finds that (1) the area is reasonably viable, giving consideration to the need for providing adequate housing for families of low- and moderateincomes in the area, and (2) the property is an acceptable risk in view of this consideration.

Special risk insurance fund

A new special risk insurance fund is established which is not intended to be actuarially sound and out of which claims will be paid on mortgages insured under the several new special mortgage insurance programs for housing for low- or moderate-income families. A $5 million advance from the general insurance fund is authorized to initiate the new special risk fund. Appropriations are authorized to cover any losses sustained by the new fund.

Condominium and cooperative ownership for low and moderate income families

Rental housing projects financed with below-market interest rate FHA 221(d) (3) mortgages are permitted to be converted to cooperative or condominium ownership.

A low or moderate income purchaser can purchase an individual family unit and an undivided interest in the common areas and facilities of a project at a price not in excess of the appraised value of the property and with a mortgage bearing the below-market interest rate then in effect. At least a 3-percent downpayment will be required, which can be applied in whole or in part toward closing costs.

A cooperative, with membership open only to low and moderate income families meeting income limits prescribed for 221(d) (3) below-market interest rate projects, can purchase a 221(d) (3) project for an amount not exceeding the appraised value of the property for continued use as a cooperative. The insured mortgage can bear the below-market interest rate in effect at the time the commitment to insure the mortgage is issued.

Assistance to nonprofit sponsors of low and moderate income housing

The Secretary of HUD is authorized to provide technical assistance with respect to the construction, rehabilitation, and operation of low and moderate income housing to nonprofit organizations. The Secretary can also make 80-percent, interest-free loans to nonprofit sponsors of such housing to cover certain preconstruction costs under federally assisted programs.

The low and moderate income sponsor fund is established for the purpose of making the loans with an authorization for appropriations of $7.5 million for fiscal year 1969 and $10 million for fiscal year 1970. The fund will be a revolving fund and repayments of loans will be deposited in the fund.

National Homeownership Foundation

The National Homeownership Foundation is created to carry out a continuing program of encouraging private and public organizations to provide increased homeownership and housing opportunities in urban and rural areas for lower income families.

The Foundation is authorized to make grants and loans (not otherwise available from Federal sources) to such organizations to help defray organizational and administrative expenses, necessary preconstruction costs, and the cost of counseling or similar services to lower income families for whom housing is being provided. The Foundation can also provide technical assistance to the organizations.

Appropriations up to $10 million are authorized. The Foundation can also use donated funds.

The Foundation is to be administered by an 18-member Board of Directors. Fifteen members are to be appointed by the President. The Secretary of HUD, the Secretary of Agriculture, and the Director of OEO are the other three members. The Board will appoint an executive director as its executive officer.

New technologies—housing for lower income families

The Secretary of HUD is directed to institute a program under which qualified public and private organizations will submit plans for the development of housing for lower income families, using new and advanced technologies, on Federal land which has been made available for that purpose, or on other land which is suitable.

The Secretary will approve up to five plans which are submitted to him under the program. He will consider (among other things) the potential of the technology employed and the ability of the organization submitting the plan to produce at least 1,000 dwelling units a year utilizing that technology.

The Secretary is directed to seek to achieve the construction of at least 1,000 dwelling units a year over a 5-year period for each of the various types of technologies proposed in the plans approved. He is required to report at the earliest practicable date with respect to the projects assisted, together with his recommendations.

Mortgages financing the projects are authorized to be insured under the FHA experimental housing program.

Study of insurance protection for homeowners

The Secretary of HUD, in cooperation with the private insurance industry, is authorized to develop a plan for establishing an insurance program to enable homeowners to meet their monthly mortgage payments in times of personal economic adversity. The Secretary is required to report his actions and recommendations within 6 months following enactment of the law.

National Advisory Commission on Low-Income Housing

A National Advisory Commission on Low-Income Housing is established to undertake a comprehensive study and investigate the resources and capabilities in the public and private sectors of the economy which may be used to fulfill more completely the objectives of the national goal of "a decent home and a suitable living environment for every American family."

