property which is approved for mortgage insurance prior to the completion of the construction of such property, or covering property the construction of which was commenced after June 27, 1934; except that this proviso shall not apply to any mortgage on property which, at any time, has been covered by a mortgage insured by the Administrator."

SEC. 6. Subsection (1) of section 203 (b) of title II is amended to read as follows:

"(1) Be held by a mortgagee approved by the Administrator as responsible and able to service the mortgage properly.'

SEC. 7. Subsection (2) of section 203 (b) of title II is amended to read as follows:

"(2) Involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the Administrator shall approve) (A) in an amount not to exceed $16,000 and not to exceed 80 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 or dwellings designed principally for residential use for not more than four families in the aggregate, irrespective of whether such dwelling or dwellings have a party wall or are otherwise physically connected with another dwelling or dwellings, except (B) as to mortgages for an amount not in excess of $5,400 and covering such dwelling or dwellings, the construction of which is begun after the enactment of this Act, the principal obligation as herein defined may be in an amount not to exceed 90 per centum of the appraised value of the property as of the date the mortgage is accepted for insurance: Provided, That the mortgagor shall be the owner and occupant of the property and at the time of the insurance shall have paid on account of the property at least 10 per centum of the appraised value in cash or its equivalent; and the property shall have been approved for mortgage insurance prior to the beginning of the construction of such dwelling or dwellings."

SEC. 8. Subsection (3) of section 203 (b) of title II is amended to read as follows: "(3) Have a maturity satisfactory to the Administrator, but not to exceed twenty years from the date of the insurance of the mortgage."

SEC. 9. The first sentence of section 203 (c) of title II is amended to read as follows:

"(c) The Administrator is authorized to fix a premium charge for the insurance mortgages under this section which in no case shall be less than an amount equivalent to one-half of 1 per centum per annum nor more than an amount equivalent to 1 per centum per annum of the amount of the principal obligation outstanding at any time, without taking into account delinquent payments or prepayments, except that as to mortgages described in paragraph (B) of subsection (2) of section 203 (b) the premium charge may be one-fourth of 1 per centum per annum on such outstanding principal. Such premiums shall be payable by the mortgagee either in cash or debentures issued by the Administrator under this title, at par plus accrued interest, in such manner as may be prescribed by the Administrator: Provided, That the Administrator may require the payment of one or more such premiums at the time the mortgage is insured at such discount rate as he may prescribe not in excess of the interest rate specified in the mortgage."

The last sentence of said section is amended to read as follows: "In the event that the principal obligation of any mortgage accepted for insurance under this section is paid in full prior to the maturity date specified in the mortgage, the Administrator is further authorized in his discretion to require the payment by the mortgagee of a premium charge in such amount as the Administrator determines to be equitable, but not in excess of the aggregate amount of the premium charges that the mortgagee would otherwise have been required to pay if the mortgage had continued to be insured under this section until such maturity date; and in the event that the principal obligation is paid in full as herein set forth and a mortgage for a similar or greater term and amount on the same property is accepted for insurance at the time for such payment, the Administrator is authorized to refund to the mortgagee all, or such portion as he shall determine to be equitable, of the current unearned annual mortgage-insurance premium theretofore paid."

SEC. 10. Section 204 (a) of title II is amended to read as follows:

"SEC. 204. (a) In any case in which the mortgagee under a mortgage insured under section 203 or section 210 shall have forclosed and taken possession of the mortgaged property in accordance with regulations of, and within a period to be determined by, the Administrator, or shall, with the consent of the Administrator, have otherwise acquired such property from the mortgagor after default, the mortgagee, upon (1) the prompt conveyance to the Administrator of such title to the property as meets the requirements of rules and regulations of the

Administrator in force at the time the mortgage was insured and evidenced in such manner as may be prescribed by such rules and regulations, and (2) the assignment to him of all claims of the mortgagee against the mortgagor or others, arising out of the mortgage transaction or foreclosure proceedings, except such claims as may have been released with the consent of the Administrator, shall be entitled to receive the benefit of the insurance as hereinafter provided. Upon such conveyance and assignment the obligation of the mortgagee to pay the premium charges for insurance shall cease and the Administrator shall, subject to the cash adjustment hereinafter provided, issue to the mortgagee debentures having a total face value equal to the value of the mortgage as hereinafter defined and a certificate of claim, as hereinafter provided. For the purposes of this subsection, the value of the mortgage shall be determined, in accordance with rules and regulations prescribed by the Administrator, by adding to the amount of the original principal of the mortgage which was unpaid on the date of the institution of foreclosure proceedings, or the acquisition of the property otherwise after default, the amount of all payments which have been made by the mortgagee for taxes, special assessments, and water rates which are liens prior to the mortgage, insurance on the property mortgaged and any mortgage insurance premiums paid after the institution of foreclosure proceedings or the acquisition of the property otherwise after default and by deducting from such total any net amount received on account of the mortgage after the institution of foreclosure proceedings or the acquisition of the property otherwise after default and from any source relating to the property on account of rent or other income after deducting reasonable expenses incurred in handling the property between such dates.

"The Administrator may at any time, under such terms and conditions as he may prescribe, consent to the release of the mortgagor from his liability under the mortgage or the credit instrument secured thereby, or consent to the release of parts of the mortgaged property from the lien of the mortgage.

"In the event a mortgage becomes in default and such default is cured and the mortgage is reinstated by payments thereon equal to the amounts in default, the mortgage insurance provided by this Act shall continue as though no default had occurred.

"Debentures issued under this section shall be in such form and denominations in multiples of $50 and subject to such terms and conditions and shall include such provisions for redemption, if any, as may be prescribed by the Administrator with the approval of the Secretary of the Treasury and may be in coupon or registered form. Any difference between the value of the mortgage determined as herein provided and the aggregate face value of the debentures issued, not to exceed $50, shall be adjusted by the payment by the Administrator of cash from the fund as to mortgages insured under section 203 and from the housing fund as to mortgages insured under section 210."

SEC. 11. Section 204 (b) of title II is amended to read as follows:

"(b) The debentures issued under this section to any mortgagee shall be executed in the name of the Mutual Mortgage Insurance Fund as obligor and signed by the Administrator by either his written or engraved signature, and shall be negotiable. They shall be dated as of the date foreclosure proceedings were instituted, or the property was otherwise acquired by the mortgagee after default, and shall bear interest from such date at a rate determined by the Administrator at the time the mortgage was offered for insurance, but not to exceed 3 per centum per annum, payable semiannually on the 1st day of January and the 1st day of July of each year, and shall mature three years after the 1st day of July following the maturity date of the mortgage on the property in exchange for which the debentures were issued. Such debentures as are issued in exchange for property covered by mortgages insured after the effective date of this amendment shall not be exempt from taxation, shall be paid out of the fund which shall be primarily liable therefor, and shall be fully and unconditionally guaranteed as to principal and interest by the United States and such guaranty shall be expressed on the face of the debentures. In the event that the fund fails to pay upon demand, when due, the principal of or interest on any debentures so guaranteed, the Secretary of the Treasury shall pay to the holders the amount thereof which is hereby authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, and thereupon to the extent of the amount so paid the Secretary of the Treasury shall succeed to all the rights of the holders of such debentures. Mortgagees of mortgages accepted for insurance prior to this amendment shall be entitled to receive cash adjustments and debentures issued in accordance with this section as hereby amended."