SECTION 105-HOUSING FOT THE ELDERLY This section would amend section 202(a) of the Housing Act of 1959 to require that tenants of projects assisted with loans under that section pay a rental not less than the tenant's income contribution (as defined in section 502(f) (2) of the Mortgage Credit Assistance Act) up to fair market rent. Tenant incomes would be reviewed at least once every two years. Any increase required in the rental for existing tenants would be delayed for at least one year and then applied in two steps. In addition, this section would prohibit the approval of new loans after the effective date of section 502 of the Mortgage Credit Assistance Act (rental assistance program). SECTION 106-RENT SUPPLEMENT PROGRAM This section would amend section 101 of the Housing and Urban Development Act of 1965 to prohibit new contracts for rent supplement payments to be entered into after the effective date of section 502 of the Mortgage Credit Assistance Act. SECTION 107-EXEMPTION FROM STATE USURY LAWS OF FHA AND VA LOANS This section would exempt FHA insured and VA guaranteed mortgages and loans from the limitations on interest rates imposed by State or local usury laws. SECTION 108-AUTHORITY OF FNMA TO DEAL IN CONVENTIONAL MORTGAGES Subsection (a) would authorize the Federal National Mortgage Association, with the approval of the Secretary of Housing and Urban Development, to purchase, and lend on the security of, conventional mortgages. Under existing law, FNMA is authorized only to purchase (or lend on the security of) mortgages or loans insured by the Secretary of Housing and Urban Development or the Farmers' Home Administration or insured or guaranteed by the Veterans' Administration. Because the conventional mortgages will not be insured or the credit of the mortgagor and value of the property examined by a Federal agency, safeguards would be provided against the sale of "inferior" mortgages to FNMA. The seller would be required either to retain an interest in the mortgage (at least a 10 percent participation) or agree to repurchase or replace the mortgage if it is in default within three years of the purchase. In addition, if the seller is required only to retain a participation in the mortgage, the mortgage could not be purchased by FNMA pursuant to a commitment entered into prior to the date the mortgage was originated. Generally, mortgages eligible for purchase by FNMA would be required to have been originated within one year of the purchase date. However, up to 10 percent of the aggregate amount of conventional mortgages purchased by FNMA could be older mortgages purchased from sellers who were engaged in mortgage lending or investing activities at the time of the purchase. The principal obligation of any conventional mortgage could not exceed the dollar limitation on maximum mortgage amount in effect on the date the mortgage was originated which would be applicable to the mortgage if it were insured by the Secretary of Housing and Urban Development. Subsection (b) would exempt any liabilities that may be incurred by a national bank in connection with the sale of conventional mortgages to FNMA from the limitations on the amount of indebtedness such bank is authorized to incur. SECTION 109-TERMINATION OF INSURANCE AUTHORITY UNDER NATIONAL HOUSING ACT This section would rewrite section 217 of the National Housing Act to prohibit the insurance of mortgages and loans under that Act after the effective date of the Mortgage Credit Assistance Act, except pursuant to commitments issued prior to that date. Title III—Insurance for Property Improvement and Mobile Home Loans Sec. 601. Home Mortgage Insurance Claim Settlement Sec. 602. Forebearance of Payments Sec. 603. Acquisition of Home Mortgages to Avoid Foreclosure Sec. 604. Title VII-Miscellaneous Sec. 701. General Authorization for Dealing With and Disposing of Property Sec. 703. Sec. 704. Insurance for Mortgages Sold or Executed in Connection With the Sale of Prop Expenditures to Correct or Compensate for Structural Defects in Mortgaged Sec. 705. Statistical and Economic Surveys Sec. 706. Penalties TITLE II-PUBLIC RENTAL HOUSING AND HOMEOWNERSHIP ASSISTANCE PROGRAM SECTION 201-REVISION TO UNITED STATES HOUSING ACT OF 1937 This section would extensively revise the United States Housing Act of 1927-the program of assistance to local public housing agencies in the provision of housing for low income families. The principal changes are: -Subsidy provisions would be clarified and simplified. The Housing and Urban Development Act of 1969 authorized the payment of annual contributions in excess of debt service requirements up to the statutory annual maximuman amount equal to the capital cost of the project multiplied by the going Federal rate plus 2 percent. The revised Act perfects this amendment by making it explicit that this maximum subsidy is available to pay (a) the full principal ard interest payments due on the debt outstanding on the project, and (b) the amount necessary