Underwriting Manual, excerpt (text)

Underwriting Manual

Underwriting And Valuation Procedure Under Title II of the National Housing Act

Federal Housing Administration·

Washington, D.C.

FHA Form No. 2049 Revised Feb. 1938 U.S. GOVERNMENT PRINTING OFFICE, 1938

p. 936-939

Quality of Neighboring Development. The quality of dwelling construction is significant, inasmuch as unsubstantial, flimsy construction is subject to rapid deterioration which hastens the lowering of class of occupancy. The same result may be expected for locations whose properties present freakish architectural designs. The rating will be adversely affected if the neighboring development consists of old, obsolete dwellings. The presence of overimprovement or underimprovement in the neighborhood constitutes a condition which may adversely affect location ratings. Areas surrounding a location are investigated to determine whether incompatible racial and social groups are present, for the purpose of making a prediction regarding the probability of the location being invaded by such groups. If a neighborhood is to retain stability, it is necessary that properties shall continue to be occupied by the same social and racial classes. A change in social or racial occupancy generally contributes to instability and a decline in values.

p. 950-952

Quality and Accessibility of Schools. When considering the question of schools, distances to the schools shottld be related to the public or private means of transportation available from the location to the schools. The social class of the parents of children at the school will in many instances have a direct bearing. Thus, physical surroundings of a neighborhood area may be favorable and conducive to enjoyable, pleasant living in its location. However, if the children of people living in such an area are compelled to attend school where the majority or a considerable number of the pupils represent a far lower level of society or an incompatible racial element, the neighborhood under consderation will prove far less stable and desirable than if this condition did not exist. Frequently, upon payment of a fee, children in such an area could attend another school with pupils of their same social class. However, desirability of the neighborhood, when compared with competitive locations, might be adversely affected by tl1e additional expense. In many instances where a school has earned a prestige through the quality of instruction and adequacy of facilities, it will be found that such attributes will be an element in n1aintaining the desirability of the entire area comprising the school district. In cases where schools are not immediately present, consideration is given to convenience and cost of required transportation.