incident to the construction of elevator type structures of sound standards of construction and design: And provided further, That such mortgage shall not involve a principal obligation exceeding the maximum amount prescribed by the provisions of this section 207 in effect prior to the effective date of the Housing Act of 1954, unless the President, pursuant to section 201 of the Housing Act of 1954 has authorized a greater maximum amount, in which event such principal obligation shall not exceed such greater maximum amount That the maximum amounts prescribed in this paragraph shall be applicable to commitments to insure issued before the day of enactment of the Housing Act or 1954 and concerning which applications for insurance have not been approved prior to such date.

SEC. 119. Section 213 (b) of said Act, as amended, is hereby amended by striking clauses (1) (2) and inserting:

"(1) not to exceed $5,000,000, or not to exceed $25,000,000 if the mortgage is executed by a mortgagor regulated or supervised under Federal or State laws or by political subdivisions of States or agencies thereof, as to rents, charges, and methods of operation; and

"(2) not to exceed, for such part of such property or project as may be attributable to dwelling use, $2,250 per room (or $8,100 per family if the number of rooms in such property or project does not equal or exceed four per family unit), and not to exceed 90 per centum of the estimated value amount which the Commissioner estimates will be the replacement cost of the property or project when the proposed improvements are completed: Provided, That if at least 65 per centum of the membership of the corporation or number of beneficiaries of the trust consists of veterans, the mortgage may involve a principal obligation not to exceed $2,375 per room (or $8,550 per family unit if the number of rooms in such property or project does not equal or exceed four per family unit), and not to exceed 95 per centum of the estimated value amount which the Commissioner estimates will be the replacement cost of the property or project when the proposed physical improvements are completed: Provided further, That as to projects which consist of elevator type structures, and to compensate for the higher costs incident to the construction of elevator type structures of sound standards of construction and design, the Commissioner may, in his discretion, increase the aforesaid dollar amount limitations per room or per family unit (as may be applicable to the particular case) within the following limits: (i) $2,250 per room to not to exceed $2,700; (ii) $2,375 per room to not to exceed $2,850; (iii) $8,100 per family unit to not to exceed $8,400; and (iv) $8,550 per family unit to not to exceed $8,900: Provided further, That such mortgage shall not involve a principal obligation exceeding the maximum amount per room or per family unit prescribed by the provisions of this section 213 in effect prior to the effective date of the Housing Act of 1954, unless the President, pursuant to section 201 of the Housing Act of 1954 has authorized a greater maximum amount, in which event such principal obligation shall not exceed such greater maximum amount: That the maximum amounts prescribed in this paragraph shall be applicable to commitments to insure issued before the day of enactment of the Housing Act of 1954 and concerning which applications for insurance have not been approved prior to such date: And provided further, That for the purposes of this section the word 'veteran' shall mean a person who has served in the active military or naval service of the United States at any time on or after September 16, 1940, and prior to July 26, 1947, or on or after June 27, 1950, and prior to such date thereafter as shall be determined by the President."

SEC. 120. (a) Section 213 (f) of said Act, as amended, is hereby amended by striking the last sentence thereof.

(b) Section 213 of said Act, as amended, is hereby amended by adding at the end thereof the following subparagraph (h) The provisions of this section may be extended, at the discretion of the Commissioner, to an insured mortgage transaction initially unsured under the provisions of Section 207 where such project was originally intended, at the time of application for mortgage insurance, to be a cooperative housing project as defined in Section 213 (a) (1) and (2).

"(B) (i) not to exceed $5,000,000, or, if executed by a mortgagor coming within the provisions of paragraph (2) (B) of this subsection (d), not to exceed $50,000,000; and

(d) To be eligible for insurance under this section, a mortgage shall"(1) have been made to and be held by a mortgagee approved by the Commissioner as responsible and able to service the mortgage properly;

"(2) involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the Commissioner shall approve) in an amount not to exceed $7,000, except that the Commissioner may by regulation increase this amount to not to exceed $8,600 in any geographical areas where cost levels so require, and not to exceed 100 per centum of the appraised value (as of the date the mortgage is accepted for insurance) of a property, upon which there is located a dwelling designed principally for a single-family residence: Provided, That the mortgagor shall be the owner and occupant of the property at the time of the insurance and shall have paid on account of the property at least $200 (which amount may include amounts to cover settlement costs and initial payments for taxes, hazard insurance, mortgage insurance premium, and other prepaid expenses): Provided further, That nothing contained herein shall preclude the Commissioner from issuing a commitment to insure and insuring a mortgage pursuant thereto where the mortgagor is not the owner and occupant and the property is to be built for sale and the insured mortgage financing is required to facilitate the construction of the dwelling and provide financing pending the subsequent sale thereof to a qualified owner-occupant, and in such instances the mortgage shall not exceed 85 per centum of the appraised value; or

