Special Message to the Congress Proposing Legislation and Outlining Administration Actions To Deal With Federal Housing Policy

To the Congress of the United States:

Six months ago, in my State of the Union Message on Community Development, I announced a sweeping study of Federal housing policy. I said then that its results would be used in formulating new Administration recommendations in this extremely important field.

That study has been completed and my recommendations are ready. In keeping with the breadth of the issues involved in housing, both the study and my proposals cover a wide spectrum.

--Some of the actions discussed in this message are designed to ease the tight credit conditions in the current housing market.

--Others are intended to improve prospects for potential home buyers to obtain mortgages over the longer term.

--Some of these proposals reflect my conviction that the housing needs of lower income families require a different approach than we have taken in the past.

--Still other actions are designed to meet other special needs and to update and improve current Federal programs which have been working.

The measures I suggest today can bring us closer to a long-established goal. As I indicated in my message last March, this Administration will not waiver in its commitment to the objective of the Housing Act of 1949: "a decent home and a suitable living environment for every American family." While our Nation has made tremendous strides toward that objective in the quarter-century since it was first enunciated, those very strides have carried us into new terrain, presenting new problems and new opportunities. The nature of the challenge has been changing--and our response must change accordingly.

A PROUD RECORD

The housing record of recent decades should be a source of pride for all Americans. For example, the proportion of our people who live in substandard housing dropped from 43 percent in 1940 to only 7 percent in 1970. During the same period, the proportion of Americans living in houses with more than one person per room dropped from 20 percent to 8 percent and the proportion of our housing which is considered "dilapidated" fell from over 18 percent to less than 5 percent.

To be sure, these indicators are imprecise-and we need to improve the ways we collect housing data. But all of these measures, however crude, point to an inescapable conclusion: very substantial progress has been made in the housing field and the benefits have been shared by Americans of all races and economic groups in all regions of the country.

In recent years, housing production in America has reached unprecedented levels. The average number of housing starts in the last twelve months was more than double the average for the previous two decades and we expect the next twelve months to be another excellent year for housing.

The ability of our economy to provide vastly expanded housing has been one of the strongest indications of its fundamental vitality. Our people have been able to match their growing desire for housing with growing purchasing power. Our housing industry has been able to expand its production and update its product. And our credit institutions have been able to finance this massive wave of construction in a way which has enabled a broad cross-section of Americans to participate in its benefits.

The state of America's housing will continue to depend on the state of America's economy more than on a. any other factor. Specific policies aimed at housing can help. But--as our housing study concludes the forces which will do the most to shape the future of housing in America will be the forces of the marketplace: families with sufficient real income and sufficient confidence to create an effective demand for better housing on the one hand, and builders and credit institutions able to respond to that demand on the other.

But even as good housing has become a reality for most Americans, it is clear that certain important problems still exist. Two are especially significant. First, we are facing certain problems in providing adequate housing credit--and we must move promptly to resolve them. Second, too many low-income families have been left behind: they still live in substandard, overcrowded and dilapidated housing--and we must help them meet their needs. This message and the legislation I will seek from the Congress focus primarily on these two challenges.

I. MAKING HOME OWNERSHIP EASIER

Credit is the life-blood of housing. Without an adequate supply of credit repayable over an extended period of time at reasonable interest rates, very few families could afford to purchase their own homes. Nor could landlords either develop an adequate supply of rental housing or make it available at reasonable rental charges.

One of the most important actions the Federal Government has taken in the housing field was its decision in the 1930's to restructure our housing credit system. The introduction then of Federal insurance for low down payment, long-term mortgages--first by the Federal Housing Administration (the FHA), and later by the Farmers Home Administration (the FmHA) and the Veterans Administration (the VA)--encouraged lenders to provide home mortgages on attractive terms to millions of American families.

At the same time, the Federal decision to insure savings deposits meant that billions of additional dollars began to flow into our banks and into thrift institutions, such as savings and loan associations. Other Federal policies led these institutions to invest most of this money in housing loans, creating vast new pools of housing credit.

Although these systems have served us well for a long time, the need for improvement has become increasingly evident in recent years. More and more, we find ourselves facing either feast or famine with respect to housing credit.

