ADMINISTRATION

SEC. 8. In carrying out the provisions of this Act, the Secretary is authorized (1) to make such expenditures as may be necessary, (2) to sue and be sued, (3) to make to such rules and regulations as may be necessary, and (4) to provide or obtain technical assistance in the planning for and construction of projects to be covered by mortgages insured under this Act.

TITLE II—INSURANCE FUNDS, PREMIUMS AND CHARGES

INSURANCE FUNDS

SEC.8 201. (a) The General Insurance Fund, created pursuant to section 519 of the National Housing Act, shall be used by the Secretary as a revolving fund for carrying out both his obligations incurred pursuant to the National Housing Act and, except as otherwise provided in this section, his obligations with respect to

(1) property improvement and mobile home loans under title III;

(2) home mortgages insured under section 401;

(3) project mortgages insured under sections 501, 503, and 505; and
(4) supplemental project loans insured under section 504.

(b) The Special Risk Insurance Fund, created pursuant to section 238(b) of the National Housing Act, shall be used by the Secretary as a revolving fund for carrying out both his obligations incurred pursuant to the National Housing Act and his obligations with respect to

(1) home mortgages insured under section 402;

(2) home mortgages insured under section 401 where the mortgage involves experimental property, property in an older and declining area, or housing for employees of research and development installations;

(3) project mortgages insured under section 502;

(4) project mortgages insured under sections 501 and 503 where the mortgage involves experimental property or property in an older and declining area; and

(5) supplemental project loans insured under section 504, where the Special Risk Insurance Fund is obligated for the insurance of the original project mortgage.

(c) The Cooperative Management Housing Insurance Fund, created pursuant to section 213(k) of the National Housing Act, shall be used by the Secretary as a revolving fund for carrying out both his obligations incurred pursuant to the National Housing Act and his obligations with respect to

(1) project mortgages insured under section 501 where the mortgagor is a cooperative; and

(2) supplemental project loans insured under section 504, where the Cooperative Management Housing Insurance Fund is obligated for the insurance of the original project mortgage or where the original project mortgage covering a cooperative housing project is uninsured.

(d) All premiums, fees, charges, and other income received by the Secretary in connection with the insurance of mortgages or loans shall be credited to the fund, obligated for such insurance. All payments made pursuant to claims of mortgagees cash adjustments, the principal of and interest paid on debentures, expenses incurred in connection with the acquisition and disposal of property, nonadministrative and administrative expenses, and all other authorized expenditures incurred pursuant to this Act and the National Housing Act shall be paid out of the fund obligated for such insurance.

(e) The Secretary is authorized to borrow from the Treasury from time to time such amounts as the Secretary shall determine are necessary to pay insurance claims in cash, in lieu of issuing debentures. Notes or other obligations issued by the Secretary for amounts borrowed under this subsection shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such notes or other obligations.

(f) Moneys in an insurance fund not needed for current operations of the fund shall be deposited with the Treasurer of the United States to the credit of the fund or invested in bonds or other obligations of, or in bonds or other obligations guaranteed by, the United States or any agency of the United States. The Secretary, with the approval of the Secretary of the Treasury, may purchase in the open market debentures which are the obligation of the fund. Such purchases shall be made at a price which will provide an investment yield of not less than the yield obtained from other investments authorized by this subsection. Debentures so purchased shall be canceled and not reissued.

(g) The Secretary is authorized to advance from one insurance fund to another such amounts as he considers necessary for the administration of the funds. Scuh advances shall be repayable at such times and at such rates of interest as the Secretary deems appropriate.

(h) There is authorized to be appropriated such sums as may be needed from time to time to cover losses sustained by the General Insurance Fund or the Special Risk Insurance Fund.

INSURANCE PREMIUMS AND CHARGES

SEC. 202. (a) The Secretary is authorized to fix an insurance premium for the insurance of mortgages and loans under this Act. The Secretary may require the payment of the insurance premium on an advance or a deferred basis, except that with respect to any mortgage or loan insured under title V or with respect to any loan under title III, such insurance premium shall be payable annually in advance by the mortgagee or lender.

