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credited or charged to the General Surplus Account and/or the Participating Reserve Account in such manner and amounts as the Commissioner may determine to be in accordance with sound actuarial and accounting practice. Upon termination of the insurance obligation of the Sales Fund by payment of any mortgage insured thereunder, the Commissioner is authorized to distribute to the mortgagor a share of the participating Reserve Account in such manner and amount as the Commissioner shall determine to be equitable and in accordance with sound actuarial and accounting practice: Provided, That in no event shall any such distributive share exceed the aggregate scheduled annual premiums of the mortgagor to the year of termination of the insurance: And provided further, That in no event may any such distributive share be distributed until any funds transferred to the Sales Fund pursuant to section 219 have been repaid in full to the transferring fund. No mortgagor or mortgagee shall have any vested right in a credit balance in any such account, or be subject to any liability arising out of the mutuality of the Sales Fund, and the determination of the Commissioner as to the amount to be paid by him to any mortgagor shall be final and conclusive.

"(o) The Commissioner shall be empowered to reissue under the Management Fund or the Sales Fund, as the case may be, commitments or the mortgage insurance for any mortgage insured under this section pursuant to a commitment issued prior to the date of the enactment of this subsection, provided the consent of the mortgagees to such reissuance is obtained, or a request by the mortgagee for such reissuance is received, by the Commissioner within such period as the Commissioner may prescribe after such date of enactment; but the mortgage insurance for any such mortgage shall not be reissued under this subsection if on the date of such enactment the mortgage is in default and the mortgagee has notified the Commissioner in writing of its intention to file claim for debentures. Any insurance or commitment not so reissued shall not be affected by the enactment of this subsection."

"(p) Notwithstanding the limitations contained in sections 203 (c) and 207 (d), premium charges for mortgages insured under sections 207 and 213 may be payable in debentures for mortgages reissued or insured pursuant to commitments reissued under the Management Fund or Sales Fund as provided in subsection (0) of this section; and the rights of mortgagees transferring to the Management Fund or Sales Fund shall not be prejudiced, impaired, or diminished with respect to the character or use of debentures received by them."

(b) Section 207(f) of such Act is amended by striking out "and section 213” each place it appears and inserting in lieu thereof "and (except with respect to mortgages the mortgage insurance for which is the obligation of the Cooperative Management Housing Insurance Fund or the Cooperative Sales Housing Insurance Fund) section 213".

(c) Section 213(a)(3) of such Act is amended by striking out the semicolon at the end thereof and inserting in lieu of such semicolon a colon and the following: "Provided, That as to mortgages the mortgage insurance for which is the obligation of the Management Fund such stock or interest shall be paid for out of the Management Fund ;".

(d) Section 213(a) of such Act is further amended by striking out the period at the end thereof and inserting in lieu of such period a colon and the following: "Provided, That as applied to mortgages the mortgage insurance for which is the obligation of the Sales Fund, the reference to the Housing Fund in section 207 (b) (2) shall refer to the Sales Fund: Provided further, That as applied to mortgages the mortgage insurance for which is the obligation of the Management Fund, the reference to the Housing Fund in section 207 (b) (2) shall refer to the Management Fund.".

(e) Section 213 (e) of such Act is amended to read as follows:

"(e) (1) The provisions of subsections (d), (e), (g), (h), (i), (j), (k), (1), (m), (n), and (p) of section 207 shall apply to mortgages insured under subsection (a) (1) and subsection (a)(3) of this section, except that as applied to mortgages the mortgage insurance for which is the obligation of the Manage ment Fund pursuant to section 213 (k) (A) all references to the Housing Insurance Fund or Housing Fund shall refer to the Management Fund, and (B) all references to section 207 or 210 shall refer to subsection (a)(1) and subsection (a)(3) of this section.

"(2) The provisions of subsections (d), (e), (g), (h), (i), (j), (k), (1), (m), (n), and (p) of section 207 shall apply to mortgages insured under subsection (a)(2) of this section, except that as applied to mortgages the mortgage insur

ance for which is the obligation of the Sales Fund pursuant to section 213 (m), (A) all references to the Housing Insurance Fund or Housing Fund shall refer to the Sales Fund, and (B) all references to section 207 or 210 shall refer to subsection (a) (2) of this section.

