§ 1744. — Insurance of loans for manufacture of houses.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1744]
TITLE 12--BANKS AND BANKING
CHAPTER 13--NATIONAL HOUSING
SUBCHAPTER VI--WAR HOUSING INSURANCE
Sec. 1744. Insurance of loans for manufacture of houses
(a) Relief of housing shortage; advances
In order to assist in relieving the acute shortage of housing which
now exists and to promote the production of housing for veterans of
World War II at moderate prices or rentals within their reasonable
ability to pay, through the application of modern industrial processes,
the Secretary is authorized to insure loans to finance the manufacture
of housing (including advances on such loans) when such loans are
eligible for insurance as hereinafter provided.
(b) Eligibility requirements
Loans for the manufacture of houses shall be eligible for insurance
under this section if at the time of such insurance, the Secretary
determines they meet the following conditions:
(1) The manufacturer shall establish that binding purchase
contracts have been executed satisfactory to the Secretary providing
for the purchase and delivery of the houses to be manufactured,
which contracts shall provide for the payment of the purchase price
at such time as may be agreed to by the parties thereto, but, in no
event, shall the purchase price be payable on a date in excess of
thirty days after the date of delivery of such houses, unless not
less than 20 per centum of such purchase price is paid on or before
the date of delivery and the lender has accepted and discounted or
has agreed to accept and discount, pursuant to subsection (i) of
this section a promissory note or notes, executed by the purchaser,
representing the unpaid portion of such purchase price, in which
event such unpaid portion of the purchase price may be payable on a
date not in excess of one hundred and eighty days from the date of
delivery of such houses;
(2) Such houses to be manufactured shall meet such requirements
of sound quality, durability, livability, and safety as may be
prescribed by the Secretary;
(3) The borrower shall establish to the satisfaction of the
Secretary that he has or will have adequate plant facilities,
sufficient capital funds, taking into account the loan applied for,
and the experience necessary, to achieve the required production
schedule;
(4) The loan shall involve a principal obligation in an amount
not to exceed 90 per centum of the amount which the Secretary
estimates will be the necessary current cost, exclusive of profit,
of manufacturing the houses, which are the subject of such purchase
contracts assigned to secure the loan, less any sums paid by the
purchaser under said purchase contracts prior to the assignment
thereof. The loan shall be secured by an assignment of the aforesaid
purchase contracts and of all sums payable thereunder on or after
the date of such assignment, with the right in the assignee to
proceed against such security in case of default as provided in the
assignment, which assignment shall be in such form and contain such
terms and conditions, as may be prescribed by the Secretary; and the
Secretary may require such other agreements and undertakings to
further secure the loan as he may determine, including the right, in
case of default or at any time necessary to protect the lender, to
compel delivery to the lender of any houses then owned and in the
possession of the borrower. The loan shall have a maturity not in
excess of one year from the date of the note, except that any such
loan may be refinanced and extended in accordance with such terms
and conditions as the Secretary may prescribe for an additional term
not to exceed one year, and shall bear interest (exclusive of
premium charges for insurance) at not to exceed 4 per centum per
annum on the amount of the principal obligation outstanding at any
time.
(c) Release of security
The Secretary may consent to the release of a part or parts of the
property assigned or delivered as security for the loan, upon such terms
and conditions as he may prescribe and the security documents may
provide for such release.
(d) Payments; default; insurance benefits for mortgagee; prerequisites;
value of mortgage
The failure of the borrower to make any payment due under or
provided to be paid by the terms of a loan under this section, or the
failure to perform any other covenant or obligation contained in any
assignment, agreement, or undertaking executed by the borrower in
connection with such loan, shall be considered as a default under this
section, and if such default continues for a period of thirty days, the
lender shall be entitled to receive the benefits of the insurance
hereinafter provided upon assignment, transfer, and delivery to the
Secretary within a period and in accordance with the rules and
regulations prescribed by the Secretary of (1) all rights and interest
arising with respect to the loan so in default; (2) all claims of the
lender against the borrower or others arising out of the loan
transaction; (3) any cash or property held by the lender, or to which it
is entitled, as deposits made for the account of the borrower and which
have not been applied in reduction of the principal of the loan; and (4)
all records, documents, books, papers, and accounts relating to the loan
transaction. Upon such assignment, transfer, and delivery, the Secretary
shall, subject to the cash adjustment provided for in section 1739(c) of
this title, issue to the lender debentures having a face value equal to
the unpaid principal balance of the loan.
(e) Debentures; date of issuance; interest
Debentures issued under this section shall be issued in accordance
with the provisions of section 1739(d) of this title except that such
debentures shall be dated as of the date of default as determined in
subsection (d) of this section and shall bear interest from such date.
(f) Applicability of other provisions
The provisions of sections 1713(k) and 1738(a) of this title shall
be applicable to loans insured under this section, except that as
applied to such loans (1) the reference in section 1713(k) of this title
to ``subsection (g)'' shall be construed to refer to ``subsection (d)''
of this section; (2) the references in section 1713(k) of this title to
insured mortgages shall be construed to refer to the assignment or other
security for loans insured under this section; and (3) the references in
section 1738(a) of this title to a mortgage or mortgages shall be
construed to include a loan or loans under this section. The provisions
of section 1738(d) of this title shall also be applicable to loans
insured under this section and the reference in section 1738(d) of this
title to a mortgage shall be construed to include a loan or loans with
respect to which a contract of insurance is issued pursuant to this
section.
