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 82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

services to mortgagors whose mortgages are insured under section 235(i) or 235(j)(4) of the National Housing Act as he determines to be necessary to assist such mortgagors in meeting the responsibilities of homeownership. There are authorized to be appropriated such sums as may be necessary to carry out the provisions of this subsection.

485 Ante,

p. 477.

Appropriation.

CREDIT ASSISTANCE

SEC. 102. (a) Title II of the National Housing Act is amended by 12 USC 1707adding after section 236 (as added by section 201 of this Act) the fol- ^^^^^ lowing new section: "SPECIAL MORTGAGE INSURANCE ASSISTANCE

"SEC. 237. (a) The purpose of this section is to help provide adequate housing for families of low and moderate income, including those who, for reasons of credit history, irregular income patterns caused by seasonal employment, or other factors, are unable to meet the credit requirements of the Secretary for the purchase of a single-family home financed by a mortgage insured under section 203, 220, 221, 234, or 235(j)(4), but who, through the incentive of homeownership and 12 USC 17^09, counseling assistance, appear to be able to achieve homeownership. msy- Ante,'p. "(b) The Secretary is authorized upon application by the mort- ^77. gagee to insure under this section any mortgage meeting the requirements of this section. "(c) To be eligible for insurance under this section, a mortgage shall— "(1) meet the requirements of section 203 (except subsection (m)), 220(d)(3)(A),.221(d)(2), 221(h)(5), 221 (i), 234(c), or 235(j)(4), except as such requirements are modified by this section; "(2) involve a principal obligation (including such initial service charges, and such appraisal, inspection, and other fees, as the Secretary shall approve) in an amount not to exceed $15,000: Provided, That the Secretary may increase the amount to not exceed $17,500 in any geographical area where he finds that cost levels so require: Provided further, That no mortgage meeting the requirements of section 203(h) or 203(i) shall be eligible for insurance under this section if its principal obligation is in excess of the maximum limits prescribed in such section; "(3) be executed by a mortgagor who the Secretary has determined, after a full and complete study of the case, would not be an acceptable credit risk for mortgage insurance purposes under sections 203, 220, 221, 234, or 235(j)(4), because of his credit standing, debt obligations, total annual income, or income characteristics, but who the Secretary is satisfied would be a reasonably satisfactory credit risk, consistent with the objectives stated in subsection (a), if he were to receive budget, debt management, and related counseling: Provided, That, in determining whether the mortgagor is a reasonably satisfactory credit risk, the Secretary shall review the credit history of the applicant giving special consideration to those delinquent accounts which were ultimately paid by the applicant and to extenuating factors which may have caused credit accounts of the applicant to become delinquent; and the Secretary shall also give special consideration to income characteristics of applicants whose total income over the two years prior to their applications has remained at levels of eligibility (as required under paragraph (4) of this subsection), but who,

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 486

Application preferences.

Counseling services.

Appropriation. 68 Stat. 607. 12 USC 1715q.

PUBLIC LAW 90-448-AUG. 1, 1968

because of the character of their seasonal employment or for other reasons, have not maintained continuous employment under one employer during that time; and "(4) require monthly payments which, in combination with local real estate taxes on the property involved, do not exceed 25 per centum of the applicant's income, based on his average monthly income during the year prior to his application or the average monthly income during the three years prior to his application, whichever is higher. " (d) The Secretary shall give preference in approving mortgage insurance applications under this section to families living in public housing units, especially those families required to leave public housing because their incomes have risen beyond the maximum prescribed income limits, and families eligible for residence in public housing who have been displaced from federally assisted urban renewal areas. "(e) The Secretary is authorized to provide, or contract with public or private organizations to provide, such budget, debt management, and rehited counseling services to mortgagors whose mortgages are insured under this section as he determines to be necessary to meet the objectives of this section. The Secretary may also provide such counseling to otherwise eligible families who lack sufficient funds to supply a down payment to help them to save an amount necessary for that purpose. " (f) The aggregate principal balance of all mortgages insured under this section and outstanding at one time shall not exceed $200,000,000. " (g) There are authorized to be appropriated such sums as may be necessary to carry out the provisions or subsection (e) of this section." (b) Section 226 of the National Housing Act is amended by inserting "235(i), 237," after "234,". RELAXATION

68 Stat. 605. 12 USC 1715n. 53 Stat. 807. 12 USC 1715c.

Repeal. 80 Stat. 1266. 12 USC 1709.

[82 STAT.

OF

MORTGAGE INSURANCE REQUIREMENTS URBAN NEIGHBORHOODS

IN

CERTAIN

SEC. 103. (a) Section 223 of the National Housing Act is amended by adding at the end thereof a new subsection as follows: " (e) Notwithstanding any of the provisions of this title except section 212, and without regard to limitations upon eligibility contained in any section of this title, the Secretary is authorized, upon application by the mortgagee, to insure under any section of this title a mortgage executed in connection with the repair, rehabilitation, construction, or purchase of property located in an older, declining urban area in which the conditions are such that one or more of the eligibility requirements applicable to the section of this title under which insurance is sought could not be met, if the Secretary finds that (1) the area is reasonably viable, giving consideration to the need for providing adequate housing for families of low and moderate income in such area, and (2) the property is an acceptable risk in view of such consideration. The insurance of a mortgage pursuant to this subsection shall be the obligation of the Special Risk Insurance Fund." (b) Section 203(1) of such Act is repealed. SPEX:;iAL. RISK INSURANCE FUND

12 USC 17071715y.

SEC. 104. (a) Title II of the National Housing Act is amended by adding after section 237 (as added by section 102 of this Act) the following new section:

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 82 STAT. ] uP A Y M E N T

PUBLIC LAW 90-448-AUG. 1, 1968 OF INSURANCE — S P E C I A L R I S K INSURANCE

487 FUND

"SEC. 238. (a)(1) Any mortgagee under a mortgage insured under section 235(i), 235(j)(4), or 237 shall be entitled to receive the bene- ^g^"'*' ^^- ^^^' fits of the insurance as provided in section 204(a) with respect to 12 USC 1710. mortgages insured. under section 203. The provisions of subsections ^2 USC 1709. (b), (c), (d), (g), (j), and (k) of section 204 shall be applicable to mortgages insurm under section 235(i), 235 (j)(4), or 237, except that all references therein to the 'Mutual Mortgage Insurance Fund' shall be construed to refer to the 'Special Risk Insurance Fund', and all references therein to section 203 shall be construed to refer to section 235 (i), 235 (j)(4), or 237, as may be appropriate. "(2) Any mortgagee under a mortgage insured under section 235 (j)(1) or 236 shall be entitled to receive the benefits of insurance as ^°®'' P- '^^^• provided in section 207(g) with respect to mortgages insured under section 207. The provisions of subsections (d), (e), (h), (i), (j), (k), 52 Stat. 9 (1), and (n) of section 207 shall be applicable to mortgages insured 12 USC 1713. under section 235(j)(1) or 236, except that all references therein to the 'General Insurance Fund' shall be construed to refer to the 'Special Risk Insurance Fund' and the premium charge provided in section 207(d) shall be payable only in cash or debentures of the Special Risk Insurance Fund. " (3) I n lieu of the amount of insurance benefits computed pursuant to paragraph (1) or (2) of this subsection the Secretary, in his discretion and in accordance with such regulations as he may prescribe, may (with respect to any mortgage loan acquired by him) compute and pay insurance benefits to the mortgagee in a total amount equal to the unpaid principal balance of the loan plus any accrued interest and any advances approved by the Secretary and made previously by the mortgagee under the provisions of the mortgage. "(b) There is hereby created a Special Risk Insurance Fund (hereinafter referred to as the 'fund') which shall be used by the Secretary as a revolving fund for carrying out the mortgage insurance obligations of sections 223(e), 233(a)(2), 235, 236, and 237, and the Secre- Ante, p. 486; tary is hereby authorized to advance to the fund the sum of $5,000,000 Post, p. 496. from the General Insurance Fund established pursuant to the provisions of section 519. Such advance shall be repayable at such times and 79 Stat. 471. a;t such rates of interest as the Secretary deems appropriate. Premium 12 USC 1735c. " """ "" charges, adjusted premium charges, inspection and other fees, service charges, and any other income received by the Secretary under sections 223(e), 233(a)(2), 235, 236, and 237, together with all earnings on the assets of the fund, shall be credited to the fund. All payments made pursuant to claims of mortgagees with respect to mortgages insured under sections 233(a)(2), 235, 236, and 237 or pursuant to section 223(e), cash adjustments, the principal of and interest paid on debentures which are the obligation of the fund, expenses incurred in connection with or as a consequence of the acquisition and disposal of property acquired under such sections, and all administrative expenses in connection with the mortgage insurance operations under such sections shall be paid out of the fund. There is authorized to be appropriated such sums as may be needed from time to time to cover losses sustained by the fund in carrying out the mortgage insurance obligations of sections 223(e), 233(a)(2), 235, 236, and 237. Moneys in the fund not needed for current operations of the fund shall be deposited with the Treasurer of the United States to the credit of the fund or invested in bonds or other obligations of, or in bonds or other obligations guaranteed by, the United States. The Secretary, with the approval of the Secretary of the Treasury, may purchase in the open

- 6 0 0 O - 69 - 34

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68 Stat. 606. 12 USC 17150. 1^ us°c ^^^ ^^'''

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

market deberitures which are the obligation of the fund. Such purchases shall be made at a price which will provide an investment yield of not less than the yield obtained from other investments authorized by this section. Debentures so purchased shall be canceled and not reissued." (b) Seotion 224 of such Act is amended by striking out "or section 233" and inserting in lieu thereof "section 233, or section 238-'. ^'^^ Section 519(e) of such Act is amended by inserting after "section 213(k)" the following: ", or the provisions of sections 223(e), 233 (a) (2), 235, 236 and 237". CONDOMINIUM AND CCX)PERATIVE OWNERSHIP FOR LOW AND MODERATE INCOME FAMILIES

