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Mr. WIGGLESWORTH, I think you have given us the number of properties and the book value that we now have under control, have

you not?

Mr. Fahey. That is right.

Mr. WIGGLESWorth. And the market value of those properties is impossible to ascertain; we can only be guided by experience?

Vír. Fahey. That is right. In some sections they are static; in others they have strengthened materially in the last 8 or 10 months. Of course, you realize that in a large part of the country you can do nothing with sales, until the problem of rent ceilings and down payments is settled. These properties are only bought as homes; people won't buy them to rent under present conditions.

Mr. WIGGLESWORTH. As I understand from the press, the H.O.L.C. is contemplating going into conversion work now.

CONVERSION PROGRAM FOR NATIONAL HOUSING AGENCY

Mr. Fahey. We are merely doing the physical work of the conversion program for the National Housing Agency, under the direction of the Administrator. You see, our people in H.O. L. C. have had a Nation-wide experience in repairing and modernizing homes. Threequarters of all those on which we made mortgages simply had to have something done to them when we took them over. The people were not able to do it themselves.

Mr. WIGGLESWORTH. Is the authority for that clear?

Mr. Fahey. Yes. There is no doubt about the authority. We are being reimbursed for all the work done under H. O. L. C. direction.

Mr. WIGGLESWORTH. How much have you done?

Mr. Fahey. It is just beginning. There are about five to six thousand applications now on hand and in process It takes time to process such things and, we are handicapped by the fact that a great many applications prove ineligable when investigated.

PERSONNEL DIVISION, H. 0. L. C.

Mr. WIGGLESWORTH. I notice in your break-down you have given us, you are still carrying a personnel division of 133 positions at something like $292,000. Why do you need such a personnel set-up?

Mr. Fahey. The personnel division carries all of the personnel records and everything in connection with employment, files, ratings and so forth for the three agencies of the administration. It has handled and still has to finish all of the reclassification work both for the home office and the field since we came under civil service. It is dealing today with a turn-over running at the rate of over 54 percent. And then, of course, we are confronted with the problems of a lot of new people coming in who need training, before we can get results. Then in addition, we are in the process of transferring personnel from Executive order to clerical, administrative and fiscal grades., and so forth.

PERSONNEL IN SECRETARY'S OFFICE, H. 0. L. C. Mr. WIGGLESWORTH. You ask for 127 in the Secretary's Office at $215,310: That is actually an increase as compared to the present year of about $18,000.

Mr. Fahey. In the reorganization of the office, with the transfer of H. O. L. C. to New York, we reorganized many of these units. I will have to ask Mr. Penniman to give you any further detail about that.

We have shifted these units under different controls from time to time, in the process of cutting down and combining.

OTHER PERSONNEL INCREASES, HOME OWNERS' LOAN CORPORATION

Mr. WIGGLESWORTH. I see an apparent increase is set up also in your Operations Statistics from $106,000 to $108,000; also, in your Public Relations Division, from $24,000 to $26,000. Why do we have to increase these divisions if we are cutting down the over-all in view of an eventual liquidation of the outfit?

Mr. FAHEY. The total in Public Relations is down; from a peak employment with annual salaries amounting to $73,020 to nine people.

Mr. WIGGLESWORTH. It is a small set-up, but why do you need it at all? You ask $26,000 here for that division?

Mr. FAHEY. Well, of course, we consist of three agencies in which the public is interested and we have to respond constantly to requests for information from newspapers and from financial publications, and from the public generally all of the time. It is down from two to three times what it was some years ago. I can send you the figures on that, if you would like to have them.

Mr. WIGGLES WORTH. I should think that would be one division that we could dispense with. It is a small division, I admit.

Mr. Fahey. Of course, now, what is being done, as Mr. Blandford explained this morning is that those divisions of the several units of the National Housing Agency are being brought together with the expectation of effecting economies in that way.

(The matter referred to is as follows:)

Provision is made in the 1944 estimates for the Public Relations Department for nine employees of which six are stenographers, typists, etc. This represents a reduction of over 47 percent from the actual peak pay roll.

This Department performs an important service for the three agencies of the Administration.

