for other purposes, having met, after
full and free conference, have agreed to recommend and do recommend
to their respective Houses as follows:
That the Senate recede from its disagreement to the amendment of
the House to the text of the bill and agree to the same with an amend-
ment as follows:
In lieu of the matter proposed to be inserted by the House amend-
ment insert the following:
SHORT TITLE
SECTION 1. This Act may be cited as the "Housing Authorization
Act of 1976".
AMENDMENTS TO THE UNITED STATES HOUSING ACT OF 1937
SEC. 2. (a) Section 5 (c) of the United States Housing Act of 1937
is amended—
(1) bv striking out the first sentence and inserting in lieu
thereof the following new sentence: "The Secretary is authorized
to enter into contracts for annual contributions aggregating not
more than $1,524,000.000 per annum, which limit shall be increased
by $965,000.000 on July 1, 1974, by $662,300,000 on July 1, 1975,
and by $850,000,000 on October 1, 1976, except that the additional
authority to enter into contracts for annual contributions provided
on or after July 1. 1975. shall be effective only in such amounts
as may be approved in appropriation Acts,"; and
(1)
H. Rept. 94-1304
2
3
(2) by inserting immediately after "on July 1, 1975," in the
(f) The third sentence of section 3(2) of such Act is amended by
fourth sentence thereof the following: "and by not less than
striking out the word "and" before "(C)" and inserting before the
$17,000,000 per annum on October 1, 1976,".
semicolon the following: "and (D) other single persons in circum-
(b) (1) Effective on October 1, 1976, the second and third sentences
stances described in regulations of the Secretary: Provided, That in
of section (c) of such Act are amended to read as follows: "Of the
no event shall more than 10 percent of the units under the jurisdiction
additional authority to enter into contracts for annual contributions
of any public housing agency be occupied by single persons under this
provided on October 1, 1976, and approved in appropriation Acts, the
clause (D) Provided further, That in determining priority for ad-
Secretary shall (A) make available at least $60,000,000 for the modern-
mission to housing under this Act the Secretary shall give preference
ization of low-income housing projects, and (B) make available at
to those single persons who are elderly, handicapped, or displaced
least $140,000,000 to assist in financing low-income housing projects
before those eligible under this clause (D)".
for ownership by public housing agencies other than under section 8,
(g) Section 8(e) (1) of such Act is amended by inserting after
of which not less than $100,000,000 shall be available only for the pur-
"State or local agency" the following: "or the Farmers' Home
pose of financing the construction or substantial rehabilitation of low-
Administration".
income housing projects. The Secretary, in utilizing the additional
(h) Notwithstanding any other provision of law, the value of any
authority to enter into contracts for annual contributions provided on
assistance paid with respect to a dwelling unit under the United States
October 1, 1976, shall administer the programs authorized by this Act
Housing Act of 1937, the National Housing Act, section 101 of the
to provide assistance for new, substantially rehabilitated, and existing
Housing and Urban Development Act of 1965, or title V of the Hous-
units, to the maximum extent practicable and consistent with section
ing Act of 1949 may not be considered as income or a resource for the
213 (d) of the Housing and Community Development Act of 1974, in
purpose of determining the eligibility of, or the amount of the bene-
accordance with the goals of units of general local government for such
fits payable to, any person living in such unit for assistance under title
types of housing as reflected in their housing assistance plans prepared
XVI of the Social Security Act. This subsection shall become effective
pursuant to section 104 (a) (4) of such Act.".
on October 1, 1976.
(2) Effective on October 1, 1976, the fourth sentence of section (c)
of such Act is amended by striking out "to the amount of contracts for
SECTION 235. HOMEOWNERSHIP PROGRAM
annual contributions required to be entered into by the Secretary un-
der the second sentence of this subsection".
SEC. 3. (a) Section 235 (m) of the National Housing Act is amended
(c) Section (c) of such Act is amended to read as follows:
by striking out "June 30, 1976" and inserting in lieu thereof "Sep-
(c) There are authorized to be appropriated, for the purpose of
tember 30, 1977".
providing annual contributions pursuant to this section not to exceed
(b) The last proviso in section 235 (b) (2) of such Act is amended
$535,000,000 on or after July 1, 1975, not to exceed $80,000,000 on
by striking out "$21,600", $25,200", "$25,200", and $28,800" and
or after July 1, 1976, and not to exceed $576,000,000 on or after
inserting in lieu thereof "$25,000", "$29,000", "$29,000", and "$33,000",
October 1, 1976."
respectively.
(d) Sections 8(c) (4) of such Act is amended by striking out the pe-
(c) Section 235 (i) (3) (B) of such Act is amended by striking out
riod at the end thereof and inserting in lieu thereof the following:
"$21,600", "$25,200", "$25,200", and "$28,800" and inserting in lieu
and subject to the provisions of the following sentence, such pay-
thereof "$25,000", "$29,000", "$29,000", and "$33,000", respectively.
ments may be made, in the case of a newly constructed or substantially
(d) Section 221 (d) (2) (A) of such Act is amended-
rehabilitated project, after such sixty-day period in an amount equal
(1) by striking out "$21,600" and "$25,200" in the matter pre-
to the debt service attributable to such an unoccupied dwelling unit
ceding the first proviso and inserting in lieu thereof "$25,000" and
for a period not to exceed one year, if a good faith effort is being made
"$29,000", respectively and
(2) by striking out "$25,200" and "$28,800" in the second pro-
to fill the unit and the unit provides decent, safe, and sanitary housing.
No such payment may be made after such sixty-day period (i) if the
viso and inserting in lieu thereof "$29,000" and "$33,000",
respectively.
unoccupied unit is in a project insured under the National Housing
(e) Section 235 (h) (2) of such Act is amended by striking out "80
Act, except pursuant to section 244 of such Act, or (ii) if the Secre-
tary determines that the dwelling unit is in a project which provides
per centum" wherever it appears and inserting in lieu thereof "95 per
centum".
the owner with revenues exceeding the costs incurred by such owner
(f) (1) Section 235 (a) of such Act is amended—
with respect to such project."
(A) by inserting "(1)" immediately after "(a)"; and
(e) Section 8(f) of such Act is amended by striking out "and" at
(B) by adding at the end thereof the following:
the end of paragraph (4), by striking out the period at the end of
paragraph (5) and inserting in lieu thereof "; and", and by adding
"(2) (A) Notwithstanding any other provision of this section, the
Secretary is authorized to make periodic assistance payments under
the following new paragraph at the end thereof:
this section on behalf of families whose incomes do not exceed the max-
"(6) the term 'debt service' means the required payments for
principal and interest made with respect to a mortgage secured by
housing assisted under this Act.".
4
5
imum income limits prescribed pursuant to subsection (h) (2) of this
(2) by inserting "(including the amount allowed for utilities
section for the purpose of assisting such families in acquiring owner-
in the case of a project with separate utility metering)' immedi-
ship of a mobile home consisting of two or more modules and a lot on
ately after "rental payment" in the second sentence thereof and
which such mobile home is or will be situated, except that periodic
by striking out everything in such sentence which follows
assistance payments pursuant to this paragraph shall not be made
"tenant's income" and inserting in lieu thereof a period.
with respect to more than 20 per centum of the total number of units
with respect to which assistance is approved under this section after
FHA SUPPLEMENTAL LOANS FOR HOSPITALS
January 1, 1976. Assistance payments under this section pursuant to
this paragraph shall be accomplished through payments on behalf of
SEC. 5. Section 241 (a) of the National Housing Act is amended-
an owner of lower-income of a mobile home as described in the preced-
(1) by inserting ", hospital," immediately after "multifamily
ing sentence to the financial institution which makes the loan, advance
project" in the first sentence thereof;
of credit, or purchase of an obligation representing the loan or ad-
(2) by inserting hospital," immediately after "such project"
vance of credit to finance the purchase of the mobile home and the lot
in the material preceding the proviso in the second sentence
on which such mobile home is or will be situated, but only if insurance
thereof; and
under section 2 of this Act covering such loan, advance of credit, or
(3) by inserting ", hospital," immediately before "or a group
obligation has been granted to such institution.
practice facility" and immediately before "or facility" in the
"(B) Notwithstanding the provisions of subsection (c) of this sec-
proviso in the second sentence thereof.
tion, assistance payments provided pursuant to this paragraph shall
be in an amount not exceeding the lesser of-
CO-INSURANCE
"(i) the balance of the monthly payment for principal, interest,
real and personal property taxes, insurance, and insurance pre-
SEC. 6. (a) Section 244 of the National Housing Act is amended by
mium chargeable under section 2 of this Act due under the loan
inserting at the end thereof the following new subsection:
or advance of credit remaining unpaid after applying 20 per
(g) (1) Where the mortgagee is a public housing agency or an in-
centum of the mobile homeowner's income; or
sured depository institution and the mortgage covers a multifamily
(ii) the difference between the amount of the monthly payment
housing project, the co-insurance contract may provide that the mort-
for principal, interest, and insurance premium chargeable under
gagee assume (i) the full amount of any loss on the insured mortgage
section 2 of this Act which the mobile homeowner is obligated to
up to an amount equal to a fixed percentage of the outstanding princi-
pay under the loan or advance of credit and the monthly payment
pal balance of the mortgage at the time of claim for insurance benefits,
of principal and interest which the owner would be obligated to
or (ii) the full amount of any losses on insured mortgages in a port-
pay if the loan or advance of credit were to bear interest at a rate
folio of mortgages approved by the Secretary up to an amount equal
derived by subtracting from the interest rate applicable to such
to a fixed percentage of the outstanding principal balance of all mort-
loan or advance of credit the interest rate differential between the
gages in such portfolio at the time of claim for insurance benefits on
maximum interest rate plus mortgage insurance premium ap-
a mortgage in the portfolio, plus a share of any loss in excess of the
plicable to mortgages insured under subsection (i) of this section
amount under clause (i) or (ii), whichever is applicable.
at the time such loan or advance of credit is made and the interest
"(2) The second sentence of subsection (d) shall not apply to mort-
rate which such mortgages are presumed, under regulations pre-
gages made to public housing agencies, but for purposes of such sec-
scribed by the Secretary, to bear for purposes of subsection (c)
ond sentence such mortgages shall not be counted in the aggregate
(2) of this section."
principal amount of all mortgages insured under this title.
(2) Section 235 (e) of such Act is amended by inserting "(a) (2)
"(3) The Secretary may make loans, from the applicable insurance
(B)," imediately before "(c)".
fund, to public housing agencies in connection with mortgages which
have been insured pursuant to this subsection and which are in default.
SECTION 236 AMENDMENTS
"(4) The Secretary may insure and make a commitment to insure
in connection with a co-insurance contract pursuant to this subsection
SEC. 4. (a) Section 236 (n) of the National Housing Act is amended
(A) a mortgage on a project assisted under the second proviso in the
by striking out "June 30, 1976" and inserting in lieu thereof "Sep-
first sentence of section 236(b) of this Act, and (B) a mortgage or
tember 30, 1977".
advance on a mortgage made to a public housing agency on a project
(b) Section 236 (2) of such Act is amended-
under construction which is not approved for insurance prior to
(1) by inserting "(including the amount allowed for utilities
construction.
in the case of a project with separate utility metering) immedi-
"(5) As used in this subsection, the term 'public housing agency'
ately after "basic rentals" in the first sentence thereof and by
has the same meaning as in section 3(6) of the United States Housing
striking out everything in such sentence which follows "of their
Act of 1937. and the term 'insured depository institution' means any
income" and inserting in lieu thereof a period; and
savings bank, savings and loan association, commercial bank or other
6
7
such depository institution whose deposits are insured by the Federal
(B) Section (3) (B) (iii) of such Act is further amended by
Deposit Insurance Corporation, by the Federal Savings and Loan In-
striking out "$15,000", "$21,000", "$25,750", "$32,250", and "$36,465"
surance Corporation, or by an agency or instrumentality of a State.
in the matter following "except" where it first appears and inserting
"(6) Notwithstanding any other provision of this Act, the Secre-
in lieu thereof "$22,500", "$25,200", "$30,900", "$38,700", and "$43,758",
tary may include in the determination of replacement cost of a proj-
respectively.
ect to be covered by a mortgage made to a public housing agency and
(4) Section 221 (d) (3) (ii) of such Act is amended-
insured pursuant to this subsection, such reserves and development
(A) by striking out "$11,240", "$15,540", "$18,630", "$23,460",
costs, not to exceed 5 per centum of the amount otherwise allowable,
and "$26,570" and inserting in lieu thereof "$16,860", "$18,648",
as may be established or authorized by the public housing agency con-
"$22,356", "$28,152", and "$31,884", respectively; and
sistent with such agency's procedures and underwriting standards.".
(B) by striking out "$13,120", "$18,630", "$22,080", "$27,600",
(b) Section 244 of such Act is amended by adding the following
and "$32,000" and inserting in lieu thereof "$19,680", "$22,356",
new sentence at the end thereof: "A mortgagee which enters into a con-
"$26,496", "$33,120", and $38,400", respectively.
tract of co-insurance under this section shall not by reason of such
(5) (A) Section (d) (4) (ii) of such Act is amended by striking
contract, or its adherence to such contract or applicable regulations
out "$12,300". "$17,188", "$20,525", "$24,700", and "$29,038" in the
of the Secretary, including provisions relating to the retention of risks
matter preceding the first semicolon and inserting in lieu thereof
in the event of sale or assignment of a mortgage, be made subject to
"$18,450", "$20,625", "$24,630", "$29,640", and "$34,846", respectively.
any State law regulating the business of insurance.".
(B) Section (d) (4) (ii) of such Act is further amended by
striking out "$13,975", "$20,025", "$24,350", "$31,500", and "$34,578"
EXPERIMENTAL FINANCING
in the matter following the first semicolon and inserting in lieu thereof
"$20,962", "$24.030", "$29,220", "$37,800", and "$41,494", respectively.
SEC. 7. Section 245 of the National Housing Act is amended by
(6) (A) Section 231(c) (2) of such Act is amended by striking out
striking out "June 30, 1976" and inserting in lieu thereof "Septem-
"$12,300", "$17.188", "$20,525", "$24,700", and "$29,038" in the matter
ber 30, 1977".
preceding the first semicolon and inserting in lieu thereof "$18,450",
MULTIFAMILY MORTGAGE LIMITS
"$20,625", "$24,630", "$29,640", and "$34,846", respectively.
(B) Section 231 (c) (2) of such Act is further amended by striking
SEC. 8. (a) The National Housing Act is amended by striking out
out "$13,975", "$20,025", "$24,350", "$31,500", and "$34,578" in the
"by not to exceed 75 per centum in any geographical area" where it
matter following the first semicolon and inserting in lieu thereof
annears in sections 207(c) (3), 213(b) (2). 220(d) (3) (B) (iii). 221
"$20,962", "$24,030", "$29,220", "$37,800", and "$41,494", respectively.
(d) (3) (ii), (d) (4) (ii), (2), and 234(e) (3) and inserting
(7) (A) Section 234 (3) of such Act is amended by striking out
in lieu thereof in each such section "by not to exceed 50 per centum in
"$13,000", "$18,000", "$21,500", "$26,500", and "$30,000" in the matter
any geographical area".
preceding the first semicolon and inserting in lieu thereof "$19,500",
(b) (1) (A) Section (c) (3) of the National Housing Act is
"$21,600", "$25,800", "$31,800", and "$36,000", respectively.
amended by striking out "$13,000", "$18,000", "$21,500", "$26.500",
(B) Section 234 (3) of such Act is further amended by striking
"$30,000", and "$3,250" in the matter preceding the first semicolon
out "$15,000", "$21,000", "$25,750", "$32,250", and "$36,465" in the
and inserting in lieu thereof "$19.500", "$21,600", "$25,800", "$31,800",
matter following the first semicolon and inserting in lieu thereof
"$36.000", and "3.900", respectively.
"$22,500", "$25,200", "$30,900", "$38,700", and "$43,758", respectively.
(B) Section 207 (c) (3) of such Act is further amended by striking
out "$15.000". "$21.000". "$25,750", "$32.250". and "$36.465" in the
CORRECTION OF DEFECTS
matter following the first semicolon and inserting in lieu thereof
"$22.500", "$25.200". "$30,900", "$38,700", and "43.758", respectively.
SEC. 9. (a) (1) Section 518(b) of the National Housing Act is
(2) (A) Section 213(b) (2) of such Act is amended bv striking out
amended by striking out "not more than nineteen months after the
"$13.000", "$18.000", "$21.500", "$26.500", and "$30,000" in the matter
date of enactment of the Housing and Community Development Act
preceding the first proviso and inserting in lieu thereof "$19,500",
of 1974" in the first sentence thereof and inserting in lieu thereof "not
"$21.600", "$25.800". "$31,800", and "$36,000". respectively.
more than four months after the date of enactment of the Housing
(B) Section 213(b) (2) of such Act is further amended bv striking
Authorization Act of 1976".
out "$15,000", "$21,000", "$25.750", "$32.250", and "$36,465" in the
(2) Section 518(b) of such Act is amended by striking out the last
first proviso and inserting in lieu theerof "$22,500", "$25,200", "$30,-
sentence and inserting in lieu thereof the following: "Expenditures
900", "$38,700". and "$43.758", respectively.
pursuant to this subsection shall be made from the insurance fund
(3) (A) Section 220(d) (3) (B) (iii) of such Act is amended by
chargeable for insurance benefits on the mortgage covering the struc-
striking out "$13,000", "$18,000", "$21,500", "$26,500", and "$30,000"
ture to which the expenditures relate. There are hereby authorized to
in the matter preceding "except" where it first appears and inserting
be appropriated such sums as may be necessary to cover the costs of
in lieu thereof "$19,500", "$21,600", "$25,800", "$31,800", and "$36,000",
such expenditures not otherwise provided for.".
respectively.
