12 U.S.C. § 1747a — Eligibility for insurance

Page 821 TITLE 12—BANKS AND BANKING § 1747c be invalid, such judgment shall not affect, impair, or invalidate the remainder of this Act or its application to other persons and circumstances, but shall be con- fined in its operation to the provisions of this Act, or the application thereof to the persons and cir- cumstances, directly involved in the controversy in which such judgment shall have been rendered.’’ INCONSISTENT PROVISIONS Act Aug. 10, 1948, ch. 832, title V, § 504, 62 Stat. 1285, provided that: ‘‘Insofar as the provisions of any other law are inconsistent with the provisions of this Act [sections 1701c, 1701e to 1701g–3, 1702, 1703, 1709, 1710, 1713, 1716, 1738, 1743 to 1746 and 1747 to 1747l of this title, section 846 of former Title 31, Money and Finance, sec- tion 694 of former Title 38, Pensions, Bonuses, and Vet- erans’ Relief, and section 1404a of Title 42, The Public Health and Welfare], the provisions of this Act shall be controlling.’’ § 1747a. Eligibility for insurance (a) To be eligible for insurance under this sub- chapter, a project shall meet the following con- ditions: (1) The Secretary shall be satisfied that there is, in the locality or metropolitan area of such project, a need for new rental dwell- ings at rents comparable to the rents proposed to be charged for the dwellings in such project. (2) Such project shall be economically sound, and the dwellings in such project shall be ac- ceptable to the Secretary as to quality, de- sign, size, and type. (b) Any insurance contract executed by the Secretary under this subchapter shall be conclu- sive evidence of the eligibility of the project and the investor for such insurance, and the validity of any insurance contract so executed shall be incontestable in the hands of an investor from the date of the execution of such contract, ex- cept for fraud or misrepresentation on the part of such investor. (c) After completion of the project the inves- tor must establish in a manner satisfactory to the Secretary that the project is free and clear of liens and that there are no other outstanding unpaid obligations contracted in connection with the construction of the project, except taxes and such other liens and obligations as may be approved or prescribed by the Secretary. Debentures issued by the investor which are payable out of net income from the project and from the benefits of the insurance contract shall not be construed as ‘‘unpaid obligations’’ as such term is used in this subsection. (June 27, 1934, ch. 847, title VII, § 702, as added Aug. 10, 1948, ch. 832, title IV, § 401, 62 Stat. 1276; amended Apr. 20, 1950, ch. 94, title I, § 122, 64 Stat. 59; Sept. 1, 1951, ch. 378, title VI, § 609(a), 65 Stat. 316; 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)(1), (2), (b), and (c). 1951—Subsec. (c). Act Sept. 1, 1951, added subsec. (c). 1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’ for ‘‘Administrator’’ wherever appearing. § 1747b. Premium charges; fees for examination and inspection (a) For insurance granted pursuant to this subchapter the Secretary shall fix and collect a premium charge in an amount not exceeding one-half of 1 per centum of the outstanding in- vestment for the operating year for which such premium charge is payable without taking into account the excess earnings, if any, applied, in addition to the minimum annual amortization charge, to amortization of the outstanding in- vestment. Such premium charge shall be pay- able annually in advance by the investor, either in cash or in debentures issued by the Secretary under this subchapter at par plus accrued inter- est: Provided, That, if in any operating year the gross income shall be less than the operating ex- penses, the premium charge payable during such operating year shall be waived, but only to the extent of the amount of the difference between such expenses and such income and subject to subsequent payment out of any excess earnings as hereinafter provided. (b) With respect to any project offered for in- surance under this subchapter, the Secretary is authorized to charge and collect reasonable fees for examination, and for inspection during the construction of the project: Provided, That such fees shall not aggregate more than one-half of 1 per centum of the estimated investment. (June 27, 1934, ch. 847, title VII, § 703, as added Aug. 10, 1948, ch. 832, title IV, § 401, 62 Stat. 1277; amended Apr. 20, 1950, ch. 94, title I, § 122, 64 Stat. 59; 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) and (b). 1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’ for ‘‘Administrator’’ wherever appearing. § 1747c. Rent schedules The Secretary shall require that the rents for the dwellings in any project insured under this subchapter shall be established in accordance with a rent schedule approved by the Secretary, and that the investor shall not charge or collect rents for any dwellings in the project in excess of the appropriate rents therefor as shown in the latest rent schedule approved pursuant to this section. Prior to approving the initial or any subsequent rent schedule pursuant to this sec- tion, the Secretary shall find that such schedule affords reasonable assurance that the rents to be established thereunder are (1) not lower than necessary, together with all other income to be derived from or in connection with the project, to produce reasonably stable revenues sufficient to provide for the payment of the operating ex- penses, the minimum annual amortization charge, and the minimum annual return; and (2) not higher than necessary to meet the need for dwellings for families of moderate income. (June 27, 1934, ch. 847, title VII, § 704, as added Aug. 10, 1948, ch. 832, title IV, § 401, 62 Stat. 1277; amended Apr. 20, 1950, ch. 94, title I, § 122, 64 Stat. 59; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17.)