Volume 84 · 450
Public Law 91–351
To Increase the availability of mortgage credit for the financing of urgently needed housing, and for other purposes.
Approved July 24, 1970
Statutory text
AN ACT
To Increase the availability of mortgage credit for the financing of urgently needed housing, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
That this Act may be cited as the “Emergency Home Finance Act of 1970”.
TITLE I— REDUCTION OF INTEREST CHARGES FOR MEMBERS OF THE FEDERAL HOME LOAN BANK SYSTEM
Sec. 101.
There is authorized to be appropriated not to exceed $250,000,000, without fiscal year limitation, to be used by the Federal Home Loan Bank Board for disbursement to Federal home loan banks for the purpose of adjusting the effective interest charged by such banks on short-term and long-term borrowing to promote an orderly flow of funds into residential construction. The disbursement of sums appropriated hereunder shall be made under such terms and conditions as may be prescribed by the Board to assure that such sums are used to assist in the provision of housing for low- and middle-income families, and that such families share fully in the benefits resulting from the disbursement of such sums. No member of a Federal home loan bank shall use funds the interest charges on which have been adjusted pursuant to the provisions of this section to make any loan, if—
the effective rate of interest, on such loan exceeds the effective rate of interest on such funds payable by such member by a percentile amount which is in excess of such amount as the Board determines to be appropriate in furtherance of the purposes of this section; or
the principal obligation of any such loan which is secured by a mortgage on a residential structure exceeds the dollar limitations on the maximum mortgage amount, in effect on the date the mortgage was originated, which would be applicable if the mortgage was insured by the Secretary of Housing and Urban Development under section 203(b) or 207 of the National Housing
52 Stat. 10, 16; 83 Stat. 383.
Act.
Not more than 20 per centum of the sums appropriated pursuant to subsection (a) shall be disbursed in any one Federal home loan bank district.
TITLE II— AUTHORITY FOR THE FEDERAL NATIONAL MORTGAGE ASSOCIATION TO PROVIDE A SECONDARY MARKET FOR CONVENTIONAL MORTGAGES
Sec. 201.
Section 302(b) of the National Housing Act is amended—
by inserting “(1)” immediately following “(b)”; and
by adding at the end thereof the following new paragraph:
“(2) For the purposes set forth in section 301(a), and with the approval of the Secretary of Housing and Urban Development, the corporation is authorized, pursuant to commitments or otherwise, to purchase, service, sell, lend on the security of, or otherwise deal in mortgages which are not insured or guaranteed as provided in paragraph (1) (such mortgages referred to hereinafter as ‘conventional mortgages’). No such purchase of a conventional mortgage shall be made if the outstanding principal balance of the mortgage at the time of purchase exceeds 75 per centum of the value of the property securing the mortgage, unless (A) the seller retains a participation of not less than 10 per centum in the mortgage; (B) for such period and under such circumstances as the corporation may require, the seller agrees to repurchase or replace the mortgage upon demand of the corporation in the event that the mortgage is in default; or (C) that portion of the unpaid principal balance of the mortgage which is in excess of such 75 per centum is guaranteed or insured by a qualified private insurer as determined by the corporation. The corporation shall not issue a commitment to purchase a conventional mortgage prior to the date the mortgage is originated, if such mortgage is eligible for purchase under the preceding sentence only by reason of compliance with the requirements of clause (A) of such sentence. The corporation may purchase u conventional mortgage which was originated more than one year prior to the purchase date only if the seller is currently engaged in mortgage lending or investing activities and if, as a result thereof, the cumulative aggregate of the principal balances of all conventional mortgages purchased by the corporation which were originated more than one year prior to the date of purchase does not exceed 10 per centum of the cumulative aggregate of the principal balances of all conventional mortgages purchased by the corporation. The corporation shall establish limitations governing the maximum principal obligation of conventional mortgages purchased by it which are comparable to the limitations which would be applicable if the mortgage were insured by the Secretary of Housing and Urban Development under section 203 (b) or 207 of the National Housing Act.”
52 Stat. 10, 16; 83 Stat. 383.
Section 5202 of the Revised Statutes (12 U.S.C. 82) is amended by adding at the end thereof the following:
“Eleventh. Liabilities incurred in connection with sales of mortgages or participations therein, to the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation.”.
TITLE III— FEDERAL HOME LOAN MORTGAGE CORPORATION
Sec. 301. short title
This title may be cited as the “Federal Home Loan
Citation of title
Mortgage Corporation Act”.
Sec. 302. definitions
As used in this title—
The term “Board of Directors” means the Board of Directors of the Corporation.
The term “Corporation” means the Federal Home Loan Mortgage Corporation created by this title.
The term “law” includes any law of the United States or of any State (including any rule of law or of equity).
