12 U.S.C. § 1745 — Insurance of mortgages on sales of Gov-

Page 817 TITLE 12—BANKS AND BANKING § 1745 mortgage shall be construed to include a loan or loans with respect to which a contract of insur- ance is issued pursuant to this section. (g) Disposal of evidence of debt, contract, claim, personal property, or security; collection or compromise of obligations and rights Notwithstanding any other provision of law, the Secretary shall have the power to assign or sell at public or private sale, or otherwise dis- pose of, any evidence of debt, contract, claim, personal property, or security assigned to or held by him in connection with the payment of insurance heretofore or hereafter granted under this section, and to collect or compromise all obligations assigned to or held by him and all legal or equitable rights accruing to him in con- nection with the payment of such insurance until such time as such obligations may be re- ferred to the Attorney General for suit or collec- tion. (h) Premium charges; amount; manner of pay- ment; application fees The Secretary shall fix a premium charge for the insurance granted under this section, but such premium charge shall not exceed an amount equivalent to 1 per centum of the origi- nal principal of such loan, and such premium charge shall be payable in advance by the finan- cial institution and shall be paid at such time and in such manner as may be prescribed by the Secretary. In addition to the premium charge herein provided for, the Secretary is authorized to charge and collect such amounts as he may deem reasonable for examining and processing applications for the insurance of loans under this section, including such additional inspec- tions as the Secretary may deem necessary. (i) Insurance for accepting and discounting promissory notes; contract provisions; de- fault in payments; remedies; debentures; in- terest; premium charges (1) In addition to the insurance of the prin- cipal loan to finance the manufacture of hous- ing, as provided in this section, and in order to provide short-term financing in the sale of houses to be delivered pursuant to the purchase contract or contracts assigned as security for such principal loan, the Secretary is authorized, under such terms and conditions and subject to such limitations as he may prescribe, to insure the lender against any losses it may sustain re- sulting from the acceptance and discount of a promissory note or notes executed by a pur- chaser of any such houses representing an un- paid portion of the purchase price of any such houses. No such promissory note or notes ac- cepted and discounted by the lender pursuant to this subsection shall involve a principal obliga- tion in excess of 80 per centum of the purchase price of the manufactured house or houses; have a maturity in excess of one hundred and eighty days from the date of the note or bear interest in excess of 4 per centum per annum; nor may the principal amount of such promissory notes, with respect to any individual principal loan, outstanding and unpaid at any one time, exceed in the aggregate an amount prescribed by the Secretary. (2) The Secretary is authorized to include in any contract of insurance executed by him with respect to the insurance of a loan to finance the manufacture of houses, provisions to effectuate the insurance against any such losses under this subsection. (3) The failure of the purchaser to make any payment due under or provided to be paid by the terms of any note or notes executed by the pur- chaser and accepted and discounted by the lend- er under the provisions of this subsection, shall be considered as a default under this subsection, and if such default continues for a period of thir- ty days, the lender shall be entitled to receive the benefits of the insurance, as provided in sub- section (d) of this section except that debentures issued pursuant to this subsection shall have a face value equal to the unpaid principal balance of the loan plus interest at the rate of 4 per cen- tum per annum from the date of default to the date the application is filed for the insurance benefits. (4) Debentures issued with respect to the in- surance granted under this subsection shall be issued in accordance with the provisions of sec- tion 1739(d) of this title except that such deben- tures shall be dated as of the date application is filed for the insurance benefits and shall bear in- terest from such date. (5) The Secretary is authorized to fix a pre- mium charge for the insurance granted under this subsection, in addition to the premium charge authorized under subsection (h) of this section. Such premium charge shall not exceed an amount equivalent to 1 per centum of the original principal of such promissory note or notes and shall be paid at such time and in such manner as may be prescribed by the Secretary. (June 27, 1934, ch. 847, title VI, § 609, as added June 30, 1947, ch. 163, title I, § 3, 61 Stat. 193; amended Aug. 10, 1948, ch. 832, title I, § 101(d), 62 Stat. 1269; Apr. 20, 1950, ch. 94, title I, § 122, 64 Stat. 59; Pub. L. 89–117, title XI, § 1108(r), Aug. 10, 1965, 79 Stat. 506; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17.) Editorial Notes AMENDMENTS 1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Com- missioner’’ wherever appearing in subsecs. (a), (b), (b)(1) to (4), (c), (d), (g), (h), and (i)(1), (2), (5). 