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Balance sheet, June 30, 1941Continued

LIABILITIES AND CAPITAL Current liabilities:

Unliquidated obliga-
tions:
Administrative ex-

pense prior fis-
cal years.--

$33, 060. 08
Administrative ex-

pense-fiscal
year 1941.--

505, 681. 73

$538, 741. 81 Title I claims in audit.

684, 110. 91 Special deposits

11, 593. 56
Trust fund receipts.

620, 907, 53
Miscellaneous receipts in process of
deposit..

355. 88

$1, 855, 709. 69 Working capital: Unexpended appropritions: Administrative expense.

$2, 189, 299. 63
Renovation and

modernization,
title I...

73, 321. 87

2, 262, 621. 50 Title I insurance reserve.

133, 359, 693. 75

135, 622, 315. 25 Surplus:

Asset value remaining from expended
and obligated appropriations

18, 745, 452. 28 Mutual mortgage insurance fund (net)-- 34, 350, 549. 12 Housing insurance fund (net)

1, 487, 915. 98 Title I insurance fund (net).

2, 393, 986. 01 Defense housing fund (net) -

4, 831, 314, 38

61, 809, 217. 77 Total liabilities and capital....

199, 287, 242. 71 Title 1, property improvement loans.Under the provisions of title I, section 2, of the National Housing Act, approved June 27, 1934, the Federal Housing Administrator was authorized to qualify private lending institutions for insurance against losses which they may sustain as a result of loans or advances of credit and purchases of obligations representing loans and advances of credit made for the purpose of financing the cost of repairing and modernizing homes and commercial or industrial properties and for the building of new structures. This section of the act has been amended several times and expired by law on March 31, 1937. However, it was restored under the act of February 3, 1938, which granted to the Administrator the authority to insure loans under this title until June 30, 1939. Under the act of June 3, 1939, the authority to insure such loans was extended for a period of 2 years ending June 30, 1941. It was again extended by the act of June 28, 1941, for a period of 2 years ending June 30, 1943. Under the present act the Administrator is authorized to insure a qualified lending institution against loss on loans made in accordance with regulations up to 10 percent of the aggregate net amount advanced by it. Losses, if any, incurred in excess of 10 percent are borne by the lending institution. In order to qualify for insurance a loan must be made in accordance with regulations issued by the Administrator and may not exceed, with respect to any piece of property, $5,000 under class 1, $3,000 under classes 2 and 3, on any one piece of property. Title I loans are of the following classes:

1. Repair, alteration, or improvement, of an existing structure or of the real property in connection therewith, exclusive of the building of new structures.

2. (a) New structures exclusive of those used wholly or in part for residential or agricultural purposes; (b) New nonresidential structures used wholly or in part for agricultural purposes.

3. New structures used wholly or in part for residential purposes.

Under the previous provisions of title I prior to the June 1939 amendment there was no charge to the lending institution for the benefits accruing to it. under its contract of insurance and all costs of operation of the Federal Housing Administration including the reimbursement of loss on defaulted notes, were borne by the Federal Government. In the amendments of June 3, 1939, provision was made for an insurance premium charge not to exceed three-quarters of 1 percent per annum, payable in advance, of the net proceeds of each loan reported for insurance under title I, as amended, effective July 1, 1939. The same premium charge is provided in the amendment of June 28, 1941:

The insurance charge on all repair and modernization loans (class 1) and new nonresidential structure loans (class 2) is three quarters of 1 percent per annum, payable in advance, and on all new residential structure loans (class 3) it is onehalf of 1 percent per annum, payable in advance or in annual installments at the option of the lending institution.

The principal changes relating to title I under the amendment of June 28, 1941, are (1) the extension of the insurance provisions of title I to June 30, 1943, (2) increase in amount of loans under (a) class 1 from $2,500 to $5,000, (b) classes 2 and 3 from $2,500 to $3,000, and (3) increase in term of loan under class 1 loans over $2,500 from 3 years and 32 days to 5 years and 32 days.

It is estimated that during the current fiscal year revenue from fees and premiums will be $2,665,750 and $2,703,800 during the fiscal year 1943. This is based upon the insurance of loans amounting to $192,232,500 and $195,937,500 in the fiscal years 1942 and 1943, respectively. This is about $105,000,000 less than the fiscal year 1941 when the volume of insured loans amounted to $297,203,492. The reduction in the estimate of the volume of business for the fiscal years 1942 and 1943 is due primarily to the shortage of critical materials for which priority ratings must be obtained, and the effect of the regulations of the Federal Reserve Board, placing certain restrictions on consumer credit.

