REFINANCING

SEC. 303. Any loan with respect to which insurance is granted under this title may be reaffirmed and the maturity thereof extended in accordance with such terms and conditions as the Secretary may prescribe, but in no event for an additional amount or term in excess of the maximum provided for in section 302.

PROHIBITIONS

SEC. 304. The Secretary is authorized to prevent the use of any financial assistance under this title

(1) which would, through multiple loans, result in an outstanding aggregate loan balance with respect to the same property or mobile home exceeding the dollar amount limitation prescribed in this title for the type of loan involved; or

(2) which involves new residential structures (other than mobile homes) that have not been completed and occupied for at least six months, except where such requirement is waived by the Secretary.

PROPERTY STANDARDS

SEC. 305. (a) The Secretary may from time to time declare ineligible for financing under this title any item, product, alteration, repair, improvement or class thereof, which he determines would not substantially protect or improve the basic livability or utility of properties which are to be improved by financing provided under this title. He may also declare ineligible for financing under this title any item which he determines is especially subject to selling abuses.

(b) The Secretary shall, with respect to mobile homes to be financed under this title

(1) prescribe minimum property standards to assure the livability and durability of the mobile home and the suitability of the site on which the mobile home is to be located; and

(2) obtain assurances from the borrower that the mobile home will be placed on a site which complies with the standards prescribed by the Secretary and with local zoning and other applicable local requirements.

CONTRACT PROVISIONS

SEC. 306. (a) The insurance granted by the Secretary to any financial institution on loans, advances of credit, and purchases made by such financial institu

tion shall not exceed either

(1) 10 per centum of the total amount of such loans, advances of credit, and purchases made under and reported for insurance under this title and under section 2 of the National Housing Act after July 1, 1939; or

(2) 90 per centum of the amount of loss on any individual loan, advance of credit, or purchase.

(b) Any payment for loss made to an approved financial institution under this title shall be final and incontestable after two years from the date the claim was certified for payment by the Secretary, in the absence of fraud or misrepresentation on the part of such institution, unless a demand for repurchase of the obligation shall have been made on behalf of the United States prior to the expiration of such two-year period.

WAIVER OF REQUIREMENTS

SEC. 307. The Secretary is authorized to waive compliance with any regulations issued by him pursuant to this title, if the enforcement of such regulations would impose an injustice upon an insured financial institution that has substantially complied with the requirements of such regulations and has acted in good faith. Such waiver shall only be exercised where it does not involve an increase in the obligation of the Secretary beyond the obligation which would have been involved if the regulation had been fully complied with.

TRANSFER OF INSURANCE

SEC. 308. The Secretary is authorized to transfer to any approved financial institution the insurance in connection with any loan which is sold to it by another approved financial institution.

TITLE IV-HOME MORTGAGE INSURANCE

BASIC INSURANCE PROGRAM

SEC. 401. (a) The Secretary is authorized to insure a home mortgage (including open-end advances) meeting the requirements of this section.

(b) The mortgage shall

(1) involve a principal obligation not to exceed an amount equal to the sum of (i) 100 per centum of $20,000 of the Secretary's appraised value of the property as of the date the mortgage is accepted for insurance, (ii) 90 per centum of such value in excess of $20,000 but not in excess of $30,000, and (iii) 80 per centum of such value in excess of $30,000; except that in the case of rehabilitation, the foregoing limitations 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 rehabilitation, 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;

(4) contain such term 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 requirements as he deems approrpiate for the protection of the consumer. The mortgage covering the condominium unit shall contain such provisions as the Secretary determines to be necessary for the maintenance of the common areas and facilities and the condominium project. The Secretary may require that the rights and obligations of the mortgagor and the owners of the condominium units in the project shall be subject to such controls as he determines to be necessary and feasible to promote and protect individual owners, the condominium project, and its occupants.