The term “mortgage” includes such classes of liens as are commonly given or are legally effective to secure advances on, or the unpaid purchase price of, real estate under the laws of the State in which the real estate is located, together with the credit instruments, if any secured thereby, and includes interests in mortgages.
The term “organization” means any corporation, partnership, association, business trust, or business entity.
The term “prescribe” means to prescribe by regulations or otherwise.
The term “property” includes any property, whether real, personal, mixed, or otherwise, including without limitation on the generality of the foregoing choses in action and mortgages, and includes any interest in any of the foregoing.
The term “residential mortgage” means a mortgage which (1) is a mortgage on real estate, in fee simple or under a leasehold having such term as may be prescribed by the Corporation, upon which there is located a structure or structures designed in whole or in part for residential use, or which comprises or includes one or more condominium units or dwelling units (as defined by the Corporation) and (2) has such characteristics and meets such requirements as to amount, term, repayment provisions, number of families, status as a first lien on such real estate, and otherwise, as may be prescribed by the Corporation.
The term “conventional mortgage” means a mortgage other than a mortgage as to which the Corporation has the benefit of any guaranty, insurance or other obligation by the United States or a State or an agency or instrumentality of either.
The term “security” has the meaning ascribed to it by section 2
48 Stat, 74, 905.
of the Securities Act of 1933.
The term “State”, whether used as a noun or otherwise, includes the several States, the District of Columbia, the Commonwealth of Puerto Rico, and the territories and possessions of the United States.
Sec. 303. establishment of the corporation
There is created the Federal Home Loan Mortgage Corporation, which shall be a body corporate and shall be tinder the direction of a Board of Directors composed of the members of the Federal Home Loan Bank Board, who shall serve as such without additional compensation. The Chairman of the Federal Home Loan Bank Board shall be the Chairman of the Board of Directors. The. principal office of the Corporation shall be in the District of Columbia or at such other place as the. Corporation may from time to time prescribe. The Corporation shall lie a member of each Federal home loan bank and, except as otherwise provided by the Federal Home loan Bank Board, shall have all the benefits, powers, and privileges, and in the exercise thereof shall be subject to all liabilities, conditions, and limitations (except those relating to Federal home loan bank stock mid subscriptions thereto and those under provisions of the Federal
12 USC 1421–1428a.
Powers.
Home Loan Bank Act preceding section 9) which are provided by the terms of such Act or other Federal statute for members of any such bank.
The Corporation shall have power (1) to adopt, alter, and use a corporate seal; (2) to have succession until dissolved by Act of Congress; (3) to make and enforce Such bylaws, rules, and regulations as may be necessary or appropriate to carry out the purposes or provisions of this title; (4) to make and perform contracts, agreements, and commitments; (5) to prescribe and impose fees and charges for services by the Corporation; (6) to settle, adjust, and compromise, and with or without consideration or benefit to the Corporation to release or waive in whole or in part, in advance or otherwise, any claim, demand, or right of, by, or against the Corporation; (7) to sue and be sued, complain and defend, in any State, Federal, or other court; (8) to acquire, take, hold, and own, and to deal with and dispose of any property; and (9) to determine its necessary expenditures and the manner in which the same shall be incurred, allowed, and paid, and appoint, employ., and fix and provide for the compensation and benefits of officers, employees, attorneys, and agents, all without regard to any other law except as may be provided by the Corporation or by laws hereafter enacted by the Congress expressly in limitation of this sentence. Nothing in this title or any other law shall be construed to prevent the appointment, employment, and provision for compensation and benefits, as an officer, employee, attorney, or agent of the Corporation, of any officer, employee, attorney, or agent of any department, establishment, or corporate or other instrumentality of the Government, including any Federal home loan bank or member thereof. The Corporation, with the consent of any such department, establishment, or instrumentality, including any Held services thereof, may utilize and act through any such department, establishment, or instrumentality and may avail itself of the use of information, services, facilities, and personnel thereof, and may pay compensation therefor, and all of the foregoing are hereby authorized to provide the same to the Corporation as it may request.
Funds of the Corporation may be invested in such hi vestments as
Funds, investment.
the Board of Directors may prescribe. Any Federal Reserve bank or Federal home loan bank, or any bank as to which at the time of its designation by the Corporation there is outstanding a designation by the Secretary of the Treasury as a general or other depositary of public money, may be designated by the Corporation as a depositary or custodian or as a fiscal or other agent of the Corporation, and is hereby authorized to act as such depositary, custodian, or agent. When designated for that purpose by the Secretary of the Treasury, the Corporation shall be a depositary of public money, under such regulations as may be prescribed by the Secretary of the Treasury, and may also be employed as fiscal or other agent of the United States, and it shall perform all such reasonable duties as such depositary or agent as may be required of it.
