79 STAT. 469.

"(m) The Commissioner is authorized to transfer to the Management Fund commitments for insurance issued under subsections (a) (1), (i), and (j) prior to the date of the enactment of this subsection, and to transfer to the Management Fund the insurance of any mortgage or loan insured prior to the date of the enactment of this subsection under subsection (a) (1), (a) (3) (if the project is acquired by a cooperative corporation), (i), or (j), but only in cases where the consent of the mortgagee or lender to the transfer is obtained or a request by the mortgagee or lender for the transfer is received by the Commissioner within such period of time after the date of the enactment of this subsection as the Commissioner shall prescribe: Provided, That the insurance of any mortgage or loan shall not be transferred under the provisions of this subsection if on the date of the enactment of this subsection the mortgage or loan is in default and the mortgagee or lender has notified the Commissioner in writing of its intention to file an insurance claim. Any insurance or commitment not so transferred shall continue to be an obligation of the General Insurance Fund.

"(n) Notwithstanding the limitations contained in other provisions of this Act, premium charges for mortgages or loans insured under this section and sections 207, 231, and 232 may be payable in debentures issued in connection with mortgages or loans transferred to the Management Fund or in connection with mortgages or loans insured pursuant to commitments transferred to the Management Fund, as provided in subsection (m) of this section.

"(o) Notwithstanding any other provision of this Act, the Commissioner is authorized to transfer funds between the Cooperative Management Housing Insurance Fund and the General Insurance Fund in such amounts and at such times as he may determine, taking into consideration the requirements of each such Fund, to assist in carrying out effectively the insurance programs for which such Funds were respectively established."

(b) Section 213 of such Act is further amended—

64 Stat. 54.

(1) by inserting before the period at the end of subsection (a) 12 USC 1715e. the following: ": Provided, That as applied to mortgages the mortgage insurance for which is the obligation of the Management Fund, the reference to the General Insurance Fund in section 207(b) (2) shall be construed to refer to the Management Fund"; and

(2) by inserting before the period at the end of subsection (e) the following: ": Provided, That as applied to mortgages or loans the insurance for which is the obligation of the Management Fund (1) all references to the General Insurance Fund shall be construed to refer to the Management Fund, and (2) all references to section 207 shall be construed to refer to subsections (a) (1), (a) (3) (if the project involved is acquired by a cooperative corporation), (i), and (j) of this section".

REHABILITATION IN URBAN RENEWAL AREAS

SEC. 209. Section 220(d)(3)(A) of the National Housing Act is 71 Stat. 296. amended

(1) by striking out the second proviso in clause (i); and (2) by striking out clause (ii) and inserting in lieu thereof the following:

"(ii) in a case where the mortgagor is not the occupant of the property and intends to hold the property for rental purposes, have a principal obligation in an amount not to exceed 93 per centum of the amount computed under the provisions of clause (i);

75 Stat. 154. 12 USC 1715k.

73 Stat. 658. 12 USC 1715k.

75 Stat. 155.

78 Stat. 778.

71 Stat. 296; 73 Stat. 661. 12 USC 1715m.

"(iii) in a case where the mortgagor is not the occupant of the property and intends to hold the property for the purpose of sale, have a principal obligation in an amount not to exceed 85 per centum of the amount computed under the provisions of clause (i), or in the alternative, in an amount equal to the amount computed under the provisions of clause (i) if the mortgagor and mortgagee assume responsibility in a manner satisfactory to the Commissioner for the reduction of the mortgage by an amount not less than 15 per centum of the outstanding principal amount thereof, or by such greater amount as may be required to meet the limitations of clause (iv), in the event the mortgaged property is not, prior to the due date of the eighteenth amortization payment of the mortgage, sold to a purchaser acceptable to the Commissioner who is the occupant of the property and who assumes and agrees to pay the mortgage indebtedness; and

"(iv) in no case involving refinancing (except as provided in clause (iii)) have a principal obligation in an amount exceeding the sum of the estimated cost of repair and rehabilitation and the amount (as determined by the Commissioner) required to refinance existing indebtedness secured by the property or project, plus any existing indebtedness incurred in connection with improving, repairing, or rehabilitating the property; or".

NONDWELLING FACILITIES FOR URBAN RENEWAL HOUSING

SEC. 210. Section 220 (d) (3) (B) of the National Housing Act is amended by striking out clause (iv) and inserting in lieu thereof the following:

66

(iv) include such nondwelling facilities as the Commissioner deems desirable and consistent with the urban renewal plan: Provided, That the project shall be predominantly residential and any nondwelling facility included in the mortgage shall be found by the Commissioner to contribute to the economic feasibility of the project, and the Commissioner shall give due consideration to the possible effect of the project on other business enterprises in the community."

