SUBCHAPTER VI—WAR HOUSING INSURANCE
Editorial Notes
Amendments
1942—Act May 26, 1942, ch. 319, §14(a),
§1736. Definitions
As used in this subchapter—
(a) The term "mortgage" means a first mortgage on real estate, in fee simple, or on a leasehold (1) under a lease for not less than ninety-nine years which is renewable; or (2) under a lease having a period of not less than fifty years to run from the date the mortgage was executed; and the term "first mortgage" means such classes of first liens as are commonly given to secure advances 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 instruments, if any, secured thereby.
(b) The term "mortgagee" includes the original lender under a mortgage, and his successors and assigns approved by the Secretary; and the term "mortgagor" includes the original borrower under a mortgage and his successors and assigns.
(c) The term "maturity date" means the date on which the mortgage indebtedness would be extinguished if paid in accordance with periodic payments provided for in the mortgage.
(d) The term "State" includes the several States, and Puerto Rico, the District of Columbia, Guam, and the Virgin Islands.
(June 27, 1934, ch. 847, title VI, §601, as added Mar. 28, 1941, ch. 31, §1,
Editorial Notes
Amendments
1967—Subsec. (b).
1960—Subsec. (d).
1959—Subsec. (d).
1952—Subsec. (d). Act July 14, 1952, inserted "Guam," after "District of Columbia,".
1950—Act Apr. 20, 1950, substituted "Commissioner" for "Administrator" wherever appearing.
Statutory Notes and Related Subsidiaries
Separability
Act Mar. 28, 1941, ch. 31, §9,
§1737. Repealed. Pub. L. 89–117, title XI, §1108(aa), Aug. 10, 1965, 79 Stat. 507
Section, act June 27, 1934, ch. 847, title VI, §602, as added Mar. 28, 1941, ch. 31, §1,
For establishment of the General Insurance Fund, see
§1738. Insurance of mortgages
(a) Relief of housing shortage; eligibility; limitations on time and amount
In order to assist in relieving the acute shortage of housing which now exists and to increase the supply of housing accommodations available to veterans of World War II at prices within their reasonable ability to pay, the Secretary is authorized, upon application by the mortgagee, to insure as hereinafter provided any mortgage which is eligible for insurance as hereinafter provided, and, upon such terms as the Secretary may prescribe, to make commitments for the insuring of such mortgages prior to the date of their execution or disbursement thereon: Provided, That the aggregate amount of principal obligations of all mortgages insured under this subchapter shall not exceed $6,150,000,000 except that with the approval of the President such aggregate amount may be increased to not to exceed $6,650,000,000: Provided further, That no mortgage shall be insured under this section after April 30, 1948, except (A) pursuant to a commitment to insure issued on or before April 30, 1948, or (B) a mortgage given to refinance an existing mortgage insured under this section and which does not exceed the original principal amount and unexpired term of such existing mortgage, and no mortgage shall be insured under
Notwithstanding the first proviso of this subsection, mortgages may be insured under
Notwithstanding the second proviso of this subsection, mortgages otherwise eligible for insurance under
(b) Eligibility requirements
To be eligible for insurance under this section a mortgage shall—
(1) have been made to, and be held by, a mortgagee approved by the Secretary as responsible and able to service the mortgage properly;
(2) involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve) in an amount not to exceed 90 per centum of the Secretary's estimate of the value (as of the date the mortgage is accepted for insurance), except that as to applications received by the Secretary on or before March 31, 1948, the mortgage may involve a principal obligation in an amount not to exceed 90 per centum of the Secretary's estimate of the necessary current cost (including the land and such initial service charges and such appraisal, inspection, and other fees as the Secretary shall approve); of a property, urban, suburban, or rural, upon which there is located a dwelling designed principally for residential use for not more than four families in the aggregate, which is approved for mortgage insurance prior to the beginning of construction. The principal obligation of such mortgage shall in no event, however, exceed—
(A) $5,400 if such dwelling is designed for a single-family residence, or
(B) $7,500 if such dwelling is designed for a two-family residence, or
(C) $9,500 if such dwelling is designed for a three-family residence, or
(D) $12,000 if such dwelling is designed for a four-family residence:
Provided, That the Secretary may, if he finds that at any time or in any particular geographical area it is not feasible, within such limitations of maximum mortgage amounts, to construct dwellings without sacrifice of sound standards of construction, design, or livability, prescribe by regulation or otherwise higher maximum mortgage amounts not to exceed—
(A) $8,100 if such dwelling is designed for a single-family residence, or
(B) $12,500 if such dwelling is designed for a two-family residence, or
(C) $15,750 if such dwelling is designed for a three-family residence, or
(D) $18,000 if such dwelling is designed for a four-family residence.
(3) have a maturity satisfactory to the Secretary but not to exceed twenty-five years from the date of the insurance of the mortgage;
(4) contain complete amortization provisions satisfactory to the Secretary;
(5) bear interest (exclusive of premium charges for insurance) at not to exceed 4 per centum per annum on the amount of the principal obligation outstanding at any time;
(6) provide, in a manner satisfactory to the Secretary, for the application of the mortgagor's periodic payments (exclusive of the amount allocated to interest and to the premium charge which is required for mortgage insurance as herein provided) to amortization of the principal of the mortgage; and
(7) contain such terms and provisions with respect to insurance, repairs, alterations, payment of taxes, default reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters as the Secretary may in his discretion prescribe.
