techniques through large-scale modernized site construction of housing and the erection of houses produced by modern industrial processes, the Administrator is authorized to insure mortgages (including advances on such mortgages during construction) which are eligible for insurance as hereinafter provided. "(b) 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 Administrator as responsible and able to service the mortgage properly; "(2) cover property, held by a mortgagor approved by the Administrator, 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 or twofamily dwellings approved by the Administrator 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 Administrator may consent to the removal or release of such plant from the lien of the mortgage upon such terms and conditions as he may approve;

"(3) involve a principal obligation in an amount

"(A) not to exceed 90 per centum of the amount which the Administrator estimates will be the value of the completed property or project, exclusive of any plant of the character described in paragraph (2) of this subsection located thereon, and

"(B) not to exceed a sum computed on the individual dwellings comprising the total project as follows:

"(i) $8,100 or 90 per centum of the valuation, whichever is less, with respect to each single-family dwelling, and

"(ii) $12,500 or 90 per centum of the valuation, whichever is less, with respect to each two-family dwelling.

"With respect to the insurance of advances during construction, the Administrator is authorized 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 Administrator shall prescribe and shall bear interest (exclusive of premium charges for insurance) at not to exceed 4 per centum per annum on the amount of the principal obligation outstanding at any time: Provided, That the Administrator, with the approval of the Secretary of the Treasury, may prescribe by regulation a higher maximum rate of interest, not exceeding 41⁄2 per centum per annum on the amount of the principal obligation outstanding at any time, if he finds that the mortgage market demands it. The Administrator 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 release.

"(c) Preference or priority of opportunity in the occupancy of the mortgaged property for veterans of World War II and their immediate families and for hardship cases as defined by the Administrator shall be provided under such regulations and procedures as may be prescribed by the Administrator.

"(d) The provisions of subsections (c), (d), (e), and (f) of section 608 shall be applicable to mortgages insured under this section."

TITLE II AMENDMENTS

(h) Section 203 (b) (2) (B) is amended by striking out "$5,400" and inserting in lieu thereof "$6,300."

(i) Section 203 (b) (2) (C) is amended

(1) by striking out "$8,600" and inserting in lieu thereof "$9,500"; (2) by striking out "$6,000" in each place where it appears and inserting in lieu thereof "$7,000";

(3) by striking out $10,000" and inserting in lieu thereof "$11,000."

(j) Section 203 (b) is amended by striking out in paragraph numbered (3) the following: "of the character described in paragraph (2) (B) of this subsection" and inserting in lieu thereof the following: "on property approved for insurance prior to the beginning of construction."

(k) Section 203 (b) is amended as follows:

(1) By striking out the period at the end of paragraph (2) (C), inserting in lieu thereof a comma and the word "or", and adding the following new paragraph:

"(D) not to exceed $6,000 and not to exceed 90 per centum of the appraised value, as of the date the mortgage is accepted for insurance (or 95 per centum if, in the determination of the Administrator, insurance of mortgages involving a principal obligation in such amount under this paragraph would not reasonably be expected to contribute to substantial increases in costs and prices of housing facilities for families of moderate income), of a property, urban, suburban, or rural, upon which there is located a dwelling designed principally for a single-family residence the construction of which is begun after March 31, 1949, and which is approved for mortgage insurance prior to the beginning of construction: Provided, That the Administrator may by regulation provide that the principal obligation of any mortgage eligible for insurance under this paragraph shall be fixed at a lesser amount than $6,000 where he finds that for any section of the country or at any time a lower-cost dwelling for families of lower income is feasible without sacrifice of sound standards of construction, design, and livability: And provided further, That with respect to mortgages insured under this paragraph 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 10 per centum (or 5 per centum, in the case of a 95 per centum mortgage insured pursuant to this paragraph (D)) of the appraised value in cash or its equivalent, or shall be the builder constructing the dwelling in which case the principal obligation shall not exceed 85 per centum of the appraised value of the property."

(2) By striking out the period at the end of paragraph numbered (3), and adding a comma and the following: "or not to exceed thirty years in the case of a mortgage insured under paragraph (2) (D) of this subsection."