"(3) if executed by a mortgagor exclusive of any such organization uhose obligations or the income thereof are exempt from Federal taxation which is a nonprofit corporation or association or other acceptable nonprofit organization, regulated or supervised under Federal or State laws or by political subdivisions of State or agencies thereof, as to rents, charges, and method of operation, in such form and in such manner as, in the opinion of the Commissioner, will effectuate the purposes of this section, the mortgage may involve a principal obligation not in excess of $5,000,000; and not in excess of $7,000 $7,600 per family unit for such part of such property or project as may be attributable to dwelling use, except that the Commissioner may by regulation increase this amount to not to exceed $8,600 in any geographical area where cost levels so require, and not in excess of 100 per centum of the Commissioner's estimate of the value of the property or project when repaired and rehabilitated for use as rental accommodations for ten or more families eligible for occupancy as provided in this section; and

"OPEN-END MORTGAGES

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"SEC. 224. Notwithstanding any other provisions of this Act, in connection with any mortgage insured pursuant to any section of this Act which covers a property upon which there is located a dwelling designed principally for residential use for not more than four families in the aggregate, the Commissioner is authorized, upon such terms and conditions as he may prescribe, to insure under said section the amount of any advance for the improvement or repair of such property made to the mortgagor pursuant to an 'open-end' provision in the mortgage, and to add the amount of such advance to the original principal obligation in determining the value of the mortgage for the purpose of computing the amounts of debentures and certificate of claim to which the mortgagee may be entitled: Provided, That the Commissioner may require the payment of such charges, including charges in lieu of insurance premiums, as he may consider appropriate for the insurance of such 'open-end' advances: And provided further, That the insurance of 'open-end' advances shall not be taken into account in determining the aggregate amount of principal obligations of mortgages which may be insured under this Act. And provided further, That no 'open-end' advance shall be insured in an amount which if added to the unpaid principal amount due on the mortgage would exceed the original principal obligation."

SEC. 130. (a) The Commissioner is hereby authorized and directed to conduct an objective and independent long-range study of the prospective foreclosure and loss experience of mortgage programs insured under the National Housing Act, as amended, and on or before February 1, 1956, shall transmit the results of such study to the Speaker of the House who shall cause the same to be printed for the information of the Congress.

(b) With respect to mortgage loans for the purchase or construction of residential property (not including farm homes) guaranteed, insured, or made pursuant to Title III of the Servicemen's Readjustment Act of 1944, as amended, the Adminis trator of Veterans Affairs is hereby authorized and directed to conduct an objective and independent long-range study of the probable losses on such loans, and on or before February 1, 1956, shall transmit the results of such study to the Speaker of the House who shall cause the same to be printed for the information of the Congress.

TITLE II-HOME MORTGAGE INTEREST RATES AND TERMS SEC. 201. On the basis of reviews, which shall be made from time to time # the request of the President by officers of the Federal Government designated by him, by a committee consisting of the administrator of the Housing and Home Finance Agency (who shall be chairman), the Chairman of the Home Loan Bank Board, the Commissioner of the Federal Housing Administration, the Assistant Deputy Administrator for Loan Guaranty of the Yeterans Administration, the Chairman of the Board of Governors of the Federal Reserve System, and the Secretary of the Treasury, of conditions affecting the mortgage investment market (including currect market yields on comparable investments such as long-term obligations of the United States and of States and municipalities and long-term corporate bonds, and after taking into consideration conditions in the building industry and the national economy, the President such Committee is hereby authorized, without regard to any other provision of law except provisions hereafter enacted expressly in limitation hereof, to establish from time to time

(1) the maximum rates of interest (exclusive of premium charges for insurance and service charges, if any) for various classifications of residential mortgage loans insured or guaranteed or made under the National Housing Act, as amended, or the Servicemen's Peadjustment Act of 1944, as amended: Provided, That no such maximum rate of interest shall, at the time established by the President, Committee, exceed 21⁄2 per centum plus the annual rate of interest determined by the Secretary of the Treasury, at the request of the President, Committee, by estimating the average yield to maturity, on the basis of dily closing mrket bid quot tions or prices during the clendr month next proceding the est .blishment of such mximum rte of interest, on all outstanding market ble obligations of the United States having maturity date of fifteen years or more from the first day of such next preceding month, and by adjusting such estimated average annul yield to the necrest one-eighth of 1 per centum;