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

(1) a newly constructed dwelling which the Secretary determines has been completed within twelve months of the sale being financed with a mortgage insured 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, insurance, or direct loan under chapter 37 of title 38, United States Code, prior to the beginning of construction; 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—

(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 Secretary may designate, shall deliver to the mortgagor (prior to the completion of the sale) a written statement setting forth the amount of the appraised value of the property, as determined by the Secretary. Where the property is to be rehabilitated by the owner thereof and the amount of the mortgage is not based on the appraised value of the property, the Secretary shall furnish such owner a statement of the Secretary's estimate of the appraised value of the property after the proposed improvements are completed.

(f) (1) Where the mortgage involves a dwelling which is approved for mortgage insurance prior to the beginning of construction, the seller or such other person as may be required by the Secretary, shall deliver to the mortgagor a warranty that the dwelling is constructed in substantial conformity with the plans and specifications (including any amendments thereof, or changes or variations therein approved in writing by the Secretary) on which the Secretary based his valuation of the dwelling. This warranty shall apply only with respect to such instances of substantial nonconformity to the plans and specifications approved by the Secretary as to which the mortgagor has given written notice to the warrantor within one year from the date of conveyance of title to, or initial occupancy of, the dwelling, whichever first occurs.

(2) The warranty required by this subsection shall be in addition to, and not in derogation of, all other rights and privileges which the mortgagor may have under any other law or instrument. The Secretary is directed to permit copies of the plans and specifications (including any amendments or variations approved in writing by the Secretary) for the dwellings covered by warranties under this subsection to be made available in the appropriate local offices for inspection or for copying by any mortgagor or warrantor during such periods of time as the Secretary deems reasonable.

HOMEOWNERSHIP ASSISTANCE

SEC. 402. (a) For the purpose of assisting lower income families in acquiring homeownership, the Secretary is authorized to make, and to contract to make, periodic assistance payments on behalf of such homeowners. The assistance shalĺ be accomplished through payments to mortgagees holding mortgages which meet the requirements of, and are insured under, this section.

(b) The assistance payments to a mortgagee by the Secretary on behalf of a mortgagor shall be made during such time as the mortgagor shall continue to occupy the property which secures the mortgage. Such payments may also be made on behalf of a homeowner who assumes a mortgage insured under this section with respect to which assistance payments have been made on behalf of the previous owner, if the new homeowner is approved by the Secretary as eligible for receiving such assistance. The Secretary is also authorized to continue making assistance payments where the mortgage has been assigned to the Secretary. (c) The assistance payment shall be in an amount not exceeding the lesser of— (1) the balance of the monthly payment for principal, interest, taxes, insurance, and mortgage insurance premium due under the mortgage remaining unpaid after applying 20 per centum of the mortgagor's income; or (2) the difference between the monthly payment for principal, interest, and mortgage insurance premium which the mortgagor is obligated to pay under the mortgage and the monthly payment for principal and interest which the mortgagor would be obligated to pay if the mortgage were to bear interest at the rate of 1 per centum per annum.

(d) The Secretary may include in the payment to the mortgagee such amount, in addition to the amount computed under subsection (c), as he deems appropriate to reimburse the mortgagee for its additional expenses in handling the mortgage. (e) Procedures shall be adopted by the Secretary for recertifications of the mortgagor's income at intervals of two years (or at shorter intervals where the Secretary deems it desirable) for the purpose of adjusting the amount of the assistance payments within the limits of the formula described in subsection (c). (f) The Secretary shall take such steps as he deems necessary to assure that the sales price of, or other consideration paid in connection with, the property with respect to which assistance payments are to be made is not inflated or excessive. (g) (1) There are authorized to be appropriated such sums as may be necessary to carry out the provisions of this section, including such sums as may be necessary to make the assistance payments under contracts entered into under this section. The aggregate amount of outstanding contracts to make such payments shall not exceed amounts approved in appropriation Acts, and payments pursuant to such contracts (and any contracts entered into under section 235 of the National Housing Act) shall not exceed $75,000,000 per annum prior to July 1, 1969, which maximum dollar amount shall be increased by $125,000,000 on July 1, 1969, by $150,000,000 on July 1, 1970, by $200,000,000 on July 1, 1971, and by such sums as may be necessary thereafter.