For the Federal Home Loan Bank System, the Department issues information on the volume and trend of home-financing and related activities, interprets the functioning of a reserve system which serves 3,800 thrift and home-financing institutions with assets of $5,500,000,000, stimulates the sale of War bonds through these institutions, and generally acts as a clearing house for the Bank System for information for its 12 regional banks.

For the Insurance Corporation, the Department provides information on the insurance of savings, and of great importance handles public relations when insured institutions get into difficulties, with a view to prevent “runs” which might spread to other institutions, and to generally protect public and private funds invested in those institutions.

For the Home Owners' Loan Corporation, the Department issues such information as is necessary to assist in the collection of its over 800,000 loans, and the liquidation of the properties the corporation has acquired. It handles the volume of inquiries inevitable in such a Nation-wide operation. These inquiries quite often involve important matters of policy, and as a consequence, must be handled by specially trained personnel.

Wartime economic conditions which are subject to daily change make this Department more vital and important than ever before.

SPECIAL DEPOSIT ACCOUNT, HOME OWNERS' LOAN CORPORATION Mr. WIGGLESWORTH. Will you say something about the special deposit account that is referred to in this new language at the start of the appropriation item:

Not to exceed a total of $12,322,250, to be derived from the same sources as the funds made available for administrative expenses of the Federal Home Loan Bank Board, Federal Savings and Loan Insurance Corporation, and Home Owners' Loan Corporation by the Independent Offices Appropriation Act, 1943, and from the special deposit account hereinafter mentionedand so forth.

Colonel LEE. Are you referring to the question of what that special deposit account is?

Mr. WIGGLESWORTH. That is a change in procedure, is it not?

Colonel LEE. No; it is in order to permit the same procedure. We had three different appropriation bills and three different sets of language, and this is to make possible the uniform handling of funds of the Federal Home Loan Bank Administration, since the funds of the Home Owners' Loan Corporation and the Federal Savings, and Loan Insurance Corporation are kept on deposit with the Treasurer of the United States. The funds of the Bank Board and the Bank Administration were and are now kept in the Treasury instead of in a special deposit account with the Treasury. So it was thought bestand this was worked out with the Treasury Department-to simplify it and to permit all of the funds to be handled in the same manner.

Mr. WIGGLESWORTH. Is it a discretionary matter, this special deposit account?

Colonel LEE. No; it is mandatory. From the standpoint of earmarking the account it seems to be a more convenient form.

Mr. WIGGLESWORTH. Further down in the language of the item there occurs this: the amounts so derived to be credited upon the books of the Treasurer of the United States in such account on accounts as the administration may determine, and the administration in its discretion may utilize the facilities of the Division of Disbursement of the Treasury Department for the disbursement of funds in or derived from such account or accounts, relating to said corporations.

Is that the same fund? Colonel LEE. It is the same fund, but that language is intended to allow the H. O. L. C. and the Federal Savings and Loan Insurance Corporation to continue the present procedure of disbursement. At present the Federal Home Loan Bank Administration disburses only through the Treasury, whereas the Home Owners Loan Corporation and the Insurance Corporation disburse through their own disbursing officers.

Mr. WiGGLESWORTH. It makes the deposit mandatory for all three agencies?

Colonel LEE. Yes; and it permits the disbursements of the two corporations, in the discretion of the commissioner, to be handled in the same way as the disbursements of the Federal Home Loan Bank Administration; in other words, they would not be compelled to disburse through their own disbursing officers is he should find it more convenient to do it the other way.

81710--43---67

PERIODICALS AND NEWSPAPERS, ' HOME OWNERS' LOAN CORPORATION

Mr. WIGGLESWORTH. What is the present limitation on periodical and newspaper expenditure?

Mr. PENNIMAN. The same as last year.
Mr. WIGGLESWORTH. $1,250 as suggested in this language?
Mr. PENNIMAN. That is the combined total.

Mr. WIGGLESWORTH. Is that the same as the limitation on the combined appropriations for the current year, or does that represent an increase?

Mr. PENNIMAN. That is the same for each, but added together. That is the combination of the three agencies added together making $1,250.

