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materials, use, equipment, and other similar research and analysis, consistent with the needs for the improvement and development of proper, adequate, and efficient marketing facilities for handling perishable agricultural commodities.

REVOLVING FUNDS

SEC. 6. (a) There is hereby created a fund to be known as “the marketing facility mortgage insurance fund” (referred to in this Act as the "insurance fund”), which shall be used by the Secretary to make insurance payments under section 9 of this Act and to meet the expenses incurred in connection with the acquisition, operation, and disposal of market facilities acquired pursuant to the provisions of the insurance contracts in the event of default by the borrower, except that no part of such fund shall be used for administrative expenses incurred in carrying out this Act. There is authorized to be appropriated to the Secretary the sum of $25,000,000 to constitute such fund which sum shall remain available until expended.

(b) There is hereby created a loan fund, to be known as the "marketing facility loan fund” (referred to in this Act as the "loan fund”), which shall be used as a revolving fund to make loans or to purchase or contract to purchase obligations under sections 10 and 11 of this Act and to meet expenses incidental to the protection of the interests of the United States in market facilities on which loans have been made and are in default, including the acquisition, operation, and disposal of such market facilities, except that no part of such fund shall be used for administrative expenses incurred in carrying out this Act. The aggregate amount of loans and of purchases or contracts to purchase obligations under the provisions of sections 10 and 11 of this Act shall not exceed $50,000,000. There is authorized to be appropriated the sum of $50,000,000 to constitute such fund, which sum shall remain available until expended.

(c) The money in the funds created under this section not needed for current operations shall be deposited with the Treasurer of the United States to the credit of the funds or invested in direct obligations of the United States or obligations guaranteed as to principal and interest by the United States.

(d) The Secretary shall make an annual report which shall include a complete statement with respect to the status of the insurance fund and the loan fund.

INSURANCE AND LOAN LIMIT

Sec. 7. The amount of any direct loan or insurance contract which may be made under this Act shall not exceed an amount equivalent to 85 per centum of the total cost of the market facility as determined by the Secretary: Provided, That in no case shall the borrower invest less than $45,000 of the total cost: And provided further, That the investment by the borrower shall always be a claim subordinate to the claim of the United States arising out of a loan or insurance contract under the authority of this Act.

INSURANCE OF MORTGAGES

Sec. 8. (a) The Secretary is authorized, upon application of a prospective mortgagor or mortgagee under a first mortgage eligible for insurance under this Act on a market facility, to insure such mortgage and to make commitments for the insurance of any such mortgage prior to the date of its execution.

(b) The aggregate amount of principal obligations outstanding at any one time on all mortgages insured under this Act, and on all mortgages with respect to which_commitments to insure have been made, shall not exceed $100,000,000. (c) In order for a mortgage on a market facility to be eligible under this Act,

(1) the person obligated to pay thereunder shall be an eligible borrower;

(2) the market facility mortgage shall be one which is determined by the Secretary to be eligible for mortgage insurance;

(3) the mortgage shall be made to and be held by a mortgagee approved by the Secretary as responsible and able to service the mortgage properly;

(4) the principal obligation (and fees and other charges chargeable under subsection (d) of this section) shall be in such amounts not in excess of the amounts specified in section 7 of this Act as may be necessary to enable the borrower to establish the market facility;

(5) the mortgage shall have a maturity satisfactory to the Secretary but not to exceed forty years from the date the mortgage is insured;

(6) the mortgage shall bear interest at not to exceed 4 per centum per annum on the amount of the principal obligation outstanding at any one time; and (7) the mortgage instruments shall

(A) provide for the repayment of the principal obligation, together with interest thereon, in installments in accordance with amortization schedules prescribed by the Secretary; and

(B) contain such provisions with respect to insurance, repairs, alterations, payment of taxes, default reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary

liens, and other matters as the Secretary may prescribe. (d) The Secretary shall require the payment by the mortgagor or mortgagee of such initial fees for inspection, appraisal, and other similar charges as he finds necessary and such amounts may be included in the principal obligation of the mortgage. The proceeds of such fees and charges shall be deposited in the insurance fund (created by section 6 (a)).