(2) Not more than 30 per centum of the total amount of contracts for assistance payments authorized by appropriation Acts may be made with respect to existing dwellings or dwelling units in existing projects, as defined by the Secretary.

(h) The Secretary is authorized to insure a home mortgage (including advances with respect to property constructed or rehabilitated pursuant to a self-help program) which meets the requirements of section 401, except as such requirements are modified by this section. The mortgage shall

(1) involve a single-family dwelling, or a one-family unit in a condominium; and

(2) have a principal obligation not to exceed the appraised value of the property as of the date the mortgage is accepted for insurance (or in the case of rehabilitation the sum of the estimated cost of rehabilitation and the Secretary's estimare of the value of the property before rehabilitation) plus such amount to cover closing costs and prepaid expenses, as the Secretary shall approve, but not to exceed the full amount of such costs less $200. (i) As used in this section the term "lower income families" means those families whose incomes do not exceed the median income for the area, as determined by the Secretary with adjustments for smaller and larger families, except that the Secretary may establish income ceilings higher or lower than the median for the area on the basis of his findings that such variations are necessary because of prevailing levels of construction costs, unusually high or low median family incomes, or other factors.

(j) In determining the income of any family for the purposes of this section, there shall be deducted an amount equal to $300 for each minor member of the family residing in the household, and the earnings of any such minor person shall not be included in the income of his family.

(k) The Secretary shall from time to time allocate and transfer to the Secretary of Agriculture, for use (in accordance with the terms and conditions of this section) in rural areas and small towns, a reasonable portion of the total authority to contract to make assistance payments as approved in appropriation Acts under subsection (g).

TITLE V-PROJECT MORTGAGE INSURANCE

MULTIFAMILY HOUSING

SEC. 501. (a) For the purposes of this section-

(1) The term "multifamily housing" means (i) housing or a housing project in which the occupancy of the dwelling units is permitted by the owner thereof in consideration of the payment of agreed rental charges; (ii) housing or a housing project which is owned by a nonprofit housing cooperative ownership corporation which restricts the permanent occupancy of the dwelling units to members of such corporation; (iii) housing or a housing project in which the individual dwelling units are to be sold, on a condominium basis or otherwise, to purchasers eligible for mortgage insurance under the provisions of title IV; and (iv) a mobile home court. (2) The term "replacement cost" means the Secretary's estimate of the value of the land, the cost of the proposed physical improvements, utilities within the boundaries of the property or project, architect's fees, builder's and sponsor's profit and risk allowance, taxes and interest during construction, and other miscellaneous charges incident to construction and the initial operation or disposition of the project as may be approved by the Secretary.

(b) The Secretary is authorized to insure a mortgage (including advances) which covers property involving a multifamily housing project. The mortgage shall be executed by a mortgagor approved by the Secretary. The Secretary may require any such mortgagor to be regulated or restricted as to rents or sales, charges, capital structure, rate of return, and methods of operation. Such regulation and restriction shall remain in effect until the termination of all obligations of the Secretary under the mortgage insurance and during such further period of time as the Secretary shall be the owner, holder, or reinsurer of the mortgage.

(c) The mortgage may involve the financing of new construction, the rehabilitation of an existing structure or structures, or the purchase or refinancing of an existing project (as defined by the Secretary) which meets such standards as may be prescribed by the Secretary.

(d) If new construction is involved, the mortgage shall have a principal obligation not in excess of 90 per centum (97 per centum in the case of a cooperative mortgagor) of the estimated replacement cost of the property or project when the proposed improvements are completed.

