paid in respect of all insurance heretofore and hereafter granted under this section and section 6, as amended, shall not exceed in the aggregate $100,000,000. NOTE.-Section 2 (b) is amended by section 37 of the bill.

(b) No insurance shall be granted under this section to any such financial institution with respect to any obligation representing any such loan, advance of credit, or purchase by [it (1)] it, if the amount of such loan, advance of credit, or purchase exceeds $10,000 with respect to loans, advances, or purchases for financing repairs, alterations, or improvements upon existing structures, or exceeds $2,500 with respect to loans, advances, or purchases for financing the building of new structures, nor unless the obligation bears such interest, has such maturity, and contains such other terms, conditions, and restrictions as the Administrator shall prescribe in order to make credit available for the purposes of this title, [and (2) unless the amount of such loan, advance of credit, or purchase is not in excess of $2,000, except that in the case of any such loan, advance of credit, or purchase made for the purpose of such financing with respect to real property already improved by apartment or multiple-family houses, hotels, office, business, or other commercial buildings, hospitals, orphanages, colleges, schools, churches, or manufacturing or industrial plants, or improved by some other structure which is to be converted into a structure of any of the types herein enumerated, such insurance may be granted if the amount of the loan, advance of credit, or purchase is not in excess of $50,000: Provided: That after April 1, 1936, no insurance shall be granted under this section to any such financial institution with respect to any obligation representing any such loan, advance of credit or purchase by it in the amount of $2,000 or less for the purpose of financing the purchase and installation of equipment and machinery upon improved real property.]

TITLE II-MUTUAL MORTGAGE INSURANCE

NOTE.-Section 201 is amended by sections 2 and 3 of the bill.

DEFINITIONS

SECTION 201. As used in section 203 of this title

(a) The term "mortgage" means 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 fifty years to run from the date the mortgage was executed [, upon which there is located a dwelling for not more than four families which is used in whole or in part for residential purposes, irrespective of whether such dwelling has a party wall or is otherwise physically connected with another dwelling]; and the term "first mortgage" means 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] State, district, or Territory in which the real estate is located, together with the credit instruments, if any, secured thereby.

(b) The term "mortgagee" includes the original lender under a mortgage, and his successors and assigns approved by the Administrator; and the term "mortgagor" includes the original borrower under a mortgage and his successors and assigns.

(c) The term "maturity date" means the date on which the mortgage would mature if paid in accordance with periodic payments provided for therein.

MUTUAL MORTGAGE INSURANCE FUND

NOTE.-Section 202 is amended by section 4 of the bill.

SEC. 202. There is hereby created a Mutual Mortgage Insurance Fund (hereinafter referred to as the "Fund"), which shall be used by the Administrator as a revolving fund for carrying out the provisions of this title with respect to mortgages insured under section 203 as hereinafter provided, and there shall be allocated immediately to such Fund the sum of $10,000,000 out of funds made available to the Administrator for the purposes of this title.

INSURANCE OF MORTGAGES

NOTE.-Section 203 (a) is amended by section 5 of the bill.

SEC. 203. (a) The Administrator is authorized, upon application by the mortgagee, to insure as hereinafter provided any mortgage offered to him [within one year from the date of its execution] which is eligible for insurance as hereinafter

provided, and, upon such terms as the Administrator may prescribe, to make commitments for the insuring of such mortgages prior to the date of their execution or disbursement thereon: Provided, That, except with the approval of the President, [(1)] the aggregate outstanding principal obligation of all mortgages [on property and low-cost housing property and projects existing on the date of enactment of this Act and] insured under this title shall [not] at no time exceed [$1,000,000,000, and (2) the insurance of mortgages on property and low-cost housing projects constructed after the passage of this Act shall be limited to a similar amount] $2,000,000,000: And provided further, That on and after July 1, 1939, no mortgages shall be eligible for insurance under this title except mortgages that cover property which is approved for mortgage insurance prior to the completion of the construction of such property, or cover property the construction of which was commenced after June 27, 1934 and completed before July 1, 1989; except that this proviso shall not apply to any mortgage on property which at any time has been covered by a mortgage insured by the Administrator.