(3) By striking out the period at the end of paragraph numbered (5), and adding a comma and the following: "or not to exceed 4 per centum per annum in the case of a mortgage insured under paragraph (2) (D) of this subsection." (1) (1) Section 203 (c) is amended (1) by striking out in the last sentence the words "section or section 210" and inserting in lieu thereof the word "title"; and (2) by striking out in said sentence (i) the words "under this section", and (ii) the following: "and a mortgage on the same property is accepted for insurance at the time of such payment,".

(2) Section 603 (c) is amended by striking out in the next to the last sentence the following: "and a mortgage on the same property is accepted for insuranc at the time of such payment,".

(m) Section 204 (a) is amended-

(1) by striking out, in the last sentence, the following: "prior to July 1, 1944,";

(2) by inserting between the first and second provisos in the last sentence the following: "And provided further, That with respect to mortgages which are accepted for insurance under section 203 (b) (2) (D) or under the second proviso of section 207 (c) (2) of this Act, there may be included in the debentures issued by the Administrator on account of the cost of foreclosure (or of acquiring the property by other means) actually paid by the mortgagee and approved by the Administrator an amount, not in excess of two-thirds of such cost or $75 whichever is the greater :".

(n) (1) Section 207 (b) is amended by amending paragraph numbered (1) to read as follows:

“(1) Federal or State instrumentalities, municipal corporate instrumentalities of one or more States, or limited dividend or redevelopment or housing corporations restricted by Federal or State laws or regulations of State banking or insurance departments as to rents, charges, capital structure, rate of return, or methods of opeation; or".

(2) Section 207 (c) is amended by amending the first sentence to read as follows:

"(c) To be eligible for insurance under this section a mortgage on any property or project shall involve a principal obligation in an amount

"(1) not to exceed $5,000,000, or, if executed by a mortgagor coming within the provisions of paragraph numbered (b) (1) of this section, not to exceed $50,000,000:

"(2) not to exceed 80 per centum of the amount which the Administrator estimates will be the value of the property or project when the proposed improvements are completed, including the land; the proposed physical improvements; utilities within the boundaries of the property or project; architects' fees; taxes and interest accruing during construction; and other miscellaneous charges incident to construction and approved by

the Administrator: Provided, That, except with respect to a mortgage executed by a mortgagor coming within the provisions of paragraph numbered (b) (1) of this section, such mortgage shall not exceed the amount which the Administrator estimates will be the cost of the completed physical improvements on the property or project, exclusive of public utilities and streets and organization and legal expenses; and

"(3) not to exceed $8,100 per family unit for such part of such property or project as may be attributable to dwelling use."

(0) (1) Section 207 (h) is amended by striking out in paragraph numbereu (1), the words "paid to the mortgagor of such property", and and inserting in lieu thereof the following: "retained by the Administrator and credited to the Housing Insurance Fund".

(2) Section 204 (f) is amended by inserting in clause numbered (1), immediately preceding the semicolon, the following: "if the mortgage was insured under section 203 and shall be retained by the Administrator and credited to the Housing Insurance Fund if the mortgage was insured under section 207".

(p) Section 2 is amended:

TITLE I AMENDMENTS

(1) by striking out "$165,000,000" in subsection (a) and inserting in lieu thereof "$175,000,000";

(2) by striking out "$3,000" in subsection (b) and inserting in lieu thereof "$4,500";

(3) by striking out the first proviso in the first sentence of subsection (b) and inserting in lieu thereof the following: "Provided, That insurance may be granted to any such financial institution with respect to any obligation not in excess of $10,000 and having a maturity not in excess of seven years and thirty-two days representing any such loan, advance of credit, or purchase made by it if such loan, advance of credit, or purchase is made for the purpose of financing the alteration, repair, improvement, or conversion of an existing structure used or to be used as a hotel, apartment house, dwelling for two or more families, hospital, orphanage, college, or school:".

(4) by striking out the last sentence of subsection (b).

SEC. 102. In order to aid housing production, the Reconstruction Finance Corporation is authorized to make loans to and purchase the obligations of any business enterprise for the purpose of providing financial assistance for the production of prefabricated houses or prefabricated housing components, or for large-scale modernized site construction. Such loans or purchases shall be made under such terms and conditions and with such maturities as the Corporation may determine: Provided, That to the extent that the proceeds of such loans or purchases are used for the purchase of equipment, plant, or machinery the principal obligation shall not exceed 75 per centum of the purchase price of such equipment, plant, or machinery: And provided further, That the total amount of commitments for loans made and obligations purchased under this section shall not exceed $50,000,000 outstanding at any one time, and no financial assistance shall be extended under this section unless it is not otherwise available on reasonable terms.

