TITLE NEWS ~\~'$.FICIAL PUBLICATION OF THE . ~'"> ~RICAN LAND TITLE ASSOCIATION @ ,, ·.. "OUR 62nd YEAR" MARCH, 1969 PRESIDENT'S MESSAGE MARCH, 1969 l hope you will agree with me that the 1969 Mid-Winter Confer­ ence was most successful. Those who attended will, I am sure, realize that ALTA has em­ barked on a course differing from that followed in the past. While it was thought that the "single purpose" policy, a draft of which had been sent to members after the Portland Convention, would be finally approved at the 1969 Mid-Winter Conference, I am sure everyone now believes that the changes suggested by the Stan­ dard Forms Committee should be carefully considered. Hopefully, final approval will take place at the 1969 Annual Convention. The discussion on rating bureaus was most interesting. I wish to thank the members of the panel and in particular, Fred B. From­ hold, the Moderator. Of great interest were the addresses by Dr. Beryl Sprinkel, ProJ fessor Ray J. Aiken and Raymond A. Jensen. I firmly believe that the members who attended have greatly added to their knowledge, and the members who did not attend have missed a great deal. It is not too early to plan to attend the Annual Convention to be held in Atlantic City, New Jersey, September 29 through October 1. Sincerely, TITLE NEWS 'l'HE OF1''ICIAL PUBLICATION OF THE AMERICAN LAND TITLE ASSOCIATION EDITORIAL OFFICE: Premier Bldg., 1725 Eye St., N.W .. Washington, D.C. 20006 202-296-3671 FEATURES Mortgage Credit-1969 2 Federal Housing Programs 7 Mortgage Market Caught ln The Web Of Economic Mismanagement 13 What A Life Insurance Company Requires.. 18 Annual Convention Plans Under Way 23 DEPARTMENTS A Message From the President i-i1side front covei· In Memoriam 24 Florida-Georgia Companies Merge 24 Names ln The Newi:; 25 Meeting Timetable 28 Volume 4/J On The Cover: Memberis of the Executive Committee and Con. vention Chairman }'rank McDonough discuss plans for the 1969 Annual Convention. For information regarding the Convention Number 3 and the Post-Convention Tour to the Bahama Islands see page 23. 1 !1611 GARY L. GARRITY, Editor DONAILEEN C. WINTER, Assistant Editor Page 1 MORTGAGE CREDIT-1969 By SENATOR JOHN SPARKMAN, D-ALA. ABOUT THE AUTHOR Senator John Sparkman (D-Ala.) received his A. B., M.A., and LL.B. degrees from the University of Ala­ bama. He was elected to Congress in 1936. In 1946 he took his seat in the Senate and is now chairman of the Senate Housing Subcommittee. (Editor's note: The following article is based on an address presented by Senator Sparkman, Chairman of the Senate Housing Subcommittee, at the Na­ tional Association of Homebuilders Convention in Houston during January.) very American surely must feel torical journey into space possible, E a keen sense of accomplish­ I cannot help but think of my' ment in that we have done what no own home-Huntsville, Alabama other nation-what no other people and the important part it played -has ever done. We have in a in this great happening. I cannot short-very short-seven year span help but be proud of the fact that sent three human beings around it was the old Redstone Rocket made the moon and successfully returned in Huntsville-even though it may them home. now be the Model-T of rocketry­ In praising and congratulating that thrust us into the Rocket age. those at the Houston Space Center Furthermore, the vehicle that and all others who made this his- hoisted the Apollo 8 into space was Page 2 the mighty Saturn-the most pow­ flows into mortgage lending insti­ erful rocket in all the World-was tutions are not what we expect dreamed up, designed, built and them to be. In fact, we are presently tested at the Marshall Space Flight experiencing some of the highest Center at my home town-Hunts­ costs we have seen in the last 20 ville. years. Speaking of the rocket age and Naturally, all of these matters the moon, I wonder just how many are causing us concern, but I, for of you enterprising homebuilders one, am optimistic about the out­ are already plotting to put housing look for housing production in 1969, on the moon and are now concerned and the decade ahead. Frankly, I about the supply of mortgage credit believe when we look back this there! time next year-and another ten . This brings me, of course to the years hence-we will find that some main topic of our discussions to­ of the fears we have today were day; that is, mortgage credit. Not false. Let me explain my reasoning. on the moon, mind you, but here First, the fiscal control; that is, on earth! the income surtax charge instituted Of all the factors affecting your during mid-1968, has not reached