When interest rates are relatively stable, we find that we have an abundance of mortgage credit available on reasonable terms, as was true in 1971, 1972 and earlier this year. Whenever interest rates move up rapidly, however, mortgage credit becomes extremely scarce. This occurred in 1966 and 1969 and it has been happening again in recent months. As a result, it has become more difficult for an American family to buy or sell a home. Even where credit is available, the combination of higher interest rates and higher down payment requirements is pricing too many of our families out of the housing market.

Why does this feast or famine situation exist?

As I pointed out in my message of August 3rd on the reform of financial institutions, one principal reason is the fact that our thrift institutions are unable to compete effectively for depositors' funds when interest rates rise quickly. The problem is a structural one: savings and loan associations are now required to invest most of their deposits in residential mortgages, which carry fixed interest rates over long periods of time. When other interest rates rise rapidly, the interest rates on their mortgage portfolios cannot keep pace-and as a consequence neither can the rates they pay to their depositors. The result is that depositors often draw their savings out of the thrift institutions or at least cut down their rate of saving leaving the thrift institutions with much less money to invest in housing. I believe this special problem can be met through the recommendations I described in my message of August 3rd.

But structural difficulties are only part of the problem. A number of additional factors also help explain why mortgage money is becoming so expensive.

One major cause is the housing boom itself, which has led to unprecedented demands for credit--and rising costs for money. In addition, inflationary fears have influenced lenders to raise their interest rates as a matter of self protection. Finally, the Federal Reserve Board has been working to restrict the money supply in order to fight inflation. Such restrictions are important, for without them we might win the immediate battle in housing but lose the long-range war in the rest of the economy, including the housing field.

But even as we pursue a responsible monetary policy, we must avoid choking off the consumer credit which families require to meet their needs. That would also be dangerous to the economy. I am particularly concerned that the burdens of fighting inflation not fall unfairly on those who want to buy a home--or sell one.

We have a delicate and difficult balance to maintain. We cannot relent in the fight against inflation, which is Gilt number one domestic problem. Nor can we expect to insulate housing from the effects of that effort. In fact, all of our measures to control inflation including our efforts to hold down Federal spending--are essential in keeping down both the price of housing and the price of money in the long rim. This requirement necessarily limits what can be prudently done to stimulate housing credit in the short run.

Nevertheless, there are some actions that can be taken on the credit front-and I intend to take them. In fact, we have already launched a number of efforts. The Committee on Interest and Dividends has instituted voluntary guidelines designed to encourage banks to keep up their levels of mortgage lending'. The Federal Reserve Board has engaged in similar efforts. The Federal National Mortgage Association has stepped up its mortgage commitment and purchasing operations to free up funds for further lending. The Federal Home Loan Bank Board has lowered the reserve requirements for lending operations of its member institutions and has stepped up its advancement of funds to them.

I am today announcing a number of additional administrative actions and legislative proposals designed to do two things: first, to help alleviate the immediate housing credit problem; and second, to improve for the longer term the supply of housing credit and the ability of our people to use it.

EASING CURRENT CREDIT CONDITIONS

1. Increasing the incentive for savings and loan associations to finance housing construction.

As money has become tighter, savings and loan institutions have become increasingly reluctant to commit housing construction loans for delivery at future dates. The reason is their uncertainty as to whether they will have enough funds to lend then at the interest rates which exist now.

Accordingly, the Federal Home Loan Bank Board will authorize a new program of "forward commitments" to savings and loan associations, promising to loan money to them at a future date should they need it to cover the commitments they now are making. This authority will cover up to $2.5 billion in loan commitments.

2. Providing interest rate assistance to Federally insured borrowers.

The Department of Housing and Urban Development will also join in the effort to ease the current mortgage credit problem by reinstituting the so-called "Tandem Plan" under the auspices of its Government National Mortgage Association. Under this plan, the GNMA will provide money for FHA-insured mortgages at interest rates somewhat below the market level. To encourage new construction, only mortgages on new housing starts will be eligible for this assistance. Up to $3 billion in mortgages for new housing will be financed under this arrangement, making loans available at attractive rates to tens of thousands of American home buyers.