(b) In the event that the principal obligation of any mortgage or loan insured under title IV or title V is paid in full prior to the maturity date, the Secretary is uathorized in his discretion to require the payment by the mortgagee or the lender of an adjusted premium charge in such amount as the Secretary determines to be equitable, but not in excess of the aggregate amount of the insurance premium that the mortgagee or lender would otherwise have been required to pay if the mortgage or loan had continued to be insured until such maturity date. Where such prepayment occurs, the Secretary is authorized to refund to the mortgagee or the lender for the account of the mortgagor or the borrower all, or such portion as he shall determine to be equitable, of the current unearned insurance premium theretofore paid.

(c) The Secretary is authorized to terminate any insurance contract upon request by the mortgagor or borrower and the mortgagee or lender. As a condition to terminating the insurance, the Secretary is authorized in his discretion to require the payment of a termination charge computed in the same manner as the adjusted premium charge.

(d) The payments specified in subsections (a), (b), and (c) shall be payable by the mortagee or the lender either in cash or in debentures issued by the Secretary except that the insurance premium for loans under title III shall be paid only in cash. The debentures presented for such payment shall represent obligations of the particular insurance fund to which such insurance premium is to be credited. (e) (1) In the case of a mortgage insured under section 401 covering a singlefamily dwelling or a one-family unit in a condomimiun where the mortgagor is a serviceman who at the time of insurance or assumption of the mortgage is the owner of the property and either occupies the property or certifies that his failure to do so is the result of his service assignment, the mortgage insurance premiums fixed by the Secretary shall not be payable by the mortgagee during the period of ownership of the property involved. Such premiums shall be paid not less frequently than once a year, upon request of the Secretary, by the Secretary of Defense or the Secretary of Transportation, as the case may be, from the respective appropriations available for pay and allowances of servicemen. (2) As used in this subsection

(A) The term "serviceman" means a person to whom the Secretary of Defense, or the Secretary of Transportation, as the case may be, has issued a certificate indicating that such person requires housing, is serving on active duty in the Armed Forces of the United States and has served on active duty for more than two years, but a certificate shall not be issued to any person ordered to active duty for training purposes only. The Secretary of Defense and the Secretary of Transportation, respectively, are authorized to prescribe rules and regulations governing the issuance of such certificate and may withhold issuance of more than one such certificate to a serviceman whenever in his discretion issuance is not justified due to circumstances resulting from his service assignment.

(B) The term "period of ownership" means the period, for which mortgage insurance premiums are fixed, prior to the date that the Secretary of Defense or the Secretary of Transportation, as the case may be, furnishes the Secretary with a certification that such ownership (as defined by the Secretary) has terminated.

(3) Where a serviceman dies while on active duty in the Armed Forces of the United States, leaving a surviving widow as owner of the property, the period of ownership shall extend for two years beyond the date of the serviceman's death or until the date the widow disposes of the property, whichever date occurs first. The Secretary of Defense or the Secretary of Transportation, as the case may be, shall notify such widow promptly following the serviceman's death of the additional costs to be borne by the mortgagor following termination of the two-year period.

PROCESSING FEES AND SERVICE CHARGES

SEC. 203. (a) The Secretary is authorized to charge and collect from the mortgagee or lender such amounts as he may deem reasonable for the processing of a mortgage or loan insurance application and for the appraisal and inspection of the property or project to be covered by the mortgage to be insured or for other services performed by the Secretary. These fees and charges shall be payable by the mortgagee or lender in cash at such time as the Secretary may require.

(b) The Secretary is authorized to include in any mortgage or loan insured under this Act or in any loan made payable to the Secretary a provision requiring the mortgagor or borrower to pay a service charge to the Secretary in the event the mortgage or loan is held by the Secretary. The service charge shall not exceed the amount prescribed by the Secretary for insurance premiums applicable to such mortgage or loan.