1965—Subsec. (f). Pub. L. 89–117, struck out cl. (1) of the first sentence which provided that all references in section 1713(k) of this title to the ‘‘Housing Fund’’ shall be construed to refer to the ‘‘War Housing Insurance Fund’’ and redesignated cls. (2), (3), and (4) thereof as cls. (1), (2), and (3), respectively. 1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’ for ‘‘Administrator’’ wherever appearing. 1948—Subsec. (b). Act Aug. 10, 1948, § 101(d)(1), (2), struck out par. (1) and inserted new par. (1), and struck out first two sentences of par. (4) and inserted two new sentences. Subsec. (f). Act Aug. 10, 1948, § 101(d)(3), inserted last sentence. Subsec. (i). Act Aug. 10, 1948, § 101(d)(4), added subsec. (i). § 1745. Insurance of mortgages on sales of Gov- ernment housing; limits and conditions; Greenbelt towns; State housing Notwithstanding any of the provisions of this subchapter, the Secretary is authorized, upon Page 818 TITLE 12—BANKS AND BANKING § 1745 application by the mortgagee, to insure or to make commitments to insure under section 1738 or section 1743 of this title any mortgage exe- cuted in connection with the sale by the Govern- ment, or any agency or official thereof, of any housing acquired or constructed under Public Law 849, Seventy-sixth Congress, as amended; Public Law 781, Seventy-sixth Congress, as amended; or Public Laws 9, 73, or 353, Seventy- seventh Congress, as amended (including any property acquired, held or constructed in con- nection with such housing or to serve the inhab- itants thereof), without regard to— (1) any limit as to the time when any mort- gage may be insured under this subchapter; (2) any limit as to the aggregate amount of principal obligations of all mortgages insured under this subchapter, but the aggregate amount of principal obligations of all mort- gages insured pursuant to this section shall not exceed $750,000,000; (3) any requirement that the obligation be approved for mortgage insurance prior to the beginning of construction or that the con- struction be new construction; (4) any of the provisions of subsections (b)(2) or (b)(5) of section 1738 of this title or para- graphs (B) and (C) of the first sentence of sec- tion 1743(b)(3) of this title: Provided, That such mortgage shall (1) otherwise be eligible for insurance under section 1738 or section 1743 of this title as the case may be, (2) have a maturity not exceeding twenty-five years from the date of insurance, (3) involve a prin- cipal obligation (including such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve) in an amount not exceeding 90 per centum of the appraised value of the mortgage property as determined by the Secretary, and (4) bear interest (exclusive of pre- mium charges) at not to exceed 5 per centum per annum on the amount of the principal obliga- tion outstanding at any time if such mortgage covers property on which there is located a dwelling designed principally for residential use for not more than four families in the aggregate, irrespective of whether such dwelling or dwell- ings have a party wall or are otherwise phys- ically connected with another dwelling or dwell- ings, or bear interest at not to exceed 41⁄2 per centum per annum on the amount of the prin- cipal obligation outstanding at any time if such mortgage covers property upon which there is located a dwelling or dwellings designed prin- cipally for residential use for more than four families. The Secretary is further authorized to insure or to make commitments to insure in accord- ance with the provisions of this section any mortgage executed in connection with the sale by the Secretary, or by any public housing agen- cy with the approval of the Secretary, of any housing (including any property acquired, held, or constructed in connection with such housing or to serve the inhabitants thereof) owned or fi- nancially assisted pursuant to the provisions of Public Law 671, Seventy-sixth Congress. The Secretary is further authorized to insure or to make commitments to insure in accord- ance with the provisions of this section any mortgage executed in connection with the sale by the Government, or any agency or official thereof, of any of the so-called Greenbelt towns, or parts