"(3) The provisions of subsections (a), (c), (d), (e), (f), (g), (h), (j), and (k) of section 204 and subsection (p) of section 207 shall apply to individual mortgages insured under subsection (d) of this section, except that as applied to mortgages the mortgage insurance for which is the obligation of the Sales Fund pursuant to section 213 (m), (A) all references to the Housing Insurance Fund or the Housing Fund in subsections (c), (d), and (f) of section 204 and subsection (p) of section 207 shall refer to the Sales Fund, and (B) all references to section 207 or 210 in subsections (c), (d), and (f) of section 204 and subsection (p) of section 207 shall refer to subsection (d) of this section."

(f) Section 219 of such Act is amended by striking out "or the Servicemen's Mortgage Insurance Fund" and inserting in lieu thereof "the Servicemen's Mortgage Insurance Fund, the Cooperative Management Housing Insurance Fund, or the Cooperative Sales Housing Insurance Fund".

SEC. 3. Title II of the National Housing Act, as amended, is hereby amended by inserting the following new section at the end thereof:

"SEC. 233. In the processing of applications for commitments to insure mortgages pursuant to this Act, if such mortgage is eligible for a commitment by the Federal National Mortgage Association pursuant to the special assistance functions of the Association under title III of this Act and the mortgagee certifies to the Commissioner that, after the issuance by the Commissioner, of his commitment to insure the mortgage, the mortgagee intends to apply to the Association or others for a commitment to purchase such mortgage and to deliver such mortgage for purchase pursuant to such commitment, there shall be included in the Commissioner's estimate of the replacement cost or value of the property or project to be covered by such mortgage an amount equal to the amount of the financing costs and fees which would be imposed by the Association in connection with its commitment and purchase of such a mortgage."

AMENDMENTS RELATING TO FEDERAL NATIONAL MORTGAGE ASSOCIATION

SEC. 4. Title III of the National Housing Act, as amended, is hereby amended— (1) by inserting, in section 302(b), after the words "insured under section 220 or 803" the following: "or under section 213 where the project involved is located in an urban renewal area";

(2) by striking out, in section 302(b), “$17,500 for each family residence or dwelling unit covered by the mortgage" and inserting in lieu thereof the following: "in the case of multifamily housing projects, for such part of the project as may be attributable to dwelling use, $17,500 per family unit, or, in the case of one-to-four-family residences, $17,500 per family residence";

(3) by inserting, before the period at the end of the second sentence of section 305(b), the following: ": Provided, That with respect to any mortgage on which a commitment to purchase is made during the one-year period beginning on the date of enactment of this proviso, the price to be paid by the Association shall be not less than the unpaid principal amount thereof at the time of purchase, with adjustments for interest and any comparable items"; and by inserting, before the period at the end of the third sentence of section 305(b), the following: ": Provided, That with respect to any mortgage on which a commitment to purchase is made during the one-year period beginning on the date of the enactment of this proviso, the charges or fees so imposed by the Association for its commitment and purchase shall not exceed 1 per centum of the unpaid principal amount of the mortgage, and not more than one-fourth of such charges or fees shall be collected at the time of the issuance of the commitment with respect to the mortgage, with the balance of such charges or fees being collected at the time of purchase";

(4) by striking out in section 305(e) "$200,000,000", "$20,000,000", and "$50,000,000" and inserting in lieu thereof "$250,000,000", "$25,000,000", and "$100,000,000", respectively; and

(5) by inserting at the end of section 305 (e) the following two sentences: "Commitments for the purchase of mortgages insured under section 213(a) (3) of this Act shall be issued or extended to correspond with the applicable two-year statutory period after completion of such projects for their sale

to cooperatives. When the Federal Housing Commissioner shall have issued, pursuant to section 213, a statement of feasibility on a project including an estimate as to the maximum amount of the mortgage involved, the Association is authorized to enter into a commitment contract to reserve funds available for the purchase of such mortgage; such reservation shall be for a period certified by the Federal Housing Commissioner as necessary, taking into account the estimated time required to issue a commitment for mortgage insurance. The Association may impose a charge of one-half of the fee which would be payable at the time of the issuance of its advance commitment to purchase the mortgage when the Federal Housing Commissioner shall have issued a commitment to insure, and such amount shall be credited toward said fee if such advance commitment is later issued by the Association.".

S. 3512

DIGEST OF BILL

Section 1.-Amends section 207 of the National Housing Act to require the FHA Commissioner when seling property acquired by him as a result of defaults under section 207 (regular rental housing), section 213 (cooperative housing), section 220 (urban renewal housing), section 221 (relocation housing), section 608 (veterans emergency housing), and section 908 (defense housing), to give first priority to a local public agency or a properly qualified consumer cooperative which makes a request to purchase the project. The price would be equal to fair market value of the project as determined by the Commissioner. Section 2.-(1) Amends section 213 of the National Housing Act to require that the certification of actual cost of an investor-sponsored cooperative be computed as of the date of sale of the project to the cooperative. Existing law requires that the certification of actual cost be computed as of the date of completion and final endorsement of the mortgage of the investor-sponsor.