NOTE.-Section 203 (b) (1) (2) and (3) is amended by sections 6, 7, and 8 of the bill.

(b) To be eligible for insurance under this section a mortgage shall

(1) [Have, or be] Be held by a mortgagee approved by the Administrator as responsible and able to service the mortgage properly.

(2) Involve a principal obligation (including such initial service charges, [and] appraisal, inspection, and other fees as the Administrator shall approve) in an amount

(A) not to exceed $16,000 and not to exceed 80 per centum of the appraised value [of the property] (as of the date the mortgage is [executed] accepted for insurance) of a property upon which there is located a dwelling or dwellings designed principally for residential use for not more than four families in the aggregate, irrespective of whether such dwelling or dwellings have a party wall or are otherwise physically connected with another dwelling or dwellings, or

(B) not to exceed $5,400 and not to exceed 90 percentum of the appraised value (as of the date the mortgage is accepted for insurance) of a property upon which there is located a dwelling designed principally for a singlefamily residence the construction of which (i) is begun after the date of enactment of the National Housing Act Amendments of 1937 and which is approved for mortgage insurance prior to the beginning of construction, or (ii) the construction of which was begun after January 1, 1937, and before the date of enactment of such Act, and which has not been sold or occupied since completion: Provided, That with respect to mortgages insured under this paragraph the mortgagor shall be the owner and occupant of the property at the time of the insurance and shall have paid on account of the property at least 10 per centum of the appraised value in cash or its equivalent, or

(C) (i) Not to exceed $8,600 in respect of a property which complies with the conditions set forth in paragraph (B) above except as to the amount of the principal obligation, and which has an appraised value (as of the date the mortgage is accepted for insurance) in excess of $6,000 but not in excess of $10,000, and (ii) not to exceed 90 per centum of $6,000 of such value plus 80 per centum of the balance of such value.

(3) Have a maturity satisfactory to the Administrator, but not to exceed twenty years from the date of the insurance of the mortgage.

(4) Contain complete amortization provisions satisfactory to the Administrator requiring periodic payments by the mortgagor not in excess of his reasonable ability to pay as determined by the Administrator.

(5) Bear interest (exclusive of premium charges for insurance) at 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 Administrator finds that in certain areas or under special circumstances the mortgage market demands it.

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

(7) Contain such terms and provisions with respect to insurance, repairs, alterations, payment of taxes, default reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters as the Administrator may in his discretion prescribe.

NOTE.-Section 203 (e) is amended by section 9 of the bill.

"(c) The Administrator is authorized to fix a premium charge for the insurance of mortgages under this section [(to be determined in accordance with the risk involved)] which in no case shall be less than an amount equivalent to one-half of 1 per centum per annum nor more than an amount equivalent to 1 per centum per annum of the amount of the [original face of the mortgage] principal obligation outstanding at any time, without taking into account delinquent payments or prepayments, except that as to mortgages described in paragraph (B) of section 203 (b) (2) and accepted for insurance prior to July 1, 1939, the premium charge may be one-fourth of 1 per centum per annum on such outstanding principal [and which shall be payable annually in advance by the mortgagee]. Such premiums shall be payable by the mortgagee either in cash or debentures issued by the Administrator under this title, at par plus accrued interest, in such manner as may be prescribed by the Administrator: Provided, That the Administrator may require the payment of one or more such premiums at the time the mortgage is insured at such discount rate as he may prescribe not in excess of the interest rate specified in the mortgage. If the Administrator finds upon the presentation of a mortgage for insurance and the tender of the initial premium charge that the mortgage complies with the provisions of this section, such mortgage may be accepted for insurance by endorsement or otherwise as the Administrator may prescribe; but no mortgage shall be accepted for insurance under this section unless the Administrator finds that the project with respect to which the mortgage is executed is economically sound. 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 specified in the mortgage, the Administrator is further authorized in his discretion to require the payment by the [mortgagor] mortgagee of a premium charge in such amount as the Administrator 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] date; and in the event that the principal obligation is paid in full as herein set forth and a mortgage on the same property is accepted for insurance at the time of such payment, the Administrator is authorized to refund to the mortgagee for the account of the mortgagor all, or such portion as he shall determine to be equitable, of the current unearned annual mortgage-insurance premium theretofore paid.

