Federal Home Loan Bank Administration

Federal Home Loan Bank Administration Creation.--The Federal Home Loan Bank Administration, as a constituent unit of the National housing Agency, performs functions formerly exercised by the Federal Home Loan Bank Board in supervision of the Federal Home Loan Bank System and Federal Savings and Loan Associations, and in administering the Federal Savings and Loan Insurance Corporation and the Home Owners' Loan Corporation. Functions relating to the United States Housing Corporation (now --125-in liquidation) are also administered in the Federal Home Loan Bank Administration, in accordance with Executive Order 9070 of February 24, 1942. The activities under control of the Federal Home Loan Bank Administration are provided for in the Federal Home Loan Bank Act, approved July 22, 1932 (47 Stat. 725; 12 U.S.C. 1421-49; 15 U.S.C. 602); the Home Owners' Loan Act of 1933, approved June 13, 1933 (48 Stat. 128; 12 U.S.C. 1461-68); and title IV of the National Housing Act, approved June 27, 1934 (48 Stat. 1246; 12 U.S.C. 1724-30), together with amendatory acts of Congress, approved April 27, 1934; May 28, 1935; February , 1938; August 10, 1939; August 11, 1939; March 28, 1941, and October 24, 1942. Organization.--The Federal Home Loan Bank Administration is headed by the Chairman of the Federal Home Loan Bank Board, who serves as the Federal Home Loan Bank Commissioner. The positions of the remaining four members of the Bank Board have been vacated for as long as title I of the Fist War power Act, 1941, remains in force. Funds.--Expenses of the Administration are paid by assessments against the regional Federal Home Loan Banks, charges against institutions examined by its Examining Division, and charges against the other agencies under its supervision. Federal Home Loan Bank System Creation.--The Federal Home Loan Bank System was created by authority of the Federal Home Loan Bank Act, approved July 22, 1932 (see citations under Federal Home Loan Bank Administration), to provide q credit reserve for thrift and home-financing institutions. Organization.--There are 12 regional Federal Home Loan Banks in the System, located in New York, Boston, Pittsburgh, Winston-Salem,

Cincinnati, Indianapolis, Chicago, Des Moines, Little Rock, Topeka, Portland (Oreg.), and Los Angeles. The management of each Bank is vested in 12 directors, 4 appointed by the Administration and 8 elected by member institutions, The directors of each Bank elect a president, who must be approved by the Bank Administration, as chief executive officer. Capital and Funds.--The capital stock of the Federal Home Loan Banks is owned by institutions which have been accepted into memberships, each of which is required to purchase stock, and by the United States. The Government's $124.741.000 stock is held by the Reconstruction Finance Corporation. The Banks may obtain other loanable funds through deposits accepted from member institutions and from other Federal Home Loan Banks, and through the issuance of bonds, debentures, or other obligations. Eligible Institutions.--The types of institutions eligible to become members of the Federal Home Loan Banks are building and loan, savings and loan, and homestead associations, savings and cooperative banks, and insurance companies. Every Federal savings and loan association is required to become a member of its regional Federal Home Loan Bank. On June 30, 1944, there were 3,714 members of the System, having estimated total assets of $6,840,241,000. Through June 30, 1944, the 12 Federal Home Loan Banks had advanced these member institutions --126-a total of $1,247,781,080, of which $1,119,503,534 had been repaid, leaving outstanding a balance of $129.277,546. Power to Borrow.--Any Bank may issue bonds, debentures, and other obligations when permitted by the Federal Home Loan Bank Administration. Consolidated debentures, which are the joint and several obligations of all the Banks, may be issued by the Administration when no assets of any Bank are pledged as security for any debt or are subject to any lien. Consolidated debentures amounting to $58,000,000 were outstanding on June 30, 1944. Loans to Veterans.--Members of the Federal Home Loan Bank System specialize in the making of loans on homes. They are therefore particularly well equipped to make and service loans to veterans under the Servicemen's Readjustment Act of 1944 (58 Stat. 291). Federal Savings and Loan Associations.--These were provided for by section 5 of the Home Owners' Loan Act of 1933 (48 Stat. 132) as amended. They are chartered and supervised by the Federal Home Loan

