We have noted in the testimony of Mr. Foley that this step is contemplated, but we consider that the Congress might well spell out a direction to this effect so that there will be no possible misinterpretation of policy in this regard.

3. Direct Government building of housing units as provided in title II of the bill should only be authorized as a last-resort measure in defense areas after it has been demonstrated that private industry cannot perform the required construction. While we do not object to the provisions of title II of the bill in this regard, we believe that a legitimate case can be made for the inclusion in title II of provisions which would (a) limit the time within which the Administrator should be permitted to exercise the authority contained in title II; (b) limit the number of units permitted to be built under title II, and (c) limit the amount of funds to be used for the construction of units under title II.

The association believes that fixing such limits would not serve unduly to handicap the Administrator's responsibilities under title II of the bill, but would, on the other hand, lend a desirable degree of certainty to the size, cost, and duration of the program.

Further in connection with title II the association has the following additional suggested amendment:

Section 203 of the bill restricts the cost of per family unit of any public housing built under the act. However, the section provides that: "For the purpose of this section the cost of any land acquired by the Administrator upon the filing of a declaration of taking in proceedings for the condemnation of fee title shall be considered to be the amount required to be paid into court upon the filing of such declaration."

It is our experience that where land is acquired by condemnation proceedings the amount required to be paid into court upon the filing of such declaration almost always represents a price less than the actual market value of the property, and that before the taking is concluded the value of the property is usually adjusted upward by the court as a result of testimony of expert appraisers.

Under these circumstances, the provisions of the bill as stated above would permit the assignment of a land cost to a public housing project considerably less than that which a private builder would have to pay. This, in turn, would make the actual construction cost limits higher for the public-housing project than for private construction.

We therefore recommend that the provisions of section 203 as to land valuation be rewritten to provide for a value to be assigned to the land based upon a competent appraisal.

4. The provisions of title III and the bill are in general satisfactory to the association recognizing as we do that in emergency cases such provisions may be necessary. However, our comments as to the size and duration of the program expressed in connection with title II are equally applicable to title III-we would recommend that the time be limited within which the President and the Administrator should be permitted to exercise the authority contained in title III, and that a fixed limit be included as to the funds authorized to be spent under the title.

5. It is noted that in title V of the bill a number of miscellaneous amendments are proposed to various statutes dealing with housing now on the books. The association is not opposed to the proposed amendments and considers that their enactment will in many instances be helpful to the industry.

6. The Mortgage Bankers Association in this instance is supporting the proposals in title II and title III of this bill, with amendments as suggested above, in the belief that in certain defense areas in emergency situations it may become necessary to utilize public funds for the construction of community facilities, the purchase of land, and the erection of dwelling units, and that in the present national emergency-with the threat of war-it is practical to have legislation on the books so that if such a need arises it can be met quickly.

However, the association's position in regard to these two titles of the bill should not be taken as implying its approval of a broad-scale public-housing program or the necessity or desirability of such a program either now or under normal conditions.

The Mortgage Bankers Association has always stated its opposition to such programs and will continue to do so in the future.

In conclusion, we would like to point out that it is indeed gratifying to see that in carrying out the proposals of this bill, it is provided that the programing and administrative operations will be performed by the Housing and Home Finance Administrator. We are in agreement with this method of operation. The administration of housing legislation must be left in experienced hands.

The lessons derived from World War II defense-housing operations are still dear in our minds. We have confidence in the ability of the Housing and Home Finance Agency to do this job and that it will, in fact, carry out the operations under the bill in accordance with the principles stated in the declaration of policy. We think it would indeed be unfortunate if the responsibilities under the act were split up among different agencies, as has been suggested by other witnesses before your committee.

While our association, if it had been requested to draft housing legislation to meet the present emergency, might well have come up with a bill differing in language and in certain other proposals from those contained in this bill, we consider that the proposals in the bill with the amendments proposed are reasonable and are well suited to meeting the present need.

We have confidence that the Congress can—and will-supervise the operations of the Federal housing agencies under the bill and that if these operations indicate a disregard of the principles as stated in the declaration of policy or an unwarranted extension of the Government's control over or participation in the building field, the Congress will speedily act to put an end to such practice.

The CHAIRMAN. I am glad to know that in substance-of course, I appreciate the fact that even members of the committee and the chairman, perhaps, might wish to change the bill or perhaps make certain limitations that the over-all thought of the bill is approved by your organization.

