1 2 3 4 5 6 7 8 9 10 11 71 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 repre senting such allocation of general overhead items as are determined by the Secretary to be acceptable and reasonable. 12 Where a factory-manufactured house or major housing com13 ponent is furnished by a subcontractor or supplier having 14 an identity of interest with the mortgagor or builder, an 15 amount representing the Secretary's estimate of the market 16 value of such factory-manufactured house or major housing 17 component shall be included for purposes of clause (1) of 18 this subsection in lieu of the actual cost of such factory19 manufactured house or major component. 20 (b) The Secretary shall require that the mortgagor 21 certify as to the actual cost to the mortgagor of construction 22 or rehabilitation, and may require such additional certifica23 tions of actual cost by such other parties as he may consider necessary to carry out the intent of this section. The Secre 24 25 tary may exempt from the requirements of this section 72 1 mortgagors under a mortgage on a property or project 2 designed principally for residential use for twelve or fewer 3 families or where the mortgage amount to be insured is less 4 than $250,000. Certifications required pursuant to this sec5 tion shall be accompanied by such data and records as the 6 Secretary shall prescribe. Upon approval by the Secretary, 7 the certification required by this section shall be final and 8 incontestable, except for fraud or material misrepresentation 9 on the part of the mortgagor. (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. 2 SEC. 507. (a) The Secretary shall not insure any mort3 gage or loan under title V involving new or rehabilitated 4 property, except a mortgage covering multifamily housing 5 designed for use by less than eight families, unless the prin6 cipal contractor provides adequate assurances to the Secre7 tary that all laborers and mechanics employed by con8 tractors or subcontractors in the construction of the project or 9 facility have been paid wages at not less than those pre10 vailing on similar construction in the locality as determined 11 by the Secretary of Labor in accordance with the Davis12 Bacon Act, as amended (40 U.S.C. 276a-276a-5). The 13 Secretary of Labor shall have, with respect to the labor 14 standards specified in this section, the authority and functions 15 set forth in Reorganization Plan Numbered 14 of 1950 (64 16 Stat. 1267), and section 2 of the Act of June 13, 1934 (40 17 U.S.C. 276c). 18 (b) The Secretary may waive compliance with this 19 section in any case where prospective owners of the dwell20 ings involved, or other persons, voluntarily donate their 21 services without compensation or where laborers or mechan22 ics, not otherwise employed at any time on the project, 23 voluntarily donate their services without full compensation 24 for the purpose of lowering the costs of construction or re25 habilitation, and the Secretary determines that any amounts 74 1 thereby saved are fully credited to the mortgagor undertak 2 ing the construction or rehabilitation. 3 TITLE VI-INSURANCE CLAIMS 4 HOME MORTGAGE INSURANCE CLAIM SETTLEMENT 5 SEC. 601. (a) To be entitled to receive the benefits of the 6 insurance, where there has been a default in mortgage pay7 ments by the mortgagor, a mortgagee holding a home mort 8 gage insured under one of the sections of title IV shall either 9 foreclose the mortgage and take possession of the property 10 within a period of time prescribed by the Secretary and in 11 accordance with regulations issued by the Secretary or (with 12 the consent of the Secretary) otherwise acquire title and 13 possession of such property. Upon acquisition of the property, 14 the mortgagee shall (1) promptly convey to the Secretary 15 title to the property which meets the requirements of rules 16 and regulations of the Secretary in force at the time the mortgage was insured, and which is evidenced in the manner 17 18 20 2 2 2 2 21 22 23 24 prescribed by such rules and regulations, and (2) assign to him all claims of the mortgagee against the mortgagor or others, arising out of the mortgage transaction or foreclosure proceedings, except such claims as may have been released with the consent of the Secretary. In lieu of obtaining title and conveying title to the Secretary, the mortgagee may (with the approval of the Secretary) tender title and trans 25 fer possession directly from the mortgagor or other ap 75 1 propriate grantor. The Secretary shall pay the mortgagee's 2 insurance claim in an amount equal to the value of the 3 mortgage. 4 (b) For the purposes of this section, the value of the 5 mortgage shall be determined (in accordance with rules and 6 regulations prescribed by the Secretary) by adding to and 7 deducting from the original principal obligation of the mort8 gage which was unpaid on the date of the institution of 9 foreclosure proceedings, or on the date of the acquisition of 10 the property after default other than by foreclosure, certain 11 items specified in subsections (c) through (e). (c) There shall be added to such unpaid principal all payments which have been made by the mortgagee for— (1) taxes, ground rents, and water rates, which are liens prior to the mortgage; (2) special assessments which are noted on the application for commitment or which become liens after the insurance of the mortgage; (3) charges for the administration, operation, maintenance, and repair of community-owned property or the maintenance and repair of the mortgaged property, the obligation for which arises out of a covenant filed for record and approved by the Secretary prior to the insurance of the mortgage; (4) insurance on the property; |