68 stait. 599^^

12 USC 1715^.

SEC. 105. (a) Section 221 of the National Housing Act is amended by adding at the end thereof two new subsections as follows: "(i)(1) The Secretary is authorized, with respect to any project involving a mortgage insured under subsection (d)(3) which bears interest at the below-market interest rate prescribed in the proviso of subsection (d)(5), to permit a conversion of the ownership of such project to a plan of family unit ownership. Under such plan, each family unit shall be eligible for individual ownership and provision shall be included for the sale of the family units, together with an undivided interest in the common areas and facilities which serve the project, to low or moderate income purchasers. The Secretary shall obtain such agreements as he determines to be necessary to assure continued maintenance of the common areas and facilities. Upon such sale, the family unit and the undivided interest in the common areas shall be released from the lien of the project mortgage. " (2)(A) The Secretary is authorized, upon application by the mortgagee, to insure under this subsection mortgages financing the purchase of individual family units under the plan prescribed in paragraph (1). Commitments may be issued by the Secretary for the insurance of such mortgages prior to the date of their execution or disbursement thereon, upon such terms and conditions as the Secretary may prescribe. To be eligible for such insurance, the mortgage shall— " (i) be executed by a mortgagor having an income within the limits prescribed by the Secretary for occupants of projects financed with a mortgage insured under subsection (d)(3) which bears interest at the below-market rate prescribed in the proviso of subsection (d)(5); " (ii) involve a principal obligation (including such initial service charges, and such appraisal, inspection, and other fees, as the Secretary shall approve) in an amount not to exceed the Secretary's estimate of the appraised value of the family unit, including the mortgagor's interest in the common areas and facilities, as of the date the mortgage is accepted for insurance; " (iii) bear interest at a rate determined by the Secretary (which may vary in accordance with the regulations of the Secretary promulgated pursuant to the last sentence of paragraph (4) of this subsection) but not less than the below-market rate in effect under the proviso of subsection (d)(5) at the date of the commitment for insurance; and "(iv) provide for complete amortization by periodic payments within such term as the Secretary may prescribe, but not to exceed the lesser of forty years from the beginning of amortization of the mortgage or three-quarters of the Secretary's estimate of the remaining economic life of the building improvements.

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489

" (B) The price for which the individual family unit is sold to the low or moderate income purchaser shall not exceed the appraised value of the property, as determined under subparagraph (A) ( i i), except that the purchaser shall be required to pay on account of the l^roperty at the time of purchase at least such amount, in cash or its equivalent (which shall be not less than 3 per centum of such price, but which may be applied in whole or in part toward closing costs), as the Secretary may determine to be reasonable and appropriate. "(3) Upon the sale of all of the family units covered by the project mortgage, and the release of all of the family units (including the undivided interest allocable to each unit in the common areas and facilities) from the lien of the project mortgage, the insurance of the project mortgage shall be terminated and no adjusted premium charge shall be collected by the Secretary upon such termination. "(4) Any mortgage covering an individual family unit insured interest rate, under this subsection shall contain a provision that, if the original ^"'''•^^^^• mortgagor does not continue to occupy the property, the interest rate shall increase to the highest rate permissible under this section and the regulations of the Secretary effective at the time the commitment was issued for the insurance of the project mortgage; except that the I'equirement for an increase in interest rate shall not be applicable if the property is sold and the purchaser is (i) a nonprofit purchaser approved by the Secretary, or (ii) a low or moderate income purchaser A\'ho has an income within the limits prescribed by the Secretary for occupants of projects financed with a mortgage insured under subsection (d)(3) which bears interest at the below-market rate prescribed in the proviso of subsection (d)(5). The mortgage shall also contain a provision that, if the Secretary determines that the annual income of the original mortgagor (or a purchaser described in clause (ii) of the preceding sentence) has increased to an amount enabling payment of a greater rate of interest, the interest rate of the individual mortgage may be increased up to the highest rate permissible under the regulations of the Secretary for mortgages insured under this section, effective at the time the commitment was issued for the insurance of the mortgage. " (5) For the purpose of this subsection— " (i) the term 'mortgage', when used in relation to a mortgage "Mortgage." insured under paragraph (2) of this subsection, includes a first mortgage given to secure the unpaid purchase price of a fee interest in, or a long-term lease-hold interest in, a one-family unit in a multifamily project and an undivided interest in the common areas and facilities which serve the project; and "(ii) the term 'common areas and facilities' includes the land "common areas and such commercial, community, and other facilities as are ^"'^ facilities." approved by the Secretary. "<'])(!) The Secretary is authorized, with respect to any rental ^ ^""^^ff'^"^ project involving a mortgage insured under subsection (d)(3) which ownership, conversion. bears interest at the below-market interest rate prescribed in the proviso of subsection (d)(5), to permit a conversion of the ownership of such project to a cooperative approved by the Secretary. Membership in such cooperative shall be made available only to those families having an income within the limits prescribed by the Secretary for occupants of projects financed with a mortgage insured under subsection (d)(3) which bears interest at such below-market rate: Provided, That families residing in the rental project at the time of its conversion to a cooperative who do not meet such income limits may be permitted to become members in the cooperative under such special terms and conditions as the Secretary may prescribe.

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 490 Cooperative Turlncf*^' "

68 Stat. 599.^

PUBLIC LAW 90-448-AUG. 1, 1968

"(2) The Secretary is authorized, upon application by the mortg^g66, to insure under this subsection cooperative mortgages financing the purchase of projects meeting the requirements of paragraph (1). Commitments may be issued by the Secretary for the insurance of such mortgages prior to the date of their execution or disbursement thereon, upon such terms and conditions as the Secretary may prescribe. To be eligible for such insurance, the mortgage shall— "(i) involve a principal obligation (including such initial service charges and appraisal, inspection, and other fees as the Secretary shall approve) in an amount not exceeding the appraised value of the property for continued use as a cooperative, which value shall be based uix>n a mortgage amount on which the debt service can be met from the income of the property when operated on a nonprofit basis, after the payment of all operating expenses, taxes, and required reserves; '*(ii) bear interest at the below-market rate prescribed in the proviso of subsection (d)(5); and "(iii) provide for complete amortization within such term as the Secretary may prescribe." ^b) Section 221(g)(1) of such Act is amended by striking out "or paragraph (5) of subsection (h) of this section" and inserting in lieu thereof "paragraph (5) of subsection (h) of this section, or paragraph (2) of subsection (i) of this section". (c) Section 221(g)(2) of such Act is amended by striking out "or paragraph (1) of subsection (h) " and inserting in lieu thereof "paragraph (1) of subsection (h) of this section, or paragraph (2) of subsection (j).". (d) Section 221(f) of such Act is amended by inserting after "subsection (h) " in the third sentence of the second paragraph the following: ", (i), or (j) ". ASSISTANCE

Loans.

[82 STAT.

TO N O N P R OF I T

SPONSORS O F LOW HOUSING

AND

MODERATE

INCOME

SEC. 106. (a) The Secretary of Housing and Urban Development is authorized to provide, or contract with public or private organizations to provide, information, advice, and technical assistance with respect to the construction, rehabilitation, and operation by nonprofit organizations of housing for low or moderate income families. Assistance by the Secretary may include— (1) the assembly, correlation, publication, and dissemination of information with respect to the construction, rehabilitation, and operation of low and moderate income housing, and (2) the provision of advice and technical assistance with respect to the construction, rehabilitation, and operation of low and moderate income housing. (b)(1) The Secretary is authorized to make loans to nonprofit organizations for the necessary expenses, prior to construction, in planning, and obtaining financing for, the rehabilitation or construction of housing for low or moderate income families under any federally assisted program. Such loans shall be made without interest and shall not exceed 80 per centum of the reasonable costs expected to be incurred in planning, and in obtaining financing for, such housing prior to the availability of financing, including, but not limited to, preliminary surveys and analyses of market needs, preliminary site engineering and architectual fees, site acquisition, application and mortgage commitment fees, and construction loan fees and discounts. The Secretary shall require repayment of loans made under this subsection, under

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PUBLIC LAW 90-44S-A\]G. I, 196ff

491

such terms and conditions as lie may require, upon completion of the project or sooner, and may cancel any part or all of a loan if he determines that it cannot be recovered from the proceeds of any permanent loan made to finance the rehabilitation or construction of the housing. (2) The Secretary shall determine prior to the making of any loan that the nonprofit organization meets such requirements with respect to financial responsibility and stability jvs he may prescribe. (3) There are authorized to be appropriated for the purposes of this Appropriation, subsection not to exceed $7,500,000 for the fiscal year ending June 80, 1969, and not to exceed $10,000,000 for the fiscal year ending June 30, 1970. Any amounts so appropriated shall remain available until expended, and any amounts authorized for any fiscal year under this paragraph but not appropriated may be appropriated for any succeeding fiscal year. (4) All funds appropriated for the purposes of this subsection shall LOW and Modl>e deposited in a fund which shall be known as the IJOW and Modemte sponso^'Fund. Income Sponsor Fund, and which shall be available without fiscal year limitation and be administered by the Secretary as a revolving fund for carrying out the purfjoses of this subsection. Sums received in repayment of loans made under this subsection shall be deposited in such fund. NATIONAL IIOMEOWNERSIIIP

FOUNDATION

S/r^x^

SEC. 107. (a)(1) There is hereby created a body corporate to be known as the "National Homeownership Foundation" (hereinafter referred to as the ''Foundation") to carry out a continuing program of encouraging private and ]>ublic organizations at the national, community, and neighborhood levels to provide increased homeownership and housing opportunities in urban and rural areas for lower income families through such means as— (A) encouraging the investment in, and spcmsoring of, housing for lower income families; (B) encouraging the establishment of programs of assistance and counseling to lower income families to enable them better to achieve and afford adequate housing; (C) providing a broad range of technical assistance through publications and advisory services to public and private organizations which are carrynig out, or are desirous of carrying out, programs to expand homeownership and housing opportunities for lower income families; and (D) providing grants and loans to public and private organizations carrying out homeownership and housing opportunity programs for lower income families to help cover some of the expenses of such programs. (2) The Foundation shall be deemed to be a corporation without members organized and established under the provisions of the Dis76 Stat. 265. trict of C^olumbia Nonprofit Corporation Act, with all the rights, D.C. Code 29powers, and responsibilities thereof except as limited by this section looi and any amendments thereto. This section shall constitute the articles of incorporation and charter of the Foundation, which shall not be an ngency or instrumentality of the United States Government. The Congress expressly reserves the exclusive right to alter or amend this charter. The Foundation shall have succession until dissolved by Act of Congress. The Foundation shall maintain its principal office in the District of Columbia. (3) No part of the net earnings of the Foundation shall inure to the Administration benefit of any private person, and no substantial part of its activities and^educationnai shall be devoted to attempting to influence legislation. The Founda- foundation.