Mr. MASSEY. Yes; I would like to make some suggestion as to possible amendments for your consideration and study.

The CHAIRMAN. We would be glad to have them, because I think most of us here have some ideas, too, and above all, it should be kept for private industry as much as possible.

Mr. MASSEY. That is our view completely. We believe the major portion of this housing job can be accomplished by private enterprise. We are particularly in favor of title I of the bill, which sets forth an amendment to the National Housing Act to be called title IX. We believe that this phase of legislation is necessary, and necessary now for the simple reason that already many of our communities have already suffered the impact of the accelerated defense program, and the housing situation is becoming critical.

In this proposed bill, you have a readily workable device under the system of FHA to provide housing at modest rentals for defense workers, and we completely support title I of the bill.

We would like to suggest, however, that you may want to make provision for different mortgage limits in high-cost areas. We have no specific limits to recommend. We believe that that would require a detailed study, and we think that your committee has the facts on which to base any possible change in higher cost areas in the mortgage limits.

The CHAIRMAN. How would we get around the increased rents? Senator Schoeppel is quite interested in that.

Do you agree with him that we should have longer amortization or something of that kind?

Mr. MASSEY. I am particularly impressed by Mr. Summer's testimony to the effect that low rentals can be achieved in high-cost areas, and that was done, of course, under section 608. The same thing could be done under section 908; that is my conviction, sir.

Naturally, it is only logical to assume that where you have a higher mortgage limit and a higher cost property, you must necessarily have a higher rental, and the higher the mortgage limit goes, the higher the rental must be to support the project and make it pay out and

become economically sound, but all in all, we would like to endorse completely, with that one possible suggestion for further study, title I of the bill.

Title II of the bill we should like to endorse, with certain reservations.

First-and this is particularly important to us in the Mortgage Bankers Association our endorsement of this phase of the bill, which involves public housing, must not be construed to be a sweeping endorsement of public housing facilities permanently, or forever, or without some modification, but our association does feel that public housing should be provided, if private enterprise fails to perform the job. We believe that in these isolated defense areas, these areas that are new, that first private enterprise should be invited to accomplish the desired housing. If private enterprise demonstrates it can't do it, then this association feels that public housing should do it.

The CHAIRMAN. I want to assure you that as far as this committee is concerned, I sincerely hope the members who are absent will agree that we are going to make that a part of the report, that private people be urged to build wherever possible. The report is not a law, but nevertheless the agencies do go by it.

Mr. MASSEY. That is directly in accord with our view. We feel, however, that the public housing portions of this bill, namely, the title II, should be reexamined by your committee, say, in 1 year. We feel that you should set a limit on this phase of the program, limiting the number of dollars that will have to be spent for public housing—and I say have to be spent

The CHAIRMAN. The Appropriations Committee will limit that. Mr. MASSEY. That is correct.

The CHAIRMAN. If it is a defense measure, we are going to have to get to work in a hurry and not delay the thing. We believe it should be limited by numbers of units, by dollar amount, and by term.

This committee would'nt want to step on the toes of the Appropriations Committee when they consider the appropriation, which will probably be in April or May, and say now since we set the limit, things have changed. I don't think the members of this committee would want to do that. I am merely speaking for myself. The Appropriations Committee wouldn't want to be limited to some definite amount in here 2 or 3 months before the money is made available. Often the Appropriations Committee has reduced or enlarged appropriations for what we term authorization bills. This is merely an authorization bill.

Mr. MASSEY. There is another suggestion that we would like very much to make with respect to title II, and that is the device or the facility by which the HHFA acquires land. We believe the price fixed for that land acquisition should not be the price that the HHFA believes it to be worth in their condemnation proceedings, but the valuation should be fixed by competent appraisers, as is the case in all types of land condemnation, usually.

With those recommendations, sir, we would like to endorse title II. Title III provides a device which we feel is necessary. We understand its highly controversial aspects, but we believe in this very, very serious situation that we find ourselves in, that title we believe to be necessary, the acquisition of land, title III.

We believe also that you might want to limit that phase of the proposed bill for, say, a period of 1 year, and this committee restudy its operation at the end of that time.

