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Show Enterprise Review Page 10b Financial Summary Patrick J. Vaculin Creation of a new, federally sponsored but privately financed corporation to encourage private investment in middle-incom- e urban housing was proposed in a report released last week by the Federal National Mortgage Association. The primary purpose of the proposed corporation would be to encourage private investment in the cities. The corporation would have the power to acquire, operate and sell real and personal property. It would be headquartered in Washington D.C. and guided by a board of some of whom directors, would be elected by stock- holders. Financial institutions participating in its programs would be required to subscribe for and purchase its common shares of stock. The draft legislation includes four other key proposals. These are: -- Creation of the 'Home Borrowers Insurance Company, authorized to issue three-yea- r policies insuring borrowers against hardship that might result from floating interest rate provisions in mortgages. When those rates are rising, cost of the insurance would be paid by mortgage lenders. -- A plan to approve the financing of consumer purchase at mortgage rates by an 'open-en- d mortgage program which creating would eliminate many of the costly legal inhibitions that presently preclude effective open-en- d mortgage financing. This proposal would permit a lending institution that holds a first mortgage on a designated property to make further advances to the homeowner for property improvement, consumer purchases, and educational and other approved purposes. It also would permit home owners to utilize the equities in their homes. -- A proposal to authorize the National Cities Corporation to designate certain real properties as City Rehabilitation Projects. It would also provide an incentive to lending institutions to make loans in areas whert heretofore they have not made them in substantial numbers. -- A plan to create an incentive and a 'soft and easy method for pension funds to invest in city housing. The establishment of the National Cities Corporation is one of three innovative approaches to financing highlighted in the FNMA Forum Two Report. Forum Two is the name of a 'think tank research project held last year on the topic, "The Changing Market for Middle-Incom- e The project was sponsored by FNMA to explore changing City Housing. life-styl- es A Short Course In Ginnie Mae Futures Mr. Mortgage Banker, . theres a game you ought to know. cities and, at the same time, to consider ways to solve financing problems surrounding middle-incom- e city housing. Besides involving a number of specialists in housing finance and land assembly and Forum Two utilization, brought together 100 people who were selected to repren sent a broad of the consumer public nationwide. summary of consumers reactions to a variety of proposals for city housing and city living conditions and concludes that there is growing interest in moving back into cities. A second major financing proposal for neighborhood conservation and rehabilitation, calls for a new program with HUD mortgage insurance and federal tax exemption, provid- ing an insured, below-markinterest rate mortgage for sale and rental housing. Such a program would lower substantially the monthly payments made by the home purchases and also could lower the monthly payments made by et renters. A third financing plan ad- folio Insurance and the deed of trust. a tool youll find most useful if you d have your profits grow. The Futures Game is just the thing to help you with your marketing. But its not a way to make or take delivery That when you're trading futures, margins are a must. You ll deposit cold hard cash or T bills, if you like. And if you re short when prices rise, you must send us more that night. In the city of Chicago, But even then, its not as bad as you might have supposed. For the loans that youve committed and the loans that you have closed. Will bring you more when they are sold, cause prices then are higher And the loss you took on futures, you 'll recover from the buyer. at LaSalle and Jackson Streets , The Board of Trade is ready, with brokers on their feet. Theyll buy your shorts and sell your 'longs and help to hedge your risk. But its not a way to make or take delivery that you should know, Now hedging is a substitute Now one thing more And Its needed to protect you, 'ere your profits you would smash. For when rates go up; loan prices fall commitments and the rest. And unsold loans will cost you dearly, though youve tried your best. The new and different Ginnie Mae for selling loans for cash. But if you've done a short hedge selling future Ginnie Maes, You'll buy back in at a lower price and that will save the day. The loss youve taken on your loans as prices went way down. Will be recovered handily, Cause your hedge has worked just dandify. But its not a way if you are going to tame Futures Market Game Is all about the due bills and how to originate ' For if you 're short and don t buy in. delivery is your fate. Now study it first thoroughly, and do it very carefully. For its not a way to make or take delivery. Reprinted by Permission, Mortgage Banker Magazine to make or take delivery MORTGAGE RATES FIIA 8.75 vanced in the report, "Port- of the mortgage Its cross-sectio- The Report includes a Now, mark ye well, men M VA 8.75 involves HUD solely as an insurer. Under this concept, HUD would insure completed loans for residential rehabilitation processed by organizations approved by HUD. The proposal couples with the processing a system of involvmortgage ing HUD and the mortgage lenders. non-HU- D Another section of the report outlines five possible strategies for 'accelerating rehabilitation in American cities. They include proposals to: Form coalitions to undertake redevelopment projects; 2. Assign public redevelopment powers to private owners 3. Integrate housing and economic development programs: 4. Take advantage of the abandonment process within cities; and 5. Encourage rehabilitation through the designation of historic districts. It is my opinion that these proposals will have a national impact in activating proposals for financing middle-incom- e city housing, especially rehabilitation but also new 1; These rates were obtained by telephone conversation with the above institutions. 'The rates are correct to the best of our knowledge but their accuracy cannot be guaranteed. |