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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

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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

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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.

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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.

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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.

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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 single-
family, 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, owner-
occupied 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

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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

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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.