Title IV has to do with loans to house manufacturers, and provides a device for interim credit for prefabricated houses, and we believe that a title embracing manufactured houses is a necessary adjunct.

The CHAIRMAN. Of course the lack of interim credit is really responsible for a lot of the prefabricated houses not doing as well as they should have done.

Mr. MASSEY. That is true.

The CHAIRMAN. There have been hundreds of them who had trouble. Mr. MASSEY. The lenders who comprise our association of course can't make loans on a house in transit. We have to have actual real estate security on which to advance our funds, and the problem of interim credit has been acute in the prefab field.

We feel that title IV is a necessary adjunct and a good piece of legislation.

Title V contains administrative and technical amendments that we believe to be necessary.

With those reservations, sir, we would like to present our endorsement of this bill, with one final observation. We would be extremely worried if the administration of this vehicle, or the programing operation, were vested in hands other than the Housing and Home Finance Agency.

The CHAIRMAN. They have done a good job.

Mr. MASSEY. Yes, sir; we went all through the World War II housing program, and there were many mistakes made because the control was not centralized in experienced hands.

The mortgage backers are grateful for this opportunity to present our conclusions, and we want to pledge our support to the Congress in furthering the defense-housing effort.

The CHAIRMAN. Thank you, Mr. Massey.

Are there any questions?

Senator SCHOEPPEL. Mr. Massey, I am merely throwing this out by way of suggestions made heretofore by Mr. Levitt. He built in a high-cost area, all types and kinds, some very excellent buildings selling at extremely low figures, even if you look around a lot of places in the country with lower real-estate values and building cost, which is amazing to me. He made this statement:

I would like for them to turn me loose with my organization at present prices and let me build units at a top of $8,100, and I would make plenty of money, and you would have an excellent home, with all the finest modern conveniences that anyone could expect.

Now, you are a banker, a mortgage banker. This thing called inflation is due to people losing confidence in the dollar, and we have got a flight of money rushing to go somewhere. So long as we can keep it in stable properties, with returnable values, put up at reasonable figures that will have a capital investment and a capital outlay there that is going to return an investment, that is the thing we ought to be thinking in terms of. That is why I am for this private-enterprise phase of this thing, and I am interested in your summation here on certain phases of this thing.

You said you would like to see the total cost figure of these homes raised, if I understood you correctly. That is somewhat contra to what Mr. Levitt has said to this committee, and we are going to look over some of his housing up there. They say there are two-, three-, and four-bedroom types with all the excellent furnishing and fixtures in there of modern design.

Mr. MASSEY. Bill Levitt has done an excellent job. My reference to raising the mortagage ceilings in certain high-cost areas was only to suggest study by this committee to assure yourself that this program would be operable in all areas. In my area the mortgage limits are perfectly satisfactory, as you have set out in this bill. However, some members of our association feel that they may not work as adequately in such areas as New York, Chicago, Detroit, and Cleveland, and I merely made that reference to suggest your study of that problem.

Senator SCHOEPPEL. I go back to Mr. Levitt again on that point, and I think it was Mr. Summer who testified awhile ago about some building he did there and his figures completely amazed me when we see what has happened in a lot of places in the country.

The CHAIRMAN. We want to thank you for coming here.
I want to make a short statement.

The committee will recess until Monday. On Monday, the committee will hear the American Council on Human Rights, the Committee on Industrial Organization, the CIO, the National Housing Conference, the Research and Planning Development Board of South Carolina with further reference to this Aiken project which would be applicable also to Paducah.

On Tuesday, February 20, the committee wil hear the National Association for the Advancement of Colored People, the National Association of Home Builders, and the MIT Department of City Planning.

I want to say that these hearings have been going on for a little more than a month, and on Wednesday we have the atomic meeting-that is, some of us do. On Thursday the "watchdog" committee has to hear Mr. Wilson and his aides on some questions that have come up, and so we will complete the hearings on Tuesday, as we stated. I am sure there will be people, as always, at the last minute who desire to have reports filed for the record, and without objection, the committee will be glad to include as a part of the hearing any written statements that any organization or Members of Congress or competent individuals may wish to file for the record.

If that is agreeable, that will be the schedule for Monday and Tuesday.

We will recess until 10 o'clock on Monday.

(Whereupon, at 12 o'clock noon, the hearing was recessed until 10 a. m. Monday, February 19, 1951.)