The Corporation, including its franchise, activities, capital,
Corporation, tax exempt status.
reserves, surplus, and income, shall be exempt from all taxation now or hereafter imposed by the United States, by any territory, dependency, or possession thereof, or by any State, county, municipality, or local taxing authority, except that any real property of the Corporation shall be subject to State, territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed. The provisions of this subsection shall be applicable without regard to any other law, including without limitation on the generality of the foregoing section 3301 of the Internal Revenue Code of 1954,
except laws hereafter enacted by Congress expressly in limitation of this subsection.
Notwithstanding section 1349 of title 28 of the United States Code or any other provision of law, (I) the Corporation shall be
deemed to be an agency included in sections 1345 and 1442 of such title 28; (2) all civil actions to which the Corporation is a party shall be deemed to arise under the laws of the United States, and the district courts of the United States shall have original jurisdiction of all such actions, without regard to amount or value; and (3) any civil or other action, case or controversy in a court of a State, or in any court other than a district court of the United States, to which the Corporation is a party may at any time before the trial thereof be removed by the Corporation, without the giving of any bond or security, to the district court of the United States for the district and division embracing the place where the same is pending, or, if there is no such district court, to the district court of the United States for the district in which the principal office of the Corporation is located, by following any procedure for removal of causes in effect at the time of such removal. No attachment or execution shall be issued against the Corporation or any of its property before final judgment in any State, Federal, or other court.
Sec. 304. capital stock
The capital stock of the Corporation shall consist of nonvoting common stock which shall be issued only to Federal home loan banks and shall have such par value and such other characteristics
Transfer.
as the Corporation prescribes. Stock of the Corporation shall be evidenced in such manner and shall be transferable only to such extent, to such transferees, and in such manner, as the Corporation prescribes.
The Federal home loan banks shall from time to time subscribe, at such price not less than par as the Corporation shall from time to time fix, for such amounts of common stock as the Corporation prescribes, and such banks shall pay therefor at such time or times and in such amount or amounts as may from time to time be fixed by call of the Corporation. The amount of the payments for which such banks may be obligated under such subscriptions shall not exceed a cumulative total of $100,000,000.
Subscriptions of the respective Federal home loan banks to such stock shall be allocated by the Corporation.
The Corporation may retire at any time all or any part of the stock of the Corporation, or may call for retirement all or any part of the stock of the Corporation by (1) publishing a notice of the call in the Federal Register or providing such notice in such other manner as the Corporation may determine to be appropriate, and (2) depositing with the Treasurer of the United States, for the purpose of such retirement, funds sufficient to effect such retirement. No call for the retirement of any stock shall be made, and no stock shall be retired without call, if immediately after such action, the total of the stock not called for retirement and of the reserves and surplus of the Corporation would be less than $100,000,000. The retirement of stock shall be at the par value thereof, or at the price at which such stock was issued if such price is greater than par value. No declaration of any dividend on stock of the Corporation shall be effective with respect to stock which at the time of such declaration is the subject of an outstanding retirement call the effective date of which has arrived.
Sec. 305. mortgage operations
The Corporation is authorized to purchase, and make commitments to purchase, residential mortgages from any Federal home loan bank, the Federal Savings and Loan Insurance Corporation, any member of a Federal home loan bank, or any other financial institution the deposits or accounts of which are insured by an agency of the United States, and to hold and deal with, and sell or otherwise dispose of, pursuant to commitments or otherwise, any such mortgage or interest therein. The operations of the Corporation under this section shall be confined so far as practicable to residential mortgages which are deemed by the Corporation to be of such quality, type, and class as to meet generally the purchase standards imposed by private institutional mortgage investors.
No conventional mortgage shall be purchased under this section if the outstanding principal balance of the mortgage at the time of purchase exceeds 75 per centum of the value of the property securing the mortgage, unless (A) the seller retains a participation of not less than 10 per centum in the mortgage; (B) for such period and under such circumstances as the Corporation may require, the seller agrees to repurchase or replace the mortgage upon demand of the Corporation in the event that the mortgage is in default; or (C) that portion of the unpaid principal balance of the mortgage which is in excess of such 75 per centum is guaranteed or insured by a qualified private insurer as determined by the Corporation. The Corporation shall not issue a com-mitment to purchase a conventional mortgage prior to the date the mortgage is originated, if such mortgage is eligible for purchase under the preceding sentence only by reason of compliance with the requirements of clause (A) of such sentence. The Corporation may purchase a conventional mortgage which was originated more than one year prior to the purchase date only if the seller is currently engaged in mortgage lending or investing activities and if, as a result thereof, the cumulative aggregate of the principal balances of all conventional mortgages purchased by the Corporation which were originated more than one year prior to the date of purchase does not exceed 10 per centum of the cumulative aggregate of the principal balances of all conventional mortgages purchased by the Corporation. The Corporation shall establish limitations governing the maximum principal obligation of conventional mortgages purchased by it which are comparable to the limitations which would lie applicable if the mortgage were insured by the Secretary of Housing and Urban Development under section 203(b) or 207 of the National Housing Act.