Bank Administration, and my be either new institutions or converted from established State-chartered institutions. As of June 30, 1944, there were 1,465 Federal savings and loan associations, with combined assets of $2,881,276,000, located in the 48 States, the Territories of Alaska and Hawaii, and the District of Columbia. Federal Savings and Loan Insurance Corporation Creation.--The Federal Savings and Loan Insurance Corporation was created by title IV of the National Housing Act (see citations under Federal Home Loan Bank Administration), to insure the safety of savings in thrift and home-financing institutions. Function.--The Corporation guarantees the safety of repurchasable (withdrawable) investments and credited earnings up to $5,000 for each investor in an insured institution. All Federal savings and loan associations, and those State-chartered building and loan, savings and loan, and homestead associations, and cooperative banks which apply and are approved, are insured. On June 30, 1944, there were 2,461 insured institutions, with total assets of $4,584,000,000. Procedure Upon Default.--To prevent the default of an insured institution or restore it to normal operation, the Corporation may make loans to, purchase assets of, or contribute to, such an institution. In the event of default and liquidation of an insured institution, the Corporation will make available to the holders of insured accounts, at their option, either a new insured account of equal amount in an insured institution which is not in default, or 10 percent of the insured account in cash, 45 percent in negotiable noninterest-bearing debentures of the Corporation due within 1 year from the date of default, and 45 percent in similar debentures due within 3 years from the date of default. Funds.--The capital of the Corporation in the amount of $100,000,000, was obtained by the sale of its stock to the Home Owners' Loan Corporation. Its income consists of premiums paid by insured institutions, admission fees from newly insured associations, and interest earned on its investments. All income above expenses is placed in reserves, which totaled $51,631,,510 on June 30, 1944. Additional funds may be obtained by the issuance of notes, bonds, or debentures. --127-Home Owners' Loan Corporation Creation.--The Home Owners' Loan Corporation was established by the Home Owners' Loan Act of 1933 (see citations under Federal Home Loan

Bank Administration). Its purpose was to grant long-term mortgage loans, at low interest rates, to distressed home owners who were unable to procure financing through normal channels, and to help stabilize real estate and mortgage values--then almost non-existent because of the depression. As provided by the act, the Corporation ceased its lending activities in 1936. Since then it has been engaged in liquidating its loans and other assets. Organization.--Collections of its loans and rental and sale of the Corporation's acquired properties are carried on through eight regional offices under the Corporation's home office in New York. These regional offices are located in New York, Atlanta, Chicago, Cincinnati, Omaha, Memphis, Dallas, and San Francisco. Lending Operations.--The Corporation granted loans totaling $3,093,451,321 to 1,017, 821 home owners, the great majority facing the loss of their homes through foreclosure. Since then, the Corporation has made additional advances and capitalizations which through June 30, 1944, aggregated $394,204,939. Practically all loans were originally made at an annual interest rate of 5 percent. The Corporation is now accepting interest at the rate of 4.5 percent. Loans were written for a term not to exceed 15 years. In order to assist delinquent borrowers to overcome their arrearages and retain their homes, Congress, in 1939, amended the act, providing that the Corporation may extend its loans, when advisable up to a maximum period of 25 years from the date of the granting of the loan. Liquidation of Assets.--Since 1936, the Corporation's chief task has been to aid its borrowers in meeting their payments and keeping their homes, and to liquidate its loans and properties. On June 30, 1944, it was collecting on 641,446 accounts--499,238 those of original borrowers and the rest purchaser of foreclosed properties. Three hundred and fifty-eight thousand, six hundred and eight borrowers and purchasers of HOLC houses had paid off their accounts in full. More than 100,000 borrowers were making monthly payments in amounts greater than called for by their contracts. Of the 197,680 properties which the Corporation had taken over, 192,221, or 97.2 percent, had been sold. Up to June 30, 1944, total loans and subsequent advances reached a cumulative total of $3,487,656,260. On the same date, $2,231,486,950, or 64 percent of this amount, had been liquidated. Other Investments.--Of $238.856,710 invested by HOLC in the securities of savings and loan associations, pursuant to the act of Congress, $46,529,250 was outstanding on June 30, 1944. The

