ings predominate which, by reason of dilapidation, overcrowding, faulty arrangement or design, lack of ventilation, light or sanitation facilities, or any combination of these factors, are detrimental to safety, health, or morals.

(6) The term "rental housing" means housing, the occupancy of which is permitted by the owner thereof in consideration of the payment of agreed charges, whether or not, by the terms of the agreement, such payment over a period of time will entitle the occupant to the ownership of the premises or space in a mobile home court or park properly arranged and equipped to accommodate mobile homes.2

1

(7) The term "State" includes the several States, and 3 Puerto Rico, the District of Columbia, Guam, the Trust Territory of the Pacific Islands, and the Virgin Islands.

(b) In addition to mortgages insured under section 203, the Secretary is authorized to insure mortgages as defined in this section (including advances on such mortgages during construction) which cover property held by

(1) Federal or State instrumentalities, municipal corporate instrumentalities of one or more States, or limited dividend or redevelopment or housing corporations restricted by Federal or State laws or regulations of State banking or insurance departments as to rents, charges, capital structure, rate of return, or methods of operation; or (2) 5 any other mortgagor approved by the Secretary which, until the termination of all obligations of the Secretary under the insurance and during such further period of time as the Secretary shall be the owner, holder, or reinsurer of the mortgage, is regulated or restricted by the Secretary as to rents or sales, charges, capital structure, rate of return, and methods of operation to such extent and in such manner as to provide reasonable rentals to tenants and a reasonable return on the investment. The Secretary may make such contracts with and acquire, for not to exceed $100, such stock or interest in the mortgagor as he may deem necessary to render effective the regulations or restrictions. The stock or interest acquired by the Secretary shall be paid for out of the General Insurance Fund,

1 Sec. 103 (a) (1), Housing and Urban Development Act of 1969, Public Law 91-152. approved December 24, 1969, 83 Stat. 379, 380, substituted "mobile home court or park" for "trailer court or park".

2 Sec. 103 (a) (1) Housing and Urban Development Act of 1969, Public Law 91-152, approved December 24, 1969, 83 Stat. 379, 380, substituted "mobile homes" for "trailer coach mobile dwellings".

3 Sec. 10(a), Alaska Omnibus Act, Public Law 86-70, approved June 25, 1959, 73 Stat. 141, 142, deleted "Alaska," and sec. 6, Hawaii Omnibus Act, Public Law 86-624, approved July 12, 1960, 74 Stat. 411, deleted "Hawaii,".

Sec. 403 (c) (2), Housing and Urban Development Act of 1969. Public Law 91-152, approved December 24, 1969, 83 Stat. 379, 395, inserted "the Trust Territory of the Pacific Islands,".

5 Immediately prior to amendment by sec. 607(1), Housing Act of 1961, Public Law 87-70, approved June 30, 1961, 75 Stat. 149, 178, this paragraph read as follows: "(2) Private corporations, associations, cooperative societies which are legal agents of owner-occupants, or trusts formed or created for the purpose of rehabilitating slum or blighted areas, or providing housing for rent or sale, and which possess powers necessary therefor and incidental thereto, and which, until the termination of all obligations of the Commissioner under such insurance, are regulated or restricted by the Commissioner as to rents or sales, charges, capital structure, rate of return, and methods of operation to such extent and in such manner as to provide reasonable rentals to tenants and a reasonable return on the investment. The Commissioner may make such contracts with, and acquire for not to exceed $100 such stock or interest in, any such corporation, association, cooperative society, or trust as he may deem necessary to render effective such restriction or regulation. Such stock or interest shall be paid for out of such Housing Fund, and shall be redeemed by the corporation, association, cooperative society, or trust at par upon the termination of all obligations of the Commissioner under this insurance."

Sec. 1108 (e), Housing and Urban Development Act of 1965, Public Law 89-117, 79 Stat. 451, 504, approved August 10, 1965, substituted "the General Insurance Fund" for "the Housing Fund".

and shall be redeemed by the mortgagor at par upon the termination of all obligations of the Secretary under the insurance.