Claim for reimbursement of loans on a qualified note may be made after payment on such note becomes in default and written demand has been made upon the borrower for payment in full of the delinquent obligation. The lending institution assigns to the United States the note on which the loss was incurred together with any security taken to secure payment thereof. The Federal Housing Administration, after payment of the claim, undertakes to effect collection from the borrower. As of June 30, 1941, there had been paid out in claims $34,393,266. Cash recoveries amounted to $7,704,097, all of which has been deposited in the Treasury to the credit of miscellaneous receipts. Property having an estimated value of $4,093,100 had been repossessed, the bulk of which has been turned over to the Procurement Division, Treasury Department, for disposition. Under the provisions of the June 1941 amendment all monies recovered on notes insured

under the June 1939 amendment are deposited in the Treasury to the credit of * the title I fund. It is estimated that about $2,600,000 in cash will be recovered during the current fiscal year, of which about $1,550,000 will be deposited to the credit of miscellaneous receipts and $1,050,000 to the credit of the title I fund. During the fiscal year 1943 it is estimated about $3,000,000 in cash will be recovered, of which about $950,000 will be deposited to the credit of miscellaneous receipts and $2,050,000 to the credit of the title I fund.

A summary of title I transactions through June 30, 1941, and a statement of recovery and expense in collections of defaulted title I notes follows:

Summary of title I transactions, cumulative through June 30, 1941

Number of

notes

Amount

Percent to loans insured

1, 461, 527

667, 760
1, 173, 904

$562, 044, 740.77
314, 987, 129.65
493, 344, 008.19

100.000 100.000 100.000

3, 303, 191 | 1,370, 375, 878.61

100.000

Total notes insured:

Prior to Feb. 3, 1938, amendment.
Under Feb. 3, 1938, amendment.
Under June 3, 1939, amendment.

Total.
Claims paid:

Insured prior to Feb. 3, 1938, amendment.
Insured under Feb. 3, 1938, amendment.
Insured under June 3, 1939, amendment.

Total...
Difference.

3. 934
2. 561
993

101, 037 22, 113, 038.12
21, 411

8,066, 765. 16
13, 133

4,897,574. 10 135, 581 35,077, 377.38 3, 167, 610 1,335, 298, 501. 23

2. 560

Summary of title I transactions, cumulative through June 30, 1941Continued

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Recovery and expense in collections of defaulted Title I notes

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$124, 070.30 163. 82 431, 225. 3219.54 467, 923. 41 16. 78 453, 658.34

19. 11 357, 712.09

16.80

1 Total recovery includes cash collections on notes and repossessed equipment and property credits, excepting unrecovered balances on sales and property destroyed by Treasury.

· Reduction in percentage of total expense to total recovery in June was caused by the entry of $156,442.23 of real property not previously recorded.

Title 11, section 203, insurance of mortgages on individual loans.—This section of the act sets up a single, self-supporting, mutual mortgage insurance plan under which approved lending institutions are insured against loss of the unpaid principal of moneys loaned on mortgages, together with such amounts as they may advance for taxes and other specified items. To be eligible for insurance under this section the mortgage must conform to certain rules as follows:

1. It must be held by a mortgagee approved by the Administrator as responsible and able to service the mortgage properly.

2. Mortgages must not exceed $16,000 and must not exceed 80 percent of the Administrator's appraised value of the property, except that mortgages not in l'nder the previous provisions of title I prior to the June 1939 amendment there was no charge to the lending institution for the benefits accruing to it under lis contract of insurance and all costs of operation of the Federal Housing Admi. tration including the reimbursement of loss on defaulted notes, were borne by the Federal Government. In the amendments of June 3, 1939, provision was in de for an insurance premium charge not to exceed three-quarters of 1 percent per annum, payable in advance, of the net proceeds of each loan reported for insura:ce under title I, as amended, effective July 1, 1939. The same premium charge : provided in the amendment of June 28, 1941.