52 Stat. 10, 16; 83 Stat. 383.
The sale or other disposition by the Corporation of a mortgage under this section may be with or without recourse, and shall be upon such terms and conditions relating to resale, repurchase, guaranty, substitution, replacement, or otherwise as the. Corporation may prescribe.
Notwithstanding any other law, authority to enter into and to perform and carry out any transactions or matter referred to in this section is conferred on any Federal home loan bank, the Federal Savings and Loan Insurance Corporation, any Federal savings and loan association, any Federal home loan bank member, and any other financial institution the deposits or accounts of which are insured by an agency of the United States to the extent that Congress has the power to confer such authority.
Sec. 306. obligations and securities
The Corporation is authorized, upon such terms and conditions its it may prescribe, to borrow, to give security, to pay interest or other return, and to issue notes, debentures, bonds, or other obligations, or other securities, including without limitation mortgage-backed securities guaranteed by the Government National Mortgage Association in the manner provided in section 306(g) of the National Housing Act. Any obligation or security of the Corporation shall be
valid and binding notwithstanding that a person or persons purporting to have executed or attested the same may have died, become under disability, or ceased to hold office or employment before the issuance thereof.
The Corporation may, by regulation or by writing executed by the Corporation, establish prohibitions or restrictions upon the creation of indebtedness or obligations of the Corporation or of liens or charges upon property of the Corporation, including after-acquired property, and create liens and charges, which may be floating liens or charges, upon all or any part or parts of the property of the Corporation, including after-acquired property. Such prohibitions, restrictions, liens, and charges shall have such effect, including without limitation on the generality of the foregoing such rank and priority, as may lie provided by regulations of the Corporation or by writings executed by the Corporation, and shall create causes of action which may be enforced by action in the United States District Court for the District of Columbia or in the United States district court, for any judicial district in which any of the property affected is located. Process in any such action may run to and be served in any judicial district or any place subject to the jurisdiction of the United States.
The Federal home loan banks shall, to such extent as the Board of Directors may prescribe, guarantee the faithful and timely performance by the Corporation of any obligation or undertaking of the Corporation on or with respect to any security (which term as used in this sentence shall not include the capital stock referred to in section 304 of
Ante, p. 454.
this title).
The provisions of this section and of any restriction, prohibition, lien, or charge referred to in subsection (b) shall be fully effective notwithstanding any other law, including without limitation on the generality of the foregoing any law of or relating to sovereign immunity or priority.
Sec. 307. miscellaneous provisions
All rights and remedies of the Corporation, including without limitation on the generality of the foregoing any rights and remedies of the Corporation on, under, or with respect to any mortgage or any obligation secured thereby, shall be immune from impairment, limitation, or restriction by or under (1) any law (except laws enacted by the Congress expressly in limitation of this sentence) which becomes effective after the acquisition by the Corporation of the subject or property on, under, or with respect to which such right or remedy arises or exists or would so arise or exist in the absence of such law, or (2) any administrative or other action which becomes effective after such acquisition. The Corporation shall be entitled to all immunities and priorities, including without limitation on the generality of the foregoing all immunities and priorities under any such law or action, to which it would be entitled if it were the United States or if it were an unincorporated agency of the United States.
The financial transactions of the Corporation shall be subject to audit by the General Accounting Office in accordance with the principles and procedures applicable to commercial corporate transactions under such rules and regulations as may be prescribed by the Comptroller General of the United States. The representatives of the General Accounting Office shall have access to all books, accounts, financial records, reports, files and all other papers, things, or property belonging to or in use by the Corporation and necessary to facilitate the audit, and they shall be afforded full facilities for verifying transactions with the balances or securities held by depositaries, fiscal agents, and custodians.
Report to Congress.
A report on each such audit shall be made by the Comptroller General to the Congress. The Corporation shall reimburse the General Accounting Office for the full cost of any such audit as billed therefor by the Comptroller General.