SEC. 103. The Servicemen's Readjustment Act of 1944, as amended, is hereby amended by inserting immediately after section 510 thereof the following new section:

"INCONTESTABILITY

"SEC. 511. Any evidence of guaranty or insurance issued by the Administrator shall be conclusive evidence of the eligibility of the loan for guaranty or insurance under the provisions of this title and of the amount of such guaranty or insurance, except that nothing in this section shall preclude the Administrator from establishing, as against the original lender, defenses based on fraud or material misrepresentation, and except that the Administrator shall not, by reason of anything contained in this section, be barred from establishing, by regulations in force at the date of such issuance or disbursement, whichever is the earlier, partial defenses to the amount payable on the guaranty or insurance."

SEC. 104. The Servicemen's Readjustment Act of 1944, as amended, is hereby amended, by striking out the period at the end of section 500 (b) and inserting in lieu thereof the following: "And provided further, That the Administrator, with the approval of the Secretary of the Treasury, may prescribe by regulation a

higher maximum rate of interest than otherwise prescribed in this section for loans guaranteed under this title, but not exceeding 41⁄2 per centum per annum, if he finds that the loan market demands it."

TITLE II-SECONDARY MARKET FOR GI HOME LOANS AND FHA INSURED MORTGAGES

PURPOSE

SEC. 201. It is the purpose of this title to provide, with appropriate safeguards against inflationary increases in housing costs and prices, a source of secondary credit for residential mortgage loans which have been insured under title II or title VI of the National Housing Act or guaranteed or insured under the Servicemen's Readjustment Act of 1944, in order to maintain an orderly market for such loans, to meet liquidity needs of financing institutions, and to encourage economically sound residential construction in any areas where the scarcity of such secondary credit develops to the extent of threatening the continued production and availability of housing for veterans and others.

CREATION OF NATIONAL HOME MORTGAGE CORPORATION AND LIQUIDATION OF FEDERAL

NATIONAL MORTGAGE ASSOCIATION

SEC. 202. (a) There is hereby created in the Housing and Home Finance Agency a body corporate to be known as the National Home Mortgage Corporation (referred to in this title as the "Corporation") which shall be an agency and instrumentality of the United States. There shall be a President of the Corporation and all of the powers of the Corporation shall be vested in him. The Housing and Home Finance Administrator shall be the President of the Corporation.

(b) At such time as the Corporation shall determine, after funds become available therefor, it shall, after giving adequate advance notice to the Reconstruction Finance Corporation, purchase all residential loans held by the Reconstruction Finance Corporation by virtue of section 203 of Public Law 132, Eightieth Congress, approved June 30, 1947, and all residential loans held by the Federal National Mortgage Association (established pursuant to title III of the National Housing Act), at prices equal to the unpaid principal plus accrued interest on such loans, and such loans, together with all related rights, and such contracts, documents, and records as may be essential to the proper servicing and resale of the loans so purchased, shall be transferred to the Corporation. At the time of such transfers the Corporation shall assume all outstanding commitments of the Reconstruction Finance Corporation (acquired pursuant to said section 203) and the Federal National Mortgage Association to purchase any residential loans. With respect to the loans, commitments, related rights, contracts, documents, and records so transferred, "National Home Mortgage Corporation" is hereby substituted, for all purposes, for "Reconstruction Finance Corporation" and "Federal National Mortgage Association", as the case may be, and no suit, action, or other proceeding lawfully commenced by or against the Reconstruction Finance Corporation or the Federal National Mortgage Association shall abate by reason of the enactment of this Act, but the court, on motion or supplemental petition filed at any time within twelve months after the date of such enactment, showing a necessity for the survival of the suit, action, or other proceeding to obtain a determination of the questions involved, may allow the same to be maintained by or against the National Home Mortgage Corporation. The Corporation shall have the same powers to service and sell loans transferred to it pursuant to this subsection as it has with respect to loans purchased under section 205.