to make up the difference between the rents actually coilected from tenants and the operating costs (other than debt service costs on all dwelling units in the project with respect to which the tenant's rent does not equal the operating cost of the unit he occupies. The subsidy for operating costs would be allocated on a needs basis to those individual units in the project housing the very poor whose rental payment cannot cover the operating costs allocable to the unit they occupy. The total amount of operating subsidy available for a project would be limited by the statutory formula-the going Federal rate plus 2 percent times the capital cost, less the amount needed for debt service, is the amount available for operating subsidy. The amount of operating subsidy available per unit in a project would depend upon the income distribution of tenants occupying all units in the project. If, for example, 50 of the 100 dwelling units in the project are occupied by families whose required rental does not cover the operating costs on their units, the average operating subsidy per unit could not exceed the total amount of operating subsidy available for the project divided by 50, the number of dwelling units with respect to which operating subsidy is needed. The actual amount of operating subsidy provided for each individual unit requiring operating subsidy could, of course, be higher or less than this amount. With these perfecting changes, the present authorization to pay an additional annual subsidy of up to $120 per dwelling unit occupied by a special category family is no longer required and would be eliminated. -Rents for dwelling units would be required to be fixed on a uniform basis. The existing provision of law authorizing local agencies to fix rents was enacted in the context of a maximum Federal subsidy which could not exceed project debt service requirements-that is subsidy was not provided to cover deficiencies between rental charges and local agency operating costs excluding debt service costs. The fixing of rents by local agencies is incompatible with the payment of subsidy for operating costs. Since the tenant rental charge constitutes the basis for the subsidy amount, it would in effect permit the local agency to control the amount of Federal subsidy. The uniform rent criteria contained in the revised Act, which requires that rents be based on a percentage of the tenant's income (between 20 and 25 percent), would assure that the operating subsidy made available is allocated on a uniform and equitable basis. -Uniform income limit criteria would be established for the program in lieu of present provisions which require individual income limit studies for each locality. The criteria provide that dwelling units may be made available for families whose incomes at the time of their initial occupancy does not exceed 80 percent of the median income for the area in which the dwelling units are located. A significant change included in the criteria would permit 20 percent of the dwelling units to be occupied by families whose income at initial occupancy does not exceed the median income for the area. This limited authorization to broaden the economic range of families served by the program is directed toward improving the quality of life in the low income housing environment. The new income criteria would also eliminate existing requirements for the establishment of income limits for continued occupancy which have proven undesirable from the standpoint of achieving an economic mix of families in housing developments and have contributed to family insecurity and instability. A new public homeownership program would be established for low income families, which would permit individual low income families or an association formed by or for the benefit of such families to purchase newly developed housing as well as existing projects now operated as rental housing. Existing homeownership provisions of the United States Housing Act of 1937 are ineffective because they provide insufficient subsidy to assist a low income family in acquiring ownership and the purchaser has to wait a long period before achieving homeowner status. The new program provides for conveyance of the property as soon as the family undertakes the obligation to purchase the property by executing a mortgage to the public housing agency. The family enjoys all the benefits of homeownership immediately. Subsidy is provided up to the full amount of principal and interest payable by the public housing agency with respect to the property. The purchaser's contribution for homeownership would be based on the same income formu'a as used for rental housing (between 20 and 25 percent of income) and would have to be sufficient to cover utilities, taxes, and insurance. He would also be required to take care of his own maintenance requirements. Flexible dwelling unit construction and development cost limits would be established to replace the present fixed construction and equipment