(2) Amends section 213 of the act to permit the cost of exterior land improvements to be included in the mortgage amount without being computed as part of the per room or per unit cost limitation.

(3) and (4) Amend section 213 of the act to specifically permit the estimate of replacement cost of the project to include (a) interest, (b) taxes, organization and legal expenses, and (c) miscellaneous charges approved by the Commissioner, during construction and during such period thereafter as the Commissioner determines is reasonable for the project to reach a breakeven point. Also specifies that the value of the land to be included in the estimated project replacement cost is its fair market value of the land.

(5) Amends section 213 of such act to provide that the sole test of feasibility for an investor-sponsor type of cooperative shall be the availability of people in the community who need housing and can afford it, rather than the market for rental housing.

(6) Restores the position of Assistant Commissioner for Cooperative Housing within the staff organization of the FHA.

(7) Amends section 213 to permit the Commissioner to exercise discretion as to the extent and period of disqualification of an investor-sponsor identified with a project which failed to become a cooperative.

(8) Amends section 213 to permit cooperatives undertaken separately to be combined into one cooperative with same mortgagor, but with a separate mortgage on each project.

(9) Amends section 213 to permit the establishment of two mutual mortgage insurance funds for cooperatives. This would permit refunds of premiums to the extent permitted by loss experience similar to refunds permitted under the FHA section 203 program. One fund would relate to management-type of continuing consumer cooperatives; the other fund would relate to sales-type cooperatives where the mortgaged property is owned by an individual.

Section 3.-Amends section 213 to permit the estimated replacement cost of a project to include financing costs and fees charged by FNMA. If a mortgage is sold to other than FNMA, an amount equivalent to FNMA fees and charges would be permitted in the estimated replacement cost.

Section 4.-(1) Amends section 302 (b) of the National Housing Act to permit the maximum amount of an FHA section 213 loan purchased by the FNMA, if such mortgage is secured by a project constructed in an urban renewal area,

to be the same as the maximum amount insured by FHA. This is now permitted for loans insured under section 220.

(2) Amends section 302 (b) of the act to permit the FNMA, in its special assistance functions, to purchase an FHA section 213 mortgage secured by a project in a nonrenewal area, to exceed $17,500 per unit by the cost of community facilities and other nondwelling items.

(3) Amends section 305(b) of the act to require that FNMA, in the performance of its special assistance function during the 1-year period beginning on date of enactment, shall not pay less than par for any mortgage. Also during the same period, would reduce FNMA charges from 12 to 1 percent of the mortgage amount, with initial payment of one-fourth of 1 percent, instead of one-half of 1 percent.

(4) Amends section 305 (e) of such act to increase FNMA special assistance authorization by $50 million, but these additional funds would be available only for projects involving consumer cooperatives.

(5) Amends section 305 (e) of the National Housing Act to require that FNMA's commitments to purchase investor-sponsored and consumer cooperative mortgages insured under section 213 be extended to allow a period of 2 years after completion of the project for FNMA's purchase of the mortgage, to conform with the period of 2 years after such completion is allowed the investor-sponsor for sale to a cooperative under section 213(b) (2).

Also authorizes FNMA, when FHA has issued a letter of site acceptance (statement of feasibility) on a housing project under section 213 and application for insurance of the mortgage covering such project has been made, to reserve the funds which will be necessary to purchase such mortgage.

[S. 3541, 86th Cong., 2d sess.]

Mr. SPARKMAN (by request) (for himself and Mr. CAPEHART)

A BILL To provide additional financial facilities in the Federal National Mortgage Association, to provide for the incorporation of Federal mortgage investment companies, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

TITLE I-FEDERAL NATIONAL MORTGAGE ASSOCIATION

SEC. 101. That part of section 302(b) of the Federal National Mortgage Association Charter Act which precedes the colon is amended by striking out "to make commitments to purchase and to purchase, service, or sell, any residential or home mortgages (or participations therein) which are insured under this Act, as amended," and by substituting therefor ", pursuant to commitments or otherwise, to purchase, lend (under section 304) on the security of, service, sell, or otherwise deal in any mortgages which are insured under the National Housing Act, as amended,".