(d) The Administrator is authorized and directed to make such rules and regulations as may be necessary to carry out the provisions of this section. NOTE.-Section 204 (a) is amended by section 10 of the bill.

PAYMENT OF INSURANCE

SEC. 204. (a) (1) In any case in which the mortgagee under [an insured] a mortgage insured under section 203 or section 210 shall have foreclosed and taken possession of the mortgaged property in accordance with regulations of, and within a period to be determined by, the Administrator, or shall, with the consent of the Administrator, have otherwise acquired such property from the mortgagor after default, the [mortgagee shall be entitled, upon mortgagee, upon (A) the prompt conveyance to the Administrator of such title to [such] the property [satisfactory to him and] as meets the requirements of rules and regulations of the Administrator in force at the time the mortgage was insured and evidenced in such manner as may be prescribed by such rules and regulations, and (B) the assignment to him 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 Administrator, shall be entitled to receive the benefit of the insurance as hereinafter provided. Upon such conveyance and assignment the obligation of the mortgagee to pay the [annual] premium charges for insurance shall cease and the Administrator [shall issue] shall, subject to the cash adjustment hereinafter provided, issue to the mortgagee debentures having a total face value equal to the value of the mortgage [on the date of the delivery of the property to the Administrator] as hereinafter defined and a certificate of claim, as hereinafter provided. For the purposes of this subsection, the value of the mortgage shall be determined, in accordance with rules and regulations prescribed by the Administrator, by adding to the amount of the original principal of the mortgage which [is] was unpaid on the date of [such delivery, (1) interest on such unpaid principal from the date foreclosure proceedings were instituted or the property was otherwise acquired as provided in this subsection to the date of such delivery at the rate provided for

in the debentures issued to the mortgagee, less any amount received on account of interest accruing on such unpaid principal between such dates, and (2) the] the institution of foreclosure proceedings, or the acquisition of the property otherwise after default, the amount of all payments which have been made by the mortgagee for [taxes and insurance] taxes, special assessments, and water rates which are liens prior to the mortgage, insurance on the property mortgaged and any mortgage insurance premiums paid after the institution of foreclosure proceedings or the acquisition of the property otherwise after default and by deducting from such total any net amount received on account of the mortgage after the institution of foreclosure proceedings or the acquisition of the property otherwise after default and from any source relating to the property on account of rent or other income after deducting reasonable expenses incurred in handling the property between such dates: Provided, That with respect to mortgages which are accepted for insurance prior to July 1, 1939, under section 203 (b) (2) (B) of this Act, as amended, and which are foreclosed before there shall have been paid on account of the principal a sum equal to 10 per centum of the appraised value of the property as of the date the mortgage was accepted for insurance, there may be included in the debentures issued by the Administrator, on account of foreclosure costs actually paid by the mortgagee and approved by the Administrator, an amount not in excess of 2 per centum of the unpaid principal of the mortgage as of the date of the institution of foreclosure proceedings, but in no event in excess of $75.

(2) The Administrator may at any time, under such terms and conditions as he may prescribe, consent to the release of the mortgagor from his liability under the mortgage or the credit instrument secured thereby, or consent to the release of parts of the mortgaged property from the lien of the mortgage.

(3) Debentures issued under this section shall be in such form and denominations in multiples of $50 and subject to such terms and conditions and shall include such provisions for redemption as may be prescribed by the Administrator 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 by the Administrator of cash from the Fund as to mortgages insured under section 208 and from the Housing Fund as to mortgages insured under section 210.

NOTE.-Section 204 (b) is amended by section 11 of the bill.

(b) The debentures issued under this section to any mortgagee shall be executed in the name of the Mutual Mortgage Insurance Fund as obligor and signed by the Administrator by either his written or engraved signature, and shall be negotiable. They 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 Administrator 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. [All such debentures shall be subject only to such Federal, State, and local taxes as the mortgages in exchange for which they are issued would be subject to in the hands of the holder of the debentures and shall be a liability of the Fund only; except that debentures issued in exchange for mortgages insured under this section prior to July 1, 1937, shall be fully guaranteed as to principal and interest by the United States.] Such debentures as are issued in exchange for property covered by mortgages insured after the effective date of this amendment 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 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 [amount in the Fund is insufficient to pay] 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] 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. Mortgagees of mortgages accepted for insurance prior to this amendment shall be entitled to receive cash adjustments and debentures issuea in accordance with this section as hereby amended.