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Contract authority.

Acceptance of grants, e t c.

Board of Directors.

Terms of office.

Compensation, travel e x p e n s e s.

80 Stat. 499. Executive Director.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

tion shall not participjDte or intervene in any political campaign on behalf of any candidate for public office. The Foundation shall be operated and administered at all times as a charitable and educational foundation. (4) No employee or officer of the Foundation shall receive compensation in excess of that received by or hereafter prescribed by law for heads of executive departments. (5) The Foundation shall make maximum use of existing public and private agencies and programs, and in carrying out its functions the Foundation is authorized to contract with individuals, private corporations, organizations, and associations, and with agencies of the Federal, State, and local governments. (6) The Foundation is authorized to receive donations and grants from individuals and from public and private organizations, foundations, and agencies. (7) The Foundation may use only donated funds, or funds derived from payment of interest on loans made by it, for the principal and interest payments on any borrowings. (b)(1) The Foundation shall have a Board of Directors consisting of eighteen members, fifteen of whom shall be appointed by the President of the United States, with the advice and consent of the Senate. The other three members shall be, ex officio, the Secretary of Housing and Urban Development, the Secretary of Agriculture, and the Director of the Office of Economic Opportunity. The President shall appoint one of the fifteen appointed members to serve as Chairman of the Board during his term of office as a member. (2) Within thirty days after the date of enactment of this Act, the President shall appoint the fifteen appointed members of the Board. Not more than five of such members shall, at the time of their appointment, be serving full time as officers or employees of the Federal Government, or as officers or employees of any State or local government. Each appointed member of the Board shall hold office for a term of three years, except that (A) any member appointed to fill a vacancy prior to the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of such term, and (B) the terms of the members first taking office shall expire, as designated by the President at the time of appointment, five at the end of the first year, five at the end of the second year, and five at the end of the third year after the date of appointment. Members of the Board, however appointed, shall be eligible for reappointment, but at no time shall there be more than five members of the Board who at the time of their appointment or reappointment were full-time officers or employees of the Federal Government or of any State or local government. (3) Appointed members of the Board who are not employees of the Federal Government, while attending meetings or conferences of the Board or otherwise serving on business of the Board, shall be entitled to receive compensation at rates fixed by the President, but not exceeding $100 per day, including travel time, and while so serving away from their homes or regular places of business they may be allowed travel expenses, including per diem in lieu of subsistence, as authorized by section 5703 of title 5, United States Code, for persons in the Government service employed intermittently. (4) The Board shall appoint an Executive Director of the Foundation. The Executive Director shall be the chief executive officer of the Foundation and shall serve at the pleasure of the Board, and all other executive officers and employees of the Board shall be responsible to him. The Board shall also cause to be appointed a secretary, a treasurer, and such other officers as may be necessary to conduct

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PUBLIC LAW 90-448-AUG. 1, 1968

properly the business of the Foundation, and shall provide for fillini^ vacancies in such offices, (5) The Board shall adopt bylaws for the Foundation which shall be made available for public inspection upon request. (c)(1) The Foundation shall assist public and private organizations, at their request, in initiatin;[^, developing, and conducting programs to expand homeownership and housing opportunities for lower income families. To provide such assistance and to carry out the puiposes of this section, the Foundation is authorized to— (A) carry out a continuing program of encouraging private and public organizations at the national, community, and neigliborhood levels in the establishment of such programs; (B) assist in the formation of organizations the purpose of which is the development and carrying out of such programs, including the establishment of local development funds for financing housing for lower income families through the pooling of moneys from private sources; {C) identify and arrange for the technical and managerial assistance and personnel needed for the successful operation of such programs by public and private organizations; (I)) assist public and private organizations in obtaining the mortgage financing, insurance, and other requirements or aids necessary for conducting programs of housing construction, rehabilitation, or improvement for lower income families; (E) arrange for, or provide on a limited basis, training for jjersons in the skills needed in administering programs of homeownership and housing opportunity for lower income families; (F) encourage research and innovation, and collect and make available such information as may be desirable to further the purposes of this section, including but not limited to such activities as the sponsoring of seminars, conferences, and meetings and the establishment of a continuing information 2)rogram to acquaint lower income families with the means they can use to improve the quality of their housing and the homeownership and housing opportunities available to them; (G) assist private and public organizations in establishing, in connection with their homeownership and housing opportunity programs for lower income families, counseling and similar activities designed to advise lower income families of the means available to better themselves economically through job training and manpower development programs; and (H) perform other similar services in order to further the purposes of this section. (2) The Foundation may, if it deems it appropriate, charge a reasonable fee for any assistance or service provided under this subsection. (d)(1) In order to assist public and private organizations which are carrying out homeownership and housing opportunity programs for lower income families to fill unmet needs, initiate exceptional programs, and experiment with new approaches and programs, the Foundation is authorized, subject to such terms and conditions as it may prescribe, to make grants and loans to such organizations to help defray the following expenses: (A) organizational and administrative expenses incurred in commencing the operation of a program, or in expanding an existing program, to the extent that the activities are related to providing homeownership and housing opportunities for lower income families; (B) necessary preconstruction costs incurred for architectural assistance, land options, application fees, and similar items; and

493

Functions.

f'ees. Grant and loan

authority.

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Report to President and Congress. Contents.

GAO audit.

A c c e s s to records, etc.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

(C) the cost of carrying- out programs providing counseling or similar services to lower income families for whom housing is being provided, in order to enable those families better to achieve and afford adequate housing, in such matters as home management, budget management, and home maintenance. (2) I n order to be eligible for a grant or loan under this subsection, the organization seeking such assistance shall demonstrate to the satisfaction of the Foundation that the funds requested are not otherwise available from Federal sources: Provided, That a grant or loan under this subsection may be provided to help cover that portion of the cost of an eligible activity not covered by Federal funds. (3) The Foundation shall encourage cooperation between public and private organizations carrying out programs of homeownership and housing opportunity for lower income families and the neighborhoods and communities affected by such programs. To help assure such cooperation and in order to coordinate, to the maximum extent feasible, any construction or rehabilitation activities with the development goals of the neighborhood or community affected, no application for a loan or grant under this subsection shall be considered unless such application has been submitted to the governing body of the community affected, or to such other entity of local government as may be designated by the governing body, for such recommendations as the local governing body or its designee may desire to make. Any recommendations so made shall be given careful consideration by the Foundation before taking final action on any such application. If, upon the expiration of thirty days after any such application has been submitted to such governing body or its designee, such body or designee fails to provide such recommendations, the application may be considered without the benefit of such recommendations. (e) The Foundation shall coordinate its activities and consult with the Department of Housing and Urban Development and other Federal departments and agencies engaged in providing homeownership and housing opportunities for lower income families. (f)(1) Not later than one hundred and twenty days after the close of each fiscal year, the Foundation shall prepare and submit to the President and to the Congress a full report of its activities during such year. Such report shall include an account of the Foundation's experiences with the efforts of private and public organizations to expand homeownership and housing opportunities for lower income families, together with such recommendations as it deems appropriate. (2) Whenever in its judgment the general unavailability of mortgage funds is sufficiently serious to deter the Foundation from carrying out its objective of expanding homeownership and housing opportunities for lower income families, the Foundation shall, in its annual report or in a separate report to the President and the Congress, state its findings and make such recommendations for alternate means of financing housing for such families as it deems appropriate. (g)(1) The financial transactions of the Foundation shall be audited by the General Accounting Office in accordance with the principles and procedures applicable to commercial corporate transactions and under such rules and regulations as may be presc^ribed by the Comptroller General of the United States. The representatives of the General Accounting Office shall have access to all books, accounts, financial records, reports, files, and all other papers, things, or property l>elonging to or in use by the Foundation and necessary to facilitate the audit, and they shall be afforded full facilities for verifying transactions with the balances or securities held by depositories, fiscal agents, and custodians. The audit shall cover the fiscal yeiir corresponding to that of the United States Government.

