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principal amount of such loan. In the case of a borrower of the character described in section 315 (a) (1) hereof, such stock subscriptions shall be paid for in cash at the time of application for the loan, or, at the election of the borrower, one-sixth of the total amount payable shall be paid at the time of application, one-sixth shall be paid prior to receipt of any proceeds of the loan from the Corporation, and the balance shall be paid in installments within twenty years thereafter. In the case of a borrower of the character described in section 315 (a) (2) hereof, such stock subscription shall be paid in installments within twenty years after the receipt of the first proceeds of the loan. Each borrower shall hold such stock in the Corporation until the value thereof shall equal, or be greater than, the unpaid balance of the mortgage loan, and any such unpaid balance shall be paid out of the proceeds of any sale of such stock. Dividends payable on stock paid in by a borrower shall be credited to any payments subsequently due on the stock subscription of such borrower.

"(c) After the amount of capital of the Corporation paid by such subscribers, other than the United States, equals $50,000,000, the Corporation shall thereafter apply annually to the payment and retirement of the shares of the capital stock held by the Secretary of the Treasury, all sums paid in as capital until all such capital stock held by the Secretary is retired at par plus any dividends which shall have accrued on such stock: Provided, That no such capital stock held by the Secretary shall be retired if such retirement would reduce the net capital, reserves, and surplus of the Corporation to an amount less than $150,000,000.

"(d) Upon any liquidation of the Corporation, all stockholders (including the United States if any of its stock has not been retired) shall share, in proportion to the stock held, in any assets of the Corporation in excess of the amount necessary to retire all outstanding stock at par, to pay accrued dividends on preferred stock, and to retire, pay, or settle all outstanding obligations and claims.

"BOARD OF DIRECTORS

"SEC. 308. The management of the Corporation shall be vested in a board of five directors appointed by the Administrator. The directors who are first appointed shall be designated to serve for terms of one, two, three, four, and five years, respectively, from the date of their appointment, but thereafter directors shall be appointed for a term of office of five years except that all vacancies shall be filled for the unexpired term.

A director shall hold office until his successor has been appointed and has qualified, unless sooner removed according to this section. The first and third vacancies resulting from the expiration of the initial terms of office shall be filled by the appointment of directors from among the members of stockholding corporations or other persons representative of housing cooperatives, and the successors to each of such directors shall also be appointed from among members of stockholding corporations or other persons representative of housing cooperatives. The Administrator shall designate a chairman from among the directors. The Administrator may remove a director from office at any time for inefficiency or failure to comply with any applicable provisions of this title or regulations issued thereunder. The Corporation may pay its directors reasonable compensation for their services and necessary expenses, subject to the approval of the Administrator.

“MORTGAGE LOANS

“Sec. 309. (a) To assist the production of housing of sound standards of design, construction, livability, and size for adequate family life available for families of moderate income, the Corporation, upon application of an eligible borrower (as herein defined) and subject to the terms and conditions of this title, may make a mortage loan (including advances during the development of the housing project) to such borrower to finance the development of a housing project to be undertaken by such borrower: Provided, That no such loan shall be made unless

"(1) the Administrator shall have certified that,

(A) the borrower is a bona fide nonprofit cooperative ownership housing corporation or a private nonprofit corporation of the character described in section 315 (a) hereof;

“(B) the proposed housing project will meet a need for housing for families of moderate income in the locality;

(C) the location and physical planning of the housing project will afford reasonable assurance as to the stability of the neighborhood, and the dwellings in the housing project will meet sound standards of design, construction, livability, and size for adequate family life; and

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“(D) the housing project will not be of elaborate or extravagant design or construction, and such design and construction and the proposed methods of construction and of operation and maintenance are such as will promote such economies as are contemplated to be achieved through the nonprofit character of the borrower, increased efficiency in production through the use of new or improved materials and techniques and methods of construction or otherwise, increased efficiency in operation and management, minimum necessary operating services, occupant

maintenance, or otherwise; and
"(2) the borrower shall have agreed with the Corporation-

(A) to establish an initial schedule of rents or charges for the dwellings in the housing project which will permit such dwellings to be made available for families of moderate income, and that such initial schedule of rents or charges and all revisions thereof shall be subject to the prior approval of the Corporation: Provided, That the Corporation shall not approve any initial schedule of rents or charges unless the Administrator has certified that such rents or charges will permit the dwellings to be made available for families of moderate income;

