Box 5, Folder 7, Document 33

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Box 5, Folder 7, Document 33

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-GENERAL SUMMARY
HOUSING AND URBAN DEVElCPXENT ACT OF 1968
Public Law 90-448, approved August 1, 1968
Housing goal - d~clant irJn of r,':ilicy
The ConGress affirms in '.he 19~8 Act the national goal of "a decent home
and a suitable living environment for every American family" (as stated
in the Housing Ac t of 1949). It states further that the highest priority
should be given t o m".:! eting the housing needs of those families for which
the national goal has not become a reality, and that there should be
the fullest prRct i.cable util i zation, in administration of Federal housing
programs, of the resour c es and capabilities of private enterprise and
self-help techniques.
OpFort uni ties for ':.r;:1Lnine and employment for lower income persons
The Secretary () f Housing and Urban Devel opment is d Lrecte d , in
administeri ng housinr; pro 6 rarns for low-jnco:ne fa:n.llJes, t o requ ire 1,
that opportunities for training and employment arisin~ in
connection with the planning, construction, rehabilitation,
and ope ra t ion of housing under the programs be given to
lower income persons residing in the area of -the housing;
and
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that to the gre atest extent feasible contracts for work
pursuant t o t he housing programs shall, where appropriate, be
awarded to bu s i ness concerns locat ed in or owned in subs t a!1tinl part b y persons r e s.id l ng -Ln the area of t he housing.
Improved des ign i n Gcv ~r nrne nt hou s i ng programs
The Congr e s:, ::om:712 nd s t h e Depar t me nt of ffUD for its recent efforts t o
improve arc h.l t e c t ural st qno ards , but dec lar e s that in the adminis t ratio n
of housin g programs wh ~c ~ a ssi s t in the prov isio n of housing f or low
e.nd mode r a t e l nco me fa mLlies , emphasis shall be gi ven to encouragi ng
good de s ig'1 a s an r!ssent i al component of the housing.
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Impro vement c,f pr ogr a11 aoml.n: r;tra t l on
The Secret a r ~' is dire cted t o make a re por t t o t he Banking and Currency
Cammi tte e s e ar l i i n cal end ar ,y e ar s 1969 and 197') id en tifying spe c i fic
areas of progr a1n admi.n l stra 1, 1<1! 1 and manageme nt wh i ch requ ire i mpr ovement.
The reports s ha ll describe ac t ions t aken and pr oposed to ~ake improvements
and recommend le gis lat ion ne eded to accomp lish the i mprovements .
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TITLE I - 10'.IBR INCOME HOUSING
Horneownershi
for lower incone familie s
sec. 23 of the !fa Lional Jlous inc; Act) is authorized to
provide Federal assistance to homeowner:::;hip uy lower income families
(including membership in a cooperative). Under the new program, the
Secretary of HUD may enter into contracts to make periodic payments
to lenders who make FHA-insured home mortgage loans to these families.
The payments will be in an amount necessary to make up the difference
between ?.O percent of the family's monthly income and the required
monthly payment under the mortgage for principal, interest, taxes,
insurance, and mortgage insur~nce premium. In no case, hrniever, can
the payment on a mortgage exceed the difference between the required
pay1nent und er the mortgage for principal, interest, and mortgage
insurance premi~~ and the payment that would be required for principal
and interest if the mortgage bore an interest rate of 1 percent. The
amount of the payment on each mortgage will vary according to the
income of the homeowner. The family's income is required to be recertified at least every 2 years and appropriate adjustments made in the
assistance payment to reflect any changes.
A new program
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The assistance payment is available for a purchaser having an income,
at the time of his initial occupancy, not in excess of 135 percent of
the maximum income limits that can be established in the area for
initial occupancy in public housing. However, up to 20 percent of the
funds authorized in appropriation acts for the program can be used to
assist families with incomes above these limits but which are not in
excess of 90 percent of the income limits for occupancy in a section
22l(d)(J) below-market interest rate housing project.
In calculating the income of the homemmer for the purpose of determining
eligibility as well as the amount on which the 20 percent computation will
be made, there will be deducted $JOO for ea~h minor child who is a
member of the homemmer' s immediate family and living with him. Also,
income of minors will not be included in the homeowner's income for this
computation.
The amount of a home mortga ge can not exceed $15,ooo ($17,500 in high
cost areas). These limits are increased to $17,500 ($20,000 in high
cost areas for families with five or more members. The same limits
apply to cooperative and condominium units.
The minimum downpayment is $200 for families with incomes up to 135
percent of the maximum income limits that can be established in the area
for initial oc cupancy in public housing and 3 percent in other cases .
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A homeowner is to be given the opportunity, to the maximum extent
feasible, to contribute the value of his labor as equity in the
dwelling.
The Secretary is authorized to provide budget, debt management, and
related counseling services to homeowners who purchrtse homes under
the new section 2J5 program.
The housin~, with a few limited exceptions, must be new or substantially rehabilitrtted housing, except that up to 25 percent of the
amount of contracts authorized to be mrtde before July 1, 1969 can
apply to existing housin~, with this percentage decreasing to 15 percent the following year, and 10 percent the third year.
The aggregate amount of contracts to make payments Crtn not exceed
amounts approved in appropriation Acts. The payments pursuant to the
contracts can not exceed $75 million per annum prior to ~uly 1, 1969.
This amount is increased by $100 million on July 1, 1969, and by
$125 million on July 1, 1970. A reasonable portion of the contract
authority is to be transferred from time to time to the Secretary of
Airiculture for use in rural a~eas and small towns.
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In addition to thP. foregoing provisions, a mortgage executed by a
nonprofit or~rtnization or a public body or agency can he insured where
it fin°mces the ourcha~e (and rehabilitation if necessary) of housing
in viable, or potentially viable, areas for resale to lower income
families. The housing must include at least four or more one-family
dwellings (or two-family dwellings, one unit of which is to be occupied
by the owner), or at least four or more one-family units in a condominium
project, in the cases where rehabilitation is involved. The individual
mortgages given to finance the resale of the housing to lower income
families will also be insured by FHA ~nd assistance payments made on
behalf of the ourch~sers.
221 (h) Program
The 221 (h) program is changed to allow the Secretary to reduce the
interest rate on a home purchaser's mortgage under the program to as
low as 1 percent where the purchaser's income justifies, with periodic
adjustments between 1 and J percent to reflect changes in the homeowner's
incoMe. Under this program nonprofit mortgagors purch~se and rehabilitate housing with FHA insured mortgaies and resell it to low-income
families.
The limit on the aggregate amount of mortgages th~t can be insured and
out~tanding at any one time under the program is increased fro!\\ $20 million to $50 million.
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New F1-IA crcdi t assistancl:! for homeowncrshi .
A mort.r,ar,e insurance is at:thorized und e r a new Sec.
237 of the
~ational Housing Act ) for families of low and mocierat,e income wro,
through the incentive of homeownership and counselinf rtSsistance,
appear to be able to achieve homeownershir hut who, for rPrtson s of
credit history, i rre r:u lar income rat terns caus·e d ty seasonal employment, or other factors, are unable to meet the credit requirements
g~nerally applicable for the purchase of a home under the rer,ular
FHA mortgage insu~ance program.
A mortgage must meet the basic re~uirements under one of the various
FHA home mortgage rrograms. The credit and income requireme nts of
the particular rrogram do not apply, howe ve r, anc the r:rincipal ohligation of the mortga - e can not exceed £15,000 (117,500 in high-cost area~).
However, if the limit on th e amount of a mortgaEe is lower under a particular rr?gram, the lower limit is appl;cable.
The monthly paymentf, combined with local real estate taxes on the
property, will not excee d 25 rercent of the home r,t'rchaser' s income,
computed over the previous year or the rrevioi:s J years, whichever is
higher. The interest rates and mortgage insurance premiums are the
same as under the progra_n:i involved for other mortgagors.
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The Secretary of HUD is autl·.oriz e d to r rovide debt management
related counseling services to mortgagors whose mortr,age s are
under these ne w ·more liberal rrovisions. He can also provide
ing to otherwise eligible families who lack a downpayment on
in order to help them to save money for a downrayme nt.
and
inst ·r c d
counsela home
The rtggregate balance of mortgages insured under these new provisions
can not exceed at any one time $200 million.
Mortp,a~e ~nsurance for housing in declin "ng areas
Mortgage insurance is authorized, under any of F'PA' c mortgage insl'rance
programs, f0r the pt.:rch::ise, repair, rehabilitR.tion, or con ::;truction of
housing loca ted in olde r, de clining t!r t an areas with out r egard to the
normal reauireinents of th e particular prop.ram if FHA finds that (1) the
area is r e asona bly via ble, giving consid er ation to t. he need for providing adequa t:,r hot· sing for families of low and moderate income s in the
area, and (2) the property is an accer tabl e risk in vie,, of this consideration.