8
9
(b) Section 518 of the National Housing Act is amended by adding
HOUSING FOR THE ELDERLY
at the end thereof the following new subsections:
"(d) The Secretary is authorized to make expenditures to correct or
SEC. 11. (a) Section 202 (a) (4) (B) (i) of the Housing Act of 1959
to reimburse the owner for the correction of structural or other major
is amended-
defects which SO seriously affect use and liveability as to create a seri-
(1) by striking out "$800,000,000" in the first sentence and in-
ous danger to the life or safety of inhabitants of any one-, two-, three-,
serting in lieu thereof "$1,475,000,000, which amount shall be
or four-family dwelling which is more than one year old on the date
increased to $2,387,500,000 on October 1, 1977, and to $3,300,000,-
of issuance of the insurance commitment, is located in an older, de-
000 on October 1, 1978"; and
clining urban area, and is covered by a mortgage insured under section
(2) by inserting the following new sentence at the end thereof
203 or 221 on or after January 1, 1973, but prior to the date of enact-
"The Secretary may not issue notes or other obligations to the
ment of this subsection of (1) the owner requests assistance from the
Secretary of the Treasury pursuant to this section in an aggregate
Secretary not more than one year after the date of enactment of this
amount exceeding $800,000,000 except as approved in appropria-
subsection, and (2) the defect is one that existed on the date of the
tion Acts."
issuance of the insurance commitment and is one that a proper inspec-
(b) Section 202 (d) (4) of such Act is amended by adding the fol-
tion could reasonably have been expected to have disclosed. The Sec-
lowing new sentence at the end thereof: "Notwithstanding the preced-
retary may require from the seller of any such dwelling an agreement
ing provisions of this paragraph, the term 'elderly or handicapped
to reimburse him for any payments made pursuant to this subsection
families' includes two or more elderly or handicapped persons living
with respect to such dwelling. Expenditures pursuant to this subsec-
together, one or more such persons living with another person who is
tion shall be made from the insurance fund chargeable for insurance
determined (under regulations prescribed by the Secretary) to be
benefits on the mortgage covering the structure to which the expendi-
essential to their care or well-being, and the surviving member or
tures relate. There are hereby authorized to be appropriated such
members of any family described in the first sentence of this para-
sums as may be necessary to cover the costs of such expenditures not
graph who were living, in a unit assisted under this section, with the
otherwise provided for.
deceased member of the family at the time of his or her death.".
(e) The Secretary of Housing and Urban Development is author-
(c) (1) Section 202 (3) of such Act is amended by striking out
ized and directed to conduct a full and complete investigation and
"current average market yield on outstanding marketable obligations
study and report to Congress, with recommendations, not later than
of the United States with remaining periods to maturity comparable
March 1, 1977, with respect to an effective program for protecting
to the average maturities of such loans" and inserting in lieu thereof
home buyers from hidden or undisclosed defects seriously affecting the
the following: "average interest rate on all interest bearing obliga-
use and livability of the home, which would be applicable to existing
tions of the United States then forming a part of the public debt, com-
homes financed with mortgages insured under this Act. In the study
puted at the end of the fiscal year next preceding the date on which
and report the Secretary shall particularly investigate the need for,
the loan is made".
cost and feasible structure of, a national home inspection and warranty
(2) The second sentence of section (4) (B) (i) of such Act is
program, with respect to such homes, to be operated by the Federal
amended by striking out "the current average market yield on out-
Government out of fees assessed on the home buyer and amortized
standing marketable obligations of the United States of comparable
over a period of two years. The Secretary's report shall also present an
maturities during the month preceding the issuance of the notes or
analysis of alternative Federal programs to meet these needs, and the
other obligations", and inserting in lieu thereof the following: "the
cost and means of financing such programs. In the report the Secretary
average interest rate on all interest bearing obligations of the United
shall also outline administrative steps which can be taken to provide
States then forming a part of the public debt, computed at the end of
disclosure to purchasers of existing homes financed with mortgages
the fiscal year next preceding the date on which the loan is made".
insured under this Act of the actual condition of the home and the
types of repairs or replacements likely to be needed within a period of
REHABILITATION LOAN PROGRAM
two years, such as repairs or replacement of furnace, roof or major
appliances, based on age and useful life expectancy of such
SEC. 12. (a) Section 312(d) of the Housing Act of 1964 is
appurtenances."
amended-
(1) by striking out "and not to exceed $100,000,000 for the fiscal
GENERAL INSURANCE FUND AUTHORIZATION
year beginning on July 1, 1975" and inserting in lieu thereof "not
to exceed $100,000,000 for the fiscal year beginning on July 1,
SEC. 10. Section 519 of the National Housing Act is amended by
1975, and not to exceed $100,000,000 for the fiscal year beginning
adding at the end thereof the following new subsection:
on October 1, 1976"; and
"(f) There are authorized to be appropriated to cover losses sus-
(2) by adding at the end thereof the following new sentence:
tained by the General Insurance Fund not to exceed $500,000,000.".
"The amount of commitments to make loans pursuant to this sec-
tion entered into after August 22, 1976, shall not exceed amounts
approved in appropriation Acts.".
H.Rept. 94-1304 2
11
10
(b) Section 312 of such Act is amended to read as follows:
(b) Section 1336(a) of the National Flood Insurance Act of 1968
(h) No loan shall be made under this section after September 30,
is amended by striking out "December 31, 1976" and inserting in lieu
1977, except pursuant to a contract, commitment, or other obligation
thereof "September 30, 1977".
entered into pursuant to this section prior to October 1, 1977.".
(c) Section 1376 of the National Flood Insurance Act of 1968 is
amended by adding at the end thereof the following new subsection
EMERGENCY HOUSING
(c) There are authorized to be appropriated for studies under this
title not to exceed $100,000,000 for the fiscal year 1977.".
SEC. 13. (a) Section 109 (b) of the Emergency Homeowners' Relief
Act is amended by striking out "June 30, 1976" and inserting in lieu
COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
thereof "September 30, 1977".
(b) The first sentence of section 110 (a) of such Act is amended—
SEC. 15. (a) Section 103 (a) (2) of the Housing and Community
(1) by striking out "Until one year from the date of enactment
Development Act of 1974 is amended by inserting ", and $200,000,000
of this title, each" and inserting in lieu thereof "Each";
for the fiscal year 1977, not more than 50 per centum of which amount
(2) by inserting "prior to October 1, 1977," immediately after
may be used under section (1)," immediately after "1976".
'(1) and
(b) Paragraph (2) of section 105(a) of such Act is amended by
(3) by inserting "until one year from the date of enactment of
inserting immediately after "neighborhood facilities," the following:
this title," immediately after "(2)".
"centers for the handicapped,".
(c) Section 111 of such Act is amended by striking out "July 1,
(c) Section 107 (a) (1) of such Act is amended by inserting the
1976" and inserting in lieu thereof "October 1, 1977".
following immediately before the semicolon at the end thereof: "or
(d) Section 3(b) of the Emergency Home Purchase Assistance Act
in behalf of new community projects assisted under title X of the
of 1974 is amended by striking out "July 1, 1976" and inserting in lieu
National Housing Act which meet the eligibility standards set forth
thereof "October 1, 1977".
in title VII of the Housing and Urban Development Act of 1970 and
(e) (1) Section 313(b) of the National Housing Act is amended by
which were the subject of an application or preapplication under such
striking out the period at the end thereof and inserting in lieu thereof
title prior to January 14, 1975".
and", and by inserting the following at the end thereof:
(d) Section 116 of such Act is amended by adding at the end thereof
(D) such mortgage involves a principal residence the sales
the following new subsection:
price of which does not exceed $48,000 ($52,000 in high-cost areas
(h) In the event that the total amount available for distribution
as determined by the Secretary) per family residence or dwelling
in fiscal year 1977 in metropolitan areas is insufficient to meet all basic
unit, except that such sales price in Alaska, Hawaii, and Guam
grant and hold harmless entitlement needs, as provided by section
may not exceed $65,000.".
106(a), and funds are not otherwise appropriated to meet such
(2) The amendment made by paragraph (1) shall apply only with
deficiency, the Secretary shall meet the deficiency, first, from amounts
respect to mortgages purchased pursuant to commitments made after
available for use under section 107 and, if such amounts are exhausted,
the date of the enactment of this Act.
through a ratable reduction of all entitlements under section 106(a).".
FLOOD INSURANCE
COMPREHENSIVE PLANNING
SEC. 14. (a) Section 202(b) of the Flood Disaster Protection Act
SEC. 16. (a) The first sentence of section 701 (e) of the Housing Act
of 1973 is amended by striking out all that follows "shall not apply
of 1954 is amended by striking out "and not to exceed $150,000,000 for
to" and inserting in lieu thereof the following: "(1) any loan made
the fiscal year 1976" and inserting in lieu thereof "not to exceed $150,-
to finance the acquisition of a residential dwelling occupied as a
000,000 for the fiscal year 1976, and not to exceed $100,000,000 for the
residence prior to March 1, 1976, or one year following identification
fiscal year 1977".
of the area within which such dwelling is located as an area containing
(b) No eligible recipient under section 701 of the Housing Act of
special flood hazards, whichever is later, or made to extend, renew, or
1954 may be excluded from qualifying for funds under such section
increase the financing or refinancing in connection with such a dwell-
solely on the basis of participation or nonparticipation under such
ing, (2) any loan, which does not exceed an amount prescribed by the
section prior to fiscal year 1977.
Secretary, to finance the acquisition of a building or structure com-
CONFIRMATION OF GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
pleted and occupied by a small business concern, as defined by the
PRESIDENT
Secretary, prior to January 1, 1976, (3) any loan or loans, which in the
aggregate do not exceed $5,000, to finance improvements to or rehabil-
SEC. 17. (a) The National Housing Act is amended by striking out
itation of a building or structure occupied as a residence prior to
the third sentence of section 308 (a) and inserting in lieu thereof the
January 1, 1976, or (4) any loan or loans, which in the aggregate do
following: "There is hereby established in the Department of Hous-
not exceed an amount prescribed by the Secretary, to finance non-
ing and Urban Development the position of President, Government
residential additions or improvements to be used solely for agricultural
National Mortgage Association, who shall be appointed by the Presi-
purposes on a farm.".
dent, by and with the advice and consent of the Senate. The Secretary
shall select and effect the appointment of qualified persons to fill the
12
13
offices of vice president, and such other offices as may be provided for
"(n) Notwithstanding any other provision of law, the Secretary is
in the bylaws. Persons appointed under the preceding sentence shall
authorized by contract or otherwise to estabish, equip and operate a
perform such executive functions, powers, and duties as may be pre-
day care center facility for the purpose of serving children who are
scribed by the bylaws or by the Secretary, and such persons shall be
members of households of employees of the Department. The Secre-
executive officers of the Association and shall discharge all such ex-
tary is authorized to establish or provide for the establishment of ap-
ecutive functions, powers, and duties.".
propriate fees and charges to be chargeable against the Department
(b) Section 309 (d) of such Act is amended by striking out the word
of Housing and Urban Development employees or others who are
"The" immediately preceding "Secretary" in the first sentence and in-
beneficiaries of services provided by such a day care center.".
serting in lieu thereof "Subject to the provisions of section
the".
HOME OWNER'S LOAN ACT
(c) Section 5315 of title 5, United States Code, is amended by adding
at the ending thereof the following new paragraph:
SEC. 22. The twelfth undesignated paragraph of section 5 (c) of the
"(108) President, Government National Mortgage Association,
Home Owner's Loan Act of 1933 (12 U.S.C. 1464 is amended by
Department of Housing and Urban Development."
adding in the first sentence, immediately after the words "made pur-
(d) Section 7(c) of the Department of Housing and Urban Devel-
suant to either of such sections" and before the period the following
opment Act is amended by striking out "seven" in the proviso and sub-
language: "and in the share capital and capital reserve of the Inter-
stituting in lieu thereof "six".
American Savings and Loan Bank".
(e) Notwithstanding the amendment made by subsection (a), the
rights, powers, and duties of the position of President, Government
RESEARCH AUTHORIZATION
National Mortgage Association, as in effect on the day preceding the
date of enactment of this Act shall remain in effect until the position
SEC. 23. (a) Section 501 of the Housing and Urban Development Act
established hereunder has been filled in accordance with the terms of
of 1970 is amended by striking out the second sentence and inserting
this Act.
in lieu thereof the following: "There are authorized to be appropri-
ated for activities under this title not to exceed $65,000,000 for the
SPECIAL ASSISTANT FOR COOPERATIVE HOUSING
fiscal year 1977.".
SEC. 18. The first sentence of section 102 (h) of the Housing Amend-
(b) Section (b) of such Act is amended by striking out the first,
ments of 1955 is amended—
third, and fourth sentences.
(1) by inserting after "section (d) (3)" a comma and the
(c) Section 502(f) of such Act is amended by striking out the period
following: "section 235, section 236, section 241, section 243, sec-
at the end of the second sentence and inserting in lieu thereof the fol-
tion 246, and section 203 (n)
lowing: "and such departments and agencies are hereby authorized to
(2) by inserting after "Housing and Urban Development Act
execute such contracts and grants.".
of 1965" the following: "or section 8 of the United States Housing
Act of 1937"; and
NATIONAL INSTITUTE OF BUILDING SCIENCES
(3) by inserting before the period the following "and Assistant
Secretary for Housing Management".
SEC. 24. Section 809 (h) of the Housing and Community Develop-
ment Act of 1974 is amended by inserting " and $5,000,000 for each
NEW COMMUNITIES
of the fiscal years 1977 and 1978" immediately after "fiscal year 1976".
SEC. 19. Section 720(a) of the Housing and Urban Development Act
RURAL HOUSING
of 1970 is amended by striking out "June 30, 1975" and inserting in
lieu thereof "October 1, 1977".
SEC. 25. (a) Section 521 (a) (1) of the Housing Act of 1949 is
amended by striking out "rate determined annually by the Secretary
URBAN HOMESTEADING
of the Treasury" and inserting in lieu thereof "rate determined by the
SEC. 20. Section of the Housing and Community Develop-
Secretary of the Treasury upon the request of the Secretary".
ment Act of 1974 is amended by striking out "and not to exceed
(b) Section 520(3) (B) of such Act is amended by inserting "for
$5,000,000 for the fiscal year 1976" and inserting in lieu thereof "not to
lower and moderate-income families" immediately after "has a serious
lack of mortgage credit".
exceed $6,250,000 for the fiscal year 1976, and for the transition quar-
ter, not to exceed $5,000,000 for fiscal year 1977, and not to exceed
(c) Section 510 of such Act is amended by redesignating subsec-
$5,000,000 for the fiscal year 1978".
tions (f) and (g) as subsections (h) and (i), respectively, and by
inserting the following new subsections immediately after subsec-
DAY CARE
tion (e)
(f) continue processing as expeditiously as possible applica-
SEC. 21. Section 7 of the Department of Housing and Urban Devel-
tions on hand received prior to the time an area has been deter-
opment Act is amended by adding at the end thereof the following new
mined by the Secretary not to be 'rural' or a 'rural area', as those
subsection:
14
terms are defined in section 520, and make loans or grants to such
applicants who are found to be eligible on the same basis as
though the area were still rural;
(g) notwithstanding that an area ceases, or has ceased, to be
'rural', in a 'rural area', or an eligible area, make assistance under
this title available in connection with transfers and asssumptions
JOINT EXPLANATORY STATEMENT OF THE
of property securing any loan made, insured, or held by the Sec-
COMMITTEE OF CONFERENCE
retary or in connection with any property held by the Secretary
under this title on the same basis as though the area were still
The managers on the part of the House and the Senate at the con-
rural;".
ference on the disagreeing votes of the two Houses on the amendments
COUNSELING
of the House to the bill (S. 3295) to extend the authorization for
annual contributions under the United States Housing Act of 1937,
SEC. 26. Title V of the Housing and Urban Development Act of
to extend certain housing programs under the National Housing Act,
1970 is amended by adding at the end thereof the following new
and for other purposes, submit the following joint statement to the
section:
House and the Senate in explanation of the effect of the action agreed
"COUNSELING TO MORTGAGORS
upon by the managers and recommended in the accompanying confer-
ence report:
"SEC. 508. (a) In carrying out activities under section 501, the Sec-
The House amendment to the text of the bill struck out all of the
retary is directed to undertake programs of studies and demonstra-
Senate bill after the enacting clause and inserted a substitute text.
tions within at least three standard metropolitan statistical areas to
The Senate recedes from its disagreement to the amendment of the
determine the extent of need for and cost effectiveness of providing
House with an amendment which is a substitute for the Senate bill
pre-purchase, default and delinquency counseling and related services
and the House amendment. The differences between the Senate bill,
to owners and purchasers of single-family dwellings insured or to be
the House amendment, and the substitute agreed to in conference are
insured under the unsubsidized mortgage insurance programs of the
noted below, except for clerical corrections, conforming changes made
National Housing Act.
necessary by agreements reached by the conferees, and minor drafting
"(b) Within one year from enactment of this section, the Secretary
and clarifying changes.
shall submit an interim report to the Congress with respect to the
progress made under such studies and demonstrations, including an
HOUSING ASSISTANCE AUTHORIZATIONS
estimate as to the date when a final report on the results of such dem-
General
onstrations will be made available to the Congress.".
