structure for use as rental accommodations for five or more families shall be insured under this subsection unless the borrower has agreed (i) to certify, upon completion of the improvement and prior to final endorsement of the loan, either that the actual cost of improvement equaled or exceeded the proceeds of the home improvement loan, or the amount by which the proceeds of the loan exceed the actual cost, as the case may be, and (ii) to pay forthwith to the financial institution, for application to the reduction of the principal of the loan, the amount, if any, certified to be in excess of the actual cost of improvement. Upon the Secretary's approval of the borrower's certification as required under this paragraph, the certification shall be final and incontestable, except for fraud or material misrepresentation on the part of the borrower.

(B) As used in subparagraph (A), the term "actual cost" means the cost to the borrower of the improvement, including the amounts paid for labor, materials, construction contracts, off-site public utilities, streets, organization and legal expenses, such allocations of general overhead items as are acceptable to the Secretary, and other items of expense approved by the Secretary, plus a reasonable allowance for builder's profit if the borrower is also the builder, as defined by the Secretary, and excluding the amount of any kickbacks, rebates, or trade discounts received in connection with the improvement.

(10) Notwithstanding any other provision of this Act, the Secretary is authorized and empowered (i) to make expenditures and advances out of funds made available by this Act to preserve and protect his interest in any security for, or the lien or priority of the lien securing, any loan or other indebtedness owing to, insured by, or acquired by the Secretary or by the United States under this subsection, or section 2 or 203 (k); and (ii) to bid for and to purchase at any foreclosure or other sale or otherwise acquire property pledged, mortgaged, conveyed, attached, or levied upon to secure the payment of any loan or other indebtedness owing to or acquired by the Secretary or by the United States under this subsection or section 2 or 203 (k). The authority conferred by this paragraph may be exercised as provided in the last sentence of section 204(g).

(11) Notwithstanding any other provision of this Act, no home improvement loan made in whole or in part for the purpose specified in clause (A)(ii) of the second sentence of paragraph (1) shall be insured under this subsection if such loan (or the portion thereof which is attributable to such purpose), when added to the aggregate principal balance of any outstanding loans insured under this subsection or section 203 (k) which were made to the same borrower for the purpose so specified (or the portion of such aggregate balance which is attributable to such purpose), would exceed $10,000 or1 such additional amount as the Secretary has by regulation prescribed in any geographical area where he finds cost levels so required pursuant to the authority vested in him by the proviso in paragraph (2) (i) of this subsection.

1 Sec. 211(b), Housing and Urban Development Act of 1965, Public Law 89-117, approved August 10, 1965, 79 Stat. 451, 470, added the remainder of this paragraph.

HOUSING FOR MODERATE INCOME AND DISPLACED FAMILIES

1

SEC. 221. (a) This section is designed to assist private industry 2 in providing housing for low and moderate income families and displaced families.3

(b) The Secretary is authorized, upon application by the mortgagee, to insure under this section as hereinafter provided any mortgage (including advances during construction on mortgages covering property of the character described in paragraphs (3) and (4) of subsection (d) of this section) which is eligible for insurance as provided herein and, upon such terms and conditions as the Secretary may prescribe, to make commitments for the insurance of such mortgages prior to the date of their execution or disbursement thereon.

(c) As used in this section, the terms "mortgage", "first mortgage", "mortgagee", "mortgagor", "maturity date" and "State" shall have the same meaning as in section 201 of this Act.

(d) 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) be secured by property upon which there is located a dwelling conforming to applicable standards prescribed by the Secretary under subsection (f) of this section, and meeting the requirements of all State laws, or local ordinances or regulations relating to the public health or safety, zoning, or otherwise, which may be applicable thereto, and shall involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve) in an amount (A) not to exceed (i) $25,000 5 (or $29,000,5 if the mortgagor's family includes five or more persons) in the case of a property upon which there is located a dwelling designed principally for a singlefamily residence, (ii) $28,000 in the case of a property upon which there is located a dwelling designed principally for a twofamily residence, (iii) $38,880 in the case of a property upon which there is located a dwelling designed principally for a threefamily residence, or (iv) $47,5205 in the case of a property upon which there is located a dwelling designed principally for a fourfamily residence: Provided, That a mortgage secured by property upon which there is located a dwelling designed principally for a

5

1 Sec. 101 (a), Housing Act of 1961, Public Law 87-70, approved June 30, 1961, 75 Stat. 149, inserted this section heading, and amended the sec. 221 mortgage insurance program for displaced families to provide more liberal terms and to broaden the program to apply to low- and moderate-income families generally. 2 See sec. 207. Appalachian Regional Development Act of 1965, which authorizes loans and grants for planning and preliminary expenses of sec. 221 housing for low- and moderate-income families and individuals.