LARGER HOME IMPROVEMENT LOANS IN HIGH COST AREAS

SEC. 211. (a) Section 220 (h) (2) (i) of the National Housing Act is amended by inserting before the semicolon at the end thereof ": Provided, That the Commissioner may, by regulation, increase such amount by not to exceed 45 per centum in any geographical area where he finds that cost levels so require".

(b) Section 220 (h) (11) of such Act is amended by inserting before the period at the end thereof "or such additional amount as the Commissioner has by regulation prescribed in any geographical area where he finds cost levels so require pursuant to the authority vested in him by the proviso in paragraph (2) (i) of this subsection".

LARGER INSURED MORTGAGES FOR SERVICEMEN

SEC. 212. Section 222 (b) of the National Housing Act is amended(1) by striking out "$20,000" in paragraph (2) and inserting in lieu thereof "$30,000"; and

(2) by striking out paragraph (3) and inserting in lieu thereof the following:

"(3) have a principal obligation not in excess of the sum of (i) 97 per centum of $15,000 of the appraised value of the property

79 STAT. 471.

as of the date the mortgage is accepted for insurance, (ii) 90 per centum of such value in excess of $15,000 but not in excess of $20,000, and (iii) 85 per centum of such value in excess of $20,000; and".

REFINANCING OF INSURED MORTGAGES

SEC. 213. Section 223 (a) (7) of the National Housing Act is amended 12 USC 1715n. by striking out "section 608 of title VI prior to the effective date of

the Housing Act of 1954 or under section 220, 221, 903, or section 908" and inserting in lieu thereof "this Act".

CONSOLIDATION OF FHA INSURANCE FUNDS

SEC. 214. Title V of the National Housing Act is amended by 12 USC 1731aadding at the end thereof the following new section: 1735b.

"ESTABLISHMENT OF GENERAL INSURANCE FUND

"SEC. 519. (a) There is hereby created a General Insurance Fund which shall be used by the Commissioner, on and after the date of the enactment of the Housing and Urban Development Act of 1965, as a revolving fund for carrying out all the insurance provisions of this Act with the exception of those specified in subsection (e). All mortgages or loans insured under this Act pursuant to commitments issued on or after the date of the enactment of the Housing and Urban Development Act of 1965, except those specified in subsection (e), and all loans reported for insurance under section 2 on or after the date of the enactment of the Housing and Urban Development Act of 1965, shall be insured under the General Insurance Fund. The Commissioner shall transfer to the General Insurance Fund

"(1) the assets and liabilities of all insurance accounts and funds, except the Mutual Mortgage Insurance Fund, existing under this Act immediately prior to the enactment of the Housing and Urban Development Act of 1965;

“(2) all outstanding commitments for insurance issued prior to the date of the enactment of the Housing and Urban Development Act of 1965, except those specified in subsection (e);

"(3) the insurance on all mortgages and loans insured prior to the date of the enactment of the Housing and Urban Development Act of 1965, except insurance specified in subsection (e); and

"(4) the insurance of all loans made by approved financial institutions pursuant to section 2 prior to the date of the enactment of the Housing and Urban Development Act of 1965. "(b) The general expenses of the operations of the Federal Housing Administration relating to mortgages and loans which are the obligation of the General Insurance Fund may be charged to the General Insurance Fund.

"(c) Moneys in the General Insurance Fund not needed for the current operations of the Federal Housing Administration with respect to mortgages and loans which are the obligation of the General Insurance Fund shall be deposited with the Treasurer of the United States to the credit of such Fund, or invested in bonds or other obligations of, or in bonds or other obligations guaranteed as to principal and interest by, the United States. The Commissioner may, with the approval of the Secretary of the Treasury, purchase in the open market debentures issued as obligations of the General Insurance Fund or issued prior to the enactment of the Housing and Urban

79 STAT. 472.

12 USC 1709, 1715e.

Ante, p. 468.

Development Act of 1965 under other provisions of this Act, except debentures issued under the Mutual Mortgage Insurance Fund. Such purchases shall be made at a price which will provide an investment yield of not less than the yield obtainable from other investments authorized by this section. Debentures so purchased shall be canceled and not reissued.

"(d) Premium charges, adjusted premium charges, and appraisal and other fees received on account of the insurance of any mortgage or loan which is the obligation of the General Insurance Fund, the receipts derived from the property covered by such mortgages and loans and from the claims, debts, contracts, property, and security assigned to the Commissioner in connection therewith, and all earnings on the assets of the Fund shall be credited to the General Insurance Fund. The principal of, and interest paid and to be paid on, debentures which are the obligation of such Fund, cash insurance payments and adjustments, and expenses incurred in the handling, management, renovation, and disposal of properties acquired, in connection with mortgages and loans which are the obligation of such Fund, shall be charged to such Fund.