(c) Premium charges; payments; acceptance for insurance; preferences; adjustments and refunds
The Secretary is authorized to fix a premium charge for the insurance of mortgages under this subchapter but in the case of any mortgage such charge shall not be less than an amount equivalent to one-half of 1 per centum per annum nor more than an amount equivalent to 1½ per centum per annum of the amount of the principal obligation of the mortgage outstanding at any time, without taking into account delinquent payments or prepayments. Such premium charges shall be payable by the mortgagee, either in cash, or in debentures issued by the Secretary under this subchapter at par plus accrued interest, in such manner as may be prescribed by the Secretary: Provided, That the Secretary may require the payment of one or more such premium charges at the time the mortgage is insured, at such discount rate as he may prescribe not in excess of the interest rate specified in the mortgage. If the Secretary finds, upon the presentation of a mortgage for insurance and the tender of the initial premium charge and such other charges as the Secretary may require, that the mortgage complies with the provisions of this subchapter, such mortgage may be accepted for insurance by endorsement or otherwise as the Secretary may prescribe; but no mortgage shall be accepted for insurance under this subchapter unless the Secretary finds that the project with respect to which the mortgage is executed is an acceptable risk in view of the shortage of housing referred to in this section. In the event that the principal obligation of any mortgage accepted for insurance under this subchapter is paid in full prior to the maturity date, the Secretary is further authorized in his discretion to require the payment by the mortgagee of an adjusted premium charge in such amount as the Secretary determines to be equitable, but not in excess of the aggregate amount of the premium charges that the mortgagee would otherwise have been required to pay if the mortgage had continued to be insured under this subchapter until such maturity date; and in the event that the principal obligation is paid in full as herein set forth, the Secretary is authorized to refund to the mortgagee for the account of the mortgagor all, or such portion as he shall determine to be equitable, of the current unearned premium charges theretofore paid. The Secretary shall prescribe such procedures as in his judgment are necessary to secure to veterans of World War II, and their immediate families, and to hardship cases as defined by the Secretary, preference or priority of opportunity to purchase or rent properties covered by mortgages insured under this subchapter.
(d) Conclusiveness of insurance contract as to eligibility
Any contract of insurance heretofore or hereafter executed by the Secretary under this subchapter shall be conclusive evidence of the eligibility of the mortgage for insurance, and the validity of any contract of insurance so executed shall be incontestable in the hands of an approved mortgagee from the date of the execution of such contract, except for fraud or misrepresentation on the part of such approved mortgagee.
(June 27, 1934, ch. 847, title VI, §603, as added Mar. 28, 1941, ch. 31, §1,
Editorial Notes
Amendments
1967—
Subsec. (a).
Subsec. (b)(2).
1950—Act Apr. 20, 1950, §122, substituted "Commissioner" for "Administrator" wherever appearing.
Subsec. (a). Act Apr. 20, 1950, §119, added last two pars.
1949—Subsec. (a). Joint Res. Oct. 25, 1949, substituted "$6,150,000,000" for "$5,750,000,000" and "$6,650,000,000" for "$6,150,000,000" in first proviso, and extended section to "March 1, 1950" by substituting the same for "October 31, 1949" in second proviso.
Act Aug. 30, 1949, extended section from "August 31, 1949" to "October 31, 1949".
Act July 15, 1949, extended section from "June 30, 1949" to "August 31, 1949".
Act Mar. 30, 1949, extended section from "March 30, 1949" to "June 30, 1949".
1948—Subsec. (a). Act Aug. 10, 1948, struck out "$5,350,000,000" and inserted in lieu thereof "$5,750,000,000 except that with the approval of the President such aggregate amount may be increased to not to exceed $6,150,000,000", and struck out the second proviso and inserted in lieu thereof the present second proviso.
Act Mar. 31, 1948, increased the insurance authorization from $4,950,000,000 to $5,350,000,000, and provided for an extension from Mar. 31, 1948, to Apr. 30, 1948.
Subsec. (b)(2). Act Mar. 31, 1948, changed the emergency necessary current-cost formula to the appraised- value formula.
Subsec. (c). Act Aug. 10, 1948, struck out of next to last sentence "and a mortgage on the same property is accepted for insurance at the time of such payment".
1947—Subsec. (a). Act Dec. 27, 1947, increased the mortgage obligation from $4,000,000,000 to $4,450,000,000, and increased the amount of obligation from $4,200,000,000 to $4,950,000,000 with the President's approval.
Act Aug. 5, 1947, increased mortgage obligation from $2,800,000,000 to $4,000,000,000 and the amount of obligation from $3,800,000,000 to $4,200,000,000 with the President's approval.
Act June 30, 1947, extended limitation dates in second proviso from June 30, 1947, to Mar. 31, 1948.
1946—Subsec. (a). Act May 22, 1946, amended provisions generally, and among other changes, increased the mortgage obligation from $1,800,000,000 to $2,800,000,000, and extended the limitation date from July 1, 1946, to June 30, 1947.
Subsec. (b)(2). Act May 22, 1946, amended provisions generally, and among other changes, inserted proviso.
Subsec. (b)(5). Act May 22, 1946, lowered interest rate from 5 to 4 per centum and struck out provision allowing Administrator to increase the rate in certain cases.
Subsec. (c). Act May 22, 1946, substituted "shortage of housing" for "emergency" in third sentence and amended last sentence.
1945—Subsec. (a). Act Mar. 31, 1945, increased the limit of obligations from $1,700,000,000 to $1,800,000,000 and extended the limitation date from 1945 to 1946.
1944—Subsec. (a). Act June 30, 1944, substituted "$1,700,000,000" for "$1,600,000,000" and inserted the provision contained in cl. (B).
1943—Subsec. (a). Act Oct. 15, 1943, substituted "$1,600,000,000" for "$1,200,000,000" and "July 1, 1945" for "July 1, 1944".
Act Mar. 23, 1943, substituted "$1,200,000,000" for "$800,000,000" and "July 1, 1944" for "July 1, 1943".
1942—Act May 21, 1942, §14(b), substituted "War" and "war" for "Defense" and "defense" wherever occurring.
