Housing Program Beneficiary Profile: Farmers Home Administration (FMHA) figures for fiscal year 1971 indicate that the typical FMHA borrower had an income of $6,500 and a family of at least four persons; the typical Section 235 borrower, according to the 1971 HUD statistical yearbook, had an income of about $6,300 and a family of five; the typical renter under Section 236 had an income of $4,800 and a family of three; the rent supplement recipient had an income of $2,700 and a family of three; and the typical household going into public housing had an income of $2,500 for a family of three.

Program Explanation

Rent Supplement: Qualified tenant family pays 25 percent of its income toward rent and federal government makes up the difference between that and the full market rent, to a maximum of 70 percent.

Section 236: Tenants pay 25 percent of their income toward rent (or, if cooperative, a proportionate share of the blanket mortgage) with federal government supplementing to a maximum of 70 percent, and a least 10 percent, of the FHA-approved rent for the unit.

Section 235 assists lower income families who wish to buy a new (or substantially rehabilitated) home by subsidizing interest rates down to a level of 1 percent. Homeowner must pay at least 20 percent of his adjusted monthly income on the mortgage, income limits being the same as under Section 236 rental housing. The value of the prospective purchaser’s labor in building or rehabilitating the home may be applied against the $200 down payment or to reduce the mortgage.

Impact of Impoundments: The effect of impoundment is immediate and serious. Federal assistance will drop by an estimated 470,000 units in fiscal 1973 under the Section 235, Section 236, and Farm Home Programs. For the 235 and 236 programs alone, the indirect economic results are estimated at over $19 billion. Using normal translation of dollars to job opportunities, the Coalition estimates the impoundment will result in a loss of 2.2 million man-years of employment.

For each unit abandoned, one family will lose a decent home; $17,000 in construction funds, on the average, will be lost; an additional $3,000 in supporting community facilities; an approximate $400 in real estate taxes, and some $200 to $400 in related services, including utilities, etc. Thus each canceled unit has a total economic impact of nearly $46,000 (using the usual 2.2 projection of the impact of housing dollars on the economy).

In the Farm Home Program about 19,000 units have been affected. This has an estimated economic impact of about $1.3 billion and cuts off about 133,000 man-years of employment.

Rental housing subsidies will fall from a projected $70 million to $46 million for fiscal 1973 and from a projected $105 million to $4 million for fiscal 1974. The ’73 shortfall represents an estimated 2,200 units; the ’74 shortfall, an additional 4,300 units.

Material from a report issued by the national Ad Hoc Coalition on Housing, Washington, D.C.