3. Increasing the size of mortgages eligible for Federal insurance.

The Federal Government presently encourages lenders to put money into housing by insuring mortgages involving low down payments and long repayment periods. The Government guarantees, in effect, that lenders will be protected in the event of a default on the loan. Such mortgage insurance, whether it is provided by the Federal Government or by private institutions, is particularly important in making mortgages available to younger families and others who do not have enough savings to make a large down payment or enough income to make the higher monthly payments that come with shorter mortgage terms.

The Congress periodically sets limits on the size of a mortgage loan which the FHA can insure and adjusts the down payment requirement. The last time this was done was in 1968. Although realistic then, the current ceiling and down payment terms are unrealistic in today's housing market. As a result, FHA insurance for multifamily units has been completely cut off and FHA-insured financing is impossible for any home purchase in a large and growing number of areas across the country.

To remedy this problem, I ask the Congress to authorize the FHA to insure larger housing loans on a low down payment basis both for single and for multifamily dwellings.

Such a change would revive Federal insurance activity in areas where it has been curtailed. In addition, it would permit at least a partial resumption of housing loan activity in certain States where anachronistic usury laws impose interest ceilings lower than current market rates and therefore shut off mortgage lending. Many of these States exempt Federally insured loans from such interest ceilings-which means that Federal insurance is a prerequisite for obtaining a housing loan in these jurisdictions. This makes it all the more important that the Congress act promptly on my proposal to expand the reach of our Federal mortgage insurance programs.

MAKING LONG-TERM IMPROVEMENTS IN THE, CREDIT SYSTEM

1. Permitting home buyers to pay market-level interest rates and still be eligible for Federal insurance.

In an effort to hold down the cost of borrowing, the Congress has limited the interest rates which a home mortgage can carry and still be eligible for FHA and VA insurance. Unfortunately, setting the interest rate below market rates does not accomplish this intended purpose.

The reason is that lenders will simply not make their money available for housing at a lower rate than they can get from a comparable investment elsewhere. If the Government's interest limit for a mortgage is set below the general market level interest rate, the lender who still puts money into housing will supplement this artificially low interest rate by requiring a special additional payment. This payment-which is really prepaid interest-is made in a lump sum at the time the loan is made and is commonly called "points."

Although points are usually charged to the seller of a house, they are generally added to the selling price and thus are paid by the buyer just the same.

This practice can have a number of unfortunate side-effects. By raising the overall price of the home, points can also raise the size of 'the down payment. Moreover, when the price of a house goes up, so does the cost of insuring that house, of paying property taxes on it and of making monthly mortgage payments. An added inequity arises when a home is resold before the mortgage term has run its course--which is the usual case. Since the points were paid to compensate the lender for what he would lose on interest over the full term of the mortgage, the lender can reap an unfair profit when the mortgage is paid off early.

In short, 'the ceiling on interest rates does just the reverse of what it was intended to do. To end this practice, I again urge the Congress to allow the FHA and the VA to insure mortgages carrying market rates of interest. This proposal would end the need for charging points; indeed, it would prohibit charging such prepaid interest points on these insured mortgages. Hopefully, those States which also have ceilings on mortgage interest rates will take similar action to eliminate their ceilings.

2. Authorizing more flexible repayment plans under Federally insured mortgages.

Many innovative changes in housing finance have been introduced by the Federal Government. It is important that we continue to pursue such innovation--and one area that is particularly ripe for new experiments involves the schedule for repaying mortgages.

To further such innovation, I will seek legislation permitting the Secretary of Housing and Urban Development to allow greater flexibility in repayment arrangements for Federally insured loans on an experimental basis.

One possibility which would be tested under this authority is that of gearing the level of repayments to expected changes in family income. Rather than making the same fiat payment over the life of the loan, families would make smaller payments in the earlier years--when they are hardest pressed--and larger payments later on--when their incomes are higher. This provision could help younger families purchase homes earlier in life than they can today and it could help them make an earlier purchase of the home in which they will eventually live, rather than making frequent moves from one home to another as their incomes rise.