(e) For insurance granted pursuant to this Act the Secretary shall collect from the mortgagee, upon insurance of the mortgage, an initial charge of one-half of 1 per centum of the principal obligation of the mortgage and annually thereafter a charge of one-half of 1 per centum of the principal obligation remaining unpaid at the time the charge becomes due, without taking into account delinquent payments or prepayments. The proceeds of such charges shall be deposited in the insurance fund.

(f) Any contract of insurance executed by the Secretary under this section shall be conclusive evidence of the eligibility of the mortgage for insurance, and the validity of any contract of insurance so executed shall be incontestable in the hands of an approved mortgagee from the date of the execution of such contract, except for fraud or misrepresentation of which such mortgagee has actual knowledge.

(g). The mortgagee may, with the approval of the Secretary, assign any mortgage insured under this Act, together with the accompanying note and contract of insurance, and the assignee thereof shall thereupon become entitled to all the benefits of such contract of insurance.

PAYMENT OF INSURANCE

Sec. 9. (a) If the mortgagor under a mortgage insured under section 8 is in default for more than twelve months and the mortgagee, in accordance with regulations prescribed by the Secretary, (1) forecloses and takes possession of the mortgaged property, or with the Secretary's consent otherwise acquires the property from the mortgagor after default, (2) conveys title to the property to the Secretary, and (3) assigns all his claims against the mortgagor or others arising out of the mortgage transaction or foreclosure proceedings (except claims released with the Secretary's consent) to the Secretary, the Secretary shall pay to the mortgagee, in cash, the value of the mortgage. The Secretary shall make such payments within one year after the date the mortgagee makes the conveyance required in the first sentence or the date he makes the assignments required in the first sentence, whichever is the later date.

(b) For the purposes of this section, the value of the mortgage shall be determined, in accordance with rules and regulations prescribed by the Secretary by adding to the amount of the original principal obligation of the mortgage which was unpaid on the date of default, the amount of all unpaid interest; the amount of all payments which have been made by the mortgagee for taxes, special assessments, water rates, and other payments in discharge of liens which are prior to the mortgage, and insurance on the property mortgaged; and a reasonable amount for necessary expenses incurred by the mortgagee in acquiring title to the property and conveying it to the Secretary; and by deducting from such total amount any amount received on account of the mortgage indebtedness after such default.

(c) If there should not be sufficient money in the insurance fund to enable the Secretary to make payments to mortgagees as provided in subsection (a) of this section, the Secretary may make and issue notes to the Secretary of the Treasury to obtain funds to make such payments. Such notes shall be signed by the Secretary or by his duly authorized representatives and shall be negotiable. Such notes shall bear interest, payable semiannually, at a rate equal to the average rate of interest, computed to the end of the calendar month next preceding the date of issue, borne by all interest-bearing obligations of the United States then forming a part of the public debt, and shall have such maturities as the Secretary may determine with the approval of the Secretary of the Treasury.

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DEVELOPMENT OF TERMINAL MARKETING FACILITIES

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(d) The Secretary of the Treasury is authorized to purchase any notes issued by the Secretary pursuant to this section and any renewals thereof and for such purchases may use as a public-debt transaction the proceeds from the sale of any securities issued under the Second Liberty Bond Act, as amended, and the purposes for which such securities may be issued under such Act, as amended, are hereby extended to include any such purchases. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes shall be treated as publicdebt transactions of the United States.

(e) In any case in which the mortgagor violates any covenant or condition of his mortgage, the Secretary may require the mortgagee to assign such mortgage, together with the incidents thereto, upon payment of the value of the mortgage determined in accordance with this section.

DIRECT LOANS SECURED BY MORTGAGES

Sec. 10. (a) The Secretary may make a loan from the loan fund to any eligible borrower for the construction of a market facility, if he finds that the borrower is unable to obtain an adequate loan for such purpose from a source other than the Federal Government upon terms and conditions generally comparable to the terms and conditions applicable to loans insured under section 8.

(b) Any loan made under this section may be in such amount not in excess of the amount authorized in section 7 of this Act as may be necessary to enable the borrower to provide the market facility, and shall be secured by a first mortgage on the market facility.