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PUBLIC LAW 90-448-AUG. 1, 1968

495

(2) A report of each such audit shall be made by the Comptroller gresT°and p^eTiGeneral to the Congress not later than January 15 following the close dent. of the fiscal year for which the audit was made. The report shall set forth the scope of the audit and shall include a statement of assets and liabilities, capital, and surplus or deficit; a statement of sources and application of funds; and such comments and information as may be deemed necessary to keep the (\mgress informed of the operations and financial condition of the Foundation, together with such recommendations with respect thereto as the Comptroller General may deem advisable. The report shall also show specifically any program, expenditure, or other financial transaction or undertaking, observed in the course of the audit, which, in the opinion of the Comptroller General, has been carried on or made without authority of law. A copy of each report shall be furnished to the President and to the Foundation at the time submitted to the Congress. (h) Funds of the Foundation shall be deposited, to the extent practicable, in accounts with financial institutions which are actively engaged in making loans or are otherwise carrying on activities in furtherance of homeownership and housing opportunities for lower income families. (i) There is authorized to be appropriated to the Foundation not to Appropriation. exceed $10,000,000 to carry out the purposes of this section. Appropri, ations made hereunder shall remain available until expended. I NEW

TECHNOLOGIES

IN

THE DEVFXOPMENT O r INCOME FAMILIES

HOUSING

FOR

LOWER

SEC. 108. (a) I n order to encourage the use of new housing technologies in providing decent, safe, and sanitary housing for lower income families; to encourage large-scale experimentation in the use of such technologies; to provide a basis for comparison of such technologies with existing housing technologies in providing such housing; and to evaluate the effect of local housing codes and zoning regulations on the lar^e-scale use of new housing technologies in the provision of such housing, the Secretary of Housing and LTrban Development (hereinafter referred to as the "Secretary") shall institute a program under which qualified organizations, public and private, will submit plans for the development of housing for lower income families, using new and advanced technologies, on Federal land which has been made available by the Secretary for the purposes of this section, or on other land where (1) local building regulations permit the construction of experimental housing, or (2) State or local law permits variances from building regulations in the construction of experimental housing for the purpose of testing and developing new building technologies. (b) The Secretary shall approve not more than five plans utilizing consideration7^^' new housing t^echnologies which are submitted to him pursuant to the " ' ^^ ^ "^ " program referred to in subsection (a) and which he determines are most promising in furtherance of the purposes of this section. I n making such determination the Secretary shall consider— (1) the potential of the technology employed for producing housing for lower income families on a large scale at a moderate cost; (2) the extent to which the plan envisages environmental quality; (3) the possibility of mass production of the technology; and (4) the financial soundness of the organization submitting the plan, and the ability of such organization, alone or in combination with other organizations, to produce at least one thousand dwelling units a year utilizing the technology proposed.

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Surplus property. 63 Stat. 377. 40 USC 471 note. Report of findings, legislative recommendations.

75 Stat. 158. 12 USC 1715X.

Ante,

p. 495.

[82

STAT.

(c) I n approving projects for mortgage insurance under section 233 (a)(2) of the National Housing Act (as added by subsection (f) of this section), the Secretary shall seek to achieve the construction of at least one thousand dwelling units a year over a five-year period for each of the various types of technologies proposed in approved plans under subsection (b). The Secretary shall evaluate each project with respect to which assistance is extended pursuant to this section with a view to determining (1) the detailed cost breakdown per dwelling unit, (2) the environmental quality achieved in each such unit, and (3) the etfect which local housing codes and zoning regulations have, or would have if applicable, on the cost per dwelling unit. (d) Notwithstanding the provisions of the Federal Property and Administrative Services Act of 1949, any land which is excess property within the meaning of such Act and which is determined by the Secretary to be suitable in furtherance of the purposes of this section may be transferred to the Secretary upon his request. (e) The Secretary shall, at the earliest practicable date, report his lindings with respect to projects assisted pursuant to this section (including evaluations of each such project in accordance with subsection (c)), together with such recommendations for additional legislation as he determines to be necessary or desirable to expand the available supply of decent, safe, and sanitary housing for lower income families through the use of technologies the efficacy of which has been demonstrated under this section. (f)(1) Section 233(a) of the National Housing Act is amended— (A) by inserting " (1) ' ' after " (a) ", (B) by redesignating clauses (1), (2), and (3) as clauses (A), (B), and (C), respectively, and (C) by adding at the end thereof the following new paragraph: "(2) The Secretary is further authorized to insure and to make commitments to insure, under this section, mortgages (including advances on mortgages during construction) secured by properties in projects to be carried out in accordance with plans approved by the Secretary under section 108 of the Housing and Urban Development Act of 1968.". (2) Section 233(c) of such Act is amended by inserting at the end thereof the following new sentence: "Any authority which the Secretary may exercise in connection with a mortgage, or property covered by a mortgage, insured under any other section of this title (including payments to reduce rentals for, or to facilitate homeownership by, lower income families) may be exercised in connection with a mortgage, or property covered by a mortgage, meeting the requirements of such other section (except as specified in subsection (b)), which is insured under this section to the same extent and in the same manner as if the mortgage insured under this section was insured under such other section." INSURANCE PROTECTION FOR

HOMEOWNERS

SEC. 109. (a) The Secretary of Housing and Urban Development is authorized, in cooperation with the private insurance industry, to develop a plan for the establishment at the earliest practicable date of an insurance program to help homeowners in meeting mortgage payments in times of personal economic adversity. Such insurance program shall be designed to protect mortgagors against foreclosure due to curtailment of income resulting from factors beyond their effective control, including such factors as death, disability, illness, and unemployment. Such insurance program shall also be designed to be actuarially sound through the use of premiums, fees, extended or increased

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payment schedules, or other simihir methods, in conjunction with such Federal participation as may be necessary. (b) Within six months following the date of enactment of this Report to conAct, the Secretary shall report to the Congress on his actions under fJcommt^ndalfors^ this section, and shall recommend to the Congress such legislation as he deems appropriate to authorize him to enter into agreements with any insurance company, or any corporation or joint enterprise formed to provide home mortgage insurance protection, for the purpose of reinsuring insurance reserve funds, subsidizing premium payments (m behalf of lower income mortgagors, or otherwise making possible the insurance protection of homeowners in accordance with subsection (a). In preparing such recommendations the Secretary shall consult with other agencies or instrumentalities of the United States which insure or guarantee home mortgages iii order that such legislation as may he recommended atl'ords equal benefits to mortgagors participating in their programs. N A T I O N A L ADVISORY COMMISSION ON LOW INCOMP: H O U S I N G

SEC. 110. (a)(1) There is hereby established the National Advisory (\)mmissioii on Low Income Housing (hereinafter referred to as the ''Commission'"). The Commission shall be composed of twenty-one Membership. members as follows: (A) Four members appointed by the President of the Senate, two from the majority party and two from the minority party; (B) Four members appointed by the Speaker of the House of Representatives, two from the majority party and two from the minority party; and (C) Thirteen members appointed by the President, not more than three of whom shall be from the Federal Government, and of whom four shall berepresentative of £^^ ^ -f ^4-"^ i iicome~TiotlEfi^ M'h^nevSFpracncable, after consultation with the ranking majority and minority members of the Housing Subcommittees of the Committees on Banking and Currency of the Senate and House of Representatives. (2) Any vacancy in the Commission shall not affect its powers, but shall be filled in the same manner in which the original appointment w as made. (3) Eleven members of the Commission shall constitute a quorum, but a lesser number may conduct hearings. (4) The members of the Commission shall elect a Chairman and a Vice Chairman from the membership of the Commission. (b)(1) The Commission shall undertake a comprehensive study and ^ commission investigation, to further the policy set forth in section 2 of this Act, of functions. practicable and effective ways of bringing decent, safe, and sanitary housing within the reach of low income families. Such study shall evaluate existing housing programs designed to assist such families, and explore new ways by which public and private resources may be more effectively utilized in meeting the housing needs of such families. In the carrying out of such studj, the Commission may, where necessary or desirable, utilize the services of private research organizations, and shall, insofar as is practicable, seek to coordinate its investigation with studies undertaken, or being undertaken by the Banking and Currency Committees of the Senate and House of Representatives. (2) The Commission shall be organized and begin its functions at „'^^?°''l^° the earliest possible date, and shall submit to the President and to P roensg ^eesnst. and ° id C r the Congress an interim report with respect to its findings and recommendations not later than July 1, 1969. A final report of its findings

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Hearings, etc.

80 Stat. 443, 467. 5 USC 5101, 5331. 5 USC 5332 note. Experts and consultants. 80 Stat. 416.

Compensation, travel expenses.

Appropriation.

Termination.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

and recommendations shall be submitted to the President and the Congress not later than July 1, 1970. (c)(1) The Commission or, on the authorization of the Commission, any subcommittee or members thereof, may, for the purpose of carrying out the provisions of this section, hold such hearings, take such testimony, and sit and act at such times and places as the Commission deems advisable. Any member authorized by the Commission may administer oaths or affirmations to witnesses appearing before the Commission or any subcommittee or members thereof. (2) Each department, agency, and instrumentality of the executive branch of the Government is authorized and directed to furnish to the Commission, upon request made by the Chairman or Vice Chairman, such information as the Commission deems necessary to carry out its functions under this section. (3) Subject to such rules and regulations as may be adopted by the Commission, the Chairman, without regard to the provisions of title 5, United States Code, governing appointments in the competitive service, and without regard to the provisions of chapter 51 and subchapter III of chapter 53 of such title relating to classification and General Schedule pay rates, shall have the power— (1) to appoint and fix the compensation of such staff personnel as he deems necessary, and (2) to procure temporary and intermittent services to the same extent as is authorized by section 3109 of title 5, United States Code, but at rates not to exceed $50 a day for individuals. (d)(1) Any member of the Commission who is appointed from the executive or legislative branch of the Government shall serve without compensation in addition to that received in his regular employment, but shall be entitled to reimbursement for travel, subsistence, and other necessary expenses incurred by him in the performance of duties vested in the Commission. (2) Members of the Commission, other than those referred to in paragraph (1), shall receive compensation at the rate of $75 per day for each day they are engaged in the performance of their duties as menibers of the Commission and sihall be entitled to reimbursement for travel, subsistence, and other necessary expenses incurred by them in the performance of their duties as members of the Commission. (e) There are authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, such sums as may be necessary to carry out this section. (f) The Commission shall cease to exist thirty days after the submission of its final report. TITLE

II—RENTAL

HOUSING FOR FAMILIES

LOWER

INCOME

PART A—PRIVATE HOUSING RENTAL A N D COOPERATIVE HOUSING FOR LOWER INCOME FAMILIES 12 USC 17071715y.

