Then there is the matter of the front door frame, where the wood is rotting away, making it difficult to lock the door. Mrs. Murphy has attempted, none too successfully, to patch it with plastic wood.
Mrs. Murphy said she really didn't take a close look at the house before she bought it because it was "FHA approved" and she didn't think she had anything to worry about.
Asked if Clearfield's salesman had shown her a number of houses, Mrs. Murphy said no and added:
"He told me he would try to find me a house that would be a convenience to my money. I get $121 every two weeks (from public assistance)."
So what kind of house did Clearfield buy for $500 and sell to Mrs. Murphy less than two months later for $5,500?
A report filed with the State Insurance Department – dated the same day that Alma Murphy purchased her house – stated she signed a consent agreement to pay higher rates for her fire insurance policy because of the condition of the property.
Referring to an inspection of the house for fire insurance purposes, the report says that "the woodwork is decaying from lack of paint and maintenance is generally bad."
There are three basic FHA insuring programs:
203 (b) – This is the traditional program that has been used to insure mortgages on one to four family houses since FHA came into existence in 1934.
221 (d) (2) – This program, enacted by Congress in 1961, is designed for families with low and moderate incomes.
The value of the house cannot exceed $20,000 for a single-family dwelling, of $23,000 for a family of five or more if the house has four or more bedrooms.
235 – This program, enacted by Congress in 1968, is designed specifically for families who cannot afford to buy a house without financial assistance.
The mortgage limits are the same as the 221 (d) (2) program – $20,000 and $23,000. The down payment seldom exceeds $200 and most of that money is used to cover pre-payable items in the closing costs, such as real estate taxes and fire insurance.
But in addition, the Department of Housing and Urban Development makes part of the monthly mortgage payments for the home-buyer.
It was the fledgling 235 program last year that attracted the interest of Texas Democratic Rep. Wright Patman and his House Committee on Banking and Currency.
While FHA was ignoring irregularities in the 235 program, Patman's committee was ignoring wholesale abuses under the nonsubsidized 221 (d) (2) plan.
For The Inquirer's investigation has documented that the 221 (d) (2) program is the speculator's delight – at least in Philadelphia.
William T. Stansbury, assistant regional administrator for FHA in Philadelphia, acknowledges there has been a lot of 221 (d) (2) mortgage activity.
"It's a program which hasn't got a lot of publicity, but a tremendous number of people have become homeowners under the program," says Stansbury.
Indeed they have and the statistics are impressive:
– One Philadelphia real estate speculator alone has sold more houses under the 221 program than all the real estate brokers of Cleveland.
– A half-dozen Philadelphia real estate speculators have sold more houses under the 221 plan than all the real estate brokers combined in Chicago and Boston.
– More houses were sold in Philadelphia during 1969 under the 221 program (10,327) than in all these cities put together: Baltimore, Boston, Chicago, Cleveland, Los Angeles, Miami, Pittsburgh, St. Louis and Washington (9,710).
Stansbury's colleague at the local FHA office, Walter R. Reynolds, who heads the low income housing and rent supplement branch, summed it all this way:
"Most of the 221 action exists in the city limits, where you have existing homes. I think the 221 program has had a lot of action in existing neighborhoods."