“(B) in the case of a borrower of the character described in section 315 (a) (2) (i), to give preference in the selection of tenants for the housing project (as among eligible applicants)

"first, to families which are to be displaced by any low-rent public housing project or by any public slum-clearance or redevelopment project initiated after January 1, 1947, or which were so displaced within three years prior to making application for admission to the housing project of the borrower; and as among such families first preference shall be given to families of disabled veterans whose disability has been determined by the Veterans' Administration to be service-connected, and second preference shall be given to families of deceased veterans and servicemen whose death has been determined by the Veterans' Administration to be service-connected, and third preference shall be given to families of other veterans and servicemen;

"second, to families of other veterans and servicemen and as among such families first preference shall be given to families of disabled veterans whose disability has been determined by the Veterans’ Administration to be service-connected, and second preference shall be given to families of deceased veterans and servicemen whose death has been determined by the Veterans' Administration to be service-connected; and

(C) to comply with such other terms and conditions as the Corporation finds, prior to the mortgage loan, are necessary or desirable to carry

out the purposes of this title. “(b) The mortgage loan shall involve a principal obligation in an amount (1) not exceeding the development cost (as herein defined) of the housing project as determined by the Administrator; and (2) not exceeding such amount as the Administrator shall have determined to be the maximum within which the project must be constructed in order that it may be made available for families of moderate income at rentals or charges within their means.

"(c) The mortgage loan shall provide for complete amortization within a period of fifty years by periodic payments upon such terms as the Corporation shall prescribe, and shall bear interest, on the amount of the principal obligation outstanding at any time, at a fixed rate, taking into account the cost to the Corporation of capital investment and borrowings from the private market, plus a percentage to compensate the Corporation for its estimated overhead and administrative expenses in connection with such loan and for proportionate payments to required reserves. In the event of the refinancing of such a loan, within such period as the Corporation shall prescribe, the amortization period may be extended to a date not later than sixty years after the date of the original mortgage. The mortgage loan may, in the discretion of the Corporation, include provisions for the deferment of payments of principal and interest thereunder: Provided, That such deferments shall not in the aggregate result in an extension of the maturity of the mortgage for a period of more than three years nor shall any such deferments result in an extension of the maturity of the mortgage for more than three years beyond the mortgage maturity otherwise authorized herein.

"(d) Subject to the provisions of this section, the mortgage loan shall be in such form, contain such provision as to security, repayment, and redemption, and be subject to such other terms and conditions as the Corporation may determine: Provided, That in the case of a borrower of the character described in section 315 (a) (1), the mortgage loan shall contain provisions requiring that such borrower have, to the extent permitted by State and local law, a priority for the purchasing of the interest of each of its members in the dwelling of such member in the event of the sale of such interest.

"(e) The borrower may, with the consent of the Corporation, pledge the contract or commitment of the Corporation to make a mortgage loan hereunder as security for a loan of construction funds from other sources.

'(f) The Corporation may charge to the borrower (in addition to any interest charges) an amount not exceeding 242 per centum of the principal amount of the mortgage loan for inspection and other services during the construction of the housing project. Such service charges may be included as a part of the development cost of the project and may be payable from the proceeds of any mortgage loan or advances thereon.

"OBLIGATIONS OF CORPORATION "SEC. 310. The Corporation is authorized to issue and have outstanding on and after July 1, 1950, notes or other obligations in an aggregate amount not to exceed $300,000,000 except that with the approval of the President such aggregate amount may be increased at any time or times on or after July 1, 1951, by additional amounts aggregating not more than $1,700,000,000 upon a determination by the President, taking into account the general effect of any such increase upon conditions in the building industry and upon the national economy that such increase is in the public iuterest: Provided, That the aggregate amount outstanding at any one time shall not exceed (1) fifteen times the aggregate par value of the Corporation's outstanding capital stock, reserves, and surplus, or (2) the unpaid principal of mortgage loans contracted for or held by it under this title (without regard to amounts or prior advances on such loans), plus the amount of its cash on hand and on deposit and the amount of its investments authorized herein. The notes and other obligations issued by the Corporation 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 such notes or other obligations. In the event the Corporation fails to pay upon demand, when due, the principal of, or interest on, any obligations so guaranteed, the Secretary of the Treasury shall pay to the holders the amounts thereof which are hereby authorized to be 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 notes or other obligations.

gage loans.