Special Risk Insu ranee fund
Srecial Risk Insurance F\.:nd is established which is not intended
to be act11ariall v sot.nd and 0t;t of which claims wi ll be paid on mortg.qp,es
insrred under th~ several new special mortgage inst; rance rrcr,rams for
housing for low or moderate income families. A .!) 5 million ad va nc P from
the general insurance fund is authorized to init i ate the new Srecial
Risk Fund. Appropriations are a11thorized to cover any lo;;ses sustained
by the new fund.
r new
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Condominium anrl cooI?erative owr,ers hip for low and moderate inc ome families
Rental housin8 projects financed with below-market interest rate
FHA 22l(d)(3) mortga8es are permitted to be converted to cooperative or
condominium ownership.
A low or moderate income purchaser can purchase an individual family unit
and an undivided interest in the common areas and facilities of a project
at a price not in excess of the appraised value of the property and with
a mortgage bearing the below-market interest rate then in effect. At
least a 3 percent doi.mpayment will be required, which can be applied in
whole or in part toward closing costs.
A cooperative, with me1i1bership open only to low and moderate income
familie s mee ting income limits prescribed for 221 (d)(3 ) below-market
interest rate projects , can purchase a 221 (d)(3 ) project for an amount
not exceeding the appraised value of the property for continued use as
a cooperative. The insured mortgage can bear the below-market interest
rate in effect at the time the commitment to insure the mortgage is issued.
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Assistance to nonprofit sponsors of low and moderate income housing
The Secretary of HUD is authorized to provide technical assistance with
respect to the construction, rehabilitation, and operation of low and
moderate income. housing to nonprofit organizations o The Secretary can
also make SO-percent, interest-free loans to nonprofit sponsors of such
. housing to cover certain preconstruction costs under Federally-assisted
programs .
The LJw and Moderate Income Sponsor Fund is established for the purpose
of making the loans with an authorization for appropriations of $7.5
million for fiscal year 1969 and $10 million for fiscal year 1970. The Fund
will be a revolving fund and repayments of loans will be deposited in the
Fund.
National Homeowner s hip Foundation
The National Home o,mer s hi p Founda tion i s crea t ed to carry out a continuing
program of encourag ing private and public organizations to provide
increased homeownership and housing opportunities i n urban and rural areas
for lower income families.
The Foundat ion i s aut horiz ed to make gr ants and loans (not otherwi se
available f rom Fe der a l s ources ) t o s uc h organizati ons to help defray
organizational and administrat:i_ve expenses , necessar y precons truction
costs, and the cost of couns elling or similar services to lower income
families for whom housing is being provided . The Foundation can also
provide t echnical ass istance to the organiz a tions .
Appropr iat ions up to $10 million are authoriz ed.
a l so use donat ed funds .
The Founda tion can
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The Foundation is to be admb.istered by an 18-member Board of Dir(!ctors.
Fifteen members are to be appolnted by the President. The Secretary of
HUD, the Secretary of ftgriculture and the Director of OEO are the other
three members. The bo0rd will appoint an executiYe director as its
executive officer.
N~w techr1olo;3i~s - housine; for lower incorn~ fami 1 Les
The Sccr2t9.ry of illJD ls directed l;o lnstitute a progrcirn under whi~h
q rnlified publl~ and pr i vs te organizations wlll suhrni t plans for the .
~evelcprn-=nt of h0uslng fo r lower Jncone families, using new and ~dvan~~d
~ e ~h ~oloGl cs , on Fed2ral land whl~h has been made a vail~,]~ for that
puc-p•JS-= , er 0 n .Jth-=l· l:md ,..,hi2 h i.s suitabJe.
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The Secretary will approve up to 5 plans which are sutmlt~ed t o hi.m
under the program. He wi.11 consider (A.rnong other t.hings) the potential
of th·= techrioloGY e mplo;i,ed and the atllity of t:ie organiz'3.t.icn rnb::iittini;
th::! plan to produce a t leas t l,OO,) dwel.llng u;1its a ;year 1.lt ilizing t:.:iat..
tecll.:.10.luGy.
'i 'he ;;;ecrc l.ary .l s dire i::: t ed t0 seek r, o 8.<~hie·-12 t;h e ::or,si·ructi. on of 9.:, least
1 1 )00 dw2lling u1ii!:.s a ye9.r over a 5-.:,·ear p e riod fur e9c!'l l f th~ ·.-erious
typ 2s 0 f L:!chnolo.;ies propo se d -fr, t.he plans appro·-1ed. H:.:: ii=; re·-_.ulr~d
~o r2p0r1; _A.t -t: hc e "!.rllest practicable dRte with respect tc the proj~cts
~saisted, toJet hcr with his r e commendations.
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Mortr3a£;e8 flnanci.ng t he projects are authcrlzed to b e insured unde r t ~e
FJA expe rime n tal housing program.
Sf-,udy of .i nsurani:::e pro~;ect ion for homeowne rs
T':le Secret.'3.ry uf 111JD, in c ooperation Ki t h the prt vate insura nce industry,
i s e.ut hori zed t.o d e velop a plan for establish ing ar1 in surance program
to ?neble h ume uwners t c me et their monthly ~ort gag2 payra2nts in ti me s of
p ':'rsonal ~cono:nic 8dve r s Lty. The Secre tary is r e ·~u ired ~o r eport h l c:
act ion s 9.nd r.ecommc~,1dA.ti ons within 6 mc·nt.hs follow ing enact:ne.ri t of the
law.
N9.tional Advi. c .>r ~- Sc ~::n i!? s ion on :Sow-In·:o:n'2 Hou s i_ng
A Nat i onal Adv i s orJ -.::ummi ::. st on on Low-Income Hous int;; ts <::sta bl l s hed to
c,r.dert.Akc-; fl. c ornprehe :1s ive s tudy and inve stigate the resou:!":ct.::G BJ 1G.
cApabi li ti es Ln t h e publ: c ancl pri. vRt. e se-~t.o~s of ~.he c :: , · i-·11y ·.,~1-c h , w.;y
b ,~ u sec. ~.o f1~1 ru1 more complete ly !:.:ie cb,1<"•~tives of Vv: nati 0nGl gt;al
of "a d e :~en t h,)rne nnd a Ll u itable livine; e nvironment for ever~· American
family".
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·.rh-2 .:;0mrnls s i o.'. 1 ~s d l r2c t e d t o f:ubm i t Lo th-2 fr·2 sidc n:·. A:1d the .:one;r ~ss a.11
i 11t'=rir:: r c?or~. ·.., ~ ~h r es~cc t t o i ':. s f.indi r:..g:c:: anc r <:?ccrrnc:idat ~on s no t lat.er
~.ha::-i .Jul y 1, 196'.: , ru:d. fl fi r.al rep ort no t ~Ater l hA.n J :.ily 1, 1970.
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TITLE II - llliN'l'/\ L l!OllSING FOR LOWE!/. UICOHF. li'f,JIILIE::3
A new program of Federal assistance to renLal and coopcrativL: hou s ing for
lower income families fa authorized by addin~ a new section 236 to the
National .Housing Act. The assis t ance is in the form of periodic payments
to the mortragee financing the housing Lo reduce the mort~agor's interest
costs on a market r a te FIUt-insured project morte;at;e.
The interest reducti.o n payinents uill reclm;e payments on thr.; project
mortgage from tlwt rcquireu for principal, inter~st, and mortgage in_surance
premium on a markeL rate mortgage t o that required J~ur principal an:::l.
interest on a mortgac e bear i ng an interest r a Le of :~ per cent.
The interest r educ tion payments will r edu ce renta l s t o .a basic chare;e, and
a tenant or c ooper a tiv(.; member wi l l e i.ther p.'.lf the basic ch:,.rge or such
greater amount as reprec enLs 25 percent of his income, but not in excess
of the charges which would be necessary without any inte res t reduction
payments. Income~; ot' tenants will be r eexamined at l eas t every 2 years
for the purpose of adjusting rentals. Rental char ges collP. cted by the
project owner in excess of the ba sic c har ges are to be returned to the
Secretary for deposit in a r evolving fund for the purpose of maki ng other
interest reduction payments .
Tenants of these projects who pay less than the fair market rental charge
for their units will generally have to have inc omes, at t he time of the
initial rent-up of the p1·oj ects, not in exc ess of 135 pe rcent of the
maximum income limits tha t can be es t ablished in t he area f or initia l
occupancy in public housing dwellings . Howe ver, up to 20 percent of the
contract funds authoriz e d in appropriation a cts may be made available for
projects in which some or all c.,f the unit s w:Ll l be occupied, at the time
of the initial r ent-up, by tenants whose incomes exc ee d the above limit
but do not ex ceed 90 percent of t he inc ome limi ts for occupancy of
section 221 (d) (J 2 be l ow-m.:i.rket i nteres t rat e r enta l housing .
In de ter mini ng i nc ome .for the pur pos e of eligibility as we ll as Lhe amount
of rent to be pa id a $J OO deduc tion i s per mi U ed for eac h minor person in
the family and any income of s uch minor is not counted .