SEC. 201. (a) Title II of the National Housing Act is amended by adding after section 235 (as added by section 101 of this Act) the f ollowinff new section: " R E N T A L AND COOPERATIVE HOUSING FOR LOWER INCOME FAMILIES

"SEC. 236. (a) For the purpose of reducing rentals for lower income families, the Secretary is authorized to make, and to contract to make, periodic interest reduction payments on behalf of the owner of a

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rental housing project designed for occupancy by lower income families, which shall be accomplished through payments to morgagees holding mortgages meeting the sj^ecial requirements specified in this section. " (b) Interest reduction payments with respect to a project shall only be made during such time as the project is operated as a rental housing project and is subject to a mortgage which meets the mjuirements of,,„^ and is insured under, subsection (j) of this section-Provided, That interest reduction payments may be made with respect to a rental or cooperative housing project owned by a private nonprofit corporation"^ -2  4, • completion of construction or rehabilitation is approved for receiving the benefits of this section?^ "(c) The interest reducfion payments to a mortgagee by the Secretary on behalf of a project owner shall be in an amount not exceeding the difference between the monthly payment for principal, interest, and mortgage insurance premium which the project owner as a mortgagor is obligated to pay under the mortgage and the monthly payment for principal and interest such project owner would be obligated to pay if the mortgage were to bear interest at the rate of 1 per centum per annum. " (d) The Secretary may include in the payment to the mortgagee Mortgage such amount, in addition to the amount computed under subsection ^" ^"^ expenses. .(c), as he deems appropriate to reimburse the mortgagee for its expenses in handling the mortgage. "(e) As a condition for receiving the benefits of interest reduction payments, the project owner shall operate the project in accordance with such requirements with respect to tenant eligibility and rents as the Secretary may prescribe. Procedures shall be adopted by the Secretary for review of tenant incomes at intervals of two years (or at shorter intervals where the Secretary deems it desirable). "(f) For each dwelling unit there shall be established with the approval of the Secretary (1) a basic rental charge determined on the basis of operating the project with payments of principal and interest due under a mortgage bearing interest at the rate of 1 per centum per annum; and (2) a fair market rental charge determined on the basis of operating the project with payments of principal, interest, and mortgage insurance premium which the mortgagor is obligated to pay under the mortgage covering the project. The rental for each dwelling unit shall be at the basic rental charge or such greater amount, not exceeding the fair market rental charge, as represents 25 per centum of the tenant's income. " (g) The project owner shall, as required by the Secretary, ac- char^s^^coUec^cumulate, safeguard, and periodically pay to the Secretary all rental tion and deposit, charges collected in excess of the basic rental charges. Such excess charges shall be deposited by the Secretary in a fund which may be used by him as a revolving fund for the purpose of making interest reduction payments with respect to any rental housing project receiving assistance under this section, subject to limits approved in appropriation Acts pursuant to subsection (i). Moneys in such fund not investment of needed for current operations may be invested in bonds or other obligations of the United States or in bonds or other obligations guaranteed as to principal and interest by the United States. " (h) In addition to establishing the requirements specified in subsection (e), the Secretary is authorized to make such rules and regulations, to enter into such agreements, and to adopt such procedures as

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[82 STAT.

he may deem necessary or desirable to carry out the provisions of this section. Appropriation. " (i)(1) Thcrc are authorized to be appropriated such sums as may be necessary to carry out the provisions of this section, includinjr such sums as may be necessary to make interest reduction payments under contracts entered into under this section. The a<rgregate amount of contracts to make such payments shall not exceed amounts approved in appropriation Acts, and payments pursuant to such contracts shall not exceed $75,000,000 per annum prior to July 1, 1969, which maximum dollar amount shall be increased by $100,000,000 on July 1, 1969, and by $125,000,000 on July 1, 1970. "(2) Not more than 20 per centum of the total amount of interest reduction payments authorized to be contracted to be made pursuant to appropriation Acts shall he contracted to be made with respect to families, occupying rental housing projects assisted under this section, whose incomes at the time of the initial renting of the projects exceed 1J')5 per centum of the maximum income limits which can be established in the area, pursuant to the limitations prescribed in sections g379^stat^^457; .2(2) aud 15(7)(b) (ii) of the United States Housing Act of 1987, for 42 USC 1402, initial occupancy in public housing dwellings, but the income of such 1415. families at the time of the initial renting of the projects shall in no case exceed 90 per centum of the limits prescribed by the Secretary for (x^cupants of projects financed with mortgages insured under sec75 Stat. 150, tion 221(d)(3) which bear interest at the below-market interest nite ^^^2 u^sc'1715'r prescribed in the proviso of section 221(d)(5). The limitations prescribed in this paragraph shall be administered by the Secretary so as to accord a preference to those families whose incomes are within the lowest practicable limits for obtaining rental accommodations in T^s^°''^ai ""^ pi"ojects assisted under this section. The Secretary shall report annually raurees"^ '^°" to the respective Committees on Banking and Currency of the Senate and House of Representatives with I'espex't to the income levels of families living in pn)jects assisted under this section. "(j)(1) The Secretary is authorized, upon applicaticm by the mortgagee, to insure a mortgage (including advances on such mortgage during construction) which meets the requirements of this subsection. Commitments for the insurance of such mortgages may he issued by the Secretary prior to the date of their execution or disbursment thereon, upon such tenns and conditions as he may prescribe. Definitions. i4(2) As used lu this subsection— ' ' (A) the terms 'family' and 'families' shall have the same 68 Stat 599. meaning as in section 221; " (B) the term 'elderly or handicapped families' shall have the 73 Stat. 667. same meaning as in section 202 of the Housing Act of 1959: and 12 USC* 1 7 m a

12 Stat. 1247. 48 USC 1707.

1

" (C) the terms 'mortgage', 'mortgagee', and 'mortgagor shall have the same meaning as in section 201. "(3) To be eligible for insurance under this subsection, a mortgage shall meet the requirements specified in subsections (d)(1) and (d)(o) of section 221, except as such requirements are modified by this subsection. In the case of a project financed with a mortgage insured under this subsection which involves a mortgagor other than a cooperative or a private nonprofit corporation or association and which is sold to a cooperative or a nonprofit corporation or association, the Secretary is further authorized to insure under this subsection a mortgage given by such purchaser in an amount not exceeding the appraised value of the property at the time of purchase, which value shall be based upon a mortgage amount on which the debt service can be met from the income of the property when operated on a nonprofit basis, aft«r payment of all operating expenses, taxes, and required reserves. "(4) A mortgage to be insured under this subsection shall—

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" (A) be executed by a private mort<:^ag'or eligible under subsection (d)(8) or (e) of section 221: " (B) bear interest (exclusiveof premium charges for insurance and service charges, if any) at not to exceed such per centum per annum (not in excess of 0 per centum), on the amount of the principal obligation outstanding at any time, as the Secretary finds necessary to meet the mortgage market; and " (C) provide for complete amortization by periodic payments within such term as the Secretary may prescribe. "(5) The property or project shall— " (A) comply with such standards and conditioiis as the Secre tary may prescribe to establish the acceptability of the property for mortgage insurance and may include such nondwelling facilities as the Secretary deems adequate and appropriate to serve the occupants and the surrounding neighborhood: Provided, That the project shall be predominantly residential and any nondwelling facility included in the mortgage shall be found by the Secretary to contribute to the economic feasibility of the project, and the Secretary shall give due consideration to the possible eirect of the ]:)roject on other business enterprises in the community: Provided further, That, in the case of a project designed primaril3' for occupancy by elderly or handicapped families, the project may include related facilities for use by elderly or handicapped families, including cafeterias or dining halls, community rooms, workshops, intirmaries, or other inpatient or outpatient health facilities, and other essential service facilities: " (B) include five or more dwelling units; and " (C) be designed primarily for use as a rental project to be occupied by lower income families or by elderly or handicapped families: Provided. That lower income persons who are less than sixty-two years of age shall be eligible for occupancy in such a project, but not more than 10 per centum of the dwelling units in any such project shall be available for occupancy by such persons. "(6) With the approval of the Secretary, the mortgagor may sell the individual dwelling units to lower income or elderly or handicapped purchasers. The Secretary may consent to the release of the mortgagor from his liability under the mortgage and the credit instrument secured thereby, or consent to the release of parts of the mortgaged property from the lien of the mortgage, upon such terms and conditions as he may prescribe, and the mortgage may provide for such release. " (k) As used in this section the term 'tenant' includes a member of a cooperative; the term 'rental housing project' includes a cooperative housing project; and the terms 'rental' and 'rental charge' mean, with respect to menibers of a cooperative, the charges under the (x;cupancy agreements between such members and the cooperative. "(1) The Secretary shall from time to time allocate and transfer to the Secretary of Agriculture, for use (in accordance with the terms and conditions of this section) in rural areas and small towns, a reasonable portion of the total authority to contract to miake peri<><lic interest reduction payments as approved m appropriation Acts under subsection (i). " (m) I n determining the income of any person for the purposes of this section, there shall be deducted an amount equal to $300 for each minor person who is a member of the immediate family of such person and living wath such family, and the earnings of any such minor person shall not be included in the income of such person or iiis family."' (b)(1) Section 212(a) of the National ITousiui^ Act is amended by ' ^ '

'• '

^

-'

75 Stat. 150; 12 USC 1715^

"Tenant."

S3 Stat. 807. 12 USC 1715C.