TITLE III-INSURANCE FOR PROPERTY IMPROVEMENT AND MOBILE HOME LOANS

TYPES OF LOANS

SEC. 301. (a) The Secretary is authorized to insure financial institutions against losses which they may sustain as a result of making, advancing credit in connection with, or purchasing property improvement and mobile home loans meeting the requirements of this title.

(b) The property improvement loan shall be for the purpose of financing alterations, repairs, and improvements upon or in connection with existing structures, and the building of new structures, upon urban, suburban, or rural real property (including the restoration, rehabilitation, rebuilding, and replacement of such improvements which have been damaged or destroyed by earthquake, conflagration, tornado, hurricance, cyclone, flood or other catastrophe), by the owners thereof or by the lessees of such real property under a lease expiring not less than six months after the maturity of the loan or advance of credit.

(c) The mobile home loan shall be for the purpose of financing the purchase of a mobile home to be used by the owner as his principal residence.

LOAN TERMS

SEC. 302. (a) A loan financing property improvements shall—

(1) involve an amount not exceeding $6,500, except that, if the loan is made for the purpose of financing the alteration, repair, improvement, or conversion of an existing structure used or to be used as an apartment house or a dwelling for two or more families, the loan shall not exceed $15,000 nor an average amount of $3,500 per family unit; and

(2) have a maturity not exceeding seven years and thirty-two days, except that such maturity limitation shall not apply if the loan is for the purpose of financing the construction of a new structure for use in whole or in part for agricultural purposes.

(b) A loan financing the purchase of a mobile home shall—

(1) involve an amount not exceeding $10,000 ($15,000 in the case of a mobile home composed of two or more modules); and

(2) have a maturity not exceeding twelve years and thirty-two days (fifteen years and thirty-two days in the case of a mobile home composed of two or more modules).

REFINANCING

SEC. 303. Any loan with respect to which insurance is granted under this title may be reaffirmed and the maturity thereof extended in accordance with such terms and conditions as the Secretary may prescribe, but in no event for an additional amount or term in excess of the maximum provided for in section 302.

PROHIBITIONS

SEC. 304. The Secretary is authorized to prevent the use of any financial assistance under this title

(1) which would, through multiple loans, result in an outstanding aggregate loan balance with respect to the same property or mobile home exceeding the dollar amount limitation prescribed in this title for the type of loan involved; or

(2) which involves new residential structures (other than mobile homes) that have not been completed and occupied for at least six months, except where such requirement is waived by the Secretary.

PROPERTY STANDARDS

SEC. 305. (a) The Secretary may from time to time declare ineligible for financing under this title any item, product, alteration, repair, improvement or class thereof, which he determines would not substantially protect or improve the basic livability or utility of properties which are to be improved by financing provided under this title. He may also declare ineligible for financing under this title any item which he determines is especially subject to selling abuses.

(b) The Secretary shall, with respect to mobile homes to be financed under this title

(1) prescribe minimum property standards to assure the livability and durability of the mobile home and the suitability of the site on which the mobile home is to be located; and

(2) obtain assurances from the borrower that the mobile home will be placed on a site which complies with the standards prescribed by the Secretary and with local zoning and other applicable local requirements.

CONTRACT PROVISIONS

SEC. 306. (a) The insurance granted by the Secretary to any financial institution on loans, advances of credit, and purchases made by such financial institution shall not exceed either

(1) 10 per centum of the total amount of such loans, advances of credit, and purchases made under and reported for insurance under this title and under section 2 of the National Housing Act after July 1, 1939; or

(2) 90 per centum of the amount of loss on any individual loan, advance of credit, or purchase.

(b) Any payment for loss made to an approved financial institution under this title shall be final and incontestable after two years from the date the claim was certified for payment by the Secretary, in the absence of fraud or misrepresentation on the part of such institution, unless a demand for repurchase of the obligation shall have been made on behalf of the United States prior to the expiration of such two-year period.