room cost limits which are difficult to relate to total development costs and have been largely ineffective in controlling costs. The construction cost per dwelling unit could not exceed by more than 10 percent the total construction cost established by the Secretary on the basis of uniform plans and specifications for each housing area. Total construction costs would have to constitute at least 65 percent of the total development cost, with other development costs such as land acquisi tion and site improvements limited to not more than 35 percent of the development cost. The 35 percent limitation on other development costs varies from the limit applicable to the private subsidized programs because of special factors which affect the cost of land and exterior improvements under the public program and because there are certain costs, such as the cost of nondwelling facilities and relocation payments, which are not includable under the private program. -The provision contained in subsection 15(10) of the existing Act authorizing grants for tenant services and programs to public housing agencies would be deleted. Section 601 of the bill provides for the inclusion of this provision as a part of a broadened program of advice and assistance with respect to housing for lower income families under section 106 of the Housing and Urban Development Act of 1968. The revised Act would delete a number of obsolete provisions, such as the sections concerning the creation of a United States Housing Authority, the making of capital grants, and the disposal of Federal projects, and wor1 make numerous technical amendments. This section amends the declaration of policy contained in section 1 of the existing Act to delete obsolete or unnecessary language. In this section and elsewhere in the revised Act the term "low income housing" is used in lieu of "low-rent housing." SECTION 2-DEFINITIONS This section would continue, with several important modifications, definitions contianed in section 2 of the existing Act. The definition of "low income housing" in section 2(1) would amend the existing definition so as to delete the requirement that income limits and rents be fixed by the local public housing agency. Statutory income limit and rent criteria are prescribed in section 9 of the revised Act. The existing definition would also be modified to delete language which requires the establishment of income limits for continued occupancy in low income housing. Under the revised Act income limits are applicable at the time of admission, but families would not be required to move because of subsequent increases in income. This section would also delete several terms, such as "slum" and "slum clearance" which are no longer pertinent to the program. A definition of "low income housing project" or "project" has been added to make it clear that the modernization or improvement of an existing low income housing project may constitute a separate project for purposes of assistance under the Act. SECTION 3-TAX EXEMPTION OF THE PUBLIC HOUSING AGENCIES This section is based on the provision contained in section 5(d) of the existing Act and provides that public housing agency obligations issued in connection with low income housing projects and the income from such projects shall be exempt from Federal taxes. SECTION 4-LOANS FOR LOW-INCOME HOUSING PROJECTS This section is based on the loan provisions contained in section 9 of the existing Act. The provision would be amended to require that loan contracts provide for the peridoic revision of the interest rate on the balance outstanding on the loan based on the going Federal rate for each six-month period. This variable interest rate requirement is the same as the requirement now applicable to loans under the urban renewal program. SECTION 5-ANNUAL CONTRIBUTIONS FOR LOW INCOME HOUSING PROJECTS This section is based on the annual contributions provisions contained in section 10 of the existing Act. It would amend the present section 10(a) so as to eliminate the authorization to pay an additional annual subsidy of up to $120 per dwelling unit occupied by an elderly or handicapped family, a displaced family, a very large family, or a family of unusually low income. The authoriza 773¤7i0m སྒྲ 1liS=[ @ 2e pགཔུསནཱཧ པུཏྟོ Act wingi auns punir housing *** Private Bromma is mos existing law by deleting the TOUNO approval before the section 2 pas my ey amend the present section 25 px to tenants so as to authorize such sales under the w cable to the new public homeownership pivari Whh w. why section 10 of the revised Act. SECTION 9--OCCUPANCY OF TOW ***** H4⠀ This section is a new section which establtati criteria which are compatible with thoan applicab ance program which would be authored umber of than Credit Assistance Act. Under present las, polph tom trg limits and rents subject to the approval of the b Subsection 9(a) provides that low the one hun buge available to families whose inom exceed 80 percent of the median 48-279 0-792 |