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[82 STAT.

striking out "or 232'' in the first sentence of the second paragraph and inserting in lieu thereof ", 232, or 236". 12 USC m s r (^) Section 227(a) of such Act is amended by striking out "or (viii) under section 234(d) " and inserting in lieu thereof " (viii) under section 234(d), or (ix) under section 236". (3) Section 227(c) of such Act is amended by striking out "or section 2 3 3 (b)(2) " each place it appears and inserting in lieu thereof "section 233, or section 236". (c) The Secretary of Housing and Urban Development is authorized, upon such terms and conditions as he may prescribe, to transfer Ante, p. 500. ^Q gection 236(j) of the National Housing Act the insurance of a mortgage which has not be finally endorsed for insurance under section 152^- 79^8131^454 221(d)(3) of such Act and which has been approved for the below12 USC 1715^ market interest rate prescribed in the proviso of section 221(d)(5) of such Act. (d) The Secretary of Housing and Urban Development is authorized, upon such terms and conditions as he may prescribe, to insure under section 236(j) of the National Housing Act a mortgage meeting the requirements of such section which is given to refinance a mortgage 1^ use ^^^ ^^^^ made under section 202 of the Housing Act of 1959: Provided, That the application for such insurance is filed with the Secretary on or before the date of project completion, or within such reasonable time thereafter as the Secretary may permit. (e)(1) Section 101(d) of the Housing and Urban Development Act 12 USC ^7^01 s ^^ ^ ^ ^ ^^ amended by adding at the end thereof the following: " I n determining the income of any tenant for the purposes of this section, there shall be deducted an amount equal to $300 for each minor person who is a member of the immediate family of such tenant and living with such tenant, and the earnings of any such minor person shall not be included in the income of such tenant." (2) Section 101(g) of such Act is amended by striking out "or section 231(c)(3) " and inserting in lieu thereof ", section 231(c)(3), or section 236". (3) Section 101(j)(1) of such Act is amended— (A) by striking out "and" at the end of subparagraph (B); (B) by striking out the period at the end of subparagraph (C) and inserting in lieu thereof "; and"; and (C) by inserting after subparagraph (C) a new subparagraph as follows: " (D) a private nonprofit corporation or other private nonprofit legal entity, a limited dividend corporation or other limited divided legal entity, or a cooperative housing corporation, which is assisted under section 236 of the National Housing Act and which has been approved for receiving the benefits of this section: Provided, That payments shall not be made with respect to more than 20 per centum of the dwelling units in any property so financed." (f) Section 207 of the Appalachian Regional Development Act of 8ism.26i. 1965 is amended— 207. ^^^' (1) by inserting in the heading "AND SECTION 236" immediately after "SECTION 221"; (2) by inserting "or section 236" after "section 221" each place it appears; (3) by inserting "or 'section 236' " after " 'section 221' " in subsection (a); and (4) by inserting ", GoA^ernment National Mortgage Association," immediately after "Federal Housing Administration" in subsection (c).

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PUBLIC LAW 90-448-AUG. 1, 1968

(s) The first sentence of section 305(i) of the National Housing Act is amended (1) by striking out "or (3) " and inserting in lieu thereof " (3) "; and (2) by inserting after "221(e)" the following: ", or (4) a mortgage insured under section 236".

so Stat. i285.  " ' ^ ''•

^"'«'

P-498.

R E N T S U P P L E M E N T PKO(}KAM

SEC. 202. (a) Section 101(a) of the Housing and Urban Develop51. ment Act of 1965 is amended by striking out everything after the word 79 Stat. 41701s. 12 USC "exceed" the second time the word appears in the third sentence and inserting in lieu thereof the following: "$150,000,000 per annum prior to July 1, 1969, which maximum dollar amount shall l>e increased by $40,000,000, on July 1, 1969, and by $100,000,000 on July 1, 1970." _ (b) Section 101(b) of such Act is amended by inserting after the ~i.. I * ^ Xfirst sentence the following: "Such term also includes a private nonprofit corporation or other private nonprofit legal entity, a limited dividend corjwration or other limited dividend legal entity, or a cooperativ'e housing corporation, which is the owner of a rental or cooperative housing projecit financed under a State or local program providing assistance through loans, loan insurance, or tax abatement and which i prior to completion of construction or rehabilitation is approved for i receiving the oenefits of this section." PART B—^LOW-REXT PUBLIC

HOUSING

INCREASED LOW-RENT PUBLIC HOUSING AUTHORIZATION

SEC. 203. (a) Section 10(e) of the United States Housing Act of 1937 is amended by striking out "$366,250,000 per annum, which limit shall be increased by $47,000,000 on the date of enactment of the Housing and Urban Development Act of 1965, and by further amounts of $47,000,000 on July 1 in each of the years 1966,1,967, and 1968, respectively," in the first sentence and inserting in lieu thereof the following: "$554,250,000 per annum, which limit shall be increased by $100,000,000 on the date of enactment of the Housing and Urban Development Act of 1968 and by further amounts of $150,000,000 on July 1 in each of the years 1969 and 1970,". (b) Section 20 of such Act is amended— (1) by striking out "not to exceed $1,500,000,000" in the firet sentence and inserting in lieu thereof "which shall not, unless authorized by the President, exceed $1,500,000,000"; and (2) by inserting after the first sentence the following: "For the purpose of determining obligations incurred to make loans pursuant to this Act against any limitation otherwise applicable with respect to such loans, the Secretary shall estimate the maximum amount to be loaned at any one time pursuant to loan agreements then outstanding with public housing agencies." UPGRADING M A N A G E M E N T A N D SERVICES I N P U B L I C H O U S I N G

52 Stat. 820; 78 Stat. 795; 79 Stat. 4 8 7. 42 USC 1410.

63 Stat. 427. 42 USC 1420.

PROJECTS

SEC. 204. Section 15 of the United States Housing Act of 1937 is Contracts and an s. amended by adding at the end thereof the following new paragraph: g r50 t Stat. 895. "(10) The Secretary is authorized to enter into contracts to make 42 USC 1415. grants to public housing agencies to assist, where necessary, in financing tenant services for families living in low-rent housing projects. I n making such contracts and grants, the Secretary shall give preference to programs providing for the maximum feasible participation of the tenants in the development and operation of such tenant services.

96-600 O -

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Tenant serv-

xces

Appropriation.

[82 STAT.

p^j.. pyrposes of tlils paragraph the term 'tenant services' inckides the following services and activities for families living in low-rent housing projects: counseling on household management, housekeeping, budgeting, money management, child care, and similar matters; advice as to resources for job training and placement, education, welfare, health, and other community services; services which are directly related to meeting tenant needs and providing a wholesome living environment; and referral to appropriate ag'encies when necessary for the provision of such services. To the maxnnum extent available and appropriate, existing public and private agencies in the community shall be \ised for the provision of such services. There are authorized to be appropriated for the purposes of this paragraph not to exceed $15,000,000 for the fiscal year ending June 80, 1969, and not to exceed $30,000,000 for the fiscal year ending June 30, 1970. Any amounts so appropriated shall remain available until expended, and any amounts authorized for any fiscal year under this paragraph but not appropriated may be appropriated for any succeeding fiscal year commencing prior to July 1, 1970.'' P U R C H A S E OF U N I T S BY T E N A N T S

79 Stat. 488. 42 USC 1415.

SEC. 205. Section 15(9) of the Ignited States Housing Act of 1937 is amended by striking out "which is suitable by reason of its detached or semidetached construction" and inserting in lieu thereof '', if the property to be acquired is sufficiently separable from other property retained by the public housing agency to make it suitable". PUBLIC HOUSING I N INDIAN

5o^st^t^2^g88; 42 USC 1401.

42 USC ui°o

AREAS

SEC. 206. (a) Section 1 of the United States Housing Act of 1937 is amended by striking o u t " urban and r u r a l nonfarm'" in the first

sentence and inserting in lieu thereof "urban, rural nonfarm, and Indian". (^^ Section 10(a) of such Act is amended by inserting "or Indian" after "nonfarm" in the fourth proviso. LIMITATION

ON H K J l l - R I S E STRUCTURES I N L O W - R E N T P U B L I C PROJECTS

HOUSING

S E C 207. Section 15 of the United States Housing Act of 1937 is amended by adding at the end thereof (after the new paragraf>h added by section 204 of this Act) the following new paragraph: "(11) Except in the case of housing predominantly for the elderly, upon enactment of this paragraph, the Secretary shall not approve high-rise elevator projects for families with children unless he makes a determination that there is no practical alternative." SALE TO T E N A N T S OF L O W - R E N T H O U S I N G I N PRIVATE

^2 u'sc M2ib

ACCOMMODATIONS

SEC. 208. (a) Section 23(f) of the United States Housing Act of ^*^'^^ ^^ amended by inserting " (1) " after "shall not apply to", and by inserting before the period at the end thereof the following: ", or (2) housing purchased (or in the process of purchase) by the public housing agency for resale to tenants as provided in subsection (g) ". (b) Section 23 of such Act is further amended by adding at the end thereof the following new subsection: " (g) To the extent authorized in contracts entered into by the Authority with a public housing agency, such agency may purchase any structure containing one or more dwelling units leased to provide low-rent housing in private ac-commodations under this section for the purpose of reselling the structure to the tenant or tenants of the struc-

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ture or to a group of such tenants occupying units aggregating in value at least 80 per centum of the structure's total value. Any such resale shall be made subject to such terms and conditions (including provision for deferment of the required downpayment and for elimination of or adjustments in the required interest payments during a temporary period) as may be necessary to enable the tenants involved to make the purchase without undue financial hardship." ADDITIONAL SUBSIDY FOR LARGE F A M I L I E S A N D F A M I L I E S OF F N U S U A L L Y LOW I N C O M E

SEC. 209. (a) Section 2(2) of the United States Housing Act of 1937 is amended by inserting at the end thereof the following new sentences: "The term 'large families' means families which include four or more minors. The term 'families of unusually low income' means families with incomes below the income level established by the public housing agency, as approved by the Authority, who could not be housed without the additional subsidy authorized under section 10

^g^"Sf Ts^y 42 us^c 1402.

