followed along with the outside market. And often when I felt it should be leading the way, acting as a brake against these big discounts, it seems to have taken the easy path of just going along with the others.

Dr. CARR. Yes.

Senator SPARKMAN. I feel that FNMA should, even though it is set up as a private corporation, at least a quasi-private corporation, that it ought to exercise some influence on the market. And when these discounts were building up, it should have provided some kind of a braking effect against it.

Dr. CARR. But, you see, Senator, that is a governmental function. Senator SPARKMAN. Yes.

Dr. CARR. Now, a private corporation could not possibly do anything about this.

Senator SPARKMAN. I realize that. And that is one reason sometimes I question as to whether or not we should have developed a split personality in 1954 or, if so, that perhaps we should have kept enough governmental control over it to provide for this influence on the market.

But anyhow, that was done in 1954, and I suppose we have become set to it.

We certainly appreciate your contribution, Doctor.

Dr. CARR. Thank you.

Senator SPARKMAN. Thanks very much.

Let me say, Senator Douglas, earlier this morning I made reference to the backup of support that the Government gives to FDIC. Later I got the figures for it. We have some interesting figures here for three or four different Government-chartered corporations where there is Treasury backup. The FDIC has a statutory Treasury borrowing authorization of $3 billion which can be called upon if needed for solvency purpose. The corresponding "backup" figures for the Federal home loan bank operation is $1 billion and Federal Savings and Loan Insurance Corporation $750 million. I thought it would be interesting to have this printed in the record along with the other. And without objection, that will be done.

Senator DOUGLAS. Yes, indeed.

Senator SPARKMAN. Well, this concludes the hearings. We will hold the record open for a week. If anyone should have any supplemental matters or any new matters to submit, we shall be very glad to receive them.

Thanks to all of you.

The committee stands adjourned.

(Whereupon, at 12:15 p.m., the subcommittee was adjourned, subject to the call of the Chair.)

(The following material was later supplied for inclusion in the record.)

NATIONAL LUMBER & BUILDING MATERIAL DEALERS ASSOCIATION,
Washington, D.C., September 24, 1963.

Hon. JOHN J. SPARKMAN,
Chairman, Housing Subcommittee, Senate Banking and Currency Committee,
U.S. Senate, Washington, D.C.

DEAR SENATOR SPARKMAN: The National Lumber & Building Material Dealers Association desires to go on record in support of legislation to authorize the creation of private corporations for the insurance of conventional loans and for

the authorization of privately financed corporations for the purchase and sale of such mortgages.

The creation of such corporations would greatly improve the market for conventional mortgages and would create new sources of funds for home mortgages. The insuring of conventional mortgages would provide a more fluid market for mortgages and would attract funds from areas of capital surplus to communities and areas where funds for mortgages are now in short supply or nonexistent.

There are several bills now before the Housing Subcommittee of the Senate Banking and Currency Committee, each of which provides a different method of accomplishing similar aims.

The final determination as to which bill or bills would best accomplish the desired end rests with the Congress.

Without discussing the detailed provisions of the three bills (S. 810, S. 811, and S. 2130), S. 810, sponsored by the American Bankers Association, would seem to offer the greatest stimulus to home financing from commercial banks and provide a new source of funds for this purpose not available, to any great extent, under present law and regulations.

S. 811 would be more limited in its application mainly affecting savings and loan associations and the purchase of participations in mortgages orignated by savings and loans.

S. 2130 would utilize an existing Government agency, the Federal National Mortgage Association, to create a secondary market for conventional mortgages. The committee may decide that none of the pending bills are completely acceptable and may draft its own bill.

We believe, however, that the proposal for private insuring companies and secondary marketing corporations created with private funds to purchase and sell conventional mortgages has greater merit than the expansion of a Government agency to buy and sell conventional loans even though the FNMA has had considerable experience in the mortgage market and has an enviable record. We respectfully urge this committee to give careful study to the pending bills and the suggestions presented to the committee at the brief hearings recently conducted by the subcommittee.

Any conclusions or determinations made should be based on the recognized need for additional funds for home mortgages and the effect upon the prospective homeowner and borrower rather than any competitive advantage of one type of lending institution over others in this field.

The savings and loan associations have done an excellent job of providing funds for homeowners and nothing should be done to jeopardize the continuation of these associations as a major source of funds for conventional home mortgages.

This situation, however, should not preclude commercial banks from providing additional funds for this purpose if this can be done without Government subsidy and on an economically sound basis.

Very truly yours,

T. T. SHEDDON, Executive Vice President.

NATIONAL ASSOCIATION OF HOME BUILDERS,
Washington, D.C., September 18, 1963.