Subsec. (a). Act May 26, 1942, §1, substituted "$800,000,000" for "$300,000,000", among other changes.
Subsec. (b)(2). Act May 26, 1942, §2, increased limitations on amount of obligations.
Subsec. (b)(3). Act May 26, 1942, §3, substituted "twenty-five" for "twenty".
Subsec. (c). Act May 26, 1942, §4, amended subsec. (c).
1941—Subsec. (a). Act Sept. 2, 1941, substituted "$300,000,000" for "$100,000,000".
Statutory Notes and Related Subsidiaries
Effective Date of 1949 Amendment
Amendment by act July 15, 1949, effective June 30, 1949, see section 202 of that act, set out as a note under
Inflation Safeguards
Act Dec. 27, 1947, ch. 525, §2,
§1739. Mortgage insurance benefits
(a) Conveyance and assignment by mortgagee after foreclosure; debentures and certificates of claim; cost of foreclosure
In any case in which the mortgagee under a mortgage insured under
(1) not in excess of 2 per centum of the unpaid principal of the mortgage as of the date of the institution of foreclosure proceedings and not in excess of $75; or
(2) not in excess of two-thirds of such cost, whichever is the greater: Provided further, That with respect to any debentures issued on or after September 2, 1964, the Secretary may, with the consent of the mortgagee (in lieu of issuing a certificate of claim as provided in subsection (e)), include in debentures, in addition to amounts otherwise allowed for such costs, an amount not to exceed one-third of the total foreclosure, acquisition, and conveyance costs actually paid by the mortgagee and approved by the Secretary, but in no event may the total allowance for such costs exceed the amount actually paid by the mortgagee: And provided further, That with respect to mortgages to which the provisions of sections 302 and 306 of the Soldiers' and Sailors' Civil Relief Act of 1940,1 as now or hereafter amended, apply and which are insured under
(b) Consent to release of mortgagee or property
The Secretary may at any time, under such terms and conditions as he may prescribe, consent to the release of the mortgagor from his liability under the mortgage or the credit instrument secured thereby, or consent to the release of parts of the mortgaged property from the lien of the mortgage: Provided, That the mortgagor shall not be released from such liability in any case until the Secretary is satisfied that the mortgaged property has been sold to a purchaser satisfactory to the Secretary, and that such purchaser has paid on account of the purchase price, in cash or its equivalent, at least 10 per centum of the Secretary's estimate of the value as of the date the mortgage is accepted for insurance.
(c) Debentures; form and denomination
Debentures issued under this subchapter shall be in such form and denominations in multiples of $50, shall be subject to such terms and conditions, and shall include such provisions for redemption, if any, as may be prescribed by the Secretary with the approval of the Secretary of the Treasury, and may be in coupon or registered form. Any difference between the value of the mortgage determined as herein provided and the aggregate face value of the debentures issued, not to exceed $350, shall be adjusted by the payment of cash by the Secretary to the mortgagee from the General Insurance Fund.
(d) Debentures; execution; negotiability; terms; tax exemptions
The debenture issued under this section to any mortgagee shall be executed in the name of the General Insurance Fund as obligor, shall be signed by the Secretary by either his written or engraved signature, and shall be negotiable. All such debentures shall be dated as of the date foreclosure proceedings were instituted, or the property was otherwise acquired by the mortgagee after default, except that debentures issued pursuant to claims for insurance filed on or after September 2, 1964, shall be dated as of the date of default or as of such later date as the Secretary, in his discretion, may establish by regulation. The debentures shall bear interest from such date at a rate determined by the Secretary, with the approval of the Secretary of the Treasury, at the time the mortgage was accepted for insurance, but not to exceed 3 per centum per annum, payable semiannually on the 1st day of January and the 1st day of July of each year. Such debentures as are issued in exchange for property covered by mortgages accepted for insurance under this section on or after May 26, 1942, shall mature ten years after the date thereof. Such debentures as are issued in exchange for property covered by mortgages accepted for insurance under this section prior to May 26, 1942, shall mature three years after the 1st day of July following the maturity date of the mortgage on the property in exchange for which the debentures were issued: Provided, That any mortgagee entitled to receive such debentures may elect to receive in lieu thereof debentures which shall mature ten years after the date thereof. Such debentures shall be exempt, both as to principal and interest, from all taxation (except surtaxes, estate, inheritance, and gift taxes) now or hereafter imposed by any Territory, dependency, or possession of the United States, or by the District of Columbia, or by any State, county, municipality, or local taxing authority, and shall be paid out of the General Insurance Fund, which shall be primarily liable therefor, and they shall be fully and unconditionally guaranteed as to principal and interest by the United States, and such guaranty shall be expressed on the face of the debentures. In the event that the General Insurance Fund fails to pay upon demand, when due, the principal of or interest on any debentures issued under this subchapter, the Secretary of the Treasury shall pay to the holders the amount thereof which is authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, and thereupon to the extent of the amount so paid the Secretary of the Treasury shall succeed to all the rights of the holders of such debentures.
(e) Certificate of claim
The certificate of claim issued by the Secretary to any mortgagee shall be for an amount which the Secretary determines to be sufficient, when added to the face value of the debentures issued and the cash adjustment paid to the mortgagee, to equal the amount which the mortgagee would have received if, at the time of the conveyance to the Secretary of the property covered by the mortgage, the mortgagor had redeemed the property and paid in full all obligations under the mortgage and a reasonable amount for necessary expenses incurred by the mortgagee in connection with the foreclosure proceedings, or the acquisition of the mortgaged property otherwise, and the conveyance thereof to the Secretary. Each such certificate of claim shall provide that there shall accrue to the holder of such certificate with respect to the face amount of such certificate, an increment at the rate of 3 per centum per annum which shall not be compounded. The amount to which the holder of any such certificate shall be entitled shall be determined as provided in subsection (f).