The insurance of mortgages under this section is intended to facilitate particularly the production of rental accommodations, at reasonable rents, of design and size suitable for family living. The Secretary, is therefore, authorized and directed in the administration of this section to take action, by regulation or otherwise, which will direct the benefits of mortgage insurance hereunder primarily to those projects which make adequate provision for families with children, and in which every effort has been made to achieve moderate rental charges.

Notwithstanding any other provisions of this section, no mortgage shall be insured hereunder 2 unless the mortgagor certifies under oath in selecting tenants for the property covered by the mortgage he will not discriminate against any family by reason of the fact that there are children in the family, and that he will not sell the property while the insurance is in effect unless the purchaser so certifies, such certification to be filed with the Secretary. Violation of any such certification shall be a misdemeanor punishable by a fine of not to exceed $500. (c) To be eligible for insurance under this section a mortgage on any property or project shall involve a principal obligation in an

amount

(1)3

4

(2) not to exceed 90 per centum of the estimated value of the property or project (when the proposed improvements are completed): Provided, That this limitation shall not apply to mortgages on housing in Alaska, or in Guam, but such a mortgage may involve a principal obligation in an amount not to exceed 90 per centum of the amount which the Secretary estimates will be the replacement cost of the property or project when the proposed improvements are completed (the value of the property or project as such term is used in this paragraph may include the land, the proposed physical improvements, utilities within the boundaries of the property or project, architect's fees, taxes, and interest accruing during construction, and other miscellaneous charges incident to construction and approved by the Secretary). And provided further, That nothing contained in this section shall preclude the insurance of mortgages covering existing construction located in slum or blighted areas, as defined in paragraph numbered (5) of subsection (a) of this section, and the Secretary may require such repair or rehabilitation work to be completed as is,

1 Sec. 104 (e) (1), Housing Act of 1959, Public Law 86-372, approved September 23, 1959, 73 Stat. 654, 655, deleted "(except provisions relating to housing for elderly persons)".

Sec. 104 (e) (1), Housing Act of 1959. Public Law 86-372, approved September 23, 1959, 73 Stat. 654, 655, deleted "(except with respect to housing designed for elderly persons, with occupancy preference therefor, as provided in the paragraph following paragraph (3) of subsection (c))".

3 Sec. 304(a)(1) of Housing and Community Development Act of 1974. Public Law 93-383, 88 Stat. 633, approved August 22, 1974, struck para. 207 (c) (1) of the National Housing Act, but did not renumber the following paragraphs.

4 Sec. 108 (a), Housing Act of 1956. Public Law 1020, 84th Congress, approved August 7, 1956, 70 Stat. 1091, 1092, substituted "90 per centum" for "80 per centum".

5 Sec. 106. Housing Act of 1964, Public Law 88-560, approved September 2, 1964, 78 Stat. 769, 774, deleted a proviso at this point which limited the amount of the mortgage to the cost of the physical improvements on the property.

6 Sec. 10(b). Alaska Omnibus Act, Public Law 86-70, approved June 25, 1959, 73 Stat. 141, 142, deleted "the Territory of" at the point indicated.

7 The words "or in Guam" were added by sec. 115(2) of the Housing Act of 1954, Public Law 560, 83d Congress, approved August 2, 1954. 68 Stat. 590, 595.

8 This proviso added by sec. 115(1) of the Housing Act of 1954, Public Law 560, 83d Congress, approved August 2, 1954, 68 Stat. 590, 594.

in his discretion, necessary to remove conditions detrimental to safety, health, or morals; and