(2) the maximum financing charges for various classifictions of loans as to which finncil institutions are insured against losses under title I of the National Housing Act, as amended;

(3) the rate of interest for deventures issued under the National Housing Act, as amended, in connection with defaults upon mortgages insured there under: Provided, That no such rate shall, at the time established by the President, Committee, exceed the annual rate of interest determined by the Secretary of the Treasury in the manner set forth in numbered clause (1) of this section; ̧

(4) the maximum fees and charges permitted to cover the costs of the origination of, including the costs of supervision of non-Government assisted construction loan disbursements in connection with, residential mortgage loans insured or guaranteed under the National Housing Act, as amended, or the Servicemen's Readjustment Act of 1944, as amended, and the maximum special service charges, if any, permitted in connection with those mortgages insured under section 203 of said National Housing Act for which such special service charges may be found to be appropriate by the President Committee on the basis of the low original principal amounts of the mortgages or on the basis of other factors impeding an adequate flow of credit for the type of housing involved and in connection with mortgages insured under sections 220 or 221 of the National Housing Act, as amended: and

SEC. 202. The Servicemen's Readjustment Act of 1944, as amended, is hereby amended by adding the following new section at the end of title III: "SEC. 515. With respect to mortgage loans for the purchase or construction of residential property (not including farm homes) guaranteed, insured, or made pursuant to this title, the Administrator shall make such rules and regulations concerning ( maximum rates of interest for such residential mortgage loans, (2) maximum ratios of lean to value and maximum maturities with respect to such residential mortgage loans, and (3) and maximum fees and charges permitted to cover the costs of the origination of, and of the supervision of construction loan disbursements in connection with, such residential mortgage loans as may be necessary to carry out limitations relating thereto established by the President Committee pursuant to the authority vested in him it by section 201 of the Housing Act of 1954."

"(b) For the purposes set forth in section 301 and subject to the limitations and restrictions of this title, the Association is authorized to make commitments to purchase and to purchase, service, or sell, any residential or home mortgages (or participations therein) which are insured under this Act, as amended, or which are insured or guaranteed under the Servicemen's Readjustment Act of 1944, as amended: Provided, That (1) no mortgage may be purchased at a price exceeding 100 per centum of the unpaid principal amount thereof at the time of purchase, with adjustments for interest and any comparable items; and (2) the Association may not purchase any mortgage if (i) it is offered by, or covers property held by, a Federal, State, territorial, or municipal instrumentality or (ii) the original principal obligation thereof exceeds or exceeded $12,500 for each family residence or dwelling unit covered by the mortgage:

(c) The Administrator of the Housing and Home Finance Agency shall from time to time, at least annually require examinations and reports of condition of the Association in such form as the Administrator shall prescribe and shall furnish periodically statements based upon the reports of the Association to the Administrator. The Administrator shall annually make a full report of its operations to the Speaker of the House of Representatives, who shall cause the same to be printed for the information of the Congress. For the purposes of this Act, examiners appointed by the Administrator shall be subject to the same requirements, responsibilities, and penalties as are applicable to examiners under the National Bank Act and the Federal Reserve Act, and shall have in the exercise of functions under this Act, the same powers and privileges as are vested in such examiners by law.

"CAPITALIZATION

"SEC. 303. (a) The Association shall have nonvcting eapital common stock, and initially shall also have nonvoling preferred stock to which the Secretary of the Treasury initially shall subscribe as provided in subsections (d) and (e) of this section. The All stock of the Association shall have a par value of $100 per share, and shall not be transferable except on the books of the Association. At the option of the Association such all stock shall be retirable at par value at any time, except that retirements of common stock (other than steek held by the Secretary of the Treasury) shall not be made if, as a consequence thereof, the amount thereof remaining outstanding would be less than $100,000,000. With respect to such the preferred stock held by him, the Secretary of the Treasury shall be entitled to cumulative dividends for each fiscal year until such preferred stock is retired, at rates determined by him at the beginning of each such fiscal year, taking into consideration the current average interest rate on outstanding marketable obligations of the United States as of the last day of the preceding fiscal year. Secretary of the Treasury shall permit the retirement of the stock held by him in the manner provided in this section. Funds of the capital surplus and the general surplus accounts of the Association shall be available to retire the capital preferred stock held by the Secretary of the Treasury as rapidly as the Association shall deem feasible.

