Federal Register, October 19, 1944-and I suggest that these regulations be included in the hearings as a complete refutation of the allegations of the representative of the American Federation of Labor with respect to the housing of veterans.

I would further urge that the Congress if it give consideration, as it doubtless will, to the question of post-war housing, consider the housing problem as a whole and not as one pertaining particularly to veterans. I believe it is a correct conclusion that veterans will benefit more by sound economy and by sound general programs conceived in the interest of all than they possibly could by special differentiations based upon their status as veterans. In this respect I think the Congress acted wisely in making the Veterans' Readjustment Act of 1944 a veteran's act and not an education or housing act.

Senator BUCK. As I recall, title III of the G. I. bill allows the veteran to apply for a loan for 5 years after the war.

General HINES. Two years after the war.

Mr. ODOм. Five years after the war, 2 years after his release from the service.

Senator BUCK. Up to 5 years, though?

Mr. ODOM. After the war, but 2 years after his discharge from the service.

Senator BUCK. That is his limit?

Mr. ODOм. That is the limit. That may be a little bit short, from the standpoint of preventing inflation. Bills have been introduced already to lengthen that limitation.

Senator BUCK. What are they going to offer?

Mr. ODOм. Well, there are various provisions. None has been acted on as yet.

General HINES. No report has been called for yet.

Regulations covering the guaranty of home loans were issued October 19, 1944, after extensive consultation with officials of other Government agencies, representatives of lending groups and service organizations. They provide in effect that a veteran who desires to buy or build a home or to improve an existing dwelling will proceed in the usual manner of a person seeking a loan for such a purpose. The veteran will go to his bank, building and loan company, or other lending agency, or an individual lender. Either before or after the veteran and the lender reach a tentative accord, a request may be made of the nearest Veterans' Administration office for a certification of eligibility of the veteran and information as to the amount available for guaranty. The Veterans' Administration will issue in eligible cases the certification of eligibility and statement of the amount for guaranty. The Veterans' Administration will also name an appraiser from the list of appraisers who are qualified and reputable, and the agency to process the loan. Perhaps it is well at this point to again. emphasize that the total amount that can be guaranteed by the Veterans' Administration is limited to a maximum of $2,000. This $2,000 guaranty can be made available to the veteran in one or more transactions so long as the aggregate of the transactions does not exceed the $2,000 maximum.

Section 501 of the law requires that before the Administrator may approve a guaranty of a loan for the purpose of purchasing or constructing a home he must find

1. That the proceeds of such loan will be used for payment for such property to be purchased or constructed by the veteran;

2. That the contemplated terms of payment required in any mortgage to be given in part payment of the purchase price or the construction cost bear a proper relation to the veteran's present and anticipated income and expenses and that the nature and condition of the property is such as to be suitable for dwelling purposes; and

3. That the purchase price paid or to be paid by the veteran for such property or the construction cost, including the value of the unimproved lot, does not exceed the reasonable, normal value thereof as determined by proper appraisal.

The act makes available a potential flow of credit which without the limitations provided by the act might lead to veterans being induced to purchase unsuitable property and to an unhealthy inflation of the real-estate market.

COOPERATION OF GOVERNMENT AGENCIES AND STATES

The Treasury has modified its regulations to permit certain banking institutions to participate in this program and the Federal Reserve has relaxed regulation W-relating to consumer credit-to liberalize the terms on which loans may be made for repairs and improvements on a home. The National Housing Agency, through its three agencies, Federal Housing Administration, Federal Home Loan Bank Administration, and Federal Public Housing Authority, is cooperating in the program. Several of the States and the District of Columbia have in process plans for amending local laws if necessary so that insurance and other corporations may make loans guaranteed in whole or in part under the act.

There are some provisions in some States where that cannot be done.

Mr. ODOм. That is right.