1

2

2

(3) 1 not to exceed, for such part of the property or projects as may be attributable to dwelling use (excluding exterior land improvements as defined by the Secretary), $19,500 per family unit without bedroom, $21,600 per family unit with one bedroom, $25,800 2 per family unit with two bedrooms, $31,800 2 per family unit with three bedrooms, and $36,000 per family unit with four or more bedrooms, or not to exceed $3,900 2 per space except that as to projects to consist of elevator-type structures the Secretary may, in his discretion, increase the dollar amount limitations per family unit to not to exceed $22,500 2 per family unit without a bedroom, $25,2002 per family unit with one bedroom, $30,900 2 per family unit with two bedrooms, $38,700 2 per family unit with three bedrooms, and $43,7582 per family unit with four or more bedrooms, as the case may be, to compensate for the higher costs incident to the construction of elevator type structures of sound standards of construction and design; and except that the Secretary may, by regulation, increase any of the foregoing dollar amount limitations contained in this paragraph by not to exceed 50 per centum in any geographical area where he finds that cost levels so require. The mortgage shall 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) at not to exceed 514 per centum per annum on the amount of the principal obligation outstanding at any time, or 5 not to exceed such percentum per annum not in excess of 6 per centum as the Secretary finds necessary to meet the mortgage market. The Secretary may consent to the release of a part or parts of the mortgaged property from the

1 Sec. 107(a), Housing Act of 1964, Public Law 88-560, approved September 2, 1964, 78 Stat. 769, 774, deleted the previous per room limits in this par. (3) on the amount of a mortgage and substituted dollar amount limitations based on the number of family units in the project with the dollar amount limitations varying according to the number of bedrooms in each unit.

Sec. 113(b), Housing and Urban Development Act of 1969, Public Law 91-152, approved December 24, 1969, 83 Stat. 379, 383, increased by ten percent as shown in the text the dollar limits in this paragraph (3) except_mobile home courts. Sec. 103(b), Housing and Urban Development Act of 1969, Public Law 91-152, approved December 24, 1969, 83 Stat. 379, 380, increased the maximum amount of a mortgage which may be insured for a mobile home court from $1,800 to $2,500 per space or from $500,000 to $1,000,000 per project mortgage. Sec. 304 (a) (2) of Housing and Community Development Act of 1974, Public Law 93-383, 88 Stat. 633, approved August 22, 1974, deleted the words "or $1,000,000 per mortgage for trailer courts or parks ;".

2 Sec. 303 (a) (1) of Housing and Community Development Act of 1974. Public Law 93-383, 88 Stat. 633, approved August 22, 1974, substituted "$13,000" for "$9,900", "$18,000" for "$13,750", "$21,500" for "$16,500", "$26,500" for "$20,350", "$30,000" for "$23,100", and "$3,250" for "$2,500".

Sec. 303 (a) (2) of such Act, substituted "$15,000" for "$11,550", "$21,000" for "$16.500". "$25,750" for "$19.800", "$32.250" for "$24,750", and "$36.465" for "$28,050". Sec. 8(b) (1) (A) of the Housing Authorization Act of 1976, Public Law 94-375, approved August 3, 1976, 90 Stat. 1067, amended section 207 (c)(3) of the National Housing Act by substituting "$19,500" for "$13.000", "$21,600" for "$18,000", "$25,800" for "$21,500", "$31.800" for "$26,500", "$36,000" for "$30,000", and "$3,900" for "$3,250". Sec. 8(b)(1) (B) of such Act amended this section by substituting "$22.500" for "$15,000", "$25,200" for "$21,000", "$30,900" for "$25,750", "$38,700" for "$32,250", and "$43.758" for "$36.465".

3 Sec. 3 of Public Law 94-173, 89 Stat. 1027, approved December 23, 1975, amended sec. 207 (c)(3) of the National Housing Act by deleting the words "by not to exceed 45 per centum in any geographical area" and inserting the words "by not to exceed 75 per centum in any geographical area". Sec. 8(a) of the Housing Authorization Act of 1976, Public Law 94-375, approved August 3, 1976, 90 Stat. 1067, amended section 207 (c) (3) of the National Housing Act by deleting the words "by not to exceed 75 per centum in any geographical area" and inserting in lieu thereof "by not to exceed 50 per centum in any geographical area".

4 Sec. 104 (c), Housing Act of 1959. Public Law 86-372, approved September 23, 1959, 73 Stat. 654, 655, substituted "54" for "4%".

