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title 5, United States Code, but at rates not to exceed

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3 (e) Members of the Commission, other than those who 4

are regular full-time employees of the Government, shall re5 ceive compensation at the rate of $75 per day for each 6

day they are engaged in the performance of their duties as 7 members of the Commission. All members of the Commission

8 shall be entitled to reimbursement for necessary travel and 9 subsistence expenses incurred by them in the performance of 10 the duties of the Commission.

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(f) There are authorized to be appropriated such sums as may be necessary to carry out this section.

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SAVINGS AND LOAN ASSOCIATIONS

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SEC. 4. (a) Section 5 (c) of the Home Owners' Loan

15 Act of 1933 (12 U.S.C. 1464 (c)) is amended16

(1) by striking out “$40,000” in the first proviso and inserting in lieu thereof “such amount as the Board

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(2) by inserting before the next to the last paragraph a new paragraph as follows:

“Any such association is authorized to act as trustee of any trust created or organized in the United States and form

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ing part of a stock bonus, pension, or profit-sharing plan 24 which qualifies or qualified for specific tax treatment under 25 section 401 (d) of the Internal Revenue Code of 1954, if the

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1 funds of such trust are invested only in savings accounts or

2 deposits in such association or in obligations or securities 3 issued by such association. All funds held in such fiduciary 4 capacity by any such association may be commingled for 5 appropriate purposes of investment, but individual records 6 shall be kept by the fiduciary for each participant and shall 7 show in proper detail all transactions engaged in under the

8 authority of this paragraph.”

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(b) (1) Section 2 of the Home Owners' Loan Act of

10 1933 (12 U.S.C. 1462) is amended by striking out sub11 section (b) and inserting in lieu thereof the following:

“(b) The term 'primary lending area' means (1) all

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13 territory located within a radius of 100 miles from the home

14 office of an association, (2) in the case of an association 15 converted from a State-chartered savings and loan institu16 tion, any additional territory within which that institution 17 was authorized to lend on real estate security prior to the 18 date of its conversion, and (3) any additional area within

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the State in which such home office is located: Provided,

20 That the Board may, in its discretion, provide by rule or 21 regulation that this clause (3) shall not be applicable in 22 the case of an association having its home office in a State 23 where State-chartered savings and loan associations are not 24 permitted to lend on real estate security in any portion of 25 the additional area described in this clause (3).”

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1 (2) Section 5 (c) of the Home Owner's Loan Act of 2 1933 (12 U.S.C. 1464 (c)) is amended by striking out in

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3 the first sentence “one hundred miles of their home office"

4 and inserting in lieu thereof “their primary lending area”. 5 (3) Section 403 (b) of the National Housing Act (12 6 U.S.C. 1726 (b)) is amended by striking out that part of 7 the third sentence which precedes the first semicolon and 8 inserting in lieu thereof the following: “Each applicant for

9 such insurance shall also file with its application an agree

10 ment that during the period that the insurance is in force 11 it will not make any loans outside of its primary lending

12 area, except loans which are made pursuant to regulations 13 of the Corporation: Provided, That such agreement shall 14 further provide that any loan made outside of its primary 15 lending area shall also be subject to such regulations”. 16 (4) Section 401 of the National Housing Act (12 17 U.S.C. 1724) is amended by adding at the end thereof the

18 following: 19 “(e) The term “primary lending area' means (1) all 20 territory located within a radius of one hundred miles from 21 the applicant's principal office, (2) any additional territory 22 within which the applicant was operating prior to June 27,

23 1934, and (3) any additional area within the State in which 24 the applicant's principal office is located.”

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REAL ESTATE LOANS BY NATIONAL BANKS

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SEC. 5. Section 24 of the Federal Reserve Act (12

3 U.S.C. 371) is amended4

(1) by striking out “80 per centum” and “twenty5 five years” in clause (3) of the third sentence of the 6

first paragraph and inserting in lieu thereof “90 per 7

centum” and “thirty years”, respectively; and 8

(2) by striking out “thirty-six months”, each place 9

it appears in the first sentence of the third paragraph, 10

and inserting in lieu thereof “sixty months”.

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SECTION-BY-SECTION SUMMARY OF S. 3442, THE MORTGAGE CREDIT ACT OF 1970

Şection 1 of the bill would establish an experimental dual interest rate system for FHA and VA assisted mortgages and loans. The present temporary authority for the Secretary of Housing and Urban Development to establish maximum interest rates for FHA and VA loans in excess of statutory maximum interest rates when necessary to meet the mortgage market would be extended until January 1, 1972.

As an alternative to this administered rate, the Secretary and the Administrator of Veterans' Affairs would be authorized to insure or guarantee loans at any interest rate agreed upon by the borrower and the lender. Direct VA loans, however, could not bear an interest rate in excess of the administered rate. This "free-rate” would be available only if the lender certifies it has charged no discounts to any party except as compensation for expenses in accordance with regulations prescribed by the Secretary and the Administrator. Discounts would continue to be permitted with respect to insured or guaranteed loans bearing an interest rate within the maximum rate established by the Secretary, but it is intended that there be no administrative limitations on the amount of discount borne by the borrower.

In order to assure that prospective mortgagors are able to evaluate the cost of borrowing under FHA and VA programs, the Secretary and the Administrator would be directed to take steps to assure that prospective borrowers have adequate information about the operation of the dual interest rate system and current financing costs in the area for FHA or VA loans—including interest rates, discounts, and other fees and allowable settlement costs.

In order to assure that maximum interest rates established by the Secretary are maintained at levels to meet the mortgage market, the Secretary and the Administrator would be directed to submit a joint report to the Congress no later than March 1, 1970, and at least once during each three-month period thereafter, on the adequacy of the Secretary-established rates in meeting the mortgage market, including the level of discounts incident to such rates and the relation of such rates and discounts to the “free-market” interest rates. The Secretary and the Administrator would also be directed to submit a joint report to the Congress not later than July 1, 1971 (six months prior to the expiration of the experimental dual interest rate system), evaluating the system and making recommendations as to permanent legislation with respect to interest rates on FHA and VA loans.

Section 2 of the bill would direct the Secretary and the Administrator, after consultation with each other, to prescribe standards governing the amounts of settlement costs allowable in any area in connection with the financing of FHA and VA assisted housing. The standards for FHA and VA loans would be consistent with each other and would be based on the Secretary's and the Administrator's estimates of the reasonable charge for necessary services involved in settlements.

The Secretary and the Administrator would also be directed to undertake a joint study and to make recommendations to the Congress no later than July 1, 1970, as to legislative and administrative actions to reduce and standardize settlement costs.

Section 3 of the bill would create a Special Advisory Commission on Housing which would, no later than November 1 of each year, recommend to the Congress specific housing goals for the next fiscal year and proposals to achieve these goals. The Commission's recommendations would be considered and discussed in the annual housing report required to be submitted by the President pursuant to Title XVI of the Housing and Urban Development Act of 1968 and would thus constitute a part of the Administration's decisional process with respect to housing policy.

The Commission would consist of thirteen members appointed by the President after consultation, whenever practicable, with the ranking majority and minority members of the Housing Subcommittees on Banking and Currency of the Senate and House of Representatives. No more than three members of the Commission could be regular full-time employees of the Federal Government and at least four members must represent consumers. Members of the Commission would serve for terms of two years.

Section 4(a) would amend Section 5(c) of the Home Owners Loan Act of 1933 to (1) remove the $40,000 mortgage ceiling and to replace it with discretionary authority by the Federal Home Loan Bank Board; (2) authorize Federal savings and loan associations to act as trustees for Keough type retirement funds.

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