Sec. 308. penal provisions
Except as expressly authorized by statute of the United States, no individual or organization (except the Corporation) shall use the term “Federal Home Loan Mortgage Corporation”, or any combination of words including the words “Federal”, and “Home Loan”, and “Mortgage”, as a name or part thereof under which any individual or organization does any business, but this sentence shall not make unlawful the use of any name under which business is being done on the date of the enactment of this Act. No individual or organization shall use or display (1) any sign, device, or insigne prescribed or approved by the Corporation for use or display by the Corporation or by members of the Federal home loan banks, (2) any copy, reproduction, or colorable imitation of any such sign, device, or insigne, or (3) any sign, device, or insigne reasonably calculated to convey the impression that it is a sign, device, or insigne used by the Corporation or prescribed or approved by the Corporation, contrary’ to regulations of the Corporation prohibiting, or limiting or restricting, such use or display by such individual or organization. An organization violating this subsection shall for each violation be punished by a tine of not more than $10,000. An officer or member of an organization participating or knowingly acquiescing in any violation of this subsection shall be punished by a fine of not more than $5,000 or imprisonment for not more than one year, or both. An individual violating this subsection shall for each violation be punished as set forth in the sentence next preceding this sentence.
The provisions of sections 215, 607, 658, 1011, and 1014 of title 18 of the United States Code are extended to apply to and with respect
62 Stat. 694–752; 76 Stat. 1125; 65 Stat. 718.
to the Corporation, and for the purposes of such section 658 the term “any property mortgaged or pledged”, as used therein, shall without limitation on its generality include any property subject to mortgage, pledge, or lien acquired by the Corporation by assignment or otherwise.
The term “bank examiner or assistant examiner”, as used in section 655 of such title 18, shall include any examiner or assistant examiner who is an officer or employee of the Corporation and any person who makes or participates in the making of any examination of or for the Corporation.
The term “bank”, as used in subsection (f) of section 2113 of such title 18, shall be deemed to include the Corporation, and any building
used in whole or in part by the Corporation shall be deemed to be used in whole or in part as a bank, within the meaning of such section 2113.
The terms “agency” and “agencies” shall be deemed to include the Corporation wherever used with reference to an agency or agencies of the United States in sections 201, 202, 203, 205, 207, 208, 200, 286, 287, 371, 506, 595, 602, 641, 654, 701, 872, 1001, 1002, 1016, 1017, 1361, 1505, and 2073 of such title 18. Any officer or employee of the Corporation
76 Stat. 1119; 62 Stat. 698–795; 65 Stat. 720; 76 Stat. 551.
shall be deemed to be a person mentioned in section 602 of such title 18 within the meaning of sections 603 and 606 of such title.
The terms “obligation or other security” and “obligations or other securities”, wherever used (with or without the words “of the United States”) in sections 471 to 476, both inclusive, and section 492 of such title 18, arc extended to include any obligation or other security
62 Stat. 705;
65 Stat. 122.
of or issued by the Corporation. Any reference in sections 474, 494, 495, and 642 of such title 18 to the United States Code, except in a territorial sense, or to the Secretary’ of the Treasury is hereby extended to include the Corporation. Section 477 of such title 18 is extended to apply with respect to section 476 of such title as extended by the first sentence of this subsection (f), and for this purpose the term “United States” as used in such section 476 shall include the Corporation.
Sec. 309. territorial applicability
Notwithstanding any other law, this title shall be applicable to the several States, the District of Columbia, the Commonwealth of Puerto Rico, and the territories and possessions of the United States.
Sec. 310. construction and separability
Except as otherwise provided in this title, or as otherwise provided by the Corporation or by laws hereafter enacted by the Congress expressly in limitation of provisions of this title, the powers and functions of the Corporation and of the Board of Directors shall be exercisable, and the provisions of this title shall be applicable and effective, without regard to any other law. Notwithstanding any other evidences of the intention of Congress, it is hereby declared to be the controlling intent of Congress that if any provision of this title, or the application thereof to any person or circumstances, is held invalid, the remainder of this title, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.
TITLE IV— GOVERNMENT NATIONAL MORTGAGE ASSOCIATION SPECIAL ASSISTANCE FUNDS
Sec. 401.
Section 305(c) of the National Housing Act is amended by striking out “by $500,000,000 on July 1, 1969” and inserting in lieu thereof “by $2,000,000,000 on July 1, 1969”.
Section 305(g) of such Act is amended—
by striking out “$2,500,000,000” and inserting in lieu thereof “$1,750,000,000”;
by striking out “at par”; and
by striking out in the first sentence all that follows the word “exceed” and inserting in lieu thereof “the dollar limitation on maximum principal obligation that would be applicable to such mortgage it insured under section 235 (i) of the National Housing
Ante, p. 450.
Act.”
Sec. 402.
The second sentence of section 302(b)(1) of the National Housing Act (as redesignated by section 201 of this Act) is amended by inserting after “(1)” the following: “is insured under section 236 or”.