(c) The Federal National Mortgage Association shall not purchase any mortgage or lien after the date of enactment of this title (except pursuant to a commitment prior to that date), and shall, after the transfer of its holdings to the National Home Mortgage Corporation as provided in subsection (b) of this section, proceed to liquidate its assets and wind up its affairs as rapidly and economically as feasible and in the public interest. For this purpose, the Association shall dispose of any remaining assets in such manner as it may determine to be in the public interest, pay all outstanding obligations, adjust and settle any claims against the Association, retire its capital stock at the amount paid by the Reconstruction Finance Corporation for such stock and the $1,000,000 paid-in surplus supplied by the Reconstruction Finance Corporation, and cover any remaining funds into the Treasury as miscellaneous receipts.

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ADVISORY BOARD

SEC. 203. There shall be an advisory board to the Corporation which shall consist of the President of the Corporation, who shall serve as Chairman, and the following or their designees: The Secretary of the Treasury, the Administrator of Veterans' Affairs, the Chairman of the Board of Governors of the Federal Reserve System, the Federal Housing Commissioner, the Chairman of the Home Loan Bank Board, and the Chairman of the Federal Deposit Insurance Corporation. The advisory board is authorized and directed to furnish information and advice to the Corporation on all matters of basic policy involved in the exercise of its powers with a view toward coordinating the operations of the Corporation with the general economic and fiscal policies of the Government and carrying out the purposes of this title.

CAPITAL STOCK AND ISSUANCE OF NOTES

SEC. 204. (a) The Corporation shall have a capital stock of $5,000,000 which shall be subscribed by the United States and paid by the Secretary of the Treasury in such amounts and at such times as requested by the Corporation. There is hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, the sum of $5,000,000 which shall be available to pay the subscription to the capital stock of the Corporation. Receipt for such payment shall be issued to the Secretary of the Treasury by the Corporation and shall evidence the stock ownership of the United States. Net earnings of the Corporation (as determined by it) shall, after reasonable provision for possible losses, be used for payment of dividends on capital stock. Any such dividends shall be covered into the Treasury as miscellaneous receipts.

(b) The Corporation may issue and have outstanding at any one time notes and other obligations for purchase by the Secretary of the Treasury in a maximum amount not exceeding $250,000,000 plus an amount equal to the total purchase price paid for the loans purchased under the requirements of section 202 (b), except that with the approval of the President of the United States this maximum may be increased by an additional amount not exceeding $250,000,000. Such notes or other obligations shall be in such forms and denominations, shall bave such maturities, and shall be subject to such terms and conditions as may be prescribed by the Corporation with the approval of the Secretary of the Treasury. Such notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the current average rate on outstanding marketable obligations of the United States as of the last day of the month preceding the issuance of the notes or other obligations by the Corporation. The Secretary of the Treasury is authorized and directed to purchase any notes or other obligations of the Corporation issued hereunder and for such purposes is authorized to use as a public debt transaction the proceeds from the sale of securities issued under the Second Liberty Bond Act, as amended, and the purposes for which securities may be issued under such Act, as amended, are extended to include any purchases of such obligations. The Secretary of the Treasury may at any time sell any of the notes or other obligations acquired by him under this section. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes or other obligations shall be treated as public debt transactions of the United States. The Corporation may retire or redeem any notes or other obligations issued by it.

PURCHASE AND SALE OF LOANS

SEC. 205. For the purposes of this title, the Corporation is hereby authorized (in addition to the purchases required under section 202 (b)) to purchase, with or without recourse, to service, and to sell without recourse (at such price or prices and under such other terms and conditions as the Corporation may prescribe) (a) any residential loan which is insured under section 203, 207, 603, or 608 of the National Housing Act, or as amended at any time, and secured by a first lien on the realty, or (b) any loan guaranteed under section 501 of the Servicemen's Readjustment Act of 1944, or as amended at any time, and secured by a first lien on the realty, or (c) any loan guaranteed under section 505 (a) of said Act or (d) any loan insured under section 508 of said Act which could have been guaranteed under section 501 and is secured by a first lien on the realty or which could have been guaranteed under section 505 (a) of said Act. The Corporation shall maintain separate accounts with respect to the purchase