(c) The instruments under which the loan is made and security given therefor shall

(1) provide for the repayment of the loan within a period satisfactory to the Secretary but not more than forty years from the date of the loan;

(2) provide for the payment of interest on the unpaid balance of the loan at the rate of 4 per centum per annum;

(3) provide for the repayment of the unpaid balance of the loan, together with interest thereon, in installments in accordance with amortization schedules prescribed by the Secretary;

(4) be in such form and contain such covenants as the Secretary shall prescribe to secure the payment of the unpaid balance of the loan, together with interest thereon, to protect the security, and to assure that the market facility will be maintained in repair;

(5) contain such provisions with respect to insurance, repair, alterations, payment of taxes, default reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters as the Secretary may prescribe; and

(6) provide that if at any time it shall appear to the Secretary that the borrower may be able to obtain a loan from a source other than the Federal Government upon terms and conditions generally comparable to the terms and conditions applicable to loans under this section, the borrower shall, upon the request of the Secretary, apply for and accept such non-Federal loan in

sufficient amount to repay the Secretary. (d) Money paid to the United States in satisfaction of any obligation arising under this section shall be deposited in the loan fund (created by section 6 (b)).

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Sec. 11. (a) To aid in the establishment of market facilities, the Secretary may make a loan to, or contract to purchase or purchase the securities and obligations of any municipality or political subdivision of a State, which does not have authority to execute a mortgage to secure a loan under sections 8 and 10, but is otherwise eligible for such a loan. All securities and obligations purchased and all loans made under this section shall bear interest at the rate of 4 per centum per annum and shall be of such sound value or so secured as reasonably to assure retirement or repayment and such financial assistance may be made either directly or in cooperation with banks or lending institutions through agreements to participate, or otherwise. No loan, including renewals or extensions thereof, may be made under this section for a period or periods exceeding forty years and no securities or obligations maturing more than forty years from date of purchase by the Secretary may be purchased under this section. No loan may be made, and no securities or obligations may be purchased, under this section, for the construction of a market facility the total cost of which, as determined by the Secretary, is in excess of the maximum amount specified under section 7 for such purpose to any borrower able to execute a mortgage to secure the loan.

(b) Financial assistance extended under this section shall be subject to the applicable provisions of this Act with respect to loans authorized under section 10.

ELIGIBILITY REQUIREMENTS

Sec. 12. To be eligible for the benefits of this Act, a borrower must show to the satisfaction of the Secretary that the facility is needed and that the location, design, method of financing, method of operation, and such other requirements as the Secretary may determine necessary to effect uate the purposes of this Act, will be met, including the following:

(a) That the proposed market facility will reduce the cost of distribution of perishable agricultural commodities and handle a sufficient volume of business to enable the loan to be amortized within the period specified at the time the loan is made.

(b) That the proposed market will be so located and designed as to make possible the direct loading and unloading of rail and truck receipts into or from the buildings of handlers receiving substantial quantities of perishable agricultural commodities by such methods of transportation, an that no restrictions will be imposed which will prevent access to the facility of supplies handled by any rail or truck transportation company.

(c) That sufficient land is included as a part of the facility to meet the needs of the initial construction, plus a reasonable amount of land for expansion of the market facility, and in no case shall the land available for future expansion be less than one-fourth of the acreage utilized in the initial construction.

(d) That not more than one-third of the total cost of the proposed market facility, including the land set aside for future expansion, is to be expended for the acquisition of land, graded and placed in condition for construction.

(e) That the proposed market facility will not be operated in a manner which would discriminate against any perishable agricultural commodity on account of geographical origin of such commodity or prevent any producer, seller, or buyer from utilizing the market facility because of his organization, business methods (if not unfair or unlawful), membership or nonmembership in any organization, or on account of the method of transportation of the products.

(f) That the rentals and other charges for the use of the proposed market facility will be established at reasonable levels approved by the Secretary and designed to meet the obligations, defray the costs of maintaining and operating the proposed market facility, and provide reasonable reserves.

(g) That any substantial alterations of the proposed market facility will be made only with the approval of the Secretary.

(h) That reports will be made to the Secretary at such intervals and giving such information concerning the market facility as the Secretary may require, and that the books and records of the market facility will be available for examination by the Secretary at its offices at any time during business hours.

