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area, except that 20 percent of the funds for this program may be used for families with higher incomes which do not exceed 90 percent of the limits for 221(d) (3) below market interest rate housing. A deduction of $300 per child is permitted in determining family income. It also provides substantially increased funding for the existing public housing and rent supplement programs. Liberalized FHA financing

It establishes a special high-risk insurance fund in FHA to encourage FHA to approve home-loan applications from buyers who cannot meet full standards and to make insured loans available in neighborhoods which do not meet present mortgage insurance requirements. Aids to housing sponsors It authorizes interest-free loans to cover preconstruction expenses

of nonprofit housing sponsors and also creates a National Homeownership Foundation to provide grants or loans.to housing sponsors. New communities

It authorizes HUD to guarantee borrowings of private developers of new communities and to make supplementary grants to States and localities in connection with federally aided water, sewer, and openspace land projects that assist the new community development. Neighborhood development program

It authorizes an alternative form of urban renewal under which a community could elect to carry out a project on the more flexible basis of annual increments of planned renewal activities over the period required for completion in place of the present lump sum commitment for an entire project fully planned in advance. Rehabilitation loans and grants

It increases the maximum rehabilitation grant from $1,500 to $3,000. It also extends the provisions of the rehabilitation grant and loan programs for definitely planned rehabilitation or code enforcement areas or where such assistance is needed to bring properties up to reasonable underwriting standards under applicable statewide property insurance inspection plans. Low and moderate income housing

It requires that a majority of the housing units provided in the future in each community's new urban renewal projects redeveloped for residential purposes must be for low- and moderate-income families, including at least 20 percent of all units for low-income families except that under certain conditions the 20-percent requirement can be waived. FNMA secondary market

It places FNMA's secondary market operation in a new privately owned corporation. FNMA's special assistance and management and liquidating functions would be retained in the Department of HUD to be administered by the Secretary through a new Government National Mortgage Association. Rural housing

It authorizes the Farmers Home Administration to make direct and insured loans available to low-income families in rural areas and small

towns with interest rates as low as 1 percent. It also authorizes a new program of grants and loans to aid self-help housing. Urban riot insurance

It authorizes a new program of Federal reinsurance against loss from riots and civil disorders for private insurance companies to encourage them to write property insurance in areas threatened by such problems. Participating companies would be required to comply with a State FAIR plan (fair access to insurance requirements) designed to secure for all owners of insurable property access to basic lines of property insurance. Flood insurance

It authorizes a new program of Federal assistance to private insurance companies to encourage them to provide property insurance against flood hazards. Interstate land sales

It makes it unlawful for any developer to sell or lease, by use of the mail or by any means in interstate commerce, any lot in any

subdivision of 50 or more lots offered as part of a common promotional plan unless (1) the subdivision is registered with HUD and (2) a printed property report is furnished to the purchaser in advance of the signing of an agreement for sale or lease. Mortgage insurance for hospitals

It authorizes a new program of FHA mortgage insurance to cover the construction and equipping of nonprofit hospitals. Model cities

It authorizes an additional $1 billion for fiscal 1970 for the model cities program and also authorizes an additional $12 million for fiscal 1969 for planning funds for the third round of model cities. College housing

It supplements the existing program of 3-percent direct loans for college housing by a new program of interest subsidies for privately financed college housing to reduce the effective rate to the college to 3 percent. National housing partnerships

It provides for the establishment of national housing partnerships to encourage the greater use of private financial resources in increasing our supply of housing for low and moderate income families in communities throughout the Nation.

DIGEST OF STATUTE

Housing goaldeclaration of policy

The Congress affirms in the 1968 act the national goal of "a decent home and a suitable living environment for every American family" (as stated in the Housing Act of 1949). It states further that there should be the fullest practicable utilization, in administration of Federal housing programs, of the resources and capabilities of private enterprise and self-help techniques. Opportunities for training and employment for lower income persons

The Secretary of Housing and Urban Development is directed, in administering housing programs for low-income families, to require:

1. That opportunities for training and employment arising in connection with the planning, construction, rehabilitation, and operation of housing under the programs be given to lower income persons residing in the area of the housing; and

2. That, to the greatest extent feasible, contracts for work pursuant to the housing programs shall, where appropriate, be awarded to business concerns located in or owned in substantial

part by persons residing in the area of the housing. Improved design in Government housing programs

The Congress commends the Department of HUD for its recent efforts to improve architectural standards, but declares that in the administration of housing programs which assist in the provision of housing for low- and moderate-income families, emphasis shall be given to encouraging good design as an essential component of the housing. Improvement of program administration

The Secretary is directed to make a report to the Banking and Currency Committees early in calendar years 1969 and 1970 identifying specific areas of program administration and management which require improvement. The reports shall describe actions taken and proposed to make improvements and recommend legislation needed to accomplish the improvements.