(f) Division of excess proceeds
(1) If, after deducting (in such manner and amount as the Secretary shall determine to be equitable and in accordance with sound accounting practice) the expenses incurred by the Secretary, the net amount realized from any property conveyed to the Secretary under this section and the claims assigned therewith exceed the face value of the debentures issued and the cash paid in exchange for such property plus all interest paid on such debentures, such excess shall be divided as follows:
(i) If such excess is greater than the total amount payable under the certificate of claim issued in connection with such property, the Secretary shall pay to the holder of such certificate the full amount so payable, and any excess remaining thereafter shall be paid to the mortgagor of such property: Provided, That on and after September 2, 1964, any excess remaining after payment to the holder of the full amount of the certificate of claim shall be retained by the Secretary and credited to the General Insurance Fund; and
(ii) If such excess is equal to or less than the total amount payable under such certificate of claim, the Secretary shall pay to the holder of such certificate the full amount of such excess.
(2) Notwithstanding any other provisions of this section, the Secretary is authorized, with the consent of the mortgagee or mortgagor, as the case may be, to effect the settlement of certificates of claim and refunds at any time after the sale or transfer of title to the property conveyed to the Secretary under this section and without awaiting the final liquidation of such property for the purpose of determining the net amount to be realized therefrom: Provided, That the settlement authority created by the Housing Amendments of 1955 shall be terminated with respect to any certificate of claim outstanding as of September 2, 1964.
(3) With the consent of the holder thereof, the Secretary is authorized to settle, without awaiting the final liquidation of the Secretary's interest in the property, any certificate of claim issued pursuant to subsection (e), with respect to which a settlement had not been effected prior to September 2, 1964, by making payment in cash to the holder thereof of such amount, not exceeding the face amount of the certificate of claim, together with the accrued interest increment thereon, as the Secretary may consider appropriate: Provided, That in any case where the certificate of claim is settled in accordance with the provisions of this paragraph, any amounts realized after September 2, 1964, in the liquidation of the Secretary's interest in the property, shall be retained by the Secretary and credited to the applicable insurance fund.
(g) Handling and disposal of property; settlement of claims
Notwithstanding any other provision of law relating to the acquisition, handling, or disposal of real property by the United States, the Secretary shall have power to deal with, complete, rent, renovate, modernize, insure, make contracts or establish suitable agencies for the management of, or sell for cash or credit, in his discretion, any properties conveyed to him in exchange for debentures and certificates of claim as provided in this subchapter; and notwithstanding any other provision of law, the Secretary shall also have power to pursue to final collection, by way of compromise or otherwise, all claims against mortgagors assigned by mortgagees to the Secretary as provided in this subchapter, except that no suit or action shall be commenced by the Secretary against any such mortgagor on account of any claim so assigned with respect to mortgages insured under
(h) Mortgagor's or mortgagee's interest in property or claim conveyed
No mortgagee or mortgagor shall have and no certificate of claim shall be construed to give to any mortgagee or mortgagor, any right or interest in any property conveyed to the Secretary or in any claim assigned to him; nor shall the Secretary owe any duty to any mortgagee or mortgagor with respect to the handling or disposal of any such property or the collection of any such claim.
(June 27, 1934, ch. 847, title VI, §604, as added Mar. 28, 1941, ch. 31, §1,
Editorial Notes
References in Text
The General Insurance Fund, referred to in text, was established by
Sections 302 and 306 of the Soldiers' and Sailors' Civil Relief Act of 1940, referred to in subsec. (a)(2), are sections 302 and 306, respectively, of act Oct. 17, 1940, ch. 888,
The Housing Amendments of 1955, referred to in subsec. (f)(2), is act Aug. 11, 1955, ch. 783,
Codification
In subsec. (g), "
Amendments
1967—
Subsec. (g).
1965—Subsecs. (c), (d), (f)(1)(i).
1964—Subsec. (a).
Subsec. (c).
Subsec. (d).
Subsec. (f).
1955—Subsec. (f). Act Aug. 11, 1955, authorized the Commissioner to effect the settlement of certificates of claim and refunds at any time after the sale or transfer of title to the property.
1950—Act Apr. 20, 1950, substituted "Commissioner" for "Administrator" wherever appearing.
1948—Subsec. (b). Act Mar. 31, 1948, substituted "value" for "necessary current cost".
1946—Subsec. (b). Act May 22, 1946, substituted "Administrator's estimate of the necessary current cost" after "10 per centum of the" for "appraised value of such property as determined by the Administrator".
1943—Subsec. (a). Act Oct. 14, 1943, inserted proviso dealing with losses due to nonforeclosure of mortgages to last sentence.
1942—Act May 26, 1942, §14(b), substituted "War" and "war" for "Defense" and "defense" wherever occurring.
Subsec. (a). Act May 26, 1942, §5, substituted "
Subsec. (c). Act May 26, 1942, §6, substituted "subchapter" for "section".
Subsec. (d). Act May 26, 1942, §7, amended subsec. (d).
Subsec. (g). Act May 26, 1942, §8, substituted "subchapter" for "section" and inserted "with respect to mortgages insured under
1 See References in Text note below.
§1740. Repealed. Pub. L. 89–117, title XI, §1108(aa), Aug. 10, 1965, 79 Stat. 507
Section, act June 27, 1934, ch. 847, title VI, §605, as added Mar. 28, 1941, ch. 31, §1,
§1741. State taxation of realty held by Secretary
Nothing in this subchapter shall be construed to exempt any real property acquired and held by the Secretary under this subchapter from taxation by any State or political subdivision thereof, to the same extent, according to its value, as other real property is taxed.