"RESERVES, DIVIDENDS, AND INVESTMENT OF FUNDS "SEC. 311. The Corporation shall carry to a specific reserve account for losses semiannually from interest receipts on mortgage loans amounts equal to oneeighth of 1 per centum per annum of the then outstanding balance of such mort

The Corporation shall make such charge-offs on account of depreciation or impairment of its assets as the Administrator shall require from time to time. In addition to the specific reserve account for losses, the Administrator shall require the establishment and maintenance of, and the Corporation shall establish and maintain, such reserve or reserves as he deems necessary. No dividends shall be paid except out of net earnings remaining after all reserves and charge-offs required under this title have been provided for, and then only with the approval of the Administrator. Such reserves, and all other funds of the Corporation not invested in mortgage loans or operating facilities, shall be kept in cash or on deposit or invested in bonds or other obligations of, or guaranteed as to principal and interest by, the United States.

TAXES

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"Sec. 312. All real property and tangible personal property of the Corporation shall be subject to State, county, municipal, or local taxation to the same extent according to its value as other similar property is taxed, and any real property shall be subject to special assessments for local improvements. Except as to such taxation of real property and tangible personal property, the Corporation, including but not limited to its franchise, capital, reserves, surplus, income, assets, and other property, shall be exempt from all taxation now or hereafter imposed by the United States or by any State, county, municipality, or local taxing authority. All notes and other obligations of the Corporation shall be exempt, both as to principal and interest, from all taxes (except surtaxes, estate, inheritance, and gift taxes) by any State, county, municipality, or local taxing authority.

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"PENALTIES

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"Sec. 314. (a) Any person who induces or influences a borrower hereunder to purchase or acquire property or to enter into any contract, in connection with any housing project to be financed, in whole or in part, with a loan made under this title, and willfully fails to disclose any interest, legal or equitable, which he has in such property or such contract, or any special benefit which he expects to receive as a result of such contract, shall be fined not more than $5,000, or imprisoned for not more than one year, or both.

*(b) No individual, association, partnership, or corporation shall hereafter use the words 'national mortgage corporation for housing cooperatives', or any combination of such words as the name or a part thereof under which he or it shall do business. Any such use shall constitute a misdemeanor and shall be punishable by a fine not exceeding $1,000.

(c) Whoever, for the purpose of obtaining any loan under this title, or any extension or renewal thereof, or the acceptance, release, or substitution of security therefor, or for the purpose of influencing in any way the action of the Corporation under this title, makes any statement, knowing it to be false, shall be punished by a fine of not more than $5,000, or by imprisonment for not more than one year, or both.

"(d) Whoever (1) falsely makes, forges, or counterfeits any obligation, in imitation of or purporting to be an obligation issued by the Corporation, or (2) passes, utters, or publishes, or attempts to pass, utter, or publish, any false, forged, or counterfeited obligation purporting to have been issued by the Corporation, knowing the same to be false, forged, or counterfeited, or (3) falsely alters any obligation issued or purporting to have been issued by the Corporation, or (4) passes, utters, or publishes, or attempts to pass, utter, or publish, as true, any falsely altered or spurious obligation issued or purporting to have been issued by the Corporation, knowing the same to be falsely altered or spurious, shall be punished by a fine of not more than $10,000, or by imprisonment for not more than five years, or both.

"PROTECTION OF LABOR STANDARDS

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"SEC. 313. In order to protect labor standards

(a) any contract for a loan pursuant to this title shall contain a provision requiring (1) that not less than the salaries prevailing in the locality, as determined or adopted (subsequent to a determination under applicable State or local law) by the Administrator, shall be paid to all architects, technical engineers, draftsmen, and technicians, employed in the development, and to all maintenance laborers and mechanics employed in the administration, of the housing project involved; (2) that not less than the wages prevailing in the locality, as predetermined by the Secretary of Labor pursuant to the Davis-Bacon Act (49 Stat. 1011), shall be paid to all laborers and mechanics employed in the development of the housing project involved; and (3) that certification as to compliance with the provisions of this subsection be made prior to the making of any payment under such contract;

"(b) the provisions of title 18, United States Code, section 874, and of title 40, United States Code, section 276c, shall apply to any housing project financed in whole or in part with funds made available pursuant to this title;

