Statement by the President Upon Signing the Housing Act of 1957.
I HAVE TODAY approved H. R. 6659, the Housing Act of 1957
This Act carries out, in the main, the legislative proposals for housing programs submitted to the Congress in February. Unfortunately, the measure also contains a number of very serious defects.
It is disappointing that the Congress has chosen to reenact discount controls for Federally insured and guaranteed mortgages and to require the Federal National Mortgage Association to pay prices above those prevailing in the private market for the mortgages it purchases under its special assistance functions. Discount controls, however flexibly they may be administered, intrude into and interfere with the operation of the private home finance system. Such controls have been tried before and have been found to be unsuccessful in accomplishing their avowed purpose. The Congress should remove this impediment to a healthy private housing economy early in the next session. The proposed increase in the price floor on mortgages purchased by the Federal National Mortgage Association under its special assistance programs also will discourage private mortgage lending and hence place a greater share of the financing burden upon the Government. This, too, should be repealed promptly.
The real solution for inadequate mortgage funds and excessive discounts is to permit the interest rates on Federally insured and guaranteed mortgages to reflect the supply and demand for funds. Accordingly, I again urge the Congress to authorize an increase in the maximum interest rates on loans guaranteed by the Veterans Administrator to 5 per cent. This will reduce the discount problem for such loans and lessen the pressure for direct Government loans and mortgage purchases.
Unfortunately also the Congress has once again failed to enact an adequate interest rate formula for the college housing loan program. It is neither necessary for an effective college housing program, nor desirable from the taxpayers' viewpoint, that the Federal Government should continue to lend at less than its current cost of borrowing. The present formula, further, deters private financing which would otherwise supply a significant part of the funds required in this important area.
I am most concerned that the Act provides new budgetary authority greatly in excess of the amounts which have been requested. In the course of preparing the budget for the fiscal year 1958, and again in the weeks following the submission of that budget, painstaking efforts were made to balance the needs of the various Federal programs while keeping overall Federal expenditures to the minimum. The provision in this Act of $1,990,000,000 in new obligational authority, more than double the amounts requested for these programs, runs directly counter to these actions. However, these amounts do not have to be made available for obligation in the current fiscal year. Hence they do not represent so serious a setback in our joint effort to control Federal expenditures as to require that the bill be disapproved.
Accordingly, I have given instructions to limit the use of the new authority provided by this Act during the fiscal year 1958 to amounts consistent with the overall budget program.
Note: As enacted, H. R. 6659 is Public Law 85-104 (71 Stat. 294).
The legislative proposals referred to in the second paragraph were summarized in a White House press release of March 29, 1957, as follows:
1. Modify the present statutory minimum down payment requirements for the purchase of homes with FHA-insured loans.
2. Make additional funds available to the Federal National Mortgage Association.
3. Adjust the maximum permissible interest rate on VA-guaranteed home loans to a level competitive with the return on comparable investments in order to make the benefits of this program more readily accessible to veterans desiring to purchase homes.
Dwight D. Eisenhower, Statement by the President Upon Signing the Housing Act of 1957. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/233352