(b) The first proviso in section 10(a) of such Act is amended— (1) by inserting after "an elderly family," the following: "or a large lamily, or a family of unusually low income,"; (2) by striking out "to lease the dwelling unit to an elderly or displaced family at a rental it could afford and"; and (3) by striking out ", and, in the case of displaced families, if and to the extent that the average or estimated average rental for units so occupied by such families was less than the rental which the Authority determines, on the basis of the average or estimated average project rentals, would have been established in leasing the units to families which were neither elderly nor similarly displaced".

^s Stat. 794.

r R O H I B m O N AGAINST CERTAIN L I M I T A T I O N S ON T Y P E S OR CATEGORIES OF L O W - R E N T H O U S I N G I N P R R ^ i T E ACCOMMODATIONS

SEC. 210. The first sentence of section 23(d) of the United States Housing Act of 1937 is amended by inserting before the period at the end thereof the following: "(and no limitation not specifically provided for in this section shall be imposed by regulations of the Authority on the types or categories of structures or dwelling units, qualifying under subsection (a)(3) and approved under subsection (c), which may be so used in any community)".

^^ ^'^' '•^e. '*^

TITLE III—FEDERAL HOUSING ADMINISTRATION INSURANCE OPERATIONS MORTGAGE INSURANCE P R E M I U M S FOR SERVICE3IEN A N D THE I R

WIDOWS

SEC. 301. Section 222 of the National Housing Act is amended— (1) by striking out "Secretary of the Treasury" each place it appears and inserting in lieu thereof "Secretary of Transportation"; and (2) by adding at the end thereof two new subsections as follows: " (f) The Secretary is authorized to transfer to this section the insurance on any mortgage covering a single-family dwelling or a onefamily unit in a condominium project insured under this Act, if the mortgage indebtedness thereof has been assumed by a serviceman who at the tmie of assumption is the owner of the property and either occupies the property or certifies that his failure to do so is the result of his

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military assignment, or, in the case of the United States Coast Guard, other assignment. "(g) Where a serviceman dies while on active duty in the Armed Forces of the United States or in the United States Coast Guard, leaving a surviving widow as owner of the property, the period of ownership by the serviceman (within the meaning of subsection (c) of this section) shall extend for two years beyond the date of the serviceman's death or until the date the widow disposes of the property, whichever date occurs first. The Secretary of Defense or the Secretary of Transportation, as the case may be, shall notify such widow promptly following the serviceman's death of the additional costs to be borne by the mortgagor following termination of the two-year period." MOninCATIONS IN TKRMS OF INSURED MORTGAGES COVERING MULTIFAMILY PROJECTS

17^5 "^^ ^^°' ^

^^^' '^^^' Title II of the National Housing Act is amended by adding after section 238 (as added by section 104 of this Act) the following new section: " M O D I F I C A T I O N S I N TERMS OF INSURED MORTGAGES COVERING MULTIFAMILY PROJECTS

289. (a) The Secretary shall not consent to any request for an extension of the time for curing a default under any mortgage covering multifamily housing, as defined in the regulations of the Secretary, or for a modification of the terms of such mortgage, except in conformity with regulations prescribed by the Secretary in accordance with the provisions of this section. Such regulations shall require, as a condition to the granting of any such request, that, during the period of such extension or modification, any part of the rents or other funds derived by the mortgagor from the property covered by the mortgage which is not required to meet actual and necessary expenses arising in connection with the operation of such property, including amortization charges under the mortgage, be held in trust by the mortgagor and distributed only with the consent of the Secretary; except that the Secretary may provide for the granting of consent to any request for an extension of the time for curing a default under any mortgage cov'erlng multifamily housing, or for a modification of the terms of such mortgage, without regard to the foregoing requirement, in any case or class of cases in which an exemption from such requirement does not (as determined by th-e Secretary) jeopardize the interests of the United States. "(b) Whoever, as an owner of a property which is security for a mortgage described in subsection (a), or as a stockholder of a corporation owning such property, or as a beneficial owner under any business organization or trust owning such property, or as an officer, director, or agent of any such owner, (1) willfully uses or authorizes the use of any part of the rents or other funds derived from property covered by such mortgage in violation of a regula-tion prescribed by the Secretary under subsection (a), or (2) if such mortgage is determined, as provided in subsection (a), to be exempt from the requirement of any such regulation or is not otherwise covered by such regulation, willfully and knowingly uses or authorizes the use, while such mortgage is in default, of any part of the rents or other funds derived from the property covered by such mortgage for any purpose other than to meet actual and necessary expenses arising in connection with such oroner^y (including amor-Hzation charges under the mortgage), shall be fined not more than $5,000 or imprisoned not more than three years, or both." ''SEC.

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CONDOMINIUMS

SEC. 303 (a) Seotion 234(c) of the National Housing Act is amended ^s Stat. leo; by striking out "rental housing, and (3) " in the first sentence and ^^2 USC^m5y. inserting m lieu thereof the following: "rental housing: Provided, That a one-family unit in a multifamily project involving eleven or less units ^hall be eligible for insurance without having been covered by a project mortgage, and (3)". (b) Section 234(c) of such Act is further amended by striking out " (iii) 75 per centum" in the third sentence and inserting m lieu thereof " (iii) 80 per centum". (c) Section 234(f) of such Act is amended by striking "five" and ^^ ^***- '^^^• inserting in lieu thereof "four". INSURANCE OF LOANS FOR P U R C H A S E OF F E E S I M P L E TITLE FROM LESSORS

SEC. 304. (a) Title II of the National Housing Act is amended by 12 USC 1707adding after section 239 (as added by section 302 of this Act) the ^^^^yfollowing new section: u P U R C H A S E OF F E E S I M P L E TITLE FROM LESSORS

"SEC. 240. (a) The Secretary is authorized, upon such terms and conditions as he may prescribe, to make commitments to insure and to insure loans made by financial institutions for the purpose of financing purchasers by homeowners of the fee simple title to property on which their homes are located. " (b) As used in this section—"(1) the term 'financial institution' means a lender approved stituu^n""'^^'" by the Secretary as eligible for insurance under section 2 or a 12 USC 1703. mortgagee approved under section 203(b)(1); and 52 Stat. 10. "(2) the term 'homeowner' means a lessee under a long-term "Homeowner!' ground lease. "(c) To be eligible for insurance under this section, a loan shall— "(1) relate to property on which there is located a dwelling designed principally for a one-, two-, three-, or four-family residence; "(2) not exceed the cost of purchasing the fee simple title, or $10,000 per family unit, whichever is the lesser; "(3) be limited to an amount which when added to any outstanding indebtedness related to the property (as determined by the Secretary) creates a total outstanding indebtedness which does not exceed the applicable mortgage limit prescribed in section 203(b); "(4) bear interest at not to exceed such per centum per annum (not in excess of 6 per centum), on the amount of the prmcipal obligation outstanding at any time, as the Secretary finds necessary to meet market conditions, and such other charges (including service charges and appraisal, inspection, and other fees) as may be approved by the Secretary; "(5) have a maturity satisfactory to the Secretary, but not to exceed twenty years from the beginning of amortization of the loan or three-quarters of the remaining economic life of the home, whichever is the lesser; and " (6) comply with such other terms, conditions, and restrictions as the Secretary may prescribe. " (d) The provisions of paragraphs (3), (5), (6), (7), (8), and 155. (10) of section 220(h) shall be applicable to loans insured under this 75 Stat. 1715k. 12 USC section and, as applied to loans insured under this section, references

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48 Stat. 132; 79 Stat. 465.

Ante, p. 5 07.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

in those paragraphs to 'home imporvement loans' and 'this subsection' shall be construed to refer to loans under this section." (b) Section 5(c) of the Home Owners' Loan Act of 1933 (12 U.S.C. 1464(c)) is amended by adding immediately after the next to the last paragraph the following new paragraph: "Notwithstanding any other provision of this subsection, an association may invest in loans or obligations, or interests therein, as to which the association has the benefit of insurance under section 240 of the National Housing Act, or of a commitment or agreement therefor, and such investments shall not be included in any percentage of assets or other percentage referred to in this subsection.'' E X T E N S I O N o r SECTION 2 2 1 (d)(2) SALES H O U S I N G PROGRAM FOR T W O - , T H R E E -, A N D F O U R - F A M I L Y RESIDENCES TO ALL LOW AND MODERA'IT-: INCOME FAMILIES

73 Stat. 659. 12 USC 1715

SEC. 305. Section 221(d)(2) of the National Housing Act is amended by striking out "a displaced family" at the end of the first proviso and inserting in lieu thereof "the morigagor". REMOVAL

68 Stat. 599.

73 Stat. 658.^ 12 USC 1715k. ,o T c^,mri, Tr

OF DIVIDEND RESTRICTION FOR N O N D W E L L I N G S E C r n O N 2 2 1 PROJECl^S

FACILITIES

SEC. 306. Section 221(f) of the National Housing Act is amended by striking out in the first sentence all that follows the word "mortgage" in the proviso and inserting in lieu thereof ": Provided further, That, in the case of a mortgage which bears interest at the below-market interest rate prescribed in the proviso of subsection ((J)(5), the pTovisioiis of section 220(d)(3)(B) (iv) shall only apply ^^ ^^^^ mortgagor waives the right to receive dividends on its equity investment in the portion thereof devoted to commercial facilities." S U P P L E M E N T A L LOAN PROGRAM FOR PROJECTS F I N A N C E D W I T H H O U S I N G ADMINISTRATION I N S U R E D MORTGAGES

12 USC 1707^"^^^y-

IN

FEDFJtAL

S E C 307. Title II of the National Housing Act is amended by adding after section 240 (as added by section 304 of this Act) the following new section: " S U P P L E M E N T A L L O A N S FOR M U L T I F A M I L Y