SEC. 102. The third sentence of section 303 (a) of such Act is amended by striking out "At the option of the Association all such stock shall be retirable at par value at any time," and by substituting therefor "At the option of the Association, all or any part of the preferred stock shall be retirable at par value at any time. The Association may purchase, and may retire, hold, or sell, its common stock,".

SEC. 103. The first sentence of section 303 (b) of such Act is amended by inserting immediately before the period at the end thereof the following: "; and by requiring each borrower to make such payments, equal to not more than one-half of 1 per centum of the amount lent by the Association to such borrower under section 304".

SEC. 104. Section 303 (c) of such Act is amended by striking out the first sentence and by substituting therefor "The Association shall issue, from time to time, to each mortgage seller or borrower its common stock, only in denominations of $100 or multiples thereof, evidencing any capital contributions (ad, sted by reason of any payments into surplus required by the Association) made by such seller or borrower pursuant to subsection (b) of this section."

SEC. 105. Section 303 (g) of such Act is amended by striking out "the Housing and Home Finance Administrator shall transmit to the President for submis

sion" and by substituting therefor "the president of the Association shall transmit".

SEC. 106. Section 304 (a) of such Act is amended by inserting "(1)" before "To carry out", and by adding at the end thereof the following new paragraph: "(2) To carry out further the purposes set forth in paragraph (a) of section 301, the Association is authorized to make loans which are secured by mortgages insured or guaranteed under the National Housing Act, or the Servicemen's Readjustment Act of 1944, chapter 37 of title 38 United States Code. In the interest of assuring sound operation, any loan made by the Association in its secondary market operations under this section, and any extension or renewal thereof, shall not exceed 90 per centum of the unpaid principal balances of the mortgages securing the loan, shall bear interest at a rate consistent with general loan policies established from time to time by the Association's board of directors, and shall mature in not more than twelve months. The volume of the Association's lending activities and the establishment of its loan ratios, interest rates, maturities, and charges or fees, in its secondary market operations under this section, should be determined by the Association from time to time; and such determinations, in conjunction with determinations made under paragraph (1), should be consistent with the objectives that the lending activities should be conducted on such terms as will reasonably prevent excessive use of the Association's facilities, and that the operations of the Association under this section should be within its income derived from such operations and that such operations should be fully self-supporting. Notwithstanding any Federal, State, or other law to the contrary, the Association is hereby empowered, in connection with any loan under this section, whether before or after any default, to provide by contract with the borrower for the settlement or extinguishment, upon default, of any redemption, equitable, legal, or other right, title, or interest of the borrower in any mortgage or mortgages that constitute the security for the loan; and with respect to any such loan, in the event of default and pursuant otherwise to the terms of the contract, the mortgages that constitute such security shall become the absolute property of the Association."

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SEC. 107. The first sentence of section 304 (b) of such Act is amended by striking out "ten" and by substituting therefor "fifteen".

SEC. 108. Section 304(d) of such Act is hereby repealed.

SEC. 109. Section 304 (b), section 309(c), and section 310 of such Act are each amended by inserting "or othe rsecurity holdings" after "mortgages". SEC. 110. Section 308 of such Act is amended by substituting therefor the following:

"PRESIDENT AND BOARD OF DIRECTORS

"SEC. 308. (a) There shall be a President of the Federal National Mortgage Association, who shall be appointed by the President of the United States by and with the advice and consent of the Senate, and who shall serve as chief executive officers of the Association.

"(b) There shall be a board of directors of the Association consisting of the President of the Federal National Mortgage Association who shall be ex officio chairman of the board of directors, and two other members who shall be appointed by the President of the United States by and with the advice and consent of the Senate. The term of the offices aforesaid shall be six years, except that the initial appointments shall be for terms of six, four, and two years, respectively, from a common commencement date. Upon the expiration of any such term, the incumbent of the office shall continue to serve until his successor is appointed and takes office. The members of the board of directors, in addition to their duties as such, shall perform other additional duties as the board of directors may from time to time prescribe. Two members of the board of directors shall constitute a quorum. The board of directors shall select and effect the appointment of qualified persons to fill the office of first vice president and such other executive officers as may be provided for in the bylaws, with such executive functions, powers, and duties as may be prescribed by the bylaws or by the board of directors, and the compensation pertaining to such other executive offices shall be at such rates as shall be determined by the board of directors. "(c) The basic rate of compensation of the president of the Association shall be the same as the basic rate of compensation established for executive offices or positions by section 105 of the Federal Executive Pay Act of 1956; the basic rate of compensation of the members of the board of directors other than the president of the Association, and the basic rate of compensation of the first vice president of the Association, shall be the same as the basic rate of compensa

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