General HINES (continuing his statement):

FARM LOAN REGULATIONS

The

Regulations concerning the guaranty of loans for the purchase of farms and farm equipment were announced on December 8, 1944. It will be recalled that the act provides that any veteran found to be eligible for a loan guaranty and who is found by the Secretary of Agriculture to be likely to carry out the undertakings required by a loan under the Bankhead-Jones Farm Tenant Act, shall be eligible for the benefits of the Bankhead-Jones Farm Tenant Act. Department of Agriculture has been designated as cooperating agency to aid in determining whether guaranty of farm loans should be approved. The issuance of the regulations followed extensive consultations with the Department of Agriculture and national organizations representing interested groups, such as farmers, bankers, and insurance companies. I have arranged to use the set-up the Department of Agriculture has in handling farms with an added member of each county committee, required to be a businessman and a veteran if possible. We intend to utilize that machinery, rather than duplicate it by setting up machinery of our own. The veteran who

91183-45-pt. 12- -2

contemplates purchasing a farm may obtain assistance from veterans' advisory committees in farming communities. Reference is made to the guaranty of loans for farm purchase on this occasion for the reason that of the Nation's 37,000,000 dwellings reported by the 1940 census, 8,000,000 are on farms and it is estimated that 6,600,000 of these farm dwellings are in need of repairs and improvement. At this point I would like to insert the loan regulations and forms.

REGULATIONS ON HOME LOANS

UNITED STATES OF AMERICA

VETERANS' ADMINISTRATION

GUARANTY OF LOANS

REGULATIONS UNDER TITLE III

SERVICEMEN'S READJUSTMENT ACT OF 1944

(Public Law 346-78th Congress)
(Chapter 268-2d Session)
(58 Statutes at Large 284)
(38 U. S. Code 693 et seq.)

[VETERANS' ADMINISTRATION SEAL]

(NOTE. This pamphlet covers the subject of Guaranty of Home Loans pursuant to Section 501 of the Act. The subjects of Guaranty of Loans for the Acquisition of Farms and Farm Equipment pursuant to Section 502, and the Guaranty of Loans for the Purchase of Businesses, etc., pursuant to Section 503, will be printed in separate pamphlets.)

FOREWORD

The Servicemen's Readjustment Act of 1944 and these regulations constitute a part of each contract of guaranty issued by the Administrator of Veterans' Affairs on behalf of the United States of America, pursuant to Title III of said Act.

The officials and employees of the Veterans' Administration from time to time assigned to duties in connection with the administration of the Act shall act on behalf of the Administrator of Veterans' Affairs, and when so acting within the scope of authority delegated to them shall for all purposes of the Act and these regulations be deemed to be acting for said Administrator.

Central Office of the Veterans' Administration, Washington 25, D. C., is the main office of the Administrator of Veterans' Affairs. The functions pursuant to Title III of the Act will also be performed in field offices of the Veterans' Administration from time to time designated for that purpose. Transactions and communications with, and contracts by such designated field offices shall have the same effect as if with, or made by, Central Office.

These regulations should be carefully read. The completed application or other papers submitted should be carefully examined by the applicants, (borrowers and lenders) in order to be certain of accuracy and avoid any possible embarrassment resulting from errors.

It will facilitate the service of the Veterans' Administration to the veterans and the lenders if, in correspondence, reference is made to the appropriate section numbers, if any, involved in the subject of the correspondence.

In view of the large number of veterans with the same or similar names, it is important not only in correspondence, but also in documents to use the veteran's full first name instead of his initial only, and also his middle initial. If unobjectionable, it will be helpful to use his full middle name. In adition to the full name, other available identifying data should be used in correspondence, such as serial number allocated to the veteran while in active service, rank, and organization at date of discharge, current residence address, etc. In mortgages and other documents it will be desirable to use the service serial number in addition to the full name, although if there is objection the number will not be required. If there has been a guaranty application previously submitted by the veteran

and the number assigned thereto by the Veterans' Administration is known, that number should be used in all communications; and on all documents pertaining to that application.

It should be clearly understood that the Act does not authorize the Veterans' Administration or the Administrator of Veterans' Affairs to lend money to the veteran under Title III; but only to guarantee loans within the prescribed limitations.

NOTICE

Federal statutes provide severe penalties including forfeitures, fines, and imprisonment, for fraud on the part of the applicant and also as to "any person who shall knowingly make or cause to be made, or conspire, combine, aid, or assist in, agree to, arrange for, or in any wise procure the making or presentation of a false or fraudulent affidavit, declaration, certificate, statement, voucher, or paper, or writing purporting to be such" concerning any application for the guaranty of a loan by the Administrator. (38 U. S. C. A. 697, 715, 450, 451, 454 (a), 556 (a); 18 U. S. C. A. 80.)

