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lien of the mortgage (1) 80 per centum of the Secretary's 2 estimate of the value of such remaining land before develop3 ment, plus (2) 90 per centum of the actual costs of the 4 development allocated by the Secretary to such remaining land. As used in this section, the term "actual costs" means

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the costs (exclusive of rebates or discounts) to the mortgagor 7 of the improvements involved. These costs include amounts. 8 paid for labor, materials, construction contracts, land plan9 ning, engineers' and architect's fees, surveys, taxes, and in10 terest during development, organizational, and legal ex11 penses, such allocation of general overhead expenses as are 12 acceptable to the Secretary, and other items of expense 13 incidental to development which may be approved by the 14 Secretary. If the Secretary determines there is an identity 15 of interest between the mortgagor and the contractor, there 16 may be included an allowance for the contractor's profit in an amount deemed reasonable by the Secretary.

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COST CERTIFICATION

SEC. 506. (a) The Secretary shall adopt such require20 ments as he determines necessary to assure that the amount 21 of any mortgage or loan finally endorsed for insurance under 22 this Act which involves multifamily housing or a health facil23 ity does not exceed the approved percentage of (1) the 24 Secretary's approved actual cost of such construction or re

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1 habilitation and (2) the amount of the allowances for the

2 following:

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(A) The Secretary's estimate of the value of the land or property prior to the beginning of construction;

or in case the land included in the property or project is held by the mortgagor under a leasehold or other interest less than a fee, such amount as the mortgagor paid for the acquisition of such leasehold or other interest but in no event in excess of the Secretary's estimate of the fair market value of such leasehold or other interest exclusive of the proposed improvements; or in the case of rehabilitation where the land and improve

ments are to be acquired by the mortgagor and the 14 purchase price thereof is to be financed with part of the

proceeds of the mortgage, the purchase price of such

land and improvements prior to such repair or rehabili

tation; or in case the land and improvements are owned by the mortgagor subject to an outstanding indebtedness to be refinanced with part of the proceeds of the mort

gage, the amount of such outstanding indebtedness secured by such land and improvements.

(B) An amount for profit and risk as prescribed pursuant to section 501 (a) (2), and an amount representing such allocation of general overhead items as are

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determined by the Secretary to be acceptable and reasonable.

3 Where a factory-manufactured house or major housing com4 ponent is furnished by a subcontractor or supplier having 5 an identity of interest with the mortgagor or builder, an 6 amount representing the Secretary's estimate of the market 7 value of such factory-manufactured house or major housing 8 component shall be included for purposes of clause (1) of 9 this subsection in lieu of the actual cost of such factory10 manufactured house or major component.

11 (b) The Secretary shall require that the mortgagor 12 certify as to the actual cost to the mortgagor of construction

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or rehabilitation, and may require such additional certifica14 tions of actual cost by such other parties as he may consider 15 necessary to carry out the intent of this section. The Secre16 tary may exempt from the requirements of this section 17 mortgagors under a mortgage on a property or project 18 designed principally for residential use for twelve or fewer 19 families or where the mortgage amount to be insured is less 20 than $250,000. Certifications required pursuant to this sec21 tion shall be accompanied by such data and records as the 22 Secretary shall prescribe. Upon approval by the Secretary, 23 the certification required by this section shall be final and

24 incontestable, except for fraud or material misrepresentation

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(c) As used in this section

(1) The term "approved percentage" means the percentage figure which, under applicable provisions of

this Act, the Secretary applies to his estimate of value, cost, or replacement cost, as the case may be, of the property or project to determine the maximum insurable mortgage amount.

(2) The term "actual cost" means the costs (exclusive of rebates or discounts) to the mortgagor of the improvements involved. These costs may include amounts paid for labor, materials, construction contracts, engineer's and architect's fees, off-site public utilities, streets, organizational and legal expenses, taxes and interest during construction, and other items of expense approved by the Secretary.

LABOR STANDARDS

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SEC. 507. (a) The Secretary shall not insure any mort18 gage or loan under this title involving new or rehabili19 tated property, except a mortgage covering multifamily 20 housing designed for use by less than eight families, unless 21 the principal contractor provides adequate assurances to the 22 Secretary that all laborers and mechanics employed by con23 tractors or subcontractors in the construction of the project or 24 facility have been paid wages at not less than those pre25 vailing on similar construction in the locality as determined

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1 by the Secretary of Labor in accordance with the Davis2 Bacon Act, as amended (40 U.S.C. 276a-276a-5). The 3 Secretary of Labor shall have, with respect to the labor 4 standards specified in this section, the authority and functions 5 set forth in Reorganization Plan Numbered 14 of 1950 (64 6 Stat. 1267), and section 2 of the Act of June 13, 1934 (40 7 U.S.C. 276c).

8 (b) The Secretary may waive compliance with this 9 section in any case where prospective owners of the dwell10 ings involved, or other persons, voluntarily donate their 11 services without compensation or where laborers or mechan12 ics, not otherwise employed at any time on the project, 13 voluntarily donate their services without full compensation 14 for the purpose of lowering the costs of construction or re15 habilitation, and the Secretary determines that any amounts 16 thereby saved are fully credited to the mortgagor undertak17 ing the construction or rehabilitation.

TITLE VI-INSURANCE CLAIMS

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HOME MORTGAGE INSURANCE CLAIM SETTLEMENT

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SEC. 601. (a) To be entitled to receive the benefits of the 21 insurance, where there has been a default in mortgage pay22 ments by the mortgagor, a mortgagee holding a home mort23 gage insured under one of the sections of title IV shall either 24 foreclose the mortgage and take possession of the property 25 within a period of time prescribed by the Secretary and in