(June 27, 1934, ch. 847, title VI, §606, as added Mar. 28, 1941, ch. 31, §1,
Editorial Notes
Amendments
1967—
1950—Act Apr. 20, 1950, substituted "Commissioner" for "Administrator".
§1742. Rules and regulations
The Secretary is authorized and directed to make such rules and regulations as may be necessary to carry out the provisions of this subchapter.
(June 27, 1934, ch. 847, title VI, §607, as added Mar. 28, 1941, ch. 31, §1,
Editorial Notes
Amendments
1967—
1950—Act Apr. 20, 1950, substituted "Commissioner" for "Administrator".
§1743. Insurance of mortgages
(a) Additional authorization; advances during construction
In addition to mortgages insured under
(b) Eligibility requirements
To be eligible for insurance under this section a mortgage shall meet the following conditions:
(1) The mortgaged property shall be held by a mortgagor approved by the Secretary. The Secretary may, in his discretion, require such mortgagor to be regulated or restricted as to rents or sales, charges, capital structure, rate of return, and methods of operation. The Secretary may make such contracts with, and acquire for not to exceed $100 stock or interest in any such mortgagor, as the Secretary may deem necessary to render effective such restriction or regulation. Such stock or interest shall be paid for out of the General Insurance Fund, and shall be redeemed by the mortgagor at par upon the termination of all obligations of the Secretary under the insurance.
(2) Preference or priority of opportunity in the occupancy of the mortgaged property for veterans of World War II and their immediate families, and for hardship cases as defined by the Secretary, shall be provided under such regulations and procedures as may be prescribed by the Secretary.
(3) The mortgage shall involve a principal obligation in an amount—
(A) not to exceed $5,000,000; and
(B) not to exceed 90 per centum of the amount which the Secretary estimates will be the necessary current cost of the completed property or project, including the land; the proposed physical improvements; utilities within the boundaries of the property or project; architects' fees; taxes and interest accruing during construction; and other miscellaneous charges incidental to construction and approved by the Secretary: Provided, That such mortgage shall not in any event exceed the amount which the Secretary estimates will be the cost of the completed physical improvements on the property or project, exclusive of off-site public utilities and streets, and organization and legal expenses: And provided further, That the principal obligation of the mortgage shall not, in any event, exceed 90 per centum of the Secretary's estimate of the replacement cost of the property or project on the basis of the costs prevailing on December 31, 1947, for properties or projects of comparable quality in the locality where such property or project is to be located; and
(C) not to exceed $8,100 per family unit for such part of such property or project as may be attributable to dwelling use.
The mortgage shall provide for complete amortization by periodic payment within such term as the Secretary shall prescribe, and shall bear interest (exclusive of premium charges for insurance) at not to exceed 4½ per centum per annum on the amount of the principal obligation outstanding at any time. The Secretary may consent to the release of a part or 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.
(c) Payments; default; insurance benefits for mortgagee; value of mortgage; foreclosure of mortgage
The failure of the mortgagor to make any payment due under or provided to be paid by the terms of a mortgage insured under this section shall be considered a default under such mortgage, and if such default continues for a period of thirty days, the mortgagee shall be entitled to receive the benefits of the insurance as hereinafter provided, upon assignment, transfer, and delivery to the Secretary, within a period and in accordance with rules and regulations to be prescribed by the Secretary of (1) all rights and interests arising under the mortgage so in default; (2) all claims of the mortgagee against the mortgagors or others, arising out of the mortgage transaction; (3) all policies of title or other insurance or surety bonds or other guaranties and any and all claims thereunder; (4) any balance of the mortgage loan not advanced to the mortgagor; (5) any cash or property held by the mortgagee, or to which it is entitled, as deposits made for the account of the mortgagor and which have not been applied in reduction of the principal of the mortgage indebtedness; and (6) all records, documents, books, papers, and accounts relating to the mortgage transaction. Upon such assignment, transfer, and delivery the obligation of the mortgagee to pay the premium charges for mortgage insurance shall cease, and the Secretary shall, subject to the cash adjustment provided for in
(d) Certificates of claim; amount
The certificate of claim issued by the Secretary to any mortgagee in connection with the insurance of mortgages under this section shall be for an amount determined in accordance with subsections (e) and (f) of
(e) Debentures; date of issuance; interest
Debentures issued under this section shall be issued in accordance with the provisions of section 1739 (d) of this title except that such debentures shall be dated as of the date of default as determined in subsection (c) of this section, and shall bear interest from such date.
(f) Applicability of other provisions
The provisions of
(g) Mortgages in connection with sale of property under subchapter I, II, VIII, or X
The Secretary shall also have power to insure under this subchapter or subchapter I, II, VIII, or X any mortgage executed in connection with the sale by him of any property acquired under any of such subchapters without regard to limitations upon eligibility, time, or aggregate amount contained therein.
(June 27, 1934, ch. 847, title VI, §608, as added May 26, 1942, ch. 319, §11,
Editorial Notes
References in Text
The General Insurance Fund, referred to in subsecs. (b) and (d), was established by
Amendments
1967—
Subsec. (b)(3)(B).
1965—Subsecs. (b)(1), (d).
Subsec. (f).
1951—Subsec. (g). Act Sept. 1, 1951, inserted references to subchapters I, VIII and X of this chapter.
1950—Act Apr. 20, 1950, substituted "Commissioner" for "Administrator" wherever appearing.
1948—Subsec. (b). Act Aug. 10, 1948, inserted second proviso in par. (3)(B), substituted "$8,100 per family unit" for "$1,500 per room" and struck out proviso relating to authority to increase "$1,500" to "$1,800" per room.
