DEFAULTS ON FHA-INSURED MORTGAGES (DETROIT) HEARINGS BEFORE A SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS HOUSE OF REPRESENTATIVES NINETY-SECOND CONGRESS FIRST SESSION DECEMBER 2, 3, AND 4, 1971 Printed for the use of the Committee on Government Operations COMMITTEE ON GOVERNMENT OPERATIONS JACK BROOKS, Texas CHET HOLIFIELD, California, Chairman L. H. FOUNTAIN, North Carolina JOHN S. MONAGAN, Connecticut BENJAMIN S. ROSENTHAL, New York FERNAND J. ST GERMAIN, Rhode Island FLOYD V. HICKS, Washington JOHN CONYERS, JR., Michigan FLORENCE P. DWYER, New Jersey PAUL N. MCCLOSKEY, JR., California BARRY M. GOLDWATER, JR., California CHARLES THONE, Nebraska Birkle, Baltas E., Assistant Director, Civil Division, U.S. General Accounting Office; accompanied by William C. Shanks, Audit Manager, General Accounting Office, Detroit, Mich_-- 2 Bixby, Michael B., the Center for Urban Law and Housing of Wayne 109 Lederer, Creighton C., commissioner, department of building and safety engineering__ Mogk, John E., professor of law, Wayne State University. 121 103 Tracy, Robert, auditor, General Accounting Office_-_ 71 77 20 Whitbeck, William C., Area Director, Detroit Area Office, U.S. Department of Housing and Urban Development; accompanied by William Cameron, Chief of the Property Distribution Branch for the Housing Management Division; Donald Jordan, Deputy Assistant Commissioner for Technical Standards, Housing Production, and Mortgage Credit; and Paul Kaup, Assistant Regional Director for Housing Management, Chicago Regional Office__ Letters, statements, etc., submitted for the record by 27 Birkle, Baltas E., Assistant Director, Civil Division, U.S. General Accounting Office: Exhibits A through E regarding HUD-insured homes Lambrecht, Robert P., president, Mortgage Bankers Association of 9-11 136-137 81-84 Levin, Carl, councilman, statement_ 131-136 26 Monagan, Hon. John S., a Representative in Congress from the State of Connecticut, and chairman, Legal and Monetary Affairs Subcommittee: Letter, dated December 2, 1971, from Senator Philip A. Hart, re subcommittee hearings in Detroit__ Ricard, Delore, inspector, Detroit Police Department: Exhibit A-C, maps and table delineating precincts and scout car territories--‒‒‒ 74-76 Whitbeck, William C., Area Director, Detroit Area Office, U.S. Department of Housing and Urban Development, statement--- (III) 60-70 DEFAULTS ON FHA-INSURED MORTGAGES (DETROIT) THURSDAY, DECEMBER 2, 1971 HOUSE OF REPRESENTATIVES, LEGAL AND MONETARY AFFAIRS SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS, Washington, D.C. The subcommittee met, pursuant to notice, at 10:35 a.m., 2247, Rayburn House Office Building, Hon. John S. Monagan (chairman of the subcommittee) presiding. in room Present: Representatives John S. Monagan and Garry Brown. Staff present: Jeremiah S. Buckley, counsel; Jane Cameron, assistant clerk; and J. P. Carlson, minority counsel, Committee on Government Operations. Mr. MONAGAN. We will call the hearing to order. Because of the difficulties in the schedule and the press of business, we are going to have to move this along rather promptly. Today the Subcommittee on Legal and Monetary Affairs begins 3 days of hearings on the increasing rate of default on FHA mortgages in Detroit, Mich. These hearings are part of the subcommittee's review of HUD operations which began last spring when we received testimony from Secretary Romney. In October, Assistant Secretary Gulledge testified regarding housing production and the allocation of subsidized housing commitments. The problem of these local defaults which frequently lead to acquisitions of FHA insured properties by HUD is certainly worthy of consideration for several reasons: If the owners of single-family houses are unable to meet their mortgage payments, then they must movean alternative which is certainly detrimental to the interests of the homeowner and his family. But the homeowner is not the only one who is hurt. His house may stand vacant for many months, creating a breeding place for crime and fires in the neighborhood. Finally, the cost of the FHA insurance fund cannot be overlooked. Reports indicate that acquired properties in Detroit have been disposed of at a substantial loss and the volume of such losses which can be borne by the insurance fund remains to be determined. The problem of defaults is not confined to single-family dwellings. Multiple-family, subsidized housing, particularly in the inner or middle city, has been experiencing difficulties. We shall also be considering this problem during our hearings. Staff investigations and newspaper reports have indicated that the volume of default and acquisition in Detroit is a serious problem and is getting worse. It is hoped that these hearings will bring the problem into focus and give the Congress and the public some idea of its dimensions. (1) |