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1 authority to contract to make assistance payments as

2 approved in appropriation Acts under subsection (g).

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TITLE V-PROJECT MORTGAGE INSURANCE

MULTIFAMILY HOUSING

SEC. 501. (a) For the purposes of this section

6 (1) The term "multifamily housing" means (i) hous7 ing or a housing project in which the occupancy of the dwell8 ing units is permitted by the owner thereof in consideration 9 of the payment of agreed rental charges; (ii) housing or a 10 housing project which is owned by a cooperative or which 11 is constructed or rehabilitated by an investor-sponsor who 12 meets such requirements as the Secretary may impose to

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assure that the consumer interest is protected, and who has 14 an agreement for the sale of the project to a cooperative 15 eligible for mortgage insurance under the provisions of this 16 title; (iii) housing or a housing project in which the indi17 vidual dwelling units are to be sold, on a condominium basis, 18 by a cooperative, or otherwise, to purchasers eligible for 19 mortgage insurance under the provisions of title IV; and 20 (iv) a mobile home park.

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(2) The term "replacement cost" means the Secre22 tary's estimate of the value of the land, the cost of the 23 proposed physical improvements, utilities within the bound24 aries of the property or project, architect's fees, taxes and 25 interest during construction, such other miscellaneous

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1 charges incident to construction and the initial operation or 2 disposition of the project as may be approved by the Secre3 tary, and a builder's and sponsor's profit and risk allowance 4 of 10 per centum of all of the foregoing items except the 5 land, or such lower percentage as the Secretary deems to be 6 reasonable and prescribes by regulation with respect to all

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or to particular categories of projects. In the case of a 8 cooperative or nonprofit mortgagor, the foregoing profit and

9 risk allowance shall be paid exclusively to the builder in 10 lieu of any other fee.

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(b) The Secretary is authorized to insure a mortgage 12 (including advances) which covers property involving a 13 multifamily housing project. The mortgage shall be executed 14 by a mortgagor approved by the Secretary. The mortgage may involve the financing of new construction, the rehabili16 tation of an existing structure or structures, or the purchase 17 or refinancing of an existing project (as defined by the Sec18 retary) which meets such standards as may be prescribed 19 by the Secretary.

20 (c) If new construction is involved, the mortgage shall 21 have a principal obligation not in excess of 90 per centum 22 (98 per centum in the case of a cooperative mortgagor) of 23 the estimated replacement cost of the property or project 24 when the proposed improvements are completed.

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(d) If rehabilitation is involved, the mortgage shall

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1 have a principal obligation not in excess of 90 per centum

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(98 per centum in the case of a cooperative mortgagor) of

3 the sum of (i) the Secretary's estimate of the cost of the

4 rehabilitation plus (ii) the Secretary's estimate of the value 5 of the property before the rehabilitation.

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(e) If the purchase or refinancing of an existing prop7 erty without rehabilitation is involved, the mortgage shall 8 have a principal obligation not in excess of 90 per centum of 9 the appraised value of the property (98 per centum in the 10 case of a cooperative mortgagor) as of the date the mortgage 11 is accepted for insurance.

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12 (f) In the case of a cooperative or nonprofit mortgagor, 13 the percentages otherwise applicable under subsection (c), (d), or (e) shall be increased to 100 per centum if the 15 principal obligation of the mortgage does not exceed the 16 amount which could be insured with respect to the project 17 under section 502.

18 (g) If the dwelling units in a project are to be sold 19 to individual purchasers, the principal obligation of the 20 blanket mortgage shall be further limited to the sum of the 21 individual mortgage amounts which could be insured for 22 owner-occupants of the proposed individual dwellings or 23 condominium units under title IV.

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(h) The mortgage shall provide for complete amorti

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1 zation by periodic payments within such term as the Secre

2 tary shall prescribe.

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3 (i) The property or project shall include five or more 4 dwelling units (which, with the approval of the Secretary, 5 need not be self-contained living units) or five or more spaces in a mobile home park, and may include such non7 dwelling facilities as the Secretary deems adequate and 8 appropriate to serve the occupants and the surrounding 9 neighborhood, except that the project shall be predominantly 10 residential. The Secretary shall give due consideration to the possible effect of the project on other business enterprises 12 in the community.

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MULTIFAMILY HOUSING ASSISTANCE

14 SEC. 502. (a) For the purpose of reducing rentals for 15 lower income tenants, the Secretary is authorized to make, 16 and to contract to make, periodic assistance payments on 17 behalf of the owner of a multifamily housing project, which 18 shall be accomplished through payments to mortgagees 19 holding mortgages meeting the requirements specified in 20 this section. No assistance payments with respect to any 21 project shall be made under this section (and no mortgage. covering any project shall be insured under subsection (i)) 23 unless the governing body of the locality where such project

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24 would be situated has by resolution specifically approved it.

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(b) Assistance payments with respect to a project shall 2 only be made by the Secretary during such time as the proj3 ect is operated as a multifamily housing project and (1) is

4 subject to a mortgage which is insured under subsection (i)

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or has been assigned to the Secretary; or (2) is owned by

a private nonprofit corporation or other private nonprofit

7 entity, a limited distribution corporation or other limited

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distribution entity, or a cooperative housing corporation, and 9 is financed under a State or local program providing assist10 ance through loans, loan insurance, or tax abatements, and 11 which prior to completion of construction or rehabilitation is approved for receiving the benefits of this section with

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respect to all or a part of the project.

(c) The assistance payment to a mortgagee by the Secretary on behalf of a project owner shall be in an amount not exceeding the difference between the monthly payment

for principal, interest, and mortgage insurance premium (or

other comparable charges approved by the Secretary) which the project owner as a mortgagor is obligated to pay under

the mortgage and the monthly payınent for principal and

interest such project owner would be obligated to pay if the

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mortgage were to bear interest at the rate of 1 per centum

per annum.

(d) The Secretary may include in the payment to the

mortgagee such amount, in addition to the amount computed