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82 STAT 479

Appropriation.

79 Stat. 457. 42 USC 1402.

63 Stat. 422. 42 USC 1415.

75 Stat. 150. 12 USC 17151. 75 Stat. 1528 79 Stat. 454.

Report to congressional committees.

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(d) Assistance payments to a mortgagee by the Secretary on behalf of a family holding membership in a cooperative association operating a housing project shall be made only during such time as the family is an occupant of such project and shall be in amounts computed on the basis of the formula set forth in subsection (c) applying the cooperative member's proportionate share of the obligations under the project mortgage to the items specified in the formula.

"(e) The Secretary may include in the payment to the mortgagee such amount, in addition to the amount computed under subsection (c), (d), or (j) (7), as he deems appropriate to reimburse the mortgagee for its expenses in handling the mortgage.

(f) Procedures shall be adopted by the Secretary for recertifications of the mortgagor's (or cooperative member's) income at intervals of two years (or at shorter intervals where the Secretary deems it desirable) for the purpose of adjusting the amount of such assistance payments within the limits of the formula described in subsection (c).

(g) The Secretary shall prescribe such regulations as he deems necessary to assure that the sales price of, or other consideration paid in connection with, the purchase by a homeowner of the property with respect to which assistance payments are to be made is not increased above the appraised value on which the maximum mortgage which the Secretary will insure is computed.

"(h) (1) There are authorized to be appropriated such sums as may be necessary to carry out the provisions of this section, including such sums as may be necessary to make the assistance payments under contracts entered into under this section. The aggregate amount of contracts to make such payments shall not exceed amounts approved in appropriation Acts, and payments pursuant to such contracts shall not exceed $75,000,000 per annum prior to July 1, 1969, which maximum dollar amount shall be increased by $100,000,000 on July 1, 1969, and by $125,000,000 on July 1, 1970.

"(2) Not more than 20 per centum of the total amount of assistance payments authorized to be contracted to be made pursuant to appropriation Acts shall be contracted to be made on behalf of families whose incomes at the time of their initial occupancy exceed 135 per centum of the maximum income limits which can be established in the area, pursuant to the limitations prescribed in sections 2(2) and 15(7) (b)(ii) of the United States Housing Act of 1937, for initial occupancy in public housing dwellings, but the incomes of such families at the time of their initial occupancy shall in no case exceed 90 per centum of the limits prescribed by the Secretary for occupants of projects financed with mortgages insured under section 221 (d) (3) which bear interest at the below-market interest rate prescribed in the proviso of section 221 (d) (5). The limitations prescribed in this paragraph shall be administered by the Secretary so as to accord a preference to those families whose incomes are within the lowest practicable limits for achieving homeownership with assistance under this section. The Secretary shall report annually to the respective Committees on Banking and Currency of the Senate and House of Representatives with respect to the income levels of families on behalf of which assistance payments have been made under this section.

"(3) Notwithstanding the provisions of subsections (b) (2) and (i) (3) (A) with respect to the prior construction or rehabilitation of a dwelling, or of the project in which there is a dwelling unit, for which assistance payments may be made, and notwithstanding the provisions of subsection (j) (1) authorizing the purchase of housing which is neither deteriorating nor substandard, not more than— "(A) 25 per centum of the total amount of contracts for as

sistance payments authorized by appropriation Acts to be made prior to July 1, 1969,

"(B) 15 per centum of the total additional amount of contracts for assistance payments authorized by appropriation Acts to be made prior to July 1, 1970, and

"(C) 10 per centum of the total additional amount of contracts for assistance payments authorized by appropriations Acts to be made prior to July 1, 1971,

may be made with respect to existing dwellings, or dwelling units in existing projects.

"(i) (1) The Secretary is authorized, upon application by the mortgagee, to insure a mortgage executed by a mortgagor who meets the eligibility requirements for assistance payments prescribed by the Secretary under subsection (b). Commitments for the insurance of such mortgages may be issued by the Secretary prior to the date of their execution or disbursement thereon, upon such terms and conditions as the Secretary may prescribe.

"(2) To be eligible for insurance under this subsection, a mortgage shall meet the requirements of section 221(d) (2) or 234 (c), except as such requirements are modified by this subsection.