1946—Subsec. (b)(2). Act May 22, 1946, substituted "Preference or priority of opportunity in the occupancy of the mortgaged property for veterans of World War II and their immediate families, and for hardship cases as defined by the Administrator, shall be provided under such regulations and procedures as may be prescribed by the Administrator" for "The mortgaged property shall be designed for rent for residential use by warworkers".
Subsec. (b)(3). Act May 22, 1946, substituted "necessary current cost" after "estimates will be the" for "reasonable replacement cost" in par. (B), and increased mortgage per room from $1,350 to $1,500 and inserted proviso in par. (C).
Subsec. (c). Act May 22, 1946, inserted "and any mortgage insurance premiums paid after default" before semicolon in cl. (C) of third sentence.
1945—Subsec. (g). Act Mar. 31, 1945, inserted provisions empowering Commissioner to insure mortgages without regard to any limitations upon time or aggregate amount contained in this subchapter.
Statutory Notes and Related Subsidiaries
Construction of Act May 26, 1942, With Ex. Ord. No. 9070, Consolidating National Housing Agency
Act May 26, 1942, ch. 319, §12,
§1744. Insurance of loans for manufacture of houses
(a) Relief of housing shortage; advances
In order to assist in relieving the acute shortage of housing which now exists and to promote the production of housing for veterans of World War II at moderate prices or rentals within their reasonable ability to pay, through the application of modern industrial processes, the Secretary is authorized to insure loans to finance the manufacture of housing (including advances on such loans) when such loans are eligible for insurance as hereinafter provided.
(b) Eligibility requirements
Loans for the manufacture of houses shall be eligible for insurance under this section if at the time of such insurance, the Secretary determines they meet the following conditions:
(1) The manufacturer shall establish that binding purchase contracts have been executed satisfactory to the Secretary providing for the purchase and delivery of the houses to be manufactured, which contracts shall provide for the payment of the purchase price at such time as may be agreed to by the parties thereto, but, in no event, shall the purchase price be payable on a date in excess of thirty days after the date of delivery of such houses, unless not less than 20 per centum of such purchase price is paid on or before the date of delivery and the lender has accepted and discounted or has agreed to accept and discount, pursuant to subsection (i) of this section a promissory note or notes, executed by the purchaser, representing the unpaid portion of such purchase price, in which event such unpaid portion of the purchase price may be payable on a date not in excess of one hundred and eighty days from the date of delivery of such houses;
(2) Such houses to be manufactured shall meet such requirements of sound quality, durability, livability, and safety as may be prescribed by the Secretary;
(3) The borrower shall establish to the satisfaction of the Secretary that he has or will have adequate plant facilities, sufficient capital funds, taking into account the loan applied for, and the experience necessary, to achieve the required production schedule;
(4) The loan shall involve a principal obligation in an amount not to exceed 90 per centum of the amount which the Secretary estimates will be the necessary current cost, exclusive of profit, of manufacturing the houses, which are the subject of such purchase contracts assigned to secure the loan, less any sums paid by the purchaser under said purchase contracts prior to the assignment thereof. The loan shall be secured by an assignment of the aforesaid purchase contracts and of all sums payable thereunder on or after the date of such assignment, with the right in the assignee to proceed against such security in case of default as provided in the assignment, which assignment shall be in such form and contain such terms and conditions, as may be prescribed by the Secretary; and the Secretary may require such other agreements and undertakings to further secure the loan as he may determine, including the right, in case of default or at any time necessary to protect the lender, to compel delivery to the lender of any houses then owned and in the possession of the borrower. The loan shall have a maturity not in excess of one year from the date of the note, except that any such loan may be refinanced and extended in accordance with such terms and conditions as the Secretary may prescribe for an additional term not to exceed one year, and shall bear interest (exclusive of premium charges for insurance) at not to exceed 4 per centum per annum on the amount of the principal obligation outstanding at any time.
(c) Release of security
The Secretary may consent to the release of a part or parts of the property assigned or delivered as security for the loan, upon such terms and conditions as he may prescribe and the security documents may provide for such release.
(d) Payments; default; insurance benefits for mortgagee; prerequisites; value of mortgage
The failure of the borrower to make any payment due under or provided to be paid by the terms of a loan under this section, or the failure to perform any other covenant or obligation contained in any assignment, agreement, or undertaking executed by the borrower in connection with such loan, shall be considered as a default under this section, and if such default continues for a period of thirty days, the lender shall be entitled to receive the benefits of the insurance hereinafter provided upon assignment, transfer, and delivery to the Secretary within a period and in accordance with the rules and regulations prescribed by the Secretary of (1) all rights and interest arising with respect to the loan so in default; (2) all claims of the lender against the borrower or others arising out of the loan transaction; (3) any cash or property held by the lender, or to which it is entitled, as deposits made for the account of the borrower and which have not been applied in reduction of the principal of the loan; and (4) all records, documents, books, papers, and accounts relating to the loan transaction. Upon such assignment, transfer, and delivery, the Secretary shall, subject to the cash adjustment provided for in
(e) Debentures; date of issuance; interest
Debentures issued under this section shall be issued in accordance with the provisions of
(f) Applicability of other provisions
The provisions of
(g) Disposal of evidence of debt, contract, claim, personal property, or security; collection or compromise of obligations and rights
Notwithstanding any other provision of law, the Secretary shall have the power to assign or sell at public or private sale, or otherwise dispose of, any evidence of debt, contract, claim, personal property, or security assigned to or held by him in connection with the payment of insurance heretofore or hereafter granted under this section, and to collect or compromise all obligations assigned to or held by him and all legal or equitable rights accruing to him in connection with the payment of such insurance until such time as such obligations may be referred to the Attorney General for suit or collection.