NOTE.-Section 204 (c) is amended by section 12 of the bill.

(c) The certificate of claim issued by the Administrator to any mortgagee shall be for such an amount [which] as the Administrator determines to be [sufficient, when added to the] sufficient to equal the difference between the aggregate face value of the debentures issued to the mortgagee, to equal] plus the cash adjustment provided for in subsection (a) of this section and the amount which the mortgagee would have received if, at the time of the [conveyance to the Administrator of the property covered by the mortgage, the mortgagor had redeemed the property and paid in full all obligations under the mortgage and those arising out of the foreclosure proceedings] acquisition of the title by the mortgagee in accordance with subsection (a) of this section, all obligations of the mortgagor based on the mortgage indebtedness had been discharged in full, including a reasonable amount for necessary expenses incurred by the mortgagee in connection with the foreclosure proceedings, or the acquisition of the mortgaged property otherwise, and the conveyance thereof to the Administrator. Each such certificate of claim shall provide that there shall accrue to the holder of such certificate with respect to the face amount of such certificate, an increment at the rate of 3 per centum per annum which shall not be compounded. The amount to which the holder of any such certificate shall be entitled shall be determined as provided in subsection (d) of this section. NOTE.-Section 204 (d) is amended by section (13) of the bill.

(d) If the net amount realized from any property conveyed to the Administrator under this section and the claims assigned therewith, after deducting all expenses incurred by the Administrator in handling, dealing with, and disposing of such property and in collecting such claims, exceeds the face amount of the debentures issued and cash paid in exchange for [the mortgage covering] such property plus all interest paid on such debentures, such excess shall be divided as follows:

(1) If such excess is greater than the total amount payable under the certificate of claim issued in connection with such property, the Administrator shall pay to the holder of such certificate the full amount so payable; and any excess remaining thereafter shall be paid to the mortgagor of such property. (2) If such excess is equal to or less than the total amount payable under such certificate of claim, the Administrator shall pay to the holder of such certificate the full amount of such excess.

NOTE.-Section 204 (e) is amended by section 14 of the bill.

(e) Notwithstanding any other provision of law relating to the acquisition, handling, or disposal of real property by the United States, the Administrator shall have power to deal with, complete, rent, renovate, modernize, insure, or sell for cash or credit, in his discretion, any properties conveyed to him in exchange for debentures and certificates of claim as provided in this section; and notwithstanding any other provision of law, the Administrator shall also have power to pursue to final collection, by way of compromise 'or otherwise, all claims against mortgagors assigned by mortgagees to the Administrator as provided in this [section] section: Provided, That section 3709 of the Revised Statutes shall not be construed to apply to any purchase or service on account of such property.

(f) No mortgagee or mortgagor shall have, and no certificate of claim shall be construed to give to any mortgagee or mortgagor, any right or interest in any property conveyed to the Administrator or in any claim assigned to him; nor shall the Administrator owe any duty to any mortgagee or mortgagor with respect to the handling or disposal of any such property or the collection of any such claim.

CLASSIFICATION OF MORTGAGES AND REINSURANCE FUND

NOTE.-Section 205 (a) is amended by section 15 of the bill.

SEC. 205. (a) Mortgages accepted for insurance under [this title] section 208 shall be [80] classified into groups [that the mortgages in any group shall involve substantially similar risk characteristics and have similar maturity dates] in accordance with sound actuarial practice and risk characteristics. Premium [charges] charges, appraisal and other fees received for the insurance of any such mortgage, the receipts derived from the property covered by the mo tgage and elaims assigned to the Administrator in connection [therewith,] therewith and all earnings on the assets of the group account shall be credited to the account of the group to which the mortgage is assigned. The principal of and interest paid and to be paid on debentures issued in exchange for [any mortgage] property conveyed to the Administrator under section 204 in connection with mortgages