The Senate bill authorized $696,000,000 in additional contract au-
And the House agree to the same.
thority on October 1, 1976, for the public housing and section 8 pro-
That the Senate recede from its disagreement to the amendment of
grams. The House amendment authorized $850,000,000. The confer-
the House to the title of the Senate bill and agree to the same.
ence report contains the House provision.
HENRY S. REUSS,
Mix of new, rehabilitated, and existing units
THOMAS L. ASHLEY,
The Senate bill required the Secretary of HUD to make at least
LEONOR K. SULLIVAN,
$465,000.000 of the additional contract authority provided on Octo-
WILLIAM S. MOORHEAD,
ber 1, 1976, available only for newly constructed and substantially
ROBERT G. STEPHENS, Jr.,
rehabilitated housing units.
FERNAND J. ST GERMAIN,
The House amendment did not specify a minimum level of funding
HENRY GONZALEZ,
for new and rehabilitated units under the public housing and section 8
PARREN J. MITCHELL,
programs. Thus, the House amendment did not alter the requirements
JERRY M. PATTERSON,
of existing law that the proportion of new, rehabilitated, and existing
JOHN J. LAFALCE,
units assisted be determined in accordance with approved housing
LES AUCOIN,
assistance plans in those communities which submitted such plans.
Managers on the Part of the House.
Section 104 (a) (4) of the Housing and Community Development Act
WILLIAM PROXMIRE,
of 1974 requires each community, as a prerequisite to receiving a com-
JOHN SPARKMAN,
munity development block grant, to prepare a housing assistance plan
HARRISON A. WILLIAMS, Jr.,
which assesses the housing assistance needs of lower-income persons
ALAN CRANSTON,
and specifies an annual target for meeting those needs. With respect
ADLAI E. STEVENSON,
to the latter, section 104 (a) (4) (B) of the 1974 Act requires the com-
Managers on the Part of the Senate.
(15)
16
17
munity to "specify a realistic annual goal for the number of dwelling
failure to carry out the 1974 Act provisions since it merely substituted
units or persons to be assisted, including (i) the relative proportion of
a Congressional determination of housing mix for an executive deter-
new, rehabilitated, and existing dwelling units.
mination. In either case the framework of the 1974 Act's reliance on
In order to ensure that the proportion of new, rehabilitated, and
local determination would be violated. The conference report accord-
existing units specified in a housing assistance plan would be followed,
ingly reiterates the existing requirement that housing funds be allo-
section 213 (a) of the 1974 Act gave each community with an approved
cated for new, rehabilitated, and existing units in communities with
housing assistance plan a veto, in effect, of applications for housing as-
housing assistance plans in accordance with the goals specified in their
sistance which were inconsistent with the community's housing plan.
housing assistance plans, to the maximum extent practicable and con-
The conferees on the 1974 Act expected that the Secretary of HUD
sistent with section 213 (d) of the 1974 Act. This provision could be
would take the appropriate steps to assure fulfillment of the intent of
applied by HUD within areas as large as housing market areas.
Congress that local communities, not the Federal Government, deter-
With respect to the approval or disapproval of housing assistance
mine the mix of new and existing units. The importance of this objec-
plans as part of community development block grant applications, the
tive is clearly recognized in the comments in the House committee
Secretary of HUD would continue to have the same authority pur-
report (Report No. 93-1114) on section 104:
suant to section 104 (c) of the Housing and Community Development
The requirement that housing assistance plans specify the
Act of 1974 which the Secretary currently has.
relative proportion of new, rehabilitated, and existing dwell-
Again, the conferees recognize that the success of the local determi-
ing units to be assisted in the community introduces a much-
nation policy contained in the conference report will depend on the
needed flexibility in the provision of Federal housing assist-
performance of HUD in implementing that policy. The conferees have
ance. These determinations would govern the use of housing
identified several abuses by HUD over the past 18 months but by no
assistance funds allocated to communities under title II of
means should those which are identified here be considered as
the bill. Communities with an ample supply of housing but
exhaustive.
with many older run-down units may wish to concentrate a
The practice by HUD of establishing national targets for the num-
substantial portion of their funds on rehabilitating and re-
ber of assisted new, rehabilitated, and existing units is inconsistent
pairing the older units. Other communities, with expanding
with local determination of housing mix. These national targets have
populations and vacant lands, may well allocate most of their
been translated into areawide targets. As a result, communities which
funds toward the construction of new units. The committee
have provided for new construction in their housing assistance plans
believes this opportunity for communities to make such judg-
and have sponsors interested in developing that housing have been
ments is an extremely important innovation in Federal hous-
required by HUD to accept existing housing units instead because the
ing policy. (Page 7.)
area's target for new construction have been reached.
It is apparent to the conferees that HUD is quite aware of the con-
Again the House committee report, in commenting on the allocation
flict between HUD targets and the contents of local housing assistance
of housing assistance funds by HUD clearly states the same objectives:
plans because it has attempted to pressure communities into preparing
The committee intends that the Secretary will allocate
housing assistance plans which more nearly conform to HUD's tar-
funds under all HUD housing programs which are funded
gets for the mix of new and existing housing. The following letter
and intended to be operative by the Congress. The propor-
from a HUD official is but one example:
tion of such funds to be utilized with respect to each of the
categories of newly constructed, substantially rehabilitated,
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT,
or existing housing will be determined, of course, by local
PHILADELPHIA AREA OFFICE,
government through their housing assistance plans. (Page
Philadelphia, Pa., February 23, 1976.
23.)
To: All community development block grant applicants.
Unfortunately, the Secretary of HUD has avoided carrying out the
Subject Section 8 Housing and CDBG applications.
terms and intent of the 1974 Act by putting pressure on communities
For the foreseeable future, it appears that developers and state
to stress existing housing over new and rehabilitated housing, by dis-
agencies will continue having difficulties in obtaining needed financing
regarding the contents of housing assistance plans in allocating hous-
for Section 8 New Construction. We at HUD are concerned that com-
ing assistance, by establishing national and area targets for the num-
munities and HUD work together to make maximum use of commu-
ber of assisted new, rehabilitated. and existing units which bore no
nities' existing housing stock-a priority of both HUD and the
relationship to the contents of housing assistance plans, by failing
Congress.
to use the traditional public housing program to provide needed new
When you are preparing your Second Year Housing Assistance
housing units, and by structuring and administering the section 8
Plan. therefore I urge you to seriously consider emphasizing the Sec-
program in a way to make it a virtual nullity as a useful tool to assist
tion 8 Existing program-rather than New Construction or Substan-
newly constructed and rehabilitated units.
tial Rehabilitation in your three year goal. The Section 8 Existing
The conferees felt that the Senate bill, in mandating a minimum
program can be used either as a "finders keepers" program in which
level of new construction, was an inappropriate response to HUD's
18
19
households find and move into units meeting Housing Quality Stand-
that in the future HUD will not discourage the development of new
ards or as an "in place" program to subsidize households living in
and rehabilitated section 8 projects because market or other conditions
units meeting Housing Quality Standards but now paying an excess
make unassisted apartment development unattractive.
of their incomes for rent. Either method can meet the housing needs
Public housing
of many elderly households and families.
In addition, I would like to encourage you to further consider the
The Senate bill required that at least $200,000,000 of the new con-
use of CDBG rehabilitation and code enforcement activities, rather
tract authority provided on October 1, 1976, be used under the tradi-
than the use of CDBG funds for acquisition of sites for subsidized
tional public housing program for newly constructed and substantially
housing. In general, Section 8 New Construction projects do not re-
rehabilitated low-income projects. The House amendment left to the
quire a financial write down in land costs or site improvements. Given
discretion of HUD the relative allocation of the new authority as
limited resources at local and federal levels, you should utilize your
between section 8 projects and traditional public housing projects,
CDBG dollars in other ways which still address your pressing housing
and also left open the relative use of funds to finance the development
and community development needs.
of new public housing projects and the acquisition of existing units.
You should be prepared for a wait of perhaps three to five years
The conference report directs HUD to allocate at least $140,000,000
for new Section 8 units to become available.
in contract authority for traditional public housing, at least $100,-
I recognize, of course, that not all communities can effectively utilize
000,000 of which must be used for the provision of additional new or
a Section 8 Existing Program. In addition, extraordinary local condi-
rehabilitated low-income projects. Thus, the conference report both
tions may determine that Section 8 New Construction is the only
reduces the size of the public housing set-aside contained in the Senate
strategy which addresses local housing needs and that CDBG monies
bill and moves closer to the House provision which provided greater
should be spent for advance site acquisition and preparation. You
discretion in the use of the additional contract authority.
should be aware, however, that all Section 8 sites must meet specified
Indian housing
site and neighborhood criteria and that CDBG approval by HUD does
The Senate bill required that at least $17,500,000 in contract author-
not necessarily imply HUD approval of the cleared site for Section 8
ity be made available on July 1, 1976, for public housing for members
units.
of Indian tribes. The House amendment required that at least $17,-
In general, I strongly urge you to consider the thrust of this mes-
000,000 of the additional contract authority provided on October 1,
sage-to conserve the existing housing stock-in your housing plan-
1976, be made available for public housing for members of Indian
ning for your CDBG application.
tribes. The conference report contains the House provision.
Sincerely,
PAUL T. CAIN,
Public housing modernization
Area Director.
The Senate bill required that at least $60,000,000 of the additional
contract authority provided on October 1, 1976, be made available for
The reference in the above letter to the difficulties in developing new
the modernization of existing public housing projects. The House
housing units under section 8 points up another aspect of HUD's
amendment contained no similar provision. The conference report con-
performance. The conferees, in fashioning the 1974 Act, did not believe
tains the Senate provision.
they were providing for a housing program for lower-income persons
Public housing operating subsidies
which was cyclical in nature, and which therefore could not produce
housing when interest rates were high and when financing for multi-
The Senate bill authorized $576,000,000 for fiscal year 1977, and the
family units was generally tight. The unwavering housing policy of
House amendment authorized $575,000,000 for grants to public hous-
the Congress has been to provide programs and funds to produce a
ing authorities to meet deficits arising because operating costs exceed
high volume of units for lower-income persons regardless of market
rental incomes. The conference report contains the Senate provision.
conditions. When the new section 8 program was authorized in 1974.
The conferees note that HUD testified that, in calculating the need
the conferees made clear that should HUD emphasize this program
for $576 million in operating subsidies, the Department has presumed
and should it not produce units in a timely manner, other programs,
implementation of a revised and improved Performance Funding For-
such as public housing and section 236, should be utilized.
mula developed for HUD by the Urban Institute. The conferees ex-
Not only has HUD kept all its eggs in the section 8 basket, it has
pect the Department to implement this revised formula as soon as
made that program, through numerous policies and administrative
possible and to report its progress to both committees within 30 days.
directives unattractive for the development of new and substantially
Outstanding appropriations
rehabilitated housing units. One of the major HUD-imposed stum-
The Senate bill contained a provision, not in the House amendment,
bling blocks to section 8 development has been the contract rent ceil-
which required that any appropriations for public housing and section
ings determined by HUD on the basis of "comparable" rents being
8 available after October 1, 1976, be used for new construction and re-
charged in the community in existing rental projects. The conferees
habilitation and for public housing in the same ratio as the additional
wish to reaffirm the statements in the House and Senate committee
authority ovided on October 1, 1976, was required to be used. The
reports which direct HUD to establish contract rents which result in
conference report does not contain the Senate provision.
sound development rather than non-development. The conferees expect
20
21
ELIGIBILITY FOR TRADITIONAL PUBLIC HOUSING AND SECTION 8
sure, or where the projects are currently owned by HUD or subject
to mortgages held by HUD. The conference report does not contain
The Senate bill contained a provision, not in the House amendment,
the Senate provision. Instead the conferees direct that any assistance
which makes single non-elderly persons eligible for occupancy of
provided by HUD for this purpose will be made available from the
public housing and section 8 units in up to 10 percent of a public hous-
$850,000,000 in additional contract authority provided by the confer-
ing agency's units, provided that single persons who are elderly, handi-
ence report on October 1, 1976, for the public housing and section 8
capped or displaced get preference for admission. The conference
programs, but only to the extent, in any community with an approved
report contains the Senate provisions. The conferees expect the Secre-
housing assistance plan, that the community has provided for such
tary of HUD to limit the applicability of this provision to situations
use in its housing assistance plan or has otherwise given its approval
involving the rehabilitation of an existing structure, the conversion of
for such use. The conferees intend that the local communities with
an existing project to a public housing or section 8 project, the filling
housing assistance plans, not HUD, will identify the projects for which
of vacant efficiencies which are not appropriate for occupancy by
such assistance could be made available.
elderly or handicapped, and any other similar situation where it would
be appropriate for single persons to receive assistance.
SECTION 235. HOMEOWNERSHIP ASSISTANCE
DEFINITION OF ASSISTANCE PAYMENTS AS INCOME
The Senate bill contained a provision not in the House amendment
increasing the contract authority for section 235 by $200 million. The
The Senate bill contained a provision which provided that subsidies
conference report does not contain the Senate provision.
under the public housing or section 8 programs would not be consid-
The Senate bill contained a provision not in the House amendment
ered as income in determining eligibility for, or the amount of assist-
which would require that the mortgage insurance premium under
ance under, the Social Security Act or any other federal law. The
section 235 not exceed the premium under 203 (b). The conference
House amendment contained a similar provision, but applicable to
report does not contain this provision.
supplemental security income payments of beneficiaries of assistance
The House amendment contained a provision not in the Senate bill
payments under any federal housing program. The House amendment
which would raise the income limit for eligibility for section 235
also contained a provision, not in the Senate bill, which excluded social
assistance from 80 percent of median to 95 percent of median. The
security increases occurring after May 1976 from the income of occu-
conference report contains the House provision.
pants of subsidized housing units for purposes of determining the
Both the House amendment and the Senate bill contained provi-
rentals to be paid by such occupants. The conference report contains
sions increasing the mortgage limits for section 235. The conference
the House provision only with respect to the exclusion of housing as-
report contains the House provision which increased the mortgage
sistance payments in the determination of supplemental security in-
limits for families with less than 5 persons from $21,600 to $25,000
come payments.
(and from $25,200 to $29,000 in high-cost areas) and for families with
five or more persons from $25,200 to $29,000 (and from $28,800 to
CONTRACTS FOR SECTION 8 PAYMENTS IN FARMERS HOME PROJECTS
$33,000 in high-cost areas).
The Senate bill contained a provision, not in the House amendment,
SECTION 236. RENTAL ASSISTANCE
which authorized section 8 housing assistance contracts of up to 40
years in cases of projects financed by the Farmers' Home Administra-
The Senate bill contained a provision not in the House amendment
tion. The conference report contains the Senate provision.
extending the section 236 program to September 30, 1977. The con-
ference report contains this provision.
PAYMENTS WITH RESPECT TO VACANT SECTION 8 UNITS
The House amendment contained a provision not in the Senate bill
stipulating that, in 236 projects with separate utility metering, an
The House amendment contained a provision, not in the Senate
bill, which authorizes the Secretary of HUD to make section 8 pay-
amount allowed for utility costs should be included in determining
whether a tenant is paying 25 percent of income toward rent. The con-
ments with respect to vacant units beyond the current 60-day period,
ference report contains this provision. The conferees expressed their
but only for up to 12 months in the amount of the debt service attrib-
intent, however, that the management of these projects should strong-
utable to the unit, and subject to other limitations. The conference
ly discourage tenants from the over-use of utilities, and should work
report contains the House provision.
to promote energy conservation in the project.
ASSISTANCE PAYMENTS TO FHA PROJECTS
FHA MORTGAGE LIMITS IN MULTIFAMILY HOUSING
The Senate bill contained a provision, not in the House amendment,
The Senate bill increased the mortgage limits for FHA insured
which authorized $154,000,000 to provide section 8-type assistance pay-
mortgages on multifamily housing by 50 percent for 0 bedroom units
ments with respect to FHA-insured projects threatened with foreclo-
and 20 percent for 1 bedroom units. The House amendment provided
22
23
an across-the-board 20 percent increase in mortgage limits, but reduced
the allowable high-cost area increment from 75 percent to 50 percent.
COMPENSATION FOR DEFECTS IN EXISTING FHA HOUSING
The conference report contains the House provision modified to in-
clude the Senate provision with respect to 0 bedroom units.