The insurance charge on all repair and modernization loans (class 1) and des nonresidential structure loans (class 2) is three quarters of 1 percent per annum payable in advance, and on all new residential structure loans (class 3) it I 0 half of 1 percent per annum, payable in advance or in annual installments at the option of the lending institution.

The principal changes relating to title I under the amendment of June 28, 1941, are (1) the extension of the insurance provisions of title I to June 30, 194% (2) increase in amount of loans under (a) class 1 from $2,500 to $5,000, (bl class 2 and 3 from $2,500 to $3,000, and (3) increase in term of loan under class Ikan over $2,500 from 3 years and 32 days to 5 years and 32 days.

It is estimated that during the current fiscal year revenue from fees and pre miums will be $2,665,750 and $2,703,800 during the fiscal year 1943. This is based upon the insurance of loans amounting to $192,232,500 and $195,937,30 in the fiscal years 1942 and 1943, respectively. This is about $105,000,000 ir than the fiscal year 1941 when the volume of insured loans amounted to $297,203,492. The reduction in the estimate of the volume of business for te fiscal years 1942 and 1943 is due primarily to the shortage of critical materia. for which priority ratings must be obtained, and the effect of the regulatsissa the Federal Reserve Board, placing certain restrictions on consumer creiit.

Claim for reimbursement of loans on a qualified note may be made aiter parment on such note becomes in default and written demand has been made pics the borrower for payment in full of the delinquent obligation. The lending 11.-11 tution assigns to the l'nited States the note on which the loss was incurred Sub gether with any security taken to secure payment thereof. The Federal Honek Administration, after payment of the claim, undertakes to effect collection fr ni. the borrower. As of June 30, 1941, there had been paid out in claims $34,393,3 Cash recoveries amounted to $7,704,097, all of which has been deposited in the past Treasury to the credit of miscellaneous receipts.. Property having an estimat: 1 value of $4,093,100 had been repossessed, the bulk of which has been turned over to the Procurement Division, Treasury Department, for disposition. i'nder to provisions of the June 1941 amendment all monies recovered on notes in trei under the June 1939 amendment are deposited in the Treasury to the credit af the title I fund. It is estimated that about $2,600,000 in cash will be recescort during the current fiscal year, of which about $1,550,000 will be deposited to the credit of miscellaneous receipts and $1,050,000 to the credit of the title I fur ! During the fiscal year 1943 it is estimated about $3,000,000 in cash will be mout. ered, of which about $950,000 will be deposited to the credit of miscellane. receipts and $2,050,000 to the credit of the title I fund.

A summary of title I transactions through June 30, 1941, and a statement of recovery and expense in collections of defaulted title I'notes follows:

Summary of title I transactions, cumulative through June 30, 1941

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100

1, 461, 527 $562,044,740 77

Total notes incured.

067, 700 1, 173, 004 483, 344, 004 19 3, 303, 191 | 1.370, 375, 878 ar

Prior to teb 3, 1834, ameodment. linder Feb 3, Ivan, ameodment. l'oder June 2, 1909, amendment.

Total
Claims pald

Insured prior to Feb. 2, 1938, amendment...
Insured under Feb. 3. inca, amendment
Insured under June 3, 1930, amendment.

Total..........
Difference...

101, 037 22, 113,038 13 21, 411 8,004, 764 16 13, 183 4. 807.874. 10 135, 581 34,077, 377.38 3, 167,610 | 1,338, 234, 801. 2

Summary of title I transactions, cumulative through June 30, 1941Continued

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Recovery and expense in collections of defaulted Title I notes

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1 Total recovery includes cash collections on notes and repossessed equipment and property credits, excepting unrecovered balances on sales and property destroyed by Treasury.

Reduction in percentage of total expense to total recovery in June was caused by the entry of $156,442.23 of real property not previously recorded.

Title II, section 203, insurance of mortgages on individual loans.—This section of the act sets up a single, self-supporting, mutual mortgage insurance plan under which approved lending institutions are insured against loss of the unpaid principal of moneys loaned on mortgages, together with such amounts as they may advance for taxes and other specified items. To be eligible for insurance under this section the mortgage must conform to certain rules as follows:

1. It must be held by a mortgagee approved by the Administrator as responsible and able to service the mortgage properly.

2. Mortgages must not exceed $16,000 and must not exceed 80 percent of the Administrator's appraised value of the property, except that mortgages not in

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