TITLE I-LOWER INCOME HOUSING

Homeownership for lower income families

A new program (sec. 235 of the National Housing Act) is authorized to provide Federal assistance to homeownership by lower income ...families (including membership in a cooperative). Under the new program, the Secretary of HUD may enter into contracts to make periodic payments to lenders who make FHA-insured home mortgage loans to these families. The payments will be in an amount necessary to make up the difference between 20 percent of the family's monthly income and the required monthly payment under the mortgage for principal, interest, taxes, insurance, and mortgage insurance premium. In no case, however, can the payment on a mortgage exceed the difference between the required payment under the mortgage for principal, interest, and mortgage insurance premium and the payment that would be required for principal and interest if the mortgage bore an interest rate of 1 percent. The amount of the payment on each mortgage will vary according to the income of the homeowner. The family's income is required to be recertified at least every 2 years and appropriate adjustments made in the assistance payment to reflect any changes.

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The assistance payment is available for a purchaser having an income, at the time of his initial occupancy, not in excess of 135 percent of the maximum income limits that can be established in the area for initial occupancy in public housing. However, up to 20 percent of the funds authorized in appropriation acts for the program can be used to assist families with incomes above these limits but which are not in excess of 90 percent of the income limits for occupancy in a section 221(d)(3) below-market interest rate housing project.

In calculating the income of the homeowner for the purpose of determining eligibility as well as the amount on which the 20-percent computation will be made, there will be deducted $300 for each minor child who is a member of the homeowner's immediate family and living with him. Also, income of minors will not be included in the homeowner's income for this computation.

The amount of a home mortgage cannot exceed $15,000 ($17,500 in high-cost areas). These limits are increased to $17,500 ($20,000 in high-cost areas) for families with five or more members. The same limits apply to cooperative and condominium units.

The minimum downpayment is $200 for families with incomes up to 135 percent of the maximum income limits that can be established in the area for initial occupancy in public housing and 3 percent of acquisition cost in other cases. The downpayment can be applied to closing costs.

A homeowner is to be given the opportunity, to the maximum extent feasible, to contribute the value of his labor as equity in the dwelling.

The Secretary is authorized to provide budget, debt management, and related counseling services to homeowners who purchase homes under the new section 235 program.

The housing, generally, must be new or substantially rehabilitated housing, except that up to 25 percent of the amount of contracts authorized to be made before July 1, 1969, can apply to existing housing, with this percentage decreasing to 15 percent the following year, and 10 percent the third year.

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.

In addition to the foregoing provisions, a mortgage executed by a nonprofit organization or a public body or agency can be insured where it finances the purchase (and rehabilitation if necessary) of

housing in viable, or potentially viable, areas for resale to lower income families. The housing must include at least four or more one-family dwellings (or two-family dwellings, one unit of which is to be occupied by the owner), or at least four or more one-family units in a condominium project, in the cases where rehabilitation is involved. The individual mortgages given to finance the resale of the housing to lower income families will also be insured by FHA and assistance payments made on behalf of the purchasers. 221(h) program

The 221(h) program is changed to allow home purchases to be financed with mortgages bearing interest rates as low as 1 percent where the purchaser's income justifies, with periodic adjustments between 1 and 3 percent to reflect changes in the homeowner's income. Under this program nonprofit mortgagors purchase and rehabilitate housing with FHA insured mortgages and resell it to low-income families.

The limit on the aggregate amount of mortgages that can be insured and outstanding at any one time under the program is increased from $20 million to $50 million. New FHA credit assistance for homeownership

FHA mortgage insurance is authorized (under a new sec. 237 of the National Housing Act) for families of low and moderate income who, through the incentive of homeownership, and counseling assistance, appear to be able to achieve homeownership but who, for reasons of credit history, irregular income patterns caused by seasonal employment, or other factors, are unable to meet the credit requirements generally applicable for the purchase of a home under the regular FHA mortgage insurance program.

A mortgage must meet the basic requirements under one of the various FHA home mortgage programs. The credit and income requirements of the particular program do not apply, however, and the principal obligation of the mortgage cannot exceed $15,000 ($17,500 in high-cost areas). However, if the limit on the amount of a mortgage is lower under a particular program, the lower limit is applicable.

The monthly payments, combined with local real estate taxes on the property, will not exceed 25 percent of the home purchaser's income, computed over the previous year or the previous 3 years, whichever is higher. The interest rates and mortgage insurance premiums are the same as under the program involved for other mortgagors.

The Secretary of HUD is authorized to provide debt management and related counseling services to mortgagors whose mortgages are insured under these new more liberal provisions. He can also provide counseling to otherwise eligible families who lack a downpayment on a home in order to help them to save money for a downpayment.

The aggregate outstanding balance of mortgages insured under these new provisions cannot exceed at any one time $200 million. Mortgage insurance for housing in declining areas

Mortgage insurance is authorized, under any of FHA's mortgage insurance programs, for the purchase, repair, rehabilitation, or construction of housing located in older, declining urban areas without regard to the normal requirements of the particular program if FHA

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