TITLE V— FUNDS FOR FINANCING MIDDLE-INCOME HOUSING
Sec. 501. findings and purpose
The Congress finds that—
periodic episodes of monetary stringency and high interest, rates make it extremely difficult for families of middle income to obtain mortgage credit at rates which they can afford to pay;
periods of monetary stringency and high interest rates are directly related to the Government’s monetary and fiscal policies;
a disproportionate share of the burden of sustaining these anti-inflationary policies of the Government falls on families of middle income who are buyers or prospective buyers of homes; and
the Government has a responsibility to lessen the disproportionate burden which such families bear as a result of such policies.
It is the purpose of this title to provide, during periods of high mortgage interest rates, a source of mortgage credit for such families which is within their financial means.
Sec. 502. mortgage credit for middle-income families
Title II of the National Housing Act is amended by adding a new section 243 as follows:
“Sec. 243. “homeownership for middle-income families
(a) Whenever he determines such action to be necessary in furtherance of the purposes set forth in section 501 of the Emergency Home Finance Act of 1970, the Secretary is authorized to make, and to contract to make, periodic assistance payments on behalf of families of middle income. The assistance shall be accomplished through interest subsidy payments to the Federal National Mortgage Association or die Federal Home Loan Mortgage Corporation (hereinafter referred to as ‘the investor’) with respect to mortgages meeting the special requirements specified in this section and made after the date of enactment, of the Emergency Home Finance Act of 1970.
“(b) To qualify for assistance payments a middle-income family shall be a mortgagor under a mortgage which is (1) insured under subsection (j) of this section, (2) guaranteed under chapter 37 of title, 38, United States Code, or (3) a conventional mortgage meeting the
72 Stat. 1203; 80 Stat. 26; 82 Stat. 116.
requirements of subsection (j)(3) of this section. In addition to the foregoing requirement, the Secretary may require that the mortgagor have an income, at the time of acquisition of the property, of not more than the median income for the area in which the property is located, as determined by the Secretary, with appropriate adjustments for smaller and larger families.
“(c) The interest subsidy payments authorized by this section shall cease when (1) the mortgagor no longer occupies the property which secures the mortgage, (2) the mortgages are no longer held by the investor, or (3) the rate of interest paid by the mortgagor reaches the rate of interest specified on the mortgage.
“(d) (1) Interest subsidy payments shall be on mortgages on which the mortgagor makes monthly payments towards principal and interest equal to an amount which would be required if the mortgage bore an effective interest rate of 7 per centum per annum including any discounts or charges in the nature of points or otherwise (but not including premiums, if any, for mortgage insurance) or such higher rate (not to exceed the rate specified in the mortgage), which the mortgagor could pay by applying at least. 20 per centum of his income towards homeownership expenses. As used in this subsection, the term ‘monthly homeownership expense’ includes the monthly payment for principal, interest, mortgage insurance premium, insurance, and taxes due under the mortgage.
“(2) In addition to the mortgages eligible for assistance under paragraph (1) of this subsection, the Secretary is authorized to make periodic assistance payments on behalf of cooperative members of middle income. Such assistance payments shall be accomplished through interest subsidy payments to the investor with respect to mortgages insured (subsequent to the effective date of this section) under section 213 which are executed by cooperatives, the membership
64 Stat. 54; 79 Stat. 468; 83 Stat. 383.
in which is limited to middle-income families. For purposes of this paragraph—
“(1) the term ‘mortgagor’, when used in subsection (b) in the ease of a mortgage covering a cooperative housing project, means a member of the cooperative;
“(2) the term ‘acquisition of the property’, when used in subsection (b), means the family’s application for a dwelling unit; and
“(3) in the ease of a cooperative mortgagor, subsection (c) shall not apply and the interest subsidy payments shall cease when the mortgage is no longer held by the investor or the cooperative fails to limit membership to families whose incomes at the time of their application for a dwelling unit meets such requirements as are laid down by the Secretary pursuant to subsection (b).
“(e) The interest subsidy payments shall be in an amount equal to the difference, as determined by the Secretary, between the total amount of interest per calendar quarter received by the investor on mortgages assisted under this section and purchased by it and the total amount of interest which the investor would have received if the yield on such mortgages was equal to the sum of (1) the average costs (expressed as an annual percentage rate) to it of all borrowed funds outstanding in the immediately preceding calendar quarter, and (2) such per centum per annum as will provide for administrative and other expenses of the investor and a reasonable economic return, as determined by the Secretary to be necessary and appropriate taking into account the purpose of this section to provide additional mortgage credit at reasonable rates of interest to middle-income families.
“(f) Procedures shall be adopted by the Secretary for recertifications of the mortgagor’s income at intervals of two years (or at shorter intervals where the Secretary deems it desirable) for the purpose of adjusting the amount of the mortgagor’s payments pursuant to subsection (d).
