I earnestly hope that you and the members of your Housing Subcommittee will reconsider your views on the matters referred to in my letter and, hopefully, modify them. I do not agree with Secretary Romney in any criticism he might have voiced of the Congress in connection with the present serious problems in HUD. On the other hand, I am very fearful that if all the Subcommittees' recommendations are incorporated in the 1972 Housing Bill, the result will be a serious compounding of the problems now existing in HUD and the virtual destruction of FHA. Cordially, JOE FINLEY, President. COMMUNITY DEVELOPMENT CORPORATION OF CORPUS CHRISTI, DEAR MR. PATMAN: It has been called to my attention that the House version of Senate Bill 3248 has several features which would have the practical effect of abolishing subsidized housing. (In particular, the provision which would require the local governing commissioner of a particular geographic area to approve any and all subsidized construction in his area). The result would be that no city councilman in a high income area would agree to such because of the racial problem we now face in America. The long term effect would be to perpetuate the segregation of income levels and ethnic groups now present. Also it would prohibit socially conscious non-profit groups-groups more interested in promoting the social well being of afflicted population groups rather, than increasing their own individual profits-from helping to demonstrate to needy individuals how they can improve their economic and social standing, and in the process bring together a more unified United States of America. For this and other reasons that Secretary Romney will demonstrate to you, the House version of Senate Bill 3248 will have the effect of abolishing subsidized housing. Therefore, we strongly urge you to seek the restructure of the House proposals which could end a program of monumental value to the unification of our Nation. Sincerely yours, JAMES M. WILLIAMS, Executive Director. COMMUNITY SERVICE SOCIETY, Hon. WRIGHT PATMAN, Washington, D.C. DEAR CONGRESSMAN PATMAN: We are writing to you at this time in connection with the proposed Housing and Urban Development Act of 1972. The Community Service Society is the largest non-sectarian family welfare agency in the nation and its Committee on Housing and Urban Development, a unit of the Department of Public Affairs, is a citizens' organization that has been working since 1898 for better housing for families of low and middle income. We would like to bring to your attention our recommendations for changes in several sections of the House bill which are of special concern to our Committee. I. FHA SUBSIDIZED PROGRAM Maximum Mortgage Amount.-The interest subsidy program, Sec. 502, is limited to 110 per cent of the prototype costs in all but exceptional cases whereas the Senate bill (S. 3248) provides for 120 per cent of prototype costs. We believe that the Senate bill is preferable because the higher limits permit greater flexibility in design, wider choice of sites, and the possibility of attracting families of varying income levels. Authorization.-The bill provides for 200 million dollars for FHA subsidized housing. It is not necessary to tell you of the desperate need for more housing for families of low and moderate income in this area. Unfortunately, however, it is impossible without subsidies to build housing that families of low income can afford. We do not believe that the proposed amount will be adequate and we urge that the authorization be increased. Operating Subsidy.—We recommend that a provision be added to the bill for additional assistance payments to be made if necessary. Such payments are often urgently needed because management costs are increasing and they are extremely difficult to predict accurately. As a consequence, many projects are going into default and jeopardizing the entire program. II. PUBLIC HOUSING Prototype. The cost ceiling is set at 110 per cent of local prototype costs in. cluding land cost, demolition and certain other costs not included in the Senate bill such as improvements to the site. We recommend that these costs be excluded from the calculations or that the limits be raised. We believe that The Senate bill is preferable because the higher limits permit greater flexibility in design, wider choice of sites, and the possibility of attracting families of varying income levels. Continued Occupancy.-On the basis of long experience and study, this orga nization is convinced that income limits for continued occupancy in public housing injure not only the tenants directly affected but the project they must leave and indeed the entire community. In in inquiry made by the Committee, a large majority of the tenants interviewed said they would be willing to pay considerably higher rents in order to remain. Upwardly-mobile families tend to be stable, hard-working, and interested in their project and their neighborhood. They give other tenants both example and encouragement; they can stimulate greater participation in community life with, possibly, a corresponding reduction in anti-social behavior. Furthermore, tenants who see families being shunted to other parts of the City and who realize that a public housing apartment cannot be regarded as a permanent home, are unlikely to feel any responsibility toward their dwelling or its surroundings. Hopelessness, leading either to apathy or to violence, is the inevitable results. The Committee considers economic and racial integration of primary social importance. A mixture of income groups can help to provide the stimulating environment that encourages development of the project into a living community rather than a sterile enclave. Economic integration could change the electorate's attitude toward public housing. A project is now seen as a dumping-place for “undesirables" that would lower neighborhood status. For these reasons we strongly urge that the bill be amended to eliminate the present continued occupancy limits and that rents be increased in proportion to tenants' ability to pay. We believe that, as a matter of principle, all income limits for continued occupancy should be abolished permanently. III. COMMUNITY DEVELOPMENT Effective Date.