The Senate bill contained a provision not in the House bill extending
the application deadline for requesting defect compensation under
FHA INSURANCE FUNDS
Section 518(b) of the National Housing Act (covering certain FHA
The Senate bill authorized the transfer of all insurance obligations
Section 203 and 221 homes purchased between 1968 and 1973) until 4
for Section 221 projects from the general insurance fund to the special
months after enactment of the bill. The conference report contains
risk insurance fund. The House amendment authorized appropria-
this provision.
tions of $500 million to cover general insurance fund losses. The con-
The Senate bill contained a provision not in the House bill creating
ference report contains the House language.
an interim compensation program under Section 518 (b) for homes
purchased between 1973 and enactment and covered by mortgages
FHA INSURANCE FOR MILITARY HOUSING
insured under sections 203 and 221, allowing one year from the date
of enactment to apply. The conference report contains this provision.
The House amendment contained a provision, not in the Senate bill,
The Senate bill contained a provision not in the House bill creating
which authorized FHA mortgage insurance for military personnel and
a new, permanent defect compensation program for all 1-4 family
others in housing markets impacted by military installations. The
existing housing purchased with FHA insured loans. This new pro-
provision permitted HUD to waive any requirement in the National
gram applied to all existing homes purchased with FHA-backed
Housing Act, including economic soundness requirements, but exclud-
financing after the date of enactment. The conference report contains
ing labor standards, if inconsistent with the objectives of the section.
the Senate provision with an amendment directing a study and report
The conference report does not contain this provision.
by HUD, instead of a new permanent program at this time, of the
need for and feasibility of an inspection, buyer information and
Co-INSURANCE
warranty against defect program for all 1-4 family existing homes
purchased with FHA-backed financing. The conferees urge the Sec-
The Senate bill contained a provision increasing HUD's authority
retary to expand the study required by this provision to include homes
to allow flexibility in risk-sharing between HUD and any co-insuring
purchased under other financing methods. The provision of the con-
lender. The House amendment allowed this increased flexibility only
ference report, however, is no more extensive than the limits of the
for multifamily projects where the co-insurer is a public housing
program proposed by the Senate and applies only to 1-4 family ex-
agency or insured depository institution. The conference report con-
isting dwellings purchased with FHA-insured loans.
tains the House language, with an amendment extending this flexi-
The Senate bill contained a provision not in the House bill provid-
bility to State-insured depository institutions.
ing that the interim 1973-76 compensation program created by the bill
The Senate bill contained a provision allowing HUD to make loans
would differ from the current Section 518(b) program in that it
to mortgages with respect to co-insured projects in default. The House
would not be restricted to older, declining urban areas and would use a
amendment contained a similar provision, but restricted these loans
more liberal definition of an eligible defect. The conference report
to projects co-insured by a public housing agency. The conference re-
does not contain this provision.
port contains the House language.
The Senate bill contained a provision not in the House amendment
SECTION 202. LOANS FOR HOUSING FOR ELDERLY AND HANDICAPPED
allowing HUD to charge a higher premium on loans co-insured by a
public housing agency than on loans insured under regular FHA pro-
The Senate bill contained a provision which would increase the
grams. The conference report deletes this provision. The conferees
borrowing authority for section 202 loans by $2.5 billion on July 1,
wish to make clear, however, that public housing agencies are not pro-
1976. The House amendment would increase the authority from $800
hibited under section 244 from charging an additional premium of
million to $1.475 billion upon enactment, to $2,387,500,000 on Octo-
their own, over and above the premium charged by FHA.
ber 1, 1977, and to $3.3 billion on October 1, 1978. The conference re-
The House amendment contained a provision, not in the Senate
port contains the House provision.
bill. allowing an increase of up to 5 percent in the HUD-determined
The House amendment contained a provision not in the Senate bill
replacement cost reserve for a project if such an increase is allowed by
which would require approval in appropriations acts of all borrowing
the co-insuring public housing agency. The conference report con-
authority under section 202 in excess of $800 million. The conference
tains this provision.
report contains the House provision.
The House amendment contained a provision not in the Senate bill
The Senate bill contained a provision not in the House amendment
exempting co-insured loans from state insurance regulation. The con-
which would establish the interest rate on loans under section 202 on
ference report contains this provision.
the basis of the average interest rate on all interest bearing obligations
24
25
of the United States forming a part of the public debt, to be com-
PURCHASE PRICE LIMIT ON HOUSING WITH GNMA TANDEM
puted at the end of the fiscal year preceding the date on which the
MORTGAGES
loan is made. Under current law, the 202 interest rate is established on
the basis of the current average market yield on outstanding market-
Both the Senate bill and the House amendment provided for pur-
able obligations of the United States with remaining periods to matur-
chase price limits for housing acquired with GNMA tandem plan
ity comparable to the average maturities of such loans. The conference
mortgages authorized under the Emergency Home Purchase Assist-
ance Act. The Senate bill provided that the purchase price limit would
report contains the Senate provision.
The House amendment contained a provision not in the Senate bill
be the median purchase price in the local market area. The House
which would delete statutory language excluding the receipts and
amendment set a purchase price limit of $52,000 ($68,750 in Alaska,
disbursements of the section 202 fund from the Budget of the United
Hawaii and Guam). The conference report sets the purchase price
States. The conference report does not contain the House provision.
limit at $48,000, with an increment to $52,000 in high cost areas and
It is anticipated that the Congress will be receiving the recommenda-
$65,000 in Alaska, Hawaii and Guam.
tions of its Budget Committees on this subject in the near future in the
ELIGIBLE COMMUNITY DEVELOPMENT ACTIVITIES
light of which this issue should be carefully reconsidered.
The House amendment contained a provision not in the Senate bill
The House amendment contains a provision not in the Senate bill
which would change the definition of an eligible elderly family to
which authorizes the use of community development block grant funds
include two or more persons living together, one such person and
for the provision of centers for the handicapped. The conference re-
another providing care to the first, or a surviving member of the
port contains the House provision.
family who was living in the unit at the time another member died.
The conference report contains the House provision.
PARTICIPATION OF NEW COMMUNITY PROJECTS
The conferees are concerned that the comparability test used to
determine contract rents for section 8 projects may provide an obstacle
The House amendment contains a provision not in the Senate bill
to the feasibility of 202 projects. There are simply no comparable units
which makes certain new community projects carried out under Title
to the housing and related facilities contemplated by the Housing and
X of the National Housing Act eligible for discretionary fund assist-
Community Development Act of 1974. Therefore, the conferees direct
ance of the community development block grant program if such proj-
HUD to use total development cost and the cost of the land in deter-
ects meet the same eligibility criteria as new community projects being
mining the section 8 contract rents for 202 projects.
carried out under Title VII of the 1970 housing act. The conference
report contains the House provision.
SECTION 312. REHABILITATION LOANS
SUPPLEMENTAL BLOCK GRANT UNEMPLOYMENT PROGRAM
The Senate bill contained a provision increasing the authorization
for Section 312 by $150 million for Julv 1 1976 to September 30. 1977.
The House amendment contains a provision not in the Senate bill
The House amendment contained authorization of $100 million for
authorizing a program of supplemental community development block
fiscal year 1977. The conference report contains the House provision.
grants in areas of high unemployment. The conference report does not
The Senate bill contained a provision not in the House amendment
contain this provision.
creating a two-tiered interest rate structure for Section 312 loans,
continuing the current 3 percent rate for low-income borrowers and
HUD RESEARCH AUTHORIZATION
allowing HUD to set a higher rate, up to the Treasury borrowing rate
plus administrative costs, for higher income borrowers. The confer-
The House amendment contains provisions not in the Senate bill
ence report does not contain this Senate provision.
which establish a $65 million authorization level for HUD research
activities for fiscal year 1977, delete the separate authorization for
EMERGENCY HOMEOWNERS RELIEF ACT
the housing allowance experiment, and allow certain delegations of
contract authority to other Federal agencies. The conference report
The Senate bill contained a provision not in the House amendment
contains the House provision.
extending until October 1. 1977, the current requirement that Federal
supervisory agencies and HUD encourage forbearance in residential
FARMERS HOME ADMINISTRATION
mortgage foreclosures and that mortgagees notify the supervisory
agency and mortgagor 30 days before starting foreclosure proceed-
The House amendments contain provisions not in the Senate bill
ings. The conference report contains this provision, with an amend-
which (1) make the determination of the Treasury going rate (as the
ment deleting the 30-day reporting requirement.
basis for the FmHA rate) upon request of the Secretary of Agricul-
The Senate bill contained a provision not in the House amendment
ture rather than annually and (2) permit FmHA to continue process-
extending until October 1, 1977. the current requirement that HUD
ing loan applications and other actions received before an area is
report everv 2 months on mortgage foreclosures. forbearance and de-
redesionated from rural to non-rural. The conference report contains
linquencies. The conference report contains the Senate provision.
the House provision.
26
27
NATIONAL INSTITUTE OF BUILDING SCIENCES
The Senate bill contained a provision not in the House amendment
allowing communities not participating in the flood insurance program
The House amendments contain a provision not in the Senate bill
to receive certain Federal assistance for disasters not involving flood-
which authorizes $5 million in each of fiscal years 1977 and 1978 as
ing. The conference report does not contain this provision.
startup funding for the National Institute of Building Sciences. The
conference report contains the House provisions.
COMMUNITY DEVELOPMENT GRANT ALLOCATION
HUD COUNSELING TO MORTGAGORS
The Senate bill contained a provision not in the House amendment
clarifying the priority of funding under the Community Develop-
The House amendments contain a provision not in the Senate bill
ment Act in the event that the funds available are insufficient to meet
which would require HUD to carry out a study on the need for and the
total entitlements specified in the Act. The conferees agreed to the
effectiveness of unsubsidized mortgagor counseling. The conference
Senate provision amended to establish that, in the event that the
report contains the House provision.
amount appropriated for block grants is insufficient to meet formula
and hold harmless entitlements as specified in the law, the Secretary
FLOOD INSURANCE
shall make proportional reductions in such entitlements. In adopting
this amendment, the conferees intend to make clear that all entitled
The Senate bill contained a provision not in the House amendment
communities would absorb any shortage of funding in amounts pro-
extending the emergency flood insurance program, which allows flood
portional to their entitlements.
insurance in areas awaiting rate map studies, from December 31, 1976,
to September 30, 1977. The conference report contains this provision.
Section 701. Comprehensive Planning
The Senate bill contained a provision exempting from the program's
The Senate bill contained a provision authorizing $100 million for
lending sanctions under Section 202 (b) loans for acquisition or refi-
fiscal year 1977 for section 701 planning. The House amendment con-
nancing for residences completed and occupied prior to January 1,
tained an authorization of $75 million. The conference report contains
1976. The House amendment exempted loans for acquisition or refi-
the Senate provision.
nancing of residences occupied before March 1, 1976, or within 1 year
The House amendment contained a provision not in the Senate bill
after designation of area as a flood hazard area, whichever is later. The
prohibiting HUD from allocating section 701 assistance funds on the
conference report contains the House provision.
basis of an applicant's prior participation in the program. The con-
The Senate bill contained three other provisions not in the House
ference report contains this House provision.
amendment allowing exemptions from the program's Section 202(b)
The conferees also expressed their intent that HUD administer the
lending sanctions:
program in a manner consistent with the provisions of section 701 (a)
(1) Loans for improvement or rehabilitation up to $10,000 for
which permit assisted governments to engage private planning con-
residences occupied before January 1, 1976. The conference report
sultants where they deem such services appropriate.
contains this Senate provision, with an amendment reducing the
Confirmation of the Federal Insurance Administrator
maximum loan to $5,000. It is the intention of the conferees that
such home improvement loans permitted by this provision could
The Senate bill contained a provision not in the House amendment
not be used for major additions to the property.
requiring that the FIA Administrator be appointed by the President
(2) Loans for acquisition of buildings occupied by small
and confirmed by the Senate, effective January 1, 1977. The conference
business concerns before January 1, 1976. The conference report
report does not contain this provision.
contains this provision, with an amendment authorizing the
Confirmation of Government National Mortgage Association
Secretary of HUD to define small businesses for the purposes of
President
this exemption and to establish the maximum loan amounts.
The Senate bill contained a provision not in the House amendment
(3) Loans up to a HUD-determined amount for non-residential
requiring that the President of GNMA be appointed by the President
additions or improvements to a farm. The conference report con-
and confirmed by the Senate. The conference report contains this
tains this provision, with an amendment restricting the exemption
provision.
to loans for additions and improvements to buildings that are to
be used solely for agricultural purposes. It is the intention of the
Special Assistant for Cooperative Housing
conferees in this provision to enable farmers to obtain financing
The Senate bill contained a provision not in the House amendment
in order to assist them in making necessary improvements for the
updating the duties of the HUD Special Assistant for Cooperative
non-residential agricultural structures on their farms.
Housing. The conference report contains this provision.
The House amendment contained a provision not in the Senate
Planning assistance for new communities
bill authorizing $100 million for fiscal year 1977 for flood insurance
The Senate bill contained a provision not in the House amendment
maps and surveys. The conference report contains this provision.
extending the new community planning assistance program until
October 1, 1977. The conference report contains this provision.
28
Urban homesteading
The Senate bill contained a provision not in the House amendment
increasing the authorization for the HUD urban homesteading pro-
gram to $6.25 million for fiscal year 1976 and the transition quarter,
and by $5 million in both fiscal year 1977 and fiscal year 1978. The
conference report contains this provision.
HUD day care center
The Senate bill contained a provision not in the House amendment
authorizing HUD to operate a day-care facility for children of em-
ployees. The conference report contains this provision. The conferees
direct that HUD provide no funds for the operation or equipment
of the facility but merely prepare and provide the space for the facil-
ity, and initial equipment on a reimbursable basis.
Inter-American Savings and Loan Bank
The Senate bill contained a provision not in the House amendment
which would allow Federal savings and loan associations to invest up
to 1 percent of assets in the Inter-American Savings and Loan Bank
without requiring that such investments be guaranteed by AID. The
conference report contains this provision.
HENRY S. REUSS,
THOMAS L. ASHLEY,
LEONOR K. SULLIVAN,
WILLIAM S. MOORHEAD,
ROBERT G. STEPHENS, Jr.,
FERNAND J. ST GERMAIN,
HENRY GONZALEZ,
PARREN J. MITCHELL,
JERRY M. PATTERSON,
JOHN J. LAFALCE,
LES AUCoIN,
Managers on the Part of the House.
WILLIAM PROXMIRE,
JOHN SPARKMAN,
HARRISON A. WILLIAMS, Jr.,
ALAN CRANSTON,
ADLAI E. STEVENSON,
Managers on the Part of the Senate.
94TH CONGRESS
~
HOUSE OF REPRESENTATIVES
REPORT
2d Session
No. 94-1291
HOUSING ACT AMENDMENTS OF 1976
JUNE 22, 1976.-Ordered to be printed
Mr. REUSS, from the committee of conference,
submitted the following
CONFERENCE REPORT
[To accompany S. 3295]
The committee of conference on the disagreeing votes of the two
Houses on the amendments of the House to the bill (S. 3295) to extend
the authorization for annual contributions under the United States
Housing Act of 1937, to extend certain housing programs under the
National Housing Act, and for other purposes, having met, after full
and free conference, have agreed to recommend and do recommend to
their respective Houses as follows:
That the Senate recede from its disagreement to the amendment of
the House to the text of the bill and agree to the same with an amend-
ment as follows:
In lieu of the matter proposed to be inserted by the House amend-
ment insert the following:
SHORT TITLE
SECTION 1. This Act may be cited as the "Housing Authorization
Act of 1976".
AMENDMENTS TO THE UNITED STATES HOUSING ACT OF 1937
SEC. 2. (a) Section 5 (c) of the United States Housing Act of 1937
is amended-
(1) by striking out the first sentence and inserting in lieu there-
of the following new sentence: "The Secretary is authorized to
enter into contracts for annual contributions aggregating not
more than $1,524,000,000 per annum, which limit shall be in-
creased by $965,000,000 on July 1, 1974, by $662,300,000 on July 1,
1975, and by $850,000,000 on October 1, 1976, except that the addi-
tional authority to enter into contracts for annual contributions
provided on or after July 1, 1975, shall be effective only in such
amounts as may be approved in appropriation Acts."; and
(2) by inserting immediately after "on July 1, 1795," in the
fourth sentence thereof the following: "and by not less than
$17,000,000 per annum on October 1, 1976,".
57-006
3
2
stances described in regulations of the Secretary: Provided, That in
(b) (1) Effective on October 1, 1976, the second and third sentences
no event shall more than 10 percent of the units under the jurisdic-
of section 5 (c) of such Act are amended to read as follows: "Of the
tion of any public housing agency be occupied by single persons under
additional authority to enter into contracts for annual contributions
this clause (D) : Provided further, That in determining priority for
provided on October 1, 1976, and approved in appropriation Acts, the
admission to housing under this Act the Secretary shall give prefer-
Secretary shall (A) make available at least $60,000,000 for the mod-
ence to those single persons who are elderly, handicapped, or displaced
ernization of low-income housing projects, and (B) make available
before those eligible under this clause (D)".
at least $140,000,000 to assist in financing low-income housing projects
(g) Section 8(e) (1) of such Act is amended by inserting after
for ownership by public housing agencies other than under section 8,
"State or local agency" the following: "or the Farmers' Home Admin-
of which not less than $100,000,000 shall be available only for the
istration".
purpose of financing the construction or substantial rehabilitation of
(h) Notwithstanding any other provision of law, the value of any
low-income housing projects. The Secretary shall, in utilizing the
assistance paid with respect to a dwelling unit under the United States
additional authority to enter into contracts for annual contributions
Housing Act of 1937, the National Housing Act, section 101 of the
provided on October 1, 1976, make assistance available under this Act
Housing Act of 1949 may not be considered as income or a resource for
as among newly constructed, substantially rehabilitated, and existing
the purpose of determining the eligibility of, or the amount of benefits
housing units in any community in the same proportion as is specified
payable to, any person living in such unit for assistance under title
by that community with respect to assistance under this Act in its
XVI of the Social Security Act. This subsection shall become effective
housing assistance plan pursuant to section 104(a) (4) (B) of the
on October 1, 1976.