PROJECTS

"SEC. 241. (a) With respect to a multifamily project or group practice facility covered by a mortgage insured under any section or title of this Act, the Secretary is authorized, upon such terms and conditions as he may prescribe, to made commitments to insure, and to insure, supplemental loans (including advances during construction or improvement) made by financial institutions approved by the Secretary. As used in this section, 'supplemental loan' means a loan, advance of credit, or purchase of an obligation representing a loan or advance of credit made for the purpose of financing improvements or additions to such project or facility: Provided, That a loan involv73 Stat. 663. ij^nr a iiursing home covered by a mortgage insured under section 232 1715W. ^j. ^ loan involving a group practice facility covered by a mortgage 80 Stat. 1274. insured under title X I may also be made for the purpose of financing e/f "^^ i749aaa gq^ipj^^gj^^ j^o be used in the operation of such nursing home or facility. " (b) To be eligible for insurance under this section, a supplemental loan shall— "(1) be limited to 90 per centum of the amount which the Secretary estimates will be the value of such improvements, additions, and equipment, except that such amount when added to the

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outstanding balance of the mortgage covering the project or facility, shall not exceed the maximum mortgage amount insurable under the section or title pursuant to which the mortgage covering such project of facility is insured; "(2) have a maturity satisfactory to the Secretary but not to exceed the remaining term of the mortgage; "(3) bear interest (exclusive of premium charges for insurance and service charges, if any) at not to exceed such per centum per annum (not in excess of 6 per centum), on the amount of the principal obligation outstanding at any time, as the Secretary finds necessary to meet market conditions; "(4) be secured in such manner as the Secretary may require; "(5) be governed by the labor standards provisions of section 212 that are applicable to the section or title pursuant to which the mortgage covering the project or facility is insured; and "(6) contain such other terms, conditions, and restrictions as the Secretary may prescribe. "(c) The provisions of subsections (d), (e), (g), (h), (i), (j), (k), (1), and (n) of section 207 shall be applicable to loans insured under this section, except that (1) all references to the term 'mortgage' shall be construed to refer to the term 'loan' as used in this section, (2) loans involving projects covered by a mortgage insured under section 218 that is the obligation of the Cooperative Management Housing Insurance Fund shall be insured under and shall be the obligation of such fund, and (3) loans involving projects covered by a mortgage insured under section 236 shall be insured under and shall be the obligation of the Special Risk Insurance Fund." H O M E IMPROVEMENT LOANS INCREASE I N MAXIMUM r i N A N C E CHARGE, A N D LOAN A M O U N T

53 Stat. 807. 12 USC 1715c.

52 Stat. is. ^'* ^'^t- ^^-^ ^ ^^' ^"^' P- '^^^•

MATURITY,

SEC. 308. Section 2(b) of the National Housing Act is amended— 7o^stat^''o9°i^' (1) by striking out "$3,600" and insertnig in lieu thereof 12 USC 1703 "$5,000"; (2) by striking out "five years'" and inserting in lieu thereof "seven years"; (3) by striking out "$5 discount" and inserting in lieu thereof "$5.50 discount"; and (4) by striking out "$1 discount" and inserting in lieu thereof "$4.50 discount". EXPERIMENTAL

HOUSING

PROGRAM

SEC. 309. Section 233 of the National Housing Act is amended— (1) by striking out "of this title" immediately before the semicolon in subsection (b) and inserting in lieu thereof "or titles of this Act"; and (2) by striking out "of this title" in subsection (e) and inserting in lieu thereof "or title of this Act",

H ^'^^ //^^^

T E R M OF FEDERAL H O U S I N G ADMINISTRATION MORTGAGES FOR LAND DEVELOPMENT

SEC. 310. Section 1002(d)(1) of the National Housing Act is amended— (1) by striking out "seven" and inserting in lieu thereof "ten"; and (2) by striking out the semicolon and inserting in lieu thereof the following: ": Provided, That the Secretary may agree to a reasonable extension of the term of a mortgage, the maturity of

]lf'i^:t^^a,

12 USC 1749bb.

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which is limited by this paragraph to not more than ten years, if he determines that unusual or unforeseen circumstances make such extension necessary to avoid undue hardship to the mortgagor;". R E H A B I L I T A T E D M U L T I F A M I L Y P R O J E C T S I N U R B A N R E N E W A L AREAS

68 Stat. 596.

70 Stat. 1097; 42 USC 1460. 12 USC \i\si

SEC. 311. (a) Section 220(d)(3)(B) (ii) of the National Housing ^.ct is amended by inserting immediately before the semicolon at the end thereof ": Provided further, That the mortgage may involve the financing of the purchase of property which has been rehabilitated by a local public agency with Federal assistance pursuant to section 110(c)(8) of the Housing Act of 1949, and, in such case the foregoing limitations upon the amount of the mortgage shall be based upon the appraised value of the property as of the date the mortgage is accepted for insurance''. ^^^ Section 221(d)(3) (iii) of such Act is amended by inserting immediately before the colon at the end of the first proviso ": Provided further. That the mortgage may involve the financing of the purchase of property which has been rehabilited by a local public agency with Federal assistance pursuant to section 110(c)(8) of the Housing Act of 1949, and, in such case, the amount of the mortgage shall not exceed the appraised value of the property as of the date the mortgage is accepted for insurance". MISCELLANEOUS HOUSING

68 Stat. 605. 12 USC 1715n.

69^stat^48^4°^'

75•^L^!Vc^^°^' Stat. 154. ^ Stat.

( S4-

75 Stat. 182.

INSURANCE

SEC. 312. (a) Section 223 of the National Housing Act is amended— (1) by striking out so much of subsection (a) as precedes paragraph (1) and inserting in lieu thereof the following: " (a) Notwithstanding any of the provisions of this Act and without regard to limitations upon eligibility contained in any section or title of this Act, the Secretary is authorized, upon application by the mortgagee, to insure or make commitments to insure under any section or title of this Act any mortgage—"; (2) by striking out "applicable to loans insured under section 203, 207, 213, 220, 221, 222, 231, 232, or 233, as the case may be" ^^ ^^^^ ^'^^^ ^^^ secoud provisos of subsection (a)(7) and inserting in lieu thereof "prescribed under the applicable section or title of this Act"; (3) by striking out "this title" each time it appears in subsection (c) and inserting in lieu thereof "this Act"; (4) by striking out "title I, title II, title VI, title VII, title VIII, or title IX " in subsection (c) and inserting in lieu thereof "any section or title of this Act"; and (5) by striking out "(except that in any case the payment of insurance shall be in debentures)" at the end of subsection (c). (b) Section 223(d) of such Act is amended by striking out all that follows "as he may prescribe," and inserting m lieu thereof the following: "insure under the same section as the original mortgage a loan by the mortgagee in an amount not exceeding the excess of the foregoing expenses over the project income. Such loan shall (1) bear interest (exclusive of premium charges for insurance) at not to exceed the per centum per annum currently permitted for mortgages insured under the section under which it is to be insured, (2) be secured in such manner as the Secretary shall require, and (3) be limited to a term not exceeding the unexpired term of the original mortgage. The Secretary is authorized to collect a premium charge for insurance of loans pursuant to this subsection in an amount computed at the same premium rate as is applicable to the original mort,.s.

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gage. This premium shall be payable in cash or in debentures of the insurance fund under which the loan is insured at par plus accrued interest. I n the event of a failure of the borrower to make any payment due under such loan or under the original mortgage, both the loan and original mortgage shall be considered in default, and if such default contmues for a period of thirty days, the lender shall be entitled to insurance benefits, computed in the same manner as for the original mortgage, except that in determining the interest rate under section 224 for the debentures representing the portion of the claim es Stat. eoe; applicable to the loan, the date of the commitment to insure the ^^f^usc^mso loan and the insurance date of the loan shall be taken into consideration rather than the commitment or insurance date for the original mortgage." S U P P L E M E N T A R Y LOANS FOR COOPERATIVE H O U S I N G P U R C H A S E D FROM THE FEDERAL (JOVERNMENT

SEC. 313. Section 213(j) of the National Housing Act is amended— (1) by inserting after the first sentence of paragraph (1) the following sentence: "The Secretary is further authorized to make commitments to insure and to insure supplementary cooperative loans (including advances during construction or improvement) with respect to any property purchased from the Federal Government by a nonprofit corporation or trust of the character described in paragraph (1) of subsection (a), if the property is covered by an uninsured mortgage representing a part of the purchase price."; and (2) by adding before the semicolon at the end of paragraph (2)(B) the following: "; except that, in the case of repairs or improvements to a property covered by an uninsured mortgage dated more than twenty years prior to the date of the commitment to insure, of such magnitude that the Secretary deems them to be a major rehabilitation or modernization of such property, the loan may have a maturity date up to ten years in excess of the remaining term of the uninsured mortgage"'. EQUIPMENT IN NURSING

75 Stat. 179. ^^ ^^^ i7i5e.

64 Stat. 54.

HOMES

SEC. 314. Section 232 of the National Housing Act is amended— (1) by striking out subsection (b)(2) and inserting in lieu thereof the following: "(2) the term 'mortgage' means a first mortgage on real estate in fee simple, or on the interest of either the lessor or lessee thereof (A) under a lease for not less than ninety-nine years which is renewable, or (B) under a lease having a period of not less than fifty years to run from the date the mortgage was executed. The term 'first mortgage' means such classes of first liens as are commonly given to secure advances (including but not limited to advances during construction) on, or the unpaid purchase price of, real estate under the laws of the State in which the real estate is located, together with the credit instrument or instruments, if any, secured thereby, and any mortgage may be in the form of one or more trust mortgages or mortgage indentures or deeds of trust, securing notes, bonds, or other credit instruments, and, by the same instrument or by a separate instrument, may create a security interest in initial equipment, whether or not attached to the realty. The term 'mortgagor' shall have the meaning set forth in section 207(a) of this Act."; (2) by striking out so much of subsection (d) as precedes paragraph (1) and inserting in lieu thereof the following:

J3 Stat. 663.^ ^^^"''

52 Stat. le. ^ '^^

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