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To qualify for mortga ~e insuranc e unner t he new progr am, a mortcaeor mus t
be a nonpr of i t organi za t ion, a c ooperati ve, or a l imi t ed di vi de nd entity
of the type s permitt ed under th e FHA se c t ion 221 (d )(J ) r ent a l hous ing
progr am . The ::i.or t eage l iJnitati on::; 'trith r esp ect to maxirrn un mor Lga ge amount
are the s ame as for mort.gaees ins w·ect W1d<~r t he (d )(J ) proc;r .::un . Interes t
reducti on payments can als o be made with res pe ct to State- a i ded rental
housinr; pro j ec t ::; appr oved for r ecei ving the benefiLs of tl1l:! program prior
to compl e t ion of c ons t ruc t ion or r ehabill t a t i on of t!1c proj ects .


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Contrac L::; l'u1· u.::;:..;j3 Lance pay111enLs an! .:rn Lhori ze (t, cutJjcc L trJ a pproval in
appropriation ac L:.;, Lu the :cmonnt. of !C'/S mill i on ann1w. lly prior to ,July 1,
1969. 'l'his 2.mounL i:.; incr8t.. ::i l.' U by i100 mil.Lion oa ,July l, J 9G') , and by
$125 million on ,Jul;yr l , J.9}0 . A reas onable portion of this authority is
tu be trarn.i.l'e rred to t he Se cretary of Ag riculture .for u::;e in rural areas
and small totl'ns.
A pro ject, 1' i.nanc(~rl 1.111dc!r the rlL'\·J progr~im c~..r1 i i:1c lude such nondwelling
facilities as the Secretary deems aduqua te ::rnd appr·opria te to serve the
occupants of the pr ojed, and the surronndi11i:; neighborhoou, as long as
the pro,jcct is preJomln.:rntly res-Lcle n !.:io. l and any nonJtwllinr; facilities
contribute to the economic fea::;ibility ol' the pr oj e c t. Where a project
is designed primarily for occupancy Ly the elderly or handicapped it c;:i,n
include rela ted fncilities f(,r their use, :.r..ich a::; dining·, work, recreation,
and health facilit.i. es .
With appro 11al of the 3 21~re Lary of mm a mortgagor ca,,--i sell the individual
dwelling units Lo lowe r incoJr,;:) p1i.rchm3ers and these p t.Lrcha::;8rs .:ire elig ible
for assisto.nce payments w1der the provisions of th0 ne:w homeownership
program.
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A cooperative or private nonprofit corporation or acsociat.ion can purchase
a proj ect from a limited dividend mortgagor and finance the purchase wi th
a mortcag8 _insured under the program.
· Projects for low and moderate income families financed under the below
marked 221 (J) (j) progr3Jn can be transferred, prior Lo fina l endorsement
for FH/1. insurance, to the new rental housing interest. reduction program.
Projects for the elrl.erly or ha ndicapped approved for direct loans can
be refina nced unde r the new intere st re duction pro~ram at any time up to,
or a reasonnble time after, proj ec t comple tion.
Rent supplr.ment payme nts may be pr ovide d for tenants in projects financed
under the new program, but no mor e t han 20 p erc ent of the units in any
one proj ec t can r eceive r unt s uppleme nt assistance.
Rent snpplcm<J nts
The authority for r ent supplement c ontracts (sub ject to approval in
appropriation a cts) is increased by $1.iO million on July 1, 1969, and by
$100 million on July 1, 1970.
State-aide d projects are maue el:Lc.Llilc for rent, supplements if the projects
are approved for thiG benefit prior to comple tion of cons tr uc tion or
rehabilitation.
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In determining the income of any tenant for the purposes of the rent
supplemr.nL program, $JOO may l.Je deducted for each mi nor person who is a
member of the immediate family of the tenant and li vinr, with t he tenant,
and the earnini:;s of any suc h minor person s hall not be included in the
income of the tenant.
Low-rent public housinE;
Authority for annual contributions to low-rent public housing is increased
by $100 million on enactment of the law, and by $150 million on July 1,
1969, and July 1, 1970.
The Secretary of HUD is authorized to make grants t o local housing
authorities to assist in financing t enant services for tenants of public
housing. Appropria ti ons f or the grant s are author i ze d up to $15 million
for fiscal year 1969, and $JO million for fisc a l 1970 .
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Preference is to be given to programs providing for maximum tenant participation in the development and operation of tenant services. Tenant
services include: counseling on household management, housekeeping,
budgeting, money management, child care, and similar matters; advice as
to r esources for job training and placement, educa t i on, welfare, health,
and other community services; services which are directly r e l ated to
meeting t enant needs and providing a wholesome living envir onment; and
referral to appropriate agencies when necessary for the provision of such
services.
Public hous ing ass i s tance i s permitted for Indian f amilies who live on
or adjacent to their farmland.
High-rise public housing projects for families with children are prohibited
except where the Secretary of HUD determines that there is no practical
alternative .
The Secr et ary i s prohibited f r om prescribing limitat i ons on the t ypes or
categories of struc tures or dwe l ling uni t s (other t han those provided i n
the law ) whi ch ca.n be l eased under t he publi c hous ing, sec tion 23 leasing
program.
An additional annua l s ubsidy of $120 i s author i zed f or public housing
units occupied by large fami l ies or fami l ies with very low incomes .
w eal housing authorities are permi t ted t o p urch~se structures lease d under
the Section 23 program for the purpose of reselling the strlict'J.I'e to the
t enants , or t o a group of tenants occupying units aggr ega t i ng in value at
least 80 percent of t he structure ' s value. The purchase can be on s uch
terms and condit i ons as may be ne cessary t o enabl e the t enants involved
to make their purc hases without undue financial hardship.
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TITLE III - FEDERAL HOUSING ADMINISTRATION INSURANCE OPERATIONS
Perfecting and liberalizing changes arP. made in a number of existing
FHA mortgagP. insurance programs. In addition:
FHA is authorized to insure loans to homeowners to finance the purchase of fee simple
title to property on which their homes are located where the
homeowner has only a lease.hold interest in the land;
insure 90 percent supplemental loans to finance improvements and
additions to FHA multifamily projects (including nursing homes
and group practice facilities);
insure supplementary rehabilitation loans to housing cooperatives
which purchased war housing covered by an uninsured mortgage;
permit the cost of nursing home equipment to be included in an
insured nursing home mort~age; and
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insure ·mortgages on new seasonal homes,
The Title I home improvement loan insurance program is changed by -
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raising the limit on the amount of a loan from $3,500 to
$5,000,
2.
raising the maximum maturity from 5 years and 32 days to
? years and 32 days, and
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incre~sine the maximum financing charge to $5.50 discount
per $100 of the first $2,500 plus $4.50 in excess of $2,500
(now $5 and $4, respectively). ·
Mortiages financing the purchase of housing rehabilitated by local pub1ic
agencies in urban renewal areas is authorized to be insured by FHA under
the existing 220 and 221 (d) (3) pro grams as well as under th e new section
2J6 progr~m providing for interest reduction payments,
The maximum mortgage amount under section 203 (1) for homes in outlying,
semirural and rural are~s is increased from $~~00- to $1),500.
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l il A;iA, !"['l: !·:~: 1.. ·,11
r·1 r:x ,;: r·H,
'.·! '·I,' i~!")t,F-'1 : i rT" LA 1: ]) 111: 1!\U: };:'. f;r r
(n ;:e\-.' ~~011,;ra:n iti ~s Act o :' 1 ') ( ;0 11 )
Title IV, the 11 Ifot-l Comrm,r!ities Act of 1968 11 , rrovices additional FPdP.ral
assist;:ince to new cornmt.; ni ties.
It . is designed t,o Ccnlist new so1 :rces of
private capital in t he ir develorment.
The Secretary of HUD is authorized to guarantee obligations issued un
the bond market by private developers to help finance the land acquisi~
tion and land development cdsts of new communities.
The obli1:ations f'. t.: arant e ed for a n~w c omtnun-i.. ty may not exc e·ed the lesser
of (a) Go r c rcent, n C \he Socn, tary's estimate of t,he ·1al: :e o.t' ·.he prorerty ur,on completion o ~· t he lanr. development, or ( h ) t hP s t.:m of "(5 rercent oi' t.b c Sc cr0. ta r y' s estimc3Le o f th8 ·, ale e of the land h 0 for e development plt.:s ) 0 r e rcent of his estim.:1te of the act uc1l co s t 0 1· the land
development, or (c) ~:·so mi1 lion.
The a ?cr c gnte amount of outstandinB principal obli ~ations that may he
gcarant c ed is limit e d to ~ 250 mi llion.
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To be eligible f or a f.Uarantee or commitme nt to guarant e e t,he Secretary
must det e rmine that 1.
t,he r, ropo se d new cornmi;ni.ty will be economic a lly i'e a s iblc and
wjll contrihut.e to the orderly de velopment of the areci of
which i t is a part;
2.
th e re is a practicab le plan fo r financin g the n1:=w c or.uurnity
and for mark e tinr the land which r e presents an accepta ble
fin .:r ncial risk to th r. l' n ited State s;
3.
th e re is a sound int e rn a l deve l opme nt plan for t r e new
comm•;ni t y t-:h ich has r c ce i ve d all rent.: ire d St.J. '·,e or local
f:;OV c rn m0 n t a r::r ro vals, ;md i_s acceptabl e to th e Secre tary
as cont r ibLtin g to r;oo d livin g condition s in t he are a and
incl11dinr; a r,ropE: r balance of hoi: sirp: f or famili e s o f low
and moderate income> ; and
th 0 int 0 rn ~1 de ve lo p me nt r lan i s c onsic t e nt ~i t h c o~rrehensive
pl:mrinp; .::'or th P. are a wh j ch mee ts c rit nria c s tab l ished by
th e Se c re t.ary.