The

"(b) The Association shall accumulate funds for its capital surplus account from private sources by requiring each mortgage seller to make payments of nonrefundable capital contributions equal to not less than 3 2 per centum of the unpaid principal amount of mortgages therein involved in purchases or contracts for purchases between such seller and the Association, or such greater percentage as may 44750-54-pt. 1-31

from time to time be determined by the Association: In addition, the Association may impose charges or fees for its services, not to exceed one-half of 1 percentum with the objective that all costs and expenses of its operations should be within its income derived from such operations and that such operations should be fully self-supporting. All earnings from the operations of the Association shall annually be transferred to its general surplus account. At any time, funds of the general surplus account may, in the discretion of the board of directors, be transferred to reserves. All dividends shall be charged against the general surplus account. This subsection (b) shall not apply to the special assistance functions of the Association under section 305 of this title or to the management and liquidating functions of the Association under section 306 of this title.

"(c) Until such time as all of the stock held by the Secretary of the Treasury has been retired, the The Association shall issue, from time to time, to each mortgage seller its eonvertible eertificates common stock (only in denominations of $100 or multiples thereof) evidencing any capital contributions made by such seller pursuant to subsection (b) of this section. which certificates shall not be transferable except on the books of the Association: Subject to such terms and eonditions as may be prescribed by the board of direeters, such eertificates shall be convertible into capital stock of the Association having an equal par value, but no such conversion shall be permitted or made until such time as all of the outstanding capital stock of the Association held by the Secretary of the Treasury has been retired and the Secretary of the Treasury does not hold any of the obligations of the Association purchased under section 304 (e) of this title. After all of the steek held by the Secretary of the Treasury has been retired, the Assoeiation may effect the direct issuance of stock in lieu of and in the same manner as is provided in this subsection for the issuance of convertible eertificates. Such dividends as may be declared by the board of directors in its discretion shall be paid by the Association to its stockholders, holders of its common stock, but in any one fiscal year the general surplus account of the Association shall not be reduced through the payment of dividends (other than to the Secretary of the Treasury) applicable to such common stock which exceed in the aggregate 5 per centum of the par value of the outstanding stock of the Association.

"(d) Within sixty days following the effective date of the Housing Act of 1954 as of the day following a cutoff date to be determined by the Association, the Association is authorized and directed to issue and deliver to the Secretary of the Treasury, and the Secretary of the Treasury is authorized and directed to accept capital stock of the Association having an aggregate par value equal to the sum of (1) the amount of $21,000,000 (being the amount of the original subscription for capital stock of $20,000,000 and paid-in surplus of $1,000,000 of the Association) and (2) an amount equal to the Association's surplus, surplus reserves, and undistributed earnings, computed as of the close of the cutoff date.

"(e) The capital preferred stock of the Association delivered to the Secretary of the Treasury pursuant to subsection (d) of this section shall be in exchange for (1) the note or notes evidencing the aforesaid original $21,000,000 (upon which the accrued interest shall have been paid through the cutoff date referred to in subsection (d) of this section), and (2) the release to the Association of any and all rights or claims which the United States might otherwise have or claim in and to the Association's capital, surplus, surplus reserves, and undistributed earnings, computed as of the close of the aforesaid cutoff date.

"(f) Notwithstanding any other provision of law, any institution, including a national bank or State member bank of the Federal Reserve System, trust company, or other banking organization, organized under any law of the United States, including the laws relating to the District of Columbia, shall be authorized to make payments to the Association of the nonrefundable capital contributions referred to in subsection (b) of this section, to receive stock or convertible cercificates of the Association evidencing such capital contributions, and to hold or dispose of such stock or certificates, subject to the provisions of this title.

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"SECONDARY MARKET OPERATIONS

"SEC. 304. (a) To carry out the purposes set forth in paragraph (a) of section 301, the operations of the Association under this section shall be confined, so far as practicable, to mortgages which are deemed by the Association to be of such quality, type, and class as to meet, generally, the purchase standards imposed by private institutional mortgage investors. In the interest of assuring sound operation, the prices to be paid by the Association for mortgages purchased in its secondary market operations under this section, should be established, from time