Housing and Community Development Act of 1974.".
(2) Effective on October 1, 1976, the fourth sentence of section
SECTION 255 HOMEOWNERSHIP PROGRAM
5(c) of such Act is amended by striking out "to the amount of con-
SEC. 3. (a) Section 235 (m) of the National Housing Act is amended
tracts for annual contributions required to be entered into by the
by striking out "June 30, 1976" and inserting in lieu thereof "Septem-
Secretary under the second sentence of this subsection".
ber 30, 1977".
(c) Section 9(c) of such Act is amended to read as follows:
(b) The last proviso in section 235 (b) (2) of such Act is amended by
(c) There are authorized to be appropriated, for the purpose of
striking out "$21.600", "$25.200", "$25,200", and "$28,800" and "in-
providing annual contributions pursuant to this section not to exceed
serting in lieu thereof "$25,000", "$29,000", "$29,000", and "$33,000",
$535,000,000 on or after July 1, 1975, not to exceed $80,000,000 on or
respectively.
after July 1, 1976, and not to exceed $576,000,000 on or after Octo-
(c) Section 235 (i) (3) (B) of such Act is amended by striking out
ber 1, 1976.".
"$21,600", "$25,200", "$25,200", and "$28,800" and inserting in lieu
(d) Section 8(c)(4) of such Act is amended by striking out the
thereof "$25,000", "$29,000", "$29,000", and "$33,000", respectively.
period at the end thereof and inserting in lieu thereof the following:
(d) Section 221 (d) (2) (A) of such Act is amended-
" and, subject to the provisions of the following sentence, such pay-
(1) by striking out "$21,600" and "$25,200" in the matter pre-
ments may be made, in the case of a meroly constructed or substantially
ceding the first proviso and inserting in lieu thereof "$25,000"
rehabilitated project, after such sixty-day period in an amount equal
and "$29,000", respectively; and
to the debt service attributable to such an unoccupied dwelling unit
(2) by striking out "$25,200" and "$28,800" in the second pro-
for a period not to exceed one year, if a good faith effort is being made
viso and inserting in lieu thereof "$29,000" and "$33,000", respec-
to fill the unit and the unit provides decent, safe, and sanitary hous-
tively.
ing. No such payment may be made after such sixty-day pe-
(e) Section 235 (h) (2) of such Act is amended by striking out "80
riod (i) if the unoccupied unit is in a project insured under the Na-
per centum" wherever it appears and inserting in lieu thereof "95 per
tional Housing Act, except pursuant to section 244 of such Act, or (ii)
centum".
if the Secretary determines that the dwelling unit is in a project
(f) (1) Section 235 of such Act is amended-
which provides the owner with revenues exceeding the costs incurred
(A) by inserting "(1)" immediately after "(a)"; and
by such owner with respect to such project.".
(B) by adding at the end thereof the following:
(e) Section 8(f) of such Act is amended by striking out "and" at
" (2) (A) Notwithstanding any other provision of this section, the
the end of paragraph (4), by striking out the period at the end of
Secretary is authorized to make periodic assistance payments under
paragraph (5) and inserting in lieu thereof and and by adding
this section on behalf of families whose incomes do not exceed the
the following new paragraph at the end thereof:
maximum income limits prescribed pursuant to subsection (h) (2) of
(6) the term 'debt service' means the required payments for
this section for the purpose of assisting such families in acquiring
principal and interest made with respect to α mortgage secured
ownership of a mobile home consisting of two or more modules and
by housing assisted under this Act.".
a lot on which such mobile home is or will be situated, except that
(f) The third sentence of section 3(2) of such Act is amended by
periodic assistance payments pursuant to this paragraph shall not be
striking out the word "and" before "(C)" and inserting before the
made with respect to more than 20 per centum of the total number of
semicolon the following: "and (D) other single persons in circum-
units with respect to which assistance is approved under this section
5
4
(2) by inserting ", hospital," immediately after "such project"
after January 1, 1976. Assistance payments under this section pursuant
in the material preceding the proviso in the second sentence there-
to this paragraph shall be accomplished through payments on behalf
of; and
of an owner of lower-income of a mobile home as described in the
(3) by inserting " hospital," immediately before "or a group
preceding sentence to the financial institution which makes the loan,
advance of credit, or purchase of an obligation representing the loan
practice facility" and immediately before "or facility" in the pro-
viso in the second sentence thereof.
or advance of credit to finance the purchase of the mobile home and
the lot on which such mobile home is or will be situated, but only if
CO-INSURANCE
insurance under section 2 of this Act covering such loan, advance of
credit, or obligation has been granted to such institution.
SEC. 6. (a) Section 244 of the National Housing Act is amended by
(B) Notwithstanding the provisions of subsection (c) of this sec-
inserting at the end thereof the following new subsection:
tion, assistance payments provided pursuant to this paragraph shall be
(g) (1) Where the mortgagee is a public housing agency or an in-
in an amount not exceeding the lesser of-
sured depository institution and the mortgage covers a multifamily
(i) the balance of the monthly payment for principal, interest,
housing project, the co-insurance contract may provide that the mort-
real and personal property taxes, insurance, and insurance pre-
gagee assume (i) the full amount of any loss on the insured mortgage
mium chargeable under section 2 of this Act due under the loan or
up to an amount equal to a fixed percentage of the outstanding princi-
advance of credit remaining unpaid after applying 20 per centrum
pal balance of the mortgage at the time of claim for insurance benefits,
of the mobile homeowner's income; or
or (ii) the full amount of any losses on insured mortgages in a port-
"(ii) the difference between the amount of the monthly pay-
folio of mortgages approved by the Secretary up to an amount equal
ment for principal, interest, and insurance premium chargeable
to a fixed percentage of the outstanding principal balance of all
under section 2 of this Act which the mobile homeowner is obli-
mortgages in such portfolio at the time of claim for insurance benefits
gated to pay under the loan or advance of credit and the monthly
on a mortgage in the portfolio, plus a share of any loss in excess of the
payment of principal and interest which the owner would be ob-
amount under clause (i) or (ii), whichever is applicable.
ligated to pay if the loan or advance of credit were to bear interest
(2) The second sentence of subsection (d) shall not apply to mort-
at a rate derived by subtracting from the interest rate applicable
gages made to public housing agencies, but for purposes of such sec-
to such loan or advance of credit the interest rate differential be-
and sentence such mortgages shall not be counted in the aggregate
tween the maximum interest rate plus mortgage insurance pre-
principal amount of all mortgages insured under this title.
mium applicable to mortgages insured under subsection (i) of this
(3) The Secretary may make loans, from the applicable insurance
section at the time such loan or advance of credit is made and the
fund, to public housing agencies in connection with mortgages which
interest rate which such mortgages are presumed, under regula-
have been insured pursuant to this subsection and which are in
tions prescribed by the Secretary, to hear for purposes of sub-
default.
section (c) (2) of this section."
(4) The Secretary may insure and make a commitment to insure
(2) Section 235(e) of such Act is amended by inserting (a) (2)
in connection with a co-insurance contract pursuant to this subsection
(B)," immediately before "(c)".
(4) a mortgage on a project assisted under the second proviso in the
first sentence of section 236(b) of this Act, and (B) a mortgage or
SECTION 236 AMENDMENTS
advance on a mortgage made to a public housing agency on a project
SEC. 4. (a) Section 236 (n) of the National Housing Act is amended
under construction which is not approved for insurance prior to
by striking out "June 30, 1976" and inserting in lieu thereof "Septem-
construction.
ber 30, 1977".
(5) As used in this subsection, the term 'public housing agency'
(b) Section 236(f) (2) of such Act is amended-
has the same meaning as in section 3(6) of the United States Housing
(1) by inserting (including the amount allowed for utilities
Act of 1937, and the term "insured depository institution' means any
in the case of a project with separate utility metering)' imme-
savings bank, savings and loan association, commercial bank or other
diately after "basic rentals" in the first sentence thereof and by
such depository institution whose deposits are insured by the Federal
striking out everything in such sentence which follows "of their
Deposit Insurance Corporation, by the Federal Savings and Loan In-
income" and inserting in lieu thereof a period; and
surance Corporation, or by an agency or instrumentality of a State.
(2) by inserting (including the amount allowed for utilities
"(6) Notwithstanding any other provision of this Act, the Secretary
in the case of a project with separate utility metering)' imme-
may include in the determination of replacement cost of a project to
diately after "rental payment" in the second sentence thereof and
be covered by a mortgage made to a public housing agency and insured
by striking out everything in such sentence which follows "ten-
pursuant to this subsection, such reserves and development costs, not
ant's income" and inserting in lieu thereof a period.
to exceed 5 per centum of the amount otherwise allowable, as may be
established or authorized by the public housing agency consistent with
FHA SUPPLEMENTAL LOANS FOR HOSPITALS
such agency's procedures and underwriting standards.".
SEC. 5. Section (a) of the National Housing Act is amended-
(b) Section 244(a) of such Act is amended by adding the following
(1) by inserting ", hospital," immediately after "multifamily
new sentence at the end thereof: "A mortgagee which enters into a
project" in the first sentence thereof;
contract of co-insurance under this section shall not by reason of such
6
7
contract, or its adherence to such contract or applicable regulations
(5) (A) Section 221 (d) (4) (ii) of such Act is amended by striking
of the Secretary, including provisions relating to the retention of risks
out "$12,300", "$17,188", "$20,525", "$24,700", and "$29,038" in the
in the event of sale or assignment of a mortgage, be made subject to
matter preceding the first semicolon and inserting in lieu thereof
any State law regulating the business of insurance.".
"$18,450", "$20,625", "$24,630", "$29,640", and "$34,846", respectively.
(B) Section 221 (d) (4) (ii) of such Act is further amended by strik-
EXPERIMENTAL FINANCING
ing out "$13,975", "$20,025", "$24,350", "$31,500", and "$34,578" in
the matter following the first semicolon and inserting in lieu thereof
SEC. 7. Section 245 of the National Housing Act is amended by strik-
"$20,962", "$24,030", "$29,220", "$37,800", and "$41,494", respectively.
ing out "June 30, 1976" and inserting in lieu thereof "September 30,
(6) (A) Section 231 (c) (2) of such Act is amended by striking out
1977".
"$12,300", "$17,188", "$20,525", "$24,700", and "$29,038" in the matter
MULTIFAMILY MORTGAGE LIMITS
preceding the first semicolon and inserting in lieu thereof "$18,450",
"$20,625", "$24,630", "$29,640", and "$34,846", respectively.
SEC. 8. (a) The National Housing Act is amended by striking out
(B) Section 231 (c) (2) of such Act is further amended by striking
"by not to exceed 75 per centum in any geographical area" where it
out "$13,975", "$20,025", "$24,350", "$31,500", and "$34,578" in the
appears in sections 207(c) (3), 213(b) (2), 220(d) (3) (B) (iii), (d)
matter following the first semicolon and inserting in lieu thereof
(3) (ii), 221 (d) (4) (ii), 231(c) (2), and 234(e) (3) and inserting in
"$20,962", "$24,030", "$29,220", "$37,800", and "$41,494", respectively.
lieu thereof in each such section "by not to exceed 50 per centum in any
(7) (4) Section 234(c) (3) of such Act is amended by striking out
geographical area".
"$13,000", "$18,000", "$21,500", "$26,500", and "$30,000", in the matter
(b) (1) (A) Section 207(c) (3) of the National Housing Act is
preceding the first semicolon and inserting in lieu thereof "$19,500",
amended by striking out "$13,000", "$18,000", "$21,500", "$26,500",
"$21,600", "$25,800", "$31,800", and "$36,000", respectively.
"$30,000", and "$3,250" in the matter preceding the first semicolon and
(B) Section 234(e) (3) of such Act is further amended by striking
inserting in lieu thereof "$19,500", "$21,600", "$25,800", "$31,800",
out "$15,000", "$21,000", "$25,750", "$32,250", and "$36,465" in the
"$36,000", and $3,900", respectively.
matter following the first semicolon and inserting in lieu thereof
(B) Section 207 (c) (3)of such Act is further amended by striking
"$22,500", "$25,200", "$30,900", "$38,700", and "$43,758", respectively.
out "$15,000", $21,000", "$25,750", "$32,250", and "$36,465" in the mat-
ter following the first semicolon and inserting in lieu thereof "$22,500",
CORRECTION OF DEFECTS
"$25,200," "$30,900", "$38,700" and "$43,758", respectively.
(2) (A) Section 213(b) (2) of such Act is amended by striking out
SEC. 9. (a) (1) Section 518(b) of the National Housing Act is
"$13,000", "$18,000", "$21,500", "$26,500", and "$30,000" in the matter
amended by striking out "not more than nineteen months after the
preceding the first proviso and inserting in lieu thereof "$19,500",
date of enactment of the Housing and Community Development Act
"$21,600", "$25,800", "$31,800", and "$36,000", respectively.
of 1974" in the first sentence thereof and inserting in lieu thereof "not
(B) Section 213 (b) (2) of such Act is further amended by striking
more than four months after the date of enactment of the Housing
out "$15,000", "$21,000", "$25,750", "$32,250", and "$36,465" in the
Authorization Act of 1976".
first proviso and inserting in lieu thereof "$22,500", "$25,200", "$30,-
(2) Section 518(b) of such Act is amended by striking out the last
900", "$38,700", and "$43,758", respectively.
sentence and inserting in lieu thereof the following: "Expenditures
(3) (A) Section 220 (d) (3) (B) (iii) of such Act is amended by strik-
pursuant to this subsection shall be made from the insurance fund
ing out "$13,000", "$18,000", "$21,500", "$26,500", and "$30,000" in the
chargeable for insurance benefits on the mortgage covering the struc-
matter preceding "execpt" where it first appears and inserting in lieu
ture to which the expenditures relate. There are hereby authorized to
thereof "$19,500", "$21,600", "$25,800", "$31,800", and "$36,000",
be appropriated such sums as may be necessary to cover the costs of
respectively.
such expenditures not otherwise provided for.".
(B) Section 220(d) (3) (B) (iii) of such Act is further amended by
(b) Section 518 of the National Housing Act is amended by adding
striking out "$15,000", "$21,000", "$25,750", "$32,250", and "$36,465"
at the end thereof the following new subsections:
in the matter following "except" where it first appears and inserting in
"(d) The Secretary is authorized to make expenditures to correct
lieu thereof "$22,500", "$25,200", "$30,900", "$38,700", and "$43,758",
or to reimburse the owner for the correction of structural or other
respectively.
major defects which so seriously affect use and liveability as to create
(4) Section 221 (d) (3) (ii) of such Act is amended-
a serious danger to the life or safety of inhabitants of any one-, two-,
(4) by striking out "$11,240", "$15,540", "$18,630", "$23,460",
three-, or four-family dwelling which is more than one year old on the
and "$26,570" and inserting in lieu thereof "$16,860", "$18,648"
date of issuance of the insurance commitment, is located in an older,
"$22,356", "$28,152", and "$31,884", respectively; and
declining urban area, and is covered by a mortgage insured under
(B) by striking out "$13,120", "$18,630", "$22,080", "$27,600",
section 203 or 221 on or after January 1, 1973, but prior to the date of
and "$32,000" and inserting in lieu thereof "$19,680", "$22,356",
enactment of this subsection if (1) the owner requests assistance from
"$26,496", "$33,120", and "$38,400", respectively.
the Secretary not more than one year after the date of enactment of
8
9
this subsection, and (2) the defect is one that existed on the date of
(b) Section 202(d) (4) of such Act is amended by adding the follow-
the issuance of the insurance commitment and is one that a proper
ing new sentence at the end thereof: "Notwithstanding the preceding
inspection could reasonably have been expected to have disclosed. The
provisions of this paragraph, the term 'elderly or handicapped fami-
Secretary may require from the seller of any such dwelling an agree-
lies' includes two or more elderly or handicapped persons living to-
ment to reimburse him for any payments made pursuant to this sub-
gether, one or more such persons living with another person who is
section with respect to such dwelling. Expenditures pursuant to this
determined (under regulations prescribed by the Secretary) to be
subsection shall be made from the insurance fund chargeable for in-
essential to their care or well-being, and the surviving member or mem-
surance benefits on the mortgage covering the structure to which the
bers of any family described in the first sentence of this paragraph
expenditures relate. There are hereby authorized to be appropriated
who were living, in a unit assisted under this section, with the deceased
such sums as may be necessary to cover the costs of such expenditures
member of the family at the time of his or her death.".
not otherwise provided for.