WAIVER OF REQUIREMENTS

SEC. 307. The Secretary is authorized to waive compliance with any regulations issued by him pursuant to this title, if the enforcement of such regulations would impose an injustice upon an insured financial institution that has substantially complied with the requirements of such regulations and has acted in good faith. Such waiver shall only be exercised where it does not involve an increase in the obligation of the Secretary beyond the obligation which would have been involved if the regulation had been fully complied with.

TRANSFER OF INSURANCE

SEC. 308. The Secretary is authorized to transfer to any approved financial institution the insurance in connection with any loan which is sold to it by another approved financial institution.

TITLE IV-HOME MORTGAGE INSURANCE

BASIC INSURANCE PROGRAM

SEC. 401. (a) The Secretary is authorized to insure a home mortgage (including open-end advances) meeting the requirements of this section.

(b) The mortgage shall

(1) involve a principal obligation not to exceed an amount equal to the sum of (i) 100 per centum of $20,000 of the Secretary's appraised value of the property as of the date the mortgage is accepted for insurance, (ii) 90 per centum of such value in excess of $20,000 but not in excess of $30,000, and (iii) 80 per centum of such value in excess of $30,000; except that in the case of rehabilitation, the foregoing limitations upon the amount of the mortgage may, in the discretion of the Secretary, be based upon the sum of the estimated cost of rehabilitation and the Secretary's estimate of the value of the property before rehabilitation, rather than upon the appraised value of the property;

(2) contain complete amortization provisions satisfactory to the Secretary requiring payments by the mortgagor not in excess of his reasonable ability to pay as determined by the Secretary and within such term as the Secretary shall prescribe;

(3) be executed by a mortgagor who shall have paid in cash or its equivalent, on account of the property, at least an amount equivalent to the closing costs or such larger amount as the Secretary may require;

(4) contain such term and provisions with respect to property insurance, mortgage insurance premium, repairs, alterations, payment of taxes, default requirements, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters as the Secretary may in his discretion prescribe.

(c) Where the mortgage involves a one-family unit in a condominium, the Secretary shall establish such requirements as he deems approrpiate for the protection of the consumer. The mortgage covering the condominium unit shall contain such provisions as the Secretary determines to be necessary for the maintenance of the common areas and facilities and the condominium project. The Secretary may require that the rights and obligations of the mortgagor and the owners of the condominium units in the project shall be subject to such controls as he determines to be necessary and feasible to promote and protect individual owners, the condominium project, and its occupants.

(d) The mortgage shall have a principal obligation not in excess of an amount equal to 85 per centum of the amount computed under the provisions of subsection (b) (1) if the mortgage involves

(1) a newly constructed dwelling which the Secretary determines has been completed within twelve months of the sale being financed with a mortgage insured under this section but which has not been approved by the Secretary for mortgage insurance or approved by the Administrator of Veterans' Affairs for guaranty, insurance, or direct loan under chapter 37 of title 38, United States Code, prior to the beginning of construction; or

(2) a mortgagor who is not the occupant of the property, except that this requirement for a reduction in the principal obligation of the mortgage shall not be applicable where

(A) the mortgagor is in the military service and his failure to occupy the property is by reason of his service assignment;

(B) the mortgagor and mortgagee assume responsibility, in a manner satisfactory to the Secretary, for the reduction of the outstanding principal amount of the mortgage, in the event the mortgaged property is not (prior to the date of the eighteenth amortization payment of the mortgage) sold to a purchaser acceptable to the Secretary who is the occupant of the property and who assumes and agrees to pay the mortgage indebtedness; or

(C) the mortgage covers experimental property and the Secretary approves the waiver of such requirement.

(e) The seller, builder, or such other person as the Secretary may designate, shall deliver to the mortgagor (prior to the completion of the sale) a written statement setting forth the amount of the appraised value of the property, as determined by the Secretary. Where the property is to be rehabilitated by the owner thereof and the amount of the mortgage is not based on the appraised value of the property, the Secretary shall furnish such owner a statement of the Secretary's estimate of the appraised value of the property after the proposed improvements are completed.