"(c) any contractor engaged on any housing project financed in whole or in part with funds made available pursuant to this title shall report monthly to the Secretary of Labor, and shall cause all subcontractors to report in like manner, within five days after the close of each month and on forms to be furnished by the United States Department of Labor, as to the number of persons on their respective pay rolls on the particular housing project, the aggregate amount of such pay rolls, the total man-hours worked, and itemized expenditures for materials. Any such contractor shall furnish to the Department of Labor the names and addresses of all subcontractors on the work at

the earliest date practicable. (e) Whoever, being connected in any capacity with the Corporation, (1) embezzles, abstracts, purloins, or willfully misapplies any moneys, funds, securities, or other things of value, whether belonging to it or pledged, or otherwise entrusted to it, or (2) with intent to defraud the Corporation or any other body, politic or corporate, or any individual, or to deceive any officer, auditor, or examiner of the Corporation, makes any false entry in any book, report, or statement of or to the Corporation, or without being duly authorized draws any order or issues, puts forth, or assigns any note, debenture, bond, or other such obliga

tion, or draft, bill of exchange, mortgage, judgment, or decree thereof, shall be punished by a fine of not more than $10,000, or by imprisonment for not more than five years, or both.

“(f) All general criminal and penal statutes of the United States relating to public moneys, property, or employees of the United States shall apply to public moneys, property, and employees of the Corporation. No officer or employee of the Corporation shall participate in any matter affecting his personal interests or the interests of any corporation, partnership, or association in which he is directly or indirectly interested.

“DEFINITIONS

“Sec. 315. As used in this title, the following terms shall have the meanings, respectively, ascribed to them below, and unless the context clearly indicates otherwise, shall include the plural as well as the singular number:

“(a) 'Eligible borrower' or 'borrower'shall mean (1) any private nonprofit cooperative ownership housing corporation the permanent occupancy of the dwellings of which is restricted to the members of such corporation, or (2) any private nonprofit corporation authorized to provide dwellings (i) the occupancy of which is to be permitted in consideration of agreed charges, or (ii) for sale to a corporation of the character described in clause (1) of this paragraph.

"(b) The term 'corporation' (except when used to designate the corporation created by section 306 hereof) shall mean either corporation' or'trust' and references to members of such corporations shall with respect to trusts mean the beneficiaries thereof.

“(c) 'Family of moderate income' shall mean any family of two or more persons within the estimated middle one-third, according to total money income from all sources, of all such families in the locality.

“(d) Housing project' shall mean a project (including all property, real and , personal, contracts, rights, and choses in action acquired, owned, or held by a borrower in connection therewith) of a borrower_designed and used primarily for the purpose of providing dwellings: Provided, That nothing in this title shall be construed as prohibiting the inclusion in a housing project of such stores, offices, or other commercial facilities, recreational or community facilities, or other nondwelling facilities as are necessary appurtenances to such housing project.

"(e) Development cost’ shall mean (1) the amount of the reasonable costs incurred by the borrower in, and necessary for, carrying out all works and undertakings for the development of a housing project and shall include the cost of all necessary surveys, plans and specifications, architectural, engineering, or other special services, land acquisition, site preparation, construction, and equipment, interest incurred during the development of the housing project up to the time of completion, initial working capital for the administration of the housing project, necessary expenses (including any initial operating deficit) in connection with the initial occupancy of the housing project; and the cost of such other items as the Administrator or Corporation shall determine to be necessary for the development of the housing project, or (2) the cost, as approved by the Administrator or the Corporation, incurred by the borrower in, and necessary for, the acquisition of a housing project developed with a loan made under this title.

“(f) 'Mortgage' or 'mortgage loan' shall mean 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 seventy-five years to run from the date the mortgage was executed; and the term 'first mortgage' shall mean 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.

“(g) The term 'veteran' shall mean a person who has served in the active military or naval service of the United States at any time on or after September 16, 1940, and prior to July 26, 1947, or at any time on or after April 6, 1917, and prior to November 11, 1918, and who shall have been discharged or released therefrom under conditions other than dishonorable. The term 'serviceman' shall mean a person in the active military or naval service of the United States who has served therein on or after September 16, 1940, and prior to July 26, 1947, or at any time on or after April 6, 1917, and prior to November 11, 1918.

“(h) The term 'going Federal rate' shall mean the annual rate of interest (or, if there shall be two or more such rates of interest, the highest thereof) specified in the most recently issued bonds of the Federal Government having a maturity of ten years or more.

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