3 Sec. 4(a). Disaster Relief Act of 1966, Public Law 89-769, approved November 6, 1966, SO Stat. 1316, 1317, substituted "displaced families" for "families displaced from urban renewal areas or as a result of governmental action".

Sec. 101 (a) (3). Housing Act of 1961, Public Law 87-70, approved June 30, 1961, 75 Stat. 149, inserted this parenthetical phrase.

5 Sec. 113(e). Housing and Urban Development Act of 1969. Public Law 91-152, approved December 24. 1969. 83 Stat. 379, 384. increased the dollar limits on one-family homes from "$15,000" to "$18,000" (or "$17,500" to "$21,000" if the mortgagors family includes five or more persons), on two-family homes from "$20,000" to "$24.000", threefamily homes from "$27.000" to "$32.400", and on four-family homes from "$33.000" to "$39.600". Sec. 302 (c) (1) of Housing and Community Development Act of 1974, Public Law 93-383, 88 Stat. 633, approved August 22, 1974, substituted "$21.600" for "$18.000". "$25,200" for "$21,000", "$28.000" for "$24,000". "$38.880" for "$32.400", and "$47.520" for "$39.600". Sec. 3(d)(1) of the Housing Authorization Act of 1976. Public Law 94-375. approved August 3. 1976. 90 Stat. 1067, amended section 221(d) (2) (A) of the National Housing Act by striking "$21.600" and "$25,200" and inserting in lieu thereof "$25,000" and "$29,000", respectively.

3

two-, three-, or four-family residence shall not be insured under this section except in the case of a dwelling for occupancy by the mortgagor Provided further, That the Secretary may increase the foregoing amounts to not to exceed $29,000 (or $33,000 if the mortgagor's family includes five or more persons), $36,000,2 $46,080,3 and $54,720, respectively, in any geographical area where he finds that cost levels so require; and (B) not to exceed the appraised value of the property (as of the date the mortgage is accepted for insurance): Provided, That (i) if the mortgagor is the owner and an occupant of the property at the time of insurance, (1) in the case of a displaced family, he shall have paid on account of the property at least $200 in the case of a single-family dwelling, $400 in the case of a two-family dwelling, $600 in the case of a three-family dwelling, and $800 in the case of a fourfamily dwelling, or (2) in the case of any other family, he shall have paid on account of the property at least 3 per centum of the Secretary's estimate of its acquisition cost, in cash or its equivalent; which amount in either instance may include amounts to cover settlement costs and initial payments for taxes, hazard insurance, mortgage insurance premium, and other prepaid expenses; or, (ii) in the case of repair and rehabilitation, the amount of the mortgage shall not exceed the sum of the estimated cost of repair and rehabilitation and the Secretary's estimate of the value of the property before repair and rehabilitation, except that in no case involving refinancing shall such mortgage exceed such estimated cost of repair and rehabilitation and the amount (as determined by the Secretary) required to refinance existing indebtedness secured by the property: Provided further, That nothing contained herein shall preclude the Secretary from issuing a commitment to insure, and insuring a mortgage pursuant thereto, where the mortgagor is not the owner and an occupant of the property, if the property is to be built or acquired and repaired or rehabilitated for sale, and the insured mortgage financing is required to facilitate the construction, or the repair or rehabilitation, of the dwelling and to provide financing pending the subsequent sale thereof to a qualified owner who is also an occupant thereof, but in such instances the mortgage shall not exceed 85 per centum of the appraised value: Provided further, That, if the mortgagor is the owner and an occupant of the property, such mortgagor shall to the maximum extent feasible be given the op

5

1 Sec. 305, Housing and Urban Development Act of 1968, Public Law 90-448, approved August 1, 1968, 82 Stat. 476, 508, substituted "the mortgagor" for "a displaced family". 2 Sec. 101 (b), Housing and Urban Development Act of 1968, Public Law 90-448, approved Aug. 1. 1968. 82 Stat 476. 483, inserted this proviso.

3 Sec. 113(e), Housing and Urban Development Act of 1969, Public Law 91-152 approved December 24, 1969, 83 Stat. 379. 384, substituted "$21,000" for "$17,500". “$24.000" for "$20.000" "$30.000" for "$25.000", "$38.400" for "$32,000", and "$45.600" for $38.000". Sec. 302(c) (2) of Housing and Community Development Act of 1974. Public Law 93-383. 88 Stat. 633, approved August 22, 1974, substituted "$25,200" for "$21,000". "$28.800" for "$24.000". "$36.000" for "$30,000", "$46.080" for "$38.400". and $54.720" for "$45.600". Sec. 3(d) (2) of the Housing Authorization Act of 1976. Public Law 94-375, approved August 3, 1976, 90 Stat. 1067. amended section 221(d) (2) (A) by striking out in the second proviso "$25,200" and "$28,800" and inserting in lieu thereof "$29.000" and "$33.000".