Hon. JOHN SPARKMAN,

Chairman, Subcommittee on Housing,
Senate Office Building, Washington, D.C.

DEAR SENATOR SPARKMAN: During the course of Mr. Buchanan's testimony yesterday questions arose as to the sources of mortgage funds and the expectations as to housing production in the future. It occurred to me, therefore, that some of the information which our economics department has developed would be useful for the committee as part of your current hearings and for future reference.

I am enclosing as a supplement to our statement, therefore, and for inclusion in the record of the hearing, special reports together with tables taken from the latest edition of the "Savings and Loan Annual Fact Book" showing a breakdown of mortgage fund sources. These are identified as follows:

NAHB Special Economic Report No. 1: New Housing Starts Projections, 1960-70, issued May 10, 1963.

NAHB Special Economic Report No. 2: Growth Trends in Major Housing Market Regions, May 13, 1963.

NAHB Special Economic Report No. 3: Housing Starts for States, 1959-62, issued June 4, 1963.

NAHB Special Economic Report No. 6: The Rental Housing Boom of the 1960's (a Special Study), issued July 12, 1963.

(NAHB Special Economic Report No. 7: Mortgage Foreclosures, issued June 24, 1963.

NAHB Special Economic Report No. 8: Housing Replacement Demand in '60s, issued July 12, 1963.

NAHB Special Economic Report No. 10: Upkeep and Improvements in Residential and Nonresidential Construction, issued August 30, 1963.

Tables 34, 35, 36, 37, 38, 41, 42, 43, and 44-taken from pages 40-49 of the Savings and Loan Fact Book for 1963, published by the United States Savings & Loan League.

There were at least two other questions raised during the hearing by Senator Javits with respect to our views on the operation of the middle-income programs enacted as part of the Housing Act of 1961 and with respect to the operation of the middle-income program of the New York housing agency. Within a few days we will respond as fully as possible to these questions.

Sincerely,

JOSEPH B. MCGRATH, Director, Governmental Affairs.

Enclosures.

Special Report

NATIONAL ASSOCIATION OF HOME BUILDERS

N. H. ROGG-DIRECTOR OF ECONOMICS AND POLICY PLANNING MICHAEL SUMICHRAST-ASSISTANT ECONOMICS DIRECTOR NORMAN FARQUHAR-ECONOMIC ANALYST

NEW HOUSING STARTS PROJECTIONS 1960-1970

UNITED STATES

May 10, 1963

In order to satisfy the need for special data on state housing projections, to be used primarily for planning purposes, NAHB's Economics Department has developed on a preliminary basis estimates for new housing starts for the decade 1960-1970. These estimates are based on total U. S. projections developed some time ago by NAHB's Economics and Policy Planning Department. Because of the enormous difficulties in doing any kind of projection into the future, particularly one based on a state breakdown, the data should be used with extreme care.

THESE ESTIMATES ARE PROVIDED PRIMARILY AS A GUIDE
TO THINKING ABOUT HOUSING ACTIVITY IN THE FUTURE
AND SHOULD NOT BE RELIED UPON TO PROVIDE FIRM
PROJECTIONS FOR ANY LOCAL MARKET.

The problems in estimating starts by states are enormous...and users should be aware of limitations inherent in these estimates. Of necessity, judgment factors nearly always play an important part in this type of forecast.

As is true with most such projects, almost innumerable refinements will have to be made. We will need more current local data for correction of our estimates to keep up with the dynamic changes in our economy. We ask local associations and members to send us local information, as this is the most important and fundamental information we need.

Again, readers using these forecasts should be cautioned that we have a
limited knowledge of factors responsible for human behavior, and it is nearly
impossible to measure precisely people's future actions. Our estimates, there-
fore, have to be based on many assumptions. But besides human factors, there
are statistical problems, such as under-reporting of building permits which
varies from place to place. Also, since some 25 Standard Metropolitan Sta-
tistical Areas are located in more than one state, there are the questions of
which direction or into which state the city will expand, estimating of growth
of a given state, etc.

The components of population change shown here for 1960-1970 are from a
publication by the Research Division of the National Education Association,
Population Projections 1960-1970, based on unofficial figures prepared for the
Association by the Bureau of the Census.

Estimates of housing starts are based on (1) population projections, (2)
household projections, (3) inventory change 1950-1960, (4) ratio of population
increase 1950-1960, and net increase in housing units 1950-1960, (5) adjusted
data for under-reporting of building permits for 1959, 1960, 1961 and 1962,
(6) demolition and other loss rate.

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