The Se cret ary is au t h ori ze d i. o es tahlish a r c vol vin r f und t'or !.he w aranty
f !'Of'. ram wf-: i. ch will ·r e comp ri sr: d o f (1 ) r e c P.i p t,s :'rom r'c-e s an d charr,e s , (2)
othe r r P. ce i p ts, and (3) s L: ch sLi ms , a1 1th ori zed to he appr opriatP d, as ma~·
be r equ i re d.
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The Secretary is al~,o alithoriz r-d t.o rnrikr. s1 1 prlcrTH!nLa.ry r.rant.~, t,r;
SLaLc anLi l e-cal rd,ljc bodies anc:I c1.. ·C'nc i c s for 1-:atr·r nnd r, (Jv1r, r
facili tics anc! ortin srace assisted l:y f'. ran ts Under the l1 01 1SllW ;ind
Urban Development Act o C 1965 or th e Gons olidat.e ci Varrn0rs' f1 nme
Administr:.ition Act, and the l!oijsing Act of l <)(,l. The S8crc1..'.lr;r r-,11d
determine~ that tr.e surrlementary 1:rants are desir.:i.ble t'or ca.rryin~~
out a new commun"i ty ciP.vc lopment ~-roj f·r. t, and th;1L .1. s1:l",t'trmtL1l n1 ,rr.l 1er
of housinf'. i.;11it.s for low and 1::ociPral.P. inr.orr:P. p·rsot!S is to r mar:e
availahlr: t.hroi.;;,:h :.h<: r r nj~r.t..
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The suppltir;;r.; nl. :11':1 r.,i·arit cannot. · xr.cr.d 20 rcrcent of t.} ~1' r.u~; t, 01· t.bc
t'acil Hy and th -~ Lot:11 Federal 1;rant i~,; limi tC: d to 8::, f •f:rr:cn_t of
fncili t.y coi,t. Arprorri.:1tions t'or s1:pple1n1:nt,3.ry r:rants a,8 .11 · thorizrid
up to ~,5 million for fiscal year 196) , and up to :: 2~ mi , lion for l'iscal
year 19'(0.
TITLE
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T_!HBAN RENE>.-! AL
Netghb..:irh noc~ Dev~: Jupr:1eni, Pro 0r9.m.~
The Secrcl.2.ry of Elm 1 : _; authurlzed. to provide financi e.l assist.an<-~) for
n~lghborhood develop:n2rit programs, ~1 ne,.,r n.pproneh to urorn1 !-=n~ ·, ra] wh ich
wlll faciJ l tat c more rapid reha.1:iili tat ion 1:md 1·ec'l:::v·. .:lopm:.!nt of blighl~(:a
areas on an 'iffect:v~ sc ale, A neighborh-ood dP.'1elopm1_>!1t program ·.:::on::.: i.sts
of urban renewa l project 1mdertakings 8..'1d activl1..i~ s i f! on~ or more ;,µ·ban
rene,.;al n.r ·=as that are planned and carried out on th1: lJ9.si.s of a:!1. rn.1i:iJ
increments. Financing is based on the amount of l 0ari and grcmt funds
needed to carry out -:h e acti vir.i es pla..1w~d dul'.'ing a l ?-mcnt .h p e :!'lod ln
ea.ch of the urban re!J~ ',181 are es -:.:on l.~ ai!len in 8. CO!Il::11l'1i ty Is r.,rOGt'3.l'i, Ir
funds ar2 avaiJabl~ and a communi tJ" ' f prog:.:-a.m is P..cc0.pt<=1bl2 to the ,3e.:::retar.:,·,
a co:urnnnltJ can receive fina;.1cial assistance based on its need for t;ub:.iequent annual incr,~me nt s of thc.: ;,roc;rom.
The Redevelcprn~nt Land Acency of t-,h8 DL~t:-ri.ct o f' C·.; l •1 !nh ·;_,: is b iv~ n
author lty t o p lan ru1d unde rt ak e ne Lr;hborhoocl develcpm2·,.t progrsms.
r~ ~reas 2 in m1t.borizatlon of grants
'rhe authoriz e.t: i on f o r urban r2 t1ewal gr:mts Ls i nr~t·-~a:·'--'d 1Jy ~1.!~ 1JillL:m
on July J., 1969. In oddi tlon , the authorizat ion for v.rb en ren~,val grants
for proj ects in model c iti es area: Ls lnc r ~ased 1y ~33 0 mi.llion.
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Reh1Ju.i.li.tatton 16rants
The limit on the a 100unt of a relv=i1; il"LtEi.t.i u ll c;rA ,:-. tu ~.:i. lo•.,·-i. r:c c.,10~
homeowne r ls ir.c r eas c n from :~1, ~,,J0 tv $ 3, 000 and the g ra:11~ Ls made
available f or r ·.=h abi.li t etion of :i:12c.l property tn ':lddi.tion Lo the d·..,re J.ling
itself.
Rehabilitation ~rant s are authori zed to b e mad e to low-:L ncomP. ho;:ne owners
for repa lr s and improveme nts of d\1e llings out s i c1..~ urban r>2rlc ·.-1al end code
enforceme nt areas 1.
where t h e dwe ] lings are .Lr;i areas certif i ed. by t he l ocal go,.rcrnlng
body as contaj 11i.ng a s llb r,t a n LiaJ. numbe r o f s t.ruc t ur~s i n !1eed
of r8habilit.at l on ,
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2.
if the locality has in effect a workable program for community
improvement, and
3.
the area is definitely planned for rehabilitation or code
enforcement within a reasonable time, and the repairs to be
assisted are consistent with the plan for rehabilitation or
code enforcement.
mm is also authorized to make rehab ill tat ion grants to
low-income homeowners whose property has been determined, after an·
inspection pursuant to an approved statewide property i nsurance plan, to
be uninsurable because of physi cal hazards. The erant may be made only
to rehabilitate the property to the extent that the Secretar.y determines
necessary to make it meet reasonable underwriting standards imposed by
the statewide plan,
The Secretary of
Rehabilitation loans
'rhe rehabilitation loan program has been broadened in the same manner as
the rehabilitation grant program with respect to properties located outside
urban renewal and code enforcem:nt areas and those found to be uninsurable.
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The amount authorized t o be appropriated for each fiscal year is increased
from $100 million to ~150 million ru1d the program is extended to June 30,
1973 (in lieu of the previous expiration date of October 1, 1969).
Eligibility for residential rehabilitati on loans is limited to persons
whose annual income is within the locally applicable income limits
for the section 221 (d) (3) below-market interest rate program.
Limit on LPA rehabilitation in urban renewal areas
The previous limits on the acquisition and rehabilitation of residential
properties by local rene wal agencies are r e moved.
Under prior law, an
LPA could acqu:!.re and rehabilitate for demonstration purpos es no more than
100 units or 5 perc ent of the total residential units in en urban renewal
area, whichever is lesser.
Dis osition of ro ert, for low and moderate income housintL_
Land in an urban renewal area is authorized to be leased i n addition to
being sold as previously provided) for low or moderate income housing at
a price consistent with the use for that purpose. A builder is permitted
to purchase the land at the write-down price for low or moderate income
sales housing. Under this provision land can also be made available at
the write-down price for housing assisted under the 221(h) program, and
the new interest reduction payment programs authorized by the Act for
homeownership and multifamily housing.
Grants for low and moderate income housi ng in open land projects
Grants are authorized for open land urban renewal projects where the land
is to be disposed of for low and moderate incomP. housing. Previously,
open land projects were not eligible for grants. The grant may be for
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two-thirds of the differenc e between the proceeds from any land dicpoaed
of at its value for low or moderate income housing and the proceeds which
would have been realized if the land had been disposed of at its fair
value without regard to its special use.
Demolition grants - rat harborar:es
The Demolition Grant Program is expanded to permit grants for the
demolition of structures which are rat harborages or potential rat
harborages.
Use of air rights sites for educational facilities
Air-rights urban renewal projects, and the construction of necessary
foundations and platforms in any type project, are authorized for the
development of educational facilities. As in the case of industrial
development, an air-rights project and the construction of foundations
and platforms would only be available for educational facilities if
the area is unsuitable for low or moderate income housing purposes.
Low and moderate income housing in residential urban renewal areas
A majority of the total number of housing units in a community's
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residential urban renewal projects which receive Federal recognition
after August 1, 1968 must be for low and moderate income families
or individuals, with at least 2~ of such total for low income
· families or individuals. The Secretary may waive the 20i requirement
to the extent that the units are not needed in the community.