* Sec. 101 (b), Housing and Urban Development Act of 1968, Public Law 90-448, approved Aug. 1. 1968. 82 Stat. 476, 483. inserted “in cash or its equivalent".

5 Sec. 101(a)(5), Housing Act of 1961, Public Law 87-70, approved June 30, 1961, 75 Stat. 149. 150, deleted the proviso which read: “And provided further, That the Commissioner shall prescribe such procedures as in his judgment are necessary to secure to families, referred to in subsection (a) above, priorities in occupancy of the remaining units of two-, three-, and four-family dwellings after occupancy of one unit by the owner;", but see sec. 221(d) (3) (iii) and sec. 221 (f).

6 Same as footnote 2 above.

portunity to contribute the value of his labor as equity in such dwelling; or

(3)1 if executed by a mortgagor which is a public body or agency (and, except with respect to a project assisted or to be assisted pursuant to section 8 of the United States Housing Act of 1937. which certifies that it is not receiving financial assistance from the United States exclusively pursuant to such Act), a cooperative (including an investor-sponsor who meets such requirements as the Secretary may impose to assure that the consumer interest is protected), or a limited dividend corporation (as defined by the Secretary), or a private nonprofit corporation or association, or 3 other mortgagor approved by the Secretary, and regulated or supervised under Federal or State laws or by political subdivisions of States, or agencies thereof, or by the Secretary under a regulatory agreement or otherwise, as to rents, charges, and methods of operation, in such form and in such manner as in the opinion of the Secretary will effectuate the purposes of this section(i) 4

(ii) 5 not exceed, for such part of the property or project as may be attributable to dwelling use (excluding exterior land improvements as defined by the Secretary), $16,860 per family unit without a bedroom $18,648 per family unit with one bedroom $22,356 per family unit with two bedrooms, $28,152 per

6

1 See provisions for rent supplements in sec. 101 (j), Housing and Urban Development Act of 1965. Sec. 201 (c), Housing and Urban Development Act of 1968, Public Law 90-448, approved Aug. 1, 1968, 82 Stat. 476, 502, provided that the insurance of a mortgage which had not been finally endorsed for insurance under sec. 221(d) (3) and which had been approved for the below market interest rate prescribed in the proviso of sec. 221(d) (5) could be transferred to section 236 (j) (the interest rate reduction program for rental housing for lower income families).

Immediately prior to amendment by sec. 101 (a) (6), Housing Act of 1961, Public Law 87-70, approved June 30, 1961, 75 Stat. 149, 150, section 221 (d) (3) read as follows:

"(3) if executed by a mortgagor which is a private nonprofit corporation or association or other acceptable private nonprofit organization, regulated or supervised under Federal or State laws or by political subdivisions of States or agencies thereof or the Federal Housing Commissioner, as to rents, charges, and methods of operation, in such form and in such manner as, in the opinion of the Commissioner, will effectuate the purroses of this section, the mortgage may involve a principal obligation not in excess of $12,500,000: and not in excess of $9,000 ner family unit for such part of such property or project as may be attributable to dwelling use, except that the Commissioner may by regulation increase this amount to not to exceed $12,000 in any geographical area where he finds that cost levels so require, and not in excess of (1) in the case of new construction, the amount which the Commissioner estimates will be the replacement cost of the property or project when the proposed improvements are completed (the replacement cost may include the land, the proposed physical improvements, utilities within the boundaries of the land, architect's fees, taxes, interest during construction, and other miscellaneous charges incident to construction and approved by the Commissioner), or (2) in the case of repair and rehabilitation, the Commissioner's estimate of the value of the property when the proposed repair and rehabilitation is completed; Provided, That such property or project. when constructed, or repaired and rehabilitated, shall be for use as rental accommodations for ten or more families eligible for occupancy as provided in this section: or". The word "Commissioner" was changed to "Secretary" by sec. 1 of Public Law 90-19, approved May 25, 1967. 81 Stat. 17.

Sec. 319 (a) of Housing and Community Development Act of 1974, Public Law 93-383. 88 Stat. 633, approved August 22, 1974, amended this section.