The Commission is directed to submit to the President and the Congress an interim report with respect to its findings and recommendations not later than July 1, 1969, and a final report not later than July 1, 1970.

TITLE II-RENTAL HOUSING FOR LOWER INCOME FAMILIES

A new program of Federal assistance to rental and cooperative housing for lower income families is authorized by adding a new section 236 to the National Housing Act. The assistance is in the form of periodic payments to the mortgagee financing the housing to reduce the mortgagor's interest costs on a market rate FHA-insured project mortgage.

The interest-reduction payments will reduce payments on the project mortgage from that required for principal, interest, and

mortgage insurance premium on a market rate mortgage to that required for principal and interest on a mortgage bearing an interest rate of 1 percent.

The interest-reduction payments will reduce rentals to a basic charge, and a tenant or cooperative member will either pay the basic charge or such greater amount as represents 25 percent of his income, but not in excess of the charges which would be necessary without any interest-reduction payments. Rental charges collected by the project owner in excess of the basic charges are to be returned to the Secretary for deposit in a revolving fund to offset payments made to the mortgagee and for the purpose of making other interest reduction payments.

Tenants of these projects who pay less than the fair market rental charge for their units will generally have to have incomes, at the time of the initial rent-up of the projects, not in excess of 135 percent of the maximum income limits that can be established in the area for initial occupancy in public housing dwellings. However, up to 20 percent of the contract funds authorized in appropriation acts may be made available for projects in which some or all of the units will be occupied, at the time of the initial rent-up, by tenants whose incomes exceed the above limit but do not exceed 90 percent of the income limits for occupancy of section 221 (d) (3) below-market interest rate rental housing.

In determining income for the purpose of eligibility as well as the amount of rent to be paid, a $300 deduction is permitted for each minor person in the family and any income of such minor is not counted. Incomes of tenants will be reexamined at least every 2 years for the purpose of adjusting rentals. Rental charges collected by the project owner in excess of the basic charges are to be returned to the Secretary for deposit in a revolving fund for the purpose of making other interest-reduction payments.

To qualify for mortgage insurance under the new program, a mortgagor must be a nonprofit organization, a cooperative, or a limited-dividend entity of the types permitted under the FHA section 221(d)(3) rental housing program. The mortgage limitations with respect to maximum mortgage amount are the same as for mortgages insured under the (d) (3) program. Interest-reduction payments can also be made with respect to State-aided rental housing projects approved for receiving the benefits of the program prior to completion of construction or rehabilitation of the projects.

Contracts for assistance payments are authorized, subject to approval in appropriation acts, in the amount of $75 million annually prior to July 1, 1969. This amount is increased by $100 million on July 1, 1969, and by $125 million on July 1, 1970. A reasonable portion of this authority is to be transferred to the Secretary of Agriculture for use in rural areas and small towns.

A project financed under the new program can include such nondwelling facilities as the Secretary deems adequate and appropriate to serve the occupants of the project and the surrounding neighborhood, as long as the project is predominantly residential and any nondwelling facilities contribute to the economic feasibility of the project. Where a project is designed primarily for occupancy by the elderly or handicapped, it can include related facilities for their use, such as dining, work, recreation, and health facilities.

With approval of the Secretary of HUD, a mortgagor can sell the individual dwelling units to lower income purchasers and these purchasers are eligible for assistance payments under the provisions of the new homeownership program.

A cooperative or private nonprofit corporation or association can purchase a project from a limited dividend mortgagor and finance the purchase with a mortgage insured under the program.

Projects for low and moderate income families financed under the below market 221(d) (3) program can be transferred, prior to final endorsement for FHA insurance, to the new rental housing interest reduction program.

Projects for the elderly or handicapped approved for direct loans can be refinanced under the new interest reduction program at any time up to, or a reasonable time after, project completion.