thereof, including projects, or parts thereof, known as Greenhills, Ohio; Greenbelt, Maryland; and Greendale, Wisconsin, developed under the Emergency Relief Appropriation Act of 1935, or of any of the village properties under the jurisdiction of the Tennessee Valley Author- ity, and any mortgage executed in connection with the first resale, within two years from the date of its acquisition from the Government, of any portion of a project or property of the char- acter described in this section. The Secretary is further authorized to insure or to make commitments to insure under sec- tion 1743 of this title in accordance with the pro- visions of this section any mortgage executed in connection with the sale by a State or munici- pality, or an agency, instrumentality, or body politic of either, of any permanent housing (in- cluding any property acquired, held, or con- structed in connection therewith or to serve the inhabitants thereof), constructed by or on behalf of such State, municipality, agency, instrumen- tality or body politic, for the occupancy of vet- erans of World War II, their families, and others: Provided, That the principal obligation of any such mortgage does not exceed either 85 per cen- tum of the appraised value of the mortgage property as determined by the Secretary or $8,100 per family unit for such part of such prop- erty as may be attributable to dwelling use. (June 27, 1934, ch. 847, title VI, § 610, as added Aug. 5, 1947, ch. 495, § 2, 61 Stat. 777; amended Aug. 10, 1948, ch. 832, title I, § 101(e), 62 Stat. 1270; Apr. 20, 1950, ch. 94, title I, §§ 120, 122, 64 Stat. 58, 59; July 14, 1952, ch. 723, § 14, 66 Stat. 605; Pub. L. 90–19, § 1(a)(3), (o), May 25, 1967, 81 Stat. 17, 19.) Editorial Notes REFERENCES IN TEXT Public Law 849, Seventy-sixth Congress, as amended, referred to in text, is act Oct. 14, 1940, ch. 862, 54 Stat. 1125, known as the ‘‘Lanham Public War Housing Act’’, which is classified generally to subchapters II to VII (§§ 1521 et seq., 1531 et seq., 1541 et seq., 1561 et seq., 1571 et seq., and 1581 et seq.) of chapter 9 of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 1501 of Title 42 and Tables. Public Law 781, Seventy-sixth Congress, as amended, referred to in text, is the Second Supplemental Na- tional Defense Appropriation Act, 1941, act Sept. 9, 1940, ch. 717, 54 Stat. 872. Section 201 thereof appropriated $100,000,000 to the President for allocation to the former ‘‘War’’ Department, and to the Navy Department, for the construction of housing necessary to the national defense program. This provision was not classified to the code. Public Laws 9, 73, or 353, Seventy-seventh Congress, as amended, referred to in text, refer to the following acts, respectively: Public Law 9, Urgent Deficiency Ap- propriation Act, 1941, act Mar. 1, 1941, ch. 9, 55 Stat. 14; Public Law 73, Additional Urgent Deficiency Appro- priation Act, 1941, act May 24, 1941, ch. 132, 55 Stat. 197; and Public Law 353, Third Supplemental National De- fense Appropriation Act, 1942, act Dec. 17, 1941, ch. 591, 55 Stat. 810. These three acts appropriated a total of $320,000,000 to the President for the purpose of providing housing necessary because of national defense activi- ties and conditions arising out of World War II. These provisions were not classified to the code, although all three acts are cited in a ‘‘Prior Additional Appropria- Page 819 TITLE 12—BANKS AND BANKING § 1746 tions’’ note under section 1523 of Title 42, The Public Health and Welfare. Public Law 671, Seventy-sixth Congress, referred to in text, is act June 28, 1940, ch. 440, 54 Stat. 676. Provisions of the Act relating to housing are contained in title II, which is classified generally to subchapter I (§ 1501 et seq.) of chapter 9 of Title 42. For complete classifica- tion of this Act to the Code, see Tables. The Emergency Relief Appropriation Act of 1935, re- ferred to in text, is Joint Res. Apr. 8, 1935, ch. 48, 49 Stat. 115. It was a temporary legislation, and was for- merly set out in a note in former chapter 16 of Title 15, Commerce and Trade. See notes under sections 721 to 728 of that title. AMENDMENTS 1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Com- missioner’’ wherever appearing, and ‘‘Secretary’’ for ‘‘Public Housing Administration’’ and ‘‘said Adminis- tration’’ in second par., respectively. 1952—Act July 14, 1952, inserted last par. 1950—Act Apr. 20, 1950, § 120, made the insurance au- thority of this section applicable to sale by the Public Housing Administration, or any public housing agency, of any housing owned or financially assisted pursuant to the provisions of sections 1501 to 1505 of Title 42. The Public Health and Welfare, which provided for the con- struction of war housing out of prior authorizations for low-rent public housing on the condition that such housing would be converted to low-rent use after termi- nation of its use for war housing. Act Apr. 20, 1950, § 122, substituted ‘‘Commissioner’’ for ‘‘Administrator’’ wherever appearing. 