3. Establishing a mortgage interest tax credit.

As another means of ensuring a steady supply of housing credit, I will propose legislation which would allow investors a tax credit on the interest they earn when they put their money into residential mortgages. This proposal would make investment in housing loans more attractive in two ways: first, it would make them more attractive to those institutions which traditionally have provided mortgage money; and second, it would give organizations which pool mortgages a better chance to compete for funds in the so-called "secondary market"--from pension funds, insurance companies, various State institutions and the like.

Under my proposal, a tax credit of up to 3 1/2 percent would be provided on interest earnings to financial institutions which invest a certain percentage of their investment portfolio in residential mortgages. The greater the proportion of the portfolio invested in mortgages, the higher the tax credit on interest earned by all the mortgages in the portfolio. When at least 70 percent of a portfolio was invested in mortgages, the tax credit on the interest those mortgages earn would be 3 1/2 percent--the equivalent, at current interest levels, of an additional interest yield of more than one-haft of one percent.

4. Furthering the development of private mortgage insurance companies.

Another significant proposal in the credit area concerns private mortgage insurance companies. These companies perform a function similar to that of the FHA, the VA, and the FmHA--they insure residential mortgages with lower down payments and for longer terms than would ordinarily be available. However, the premiums they charge for such insurance are much lower than those of the Federal agencies. Such private mortgage insurance companies have become a significant factor in the housing market in recent years and we should encourage their continued development.

To help further this objective, I recommend that the Congress--along with the Administration--consider ways of allowing private mortgage insurance companies to purchase inexpensive Federal reinsurance. To this end, I will submit legislation which can provide a basis for this discussion. Such insurance would provide added protection to the owner of a mortgage and could speed the acceptance of private mortgage insurance, especially in secondary markets. It could thus make available even more sources of low down payment, long-term home financing for prospective home buyers.

II. THE CHALLENGE OF LOW-INCOME HOUSING

Since 1937, the Federal Government has tried to help low income families by providing housing for them. Over the years, nearly $90 billion of the taxpayers' money has been spent or committed for public housing projects and other subsidized housing programs.

These programs have been particularly active during the past few years. Since 1969, the Federal Government has subsidized nearly 1.6 million units of new housing and over 400,000 units of existing and rehabilitated housing. These 2 million units will cost taxpayers an estimated $2.5 billion in each of the next few years and could cost us close to $50 billion altogether.

THE, FAILURES OF FEDERAL HOUSING PROGRAMS

But what have we been getting for all this money?

Federal programs have produced some good housing--but they have also produced some of the worst housing in America. Our recent study makes this clear--and so does my own experience.

I have seen a number of our public housing projects. Some of them are impressive, but too many are monstrous, depressing places--run down, overcrowded, crime-ridden, falling apart.

The residents of these projects are often strangers to one another--with little sense of belonging. And because so many poor people are so heavily concentrated in these projects, they often feel cut off from the mainstream of American life.

A particularly dramatic example of the failure of Federal housing projects is the Pruitt-Igoe project in St. Louis. It was nominated for all sorts of awards when it was built 17 years ago. It was supposed to house some 2,700 families--but it simply didn't work. In fact, a study of this project was published two years ago with the appropriate subtitle: "Life in a Federal Slum."

Last month, we agreed to tear down this Federal slum every unit of it. Almost everyone thought it was the best thing we could do.

Pruitt-Igoe is only one example of an all too common problem. All across America, the Federal Government has become the biggest slumlord in history.

But the quality of Federally-assisted housing is by no means the only problem. Our present approach is also highly inequitable. Rather than treating those in equal circumstances equally, it arbitrarily selects only a few low income families to live in Federally supported housing, while ignoring others. Moreover, the few often get a new home, while many other families--including those who pay the taxes to support these programs--must make do with inferior older housing. And since recipients often lose their eligibility for public housing when they exceed a certain income level, the present approach can actually reward dependence and discourage self-reliance.

The present approach is also very wasteful, for it concentrates on the most expensive means of housing the poor, new buildings, and ignores the potential for using good existing housing. Government involvement adds additional waste; our recent study shows that it costs between 15 and 40 percent more for the Government to provide housing for people than for people to acquire that same housing themselves on the private market.