“(g) The Secretary shall prescribe such regulations as he deems necessary to assure that the sales price of, or other consideration paid in connection with, the purchase by a homeowner of the property with respect to which assistance payments are to lie made is not increased above the appraised value on which the maximum mortgage which the Secretary will insure is computed.
“(h) (1) There are authorized to be appropriated such sums as may be necessary to enable the Secretary to make interest subsidy payments under contracts entered into under this section. The aggregate amount of contracts to make such payments shall not exceed amounts approved in appropriation Acts, and payments pursuant to such contracts shall not exceed $105,000,000 during the first year of such contracts prior to July 1, 1971, which amount shall be increased by an additional $105,000,000 during the first year of an additional number of such contracts on July 1 of each of the years 1971 and 1972.
“(2) No interest subsidy payments under this section shall be made after June 30, 1973, except pursuant to contracts entered into on or before such date.
“(i) In determining the income of any family for the purposes of this section, income from all sources of each member of the family in the household shall be included, except that the Secretary shall exclude income earned by any minor person.
“(j) (1) The Secretary is authorized, upon application by the mortgagee, to insure a mortgage executed by a mortgagor who meets the eligibility requirements for assistance payments prescribed by the Secretary under subsection (b). Commitments for the insurance of such mortgages may be issued by the Secretary prior to the date of their execution or disbursement thereon, upon such terms and conditions as the Secretary may prescribe.
“(2) To be eligible for insurance under this subsection, a mortgage
75 Stat. 160; 83 Stat. 380, 384.
shall meet the requirements of section 221 (d)(2) or 234(e), except as such requirements are modified by this subsection: Provided, however, That in the discretion of the Secretary 25 per centum of the authority conferred by this section and subject to all the terms thereof may be used for mortgages on existing housing.
“(3) A mortgage to be insured under this section shall—
“(i) involve a single-family dwelling which has been approved by the Secretary prior to the “beginning of construction, or a one-family unit in a condominium project (together with an undivided interest in the common areas and facilities serving the project) which is released from a multi family project, the construction of which has been completed within two years prior to the filing of the application for assistance payments with respect to such family unit and the unit shall have had no previous occupant other than the mortgagor;
“(ii) involve a single-family dwelling whose appraised value, as determined by the Secretary, is not in excess of $20,000 (which amount may be increased by not more than 50 per centum in any geographical area where the Secretary authorizes an increase on the basis of a finding that the cost level so requires).
“(iii) be executed by a mortgagor who shall have paid in cash or its equivalent on account of the property (A) 3 per centum of the first $15,000 of the appraised value of the property, (B) 10 per centum of such value m excess of $15,000 but not in excess of $25,000, and (C) 20 per centum of such value in excess of $25,000.”
Sec. 508. conforming amendments
Section 238 of the National Housing Act is amended by—
striking out “section 235 (i), 235(j)(1), or 237” each place it appears in subsection (a) and inserting in lieu thereof “section 235(f), 235(j)(4), 237, or 243”; and
striking out “235, 230, and 237” each place it appears in subsection (b) and inserting in lieu thereof “235, 236, 237, and 243”.
Sec. 504. amendment to the federal national mortgage association charter act
Section 304(a)(1) of the National Housing Act is amended
by adding at the end thereof the following: “Nothing in this title shall prohibit the corporation from purchasing, and making commitments to purchase, any mortgage, with respect to which the Secretary of Housing and Urban Development has entered into a contract with the corporation to make interest subsidy payments under section 502 of the Emergency Home Finance Act of 1970.”.
Ante, p. 458.
TITLE VI— FLEXIBLE INTEREST RATE AUTHORITY
Sec. 601.
Section 3(a) of the Act entitled “An Act to amend chapter 37 of title 38 of the United States Code with respect to the veterans’
home loan program, to amend the National Housing Act with respect to interest rates on insured mortgages, and for other purposes”, approved
May 7, 1968, is amended by striking out “October 1, 1970” and inserting in lieu thereof “January 1, 1972”.
TITLE VII— MISCELLANEOUS
Sec. 701. settlement costs in the financing of federal housing administration and veterans’ administration assisted housing
With respect to housing built, rehabilitated, or sold with assistance provided under the National Housing Act or under
chapter 37 of title 38, United States Code, the Secretary of Housing and Urban Development and the Administrator of Veterans’ Affairs are respectively authorized and directed to prescribe standards governing the amounts of settlement costs allowable in connection with the financing of such housing in any such area. Such standards shall—
be established after consultation between the Secretary and the Administrator;
be consistent in any area for housing assisted under the National Housing Act and housing assisted under chapter 37 of title 38, United States Code; and
be based on the Secretary’s and the Administrator’s estimates of the reasonable charge for necessary services involved in settlements for particular classes of mortgages and loans.
