CONGRESSIONAL RECORD -- SENATE
July 15, 1965
Page 16947
Mr. MUSKIE. Mr. President, I offer an amendment which I send to the desk and ask to have stated.
The PRESIDING OFFICER. The amendment of the Senator from Maine will be stated.
The LEGISLATIVE CLERK. On page 46, between lines 6 and 7, it is proposed to insert the following:
MORTGAGE LIMITS FOR HOMES UNDER SECTION 203 (b)
SEC. 214. Clause (III) of section 203(b) (2) of the National Housing Act is amended by striking out "75 per centum" and inserting in lieu thereof "85 per centum".
Mr. MUSKIE.. Mr. President, I have discussed the amendment with the distinguished Senator from Alabama. The amendment would cover a problem in relation to the FHA program that is not covered in either the House bill or the Senate bill as they now stand. The purpose of the amendment is to take the problem to conference.
The sole effect of the proposed amendment is to increase slightly the ratio of mortgage to value on homes valued between $20,000 and $30,000 -- which latter figure remains as the maximum permissible value of a home eligible for an insured mortgage. Thereby, of course, the downpayment required on such homes is correspondingly reduced.
When the mortgage ratio schedule now in effect was enacted, a $15,000 to $20,000 home was considered as typically available for so-called moderate-income families and ratios were so devised to favor that bracket, with homes in excess of that valuation requiring substantially higher down payments.
Since then, increased costs -- particularly land costs and higher street and land development requirements -- and the public demand for larger and better equipped homes have now moved the typical modest home bracket in many areas from $15,000 to $20,000 to $20,000 to $30,000.
Down payments now required by the act for the latter bracket in some cases are no less than -- and frequently are the same or more than -- available in practice on an uninsured loan. For example, federally chartered savings and loan associations -- without benefit of insurance on the loan on FHA inspections -- may lend 90 percent on the first $25,000 of value and 80 percent on the excess up to $30,000.
The amendment would make the downpayment on an FHA-insured loan on a home valued at $20,000 to $30,000 more suitable to the realities of today's new home market, and more nearly in conformity with the practice on uninsured loans.
I should like to ask the Senator from Alabama for his comment.
Mr. SPARKMAN. Mr. President, I have considered the subject. I believe the Senator has correctly stated it. A hardship would be placed on the purchasers of homes in that price bracket. There are areas in the country where it is difficult to buy a home at a lower price than an amount between $20,000 and $30,000, or even between $15,000 and $30,000. The amount of the down payment is quite steep. The amendment would give some relief -- not a great deal -- I believe about $500. So far as I am concerned, I am willing to accept the amendment.
Mr. MUSKIE. I have discussed the amendment with the Senator from Texas. I understand that he is agreeable to the amendment.
Mr. TOWER. I am agreeable.
Mr. MUSKIE. Mr. President, I yield back the remainder of my time.
Mr. TOWER. Mr. President, I yield back the remainder of my time.
The PRESIDING OFFICER. All time having been yielded back, the question is on agreeing to the amendment of the Senator from Maine.
The amendment was agreed to.