payment, when specifically authorized by the Administrator, of actual transportation expenses and not to exceed $10 per diem in lieu of subsistence and other expenses to persons serving, while away from their homes, without other compensation from the United States, in an advisory capacity to the Administration; not to exceed $2,000 for expenses of attendance, when specifically authorized by the Administrator, at meetings concerned with the work of the Administration; typewriters, adding machines, and other labor-saving devices, including their repair and exchange; rent in the District of Columbia; transfer of household goods and effects as provided by the Act of October 10, 1940, and regulations promulgated thereunder; and all other necessary administrative expenses: Provided, That all necessary expenses of the Administration (including services performed on a contract or fee basis, but not including other personal services) in connection with the acquisition, protection, completion, operation, maintenance, improvement, or disposition of real or personal property of the Administration acquired under authority of titles I, II, and VI of said National Housing Act, shall be considered as nonadministrative expenses for the purposes hereof: Provided further, That, except for the limitations in amounts hereinbefore specified and the restrictions in respect to travel expenses, the administrative expenses and other obligations, including nonadministrative expenses, of the Administration shall be incurred, allowed, and paid in accordance with the provisions of said Act of June 27, 1934, as amended (12 U. S. C. 1701): Provided further, That not exceeding $300,000 of the sum herein authorized shall be expended in the District of Columbia for purposes of the Public Relations and Education Division: Provided further, That not to exceed $50,000 of the amount made available hereby for administrative expenses may be transferred to the National Bureau of Standards to carry out specific projects of the Administration, upon the request of the Administrator, for studies of the properties and suitability of building materials with particular reference to their use in low-cost and low-rent housing, including the construction of such experimental structures as may be necessary therefor, and for printing, binding, and disseminating the results of such studies. PAYMENT OF LOSSES Payment of losses: Not to exceed $4,000,000 of the funds of the Reconstruction Finance Corporation, advanced or to be advanced to the Federal Housing Administration under authority of the National Housing Act of June 27, 1934, as amended (12 U. S. C. 1701), and not to exceed $4,000,000 of the funds (after allowance for administrative expenses as authorized under the heading, Administrative expenses, Federal Housing Administration) in the account in the Treasury comprised of premiums collected under authority of section 2 (f), title I, of said Act, shall be available for the payment of losses under insurance granted under section 2 and section 6, title I, of said Act. JUSTIFICATION OF ESTIMATES Mr. FERGUSON. Mr. Chairman, I would like to submit for the record the following justification: Justification of estimates Regular appropriation, fiscal year 1942__ Supplemental appropriation, fiscal year 1942 Base for fiscal year 1943... Increases and decreases required for fiscal year 1943: $13, 388, 000 1, 366, 453 14,754, 453 GENERAL STATEMENT The Federal Housing Administration was established on June 30, 1934, pursuant to the National Housing Act of June 27, 1934, "to encourage improvement in housing standards and conditions, to provide a system of mutual mortgage insurance and for other purposes." Under the provisions of the act, as amended, the activities of the Federal Housing Administration may be divided into four classes: 1. The insurance of lending institutions under title I against loss on loans made to citizens for the purpose of repairing, modernizing, and improving their property, and the building of new structures. 2. The insurance of lending institutions under section 203 against loss on loans secured by mortgages on one- to four-family dwellings. 3. The insurance of lending institutions under section 207 against loss on loans secured by mortgages on large-scale rental properties. 4. The insurance of lending institutions under title VI against loss on loans secured by mortgages on one- to four-family dwellings constructed in designated defense areas. None of the activities of the Federal Housing Administration involve the lending of Government money, the whole theory of the act being to encourage the lending of private capital on a sound and profitable basis. The following is a balance sheet of the Federal Housing Administration as of June 30, 1941: Balance sheet, June 30, 1941 Title I, 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 Summary of title I transactions, cumulative through June 30, 1941-Continued Recovery and expense in collections of defaulted Title I notes 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 |