(c) Section 202(a) (3) of such Act is amended by striking out all
"(e) The Secretary of Housing and Urban Development is author-
that follows "and shall bear interest at a rate" up to "plus an allow-
ized and directed to conduct a full and complete investigation and
ance" and inserting in lieu thereof "of 7 per centum per annum.".
study and report to Congress, with recommendations, not later than
March 1, 1977, with respect to an effective program for protecting
REHABILITATION LOAN PROGRAM
home buyers from hidden or undisclosed defects seriously affecting the
use and livability of the home, which would be applicable to existing
SEC. 12. (a) Section 312 of the Housing Act of 1964 is amended-
homes financed with mortgages insured under this Act. In the study
(1) by striking out "and not to exceed $100,000,000 for the fiscal
and report the Secretary shall particularly investigate the need for,
year beginning on July 1, 1975" and inserting in lieu thereof "not
cost and feasible structure of a national home inspection and warranty
to exceed $100,000,000 for the fiscal year beginning on July 1, 1975,
program, with respect to such homes, to be operated by the Federal
and not to exceed $100,000,000 for the fiscal year beginning on
Government out of fees assessed on the home buyer and amortized
October 1, 1976"; and
over α period of two years. The Secretary's report shall also present an
(2) by adding at the end thereof the following new sentence:
analysis of alternative Federal programs to meet these needs, and the
"The amount of commitments to make loans pursuant to this sec-
cost and means of financing such programs. In the report the Secretary
tion entered into after August 22, 1976, shall not exceed amounts
shall also outline administrative steps which can be taken to provide
approved in appropriation Acts.".
disclosure to purchasers of existing homes financed with mortgages
(b) Section 312 (h) of such Act is amended to read as follows:
insured under this Act of the actual condition of the home and the
(h) No loan shall be made under this section after September 30,
types of repairs or replacements likely to be needed within a period of
1977, except pursuant to a contract, commitment, or other obligation
two years, such as repairs or replacement of furnace, roof or major
entered into pursuant to this section prior to October 1, 1977.".
appliances, based on age and useful life expectancy of such
EMERGENCY HOUSING
appurtenances."
SEC. 13. (a) Section 109(b) of the Emergency Homeowners' Relief
GENERAL INSURANCE FUND AUTHORIZATION
Act is amended by striking out "June 30, 1976" and inserting in lieu
SEC. 10. Section 519 of the National Housing Act is amended by
thereof "September 30, 1977".
adding at the end thereof the following new subsection:
(b) The first sentence of section 110(a) of such Act is amended-
"(f) There are authorized to be appropriated to cover losses sus-
(1) by striking out "Until one year from the date of enact-
tained by the General Insurance Fund not to exceed $500,000,000.".
ment of this title, each" and inserting in lieu thereof "Each";
(2) by inserting "prior to October 1, 1977," immediately after
"(1)"; and
HOUSING FOR THE ELDERLY
(3) by inserting "until one year from the date of enactment of
SEC. 11. (a) Section 202(a) (4) (B) (i) of the Housing Act of 1959
this title," immediately after "(2)".
is amended-
(c) Section 111 of such Act is amended by striking out "July 1,
(1) by striking out $$800,000,000" in the first sentence and in-
1976" and inserting in lieu thereof "October 1, 1977".
serting in lieu thereof "$1,475,000,000, which amount shall be in-
(d) Section 3(b) of the Emergency Home Purchase Assistance Act
creased to $2,387,500,000 on October 1, 1977, and to $3,300,000,000
of 1974 is amended by striking out "July 1, 1976" and inserting in lieu
on October 1, 1978"; and
thereof "October 1, 1977".
(2) by inserting the following new sentence at the end thereof:
(e) (1) Section 313(b) of the National Housing Act is amended by
"The Secretary may not issue notes or other obligations to the
striking out the period at the end thereof and inserting in lieu thereof
Secretary of the Treasury pursuant to this section in an aggregate
"; and by inserting the following at the end thereof:
amount exceeding $800,000,000 except as approved in appropria-
"(D) such mortgage involves a principal residence the sales
tion Acts.".
price of which does not exceed $48.000 ($52,000 in high-cost areas
11
10
(d) Section 116 of such Act is amended by adding at the end thereof
as determined by the Secretary) per family residence or dwelling
the following new subsection:
unit, except that such sales price in Alaska, Hawaii, and Guam
(h) In the event that the total amount available for distribution in
may not exceed $65,000.".
fiscal year 1977 in metropolitan areas is insufficient to meet all basic
(2) The amendment made by paragraph (1) shall apply only with
grant and holdharmless entitlement needs, as provided by section
respect to mortgages purchased pursuant to commitments made after
106 and funds are not otherwise appropriated to meet such de-
the date of the enactment of this Act.
ficiency, the Secretary shall meet the deficiency, first, from amounts
available for use under section 107 and, if such amounts are exhausted,
FLOOD INSURANCE
through a rotatable reduction of all entitlements under section 106
(a).".
SEC. 14. (a) Section 202(b) of the Flood Disaster Protection Act of
COMPREHENSIVE PLANNING
1973 is amended by striking out all that follows "shall not apply to"
and inserting in lieu thereof the following: "(1) any loan made to
SEC. 16. (a) The first sentence of section 701(e) of the Housing Act
finance the acquisition of a residential dwelling occupied as a residence
of 1954 is amended by striking out "and not to exceed $150,000,000
prior to March 1, 1976, or one year following identification of the area
for the fiscal year 1976" and inserting in lieu thereof "not to exceed
within which such dwelling is located as an area containing special
$150,000,000 for the fiscal year 1976, and not to exceed $100,000,000 for
flood hazards, whichever is later, or made to extend, renew, or increase
the fiscal year 1977".
the financing or refinancing in connection with such a dwelling, (2)
(b) No eligible recipient under section 701 of the Housing Act of
any loan, which does not exceed an amount prescribed by the Secre-
1954 may be excluded from qualifying for funds under such section
tary, to finance the acquisition of a building or structure completed
solely on the basis of participation or nonparticipation under such sec-
and occupied by a small business concern, as defined by the Secretary,
tion prior to fiscal year 1977.
prior to January 1, 1976, (3) any loan or loans, which in the aggregate
do not exceed $5,000, to finance improvements to or rehabilitation of
CONFIRMATION OF GOVERNMENT NATIONAL MORTGAGE ASSOCIATION PRESIDENT
a building or structure occupied as a residence prior to anuary 1, 1976,
or (4) any loan or loans, which in the aggregate do not exceed an
SEC. 17. (a) The National Housing Act is amended by striking out
amount prescribed by the Secretary, to finance nonresidential addi-
the third sentence of section 308 and inserting in lieu thereof the
tions or improvements to be used solely for agricultural purposes on
following: "There is hereby established in the Department of Housing
a farm.".
and Urban Development the position of President, Government Na-
(b) Section 1336(a) of the National Flood Insurance Act of 1968
tional Mortgage Association, who shall be appointed by the President,
is amended by striking out "December 31, 1976" and inserting in lieu
by and with the advice and consent of the Senate. The Secretary shall
thereof "September 30, 1977".
select and effect the appointment of qualified persons to fill the offices
(c) Section 1376 of the National Flood Insurance Act of 1968 is
of vice president, and such other offices as may be provided for in the
amended by adding at the end thereof the following new subsection:
bylaws. Persons appointed under the preceding sentence shall per-
"(c) There are authorized to be appropriated for studies under this
form such executive functions, powers, and duties as may be prescribed
title not to exceed $100,000,000 for the fiscal year 1977.".
by the bylaws or by the Secretary, and such parsons shall be executive
officers of the Association and shall discharge all such executive func-
COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
tions, powers, and duties.".
(b) Section 309(d) of such Act is amended by striking out the
SEC. 15. (a) Section 103(a) (2) of the Housing and Community
word "The" immediately preceding "Secretary" in the first sentence
Development Act of 1974 is amended by inserting ", and $200,000,000
and inserting in lieu thereof "Subject to the provisions of section 308
for the fiscal year 1977, not more than 50 per centum of which amount
(a), the".
may be used under section 106(d) (1)," immediately after "1976".
(c) Section 5315 of title 5, United States Code, is amended by add-
(b) Paragraph (2) of section 105 (a) of such Act is amended by in-
ing at the end thereof the following new paragraph:
serting immediately after "neighborhood facilities," the following:
(108) President, Government National Mortgage Association,
"centers for the handicapped,".
Department of Housing and Urban Development.".
(c) Section 107 (a) (1) of such Act is amended by inserting the fol-
lowing immediately before the semicolon at the end thereof: "or in
(d) Section 7(c) of the Department of Housing and Urban Devel-
behalf of new community projects assisted under title X of the Na-
opment Act is amended by striking out "seven" in the proviso and
tional Housing Act which meet the eligibility standards set forth in
substituting in lieu thereof "six".
title VII of the Housing and Urban Development Act of 1970 and
(e) Notwithstanding the amendment made by subsection (a), the
which were the subject of an application or preapplication under such
rights, powers, and duties of the position of President, Government
title prior to January 14, 1975".
National Mortgage Association, as in effect on the day preceding the
12
13
date of enactment of this Act shall remain in effect until the position
RESEARCH AUTHORIZATION
established hereunder has been filled in accordance with the terms of
this Act.
SEC. 23. (a) Section 501 of the Housing and Urban Development
Act of 1970 is amended by striking out the second sentence and insert-
SPECIAL ASSISTANT FOR COOPERATIVE HOUSING
ing in lieu thereof the following "There are authorized to be appro-
priated for activities under this title not to exceed $65,000,000 for the
SEC. 18. The first sentence of section 102(h) of the Housing Amend-
fiscal year 1977.".
ments of 1955 is amended-
(b) Section of such Act is amended by striking out the first,
(1) by inserting after "section 221 (d) (3)' a comma and the fol-
third, and fourth sentences.
lowing: "section 235, section 236, section 241, section 243, section
(c) Section 502 (f) of such Act is amended by striking out the period
246, and section 203(n)";
at the end of the second sentence and inserting in lieu thereof the fob
(2) by inserting after "Housing and Urban Development Act
lowing: "and such departments and agencies are hereby authorized
of 1965" the following: "or section 8 of the United States Housing
to execute such contracts and grants.".
Act of 1937"; and
(3) by inserting before the period the following "and Assist-
NATIONAL INSTITUTE OF BUILDING SCIENCES
ant Secretary for Housing Management".
SEC. 24. Section 809(h) of the Housing and Community Develop-
NEW COMMUNITIES
ment Act of 1974 is amended by inserting and $5,000,000 for each
of the fiscal years 1977 and 1978" immediately after "fiscal year 1976".
SEC. 19. Section 720 of the Housing and Urban Development Act
of 1970 is amended by striking out "June 30, 1975" and inserting in
RURAL HOUSING
lieu thereof "October 1, 1977".
SEC. 25. (a) Section 521 (a) (1) of the Housing Act of 1949 is amend-
URBAN HOMESTEADING
ed by striking out "rate determined annually by the Secretary of the
Treasury" and inserting in lieu thereof "rate determined by the Secre-
SEC. 20. Section 810(g) of the Housing and Community Develop-
tary of the Treasury upon the request of the Secretary".
ment Act of 1974 is amended by striking out "and not to exceed
(b) Section 520(3) (B) of such Act is amended by inserting "for
$5,000,000 for the fiscal year 1976" and inserting in lieu thereof "not
lower and moderate-income families" immediately after "has a serious
to exceed $6,250,000 for the fiscal year 1976, and for the transition
lack of mortgage credit".
quarter, not to exceed $5,000,000 for fiscal year 1977, and not to exceed
(c) Section 510 of such Act is amended by redesignating subsections
$5,000,000 for the fiscal year 1978".
(f) and (g) as subsections (h) and (i), respectively, and by inserting
the following new subsections immediately after subsection (e)
DAY CARE
"(f) continue processing as expeditiously as possible applica-
tions on hand received prior to the time an area has been deter-
SEC. 21. Section 7 of the Department of Housing and Urban De-
mined by the Secretary not to be 'rural' or a 'rural area', as those
velopment Act is amended by adding at the end thereof the following
terms are defined in section 520, and make loans or grants to such
new subsection:
applicants who are found to be eligible on the same basis as though
"(n) Notwithstanding any other provision of law, the Secretary is
the area were still rural;
authorized by contract or otherwise to establish, equip and operate
"(g) notwithstanding that an area ceases, or has ceased, to be
a day care center facility for the purpose of serving children who are
'rural', in α 'rural area', or an eligible area, make assistance under
members of households of employees of the Department. The Secre-
this title available in connection with transfers and assumptions
tary is authorized to establish or provide for the establishment of
of property securing any loan made, insured, or held by the Secre-
appropriate fees and charges to be chargeable against the Department
tary or in connection with any property. held by the Secretary
of Housing and Urban Development employees or others who are
under this title on the same basis as though the area were still
beneficiaries of services provided by such a day care center.".
rural;".
COUNSELING
HOME OWNER'S LOAN ACT
SEC. 26. Title V of the Housing and Urban Development Act of 1970
SEC. 22. The twelfth undesignated paragraph of section 5(c) of the
is amended by adding at the end thereof the following new section:
Home Owner's Loan Act of 1933 (12 U.S.C. 1464(c)) is amended
by adding in the first sentence, immediately after the words "made
"COUNSELING TO MORTGAGORS
pursuant to either of such sections" and before the period the follow-
ing language: "and in the share capital and capital reserve of the
"Sec. 508. (a) In carrying out activities under section 501, the Secre-
Inter-American Savings and Loan Bank".
tary is directed to undertake programs of studies and demonstrations
14
within at least three standard metropolitan statistical areas to deter-
mine the extent of need for and cost effectiveness of providing pre-
purchase, default and delinquency counseling and related services to
owners and purchasers of single-family dwellings insured or to be
insured under the unsubsidized mortgage insurance programs of the
National Housing Act.
JOINT EXPLANATORY STATEMENT OF THE
"(b) Within one year from enactment of this section, the Secretary
COMMITTEE OF CONFERENCE
shall submit an interim report to the Congress with respect to the
progress made under such studies and demonstrations, including an
The managers on the part of the House and the Senate at the con-
estimate as to the date when a final report on the results of such dem-
ference on the disagreeing votes of the two Houses on the amendments
onstrations will be made available to the Congress.".
of the House to the bill (S. 3295) to extend the authorization for
And the House agree to the same.
annual contributions under the United States Housing Act of 1937,
That the Senate recede from its disagreement to the amendment of
to extend certain housing programs under the National Housing Act,
the House to the title of the Senate bill and agree to the same.
and for other purposes, submit the following joint statement to the
House and the Senate in explanation of the effect of the action agreed
HENRY S. REUSS,
upon by the managers and recommended in the accompanying confer-
THOMAS L. ASHLEY,
ence report:
LEONOR K. SULLIVAN,
The House amendment to the text of the bill struck out all of the
WILLIAM S. MOORHEAD,
Senate bill after the enacting clause and inserted a substitute text.
ROBERT G. STEPHENS, Jr.,
The Senate recedes from its disagreement to the amendment of the
FERNAND J. ST GERMAIN,
House with an amendment which is a substitute for the Senate bill
HENRY GONZALEZ.
and the House amendment. The differences between the Senate bill,
PARREN J. MITCHELL,
the House amendment, and the substitute agreed to in conference are
JERRY M. PATTERSON,
noted below, except for clerical corrections, conforming changes made
JOHN J. LAFALCE,
necessary by agreements reached by the conferees, and minor drafting
LES AUCOIN,
and clarifying changes.
Managers on the Part of the House.
WILLIAM PROXMIRE,
HOUSING ASSISTANCE AUTHORIZATIONS
JOHN SPARKMAN,
General
HARRISON A. WILLIAMS, Jr.,
The Senate bill authorized $696,000,000 in additional contract au-
ALAN CRANSTON,
thority on October 1, 1976, for the public housing and section 8 pro-
ADLAI E. STEVENSON,
grams. The House amendment authorized $850,000,000. The confer-
JOHN TOWER,
ence report contains the House provision.
EDWARD W. BROOKE,
Mix of new, rehabilitated, and existing units
JAKE GARN,
Managers on the Part of the Senate.
The Senate bill required the Secretary of HUD to make at least
$465,000,000 of the additional contract authority provided on Octo-
ber 1, 1976, available only for newly constructed and substantially
rehabilitated housing units.
The House amendment did not specify a minimum level of funding
for new and rehabilitated units under the public housing and section 8
programs. Thus, the House amendment did not alter the requirements
of existing law that the proportion of new, rehabilitated, and existing
units assisted be determined in accordance with approved housing
assistance plans in those communities which submitted such plans.
Section 104(a) (4) of the Housing and Community Development Act
of 1974 requires each community, as a prerequisite to receiving a com-
munity development block grant, to prepare a housing assistance plan
which assesses the housing assistance needs of lower-income persons
and specifies an annual target for meeting those needs. With respect
to the latter, section 104(a) (4) (B) of the 1974 Act requires the com-
munity to "specify a realistic annual goal for the number of dwelling
(15)
16
17
units or persons to be assisted, including (i) the relative proportion of
failure to carry out the 1974 Act provisions since it merely substituted
new, rehabilitated, and existing dwelling units.