Corporation also owns the $100,000,000 stock of the Federal Savings and Loan Insurance Corporation. Financial Operations.--The capital stock of the Corporation, owned by the Untied States, amounts to $200,000,000. The HOLC lending program, however, was financed primarily through its bonds which it was authorized to issue in an amount up to $4,750,000,000, exclusive of those for refunding purposes. The Corporation now is retiring its bonds as rapidly as funds become available for that purpose. --128-Exclusive of bonds for refunding purposes, the Corporation had issued bonds in the cumulative amount of $3,489.453,550 up to June 30, 1944. Bonds outstanding totaled $1,334,904,000. United States Housing Corporation Creation.--The United States Housing Corporation was incorporated on July 10, 1918, pursuant to acts of Congress approved May 16, 1918 (40 Stat. 550), and June 4, 1918 (40 Stat. 5959). Its purpose was to provide housing for war workers in World War I. The Corporation is now in liquidation. Federal Housing Administration Creation.--The Federal Housing Administration is one of the main constituent units of the National Housing Agency. Its function is to insure private lending institutions against loss on loans secured by mortgages on one- to four-family dwellings or on large scale rental housing projects, and on loans for property repair or improvements. The Federal Housing Administration was created by the National Housing Act, approved June 27, 1934 (48 Stat. 1246; 12 U.S.C. 1702), as amended by acts of Congress approved May 28, 1935; August 23, 1935; April 3, 1936; April 17, 1936; March 28, 1941; June 28, 1941; September 2, 1941; May 26, 1942; March 23, 1943; October 14, 1943; October 15, 1943; and June 30, 1944. Functions.--The National Housing Act, as amended, authorizes the Federal Housing Commissioner to insure lending institutions against losses incurred on two general types of loans: those for the repair, alteration, or improvement or real property--which may or may not be secured by collateral security--and those secured by mortgages on structures designed primarily for residential use.

For the duration of the war new construction is limited to war areas, and priority ratings as required by the War Production Board must b obtained whenever critical material are necessary for private or public housing construction or for repair or rehabilitation work. Federal Housing Administration field offices accept, process, and approve applications for priorities and authority to begin construction on privately financed war housing and on utility lines or systems necessary thereto. In addition, FHA field offices issue allotments and preference ratings in connection with approved privately financed war housing projects. They likewise make compliance inspections of such projects to determine conformity of the construction with WPB and NHA regulations regarding the use of critical materials. There is no correlation whatever between these activities on behalf of the war Production Board and the issuance of Federal Housing Administration commitments for mortgage insurance. Title I offers insurance to private lending institutions on loans up to $5,000 to alter, convert, improve, or repair an existing structure to provide additional living accommodations in areas where an acute housing shortage exists or impends to reason of war activities; on loans up to $2,500 to alter, repair, or improve other existing structures; and on loans up to $3,000 to build new structures. --129-The insurance coverage on these loans amounts to 10 percent of the aggregate advanced by the lender. The maximum liability which may be outstanding at any time, plus the total amount of claims paid under title I, less the amount collected from insurance premiums and other sources, is $165,000,000. Title II is designed to improve housing standards and conditions by utilizing "the best available means for achieving a sustained long-term residential construction program with a minimum expenditure of Federal funds and a maximum reliance upon private business enterprise." The means to this end are the Mutual Mortgage Insurance Fund and the Housing Insurance Fund. The total insurance liability under title II may not exceed $4,000,000,000 at any one time, except that with the approval of the President the aggregate may be increased to an amount not to exceed $5,000,000,000. However, the total amount of the principal obligations of mortgages insured after June 3, 1939, and covering property the construction of which was completed more than 1 year prior to the date of application for insurance shall not exceed 35 percent of the total amount of mortgages with respect to which insurance may be granted after such date.