-The consolidation of the programs is scheduled to go into effect on July 1, 1973 but no provision is included to cover the cost of changes in existing projects. The Senate bill provides an authorization of $300 million for this purpose and we recommend that in order to cover the transition the same amount be included in the House bill for fiscal 1974. Non-Cash Contributions.—Existing Title I and Neighborhood Development Programs (NDP's) have accumulated a substantial amount of excess credits in schools, hospitals, public housing projects, etc. for the amount of development that has been accomplished. It should be permissible to transfer these credits to the new programs. In the past, it has been possible to transfer these excess credits from one project to a subsequent development. We very much hope you will reexamine these portions of the bill and amend them so they will adequately serve some of the families who are in urgent need of decent housing. Sincerely yours, BYARD WILLIAMS, Chairman, Committee on Housing and Urban Development. Hon. KENNETH J. GRAY, HOUSING AUTHORITY OF THE COUNTY OF UNION, DEAR KEN: The Banking and Currency Committee will be considering major issues in the pending HUD Act of 1972 on June 12 and 13. These issues have already passed the Senate. Would you please contact Wright Patman, Chairman or any other members of the committee urging immediate passage of the following amendments: 1. PROTOTYPE The House Subcommittee bill includes the cost of land and site improvements under the 110 percent of local prototype ceiling. An amendment is required which will exclude these items from the prototype and retain the prototype calculation as it is in present law and in the Senate-passed bill: Prototype plus 110 percent, excluding the cost of land, site improvements, demolition, and nondwelling facilities. Retention of the provision in the House Subcommittee bill could result in pressures for local housing authorities to select below-standard site locations, and reduce the quality and amenities of housing construction. 2. CONTINUED OCCUPANCY LIMITS The House Subcommittee bill retains "continued occupancy limits" although it advocates a "cross-section of income occupancy" in public housing. An amendment is needed to eliminate the continued occupancy limits so that both economic and social stability can be maintained in public housing projects, permitting families to stay in occupancy and provide leadership and social stability, while paying economic rent without subsidy when their income rises sufficiently to afford it. Since the House bill also requires from 15 to 30 percent of low income families to be housed in new FHA-assisted housing projects, this should provide additional housing opportunities for the very lowest income families waiting for housing. The Senate bill passed on March 2, eliminates the continued occupancy limits in public housing. 3. WELFARE RENTS EQUAL TO OPERATING COSTS An amendment will be presented to the full Banking and Currency Committee requiring that welfare agencies make Payments equal to operating costs for welfare tenants living in public housing. This will reduce the requirements for operating subsidy from public housing funds by about 60 million dollars annually, and free it to be used for important purposes like deferred maintenance, improved management and maintenance, etc., as was intended under the HUD Act of 1969. Your assistance will be greatly appreciated. VICKI D. CHAMNESS. NEW ORLEANS, LA., May 26, 1972. Hon. HALE BOGGS, U.S. House of Representatives, House Office Building, Washington, D.C. DEAR HALE: It has come to my attention that the latest version of the omnibus Housing and Urban Development Act Amendments of 1972 contains a provision in Title IX wherein Section 907 (a) purportedly reads as follows: "No attorney who performs any legal services which are incident to or a part of any real estate settlement with respect to which any party to such settlement has obtained a Federally related mortgage loan shall receive any commission in connection with the issuance of title insurance for any real property which is a part of such settlement." Frankly I am distressed to learn that the draft containing this language has cleared the subcommittee and is now before the full House Banking and Currency Committee chaired by Representative Wright Patman. The inclusion of this language in the Amendments to the Housing and Urban Development act would be disastrous on the legal practice of many lawyers, particularly lawyers in Louisiana. I do not consider myself an exception. As you are well aware, title insurance in Louisiana with one or two exceptions is handled as an adjunct to the legal practice of the lawyer, who is likewise the authorized agent and representative of a title company in Louisiana. It is inconceivable to me that a provision such as this is necessary since the federally insured mortgage loan which is likewise the subject of title insurance has the benefit of the title insurance company regardless of the position of the attorney who makes the examination. In the event the attorney making the examination were in error, this does not preclude collection of any losses or damage by virtue of a title defect from the title company and it is then between the lawyer and the title company to determine whose ultimate responsibility the loss is. I honestly do not feel that there is any conflict between an attorney handling the closing of a mortgage transaction or a federal project and likewise either by agent for or an examining attorney of a title insurance company. Frankly I can see no reason for this type of legislation. By way of example, in my office Claude Champagne, who I believe you know, has been a notary public for over ten years but he is not a lawyer. He has absolutely nothing to do with examining titles, but he is the closing notary on any number of single family residences on which there are federally insured or guaranteed mortgages. Since Claude works in my office, I would presume that if this legislation were adopted I would be precluded from Claude handling the notarial work and my office handling the title work and would have to choose between the two. In many cases it is not possible to choose between the two, and I may in all likelihood lose both. It should also be recognized that this particular provision that is proposed would not be effective in most states. In most states, and I have been involved in real estate transactions in a