"(e) The General Insurance Fund shall not be used for carrying out the provisions of sections 203 (b), 203 (h), and 203 (i), or the provisions of section 213 to the extent that they involve mortgages the insurance for which is the obligation of the Cooperative Management Housing Insurance Fund created by section 213 (k); and nothing in this section shall apply to or affect any mortgages, loans, commitments, or insurance under such provisions."

OPTIONAL CASH PAYMENT OF INSURANCE BENEFITS

SEC. 215. Title V of the National Housing Act is amended by adding at the end thereof (after the new section added by section 214 of this Act) the following new section:

"OPTIONAL CASH PAYMENT OF INSURANCE BENEFITS

"SEC. 520. (a) Notwithstanding any other provisions of this Act with respect to the payment of insurance benefits, the Commissioner is authorized, in his discretion, to pay in cash or in debentures any insurance claim or part thereof which is paid on or after the date of the enactment of the Housing and Urban Development Act of 1965 on a mortgage or a loan which was insured under any section of this Act either before or after such date. If payment is made in cash, it shall be in an amount equivalent to the face amount of the debentures that would otherwise be issued plus an amount equivalent to the interest which the debentures would have earned, computed to a date to be established pursuant to regulations issued by the Commissioner.

"(b) The Commissioner is authorized to borrow from the Treasury from time to time such amounts as the Commissioner shall determine are necessary to make payments in cash (in lieu of issuing debentures guaranteed by the United States, as provided in this Act) pursuant to the provisions of this section. Notes or other obligations issued by the Commissioner in borrowing under this subsection shall be subject to such terms and conditions as the Secretary of the Treasury may prescribe. Each sum borrowed pursuant to this subsection shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the average market yield on outstanding marketable obligations of the United States of comparable maturities during the month preceding the issuance of such notes or other obligations."

79 STAT. 473.

APPROVAL OF TECHNICALLY SUITABLE MATERIALS

SEC. 216. Title V of the National Housing Act is amended by inserting after section 520 (added by section 215 of this Act) a new section as follows:

"APPROVAL OF TECHNICALLY SUITABLE MATERIALS

"SEC. 521. The Commissioner shall adopt a uniform procedure for the acceptance of materials and products to be used in structures approved for mortgages or loans insured under this Act. Under such procedure any material or product which the Commissioner finds is technically suitable for the use proposed shall be accepted. Acceptance of a material or product as technically suitable shall not be deemed to restrict the discretion of the Commissioner to determine that a structure, with respect to which a mortgage is executed, is economically sound or an acceptable risk."

WATER AND SEWER FACILITIES IN CONNECTION WITH CERTAIN

FEDERALLY ASSISTED HOUSING

SEC. 217. (a) Title V of the National Housing Act is amended by inserting after section 521 (added by section 216 of this Act) a new section as follows:

"WATER AND SEWER FACILITIES

"SEC. 522. Notwithstanding any other provision of this Act, no mortgage which covers new construction shall be approved for insurance under this Act (except pursuant to a commitment made prior to the date of the enactment of the Housing and Urban Development Act of 1965) if the mortgaged property includes housing which is not served by a public or adequate community water and sewerage system: Provided, That this limitation shall be applicable only to property which is not served by a system approved by the Commissioner pursuant to title X of this Act and which is situated in an area Ante, p. 461. certified by appropriate local officials to be an area where the establishment of public or adequate community water and sewerage systems is economically feasible: Provided further, That for purposes of this section the economic feasibility of establishing such public or adequate community water and sewerage systems shall be determined without regard to whether such establishment is authorized by law or is subject to approval by one or more local governments or public bodies."

(b) Section 1804 of title 38, United States Code, is amended by add- 72 Stat. 1206. ing at the end thereof a new subsection as follows:

(e) No loan for the purchase or construction of new residential property (other than property served by a water and sewerage system approved by the Federal Housing Commissioner pursuant to title X of the National Housing Act) shall be financed through the assistance of this chapter, except pursuant to a commitment made prior to the date of the enactment of the Housing and Urban Development Act of 1965, if such property is not served by a public or adequate community water and sewerage system and is located in an area where the appropriate local officials certify that the establishment of such systems is economically feasible. For purposes of this subsection, the economic feasibility of establishing public or adequate community water and sewerage systems shall be determined without regard to whether such establishment is authorized by law or is subject to approval by one or more local governments or public bodies."