Workable program requirements in case of Indian tribes
An additional period of time, until January 1, 1970, is provided for Indian
tribes, bands, or nations to adopt and carry out minimum standards housing
codes for workable program certification.
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Interim assistance for blighted areas
The Secretary of HUD is authorized to contract to make grants aggregating
up to $15 million a year to cities or counties to assist them in taking
interim steps to alleviate harmful conditions in slum or blighted areas
of communities which are planned for substantial clearance, rehabilitation,
or federally assisted code enforcement in the near future, but which need
~ome immediate public action until permanent action can be taken .
The Secretary is required to encourage employment of unemployed or
under-employed residents of an assisted area in carrying out the activities
to be assisted.
Grants may not exceed two-thirds of the cost of planning and carrying out
an interim assistance program, except that three-fourths grants can be
made to any community with a population of 50,000 or less.
A community has to have an approved workable program for community
improvement to qualify for assistance, and relocation assistance and
payments will be available.
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Rcl.oca Lio11 l'a-: r1 1t : t1l.:,

~--Relocation adJu0LT!li;11L
pay1w::nL:, m· c) bn1.:.id0ncd to JJCrmit. p.::iy rr1ent.,:::; of up to
$)00 per J8:.J.l ', !\J!.' .-L / - J c:::i r r1:::'l'~.(ld . ::ur:ll p::.y11tt.mL~: !J:.J.ve be en heretofore
limited to :.J. rnaxjJn11m of $S\..HI pa~_,a:;le OVL!l' a ;; rnonLh period .
A new pRyment is a nt hori_:,ecJ for a dinpl.:lced owner-occupcmt ul' residential
property t o cnahlc !Ji.ill Lo p urr.has c c.1 r e placement d1,elline . Tlte payment,
which cmmo t exceed ~~1_' _,000 , le l,hc• dil'fen.mc e bet.,_·men tlte avcr:i.gc price
for- an adequa t e replaceme n t homt.i und the ucquis i tion price of hi::; former
home.
Tl'l'Jl~ VI - ln-1. 01\N PLi\NN:rNG AND FAC ILITif;_;
Comp:?:"ehe ns i ve pla!m.r nc
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The section 701 planning as:::;istance e:rant proc ram ls exter1sivo ly revised.
The Secretary oJ' HUD i s ,not-·authorized to make _comprehensive plannine:
grants to State pl:rnning agencies for ass i stance to 11 distr ict 11 planning
agonc ie::; for rU1·al and other nonmetropoliLan areaG. Consultation with the
Secre t ary of Ag r iculture i s required pr ior t o approval of a n;y district
planning grants. The Secretary of Agriculture and, when appropriate,
the Secretary of Conunerce may provide technical ass i ::;tanc e in connection
with the establishment of districts a nJ the carrying out of planning by
them. Such Jistrict planning may not b e aimed at assistins businesses
to reloca te .from one a rea to another.
Other new provision::; authorize direct planning grarrts t o Indian trib a l
planning counc ils or other bodies for planning on Indian res ervations;
to re g iona l and district councils of governmen t as we ll as those organized
on a metropolitan ba n i ::; ; to reg ional commiss ions and economic development
distric ts established unJe r tho Public Works and Economic Development Act
of 1965; t o cities, without regard to popul:.J.tion, within metropolitllll areas
for plarming which is part of' metropolita n planni..11.g ; and t o official
Goverrunent pl<-1.nninr: a ge ncies for nreas where rapid urbo.niz.:i.tion is expected
as a result of a new c oJ11JT11111i ty- cie ve Lopmc nt a s sisted under title JV of
this act. The Secretory i s r cqnir e d to ·cons ul t i,J ith the Secr e tary of
Cormnerco Lefore rr1c1 king any pl3I111in;_~ gnmt which includes any part of an
economic d~velopment d i strict .
The definition of c ~mprAhensive pl~nning is broadened to include
planning for the provision of governme nt,3 l servlces and for the rievelooment ,3nrl utilization of human and natural resources. The inclusion
of· a housing element is required a~ part of the pr eplration of comprehensive lani use plans. The USP. o f private consultants, whP.re their
profe s si0na] sArv i c~s are dP.P.med appropriate by the assisted governments,
is added to the stated purposes of the program.
The authorlzation of apnropriations for grants is increased by P35 mil~
lion for fis~.:ll y~1r 19t;9 (includ\.ng t 20 million ea r m::irked for district
planning) ancl by :$125 million (induding plO million for district planning) beginnin ~ fiscal YA~r 1970. It is also provided th.qt an additional
$10 million of s P. ct\. on ?Ol apor or r i~tions i s to be avail able fo r study ,
fes e a r ch ani de~onstr~tion proje~ts.
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Planned areawirle rlevPlopm~nt
Supplemontary grants (rt es i gnP.d to Anc0'1r;i.ge areawide planning) are autl1orized for F'P.der.11ly-assisted projects in ;ill multi j 11risdictional
areas (not just metropolitan ar~a~ as previou ~ly provided )su~h as the
rural pl;mninp; distri c ts proposeri to ~e assisted with co·TJprehensive
planninR grants unde r t he comorehensive plRnnin g provisions of the
law. UnUBed authorizations for appropriations for supplementary grants
for fiscal year 19~7 3nd 1968 are made available through fiscal year 1970.
Advance Acqui sition of l and
The adv::ince acquisti on of bnd progr.:im is extensively revised. Among
the more signific::int ch::inges is a broadenin g of the definiti on o f eligible
land from land "pl::inned to ~e utilized in connec t ion with the future
construction of oublic works and facilities" to "land planned to be
utilized in the future for public purposes". Grants can also be made
for the imputed interest cost when a public body does not use borrowed
funds to acqui~e the land. Authority is given the Secretary to extend
the requirement that the land must be used for its proposed purpose
within five years if he de ems a longer period necessary due to unusual
circumstancPs ~nd so advises the B~nking and Cur~ency Committees of the
Congress. It is also provided that assistance under this program will
·not render a project ineligible for othPr Federal assistance programs
and th at the cost of land acquired with assistance under this prograM
will not be an ineligible project cost in such other programs.
Water and s ewer f ac i lit i es progr am
The interim planning requirements under the basic water an~ s ewer facilities grant pro ~ram is extended to Octobe r 1, 19~9. It is also provided that in admini s t e ring the program, to the greatest extent practicable, new job O:.lportunities shall be provided for unemployed or
underemployed persons.
Authorizati ons -- water and sewer, neighorhood f acilities, and advanc e
acq~~ ~~ t _
~o!1 _of lanrl prog!_cl!11S .
The author i7.ation fo r appropri ations for the s e three pr o:rams is ext ended
to permit the appropr i ation , fo r fi s cal ye ar 1970, of any fu nds autho r i zed
but not appropr i ated p r ior to th at time . Also, an additional $150 million
fo r f i sc al ye ar 19h9 an1 $115 milli on for fis ca l y ear 1970 are autho r i zed
to be anor opr i a t ed fo r the wa t er and s Pwer faciliti es grant pr ogram.
Open space l and program
The contract authoriza t ion o f $310 mil l ion for grants under th e open
space land nrogram ls changed to a lJ lO mi l l i on au thori zat i on o f appropriations prior to July 1, 1969, wi t h $150 millio~ in add i tional appro. priations authorized for fiscal year 1970 . The l imit on the amount of
the fun1s that can be used for s t udies and ~ublishing of information
is increased from $50, 000 to $1?.5,000 per year.
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FPa:.ih .i. liLy ::, Lurlic s - p 11h.lic i-rork;:; pl.r. nninc :t< !'ro.ncr :,
It is ·m:.ide clear th:'lt the Secret::iry of HUD has au th0ri ty t0 m;ike ;iclvanr:es
for feasibility stur:lies unrier the oubl ic works pl;rnning .:i-iv;inces progr;:im.
TITLE VIT - !JRBAU MASS TRANSPORTATION
Authoriza tlon
The autl1~ri7.,:ition o ~ appropri;itionf; for gr;ints ;,nri 0ther ::issi.c:-t.;rnce to
· urb::in mass transportation is inr:re:ised by $190 mil lion ror fiscal ye;ir
1970. The a'.llount of funrls which c 'rn be used . for res~;:ireh, riev ~lopment,
and demonstration projects is increased hy ~IS mill i on, c0i'!lTTl 0 nc i.np.:
July 1, 1968, -'l !lri t.hP. st;itutory limit on the fun-1s av:1i1;1ble fo'!" this
purpose is n ~moved, cor.imencing July 1, 191S9.
Emergency rir orr am extended
The emergency ma s s transportation c apital grant program expir~ti 1n d::it~
is extended from ~ovember 1, 19~8 to July 1, 1970.
Defi nition
The definition of "mas s transportation" in the Urhan Mas s Transnortation
Act of 194+ is amended t o allow g r e;i ter flexibility 1.nd oon0rtunity for
aoplication of n~w concepts ::ind systems.