One of the most disturbing aspects of the current approach is the fact that families are offered subsidized housing on a "take it or leave it" basis--losing their basic right to choose the house they will live in and the place they will live. Too often they are simply warehoused together wherever the Government puts them. They are treated as a class apart, with little freedom to make their own decisions.

DEVELOPING A BETTER APPROACH

Leaders of all political persuasions and from all levels of government have given a great deal of thought in recent years to the problem of low-income housing. Many of them agree that the Federally subsidized housing approach has failed. And many of them also agree on the reasons for that failure.

The main flaw they point to in the old approach is its underlying assumption that the basic problem of the poor is a lack of housing rather than a lack of income. Instead of treating the root cause of the problem--the inability to pay for housing-the Government has been attacking the symptom. We have been helping the builders directly and the poor only indirectly, rather than providing assistance directly to low income families.

In place of this old approach, many people have suggested a new approach-direct cash assistance. Under this approach, instead of providing a poor family with a place to live, the Federal Government would provide qualified recipients with an appropriate housing payment and would then let them choose their own homes on the private market. The payment would be carefully scaled to make up the difference between what a family could afford on its own for housing and the cost of safe and sanitary housing in that geographic area. This plan would give the poor the freedom and responsibility to make their own choices about housing--and it would eventually get the Federal Government out of the housing business.

Not surprisingly, our recent housing study indicates what others have been saying: of the policy alternatives available, the most promising way to achieve decent housing for all of our families at an acceptable cost appears to be direct cash assistance.

Our best information to date indicates that direct cash assistance will in the long run be the most equitable, least expensive approach to achieving our goal of a decent home for all Americans--a goal I am committed to meeting. It appears to be a policy that will work--not a policy where success will always be a mirage. However, it may develop that the advantages we now see for direct cash assistance will be outweighed by other factors not presently foreseen or that such advantages may be obtainable in alternative ways which offer additional advantages. In that event, I would, of course, reexamine the situation in partnership with the Congress before moving ahead. But right now, in my judgment, our principal efforts should be directed toward determining whether a policy of direct cash assistance-with first priority for the elderly poor--can be put into practical operation.

As we proceed with new policies for aiding lower income families, we must also move with caution. Too often in the past new Federal programs have been launched on a sea of taxpayers' dollars with the best intentions but with too little information about how they would work in practice. The results have been less than what was promised and have not been consistent with the Government's obligation to spend the taxpayers' money as effectively as possible.

One particular problem is that past efforts in one area of assistance have tended to ignore programs in other areas, resulting in an inequitable hodge-podge activity which satisfies no one. In this regard, the relationship between housing programs and welfare payments is particularly critical. We must carefully consider the ways in which our housing programs will relate to other programs which also assist low income persons.

Some field work has already begun with respect to direct cash assistance in the area of housing for those with low incomes. In 1970 the Congress authorized housing allowance experiments involving over 18,000 families and costing over $150 million. We expect preliminary data to emerge from these tests in the coming months and we intend to use these data as we evaluate the possibility of further efforts.

This work should help us answer some important and difficult questions.

What, for example, is the appropriate proportion of income that lower income families should pay for housing? Should this level be higher or lower for different kinds of families--for young families with children, for example, or for the elderly, or for other groups? Should families receiving Federal aid be required to spend any particular amount on housing? If they are, and the requirement is high, what kind of inflationary pressures, if any, would that produce in tight housing markets and what steps could be taken to ease those pressures? In the important case where poor families already own their own housing, how should that fact be weighed in measuring their income level? How should the program be applied in the case of younger families who have parents living with them?

All these questions are critical--and they deserve close examination.

In addition, I am also asking the Congress for authority to take two other steps to help us test the cash assistance approach.

First, we need to expand our experimental programs to test additional techniques for administration.

Second, we need to develop and put into effect the appropriate mechanisms for measuring the cost of safe and sanitary housing in various parts of the country. Sound, reliable cost information of this kind would be of vital importance to a fully operational program.

If these steps can be taken in the near future, then I believe we will have the basic information needed to make a final decision concerning this approach late in 1974 or early in 1975.