Rent supplement payments may be provided for tenants in projects financed under the new program, but no more than 20 percent of the units in any one project can receive rent supplement assistance.

Rent supplements

The authority for rent supplement contracts (subject to approval in appropriation acts) is increased by $40 million on July 1, 1969, and by $100 million on July 1, 1970.

State-aided projects are made eligible for rent supplements if the projects are approved for this benefit prior to completion of construction or rehabilitation.

In determining the income of any tenant for the purposes of the rent supplement program, $300 may be deducted for each minor person who is a member of the immediate family of the tenant and living with the tenant, and the earnings of any such minor person shall not be included in the income of the tenant.

Low-rent public housing

Authority for annual contributions to low-rent public housing is increased by $100 million on enactment of the law, and by $150 million on July 1, 1969, and July 1, 1970.

The Secretary of HUD is authorized to make grants to local housing authorities to assist in financing tenant services for tenants of public housing. Appropriations for the grants are authorized up to $15 million for fiscal year 1969, and $30 million for fiscal 1970.

Preference is to be given to programs providing for maximum tenant participation in the development and operation of tenant services. Tenant services include: counseling on household management, housekeeping, budgeting, money management, child care, and similar matters; advice as to resources for job training and placement, education, welfare, health, and other community services; services which are directly related to meeting tenant needs and providing a wholesome living environment; and referral to appropriate agencies when necessary for the provision of such services.

Public housing assistance is permitted for Indian families who live on or adjacent to their farmland.

High-rise public housing projects for families with children are prohibited except where the Secretary of HUD determines that there is no practical alternative.

The Secretary is prohibited from prescribing limitations on the types or categories of structures or dwelling units (other than those provided

in the law) which can be leased under the public housing, section 23 leasing program.

An additional annual subsidy of $120 is authorized for public housing units occupied by large families or families with very low incomes.

Local housing authorities are permitted to purchase structures leased under the section 23 program for the purpose of reselling the structure to the tenants, or to a group of tenants occupying units aggregating in value at lease 80 percent of the structure's value. The purchase can be on such terms and conditions as may be necessary to enable the tenants involved to make their purchases without undue financial hardship.

TITLE III-FEDERAL HOUSING ADMINISTRATION INSURANCE OPERATIONS

Perfecting and liberalizing changes are made in a number of existing FHA mortgage insurance programs. In addition:

FHA is authorized to:

Insure loans to homeowners to finance the purchase of fee simple title to property on which their homes are located where the homeowner has only a leasehold interest in the land;

Insure 90 percent supplemental loans to finance improvements and additions to FHA multifamily projects (including nursing homes and group practice facilities);

Insure supplementary rehabilitation loans to housing cooperatives which purchased war housing covered by an uninsured mortgage;

Permit the cost of nursing home equipment to be included in an insured nursing home mortgage;

Insure mortgages on new seasonal homes.

The title I home improvement loan insurance program is changed by: 1. Raising the limit on the amount of a loan from $3,500 to $5,000;

2. Extending the maximum maturity from 5 years and 32 days to 7 years and 32 days; and

3. Increasing the maximum financing charge to $5.50 discount per $100 of the first $2,500 plus $4.50 in excess of $2,500 (now $5 and $4, respectively).

Mortgages financing the purchase of housing rehabilitated by local public agencies in urban renewal areas are authorized to be insured by FHA under the existing 220 and 221(d)(3) programs as well as under the new section 236 program providing for interest reduction payments. The maximum mortgage amount under section 203 (i) for homes in outlying, semirural, and rural areas is increased from $12,500 to $13,500.

TITLE IV- -GUARANTEES FOR FINANCING NEW COMMUNITY LAND
DEVELOPMENT

("New Communities Act of 1968")

Title IV, the "New Communities Act of 1968," provides additional Federal assistance to new communities. It is designed to enlist new sources of private capital in their development.