1948—Act Aug. 10, 1948, inserted last par. relating to the Greenbelt towns. § 1746. Insurance on mortgages on large-scale housing projects (a) Additional authorization; encouragement of cost-reduction techniques; advances In addition to mortgages insured under other sections of this subchapter, and in order to as- sist and encourage the application of cost-reduc- tion techniques through large-scale modernized site construction of housing and the erection of houses produced by modern industrial processes, the Secretary is authorized to insure mortgages (including advances on such mortgages during construction) which are eligible for insurance as hereinafter provided. (b) Eligibility requirements To be eligible for insurance under this section, a mortgage shall— (1) have been made to and be held by a mort- gagee approved by the Secretary as respon- sible and able to service the mortgage prop- erly; (2) cover property, held by a mortgagor ap- proved by the Secretary, upon which there is to be constructed or erected dwelling units for not less than twenty-five families consisting of a group of single-family dwellings approved by the Secretary for mortgage insurance prior to the beginning of construction: Provided, That during the course of construction there may be located upon the mortgaged property a plant for the fabrication or storage of such dwellings or sections or parts thereof, and the Secretary may consent to the removal or re- lease of such plant from the lien of the mort- gage upon such terms and conditions as he may approve; (3) involve a principal obligation in an amount— (A) not to exceed 85 per centum of the amount which the Secretary estimates will be the value of the completed property or project, exclusive of any plant of the char- acter described in paragraph (2) of this sub- section located thereon, and (B) not to exceed a sum computed on the individual dwellings comprising the total project as follows: $5,950 or 85 per centum of the valuation, whichever is the lower amount, with respect to each single-family dwelling: Provided, That if the Secretary finds that it is not feasible, within the dollar amount limitation in this clause on the principal obligation of the mortgage, to con- struct dwellings containing three or four bedrooms without sacrifice of sound stand- ards of construction, design, and livability, he may increase such dollar amount limita- tion by not exceeding $850 for each addi- tional bedroom (as defined by the Secretary) in excess of two contained in each such dwelling if he finds that such dwelling meets sound standards of design and livability as a three-bedroom unit or a four-bedroom unit, as the case may be, but the amount com- puted under this clause for each such dwell- ing shall not exceed, in any event, $7,650. With respect to the insurance of advances during construction, the Secretary is author- ized to approve advances by the mortgagee to cover the cost of materials delivered upon the mortgaged property and labor performed in the fabrication or erection thereof; (4) provide for complete amortization by periodic payments within such term as the Secretary shall prescribe and shall bear inter- est (exclusive of premium charges for insur- ance) as not to exceed 4 per centum per annum on the amount of the principal obligation out- standing at any time: Provided, That the Sec- retary with the approval of the Secretary of the Treasury, may prescribe by regulation a higher maximum rate of interest, not exceed- ing 41⁄2 per centum per annum on the amount of the principal obligation outstanding at any time, if he finds that the mortgage market de- mands it. The Secretary may consent to the release of a part or parts of the mortgaged property from the lien of the mortgage upon such terms and conditions as he may prescribe and the mortgage may provide for such re- lease, and the mortgage may provide that, upon the completion of the construction of the project, such mortgage may be replaced by in- dividual mortgages covering each individual dwelling in the project. Each such individual mortgage may be insured under this section with the mortgagor being either the builder who constructed the dwellings or the owner and occupant of the dwelling at the time, and where the mortgagor is the owner and occu- pant, may involve a principal obligation in such amount and have such maturity and in- terest rate as a mortgage eligible for insur- ance under section 1709(b)(2)(D) of this title. (c) Preferences in occupancy for veterans and hardship cases Preference or priority of opportunity in the occupancy of the mortgaged property for vet-