industry, mortgage credit, the lack its full impact as yet. Second, al­ of it, is the one subject which has though government spending has received the most concentrated at­ been cut significantly-and we hope tention and effort over the years. will continue to be held down-the Certainly this is true of the last full impact of these cuts has not two decades. Yet, with all that has been felt in our economy. Third, the been done, with all the actions that last monetary action taken, that is, we have taken, we do not seem so the increase in the rediscount rate far to have found a solution to pro­ and the sale of government bonds vide for a stable flow of mortgage in the open market by the Federal money. Reserve Board are just beginning to have effect. Fourth, the increase Today, many of you are wor­ in family formations which will ried about the outlook for housing place huge demands on the housing production in the coming twelve market in 1969 and the 70's are ·months because of the present situ­ just beginning to be felt. ation in the mortgage market and When the full in our economy in general. and total effect of all these things take place - When our economy heats up it which I believe will be very soon - seems it strikes more directly at many of the fears we have today home production than it does at any will abate. I therefore think 1969 other major industry. And, it can­ will be a better than average year not be denied that we are in an for housing production. I will also inflationary trend. say that I do not believe it will be The ever higher cost of living is very long before we will be produc­ eroding consumer buying power ; ing housing at an annual rate of at lumber prices are on the rise and least two million starts. are boosting the cost of homes ; In other words, I believe we will interest rates remain high, and in- soon experience a "cooling off" in Page 3 the economy, and this will permit voluminous amount of work and ex­ us to move ahead at a rapid pace. pense involved in handling and Very shortly now, we can ex­ servicing mortgage portfolios. With pect some of the provisions of legis­ GNMA now being able to guarantee, lation enacted last year to be im­ let us say, a certificate or obligation plemented, and these provisions, I backed by a block of $5 million of believe, will be most helpful and mortgages, managers of pension, beneficial in making new sources retirement, and other funds will of money available for housing. find they can conveniently invest in Let me give some examples of the mortgage market without the the provisions to which I refer. cumbersome burden of portfolio I believe As you know, the 1968 Housing management. Certainly, and Urban Development Act, among this arrangement will help provide in­ many, many things provided the literally millions of dollars of machinery for the secondary mar­ vestment capital for mortgages and ket operation of the FNMA to be­ capital that have not heretofore come privately owned and privately been generally available for mort­ financed. At the same time, a new gage investment. government corporation-known as The 1968 Act contains another "Ginnie Mae" was formed. I some­ provision which will also help chan­ times feel that the "spinning off" nel "new" money into housing. I of FNMA per se generated so much refer to the Title creating the Na­ interest that many overlooked one tional Housing Corporation with of the most important features limited partnership. This title was written into the new GNMA func­ suggested by the President's Com­ tions. I refer to the provision which mission on Urban Housing which authorizes the GNMA to guaran­ was headed by Mr. Edgar A. Kaiser tee obligations issued by both the and therefore might be called the new FNMA and private financial Kaiser Amendment. institutions holding portfolios of Very briefly, the title creates government supported mortgages, a nationally chartered private that is, FHA, VA, and Farmers corporation and authorizes the Home mortgages. This new au­ corporation to form limited part­ thority is particularly significant nerships. The limited partnerships· in that it presents the potential can be made up of any persons, for channeling large amounts of groups, organizations or businesses private capital, heretofore not interested in providing the financiat readily available for mortgage in­ backing for housing - in other vestment, into the mortgage money words, "angels"-but who, on the market. For several years now we other hand, do not have any ex­ have talked about tapping various pertise in housing activities and pension and retirement funds for matters.