SECTION-BY-SECTION SUMMARY PRIVATE MORTGAGE INSURANCE GUARANTEE To provide for the guarantee of private mortgage insurance. Section 1 would provide that this Act may be cited as the "Private Mortgage Insurance Guarantee Act of 1973." Section 2. Findings This section would contain Congressional findings that a sound national system of mortgage insurance issued by private mortgage insurers and backed by a voluntary Federal program for the guarantee to holders of insured mortgages that in the event a private mortgage insurer suffers financial difficulty its mortgage insurance contracts will be performed, would improve the orderly flow of funds into the finance of residential housing, create new mortgage investments in secondary markets, improve the availability of residential mortgage financing, and complement Federal housing and other programs to attain the National goal of a decent home and a suitable living environment for every American family. Section 3. Definitions Subsection (a) would define the term "mortgage insurance contract" as any insurance contract insuring a mortgage against all risks or specified risks of loss under a note or other evidence of indebtedness secured by a mortgage, deed of trust or other instrument constituting a lien on real estate the improvements on which are a residential building or buildings, other than a title insurance contract, fire and extended coverage or similar hazard insurance contract or mortgage payment life or disability insurance contract. Subsection (b) would define the term "person" to include any individual or group of individuals, corporation, partnership, association, or other organization. Subsection (c) would define the term "insured mortgagee" as the person insured under a mortgage insurance contract. Subsection (d) would define "private mortgage insurer" as any person which is authorized under the laws of a State to issue mortgage insurance contracts. Subsection (e) would define "guarantee" as the Secretary's guarantee of the performance of obligations of a private mortgage insurer under a mortgage insurance contract, and "guarantee agreement" as an agreement to guarantee. Subsection (f) would define "Secretary" as the Secretary of Housing and Urban Development. Section 4. Guarantee of private mortgage insurance This section would authorize the Secretary to guarantee private mortgage insurance contracts issued after the effective date of the Act. The guarantee agreements by the Secretary would contain such incontestability provisions and be issued on such terms and conditions as determined by the Secretary, but such guarantee agreements would not relieve a private mortgage insurer of its primary obligation to perform the guaranteed mortgage insurance contracts. The Secretary would be authorized to enter into and carry out any contracts necessary to the guarantee programs, and to issue such rules and regulations as he would deem appropriate to establish requirements for private mortgage insurers to be eligible for guarantee and to establish the types and classes of mortgage insurance contracts which would be guaranteed. Section 5. Premiums This section would provide that the Secretary shall establish such premiums as he determines to be adequate to cover administrative expenses and to provide satisfactory reserves against the risks assumed pursuant to the guarantee programs established under this Act, and to establish application and other fees and charges as appropriate. The Secretary would be authorized to establish different premium rates with respect to particular private mortgage insurers and with respect to different types or classes of mortgage insurance contracts. Section 6. Guarantee fund Subsection (a) would provide for the creation of a separate fund to be used by the Secretary as a revolving fund for the payment of claims and other program expenses, and would authorize the Secretary to borrow from the Treasury and advance to the fund amounts not to exceed $10,000,000. Subsection (b) would provide that if at any time the moneys available in the fund are insufficient to enable the Secretary to discharge his responsibilities under guarantee agreements under this Act, he is authorized to issue to the Secretary of the Treasury notes or other obligations in such forms and denominations, bearing such maturities, and subject to such terms and conditions, as may be prescribed by the Secretary of the Treasury. Subsection (c) would provide that notes or other obligations issued by the Secretary for amounts borrowed shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the average market yield on outstanding comparable marketable obligations of the United States. Subsection (d) would provide that moneys in the fund established under this Act which the Secretary determines are not needed for the current operations of the Department of Housing and Urban Development with respect to obligations of the Secretary under guarantee agreements entered into pursuant to this Act shall be deposited by the Secretary with the Treasurer or invested in bonds or other obligations of, or guaranteed as to principal and intrest by, the United States. Section 7. Payment of claims Subsection (a) would provide that guarantee agreements made by the Secretary under this Act may provide for payment of claims in cash or debentures, or both. Subsection (b) would provide that debentures issued under Section 7 shall be in such form and denominations, for such terms, and subject to such conditions as prescribed by the Secretary with the approval of the Secretary of the Treasury. Subsection (c) would provide that debentures shall be dated as provided in the guarantee agreement and shall bear interest at the rate in effect under regulations of the Secretary which shall be the rate established by the Secretary under Section 602 (e) of the Revised. National Housing Act. Subsection (d) would provide that principal and interest on debentures shall be subject to State and local taxation to the same extent as obligations issued under the Second Liberty Bond Act. Subsection (e) would provide that debentures shall be redeemed and paid out of the fund established by the Act, and shall be fully and unconditionally guaranteed as to principal and interest by the United States, and that the full faith and credit of the United States is pledged to the payment of the debentures. Section 8. Claims and judicial review Subsection (a) would provide that claims against the Secretary under the Act shall be submitted in accordance with the terms and conditions established by the Secretary. Subsection (b) would provide that upon disallowance of any claim under color of guarantee by the Secretary under this Act, or upon refusal of the claimant to accept the amount allowed upon any such claim, the claimant may institute an action against the Secretary on such claim in an appropriate United States district court, within one year. Subsection (c) would provide that upon payment of any claim under this Act, the Secretary shall succeed to all of the rights of the claimant with respect thereto. Section 9. Records, annual statements and audits Subsection (a) would provide that a participating private mortgage insurer shall furnish the Secretary with such information as required by the Secretary in such form as the Secretary shall prescribe and shall furnish a correct copy of any statement submitted to a State insurance authority at the time filed with such State insurance. authority. Subsection (b) would provide that the Secretary shall have access to any books, documents, papers and records of a private mortgage insurer guaranteed by the Secretary, and that the Secretary shall cooperate with State insurance authorities and use their examining facilities to the extent feasible. Section 10. Administrative provisions Subsection (a) would provide that the Secretary shall have the powers necessary to carry out this Act including the powers set forth in sections 108 (except with respect to technical assistance), 701, 702 and 703 of the Revised National Housing Act. Subsection (b) would provide that financial transactions in payment of claims under guarantee agreements shall be final and conclusive upon all officers of the Government. Subsection (c) would provide that any real property acquired and held by the Secretary under this Act shall be subject to taxation by any State or subdivision thereof. Section 11. Appropriations This section would provide that there is authorized to be appropriated such sums as may be necessary to carry out this Act. |