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B-167637 1 (1970-01-09)

handle is hein.gao/gaobabkly0001 and id is 1 raw text is: by ~ ~ C -ho cvZ, c 'pol 1Y7 /97 SCOMPTROLLER GENERAL OF TA J,,ITEE) STATES kV WASHINGTON D C 20548 RELEASED JAN 9 197 B-167637 Dear Mr. Long: Reference is made to your telegram of July 30, 1969, and the letter of September 19, 1969, from Mr. Christophet Bfromner of your office request- ing us to review the mortgage insurance applications before the Federal Housing Administration (FHA), Department of Housing and Urban Development (HUD), for two multifamily housing projects, Fox Ridge and Franklin Park, proposed for construction in Baltimore County, Maryland, pursuant to section 236 of the National Housing Act. Mr. Pfrommer indicated in his letter that in our review we should include the following considerations: (i) the extent to which the builder of the proposed projects previously had participated in multifamily hous- ing programs administered by FHA, (2) ownership and relocation of a road involved in the construction of the Fox Ridge project, (3) coordination of actions of HUD and the Baltimore County government which resulted in the issuance of conditional commitments to the Julio Brothers to insure the moitgage loans for the proposed projects, (4) whether HUD procedutes were followed in approving the conditional commitments to insure the mortgage loans, and (5) the basis for the Acting Assistant Secretary- Commissioner's opinion that HUD was legally bound to carry through the conditional commitments to insure mortgage loans for the proposed proj- \ects. The results of our review and our discussions of these matters with responsible agency officials are summarized below. Sack round 2y/S Section 236, which was added to the National Housing Act by section 201 of the Housing and Urban Development Act of 1968 (82 Stat. 498), pro- vides a program for rental and cooperative housing for lower income fami- e lies. Pursuant to section 236 of the act, HUD is authorized to insure privately financed mortgage loans on multifamily housing projects and to pay, on ;1eFf of themortgagors, th -e-interest on the mortgage loans an excess of 1 percent and the mortgage insurance premiums. These payments-- (A called interest reduction payments--permit a basic monthly rehnal for each l-o-using unitto be-est-ablished at a rate lower than would be applicable if the project received no Federal assistance. Section 236 provides that a tenant pay either the basic rental or 25 percent of his monthly income, whichever is greater. Section 236 provides also that a tenant's rental payment not exceed the rental which would be applicable if no Federal IotI q~q

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