TITLE 38-PENSIONS, BONUSES AND VETERANS' RELIEF 1

Chapter I-Veterans' Administration

PART 36-REGULATIONS UNDER SERVICEMEN'S READJUSTMENT ACT OF 1944

GUARANTY OF LOANS

OCTOBER 18, 1944.

The following regulations govern the guaranty of loans under Title III of the Servicemen's Readjustment Act of 1944:

1 As printed in the Federal Register, Volume 9, Number 210, Washington, Friday, October 20, 1944.

AUTHORITY: §§ 36,4000 to 36.4049, inclusive, issued under 58 Stat. 284.

§ 36.4000 Definitions. Wherever used in these regulations, unless the context otherwise requires, the terms defined in this section shall have the meaning herein stated, namely:

(a) "Administrator" means the Administrator of Veterans Affairs or any employee of the Veterans' Administration designated by him to act in his stead.

(b) "United States" used geographically means the several States, Territories and possessions, and the District of Columbia.

(c) "State" means any of the several States, Territories and possessions, and the District of Columbia.

(d) "Designated Agency" or "Agency" as used in respect to processing applications for guaranty of loans, means any Federal instrumentality designated by the Administrator (including Veterans' Administration if so designated) to certify whether an application meets the requirements of the act and regulations, and recommend whether the application should be approved if the applicant is found eligible.

(e) "Federal Agency" as used with respect to agencies making, guaranteeing or insuring primary loans, means any Executive Department, or administrative agency or unit of the United States Government (including a corporation essentially a part of the Executive Branch) at any time authorized by law to make, guarantee or insure such loans.

(f) "Guaranty" means the obligation of the United States of American assumed by virtue of the guaranty by the Administrator as provided in Title III of the Servicemen's Readjustment Act of 1944 (58 Stat. 284; 38 U. S C. 693), and subject to the limitatinons and conditions thereof and of these regulations. The subject of the guaranty is that portion of an eligible loan procured by an eligible veteran which may be subject to being guaranteed as provided in said Title III, as determined by the Administrator upon application in accordance with these regulations.

(g) "Mortgage" means an applicable type of security instrument commonly used or legally available to secure loans or the unpaid portion of the purchase price of real or personal property in a State, District, Territory, or possession of the United States of America in which the property is situated. It includes, for example, deeds of trust, security deeds, escrow instruments, real estate mortgages, conditional sales agreements, chattel mortgages, etc.

(h) "Secondary" or "junior" loan means a loan which is secured by a lien or liens subordinate to any other lien or liens on the same property.

(i) "Guaranteed loan" means a loan unsecured, or secured by a primary lien, or where permissible under the act and these regulations, a secondary lien, which loan is guaranteed in whole or in part by the Administrator as evidenced by endorsement thereon; or by Loan Guarantee Certificate issued by the Administrator, and which shall have become effective as prescribed by these regulations; or by such other legal evidence as may be provided by the Administrator.

(j) "Home" and "residential property" means any dwelling consisting of not more than four family units, or any combination dwelling and business property, the primary use of which is occupation by the veteran as his home.

(k) (1) "Reasonable normal value" for the purposes and intent of the act is that which can be justified as a fair and reasonable price to be paid for a property for the purposes for which it is being acquired, assuming a reasonable business risk, but without undue speculative or other hazard as to the future of such value. (2) The purpose and intent are (i) to assure that the price to be paid represents a fair and reasonably permanent value in the real property to be acquired, (ii) to give, so far as the real estate is concerned, the basis for a fair but not unreasonable risk on the part of the United States Government when executing its guarantee, (iii) to assure that the appraisal shall be founded upon true and reasonably permanent values.

(3) Each valuation shall be justified, inter alia, (i) by the history of values and prices for this and similar properties, (ii) by the future resale possibilities as indicated by trends in the immediate locality and (iii) by the most probable and reasonably assured long term future economic and real estate conditions, national and local, as they will affect properties similar to and competitive with that under appraisal.

(4) "Reasonable normal value" is not necessarily "fair market value" nor "fair market price" in the usual legal sense of those terms, nor is it necessarily the same as "value for mortgage purposes."

(1) 'Property" and "lot" as used in section 501 of the act refer to an interest in reality defined in this section, and subject to the conditions therein.