Non f e deral sho.re of ne t projec t cos ·t
Not more thnn half of the non-federal sh~r or the n~t proj r rt ros t of
a mass trRns por tation nro j ect is oermitte d to ~e paid fro~ priv ~t e
sourc es , e xcept in cer t a in c as e s of rle:non s tralf:id fL=; cal in;-1h i Lity . A'1y
oublic or r riv a t e tr.:rn s i.t sy st em f'unrl. s provi ciPci for l !,P. rn, n- t;"l"! ler;il
sh;J.re mu s t 1-ie sol e ly fro"! unr:list.rihute d c ~sh surplu ~Ps, r w)l ::i c P11ent or
de'1reci:ition funds or r <"?se rve s av.:1 il a ble i n c1sh, o r new ca ptia1.
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TITLE VIII - SECONDiillY MOTITGJ\GE MAR.KET
The existing Ft::ldcral Na tiona l l"iort.ra8e Associa t ion (1'1Il'iA) i s directed t o
be par titi one d i nto t wo i, cpa ratc corporations . One wi ll b ~] a Governme nt
spons ored privat e c orpor ation, to b e lrnmm a:.; tile Fe dera l. !la t i.cno.l Mortr.a '.:i:e
Association (FNHA ), to ope rat e t h0 :,c~c ondary mortr..:i.r,e marke t. oywr:Li,l ons .
The othe r wi ll r ema in in the Government a nd conti nue to ope1\1.te t he
opecia l assio t a nc e funct i ons for s pecial Fe de r a lly - aided hons ing programs,
and the manageme nt a nd l i qui da tin~; f unc U one of the old FNMA. TllP 112H
cor porat i on wi ll b e known a s t he Governme nt Nat :Lonal Mort c;ago A:J;:;ocfo.t ion
(GHMA ) .
FNMA i s authoriz ed to issn8 and s e ll securities l..i.::.tckod by a por tion of
i t s mortgage p 0rtfolio , with GNM.J\ ~u.'.lran t ce :i.ng pa;y11tenL on s uc h securitie s.
GNMA can also euarantee s imilar securi t i es i ssued by o ther pr i vate issuers
·where they are uacke tl by FIIJ\, VA, and some Farme rs Home Administration
mortgages or loans.
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The spcci.:i.l assit,tance authorl7. a Lion of FU.MA. (no.-1 GNHA ) i s increa:..:ed by
$500 million on July 1, 1969.
The provisions of thi:.; title will become effective after a date, no more
than 120 days following its enactment, established by tlte Secretary of
HUD. The Secretary ho.s established this date as September 1, 1?68 .
Provisions are madu uit h respect to tlie capital stock of F1'111A and its
board of directors Juring a transitional period. The transiLiono.l period
will end when 1/ 3 o.f Lhe FI,JMA r, omm,·,n ::; t ock is owned h•r pers ons or orc;aniza tions in tile rnorti_:.:i.;:e l endin~; , home builu:Lnr; , r eal r.stn Le or related
businesses , but not sooner than May 1, 1:)70, nor .la ter than M.:.i.y 1, 1973.
The ITU1jor i ty of FNMA' s board of di rec t or::; ar c. to b e; appointcrJ. by the
Secretary of HUD durini; t he trans i t ional period. 'I'lic President of FNMA
during this period will be appointed Ly the Prc::iident of the United States
and confirme d by the Sen:i.te. One of t he ~ecretary ' s o.ppoinkes to the
Boa.rd will be the President.
After the trans itiona l period FNMA wi ll be governed by a 15- memuer board
of directors, five of whom will be appointe d by the Pres i dent of the United
States.
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The new FNMA will be sub,ject to the general regula tory control of the
Secretar y of HUD, who also mus t approve the issuance of all stocks and
other obligati ons by FNMA and may r equire it to alloca te a r eas onable
portion of its mortgae;e purchases to mortgages i n low and moder ate inc ome
housing .
TITLE IX - NATIONAL HOUSING PARTNERSHJJl~
A nati ona l housjJ1g partners hip i s · to be cr eat ed f or the purpose of securing
the partic ip3.tion of private i nves t or s in progr c:ww and projects to provj de
hous ing for l ow and moderate i nc ome families .
Ini ti.ally , a f eder .:i.lly char ter ed, priva t el y f unded corpora tion will be
organize d under the Db trict of Columtia Dusiness Corpor~tt i ou Act . The
corpora tion in turn will organize t he Nat i ona l partners hip under t he D.C.
Unif orm Limi t e d Par t ner ship Ar:t .
The corporat.i.on will serve as t he ccncral partner anrl manDr,i.ng acent of
the Na t iono.l partnc1·chip and each of its stockl1olders can be limited
partner s. It will provi de the staff .:i.nd expertise f or t lie Partnerchip in
orc;ani zing and plannint.; project undcrtakinc;s i n which Lile p::ir L11crship
has an interest, and r eceive a fee for such s crv:ices .
Both the corporation .:md the Na tional par~,nership are authorized to
engage in a uroad range of' ac tivities appropria t c to tl ie provision of
housing and relate d facilities primarily for low or moderate income
families , with or without the use of Federo.l programs, ancl m.:iy enter int o
and participate in al l forms of -partnerships and associations. The National
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partnershi p is expected to form pa rtnership ventures with local investors
for the purpose of building low and moderate income housing projects
throughout the nation. Normally, it will be a limited partner in such
undertakings, with an interest of not more than 25% of the aggregate
initial equity investment for the project.
The President will appoint t,he incorporators of the corporation and 3 of
the 15 members of the board of di r ectors. The incorporators will serve
as the initial board of directors and arrange for the initial off ering
of shares of stock in the corporation and interests in the National
partnership.
The President is authorized to create additional partnerships when he
determines it to be in t he nati onal inter est.
National banks are authorized to invest in a corporation and other
entities formed under this title.
TITLE X - RURAL HOUSJNG
Housing for low and moderate income per s ons and f amili es
The Secre t ary of Agr i culture is aut horized to pr ovide direct and insured
loans for housing in rural areas to low and moderate income persons and
families and to provide renta l or cooper ative housing for such per s ons
where assistance is not available under the new interest redu8tion programs
authoriz ed by t he l aw. The interest rate on the loans can be at a r ate
set by the Secr etary after considering the c ost of money to the Treasury
and the payment ability of the appl icants , but not l ess than 1 percent
per annum. An int erest supplement necessary to market the insured loans
will be paid from, and reimbursed hy annual appropriations to, the Rural
Housing Insurance Fund.
Housing fo r rural t r a inees
The Secret ary of Agriculture is authorized t o provide f i nancial and
technical a ssistance to t he provision of hous i ng and r el a t ed facilit ies
in rural areas f or rural trainees (and their famil i es ) enrolled i n
Federally assisted t r aining cours es to improve their employment capability.
Advances for land purchase f or t he housing will be repayable within 33
years and bear inter est at a r ate (not l ess than 1 percent ) determined by
the Secretary of the Treasury t aking into considerat i on the current
average market yie ld on outs t anding Federal obligations . Other advances
would be nonrepayable, or repayable with or without interest, depending
on t he applicant ' s payment ability, from pro j ect net income and any other
available sources .
Mutua l and self-help housing
A new program of grant s and l oans is aut horized t o provide assistance in
rural areas and small t owns to needy low-income individuals and t heir
fami lies f or mutual or self-help housing. Gr ants can be made to public
or private nonprofit organizations to pay part or all of the costs of
developing compreh nai ve programs of t echnical and supervisory assistance
to aid individuals and their families in carrying out rrrutual or self-help
_housing efforts.
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loans can be made on such terms and conditions and rn such amounts as the
Sacl!etary of Agriculture deems necessary, to needy low-income individuals
participating in programs of mutual or self-help housing approved by him,
for .the acquisition and development of land and for the purchase of
building materials as may be necessary, for the construction of dwellings.
Loa.ns will bear interest at not .more than J percent per annum, and be
repayable withrn 33 years.
A eel.f-help housing land development fund is authorized to provide a source
of short-term loans to public or private nonprofit organizations to buy and
develop building sites to be sold to families, nonprofit organizations,_
and cooperatives eligible for assistance under the new interest reduction
progrmna for housing for lower income families.
TITLE J;I - LR PAN PROP~RTY PROTECTION AND REIN.stRArJCE
_T itle XI enacts the "Urban Property Protection and Rernsurance Act of 1968."
(
Under this Act the Secretary of HI.JD is authorized to provide private
.insurers with reinsurance against losses resulting from riots or civil
disorders. The sale of reinsurance is limited to those insurers that
cooperate with State insurance authorities in developin~ statewide plans
to assure fair access to insurance requirements, called FAIR plans.
Reinsurance may only be provided in States which have such plans.
FAIB plans may vary among the States, but all plans must satisfy minimum
statutory criteria. The principal requirement is that no risk can te
written at the surcharged rate or denied covera~e unless there has teen
an inspection of the property and a determi nation made that it does not
meet reasonable underwriting standards at the applicable premium.