"
a Congressional determination of housing mix for an executive deter-
In order to ensure that the proportion of new, rehabilitated, and
mination. In either case the framework of the 1974 Act's reliance on
existing units specified in a housing assistance plan would be followed,
local determination would be violated. The conference report accord-
section 213 (a) of the 1974 Act gave each community with an approved
ingly reiterates the existing requirement that housing funds be allo-
housing assistance plan a veto, in effect, of applications for housing as-
cated for new, rehabilitated, and existing units in a community in the
sistance which were inconsistent with the community's housing plan.
proportion specified in that community's housing assistance plan.
The conferees on the 1974 Act expected that the Secretary of HUD
Thus, if a housing assistance plan provides for an annual target of
would take the appropriate steps to assure fulfillment of the intent of
50 new units, 20 rehabilitated units, and 30 existing units, available
Congress that local communities, not the Federal Government, deter-
funds, whether sufficient to support 100 units, 50 units, or some other
mine the mix of new and existing units. The importance of this objec-
number, generally should be allocated in a manner estimated to permit
tive is clearly recognized in the comments in the House committee
50 percent of the units to be new, 20 percent to be rehabilitated, and 30
report (Report No. 93-1114) on section 104:
percent to be existing. The conferees expect the Secretary of HUD to
The requirement that housing assistance plans specify the
adopt procedures to permit communities to modify the part of their
relative proportion of new, rehabilitated, and existing dwell-
housing assistance plans relating to the mix of housing units in order
ing units to be assisted in the community introduces a much-
to reflect changed conditions or priorities or for the purpose of re-
needed flexibility in the provision of Federal housing assist-
capturing unused allocations.
ance. These determinations would govern the use of housing
Where the amount of housing assistance funds allocated to a par-
assistance funds allocated to communities under title II of
ticular community is not sufficiently large to make the proportionate
the bill. Communities with an ample supply of housing but
use of each category of housing feasible, the community and HUD
with many older run-down units may wish to concentrate a
may informally work out a modification of the mix of housing units
substantial portion of their funds on rehabilitating and re-
provided for in the community's housing assistance plan. It is not the
pairing the older units. Other communities, with expanding
intent of the conferees that every community with a housing assistance
populations and vacant lands, may well allocate most of their
plan must necessarily receive some allocation of funds, and, therefore,
funds toward the construction of new units. The committee
current procedures in allocating housing assistance funds need not be
believes this opportunity for communities to make such judg-
modified for the purpose of assuring an allocation for each such com-
ments is an extremely important innovation in Federal hous-
munity. However, the conferees expect HUD, in allocating funds, not
ing policy. (Page 7.)
to penalize any community because it has a housing assistance plan,
and not to favor one community over another solely because of the mix
Again, the House committee report, in commenting on the allocation
of housing units called for in the community's housing assistance plan.
of housing assistance funds by HUD clearly states the same objectives
With respect to the approval or disapproval of housing assistance
The committee intends that the Secretary will allocate
plans as part of community development block grant applications, the
funds under all HUD housing programs which are funded
Secretary of HUD would continue to have the same authority pur-
and intended to be operative by the Congress. The propor-
suant to section 104 (c) of the Housing and Community Development
tion of such funds to be utilized with respect to each of the
Act of 1974 which the Secretary currently has.
categories of newly constructed, substantially rehabilitated,
Again, the conferees recognize that the success of the local determi-
or existing housing will be determined, of course, by local
nation policy contained in the conference report will depend on the
governments through their housing assistance plans. (Page
performance of HUD in implementing that policy. The conferees have
23.)
identified several abuses by HUD over the past 18 months but by no
means should those which are identified here be considered as
Unfortunately, the Secretary of HUD has avoided carrying out the
exhaustive.
terms and intent of the 1974 Act by putting pressure on communities
The practice by HUD of establishing national targets for the num-
to stress existing housing over new and rehabilitated housing, by dis-
ber of assisted new, rehabilitated, and existing units is inconsistent
regarding the contents of housing assistance plans in allocating hous-
with local determination of housing mix. These national targets have
ing assistance, by establishing national and area targets for the num-
been translated into areawide targets. As a result, communities which
ber of assisted new, rehabilitated, and existing units which bore no
have provided for new construction in their housing assistance plans
relationship to the contents of housing assistance plans, by failing
and have sponsors interested in developing that housing have been
to use the traditional public housing program to provide needed new
required by HUD to accept existing housing units instead because the
housing units, and by structuring and administering the section 8
area's target for new construction had been reached.
program in a way to make it a virtual nullity as a useful tool to assist
It is apparent to the conferees that HUD is quite aware of the con-
newly constructed and rehabilitated units.
flict between HUD targets and the contents of local housing assistance
The conferees felt that the Senate bill, in mandating a minimum
plans because it has attempted to pressure communities into preparing
level of new construction, was an inappropriate response to HUD's
18
19
housing assistance plans which more nearly conform to HUD's tar-
gets for the mix of new and existing housing. The following letter
The reference in the above letter to the difficulties in developing new
from a HUD official is but one example:
housing units under section 8 points up another aspect of HUD's
performance. The conferees, in fashioning the 1974 Act, did not believe
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT,
they were providing for a housing program for lower-income persons
PHILADELPHIA AREA OFFICE,
which was cyclical in nature, and which therefore could not produce
Philadelphia, Pa., February 23, 1976.
housing when interest rates were high and when financing for multi-
To: All community development block grant applicants.
family units was generally tight. The unwavering housing policy of
Subject: Section 8 Housing and CDBG applications.
the Congress has been to provide programs and funds to produce a
high volume of units for lower-income persons regardless of market
For the foreseeable future, it appears that developers and state
conditions. When the new section 8 program was authorized in 1974,
agencies will continue having difficulties in obtaining needed financing
the conferees made clear that should HUD emphasize this program
for Section 8 New Construction. We at HUD are concerned that com-
and should it not produce units in a timely manner, other programs,
munities and HUD work together to make maximum use of commu-
such as public housing and section 236, should be utilized.
nities' existing housing stock-a priority of both HUD and the
Not only has HUD kept all its eggs in the section 8 basket, it has
Congress.
made that program, through numerous policies and administrative
When you are preparing your Second Year Housing Assistance
directives unattractive for the development of new and substantially
Plan, therefore I urge you to seriously consider emphasizing the Sec-
rehabilitated housing units. One of the major HUD-imposed stum-
tion 8 Existing program-rather than New Construction or Substan-
bling blocks to section 8 development has been the contract rent ceilings
tial Rehabilitation in your three year goal. The Section 8 Existing
determined by HUD on the basis of "comparable" rents being charged
program can be used either as a "finders keepers" program in which
in the community in existing rental projects. The conferees wish to
households find and move into units meeting Housing Quality Stand-
reaffirm the statements in the House and Senate committee reports
ards or as an "in place" program to subsidize households living in
which direct HUD to establish contract rents which result in sound
units meeting Housing Quality Standards but now paying an excess
development rather than non-development. The conferees expect that
of their incomes for rent. Either method can meet the housing needs
in the future HUD will not discourage the development of new and
of many elderly households and families.
rehabilitated section 8 projects because market or other conditions
In addition, I would like to encourage you to further consider the
use of CDBG rehabilitation and code enforcement activities, rather
make unassisted apartment development unattractive.
than the use of CDBG funds for acquisition of sites for subsidized
Public housing
housing. In general, Section 8 New Construction projects do not re-
The Senate bill required that at least $200,000,000 of the new con-
quire a financial write down in land costs or site improvements. Given
tract authority provided on October 1, 1976, be used under the tradi-
limited resources at local and federal levels, you should utilize your
tional public housing program for newly constructed and substantially
CDBG dollars in other ways which still address your pressing housing
rehabilitated low-income projects. The House amendment left to the
and community development needs.
discretion of HUD the relative allocation of the new authority as
You should be prepared for a wait of perhaps three to five years
between section 8 projects and traditional public housing projects,
for new Section 8 units to become available.
and also left open the relative use of funds to finance the development
I recognize, of course, that not all communities can effectively utilize
of new public housing projects and the acquisition of existing units.
a Section 8 Existing Program. In addition, extraordinary local condi-
The conference report directs HUD to allocate at least $140,000,000
tions may determine that Section 8 New Construction is the only
in contract authority for traditional public housing. at least $100,-
strategy which addresses local housing needs and that CDBG monies
000,000 of which must be used for the provision of additional new or
should be spent for advance site acquisition and preparation. You
rehabilitated low-income projects. Thus, the conference report both
should be aware, however, that all Section 8 sites must meet specified
reduces the size of the public housing set-aside contained in the Senate
site and neighborhood criteria and that CDBG approval by HUD does
bill and moves closer to the House provision which provided greater
not necessarily imply HUD approval of the cleared site for Section 8
discretion in the use of the additional contract authority.
units.
In general, I strongly urge you to consider the thrust of this mes-
Indian housing
sage-to conserve the existing housing stock-in your housing plan-
The Senate bill required that at least $17,500,000 in contract author-
ning for your CDBG application.
ity be made available on July 1, 1976, for public housing for members
Sincerely,
of Indian tribes. The House amendment required that at least $17,-
PAUL T. CAIN,
000,000 of the additional contract authority provided on October 1,
Area Director.
1976, be made available for public housing for members of Indian
tribes. The conference report contains the House provision.
20
21
Public housing modernization
The Senate bill required that at least $60,000,000 of the additional
rentals to be paid by such occupants. The conference report contains
contract authority provided on October 1, 1976, be made available for
the House provision only with respect to the exclusion of housing as-
the modernization of existing public housing projects. The House
sistance payments in the determination of supplemental security in-
amendment contained no similar provision. The conference report con-
come payments.
tains the Senate provision.
CONTRACTS FOR SECTION 8 PAYMENTS IN FARMERS HOME PROJECTS
Public housing operating subsidies
The Senate bill authorized $576,000,000 for fiscal year 1977, and the
The Senate bill contained a provision, not in the House amendment,
House amendment authorized $575,000,000 for grants to public hous-
which authorized section 8 housing assistance contracts of up to 40
ing authorities to meet deficits arising because operating costs exceed
years in cases of projects financed by the Farmers' Home Administra-
rental incomes. The conference report contains the Senate provision.
tion. The conference report contains the Senate provision.
The conferees note that HUD testified that, in calculating the need
for $576 million in operating subsidies, the Department has presumed
PAYMENTS WITH RESPECT TO VACANT SECTION 8 UNITS
implementation of a revised and improved Performance Funding For-
mula developed for HUD by the Urban Institute. The conferees ex-
The House amendment contained a provision, not in the Senate
pect the Department to implement this revised formula as soon as
bill, which authorizes the Secretary of HUD to make section 8 pay-
possible and to report its progress to both committees within 30 days.
ments with respect to vacant units beyond the current 60-day period,
but only for up to 12 months in the amount of the debt service attrib-
Outstanding appropriations
utable to the unit, and subject to other limitations. The conference re-
The Senate bill contained a provision, not in the House amendment,
port contains the House provision.
which required that any appropriations for public housing and section
8 available after October 1, 1976, be used for new construction and re-
ASSISTANCE PAYMENTS TO FHA PROJECTS
habilitation and for public housing in the same ratio as the additional
authority provided on October 1, 1976, was required to be used. The
The Senate bill contained a provision, not in the House amendment,
conference report does not contain the Senate provision.
which authorized $154,000,000 to provide section 8-type assistance pay-
ments with respect to FHA-insured projects threatened with foreclo-
ELIGIBILITY FOR TRADITIONAL PUBLIC HOUSING AND SECTION 8
sure, or where the projects are currently owned by HUD or subject
to mortgages held by HUD. The conference report does not contain
The Senate bill contained a provision, not in the House amendment,
the Senate provision. Instead the conferees expect that any assistance
which makes single non-elderly persons eligible for occupancy of
provided by HUD for this purpose will be made available from the
public housing and section 8 units in up to 10 percent of a public hous-
$850,000,000 in additional contract authority provided by the confer-
ing agency's units, provided that single persons who are elderly, handi-
ence report on October 1, 1976, for the public housing and section 8
capped or displaced get preference for admission. The conference re-
programs, but only to the extent, in any community with an approved
port contains the Senate provisions. The conferees expect the Secretary
housing assistance plan, that the community has provided for such
of HUD to limit the applicability of this provision to situations in-
use in its housing assistance plan. The conferees intend that the local
volving the rehabilitation of an existing structure, the conversion of
communities with housing assistance plans, not HUD, will identify
an existing project to a public housing or section 8 project, the filling
the projects for which such assistance could be made available.
of vacant efficiencies which are not appropriate for occupancy by
elderly or handicapped, and any other similar situation where it would
SECTION 235. HOMEOWNERSHIP ASSISTANCE
be appropriate for single persons to receive assistance.
The Senate bill contained a provision not in the House amendment
DEFINITION OF ASSISTANCE PAYMENTS AS INCOME
increasing the contract authority for section 235 by $200 million. The
conference report does not contain the Senate provision.
The Senate bill contained a provision which provided that subsidies
The Senate bill contained a provision not in the House amendment
under the public housing or section 8 programs would not be consid-
which would require that the mortgage insurance premium under
ered as income in determining eligibility for, or the amount of assist-
section 235 not exceed the premium under 203 (b). The conference
ance under, the Social Security Act or any other federal law. The
report does not contain this provision.
House amendment contained a similar provision, but applicable to
The House amendment contained a provision not in the Senate bill
supplemental security income payments of beneficiaries of assistance
which would raise the income limit for eligibility for section 235
payments under any federal housing program. The House amendment
assistance from 80 percent of median to 95 percent of median. The
also contained a provision, not in the Senate bill, which excluded social
conference report contains the House provision.
security increases occurring after May 1976 from the income of occu-
Both the House amendment and the Senate bill contained provi-
pants of subsidized housing units for purposes of determining the
sions increasing the mortgage limits for section 235. The conference
report contains the House provision which increased the mortgage
22
23
limits for families with less than 5 persons from $21,600 to $25,000
(and from $25,200 to $29,000 in high-cost areas) and for families with
the House language, with an amendment extending this flexibility to
five or more persons from $25,200 to $29,000 (and from $28,800 to
State-insured depository institutions.
$33,000 in high-cost areas).
The Senate bill contained a provision allowing HUD to make loans
to mortgages with respect to co-insured projects in default. The House
SECTION 236. RENTAL ASSISTANCE
amendment contained a similar provision, but restricted these loans
to projects co-insured by a public housing agency. The conference re-
The Senate bill contained a provision not in the House amendment
port contains the House language.
extending the section 236 program to September 30, 1977. The con-
The Senate bill contained a provision not in the House amendment
ference report contains this provision.
allowing HUD to charge a higher premium on loans co-insured by a
The House amendment contained a provision not in the Senate bill
public housing agency than on loans insured under regular FHA pro-
stipulating that, in 236 projects with separate utility metering, an
grams. The conference report deletes this provision. The conferees
amount allowed for utility costs should be included in determining
wish to make clear, however, that public housing agencies are not pro-
whether a tenant is paying 25 percent of income toward rent. The con-
hibited under section 244 from charging an additional premium of
ference report contains this provision. The conferees expressed their
their own, over and above the premium charged by FHA.
intent, however, that the management of these projects should strong-
The House amendment contained a provision, not in the Senate bill,
ly discourage tenants from the over-use of utilities, and should work
allowing an increase of up to 5 percent in the HUD-determined re-
to promote energy conservation in the project.
placement cost reserve for a project if such an increase is allowed by
the co-insuring public housing agency. The conference report con-
FHA MORTGAGE LIMITS IN MULTIFAMILY HOUSING
tains this provision.
The House amendment contained a provision not in the Senate bill
The Senate bill increased the mortgage limits for FHA insured
exempting co-insured loans from state insurance regulation. The con-
mortgages on multifamily housing by 50 percent for 0 bedroom units
ference report contains this provision.
and 20 percent for 1 bedroom units. The House amendment provided
an across-the-board 20 percent increase in mortgage limits, but reduced
COMPENSATION FOR DEFECTS IN EXISTING FHA HOUSING
the allowable high-cost area increment from 75 percent to 50 percent.
The conference report contains the House provision modified to in-
The Senate bill contained a provision not in the House bill extending
clude the Senate provision with respect to 0 bedroom units.
the application deadline for requesting defect compensation under
Section (b) of the National Housing Act (covering certain FHA
FHA INSURANCE FUNDS
Section 203 and 221 homes purchased between 1968 and 1973) until 4
The Senate bill authorized the transfer of all insurance obligations
months after enactment of the bill. The conference report contains
this provision.
for Section 221 projects from the general insurance fund to the special
risk insurance fund. The House amendment authorized appropria-
The Senate bill contained a provision not in the House bill creating
an interim compensation program under Section for homes
tions of $500 million to cover general insurance fund losses. The con-
ference report contains the House language.
purchased between 1973 and enactment and covered by mortgages
insured under sections 203 and 221, allowing one year from the date
FHA INSURANCE FOR MILITARY HOUSING
of enactment to apply. The conference report contains this provision.