NONADMINISTRATIVE EXPENDITURES, HOME OWNERS' LOAN

CORPORATION

Mr. WIGGLES WORTH. Would you give us some statement as to your nonadministrative expenditures for the past year so we can see what they were, what they amounted to?

Mr. WOODRUM. You mean for the record?
Mr. WIGGLESWORTH. Yes.
Mr. Fahey. We will send it along for the record.
(The statement referred to is as follows:)

Nonadministrative expenses for the fiscal year ending June 30, 1942
Bond interest-net.-

$53, 202, 757. 11 Property expense: Taxes.

6, 945, 172. 31 Insurance

11, 133. 38 Maintenance

3, 402, 635. 44 Miscellaneous

2, 382, 572. 95 Commissions.

1, 835, 106. 40 Depreciation. Unallocated...

22, 543, 57

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Total..

14, 586, 897. 29

Total nonadministrative expenses.1 Deficit.

67, 789, 654. 40

STATUS OF LOANS

(See pp. 1052) Mr. DIRKSEN. Mr. Fahey, just to get a perspective of this whole thing, you made 1,017,000 plus loans for a total of $3,093,000,000 originally?

Mr. Faney. Yes.

Mr. Dirksen. Your justification shows that you have remaining 811,521 loans in the active account, and of that number, 580,000 plus are on schedule.

Mr. FAHEY. Yes.

Mr. DIRKSEN. And 230,000 plus are in arrears. That is 28 percent of your loan accounts are in arrears at the present time.

Mr. FAHEY. Yes.
Mr. DIRKSEN. Is that correct?

Mr. FaHEY. Yes.

Mr. DIRKSEN. Your cumulative-property sales number 156,586 properties. I assume that that figure is exclusive of the 41,000-plus properties you carry now, over which you have jurisdiction?

Mr. FAHEY. Yes.

Mr. DIRKSEN. That would make a total roughly of 197,000 properties sold or owned?

Mr. Fahey. Yes. If I may interrupt, however, there is one thing about the properties in jurisdiction or in process that we have to bear in mind, and that is that a certain number of them will not go to foreclosure.' I mean that when we start foreclosure proceedings they work out some kind of arrangement with us.

Mr. DIRKSEN. That would apply to some of the 41,000?
Mr. Fahey. That is right.

Mr. DIRKSEN. But in the main you own 41,000 now, and 156,000plus were actually acquired and sold?

Mr. FaHEY. Yes.
Mr. DIRKSEN. That makes a total of 197,000?
Mr. FaHEY. Yes.
Mr. DIRKSEN. That is about 20 percent of your total properties?
Mr. Fahey. 18.7 percent.
Mr. DIRKŠEN. 18 percent?
Mr. FAHEY. Yes.

Mr. DIRKSEN. And 28 percent are still in arrears as of the most current date?

Mr. FAHEY. Yes. Mr. DIRKSEN. So that would be roughly 46 percent that were either sold or in arrears or are owned.

Mr. Fahay. As to being in arrears, everything that is not paid to date is in arrears.

Mr. FITZPATRICK. What was that figure that you used, 46 percent?

Mr. DIRKSEN. Twenty percent of all the properties that have been financed were either sold, have been acquired by foreclosure or voluntary deed and sold by the Corporation, or are owned by the Corporation today, and in addition to that 18 percent plus, 28 percent of the properties, namely, 230,830, are presently shown as in arrears.

Tell us a little about "arrears." To what extent are these properties in arrears?

Mr. Fahey. We count everything beyond due date as in arrears. Only 6 percent are behind more than 90 days. Mr. DIRKSEN. Six percent? Mr. Fahey. That is right.

Mr. DIRKSEN. You might show tabularwise in the record what those arrearages are, if that is not too burdensome a job.

Mr. Fahey. I think we can.
(The statement referred to is as follows:)
Arrearages as of June 30, 1942, are as follows:
Less than 1 month..

45, 501 5. 69 1 month, less than 2.

104, 931 12. 98 2 months, less than 3.

35, 479 4. 33 3 months, less than 7.

35, 360

4. 38 7 months, less than 12.

5, 070 63 12 months or more.

1, 177 . 14

Percent

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