(i) That the title to the market facility, or any part thereof, will not be transferred or encumbered, or leased for any purpose not related to the operation of the market, and that any of the vacant land of the market facility will not be leased for a period longer than one year (including the period of any renewals or extensions of such lease), except with the approval of the Secretary.

MAXIMUM CHARGES

SEC. 13. If any assistance is extended by the Secretary under sections 8, 10, or 11, to aid in financing the construction of a market facility, the maximum charges which may be received for the use of the market facility shall be subject to the approval of the Secretary during the period between the date the assistance is extended and the maturity date originally specified (1) in the mortgage instruments, if the assistance extended was through the insurance of a mortgage under section 8, (2) in the instruments under which the loan was made, if the assistance extended was a loan under section 10 or section 11, or (3) in the securities or obligations, if the assistance extended was through the purchase of securities or obligations under section 11. The Secretary shall approve such maximum charges if he determines they are reasonable and nondiscriminatory. Whoever knowingly demands, receives, or pays a charge in excess of the applicable maximum charges approved under this section shall upon conviction thereof be punished by a fine of not more than $2,000 or imprisonment for not more than two years, or both.

DEFAULT

SEC. 14. (a) In the event that the borrower violates any covenant or condition arising in connection with any loan or mortgage insurance obtained under this Act, or defaults in making any payment on any direct loan obtained under the authority of this Act, the Secretary may declare the entire loan due and payable at once and may institute such proceedings as he deems necessary or appropriate to protect the interests of the United States. If the Secretary finds that the mortgagor (1) has made reasonable efforts to meet all defaulted payments and to comply with the other covenants and conditions of the mortgage, and (2) will probably be able to meet such defaulted payments within five years after the maturity dates or date of the defaulted payments, the Secretary may enter into an agreement with the mortgagor providing for the payment of such defaulted payments together with interest thereon, at such times not later than five years after the maturity date or dates as the Secretary may deem to be within the probable future means of the mortgagor. Should any mortgagor with whom the Secretary has entered into such agreement thereafter fail to meet any payments the Secretary may proceed to foreclose the mortgage or institute such other proceedings as he may deem necessary.

ACQUISITION, OPERATION, AND DISPOSAL Sec. 15. The Secretary in the event of default is authorized and empowered to bid for and purchase at any foreclosure or other sale or otherwise to acquire property pledged or mortgaged or conveyed to secure any loan or other indebtedness owing to the Secretary or arising out of insurance issued by the Secretary under this Act; to accept title to any property so purchased or acquired; to maintain and operate or lease such property for such period as may be necessary to protect the interest of the United States therein and to sell or otherwise dispose of such property at public or private sale to the highest responsible bidder on such terms and on such conditions as the Secretary deems feasible. All net amounts realized from the operation or disposal of any property acquired under this section shall be deposited in the insurance or loan fund whichever is appropriate. The insurance fund and the loan fund, whichever is applicable, shall be available to defray expenditures in connection with the acquisition, maintenance, operation, and disposal of any such properties without regard to the provisions of section 3709 of the Revised Statutes.

FEES AND COMMISSIONS

Sec. 16. No officer or employee of the Department of Agriculture shall directly or indirectly be the beneficiary of or receive any fee, commission, gift, or other consideration for, or in connection with, any transaction or business under this Act other than such salary, fee, or other compensation as he may receive as such officer or employee. Any person violating any provision of this section shall upon conviction thereof be punished by a fine of not more than $2,000 or imprisonment for not more than two years, or both.

ADMINISTRATIVE PROVISIONS

Sec. 17. (a) The Secretary is authorized to promulgate such rules and regulations as may be necessary for the administration of this Act.

(b) The Secretary may delegate his authority to any officer or employee of the Department of Agriculture.

ADMINISTRATIVE EXPENSES

Sec. 18. There is authorized to be appropriated such sums as Congress may from time to time determine to be necessary to enable the Secretary to carry out the provisions of this Act, except that any expenses in connection with marketing facility research, development of plans for market facilities, determination of the need for market facilities, and methods of operation of market facilities shall be financed from funds made available pursuant to the Agricultural Marketing Act of 1946 and the marketing farm products” item in the Department of Agriculture Appropriation Act.

The CHAIRMAN. The problem involved here is a rather old one, just about as old as some of the old marketing buildings, 150 to 200

years old.

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