A CONTINUING NEED FOR LIMITED CONSTRUCTION PROGRAMS

During the period in which a new approach is being developed, there will be a continuing need to provide housing for some low income families. We must recognize that in some areas of the country there will simply not be a sufficient supply of housing for the foreseeable future. I therefore propose that the Federal Government continue to assist in providing a limited amount of construction for low income housing--though I would expect to use this approach sparingly.

To eliminate the many tangled problems which attend the delivery of subsidies under current construction programs, I am recommending a new approach to construction assistance by the Federal Government. Under this approach, the developer would make newly constructed units available at special rents for low income families and the Government in return would pay the developer the difference between such rents and fair market rents.

During the remainder of fiscal year 1974, the Department of Housing and Urban Development will continue to process subsidy applications for units which had moved most of the way through the application process by January 5 of this year. In addition, the Department will process applications in cases where bona fide commitments have been made.

I am advised by the Secretary for Housing and Urban Development that one of the existing construction programs--the Section 23 program under which new and existing housing is leased for low income families--can be administered in a way which carries out some of the principles of direct cash assistance. If administered in this way, this program could also provide valuable information for us to use in developing this new approach.

Accordingly, I am lifting the suspension of January 5 with respect to these Section 23 programs. I am also directing the Secretary of Housing and Urban Development to take whatever administrative steps are available to him to eliminate any abuses from such programs and to bring them into line as closely as possible with the direct cash assistance approach.

Altogether, in order to meet bona fide commitments requiring action during this fiscal year and to carry out the Section 23 program, authorization has now been given to process applications for an additional 200,000 units, 150,000 units of which would be new construction.

IMPROVING THE OPERATION OF PRESENT PUBLIC HOUSING

There was a time when the only continuing Federal expense connected with public housing after it was built was paying the debts incurred in building it. Other expenses were met from rental income.

As time went on, however, laws were passed making the Federal Government liable for operating deficits. In recent years, as the operating costs of public housing projects has increased and as the income level and rent payments of their occupants have decreased, the cost of such projects for the Federal Government has gone up at an alarming rate. The Federal bill for operating subsidies has grown more than eightfold since 1969__ from $33 million annually to $280 million annually--and an additional $1 billion has been obligated for capital improvements.

Moreover, as efforts have been made in recent years to prevent tenants from paying too much of their incomes for housing, some housing managements have been persuaded that some tenants should pay nothing at all. The Federal Government then picks up a good part of tab, adding considerably to the costs of maintaining these projects.

This growing financial burden for the Federal Government is only one of many problems relating to public housing. Because the local housing authority is responsible for the management of public housing projects while the Federal Government is responsible for project deficits,. including those due to poor management, the local authority has little incentive to improve management standards.

There are also indications that even with improved management and a more realistic approach to rents, current Federal subsidies may need to be adjusted to provide for continued operation and maintenance of these projects.

In view of these many problems, I have asked the Secretary of Housing and Urban Development to develop a set of recommendations addressing each of these problems. One of our goals will be to achieve a more equitable sharing of responsibility among the Federal Government, local communities and residents.

III. ADDITIONAL ACTIONS TO MEET OUR HOUSING NEEDS

NEIGHBORHOOD PRESERVATION

Simply providing Federal housing assistance to families without proper regard for the condition of the neighborhood as a whole too often results in unmet expectations for the families, added burdens for the municipality and a waste of the taxpayers' dollars. It is important, therefore, that all of our efforts in the housing and community development field be carried out as a partnership venture of the Federal Government, the local government, local financial institutions and the citizens of the neighborhoods involved.

Added resources such as those which would be available under my proposed $2.3 billion Better Communities Act can provide important support for these efforts. To smooth the transition to the Better Communities Act, I am directing the Department of Housing and Urban Development to make available up to $60 million in Section 312 rehabilitation loans in the current fiscal year. Priority will be given to those communities which need these loans to complete present projects or where complementary local rehabilitation efforts have already been launched.

In addition, I have directed the Secretary of Housing and Urban Development, using his research and demonstration funds, to pursue promising approaches to neighborhood preservation which might be adopted by communities on a broader basis.