(g) Disposal of evidence of debt, contract, claim, personal property, or
security; collection or compromise of obligations and rights
Notwithstanding any other provision of law, the Secretary shall have
the power to assign or sell at public or private sale, or otherwise
dispose of, any evidence of debt, contract, claim, personal property, or
security assigned to or held by him in connection with the payment of
insurance heretofore or hereafter granted under this section, and to
collect or compromise all obligations assigned to or held by him and all
legal or equitable rights accruing to him in connection with the payment
of such insurance until such time as such obligations may be referred to
the Attorney General for suit or collection.
(h) Premium charges; amount; manner of payment; application fees
The Secretary shall fix a premium charge for the insurance granted
under this section, but such premium charge shall not exceed an amount
equivalent to 1 per centum of the original principal of such loan, and
such premium charge shall be payable in advance by the financial
institution and shall be paid at such time and in such manner as may be
prescribed by the Secretary. In addition to the premium charge herein
provided for, the Secretary is authorized to charge and collect such
amounts as he may deem reasonable for examining and processing
applications for the insurance of loans under this section, including
such additional inspections as the Secretary may deem necessary.
(i) Insurance for accepting and discounting promissory notes; contract
provisions; default in payments; remedies; debentures; interest;
premium charges
(1) In addition to the insurance of the principal loan to finance
the manufacture of housing, as provided in this section, and in order to
provide short-term financing in the sale of houses to be delivered
pursuant to the purchase contract or contracts assigned as security for
such principal loan, the Secretary is authorized, under such terms and
conditions and subject to such limitations as he may prescribe, to
insure the lender against any losses it may sustain resulting from the
acceptance and discount of a promissory note or notes executed by a
purchaser of any such houses representing an unpaid portion of the
purchase price of any such houses. No such promissory note or notes
accepted and discounted by the lender pursuant to this subsection shall
involve a principal obligation in excess of 80 per centum of the
purchase price of the manufactured house or houses; have a maturity in
excess of one hundred and eighty days from the date of the note or bear
interest in excess of 4 per centum per annum; nor may the principal
amount of such promissory notes, with respect to any individual
principal loan, outstanding and unpaid at any one time, exceed in the
aggregate an amount prescribed by the Secretary.
(2) The Secretary is authorized to include in any contract of
insurance executed by him with respect to the insurance of a loan to
finance the manufacture of houses, provisions to effectuate the
insurance against any such losses under this subsection.
(3) The failure of the purchaser to make any payment due under or
provided to be paid by the terms of any note or notes executed by the
purchaser and accepted and discounted by the lender under the provisions
of this subsection, shall be considered as a default under this
subsection, and if such default continues for a period of thirty days,
the lender shall be entitled to receive the benefits of the insurance,
as provided in subsection (d) of this section except that debentures
issued pursuant to this subsection shall have a face value equal to the
unpaid principal balance of the loan plus interest at the rate of 4 per
centum per annum from the date of default to the date the application is
filed for the insurance benefits.
(4) Debentures issued with respect to the insurance granted under
this subsection shall be issued in accordance with the provisions of
section 1739(d) of this title except that such debentures shall be dated
as of the date application is filed for the insurance benefits and shall
bear interest from such date.
(5) The Secretary is authorized to fix a premium charge for the
insurance granted under this subsection, in addition to the premium
charge authorized under subsection (h) of this section. Such premium
charge shall not exceed an amount equivalent to 1 per centum of the
original principal of such promissory note or notes and shall be paid at
such time and in such manner as may be prescribed by the Secretary.
(June 27, 1934, ch. 847, title VI, Sec. 609, as added June 30, 1947, ch.
163, title I, Sec. 3, 61 Stat. 193; amended Aug. 10, 1948, ch. 832,
title I, Sec. 101(d), 62 Stat. 1269; Apr. 20, 1950, ch. 94, title I,
Sec. 122, 64 Stat. 59; Pub. L. 89-117, title XI, Sec. 1108(r), Aug. 10,
1965, 79 Stat. 506; Pub. L. 90-19, Sec. 1(a)(3), May 25, 1967, 81 Stat.
17.)
Amendments
1967--Pub. L. 90-19 substituted ``Secretary'' for ``Commissioner''
wherever appearing in subsecs. (a), (b), (b)(1) to (4), (c), (d), (g),
(h), and (i)(1), (2), (5).
1965--Subsec. (f). Pub. L. 89-117, struck out cl. (1) of the first
sentence which provided that all references in section 1713(k) of this
title to the ``Housing Fund'' shall be construed to refer to the ``War
Housing Insurance Fund'' and redesignated cls. (2), (3), and (4) thereof
as cls. (1), (2), and (3), respectively.
1950--Act Apr. 20, 1950, substituted ``Commissioner'' for
``Administrator'' wherever appearing.
1948--Subsec. (b). Act Aug. 10, 1948, Sec. 101(d)(1), (2), struck
out par. (1) and inserted new par. (1), and struck out first two
sentences of par. (4) and inserted two new sentences.
Subsec. (f). Act Aug. 10, 1948, Sec. 101(d)(3), inserted last
sentence.
Subsec. (i). Act Aug. 10, 1948, Sec. 101(d)(4), added subsec. (i).
Section Referred to in Other Sections
This section is referred to in section 1738 of this title; title 5
sections 551, 701.