3 Sec. 114(a). Housing Act of 1964. Public Law 88-560. approved September 2, 1964. 78 Stat. 769, 778, inserted. "or other mortgagor approved by the Commissioner, and". 4 Sec. 304 (e) (1) of Housing and Community Development Act of 1974. Public Law 93-383. 88 Stat. 633, approved August 22, 1974, struck clause (i) of section 221(d)(3) of the National Housing Act, but did not renumber the following paragraphs.

5 Sec. 107(d)(1). Housing Act of 1964. Public Law 88-560, approved September 2, 1964. 78 Stat. 769, 775, deleted the previous per room limits in this par. (3) (ii) 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(e). Housing and Urban Development Act of 1969, Public Law 91-152, approved December 24. 1969, 83 Stat. 379, 384, increased by fifteen percent as shown in the text the dollar limits in this par. 3 (ii).

• Sec. 303 (d) (A) of Housing and Community Development Act of 1974. Public Law 93-383. SS Stat. 633. approved August 22, 1974, substituted "$11.240" for "$9,200". “815 540 for "$12.937.50". "$18.030" for "$15.525", "$23.400" for "$19.550", and "$26.570" for "$22.137.50". Sec. 8(b) (4) (A) of the Housing Authorization Act of 1976. Public Law 94-375 approved August 3, 1976, 90 Stat. 1067. amended setcion 221 (d) (3) (ii) of the National Housing Act by substituting "$16,860" for "$11,240", "$18.648"

family unit with three bedrooms, and $31,8841 per family unit with four or more bedrooms; 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 $19,6802 per family unit without a bedroom, $22,356 2 per family unit with one bedroom, $26,4962 per family unit with two bedrooms, $33,1202 per family unit with three bedrooms, and $38,400 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 clause by not to exceed 50 per centum in any geographical area 3 where he finds that cost levels so require; and

(iii) not exceed (1) in the case of new construction, the amount which the Secretary estimates will be the replacement cost of the property or project when the proposed improvements are completed (the replacement cost may include the land, the proposed physical improvements, utilities within the boundaries of the land, architect's fees, taxes, interest during construction, and other miscellaneous charges incident to construction and approved by the Secretary), or (2) in the case of repair and rehabilitation, the sum of the estimated cost of repair and rehabilitation and the Secretary's estimate of the value of the property before repair and rehabilitation: Provided, That in no case involving refinancing shall such mortgage exceed such estimated cost of repair and rehabilitation and the amount (as determined by the Secretary) required to refinance existing indebtedness secured by the property or project: 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 amount of the mortgage shall not exceed the appraised value of the property as of the date the mortgage is accepted for insurance: Provided further, That in the case of any

for "$15.540", "$22,356" for "$18,630", "$28,152" for "$23,460", and "$31,884" for "$26.570". 1 Sec. 303 (d) (A) of Housing and Community Development Act of 1974. Public Law 93-383, 88 Stat. 633. approved August 22, 1974, substituted "$11.240" for "$9,200", $15.540" for "$12.937.50", "$18.630" for "$15.525", "$23.460" for "$19,550", and "$26,570" for "$22.137.50". Sec. 8(b)(4) (A) of the Housing Authorization Act of 1976. Public Law 94-375. approved August 3, 1976, 90 Stat. 1067, amended section 221 (d) (3) (ii) of the National Housing Act by substituting "16.860" for "$11.240", "$18,648" for $15.540", "$22,356" for "$18,630", "$28,152" for "$23,460", and "31,884" for "$26.570".

2 Sec. 303 (d) (B) of the Housing and Community Development Act of 1974, Public Law 93-383. 88 Stat. 633, approved August 22. 1974, amended section 221 (d) (3) (ii) of the National Housing Act by substituting "$13.120" for "$10.925". "$18,630" for "$15,500”, "$22.080" for "$18.400", "$27.600" for "$23.000", and "$32.000" for "$26.162.50". Sec. 8(b)(4) (B) of the Housing Authorization Act of 1976, Public Law, 94-375. approved August 3, 1976, 90 Stat. 1067. amended this section by substituting "$19.680" for "$13 120". "$22.356" for "$18,630", "$26,496" for "$22,080", "$33,120" for "$27,600", and "38,400" for "32.000”.

3 Sec. 3 of Public Law 94-173, 89 Stat. 1027. approved December 23, 1975, amended sec. 221(d) (3) (ii) 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 221 (d) (3) (ii) of the National Housing Act by striking "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. 311(b). Housing and Urban Development Act of 1968. Public Law 90-448, approved Aug. 1, 1968, 82 Stat. 476, 510 inserted this proviso.

5 Sec. 114(c). Housing Act of 1964, Public Law 88-560, approved September 2, 1964, 78 Stat. 769, 779, inserted this proviso.