IMPROVING RURAL HOUSING

The problems of providing good housing in our rural areas are especially challenging, not only because the proportion of substandard housing is greater in rural areas but also because these areas often lack the resources to foster greater economic development--and better housing. Of course, many of our housing programs and proposals are designed to assist all families, urban and rural alike. But there is also a special need to address in a special way the rural housing challenge.

Our recent housing study concludes that the basic housing problem in many rural areas is that our major financial institutions are not represented in these areas and that credit is therefore inadequate. The Farmers Home Administration has done a great deal to help change this picture--but further efforts are needed. At my direction, the Department of Agriculture and the Department of Housing and Urban Development will seek additional ways of correcting this situation and increasing credit availability in rural areas.

In my Community Development Message last March 8th, I emphasized that "in pursuing a policy of balanced development for our community life, we must always keep the needs of rural America clearly in sight." I mentioned then my continuing support for a revenue sharing approach for rural development, acknowledging that the Rural Development Act fell short of what I preferred in this regard. I went on to indicate my intention, after fully evaluating the effectiveness of this act, to seek whatever additional legislation may be needed. I repeat that pledge today.

A SUITABLE LIVING ENVIRONMENT

The housing we live in and the environment surrounding that housing are inextricably linked. In the final analysis, the quality of housing depends on matters such as transportation, proximity to educational and health services, and the availability of jobs and shopping. It also depends on economic factors which are shaped by the larger community. One important finding of our housing study was that the costs of the land on which new housing is located has risen faster than any other cost component of housing.

The Congress, too, has recognized these relationships in its finding "that Federal programs affect the location of population, economic growth, and the character of urban development [and] that such programs frequently conflict and result in undesirable and costly patterns of urban development which adversely affect the environment and wastefully use our natural resources."

It is clear that housing policy cannot be considered separately from other policies related to the economic, social and physical aspects of community development. The next Report on Urban Growth, which I shall submit to the Congress in 1974, will further address these crucial relationships.

ASSURING EQUAL OPPORTUNITY

Over the last several years, great strides have been made toward assuring Americans of all races and creeds equal and unhindered access to the housing of their choice. As I stated in 1971:

"At the outset, we set three basic requirements for our program to achieve equal housing opportunity: It must be aimed at correcting the effects of past discrimination; it must contain safeguards to ensure against future discrimination; and it must be results-oriented so its progress toward the overall goal of increasing housing opportunities can be evaluated.

"The administration is embarked upon this course. It must and will press forward firmly.

"The chief components of such a program include the firm enforcement of laws relating to equal housing opportunity, the development of appropriate equal housing opportunity criteria for participation in programs affecting housing, the development of information programs, and the development of policies relating to housing marketing practices."

Each of these components has been put into operation and we are continuing to move ahead. It is important that all Federal agencies vigorously pursue a wide range of efforts to enforce fair housing and equal opportunity laws--and all members of my Administration will continue to be particularly vigilant in this regard.

The availability of mortgage credit has also been restricted in many instances on the grounds that the applicant's financial resources, which would otherwise have been adequate, were deemed insufficient because the applicant was a woman. These practices have occurred, unfortunately, not only in home mortgage lending but also in the field of consumer credit. I shall therefore work with the Congress to achieve legislation which will prohibit lenders from discriminating on the basis of sex or marital status.

FURTHER PROPOSALS

A number of other proposals have grown out of our recent study will be included in the leg I will submit to the Congress. They include efforts to encourage home improvements and to facilitate the purchase of mobile homes; measures to ease the Federal burdens in disposing of the large and still growing number of properties returning to the Government upon default; and steps to streamline and reduce the processing time for FHA applications, including a proposal that would move toward the Veterans Administration technique of coinsurance. I urge their prompt consideration.

The American dream cannot be complete for any of us unless it is within the reach of all of us. A decent home in a suitable living environment is an essential part of that dream.

We have done a great deal as a people toward ensuring that objective for every American family in recent years. Our success should not be a reason for complacency, however; rather, it should reinforce both our determination to complete this work and our confidence that we can reach our goal.

The measures I have discussed in this message can make a significant contribution to that great undertaking. I look forward to working closely with the Congress in advancing these efforts.

RICHARD NIXON

The White House,

September 19, 1973.