Additional requirements relate to the procedures to be followed with
respect to inspections, the provision of reasonable notice to property
owners of cancellation or nonrenewal of policies, and the formation of
an all-industry facility which will place the insurance in the r egu lar
market. S1; ch •'AIR Plans are to be administered under the supervi sion
of the State insurance auth ority. As a condition for providing reinsurance
in a State, the Secretary can require additional programs to make property
insurance available without regard to environmental hazards.
Reinsurance is offere d in standards lines of property insurance coverage
and can be pr ovid ed ·immediately followin g enactment by means of a binder
agreement, which expires aft er 90 days unl es s sooner replaced by a
reinsurance contract.
Premium rates and the terms and conditions of reinsurance contracts are
to be uniform throughout the country. The premiums for the fi rst year
must provide sufficient income to cover a level of riot losses in excess
of the amount of insured riot losses in 1967.
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A .~ 1.at,p ir: 1'(!:Jt·~n· t: Lo a:-st, rr.r. .J. nnrtiori of t,hr. :u . :-.t•,s rr :in::i : rr·d r;; Lhf:
Secn,t-.:i:·y 1d t,hh1 'l /£';-tr ·:' r l-:;i !,!i n r:lr.~:r. n:· i k; n1•:d. n .f'! l: !r· lr:r·i;.]:1',iw"?
se ~r- i on.
fhc ceil:i rw ori t.bn share 1-: ill h! c;~ o · ·.1.,. rrr·r ,,r t,~.- i: r: 1 r;"Jr.c,·.·
rrc"? n:i 1 ms, r..J.rrir ·u in 1.lir: :jt:lt,r. on rr-h:st ·!'f'd ljr:r. ~; c, I' nror " rl,.' j n!:'t i r:1r:c n .
~-L.cr. sharirw 1-!i. 11 onl, h ,• r rrit j rc:rl j J' r r. instir,..,cJ .! o:::sr:s cxc,·rcl r remi!:rnr-:
raid f or nd.r:s tr,1r iCf: b;.· i1s1 : r;i1 1CP. cor.,r-ad r f in that. St.:i t, ~, (pr, -r:1iur:::: pa5d
ir: '.h,:, c1 -rrent ;yr·o r r·l L::~ r1·r1riit1n:~, r ·1iL ·i: . pr-:::vic.· :::, ;·'r1! ·:: :i r. P.xce~·s oi'
rejr.sL-ruJ ci.a:iH.s).

A :·i:-:tio ,1al Inst:rar 1c'" Tlcv<! : orr.1ent,
a~· thori /. cd. Trc a . 1~ry Lo1-ro1-1.irir:s
for r r:: ~rl~'\,rCd lo ss es, lir.ii t.ec to
Congress rnay at i t/·,c-rizc 't;r j oint
r\ nr! is crca'.:.f'cl 1,c c :,n·y r,1 t, tl if! rroi·r;-1.r.,:
arc ,11 .t.hc,r L ~<;c] t o ;·;ri ~:c r,1.. n-.C? r. V '.'l J cla7rrr·
,,, 2 1J0 miJ.lion or ~- \.Cl: f 1, rj,J-rsr S\ ;,,S ,, :-; i.hc
rcsclu tion.
'he Secrl' t a ry i:; re~uirec to r,1ake a study conce rnirw thr: ;:i,:Ail::i.tilit:/
o!.' rrorc:r1',y ir.s1 ·rance i.11 1. rtan area~ and t c, f;1_:bm:it th r: r e s1 -l f.s to the
President and U1r, Con£;r ess no lat e r t,har. 1 ye ar after t.hf; en,1ct1r.ent
of the lr1w. li e js also actl~orized t:o co:1duct othr:r !':ti.dies r,Prtinent
t.o his reir.s , ra11cc, anci statewi~e rlan responsi h .li ti 8s .
A 11-mcmhe r advisory t .03: ·d is to be aproini.,f?O l-y t, l\e ::ecrr t.::r·y ·, ,i tl\ nrt,
less tl,an i'oL;r n.cmh:n ; to r·,~1,resf:nt t,he 5 nrt,rar:c f; industry ar ·c: not. le~ . s
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tran ~·01 :r n.fr:th~rt t;o rc:p r csen t th.' St ;,t.e in[;vr~mcf" a1 .t~1o rit,ies.
TITLE XII - DISTRICT OF COLUMBIA INSURANCE PLACEMENT ACT
The District of Columbia Insurance Placement Act establishes programs to
assure the availability of basic property insurar1ce protection against
fire and other perils for residential and business properties in the
District of Columb..i.a. Such programs are subject to the :=mpervision and
regulation of the Commissioner of the District of Columbia.
Within JO day::; after enactment all license d insurers in the District who
write basic property insuranc e are required to establish an Industry
Placement Fa cility which is to adminis-ter a program to provide for the
equitable distribution of responsibility for insuring qualified property
for which insurance cannot be obtained through the normal ins~rance
market.
Rules and regulations are to be adopted by the Facility to assure all
property owners fair access to insurance requirements. Suc h rules and
regulations, which must be approved by the Commissioner, arc requ:i_red
to be consistent with the -state-wide plan requirements of the Urban
Property Protection and Reinsurance Act of 1968 (Title XI, Supra).
The Commissioner is a uthorized to establish a joint unde rwriting association
to provide for the reinsurin[; of basic prop:!rty insurance without regard
to environmental ha zard, if he finds that such a pror ram is necessary to
carry out the purposes of the Act.
�22
The Com.miss ioncr is authorized to a::;sess each insurance company authorized
to do business in tltc District an amount su.fficienl, to satisfy the state
sharing requireme11t for Federal reinsurance under the Urban Propert.y
Protection and Reinsurance Act. Such assessments would be based on a
company's proportionate share of premiums earned on reinsured lines during
the preceding year. In the event of such assessments, the companies will
increase their premiums by an amount sufficient to recover the a::;sessment
within not more than a J year period.
TITLE XIII - NATION/1.L FLOOD INSlJR/',NCE
Title XIII enacts the "National Flood Insurance Act of 19613 11 • Under this
Act, the Secret9-ry of HUD is authorized to estaulish and carFJ out a national
flood insuranc,::! progra,11 to enable persons to purchase insurance against
losses resulting from physical damage to or loss of real property or
personal property arising from any flood occurring in the United States.
He is directed to encourage and arrange for maximum participation in the
program by insurance companies and other insurers, and by related agents,
brokers and organizations .
(_
The Act provides for the operation of the flood insurance progr~n .J.~ a
joint venture between the Federal Government and the private insurance
industry (with the industry participating on a risk-sharing ba::.;is).
However, as an alternative, the Secretary may, if necessary, operate
the program without the companies participating on other than a fiscal
agency basis.
The Secretary is authorized to borrow up to $250 million from the Treasury
to carry out the ins urance program. A National Flood Insurance Fund is
established for makinc payments authorized by the bill, including premium
equalization payments and reinsurance for losses in excess of losses
assumed by insura~c~ company pools form~d to provide flood ins urance .
Coverage will be available initially for one to four family dwellinr;s and
small business establishments but is to be extended to additional types
and classes of property as found f easiule by the Secretary. In the case
of dwellings, the insurance limit, where the rate is less than the full
risk rate, will be $17,500 for any s i ngle dwe lling and $JO,ODO for a
twc to .fo'. H' family structure, plus $,S,000 per dwelling for contents. Small
business properties can be insured for up to a total of $30 , 000 for the
structure and $5 , 000 for the contents of each individual busine::,s. These
limits may be doubled upon the payment of full premium rates for t!te
coverage in excess of such limits by the insured proper ty mmer.
The Secretary is directed to develop cri tcria designed to enc ouracc tlie
adoption of State and local measures to constrict · the devclopmc.mL of land
which is expose d to· flood dam.:1r;e, s uide development of proposed construction
away from locations threatened by flood hazard3, assist in reducing d&~age
caused by .floods, and otherwise improve land management arnl use of floodprone areas.
�(
2J
After June JO, 1970, no new flood insurance coverage can be provided in
aey area unless an appropriate public body has adopted permanent land UBe
and control measures which the Secretary finds are conBistent with the
criteria he has prescribed for land management and UBe in flood prone areas.
The Secretary is directed to appoint a flood insurance advisory connnittee.
The face amount of flood insurance coverage outstanding and in force at
$2.5 billion.
any one time is limited to
The Flood Insurance Program will go into effect 120 days following the
date of enactment unless the Secretary prescribes a later effective date,
not to exceed 180 days from the date of enactment.
The Secre:ary of HUD is authorized to undertake studies for the purpose
of determining the extent to which insurance protection against earthquakes
or other natural disaster perils, other than flood is not available and '
the feasibility of such insurance protection bein~ made available. '
TITLE XIV - INTERSTATE LA~D SALES
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The "Interstate Land Sales Full Disclosure Act" enacted by Title XIV
makes it unlawful for any developer to sell or lease, by the u~e of the
mail or by any means in interstate commerce, any lot in any subdivi sion
(defined 86 one with 50 or more lots for sale 88 part of a common
promotional plan) unless
(1)
there has been filed with Secretary of HUD
listing certain required information about
land, the state of its title, its physical
of roads and utiliti es , and other matters;
a statement of record
the ownership of the
nature, the availab ility
and
(2)
a printe d property report, containing pertinent extracts from the
statement of record, is furnished to the purchaser in advance of the
signing of an agreement for purchase or lease.