(h) Premium charges; amount; manner of payment; application fees
The Secretary shall fix a premium charge for the insurance granted under this section, but such premium charge shall not exceed an amount equivalent to 1 per centum of the original principal of such loan, and such premium charge shall be payable in advance by the financial institution and shall be paid at such time and in such manner as may be prescribed by the Secretary. In addition to the premium charge herein provided for, the Secretary is authorized to charge and collect such amounts as he may deem reasonable for examining and processing applications for the insurance of loans under this section, including such additional inspections as the Secretary may deem necessary.
(i) Insurance for accepting and discounting promissory notes; contract provisions; default in payments; remedies; debentures; interest; premium charges
(1) In addition to the insurance of the principal loan to finance the manufacture of housing, as provided in this section, and in order to provide short-term financing in the sale of houses to be delivered pursuant to the purchase contract or contracts assigned as security for such principal loan, the Secretary is authorized, under such terms and conditions and subject to such limitations as he may prescribe, to insure the lender against any losses it may sustain resulting from the acceptance and discount of a promissory note or notes executed by a purchaser of any such houses representing an unpaid portion of the purchase price of any such houses. No such promissory note or notes accepted and discounted by the lender pursuant to this subsection shall involve a principal obligation in excess of 80 per centum of the purchase price of the manufactured house or houses; have a maturity in excess of one hundred and eighty days from the date of the note or bear interest in excess of 4 per centum per annum; nor may the principal amount of such promissory notes, with respect to any individual principal loan, outstanding and unpaid at any one time, exceed in the aggregate an amount prescribed by the Secretary.
(2) The Secretary is authorized to include in any contract of insurance executed by him with respect to the insurance of a loan to finance the manufacture of houses, provisions to effectuate the insurance against any such losses under this subsection.
(3) The failure of the purchaser to make any payment due under or provided to be paid by the terms of any note or notes executed by the purchaser and accepted and discounted by the lender under the provisions of this subsection, shall be considered as a default under this subsection, and if such default continues for a period of thirty days, the lender shall be entitled to receive the benefits of the insurance, as provided in subsection (d) of this section except that debentures issued pursuant to this subsection shall have a face value equal to the unpaid principal balance of the loan plus interest at the rate of 4 per centum per annum from the date of default to the date the application is filed for the insurance benefits.
(4) Debentures issued with respect to the insurance granted under this subsection shall be issued in accordance with the provisions of
(5) The Secretary is authorized to fix a premium charge for the insurance granted under this subsection, in addition to the premium charge authorized under subsection (h) of this section. Such premium charge shall not exceed an amount equivalent to 1 per centum of the original principal of such promissory note or notes and shall be paid at such time and in such manner as may be prescribed by the Secretary.
(June 27, 1934, ch. 847, title VI, §609, as added June 30, 1947, ch. 163, title I, §3,
Editorial Notes
Amendments
1967—
1965—Subsec. (f).
1950—Act Apr. 20, 1950, substituted "Commissioner" for "Administrator" wherever appearing.
1948—Subsec. (b). Act Aug. 10, 1948, §101(d)(1), (2), struck out par. (1) and inserted new par. (1), and struck out first two sentences of par. (4) and inserted two new sentences.
Subsec. (f). Act Aug. 10, 1948, §101(d)(3), inserted last sentence.
Subsec. (i). Act Aug. 10, 1948, §101(d)(4), added subsec. (i).
§1745. Insurance of mortgages on sales of Government housing; limits and conditions; Greenbelt towns; State housing
Notwithstanding any of the provisions of this subchapter, the Secretary is authorized, upon application by the mortgagee, to insure or to make commitments to insure under section 1738 or
(1) any limit as to the time when any mortgage may be insured under this subchapter;
(2) any limit as to the aggregate amount of principal obligations of all mortgages insured under this subchapter, but the aggregate amount of principal obligations of all mortgages insured pursuant to this section shall not exceed $750,000,000;
(3) any requirement that the obligation be approved for mortgage insurance prior to the beginning of construction or that the construction be new construction;
(4) any of the provisions of subsections (b)(2) or (b)(5) of
Provided, That such mortgage shall (1) otherwise be eligible for insurance under section 1738 or
The Secretary is further authorized to insure or to make commitments to insure in accordance with the provisions of this section any mortgage executed in connection with the sale by the Secretary, or by any public housing agency with the approval of the Secretary, of any housing (including any property acquired, held, or constructed in connection with such housing or to serve the inhabitants thereof) owned or financially assisted pursuant to the provisions of Public Law 671, Seventy-sixth Congress.
The Secretary is further authorized to insure or to make commitments to insure in accordance with the provisions of this section any mortgage executed in connection with the sale by the Government, or any agency or official thereof, of any of the so-called Greenbelt towns, or parts thereof, including projects, or parts thereof, known as Greenhills, Ohio; Greenbelt, Maryland; and Greendale, Wisconsin, developed under the Emergency Relief Appropriation Act of 1935, or of any of the village properties under the jurisdiction of the Tennessee Valley Authority, and any mortgage executed in connection with the first resale, within two years from the date of its acquisition from the Government, of any portion of a project or property of the character described in this section.
The Secretary is further authorized to insure or to make commitments to insure under
(June 27, 1934, ch. 847, title VI, §610, as added Aug. 5, 1947, ch. 495, §2,
Editorial Notes
References in Text
Public Law 849, Seventy-sixth Congress, as amended, referred to in text, is act Oct. 14, 1940, ch. 862,
Public Law 781, Seventy-sixth Congress, as amended, referred to in text, is the Second Supplemental National Defense Appropriation Act, 1941, act Sept. 9, 1940, ch. 717,
Public Laws 9, 73, or 353, Seventy-seventh Congress, as amended, referred to in text, refer to the following acts, respectively: Public Law 9, Urgent Deficiency Appropriation Act, 1941, act Mar. 1, 1941, ch. 9,
Public Law 671, Seventy-sixth Congress, referred to in text, is act June 28, 1940, ch. 440,
The Emergency Relief Appropriation Act of 1935, referred to in text, is Joint Res. Apr. 8, 1935, ch. 48,
Amendments
1967—
1952—Act July 14, 1952, inserted last par.