The Secretary and the Administrator shall undertake a joint study and make recommendations to the Congress not later than one year after the date of enactment of this Act with respect to legislative and administrative actions which should be taken to reduce mortgage settlement costs and to standardize these costs for all geographic areas.
Sec. 702. emergency relief from interest rate conflict between federal law and state law
Notwithstanding any other law, from the date of enactment of this title until July 1, 1972, loanss to local public agencies under
title I of the Housing Act of 1949 and to local public housing agencies under the United States Housing Act of 1937 may, when determined by the Secretary of Housing and Urban Development to be necessary because of interest rate limitations of State laws, bear interest at a rate less than the applicable going Federal rate but not less than 6 per centum per annum.
Sec. 703. treasury borrowing authority for new communities program
Section 407(a) of the Housing and Urban Development
Act of 1968 is amended by adding at the end thereof the following: “The Secretary may issue obligations to the Secretary of the Treasury in an amount outstanding at any one time sufficient to enable the Secretary to carry out his functions with respect to the guarantees authorized by this title. The obligations issued under this subsection shall have such maturities and bear such rate or rates of interest as shall be determined by the Secretary of the Treasury. The Secretary of the Treasury is authorized and directed to purchase any obligations of the Secretary issued under this subsection, and for such purpose the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under the Second
Liberty Bond Act, as now or hereafter in force, and the purposes for which securities may be issued under such Act are extended to include purchases of the Secretary’s obligations hereunder.”
Sec. 704. real estate loans by national banks
Section 24 of the Federal Reserve Act (12 U.S.C. 371) is amended—
by striking out “80 per centum” and “twenty-five years” in clause (3) of the third sentence of the first paragraph and inserting in lieu thereof “90 per centum” and “thirty years”, respectively; and
by striking out “thirty-six months”, each place it appears in the first sentence of the third paragraph, and inserting in lieu thereof “sixty months”.
Sec. 705. extension of time for continuance of certain activities
Section 408(c)(2) of the National Housing Act (12 U.S.C.
1730a(c)(2)) is amended by striking “two” and inserting in lieu thereof “five”.
Sec. 706. statewide lending for federal savings and loan associations
Section 5(c) of the Home Owners’ Loan Act of 1933 is amended (1) by adding after “their home office” in the first sentence the following: “or within the State in which such home office is located”; and (2) by substituting the word “section” for the word “proviso” used in the last clause of the second proviso.
Sec. 707. reserves of insured institutions
Section 403(b) of the National Housing Act (12 U.S.C. 1726(b)) is amended by inserting after “Provided, That” the second
48 Stat. 1258; 49 Stat. 298; 78 Stat. 804.
place the term appears the following: “the Corporation may extend the twenty-year limitation hereinabove prescribed by not more than ten years in the case of any insured institution if it determines such action to be necessary to meet mortgage needs: Provided further, That”.
Sec. 708. savings and loan associations as pension trustees
Section 5(c) of the Home Owners’ Loan Act of 1933 (12 U.S.C. 1464(c)) is amended 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 forming part of a stock bonus, pension, or profit-sharing plan which qualifies or qualified for specific tax treatment under section 401(d) of the Internal Revenue Code of 1954, if the funds of such trust are invested only in savings
accounts or deposits in such association or in obligations or securities issued by such association. All funds held in such fiduciary capacity by any such association may be commingled for appropriate, purposes of investment, but individual records shall be kept by the fiduciary for each participant and shall show in proper detail all transactions engaged in under the authority of this paragraph”
Sec. 709. maximum loan on single-family dwelling
Section 5(c) of the Home Owners’ Loan Act of 1933 (12 U.S.C. 1464(c)) is amended by striking out “$40,000” in the first
proviso and inserting in lieu thereof “$45,000”.
Sec. 710. college housing grant authorization
Section 401(f)(2) of the Housing Act of 1950 is amended
by striking out all that follows “increased by” and inserting in lieu thereof “$6,300,000 on July 1, 1970”.
Sec. 711. national housing partnerships
Title IX of the Housing and Urban Development Act of 1968 is amended
by adding after section 911 the following new section:
“Sec. 912. “state regulation
Nothing contained in this title shall preclude a State or other local jurisdiction from imposing, in accordance with the laws of such State or other local jurisdiction, any valid nondiscriminatory tax, obligation, or regulation on the partnership as a taxable and or legal entity, but no limited partner of the partnership not otherwise subject to taxation or regulation by or judicial process of a State or other local jurisdiction shall be subject to taxation or regulation by or subject to or denied access to judicial process of such State or other local jurisdiction, or be so subject or denied access to any greater extent, because of activities of the corporation or partnership within such State or other local jurisdiction.”
Approved July 24, 1970.