These requirement s do not apply to any subdivi sion where the property is
clear of all liens and if every purchaser has personally inspected the
lot which he purchased, as evidenced by a written affi rmation by the
developer.
Any contract for the purchase or lease of a lot covered by this Act is
voidable at the option of the purchas r if be was not furnished with
a property report ·at least 48 hours in advance of his signing the contract.
If the property report was received by the purchaser less than 48 hours
in advance of his signing the contract, it is voidable for a period of
48 hours after the signing .unless he stipulates in writing that he has
read the report and inspected the lot before he signed the contract •
._____
_____
.___
~-~-~~-~-~-~
�24
Hillful viol.:it:i.on of these requirements is su1;jcct to criminal penalties of
imprisonment for not more than 5 yea.rs, or a fine of not more than
$5,000, or both. Broader civil remedies than heretofore available are
also provided. A suit for damages may be brought in any State or
Federal court for the district in which the defendent may be found or in
which the transaction took place. The Secretary is authorized to seek
an injunction against any developer he can show is violating or about
to violate the law.
In carrying out his responsibilities under this legislat-Lon, the
Secretary is required to cooperate with State authorities charged with .
the responsibility of regulating the sale of lots in subdivisions.
This Act does not become effective untll 270 days after enactment.
TITLE XV - tv()RTGAGE INSURANCE FOR NONPROFIT HOSPITALS
This title establishes a new FHA program ( section 242 of the National
Housing Act) under which the Secretary of HUD will insure mortgages covering
new or rehabilitated hospitals (including initial equipment). The mortgage
may not exceed $25 million or 90 percent of replacement cost and the
hospital must be owned and operated by one or more nonprofit organizations.
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. TITLE XVI - HOUSJNG GOAL'3 AND ANNUAL HOUSING REPORT
Reaffirmation of national goal
The Congress finds that the supply of the Nation's housing is not increasing
rapidly enough to meet the national housing goal and reaffirms this goal.
It determines that it can be substantially achieved within the next decade
by the construction or r ehabilitation of twenty-six million housing units,
six million of these for low and moderate income families.
Report outlining plan
Not later than January 15, 1969, the President is required to make a
report to the Congress setting f orth a plan to be carried out over the
next ten years for the elimination of all substandard housing and the
realization of the national housing goal. The report shall, in addition,
contain a projection of the residential mortgage market needs and
prospects during the coming year, including an estimate of the requirements with respect to the ava ilability, need and flow of mortgage funds ,
together with recormnendations for encouraging the availability of funds.
Periodic reports
1.5, . 1970, and on each succeeding year through 1979, the President
is required to submit to the Congress a report of results achieved in the
provision of hous ing, and r ecormnendations for legislation or additional
adm.:i.ni.strati ve ac tion tha t may be needed to achieve the objectives of
the President's plan.
On January
�25
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.Q_onnnission on Mortga13e Interest Rates
Funds appropriated and available for studies of hoUBing markets and credit
under laws previously enacted in 19LB and 1956 are made available for
expenses of the Corrnnission on MortcaBe Interest Rates to study mortgage
interest rates. This Commission was established by Public law 90-JOl.
TITLE XVII - MISCELLANEOUS
Model cities
The authorization for supplemental grants for model cities is increased
by $1 billion for fiscal year 1970, and an additional $12 million is
authorized for fiscal year 1969 for grants for planning model cities
programs. Amounts authorized but not appropriated are made available for
appropriation for any succeeding f i scal year commencing prior to July 1, 1970.
•Urban renewal demons tration grant program
Urban renewal demonstration grants are authorized to be made to nonprofit
organizations. Under prior law these grants were available only for
public bodies.
The l:illlit on the amount of urban renewal demonstrati on grants i s increased
from two-thirds of the cost of the undertakings to 90 percent of the cost.
(
The amount of funds available for these grants is increased from $10
million to $20 milli on.
~
r..l'§at i on ror urban lnfol"Ti\ation and t echnic al Msist ance lervice
~
Thea.ithor ization for grants to State s to assi s t in the pr ovis ion of
urban in fomation and tP.chnical assistance i s increased by $5 million
tor fi s cal y ear 1969, and by $15 million for fisc al year 1970. Amounts
author i~od for the se gr~nts but not appropriat ed are author i zed to be
appr opr iat ed fo r any succeeding fi.scal year commencing pr ior to July 1, 1970.
Advance~ in t e chnology in housing and urban deve lopment
Such 8Wl1S as may be
mencing wi t h fi s cal
que s and m~thods of
and rehabilitation ,
authorh.ed for such
authorized.
necessary are authori zed t o be appropr iated comye ar 1969, fo r s t udies of new and improved t echni~
appl yin g advance s i n ~echnoloa to horlsin c construction
and to urban devolopment. Fbur-year contrac t s are
Btu.dies rat her than 2-year cont ract &r as heretofore
Collne;e housin&
The colle e housini direct . l oan program i s expanded t o add a new profP'e.M t o provide financial aBsist ane by means of annual debt service
grmnts. Tb now grant program i s t o he need t o reduce t he borro~er•s
annual debt service payments on pr i vat e market l oan5 t o the average,
annual debt service that woul d h~ve ooen required if the loan
"
�26
based on the rate charge~ on loans unner the direct loan program. Annual
grants can be marlA over rt fixed period up to 40 years. The total amount
or annual grant contracts is subject to approval in appropriation acts.
The total ~nount cannot exceed $10 million, with this limit increased
by $10 million on July 1, 1969.
The loan and new grant program are made available for the purchase of
existing propP-rties which are in need of little or no_rehabilitation.
Federal-State traininr prn rrams
The Federal-State training program is 'croadened to permit grants to
States for th e train i ng of ffiibprofe~sional (heretofore limit ed to
professional) persons who will be employed in the field of hot,sing
as well as communit y develor ment. The trainees may be trained for
employment by _private nonprofit organizations which have responsibility
for h0t:sins and comrm.:n:i.ty development rrograms, in addition to public
organizations. Guam, Air,eri can Samoa, and the Tr: st Te rritory of the
Pacific Islands are made eligible for f,rants under the program.
Additional Assistant Secretary ol' Housing and l rban Development
·An additional Assistant Secretary of Housing and Urban Development
l.
is authorized.
Self-help Studies
Grants are authorized to be made t.:nder the low-income housing de :r onstration program for studies of self-he lp in the construction, r ehab ilitation,
and maintenance of hocsing for low-income persons and families and the
methods of se l ec tin F, , involving, and directing them in self-help activiti es .
Tbe Secretary of HUD is required to r eport to C~neress within one year
on the results of any scch studies.
Saving& nnd loan as socj ations
Federal sa vings and l oan as sociations are autrorized to raise carital
in the form oi savings deposits or oth er accounts (in addition to shares)
and to borrow and isst;e bonds or other obligations.
Their lending and ~nve s tment powers are liberalized and br oadened by
authori~ine them to invest in 1. time deposits, certificate s or accounts in banks insured by
the FDIC;
2. unsecured loan s r.o l. exceeding f5, 000 to finance the cons t nction
of new structure s relating to resid ential use (vacation homes);
J. mobile home financin g ;
h. loans not exceetjing ~s,ooo for th e equipping of homes;
S. loans gu aranteed by AID on housine projects locate d in
developing co untries outside o f Latin American; and
�•
l
27
/). lc:,a !l~: Lo i•'eci e l';J lly s Ll r e rvi S C'd 1'i nai 'r, i;.i 1 in ~, t. i. tl J t 101 ,:; or
tr·ok-~1· ~ or [:1-; aler~; rq :i s tt~r,·d ,1i Lh Lhe SEC, i '. ' Ll 1E: l oa ns
arc secured ·l:y loa ns, ol ,lit'.atiuns or invcst.m 0. nk-; iri which
the fode1·al a:;soc i:ition ha s c: tatu tory a11 tr.ority to inv~s L d ir ~c :.ly.
reocral Porne Loan 71 a nk Act
Federal home loan banks are authorized to invf:st in ho1 ·sinr: rro _je ct
loans huarante ed 1,nut~r Lhe Foreign Assistance Act or 19(;1.
Section 2L of the . [,'edc r a l f-icservc act is amenc.lc cl to allt~1cy,~-~~--,; s>,n._:',.lru~tion loans by nat1onal banks 1:r to J rn ont,h.- 1n lr.rwth ·,,se:r1 C"Ji.:0fy r':!--1'.--1111 t.eci
to 211 rr.onths) as an exce ption to t he limitation on r ~al cs t at.e loai1s .
National f.ai1ks are pc: rmi tt c d to continue to ru r chase part.ici ra t ions in
existirw mort~'.agcs, .:md it is mat:c c l ear t hat loans by nat i. onal h;mks
are not to he consid e r e d as re a l e s tate loans wh ~r c the bnnk looks primarily for rerayrnent ol; t of secc rit y othi:-?r than r e al e state.
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