5 Sec. 3(b), Public Law 90-301, approved May 7, 1968, 82 Stat. 113, 114 inserted the balance of this sentence. See also, sec. 3(a), Public Law 90-301, immediately following the National Housing Act in this compilation, which permits the Secretary until October 1, 1969, to set a higher interest rate.

lien of the mortgage upon such terms and conditions as he may prescribe and the mortgage may provide for such release. No mortgage shall be accepted for insurance under this section or section 210 unless the Secretary finds that the property or project, with respect to which the mortgage is executed, is economically sound. Such property or project may include eight or more family units and may include such commercial and community facilities as the Secretary deems adequate to serve the occupants.

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(d) The Secretary shall collect a premium charge for the insurance of mortgages under this section which shall be payable annually in advance by the mortgagee, either in cash or in debentures issued by the Secretary under any title and section of this Act, except debentures of the Mutual Mortgage Insurance Fund, or of the Cooperative Management Housing Insurance Fund, at par plus accrued interest. 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 the appraisal of a property or project offered for insurance and for the inspection of such property or project during construction: Provided, That such charges for appraisal and inspection shall not aggregate more than 1 per centum of the original principal face amount of the mortgage.

(e) In the event that the principal obligation of any mortgage accepted for insurance under this section is paid in full prior to the maturity date, the Secretary is 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 until such maturity date.

2

(f)2

(g) 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 mortgagor or others, arising out of the mortgage transactions; (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

1 The phrase "may include eight or more family units and" inserted by sec. 102(b) (5) of the Housing Amendments of 1955, Public Law 345, 84th Congress, approved August 11, 1955, 69 Stat. 635.

2 Deleted by sec. 1108 (e) (3). Housing and Urban Development Act of 1965, Public Law 89-117, approved August 10, 1965, 79 Stat. 451, 504.

cash adjustment provided for in subsection (j), issue to the mortgagee a certificate of claim as provided in subsection (h), and debentures having a total face value equal to the original principal face amount of the mortgage plus such amount as the mortgagee may have paid for (A) taxes, special assessments, and water rates, which are liens prior to the mortgage; (B) insurance on the property; and (C) reasonable expenses for the completion and preservation of the property and any mortgage insurance premiums paid after default, less the sum of (i) that part of the amount of the principal obligation, that has been repaid by the mortgagor, (ii) an amount equivalent to 1 per centum of the unpaid amount of such principal obligation, and (iii) any net income received by the mortgagee from the property: Provided, That the mortgagee in the event of a default under the mortgage may, at its option and in accordance with regulations of, and in a period to be determined by, the Secretary, proceed to foreclose on and obtain possession of or otherwise acquire such property from the mortgagor after default, and receive the benefits of the insurance as herein provided, upon (1) the prompt conveyance to the Secretary of title to the property which meets the requirements of the rules and regulations of the Secretary in force at the time the mortgage was insured and which is evidenced in the manner prescribed by such rules and regulations, and (2) the assignment to him of all claims of the mortgagee against the mortgagor or others, arising out of the mortgage transaction or foreclosure proceedings, except such claims that may have been released with the consent of the Secretary. Upon such conveyance and assignment, the obligation of the mortgagee to pay the premium charges for insurance shall cease and the mortgagee shall be entitled to receive the benefits of the insurance as provided in this subsection, except that in such event the 1 per centum deduction, set out in (ii) hereof, shall not apply: Notwithstanding any other provision of this Act, upon receipt, after the date of enactment of the Housing Act of 1964, of an application for insurance benefits on a mortgage insured under this Act, the Secretary may terminate the mortgagee's obligation to pay premium charges on the mortgage.

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(h) The certificate of claim issued under this section 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, on the date of the assignment, transfer and delivery to the Secretary provided for in subsection (g), the mortgagor had extinguished the mortgage indebtedness by payment in full of 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. If the net amount realized from the mortgage, and all claims in connection therewith, so assigned, transferred, and delivered, and from the property covered by such mortgage and

1 This sentence added by sec. 105(b), Housing Act of 1964, Public Law 88-560, approved September 2, 1964, 78 Stat. 769, 772.

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