(e) If rehabilitation is involved, the mortgage shall have a principal obligation not in excess of 90 per centum (97 per centum in the case of a cooperative mortgagor of the sum of (i) the Secretary's estimate of the cost of the rehabilitation plus (ii) the Secretary's estimate of the value of the property before the rehabilitation.

(f) If the purchase or refinancing of an existing property without rehabilitation is involved, the mortgage shall have a principal obligation not in excess of 90 per centum of the appraised value of the property (97 per centum in the case of a cooperative mortgagor) as of the date the mortgage is accepted for insurance.

(g) If the dwelling units in a project are to be sold to individual purchasers, the principal obligation of the blanket mortgage shall be further limited to the sum of the individual mortgage amounts which could be insured for owner-occupants of the proposed individual dwellings or condominium units under title IV.

(h) The mortgage shall provide for complete amoritization by periodic payments within such term as the Secretary shall prescribe.

(i) The property or project shall include five or more dwelling units (which, with the approval of the Secretary need not be self-contained living units) or five or more spaces in a mobile home court, and may include such non-dwelling facilities as the Secretary deems adequate and appropriate to serve the occupants and the surrounding neighborhood, except that the project shall be predominantly residential. No nondwelling facility shall be included in the project unless it is found by the Secretary to contribute to the economic feasibility of the project (and the Secretary shall give due consideration to the possible effect of the project on other business enterprises in the community).

MULTIFAMILY HOUSING ASSISTANCE

SEC. 502. (a) For the purpose of reducing rentals for lower income tenants, the Secretary is authorized to make, and to contract to make, periodic assistance payments on behalf of the owner of a multifamily housing project, which shall be accomplished through payments to mortgagees holding mortgages meeting the requirements specified in this section.

(b) Assistance payments with respect to a project shall only be made by the Secretary during such time as the project is operated as a multifamily housing project and (1) is subject to a mortgage which is insured under subsection (i) or has been assigned to the Secretary; or (2) is owned by a private nonprofit corporation or other private nonprofit entity, a limited distribution corporation or other limited distribution entity, or a cooperative housing corporation, and is financed under a State or local program providing assistance through loans, loan insurance, or tax abatements, and which prior to the beginning of construction or rehabilitation is approved for receiving the benefits of this section with respect to all or a part of the project.

(c) The assistance payment to a mortgagee by the Secretary on behalf of a project owner shall be in an amount not exceeding the difference between the monthly payment for principal, interest, and mortgage insurance premium (or other comparable charges approved by the Secretary) which the project owner as a mortgagor is obligated to pay under the mortgage and the monthly payment for principal and interest such project owner would be obligated to pay if the mortgage were to bear interest at the rate of 1 per centum per annum.

(d) The Secretary may include in the payment to the mortgagee such amount, in addition to the amount computed under subsection (c), as he deems appropriate to reimburse the mortgagee for its additional expenses in handling the mortgage. (e) As a condition for receiving the benefits of assistance payments, the project owner shall operate the project in accordance with such requirements with respect to tenant eligibility and rents as the Secretary may prescribe. Procedures shall be adopted by the Secretary for review of tenant incomes at intervals of two years (or at shorter intervals where the Secretary deems it desirable).

(f) (1) For each dwelling unit there shall be established with the approval of the Secretary (i) a basic rental charge determined on the basis of operating the project with payments of principal and interest due under a mortgage bearing interest at the rate of 1 per centum per annum; and (ii) a fair market rental charge determined on the basis of operating the project with payments of principal, interest, and mortgage insurance premium (or other comparable charges approved by the Secretary) which the mortgagor is obligated to pay under the mortgage covering the project. The rental for each dwelling unit shall be at the basic rental charge or such greater amount, not exceeding the fair market rental charge, as represents 25 per centum of the tenant's income.

(2) With respect to up to 20 per centum of the dwelling units in any project, the Secretary is authorized to make, and contract to make, additional assistance payments to the project owner on behalf of tenants whose incomes are too low for them to afford the basic rentals. The additional assistance payments authorized by this