(1) have a mortgagee approved by the Commission as responsible and able to service the mortgage properly; and a mortgagor approved by the Commission as possessing the ability, experience, financial resources, and other qualifications necessary to the adequate operation and maintenance of the mortgaged property; "(2) involve an obligation in a principal amount which does not exceed 75 per centum of the cost (as estimated by the Commission) of the construction, reconstruction, or reconditioning financed by the loan or advance, but in no event to exceed 75 per centum of the amount which the Commission estimates will be the value of the property when the construction, reconstruction, or reconditioning is completed;

"(3) secure an obligation having a maturity date satisfactory to the Commission but not to exceed twenty years from the date of its execution;

"(4) contain amortization provisions satisfactory to the Commission requiring periodic payments by the mortgagor;

"(5) secure an obligation bearing interest (exclusive of premium charges for insurance) at a rate not to exceed 5 per centum per annum on the amount of the principal obligation outstanding at any time or not to exceed 6 per centum per annum if the Commission finds that in certain areas or under special circumstances the mortgage market demands it;

"(6) provide, in a manner satisfactory to the Commission, for the application of the mortgagor's periodic payments to amortization of the principal of the mortgage, exclusive of the amount allocated to interest and to the premium charge which is required for mortgage insurance as hereinafter provided;

"(7) contain such terms and provisions with respect to the construction, reconstruction, reconditioning, maintenance, or operation of the property, repairs, alterations, payment of taxes, insurance, delinquency charges, revisions, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters pertinent to the security as the Commission may prescribe; and

(8) secure a new loan or advance made to aid in financing the construction, reconstruction, or reconditioning, subsequent to the enactment of this title, of vessels owned by citizens of the United States which are designed principally for commercial use (a) in the coastwise or intercoastal trade; (b) on the Great Lakes, or on bays, sounds, rivers, harbors, or inland lakes of the United States; or (c) in foreign trade between the United States and foreign countries in continental North America, and between the United States and all islands lying between the continent of South America and the United States in the Gulf of Mexico, the Caribbean Sea, or the Atlantic Ocean.

"(b) No mortgage shall be accepted for insurance unless the Commission finds that the property or project with respect to which the mortgage is executed is economically sound.

"(c) The Commission is authorized to fix a premium charge for the insurance of mortgages under this title, but in the case of any mortgage such charge shall not be less than an amount equivalent to one-half of 1 per centum per annum nor more than an amount equiva

lent to 1 per centum per annum of the amount of the principal obligation of the mortgage outstanding at any time, without taking into account delinquent payments or prepayments. All such premium charges shall be payable by the mortgagee as prescribed by the Commission. 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 Commission is further authorized in its discretion to require the payment by the mortgagee of an adjusted premium charge in such amount as the Commission 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 under this section until such maturity date.

"(d) The Commission is authorized to charge and collect such amounts as it may deem reasonable for the investigation of applications for insurance, for the appraisal of properties offered for insurance, for the issuance of commitments, and for the inspection of such properties during construction, reconstruction, or reconditioning: Provided, That such charges shall not aggregate more than one-half of 1 per centum of the original principal amount of the mortgage to be insured. All moneys received under the provisions of this title shall be deposited in the fund.

"SEO. 1105. (a) In any case in which the mortgagee under an insured mortgage shall have foreclosed and acquired title and possession of the mortgaged property in accordance with regulations of, and within a period to be determined by, the Commission, or shall, with the consent of the Commission, have otherwise acquired such property from the mortgagor after default, the mortgagee shall be entitled to receive the benefits of the insurance as hereinafter provided, upon (1) the prompt conveyance to the Commission of title to the property which meets the requirements of rules and regulations of the Commission 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 the Commission of all claims of the mortgagee against the mortgagor or others, arising out of the mortgage transaction or foreclosure proceedings, except such claims as may have been released with the consent of the Commission. Upon such conveyance and assignment the obligation of the mortgagee to pay the premium charges for insurance shall cease and the Commission shall, subject to the cash adjustment hereinafter provided, issue to the mortgagee debentures having a total face value equal to the balance of the principal obligation of the mortgage which was unpaid on the date of the institution of foreclosure proceedings, or on the date of the acquisition of the property after default other than by foreclosure. In the event that the mortgagee acquires the property other than by purchase at foreclosure sale after foreclosure proceedings have been instituted, debentures having a total face value equal to the balance of the principal obligation of the mortgage which was unpaid on the date of the institution of foreclosure proceedings shall be issued to the mortgagee.

"(b) Debentures issued under this section shall be in such form and denominations in multiples of $50, shall be subject to such terms and conditions, and shall include such provisions for redemption, if

any, as may be prescribed by the Commission with the approval of the Secretary of the Treasury, and may be in coupon or registered form. Any difference between the value of the mortgage determined' as herein provided and the aggregate face value of the debentures issued, not to exceed $50, shall be adjusted by the payment of cash by the Commission to the mortgagee from the fund.

"(c) The debentures issued under this section shall be executed in the name of the fund as obligor, shall be signed by the Chairman of the Commission by either his written or engraved signature, and shall be negotiable. All such debentures shall be dated as of the date foreclosure proceedings were instituted, or the property was otherwise acquired by the mortgagee after default, and shall bear interest from such date at a rate determined by the Commission, with the approval of the Secretary of the Treasury, at the time the mortgage was offered for insurance, but not to exceed 3 per centum per annum, payable semiannually on the 1st day of January and the 1st day of July of each year, and shall mature three years after the 1st day of July following the maturity date of the mortgage on the property in exchange for which the debentures were issued. They shall be exempt, both as to principal and interest, from all taxation (except surtaxes, estate, inheritance, and gift taxes) now or hereafter imposed by the United States, by any Territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority. They shall be paid out of the fund, which shall be primarily liable therefor, and they 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 the debentures. In the event that the fund fails to pay upon demand, when due, the principal of, or interest on, any debentures so guaranteed, the Secretary of the Treasury shall pay to the holders the amount thereof, which is hereby authorized to be appropriated out of any money in the Treasury not otherwise 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 debentures.

