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1 the mortgagee for its additional expenses in handling the

2 mortgage.

3 (d) As a condition for receiving the benefits of assistance 4 payments, the project owner shall operate the project in 5 accordance with such requirements with respect to tenant 6 eligibility and rents as the Secretary may prescribe. In pre7 scribing such requirements the Secretary shall seek to assure 8 that in each assisted project there is a reasonable range in the 9 income levels of tenants.

10 (e) For each dwelling unit there shall be established 11 with the approval of the Secretary (i) a basic rental charge 12 determined on the basis of operating the project with pay13 ments of principal and interest due under a mortgage and 14 any supplemental loan bearing interest at the rate of 1 per 15 centum per annum; and (ii) a fair market rental charge de16 termined on the basis of operating the project with payments 17 of principal, interest, and mortgage insurance premium (or 18 other comparable charges approved by the Secretary) which 19 the mortgagor is obligated to pay under the mortgage and 20 any supplemental loan covering the project. The rental 21 for each dwelling unit shall not be lower than 20 per centum 22 of the tenant's income as determined by the Secretary, but 23 shall not exceed the fair market rental charge.

24 (f) The assistance payment to a mortgagee by the 25 Secretary on behalf of a project owner shall not exceed

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1 an amount which would reduce the aggregate fair market 2 rental charges for all dwelling units in the project to 80 per 3 centum (65 per centum where the project is designed for 4 elderly or handicapped tenants) of the aggregate basic rental 5 charges for such units. At the time of the initial renting of 6 the project (other than a project designed for elderly or 7 handicapped tenants), at least one-half of the units shall be 8 rented to tenants whose incomes are such that the basic 9 rental charges do not exceed 20 per centum of their incomes. (g) There are authorized to be appropriated such sums 11 as may be necessary to carry out the provisions of this sec12 tion, including such sums as may be necessary to make 13 assistance payments under contracts entered into by the Sec14 retary under this section. The aggregate amount of outstand15 ing contracts to make such payments shall not exceed amounts 16 approved in appropriation Acts, and payments pursuant to 17 such contracts (and any contracts entered into under section 18 236 of the National Housing Act) shall not exceed $75,000,19 000 per annum prior to July 1, 1969, which maximum dollar 20 amount shall be increased by $125,000,000 on July 1, 1969, 21 by $150,000,000 on July 1, 1970, by $200,000,000 on 22 July 1, 1971, and by $200,000,000 on July 1, 1974.

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(h) (1) The Secretary is authorized to insure a mort24 gage (which meets the requirements of section 501, except 25 as such requirements are modified by this section) upon a

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1 multifamily housing project which is to be occupied pri2 marily by those who are qualified as lower income tenants at 3 the time of their initial occupancy and which is to be assisted 4 under this section or under part B of title I of the Housing 5 and Urban Development Act of 1973.

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(2) If the mortgage is executed by a mortgagor which 7 is a cooperative, a private nonprofit corporation or associa

8 tion, or a builder-seller, as defined by the Secretary, the prin9 cipal obligation of the mortgage shall not exceed

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228

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(A) in the case of new construction, the Secretary's estimate of the replacement cost of the property or project when the proposed improvements are completed;

(B) in the case of rehabilitation, the sum of the Secretary's estimate of the cost of rehabilitation plus the Secretary's estimate of the value of the property before rehabilitation; or

(C) in the case of the purchase or refinancing of existing property without rehabilitation, the appraised value of the property as of the date the mortgage is accepted for insurance.

(3) If the mortgage is executed by a limited distribu

23 tion corporation or other limited distribution entity, as de24 fined by the Secretary, or by an investor-sponsor who agrees 25 to sell the project to a cooperative and who meets such re

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quirements as the Secretary may prescribe to assure that

the consumer interest is protected, the amount of the mort

3 gage shall not exceed 90 per centum of the amount other

wise authorized under this section.

(4) In the case of a project financed with a mortgage

insured under this subsection or under section 236 of the

National Housing Act which involves a mortgagor other than a cooperative or a private nonprofit corporation or association, and which is sold to a cooperative or a nonprofit cor

poration or association, the Secretary is further authorized to insure under this subsection a mortgage given by such purchaser in an amount not exceeding the appraised value of the property at the time of purchase, which value shall be based upon a mortgage amount on which the debt service

can be met from the income of the property when operated

on a nonprofit basis, after payment of all operating ex

penses, taxes, and required reserves.

(j) As used in this section

(1) The term "tenant" includes a member of a cooperative and the terms "rental" and "rental charge"

mean, with respect to members of a cooperative, the charges under the occupancy agreements between such members and the cooperative; and

(2) The term "lower income tenants" means those tenants whose incomes do not exceed 80 per centum of

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the median income for the area, as determined by the Secretary with adjustments for smaller and larger fami

lies, except that the Secretary may establish income ceilings higher or lower than 80 per centum of the

median for the area on the basis of his findings that such variations are necessary because of prevailing levels of construction costs, unusually high or low family

incomes, or other factors.

MORTGAGE INSURANCE FOR HEALTH FACILITIES

SEC. 503. (a) For the purposes of this section—

(1) The term "hospital" means a proprietary facility, or 12 facility of a private nonprofit corporation or association, 13 which provides community service for inpatient medical care 14 of the sick or injured (including obstetrical care).

15

(2) The term "nursing home" means a proprietary 16 facility, or facility of a private nonprofit corporation or asso17 ciation, for the accommodation of convalescents or other per

18

sons who are not acutely ill and not in need of hospital care 19 but who require skilled nursing care and related medical serv20 ices, in which such nursing care and medical services are 21 prescribed by, or are performed under the general direction 22 of, persons licensed to provide such care or services in accord23 ance with the laws of the State where the facility is located. (3) The term "intermediate care facility" means a 25 proprietary facility, or facility of a private nonprofit corpo

24