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tions upon the amount of the mortgage may, in the discretion of the Secretary, be based upon the sum of

the estimated cost of rehabilitation and the Secretary's estimate of the value of the property before rehabilita

tion, rather than upon the appraised value of the property;

(2) contain complete amortization provisions satisfactory to the Secretary requiring payments by the mortgagor not in excess of his reasonable ability to pay as determined by the Secretary and within such term as the Secretary shall prescribe;

(3) be executed by a mortgagor who shall have paid in cash or its equivalent, on account of the property, at least an amount equivalent to the closing costs or such larger amount as the Secretary may require; and (4) contain such terms and provisions with respect to property insurance, mortgage insurance premium, repairs, alterations, payment of taxes, default requirements, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters as the Secretary may in his discretion prescribe.

(c) Where the mortgage involves a one-family unit in a condominium, the Secretary shall establish such require

ments as he deems appropriate for the protection of the con

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1 sumer. The mortgage covering the condominium unit shall

2 contain such provisions as the Secretary determines to be

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necessary for the maintenance of the common areas and facili4 ties and the condominium project. The Secretary may re5 quire that the rights and obligations of the mortgagor and 6 the owners of the condominium units in the project shall be 7 subject to such controls as he determines to be necessary and 8 feasible to promote and protect individual owners, the con9 dominium project, and its occupants.

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(d) The mortgage shall have a principal obligation not 11 in excess of an amount equal to 85 per centum of the amount 12 computed under the provisions of subsection (b) (1) if the 13 mortgage involves

(1) a newly constructed dwelling which the Sectary determines has been completed within twelve

months of the sale being financed with a mortgage in

sured under this section but which has not been approved

by the Secretary for mortgage insurance or approved by the Administrator of Veterans' Affairs for guaranty, in

surance, or direct loan under chapter 37 of title 38, United States Code, prior to the beginning of construc

tion; or

(2) a mortgagor who is not the occupant of the property, except that this requirement for a reduction in the principal obligation of the mortgage shall not be applicable where

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(A) the mortgagor is in the military service and his failure to occupy the property is by reason

of his service assignment;

(B) the mortgagor and mortgagee assume responsibility, in a manner satisfactory to the Secretary, for the reduction of the outstanding principal amount of the mortgage, in the event the mortgaged property is not (prior to the date of the eighteenth amortization payment of the mortgage) sold to a purchaser acceptable to the Secretary who is the occupant of the property and who assumes and agrees to pay the mortgage indebtedness; or

(C) the mortgage covers experimental property and the Secretary approves the waiver of such requirement.

(e) The seller, builder, or such other person as the 17 Secretary may designate, shall deliver to the mortgagor 18 (prior to the completion of the sale) a written statement

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setting forth the amount of the appraised value of the prop

erty, as determined by the Secretary. Where the property 21 is to be rehabilitated by the owner thereof and the amount 22 of the mortgage is not based on the appraised value of the

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property, the Secretary shall furnish such owner a statement 24 of the Secretary's estimate of the appraised value of the

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property after the proposed improvements are completed.

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(f) (1) Where the mortgage involves a dwelling which

2 is approved for mortgage insurance prior to the beginning 3 of construction, the seller or such other person as may be 4 required by the Secretary, shall deliver to the mortgagor a warranty that the dwelling is constructed in substantial con

6 formity with the plans and specifications (including any 7 amendments thereof, or changes or variations therein ap8 proved in writing by the Secretary) on which the Secretary 9 based his valuation of the dwelling. This warranty shall apply only with respect to such instances of substantial non11 conformity to the plans and specifications approved by the

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Secretary as to which the mortgagor has given written 13 notice to the warrantor within one year from the date of con14 veyance of title to, or initial occupancy of, the dwelling, 15 whichever first occurs.

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(2) The warranty required by this subsection shall be 17 in addition to, and not in derogation of, all other rights and

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privileges which the mortgagor may have under any other 19 law or instrument. The Secretary is directed to permit copies 20 of the plans and specifications (including any amendments

21 or variations approved in writing by the Secretary) for the 22 dwellings covered by warranties under this subsection to be 23 made available in the appropriate local offices for inspection

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or for copying by any mortgagor or warrantor during such

periods of time as the Secretary deems reasonable.

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SEC. 402. (a) For the purpose of assisting lower income 3 families in acquiring homeownership, the Secretary is au4 thorized to make, and to contract to make, periodic assistance payments on behalf of such homeowners. The assistance 6 shall be accomplished through payments to mortgagees hold7 ing mortgages which meet the requirements of, and are in8 sured under, this section.

9 (b) The assistance payments to a mortgagee by the Secretary on behalf of a mortgagor shall be made during 11 such time as the mortgagor shall continue to occupy the

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property which secures the mortgage. Such payments may 13 also be made on behalf of a homeowner who assumes a mort

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gage insured under this section with respect to which assist

ance payments have been made on behalf of the previous 16 owner, if the new homeowner is approved by the Secretary 17 as eligible for receiving such assistance. The Secretary is also

18 authorized to continue making assistance payments where the

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mortgage has been assigned to the Secretary.

(c) The assistance payment shall be in an amount not

21 exceeding the lesser of—

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(1) the balance of the monthly payment for prin

cipal, interest, taxes, insurance, and mortgage insurance

premium due under the mortgage remaining unpaid after

applying 20 per centum of the mortgagor's income; or