The Mutual Mortgage Insurance system establishes a revolving fund for the insurance of mortgages on structures with accommodations for not more than four separate families. The mortgages, as provided for under section 203 of the act, are of three types: 1. Those which do not exceed $5,400 may cover up to 90 percent of $6,000 of the appraised value of property improved by a singlefamily, owner-occupied dwelling approved for mortgage insurance prior to the beginning of construction. 2. Those which do not exceed $8,600 may cover up to 90 percent of $6,000 of the appraised value plus 80 percent of such value in excess of $6,000 of property improved by a single-family, owneroccupied dwelling approved for mortgage insurance prior to the beginning of construction. 3. Those which do not exceed $16,000 may cover up to 80 percent of the appraised value of a property improved by a structure which need not be newly constructed or owner-occupied, but which must be designed to house not more than four separate families. However, no mortgage to refinance an existing mortgage shall be insured under this section unless the mortgagor certifies to the Commissioner that he has applied to the holder of the existing mortgage for refinancing, and after reasonable opportunity the holder has failed or refused to make a loan on as favorable terms as those of the mortgage offered for insurance. The provisions of section 203 are also applicable to eligible mortgages covering farm properties, provided that not less than 15 percent of the principal is to be expended for materials and labor for construction or repairs. The Housing Insurance Fund is a revolving fund for the insurance of mortgages of two types: (1) those involving a principal obligation in an amount not to exceed $5,000,000 and not to exceed 80 percent of the value of the property when the proposed improvements are completed, and (2) those previously insured under section 210, which was repealed by an act approved June 3, 1939. Title VI was created by an amendment to the National Housing Act signed by the President on March 28, 1941, Its scope was expanded --130-by the amendments of May 26, 1942, so that in addition to providing for the insurance of mortgages on one- to four-family dwellings for sale or rent, with occupancy priority to war workers, it also provides for the

insurance of mortgages not exceeding $5,000,000 on rental housing for war workers. The title VI insurance authorization is $1,700,000,000. In contrast to the provision of section 203 limiting 90-percent mortgages to owner-occupied new homes, section 603 of title VI authorizes the insurance of mortgages representing up to 90 percent of the Federal Housing Administration valuation of newly constructed dwellings of which the builder is the mortgagor. The mortgagor must, however, establish to the satisfaction of the Commissioner that occupancy priority will be given to persons engaged in war activities. Mortgages insured under section 603 are limited to a maximum of %5,400 on a single-family dwelling, $7,500 on a two-family dwelling, $95,000 on a three-family dwelling, and $12,000 on a four-family dwelling. The maximum term is 25 years and the maximum interest rate is 4.5 percent. Under section 608 of title VI the Commissioner is authorized to insure mortgages, including advances during construction, on large-scale projects in amounts not to exceed $5,000,000 and not to exceed 90 percent of the Commissioner's estimate of the reasonable replacement cost of the completed project, but not in excess of his estimate of the cost of the completed physical improvements exclusive of off-site public utilities and streets, and organization and legal expenses, and not to exceed $1,350 a room for such part of such project as may be attributable to dwelling use. The property must be designed for rent for residential use by war workers. The mortgagor must be approved by the Commissioner and may be regulated by him as to rents or sales, charges, capital structure, rate of return, and methods of operation. In authorizing insurance of mortgages under title VI, the Commissioner need not find that the project is economically sound, as under title II, but must find that the project with respect to which the mortgage is executed is an acceptable risk in view of the war emergency. The Commissioner is authorized to prescribe such procedures as he may deem necessary to secure occupancy priority to war workers. The Federal Housing Administration is now concentrating all its activities, as far as new construction is concerned, on title VI of the National Housing Act. In addition, the Administration is carrying on a program to encourage the attainment of three objectives: (1) the financing of existing property on a sound amortized basis, (2) the conversion of older properties for residential use, and (3) to meet sanitary and health requirements and to maintain property values, property repair within the restrictions of the War Production Board and of Federal Reserve Board Regulation W, which restricts the extension of consumer credit.

The Federal Housing Administration now insures loans to veterans, and FHA field offices are accepting applications from private lending institutions for the insurance of principal loans supplemented by loans under section 505 of the Servicemen's Readjustment Act of 1944. The Federal National Mortgage Association, organized by the Reconstruction Finance Corporation on February 10, 1938, under the --131-National Housing Act as amended February 3, 1938, provides a ready market for insured mortgages. Organization.--The work of the Federal Housing Administration is directed by the Commissioner. The general administrative staff includes a Deputy Commissioner, the General Counsel, four Assistant Commissioners, one Assistant to the Commissioner, the Comptroller, and four Zone Commissioners. The principal divisions of the Administration, the general nature of each of which is indicated by its name, are as follows: Legal, Underwriting, Title I, Mortgage Insurance, Administrative Services, Research and Statistics, and Controller.