12 1 needed facilities, to protect his interests as insurer, to promote 2 efficient and economical administration, and otherwise to 3 further the objectives of this Act. 4 "(c) To be eligible for insurance under this Act, the 5 mortgage transaction shall be determined by the Secretary to 6 be an insurable risk, except that the Secretary may accept 7 for insurance as a special risk a mortgage transaction involv8 ing experimental property, property located in an older and 9 declining area where there is a reasonale prospect for revital10 ization, single-family housing for employees or personnel of 11 research or development or military installations where it is 12 established to the satisfaction of the Secretary that there is a 13 special need for such housing, or a supplemental project loan 14 where the Special Risk Insurance Fund created pursuant to 15 section 238 (b) of the National Housing Act is obligated for 16 insurance of the original project mortgage. 17 "(d) Prior to July 1, 1977, the Secretary may also 18 accept and insure as a special risk a transaction involving 19 experimental financing, if such transaction would, except 20 for the financing instrument or method involved and adjust21 ments in loan-to-value ratios or other matters necessary to 22 accommodate such instrument or method, qualify for insurance under any provision of the Act. The outstanding ag24 gregate principal amount of instruments insured under this 25 subsection should not exceed 2 per centum of the outstanding 233 13 1 aggregate principal amount of mortgages and loans insured 2 under titles IV and V of this Act. 3 "(e) The Secretary shall not insure any mortgage or 4 loan under this Act the interest from which is exempt from 5 Federal taxation. 6 7 "LIMITATIONS IN RELATION TO VALUE OR COST "SEC. 103. For each program under titles IV and V of 8 this Act which authorizes insurance of mortgages or loans 9 involving the construction or rehabilitation of property, or 10 the refinancing, repair or improvement of existing property, 11 and subject to the provisions of those titles, the Secretary 12 shall prescribe such limitations with respect to the ratio be13 tween the principal amount of eligible mortgages or loans 1 and the value, cost or replacement cost of the properties or 15 work covered by such mortgages or loans as he deems appro16 priate (giving consideration to prevailing market conditions 17 and practices) to minimize his risks as insurer while facilitat18 ing the provision of housing opportunities or the provision of 19 needed facilities. 20 21* "INTEREST RATES "SEC. 104. Except as provided in title III or with 22 respect to experimental financing, the interest rate on a mort23 gage or loan insured under this Act shall be as agreed 24 to by the mortgagee and mortgagor or lender and borrower, 25 unless the Secretary determines that such rate is excessive 14 1 in view of the current interest rates in the mortgage or loan 2 market in the areas involved. The Secretary shall prescribe 3 such regulations as may be necessary to assure that mort4 gagees or lenders do not, directly, or indirectly, make any 5 charges in the nature of discounts or points in connection 6 with mortgages insured under this Act. 7 8 "WATER AND SEWER FACILITIES "SEC. 105. No mortgage which covers new construction 9 shall be approved for insurance under this Act if the mort10 gaged property includes housing which is not served by a 11 public or adequate private community water and sewerage 12 system, unless the property is situated in an area where the 13 establishment of such a system is determined by the Secre14 tary not to be economically feasible and where the Secretary 15 determines that the absence of such a system will not create 16 a significant environmental hazard. The economic feasibility 17 of establishing such public or adequate private community 18 water and sewerage systems shall be determined without 19 regard to whether such establishment is authorized by law or is subject to approval by one or more local governments 21 or public bodies. 20 22 23 "APPROVAL OF TECHNICALLY SUITABLE MATERIALS "SEC. 106. The Secretary shall adopt a uniform pro24 cedure for the acceptance of materials and products to be 25 used in structures approved for mortgages or loans insured 15 1 under this Act. Under such procedure any material or prod2 uct which the Secretary finds is technically suitable for the 3 use proposed shall be accepted. Acceptance of a material or 4 product as technically suitable shall not be deemed to restrict 5 the discretion of the Secretary to determine that a structure, 6 with respect to which a mortgage is executed, is an insurable 7 or special risk. 8 "INSURANCE CONTRACT INCONTESTABILITY 9 "SEC. 107. Any contract of insurance executed by the 10 Secretary under the provisions of titles IV and V shall be 11 conclusive evidence of the eligibility of the loan or mortgage 12 for insurance. The validity of any contract of insurance so 13 executed shall be incontestable in the hands of an approved 14 financial institution or approved mortgagee from the date of 15 the execution of such contract, except for fraud or misrepre16 sentation on the part of such financial institution or 17 mortgagee. 18 19 2 "SEC. 108. With respect to the functions, powers, and 20 duties vested in him by the provisions of this Act, the Sec 21 retary is authorized (1) to make such expenditures as may 22 he necessary, (2) to sue and be sued, and (3) to make such 23 rules and regulations as may be necessary. 4 12 "SEC. 201. (a) The General Insurance Fund, created 5 pursuant to section 519 of the National Housing Act, shall 6 be used by the Secretary as a revolving fund for carrying out both his obligations incurred pursuant to the National 8 Housing Act and, except as otherwise provided in subsec9 tions (b) and (c) of this section, his obligations with re10 spect to mortgages and loans under titles III, IV, and V of this Act. The Secretary shall transfer to the General Insurance Fund all assets, liabilities, outstanding commitments, 13 and insurance of the Mutual Mortgage Insurance Fund 14 created by section 202 of the National Housing Act and, 15 after such transfer, shall use the General Insurance Fund in 16 accordance with the provisions of this section (and without 17 regard to section 205 of the National Housing Act) for 18 carrying out his obligations under sections 203 (b), 203 (h), or 203 (i) of the National Housing Act. 19 20 "(b) The Special Risk Insurance Fund, created pur21 suant to section 238 (b) of the National Housing Act, shall 22 be used by the Secretary as a revolving fund for carrying out 23 both his obligations pursuant to the National Housing Act 24 and his obligations with respect to mortgages and loans in |