"(3) A mortgage to be insured under this subsection shall

82 STAT, 480

68 Stat. 599. 12 USC 17151. 75 Stat. 160.

"(A) involve a single-family dwelling which has been approved 12 USC 1715y. by the Secretary prior to the beginning of construction or substantial rehabilitation, or a two-family dwelling one of the units of which is to be occupied by the owner if the dwelling is purchased with the assistance of a nonprofit organization and is approved by the Secretary prior to the beginning of substantial rehabilitation, or a one-family unit in a condominium project (together with an undivided interest in the common areas and facilities serving the project) which is released from a multifamily project, the construction or substantial rehabilitation of which has been completed within two years prior to the filing of the application for assistance payments with respect to such family unit and the unit has had no previous occupant other than the mortgagor: Provided, That the mortgage may involve an existing dwelling or a family unit in an existing condominium project which meets such standards as the Secretary may prescribe, if the mortgagor qualifies as a displaced family as defined in section 221 (f), or a family which includes five or more minor persons, or a family occupying low-rent public housing: Provided further, 80 Stat. 1317. That the mortgage may involve an existing dwelling or a family unit in an existing condominium project if assistance payments have been made on behalf of the previous owner of the dwelling or family unit with respect to a mortgage insured under subsection (j) (4): Provided further, That the mortgage may involve a dwelling unit in an existing project covered by a mortgage insured under section 236 or in an existing project receiving the ben- Post, p. 498. efits of financial assistance under section 101 of the Housing and Urban Development Act of 1965;

68 Stat. 5998

79 Stat. 451.

"(B) where it is to cover a one-family unit in a condominium 12 USC 1701s. project, have a principal obligation not exceeding $15,000 ($17,500 in any geographical area where the Secretary authorizes an increase on the basis of a finding that cost levels so require), except that with respect to any family with five or more persons the foregoing limits shall be $17,500 and $20,000, respectively; and "(C) be executed by a mortgagor who shall have paid (i) in the case of any family whose income is not in excess of 135 per centum of the maximum income limits which can be established

54-544 O 71 vol. II -- 4

82 STAT 481

79 Stat. 457.

42 USC 1402.

63 Stat. 422. 42 USC 1415.

in the area, pursuant to the limitations prescribed in sections 2(2) and 15(7) (6) (ii) of the United States Housing Act of 1937, for initial occupancy in public housing dwellings, at least $200, or (ii) in the case of any other family, at least 3 per centum (or such larger amount as the Secretary may require) of the Secretary's estimate of the cost of acquisition, which amount (in cash or its equivalent) in either instance may be applied for the payment of settlement costs and initial payments for taxes, hazard insurance, mortgage insurance premiums, and other prepaid expenses. "(j) (1) In addition to mortgages insured under the provisions of subsection (i), the Secretary is authorized, upon application by the mortgagee, to insure a mortgage (including advances under such mortgage during rehabilitation) which is executed by a nonprofit organization or public body or agency to finance the purchase of housing, and the rehabilitation of such housing if it is deteriorating or substandard, for subsequent resale to lower income home purchasers who meet the eligibility requirements for assistance payments prescribed by the Secretary under subsection (b). Commitments for the insurance of such mortgages may be issued by the Secretary prior to the date of their execution or disbursement thereon, upon such terms and conditions as the Secretary may prescribe.

"(2) To be eligible for insurance under paragraph (1) of this subsection, a mortgage shall

"(A) be executed by a private nonprofit organization or public body or agency, approved by the Secretary, for the purpose of financing the purchase (with the intention of subsequent resale), and rehabilitation where the housing involved is deteriorating or substandard, of property comprising one or more tracts or parcels, whether or not contiguous, consisting of (i) four or more single-family dwellings of detached, semidetached, or row construction, or (ii) four or more one-family units in a structure or structures for which a plan of family unit ownership approved by the Secretary is established; except that in a case not involving the rehabilitation of deteriorating or substandard housing the property purchased may consist of one or more such dwellings or units;

"(B) be in a principal amount not exceeding the appraised value of the property at the time of its purchase under the mortgage plus the estimated cost of any rehabilitation;

(C) bear interest (exclusive of premium charges for insurance and service charge, if any) at not to exceed such per centum per annum (not in excess of 6 per centum), on the amount of the principal obligation outstanding at any time, as the Secretary finds necessary to meet the mortgage market;

"(D) provide for complete amortization (subject to paragraph (4) (E)) by periodic payments within such term as the Secretary may prescribe; and

"(E) provide for the release of individual single-family dwellings from the lien of the mortgage upon their sale in accordance with paragraph (4).

"(3) No mortgage shall be insured under paragraph (1) unless the mortgagor shall have demonstrated to the satisfaction of the Secretary that (A) the property involved is located in a neighborhood which is sufficiently stable and contains sufficient public facilities and amenities to support long-term values, or (B) the purchase or rehabilitation of such property plus the mortgagor's related activities and the activities of other owners of housing in the neighborhood, together with actions to be taken by public authorities, will be of such scope

82 STAT. 482

and quality as to give reasonable promise that a stable environment will be created in the neighborhood.

"(4)(A) No mortgage shall be insured under paragraph (1) unless the mortgagor enters into an agreement, satisfactory to the Secretary, that it will offer to sell the dwellings involved, after purchase and upon completion of any rehabilitation, to lower income individuals or families meeting the eligibility requirements established by the Secretary under subsection (b).

