12 U.S.C. § 1750g — Insurance of additional mortgages

(a) Authorization In addition to mortgages insured under section 1750b of this title , the Secretary is authorized to insure mortgages as defined in section 1750 of this title (including advances on such mortgages during construction) which are eligible for insurance as provided below. (b) Eligibility requirements; release of part of property To be eligible for insurance under this section a mortgage must meet the following conditions: (1) The mortgaged property must be held by a mortgagor approved by the Secretary. The Secretary may, in his discretion, require such mortgagor to be regulated or restricted as to rents or sales, charges, capital structure, rate of return, and methods of operation. The Secretary may make such contracts with, and acquire for not to exceed $100 stock or interest in any such mortgagor, as the Secretary may deem necessary to render effective such restriction or regulation. Such stock or interest must be paid for out of the General Insurance Fund, and must be redeemed by the mortgagor at par upon the termination of all obligations of the Secretary under the insurance. (2) The mortgage must involve a principal obligation in an amount— (A) not to exceed $5,000,000; and (B) not to exceed 90 percent of the amount which the Secretary estimates will be the value of the property or project when the proposed improvements are completed: Provided , That such mortgage must not in any event exceed the amount which the Secretary estimates will be the cost of the completed physical improvements on the property or project exclusive of off-site public utilities and streets and organization and legal expenses; and (C) not to exceed $8,100 per family unit (or $7,200 per family unit if the number of rooms in such property or project does not equal or exceed four per family unit) for such part of such property or project as may be attributable to dwelling use: Provided , That the Secretary may by regulation increase such dollar amount limitations by not exceeding $900 in any geographical area where he finds that cost levels so require. (3) The mortgagor must enter into the agreement required by section 1715r of this title . The mortgage must provide for complete amortization by periodic payments within such term as the Secretary must prescribe, and must bear interest (exclusive of premium charges for insurance) at not to exceed 4½ percent each year on the amount of the principal obligation outstanding at any time. The Secretary 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) Default; debentures; cash adjustment; certificate of claim The mortgagee is entitled to receive debentures in connection with mortgages insured under this section in the amount and under the conditions specified in subsection (g) of section 1713 of this title , and the references in said subsection (g) to the cash adjustment provided for in subsection (j) of section 1713 and to the certificate of claim provided for in subsection (h) of section 1713 must be deemed to refer respectively to the cash adjustment provided for in subsection (c) of section 1750c of this title and to the certificate of claim provided for in subsection (d) of this section. (d) Certificate of claim; contents and payment The certificate of claim issued by the Secretary to any mortgagee under this section must be for an amount determined under, and must contain provisions and must be paid under, the provisions of section 1713(h) of this title . (e) Debentures; issuance and payment under section 1750c(c), (d) of this title Debentures issued under this section must be issued under the provisions of section 1750c(c) and (d) of this title except that such debentures must be dated as of the date of default as determined in subsection (c) of this section, and must bear interest from such date. (f) Applicability of section 1713(k), (l) of this title The provisions of section 1713(k) and ( l ) of this title must be applicable to mortgages insured under this section and to property acquired by the Secretary under this section, except that, as applied to such mortgages and property, the reference in it to subsection (g) must be construed to refer to subsection (c) of this section. (g) Applications under section 1743; credit for fees upon reapplication under this section In any case where an application for insurance under section 1743 of this title was received by the Secretary of Housing and Urban Development on or before March 1, 1950 , and has not been rejected or committed upon, the mortgagee upon reapplication for insurance of a mortgage under this section with respect to that property must receive credit for any application fees paid in connection with the prior application: Provided , That this subsection must not constitute a waiver of any requirements otherwise applicable to the insurance of mortgages under this section. (h) Preferences The Secretary must grant preference to applications for insurance under this subchapter to mortgages covering housing of lower rents.