The Senate bill contained a provision not in the House bill creating
The House amendment contained a provision, not in the Senate bill,
a new, permanent defect compensation program for all 1-4 family
which authorized FHA mortgage insurance for military personnel and
existing housing purchased with FHA insured loans. This new pro-
others in housing markets impacted by military installations. The
gram applied to all existing homes purchased with FHA-backed
provision permitted HUD to waive any requirement in the National
financing after the date of enactment. The conference report contains
Housing Act, including economic soundness requirements, but exclud-
the Senate provision with an amendment directing a study and report
ing labor standards, if inconsistent with the objectives of the section.
by HUD, instead of a new permanent program at this time, of the
The conference report does not contain this provision.
need for and feasibility of an inspection, buyer information and
warranty against defect program for all existing homes purchased
Co-INSURANCE
with FHA-backed financing. The conferees urge the Secretary to ex-
pand the study required by this provision to include homes purchased
The Senate bill contained a provision increasing HUD's authority
under other financing methods.
to allow flexibility in risk-sharing between HUD and any co-insuring
The Senate bill contained a provision not in the House bill provid-
lender. The House amendment allowed this increased flexibility only
ing that the interim 1973-76 compensation program created by the bill
for multifamily projects where the co-insurer is a public housing agen-
would differ from the current Section 518(b) program in that it
cy or insured depository institution. The conference report contains
would not be restricted to older, declining urban areas and would use a
more liberal definition of an eligible defect. The conference report
does not contain this provision.
24
25
SECTION 202. LOANS FOR HOUSING FOR ELDERLY AND HANDICAPPED
to the housing and related facilities contemplated by the Housing and
The Senate bill contained a provision which would increase the
Community Development Act of 1974. Therefore, the conferees direct
borrowing authority for section 202 loans by $2.5 billion on July 1,
HUD to use actual development cost in determining the section 8 con-
1976. The House amendment would increase the authority from $800
tract rents for 202 projects.
million to $1.475 billion upon enactment, to $2,387,500,000 on Octo-
SECTION 312. REHABILITATION LOANS
ber 1, 1977, and to $3.3 billion on October 1, 1978. The conference re-
port contains the House provision.
The Senate bill contained a provision increasing the authorization
The House amendment contained a provision not in the Senate bill
for Section 312 by $150 million for July 1, 1976 to September 30, 1977.
which would require approval in appropriations acts of all borrowing
The House amendment contained authorization of $100 million for
authority under section 202 in excess of $800 million. The conference
fiscal year 1977. The conference report contains the House provision.
report contains the House provision.
The Senate bill contained a provision not in the House amendment
The Senate bill contained a provision not in the House amendment
creating a two-tiered interest rate structure for Section 312 loans,
which would establish the interest rate on loans under section 202 on
continuing the current 3 percent rate for low-income borrowers and
the basis of the average interest rate on all interest bearing obligations
allowing HUD to set a higher rate, up to the Treasury borrowing rate
of the United States forming a part of the public debt, to be com-
plus administrative costs, for higher income borrowers. The confer-
puted at the end of the fiscal year preceding the date on which the
loan is made. Under current law, the 202 interest rate is established on
ence report does not contain this Senate provision.
the basis of the current average market yield on outstanding market-
EMERGENCY HOMEOWNERS RELIEF ACT
able obligations of the United States with remaining periods to matur-
ity comparable to the average maturities of such loans. The conference
The Senate bill contained a provision not in the House amendment
report contains the Senate provision insofar as the Senate provision
extending until October 1, 1977, the current requirement that Federal
lowers the interest rate on 202 loans, with an amendment which would
supervisory agencies and HUD encourage forbearance in residential
establish the interest rate at 7 per cent.
mortgage foreclosures and that mortgagees notify the supervisory
The conferees feel that the 7 percent rate is a good compromise
agency and mortgagor 30 days before starting foreclosure proceed-
between the interest rates established under the Senate bill and House
ings. The conference report contains this provision, with an amend-
amendment. The interest rate under the Senate provision for fiscal
ment deleting the 30-day reporting requirement.
year 1976 is 6.35 percent. The rate as computed as of April 30, 1976,
The Senate bill contained a provision not in the House amendment
is 6.38 percent. The interest rate under the current formula was most
extending until October 1, 1977, the current requirement that HUD
recently calculated at 8.25 percent. The interest rate calculated on the
report every 2 months on mortgage foreclosures, forbearance and de-
basis of the Senate bill has historically never been higher on a fiscal
linquencies. The conference report contains the Senate provision.
year basis than 6.56 percent. The interest rate calculated on the basis
of the formula in current law has never been as low on a calendar
PURCHASE PRICE LIMIT ON HOUSING WITH GNMA TANDEM
basis as 7 percent since the time long-term obligations have been freed
MORTGAGES
from statutory interest rate limitations.
The House amendment contained a provision not in the Senate bill
Both the Senate bill and the House amendment provided for pur-
which would delete statutory language excluding the receipts and
chase price limits for housing acquired with GNMA tandem plan
disbursements of the section 202 fund from the Budget of the United
mortgages authorized under the Emergency Home Purchase Assist-
States. The conference report does not contain the House provision.
ance Act. The Senate bill provided that the purchase price limit would
It is anticipated that the Congress will be receiving the recommenda-
be the median purchase price in the local market area. The House
tions of its Budget Committees on this subject in the near future in the
amendment set a purchase price limit of $52,000 ($68,750 in Alaska,
light of which this issue should be carefully reconsidered.
Hawaii and Guam). The conference reports sets the purchase price
The House amendment contained a provision not in the Senate bill
limit at $48,000, with an increment to $52,000 in high cost areas and
which would change the definition of an eligible elderly family to
$65,000 in Alaska, Hawaii and Guam.
include two or more persons living together, one such person and
another providing care to the first, or a surviving member of the
ELIGIBLE COMMUNITY DEVELOPMENT ACTIVITIES
family who was living in the unit at the time another member died.
The House amendment contains a provision not in the Senate bill
The conference report contains the House provision.
which authorizes the use of community development block grant funds
The conferees are concerned that the comparability test used to
for the provision of centers for the handicapped. The conference re-
determine contract rents for section 8 projects may provide an obstacle
port contains the House provision.
to the feasibility of 202 projects. There are simply no comparable units
26
27
PARTICIPATION OF NEW COMMUNITY PROJECTS
insurance in areas awaiting rate map studies, from December 31, 1976,
to September 30, 1977. The conference report contains this provision.
The House amendment contains a provision not in the Senate bill
The Senate bill contained a provision exempting from the program's
which makes certain new community projects carried out under Title
lending sanctions under Section 202 (b) loans for acquisition or refi-
X of the National Housing Act eligible for discretionary fund assist-
nancing for residences completed and occupied prior to January 1,
ance of the community development block grant program if such proj-
1976. The House amendment exempted loans for acquisition or refi-
ects meet the same eligibility criteria as new community projects being
nancing of residences occupied before March 1, 1976, or within 1 year
carried out under Title VII of the 1970 housing act. The conference
after designation of area as a flood hazard area, whichever is later. The
report contains the House provision.
conference report contains the House provision.
The Senate bill contained three other provisions not in the House
SUPPLEMENTAL BLOCK GRANT UNEMPLOYMENT PROGRAM
amendment allowing exemptions from the program's Section 202
lending sanctions:
The House amendment contains a provision not in the Senate bill
(1) Loans for improvement or rehabilitation up to $10,000 for
authorizing a program of supplemental community development block
residences occupied before January 1, 1976. The conference report con-
grants in areas of high unemployment. The conference report does not
tains this Senate provision, with an amendment reducing the maxi-
contain this provision.
mum loan to $5,000. It is the intention of the conferees that such home
improvement loans permitted by this provision could not be used for
HUD RESEARCH AUTHORIZATION
major additions to the property.
The House amendment contains provisions not in the Senate bill
(2) Loans for acquisition of buildings occupied by small business
which establish a $65 million authorization level for HUD research
concerns before January 1, 1976. The conference report contains this
activities for fiscal year 1977, delete the separate authorization for
provision, with an amendment authorizing the Secretary of HUD to
the housing allowance experiment, and allow certain delegations of
define small businesses for the purposes of this exemption and to estab-
lish the maximum loan amounts.
contract authority to other Federal agencies. The conference report
(3) Loans up to a HUD-determined amount for non-residential
contains the House provision.
additions or improvements to a farm. The conference report contains
this provision, with an amendment restricting the exemption to loans
FARMERS HOME ADMINISTRATION
for additions and improvements to buildings that are to be used solely
The House amendments contain provisions not in the Senate bill
for agricultural purposes. It is the intention of the conferees in this
which (1) make the determination of the Treasury going rate (as the
provision to enable farmers to obtain financing in order to assist them
basis for the FmHA rate) upon request of the Secretary of Agricul-
in making necessary improvements for the non-residential agricultural
ture rather than annually and (2) permit FmHA to continue process-
structures on their farms.
ing loan applications and other actions received before an area is re-
The House amendment contained a provision not in the Senate
designated from rural to non-rural. The conference report contains the
bill authorizing $100 million for fiscal year 1977 for flood insurance
maps and surveys. The conference report contains this provision.
House provision.
The Senate bill contained a provision not in the House amendment
NATIONAL INSTITUTE OF BUILDING SCIENCES
allowing communities not participating in the flood insurance program
to receive certain Federal assistance for disasters not involving flood-
The House amendments contain a provision not in the Senate bill
ing. The conference report does not contain this provision.
which authorizes $5 million in each of fiscal years 1977 and 1978 as
startup funding for the National Institute of Building Sciences. The
COMMUNITY DEVELOPMENT GRANT ALLOCATION
conference report contains the House provisions.
The Senate bill contained a provision not in the House amendment
HUD COUNSELING TO MORTGAGORS
clarifying the priority of funding under the Community Develop-
ment Act in the event that the funds available are insufficient to meet
The House amendments contain a provision not in the Senate bill
total entitlements specified in the Act. The conferees agreed to the
which would require HUD to carry out a study on the need for and the
Senate provision amended to establish that, in the event that the
effectiveness of unsubsidized mortgagor counseling. The conference
amount appropriated for block grants is insufficient to meet formula
report contains the House provision.
and hold harmless entitlements as specified in the law, the Secretary
shall make proportional reductions in such entitlements. In adopting
FLOOD INSURANCE
this amendment, the conferees intend to make clear that all entitled
The Senate bill contained a provision not in the House amendment
communities would absorb any shortage of funding in amounts pro-
extending the emergency flood insurance program, which allows flood
portional to their entitlements.
28
29
Section 701. Comprehensive Planning
Inter-American Savings and Loan Bank
The Senate bill contained a provision authorizing $100 million for
The Senate bill contained a provision not in the House amendment
fiscal year 1977 for section 701 planning. The House amendment con-
which would allow Federal savings and loan associations to invest up
tained an authorization of $75 million. The conference report contains
to 1 percent of assets in the Inter-American Savings and Loan Bank
the Senate provision.
without requiring that such investments be guaranteed by AID. The
The House amendment contained a provision not in the Senate bill
conference report contains this provision.
prohibiting HUD from allocating section 701 assistance funds on the
basis of an applicant's prior participation in the program. The con-
HENRY S. REUSS,
ference report contains this House provision.
THOMAS L. ASHLEY,
The conferees also expressed their intent that HUD administer the
LEONOR K. SULLIVAN,
program in a manner consistent with the provisions of section 701 (a)
WILLIAM S. MOORHEAD,
which permit assisted governments to engage private planning con-
ROBERT G. STEPHENS, Jr.,
sultants where they deem such services appropriate.
FERNAND J. ST GERMAIN,
Confirmation of the Federal Insurance Administrator
HENRY GONZALEZ,
PARREN J. MITCHELL,
The Senate bill contained a provision not in the House amendment
JERRY M. PATTERSON,
requiring that the FIA Administrator be appointed by the President
JOHN J. LAFALCE,
and confirmed by the Senate, effective January 1, 1977. The conference
LES AUCOIN,
report does not contain this provision.
M anagers on the Part of the House.
Confirmation of Government National Mortgage Association
WILLIAM PROXMIRE,
President
JOHN SPARKMAN,
The Senate bill contained a provision not in the House amendment
HARRISON A. WILLIAMS, Jr.,
requiring that the President of GNMA be appointed by the President
ALAN CRANSTON,
and confirmed by the Senate. The conference report contains this
ADLAI E. STEVENSON,
provision.
JOHN TOWER,
Special Assistant for Cooperative Housing
EDWARD W. BROOKE,
JAKE GARN,
The Senate bill contained a provision not in the House amendment
Managers on the Part of the Senate.
updating the duties of the HUD Special Assistant for Cooperative
Housing. The conference report contains this provision.
o
Planning assistance for new communities
The Senate bill contained a provision not in the House amendment
extending the new community planning assistance program until
October 1, 1977. The conference report contains this provision.
Urban homesteading
The Senate bill contained a provision not in the House amendment
increasing the authorization for the HUD urban homesteading pro-
gram to $6.25 million for fiscal year 1976 and the transition quarter,
and by $5 million in both fiscal year 1977 and fiscal year 1978. The
conference report contains this provision.
HUD day care center
The Senate bill contained a provision not in the House amendment
authorizing HUD to operate a day-care facility for children of em-
ployees. The conference report contains this provision. The conferees
direct that HUD provide no funds for the operation or equipment
of the facility but merely prepare and provide the space for the facil-
ity, and initial equipment on a reimbursable basis.
August 4, 1976
Office of the White House Press Secretary
NOTICE TO THE PRESS
The President has signed S. 3295 - Housing Authorization Act of 1976.
This bill extends HUD program authorities through fiscal year 1977; modifies
and adds funding authorizations for HUD programs; and revises a variety of
HUD authorities, responsibilities and operations.
The bill provides $850 million of additional contract authority for fiscal year
1977 for rental subsidies in low-income housing projects. The bill changes the
int erest rate formula for section 202 direct loans which finance the development
of rental housing for the elderly or handicapped. The rate of these HUD 40-year
loans would be calculated using average interest rates on all interest-bearing
U.S. obligations which are part of the public debt; existing law uses the average
rate on long-term obligations. This change would lower the present interest
rate paid from 9% to 7 1/2%.
S. 3295 also provides that the minimum interest rate for certain rural housing
loans be determined by the Secretary of the Treasury on request of the Secretary
of Agriculture, instead of annually, as presently required.
Other provisions include:
the authority to insure mortgages under the section 236 rental housing
assistance program, which provides interest reduction payments on
behalf of lower income families.
the section 312 rehabilitation loan program, which finances home im-
provements or repairs in slum areas. $100 million would be authorized
to be appropriated in 1977.
the standby program of emergency relief for homeowners threatened
with foreclosure, which would allow HUD to insure or make loans on
behalf of homeowners who have been unable to make mortgage payments
for at least 3 months.
authorization for an additional $2.5 billion of loans under the section 202
housing for the elderly or handicapped program in fiscal years 1977-1979.
-- $576 million for public housing operating subsidies in fiscal year 1977.
$100 million for fiscal year 1977 for the section 701 comprehensive
planning grant program.
# # #
FOR IMMEDIATE RELEASE
AUGUST 4, 1976
Office of the White House Press Secretary
THE WHITE HOUSE
STATEMENT BY THE PRESIDENT
I have
signed into law S. 3295, the Housing
Authorization Act of 1976.
The need to increase the quantity and quality of
housing in America and to assure adequate housing for all
Americans has been one of my primary concerns. S. 3295
contains provisions which are important in helping us reach
these housing goals, and also contains important fiscal
year 1977 authorizations for the Department of Housing and
Urban Development. Unfortunately, it also contains provisions
which indicate the strong reluctance on the part of this
Congress to seek real solutions to the problems we face in
assuring adequate housing for all lower-income Americans.
Two years ago, the Ninety-third Congress authorized
a new approach to provide rental subsidies for lower-
income families --- the Section 8 Housing Assistance
Payments Program. This program was designed to avoid the
serious, and well-documented, defects in the then-existing
public housing program.
As a result of that new program, for the first time
in our history we have been using effectively the existing
housing in inventory, as well as new housing, to provide
decent shelter for the Nation's poor. This approach is
approximately half as costly as constructing new public
housing, and it prevents the waste of our Nation's housing
stock. Moreover, this program permits lower-income families
to live in modest homes, indistinguishable from those of
their neighbors, instead of institutionalized housing.
In S. 3295, however, the Congress has ignored both our
unfortunate previous experience and the recent success re-
sulting from the Section 8 program. Reversing this record
of progress, it voted to re-initiate a public housing program.
Fortunately, in the 1977 HUD appropriation bill, the Congress
has voted overwhelmingly to cut back the size of that program.
S. 3295 would also extend a number of programs which
should be discontinued and would authorize appropriations
far in excess of my budget proposals. Although the Congress
in acting on HUD's appropriation bill has demonstrated much
greater restraint than was shown in S. 3295, the threat to
future budgets remains because these high authorizations
produce unrealistic expectations.
This bill also calls for short-sighted and illogical
changes in the way interest rates are established under
certain existing Federal programs.
more
2
Despite my strong reservations about these and other
undesirable features, I have signed this bill because good
government requires that a number of the authorizations and
program extensions contained in S. 3295 become law as soon
as possible. I have instructed Secretary Hills to use the
resources of the Department of Housing and Urban Development
to implement this measure in a manner which will maximize
its benefits while reducing as much as possible the inevitable
frustration, delays, and increased costs it will also bring.
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