1950—Act Apr. 20, 1950, §120, made the insurance authority of this section applicable to sale by the Public Housing Administration, or any public housing agency, of any housing owned or financially assisted pursuant to the provisions of
Act Apr. 20, 1950, §122, substituted "Commissioner" for "Administrator" wherever appearing.
1948—Act Aug. 10, 1948, inserted last par. relating to the Greenbelt towns.
§1746. Insurance on mortgages on large-scale housing projects
(a) Additional authorization; encouragement of cost-reduction techniques; advances
In addition to mortgages insured under other sections of this subchapter, and in order to assist and encourage the application of cost-reduction techniques through large-scale modernized site construction of housing and the erection of houses produced by modern industrial processes, the Secretary is authorized to insure mortgages (including advances on such mortgages during construction) which are eligible for insurance as hereinafter provided.
(b) Eligibility requirements
To be eligible for insurance under this section, a mortgage shall—
(1) have been made to and be held by a mortgagee approved by the Secretary as responsible and able to service the mortgage properly;
(2) cover property, held by a mortgagor approved by the Secretary, upon which there is to be constructed or erected dwelling units for not less than twenty-five families consisting of a group of single-family dwellings approved by the Secretary for mortgage insurance prior to the beginning of construction: Provided, That during the course of construction there may be located upon the mortgaged property a plant for the fabrication or storage of such dwellings or sections or parts thereof, and the Secretary may consent to the removal or release of such plant from the lien of the mortgage upon such terms and conditions as he may approve;
(3) involve a principal obligation in an amount—
(A) not to exceed 85 per centum of the amount which the Secretary estimates will be the value of the completed property or project, exclusive of any plant of the character described in paragraph (2) of this subsection located thereon, and
(B) not to exceed a sum computed on the individual dwellings comprising the total project as follows: $5,950 or 85 per centum of the valuation, whichever is the lower amount, with respect to each single-family dwelling: Provided, That if the Secretary finds that it is not feasible, within the dollar amount limitation in this clause on the principal obligation of the mortgage, to construct dwellings containing three or four bedrooms without sacrifice of sound standards of construction, design, and livability, he may increase such dollar amount limitation by not exceeding $850 for each additional bedroom (as defined by the Secretary) in excess of two contained in each such dwelling if he finds that such dwelling meets sound standards of design and livability as a three-bedroom unit or a four-bedroom unit, as the case may be, but the amount computed under this clause for each such dwelling shall not exceed, in any event, $7,650.
With respect to the insurance of advances during construction, the Secretary is authorized to approve advances by the mortgagee to cover the cost of materials delivered upon the mortgaged property and labor performed in the fabrication or erection thereof;
(4) provide for complete amortization by periodic payments within such term as the Secretary shall prescribe and shall bear interest (exclusive of premium charges for insurance) as not to exceed 4 per centum per annum on the amount of the principal obligation outstanding at any time: Provided, That the Secretary with the approval of the Secretary of the Treasury, may prescribe by regulation a higher maximum rate of interest, not exceeding 4½ per centum per annum on the amount of the principal obligation outstanding at any time, if he finds that the mortgage market demands it. The Secretary may consent to the release of a part or 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, and the mortgage may provide that, upon the completion of the construction of the project, such mortgage may be replaced by individual mortgages covering each individual dwelling in the project. Each such individual mortgage may be insured under this section with the mortgagor being either the builder who constructed the dwellings or the owner and occupant of the dwelling at the time, and where the mortgagor is the owner and occupant, may involve a principal obligation in such amount and have such maturity and interest rate as a mortgage eligible for insurance under
(c) Preferences in occupancy for veterans and hardship cases
Preference or priority of opportunity in the occupancy of the mortgaged property for veterans of World War II and their immediate families and for hardship cases as defined by the Secretary shall be provided under such regulations and procedures as may be prescribed by the Secretary.
(d) Applicability of other provisions
The provisions of subsections (c), (d), (e), and (f) of
(June 27, 1934, ch. 847, title VI, §611, as added Aug. 10, 1948, ch. 832, title I, §101(f),
Editorial Notes
References in Text
Amendments
1967—
1950—Act Apr. 20, 1950, §122, substituted "Commissioner" for "Administrator" wherever appearing.
Subsec. (b)(3). Act Apr. 20, 1950, §121(1), (2), substituted "85" for "80" in cl. (A), and inserted entirely new material in cl. (B).
Subsec. (b)(4). Act Apr. 20, 1950, §121(2), inserted ", and the mortgage may provide that, upon the completion of the construction of the project, such mortgage may be replaced by individual mortgages covering each individual dwelling in the project. Each such individual mortgage may be insured under this section with the mortgagor being either the builder who constructed the dwellings or the owner and occupant of the dwelling at the time, and where the mortgagor is the owner and occupant, may involve a principal obligation in such amount and have such maturity and interest rate as a mortgage eligible for insurance under
Subsec. (d). Act Apr. 20, 1950, §121(3), inserted "covering a project described in subsection (b) of this section, and the provisions of subsections (a) to (f), and (h) of
§1746a. Termination of commitment authority under this subchapter
Notwithstanding any other provision of this subchapter, no mortgage or loan shall be insured under any section of this subchapter after August 2, 1954 except pursuant to a commitment to insure issued on or before such date.
(June 27, 1934, ch. 847, title VI, §612, as added Aug. 2, 1954, ch. 649, title I, §127,