"(d) Notwithstanding any other provision of law relating to the acquisition, handling, or disposal of property by the United States, the Commission shall have the right to complete, recondition, reconstruct, renovate, repair, maintain, operate, or charter, or sell for cash or credit, in its discretion, any properties conveyed to it in exchange for debentures as provided in this section; and notwithstanding any other provision of law, the Commission shall also have power to pursue to final collection, by way of compromise or otherwise, all claims against mortgagors assigned by mortgagees to the Commission as provided in this section.

"SEC. 1106. No provision of this title shall be construed to authorize the Commission to insure a mortgage securing any loan or advance made prior to the enactment of this title and no mortgage shall be insured for refinancing in whole or in part any existing mortgage indebtedness except

"(1) where a substantial portion of the total amount to be secured by the new mortgage shall be applied to new construction, reconditioning, or reconstruction of one or more of the mortgaged vessels: Provided, however, That the aggregate amount of all mortgages

insured under this paragraph and outstanding at any one time shall not exceed $20,000,000, and provided that all of the eligibility requirements of section 1104 not inconsistent with this paragraph are complied with;

"(2) where the Commission has insured a mortgage under the provisions of this title, and the mortgagor thereafter makes application to the mortgagee or another lender for an additional loan or advance for reconditioning or reconstructing the mortgaged property, the Commission may insure a new mortgage in the amount of the principal outstanding balance of the original mortgage plus the amount of the new loan, provided the total amount is within the limits of section 1104 and the new mortgage conforms to all other eligibility requirements thereof; and

(3) the Commission may insure mortgages given to finance the purchase of vessels theretofore acquired by the fund under the provisions of section 1105 and to secure loans or advances made for reconditioning and reconstruction of such vessels.

"SEC. 1107. Whoever, for the purpose of obtaining any loan or advance of credit from any person, partnership, association, or corporation with the intent that such loan or advance of credit shall be offered to or accepted by the Commission for insurance, or for the purpose of obtaining any extension or renewal of any loan, advance of credit, or mortgage insured by the said Commission, or the acceptance, release, or substitution of any security on such a loan, advance of credit, or for the purpose of influencing in any way the action of the said Commission under this title, makes, passes, utters, or publishes, or causes to be made, passed, uttered, or published any statement, knowing the same to be false, or alters, forges, or counterfeits, or causes or procures to be altered, forged, or counterfeited, any instrument, paper, or document, or utters, publishes, or passes as true, or causes to be uttered, published, or passed as true, any instrument, paper, or document, knowing it to have been altered, forged, or counterfeited, or willfully overvalues any security, asset, or income, shall be guilty of a misdemeanor and punished as provided under section 806 (b) of this Act.

"SEC. 1108. The Commission is authorized and directed to make such rules and regulations as may be deemed necessary or appropriate to carry out the purposes and provisions of this title.

"SEC. 1109. There is hereby authorized to be appropriated the sum of $1,000,000 and such further sums as may be necessary to carry out the provisions of this title."

Approved, June 23, 1938.

[CHAPTER 146-1ST SESSION]

[8. J. Res. 51]

JOINT RESOLUTION

To amend the joint resolution entitled "Joint resolution providing for the prohibition of the export of arms, ammunition, and implements of war to belligerent countries; the prohibition of the transportation of arms, ammunition, and implements of war by vessels of the United States for the use of belligerent states; for the registration and licensing of persons engaged in the business of manufacturing, exporting, or importing arms, ammunition, or implements of war; and restricting travel by American citizens on belligerent ships during war", approved August 31, 1935, as amended.

Resolved by the Senate and House of Representatives of the United States of America in Congress assembled, That the joint resolution entitled "Joint resolution providing for the prohibition of the export of arms, ammunition, and implements of war to belligerent countries; the prohibition of the transportation of arms, ammunition, and implements of war by vessels of the United States for the use of belligerent states; for the registration and licensing of persons engaged in the business of manufacturing, exporting, or importing arms, ammunition, or implements of war; and restricting travel by American citizens on belligerent ships during war", approved August 81, 1935, as amended, is amended to read as follows:

"EXPORT OF ARMS, AMMUNITION, AND IMPLEMENTS OF WAR

"SECTION 1. (a) Whenever the President shall find that there exists a state of war between, or among, two or more foreign states, the President shall proclaim such fact, and it shall thereafter be unlawful to export, or attempt to export, or cause to be exported, arms, ammunition, or implements of war from any place in the United States to any belligerent state named in such proclamation, or to any neutral state for transshipment to, or for the use of, any such belligerent

state.

"(b) The President shall, from time to time, by proclamation, extend such embargo upon the export of arms, ammunition, or implements of war to other states as and when they may become involved in such war.

"(c) Whenever the President shall find that a state of civil strife exists in a foreign state and that such civil strife is of a magnitude or is being conducted under such conditions that the export of arms, ammunition, or implements of war from the United States to such foreign state would threaten or endanger the peace of the United States, the President shall proclaim such fact, and it shall thereafter be unlawful to export, or attempt to export, or cause to be exported, arms, ammunition, or implements of war from any place in the United States to such foreign state, or to any neutral state for transshipment to, or for the use of, such foreign state.

(d) The President shall, from time to time by proclamation, definitely enumerate the arms, ammunition, and implements of war,