number of them, the title insurance and the closing itself is handled by a title company that has a large abstract plant, and lawyers themselves seldom are involved in both the title insurance and the legal work. I would assume that for that reason the reaction to this proposed legislation will not be the same in other states as it is in Louisiana. I have tried to consider the reason for this type of provision, and I can only assume that this provision is inserted somewhat along the same lines of thinking as a cost certification requirement on a construction contractor. If the appropriate federal agency involved feels that there is a duplication of fees, I believe that should be stated, and it should be handled to prevent a duplication in fees, but a broad sweeping prohibition such as is proposed is improper. I have no hesitancy in stating that if the legislation is to prohibit duplication or unknown charges involved in the transaction that disclosure of the collection or title premium being charged would be required. Actually there is no duplication of fees since the handling of the legal work is different than the handling of the title examination. With respect to the closing of the loan itself, if it is an insured closing through a title company that is included as part of the premium and the lawyer who represents the company does not get additional compensation out of the title insurance. What his legal fee might be on any particular closing is established by other governmental regulations on projects ranging in size from single family houses to the most sophisticated housing developments, dormitories, nursing homes and the like. I don't think that there has ever been a piece of federal legislation that would be more injurious to my personal practice as what is proposed here, and I would ask that you exert every effort that you reasonably can to have this proposed provision excluded from the proposed amendments to the Housing and Urban Development Act. If you need any additional information from me, please do not hesitate to let me know, and I would appreciate if you would have someone in your office keep me up to date as to the progress of this matter during its walk through the Congress. With my best regards and again I earnestly solicit your support, I am Sincerely, LOUIS G. SHUSHAN, Attorney. NEW ORLEANS, LA., June 2, 1972. Re Federal regulation of title insurance. Hon. HALE BOGGS, U.S. House of Representatives, House Office Building, Washington, D.C. DEAR HALE: I previously wrote you regarding the captioned matter to its effect on attorneys who likewise do title examination work. I have also written some of your other colleagues and I am using this method for clarifying one point. I am not certain that my previous letter made it clear that a distinction should be made between commissions or forwarding fees received by attorneys who do no title examination work and the collection of a title insurance premium by a title agent who in turn pays the attorney who actually examined the title. It is my belief that the draftors of this legislation failed to understand the difference between an attorney who provides a service which includes a title search, title examination and possibly closing and a lawyer who receives a "referral fee" but provides no service other than the directing of business. Again let me state how very important this is, and I would appreciate hearing from you on any reactions you have been able to muster as well as the present status of the matter. With warmest personal regards, I am LOUIS G. SHUSHAN, Attorney. DUTTON, KAPPES & OVERMAN, Re Housing and Urban Development Act of 1972, title IX. Hon. WILLIAM A. BARRETT, DEAR CONGRESSMAN BARRETT: Title IX of the House version of the Housing and Urban Development Act regulates closing costs on federally related mortgage transactions. The way Title IX is currently worded it will have the effect of depriving lower and middle income groups of the benefit of being represented by independent legal counsel at federally related real estate closings. I can appreciate the fact that Congress is anxious to put a stop to the real estate closing cost abuses by attorneys and others in the D.C., Maryland and New York areas which have recently been publicized by the Washington Post. The practice whereby a lawyer receives a split of the title insurance premium simply for referring title business to a commercial title insurance company is deplorable and should be proscribed by appropriate legislation. The Senate version of the Housing and Urban Development Act of 1972 (S. 3248) does proscribe this practice and deserves the support of every Senator and Representative. The House bill has a similar anti-kickback provision. However, in an attempt to strengthen the House version, the Housing Subcommittee has added a number of other well-intentioned but little understood amendments. The result is that the House version of the Housing and Urban Development Act of 1972 as reported by the Housing Subcommittee on May 11 contains provisions contrary to the public's interest. If Title IX of the Subcommittee's bill becomes law it will have the effect of eliminating the family lawyer from federally related real estate transactions. The reason for this is that the title insurance must be purchased from someone other than an attorney already representing a party to the transaction. Therefore, in order to have the family lawyer involved in the transaction, two fees must be paid-one to the title insurer and another to the attorney. Since Title IX allows the title insurance company to provide all title services, most lower and middle income families will have to forego the benefits of independent legal counsel and depend on a title insurance company which has no fiduciary responsibility with respect to them to provide closing services. Of course, the more affluent buyers and sellers as well as the financial institutions involved will be represented by their own lawyers even if they are forced to go elsewhere for their title insurance. However, it would be unwise for Congress to place this burden on lower income familes. The solution is to allow the lawyer to be paid for all legal services rendered including compensation for drafting and issuing title insurance but to prohibit him or anyone else from receiving a payment simply for referring the business |