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(B) The Secretary is authorized to insure under this paragraph mortgages executed to finance the sale of individual dwellings to lower income purchasers as provided in subparagraph (A). Any such mortgage shall

"(i) be in a principal amount not in excess of that portion of the unpaid principal balance of the blanket mortgage covering the property which is allocable to the individual dwelling involved;

"(ii) bear interest at the same rate as the blanket mortgage; and

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"(iii) provide for complete amortization by periodic payments within a term equal to the remaining term (determined without regard to subparagraph (E)) of such blanket mortgage. "(C) The price for which any individual dwelling is sold under this paragraph shall be in an amount equal to that portion of the unpaid principal balance of the blanket mortgage covering the property which is allocable to the dwelling plus such additional amount, not less than $200 (which may be applied in whole or in part toward closing costs and may be paid in cash or its equivalent), as the Secretary may determine to be reasonable.

"(D) Upon the sale under this paragraph of any individual dwelling, such dwelling shall be released from the lien of the blanket mortgage. Until all of the individual dwellings in the property covered by the blanket mortgage have been sold, the mortgagor shall hold and operate the dwellings remaining unsold at any given time, in such manner and under such terms as the Secretary may prescribe, as though they constituted rental units.

"(E) Upon the sale under this paragraph of all the individual dwellings in the property covered by the blanket mortgage and the release of all individual dwellings from the lien of the blanket mortgage, the insurance of the blanket mortgage shall be terminated and no adjusted premium charge shall be charged by the Secretary upon such termination.

"(5). Where the Secretary has approved a plan of family unit own- Definitions. ership the terms 'single-family dwelling', 'single-family dwellings', 'individual dwelling', and 'individual dwellings shall mean a family unit or family units, together with the undivided interest (or interests) in the common areas and facilities.

"(6) For purposes of this subsection, the terms 'single-family dwelling' and 'single-family dwellings' (except for purposes of paragraph (5)) shall include a two-family dwelling which has been approved by the Secretary if one of the units is to be occupied by the

owner.

"(7) In addition to the assistance payments authorized under subsection (b), the Secretary may make such payments to a mortgagee on behalf of a nonprofit organization or public body or agency which is a mortgagor under the provisions of paragraph (1) in an amount not exceeding the difference between the monthly payment for principal, interest, and mortgage insurance premium which the mortgagor is obligated to pay under the mortgage and the monthly payment for

82 STAT. 483

Infra.

75 Stat. 149; 80 Stat. 1268. 12 USC 17151.

80 Stat. 1269.

principal and interest such mortgagor would be obligated to pay if the mortgage were to bear interest at the rate of 1 per centum per

annum.

"(8) A mortgage covering property which is not deteriorating or substandard may be insured under this subsection only if it is situated in an area in which mortgages may be insured under section 221 (h). "(k) The Secretary shall from time to time allocate and transfer to the Secretary of Agriculture, for use (in accordance with the terms and conditions of this section) in rural areas and small towns, a reasonable portion of the total authority to contract to make assistance payments as approved in appropriation Acts under subsection (h) (1).

(1) In determining the income of any person for the purposes of this section, there shall be deducted an amount equal to $300 for each minor person who is a member of the immediate family of such person and living with such family, and the earnings of any such minor person shall not be included in the income of such person or his family." (b) (1) Section 221(d) (2) (A) of the National Housing Act is amended

(A) by striking out "not to exceed (i) $12,500” and inserting in lieu thereof "not to exceed (i) $15,000 (or $17,500, if the mortgagor's family includes five or more persons)"; and

(B) by striking out "not to exceed $15,000" in the second proviso and inserting in lieu thereof "not to exceed $17,500 (or $20,000 if the mortgagor's family includes five or more persons)”. (2) Section 221(d) (2) (B) of such Act is amended

(A) by inserting ", in cash or its equivalent" before the semicolon after "acquisition cost" in the first proviso; and

(B) by inserting before the semicolon after "appraised value" at the end thereof the following: ": 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 opportunity to contribute the value of his labor as equity in such dwelling".

(c) (1) Section 221 (h) (5) (B) (ii) of such Act is amended to read as follows:

"(ii) bear interest at the same rate as the principal mortgage or such lower rate, not less than 1 per centum, as the Secretary may prescribe if in his judgment the purchaser's income is sufficiently low to justify the lower rate, and provide for complete amortization within a term equal to the remaining term (determined without regard to subparagraph (E)) of such principal mortgage: Provided, That, if the rate of interest initially prescribed is less than the rate borne by the principal mortgage and the purchaser's income (as determined on the basis of periodic review) subsequently rises, the rate of interest so prescribed shall be increased (but not above the rate borne by such principal mortgage), under regulations of the Secretary, to the extent appropriate to reflect the increase in such income, and the mortgage shall so provide."

"(2) Section 221 (h) (4) of such Act is amended by striking out "$20,000,000" and inserting in lieu thereof "$50,000,000".

(3) Section 221 (h) of such Act is further amended by adding at the end thereof the following new paragraph:

“(6) In addition to the mortgages that may be insured under paragraphs (1) and (5), the Secretary is authorized to insure under this subsection at any time within one year after the date of the enactment of this paragraph, upon such terms and conditions as he may prescribe,

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