§ 1747g. — Debentures.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1747g]
TITLE 12--BANKS AND BANKING
CHAPTER 13--NATIONAL HOUSING
SUBCHAPTER VII--INSURANCE FOR INVESTMENTS IN RENTAL HOUSING FOR FAMILIES
OF MODERATE INCOME
Sec. 1747g. Debentures
(a) Acquisition of project by Secretary; issuance of debentures
If the aggregate of the amounts paid to the investor pursuant to
section 1747f of this title with respect to a project insured under this
subchapter shall at any time equal or exceed 15 per centum of the
established investment, the Secretary thereafter shall have the right,
after written notice to the investor of his intentions so to do, to
acquire, as of the first day of any operating year, such project in
consideration of the issuance and delivery to the investor of debentures
having a total face value equal to 90 per centum of the outstanding
investment for such operating year. In any such case the investor shall
be obligated to convey to said Secretary title to the project which
meets the requirements of the rules and regulations of the Secretary in
force at the time the insurance contract was executed and which is
evidenced in the manner prescribed by such rules and regulations, and,
in the event that the investor fails so to do, said Secretary may, at
his option, terminate the insurance contract.
(b) Relinquishment of project by investor
If in any operating year the aggregate of the differences between
the operating expenses (exclusive of any premium charges previously
waived hereunder) and the gross income for the preceding operating
years, less the aggregate of any deficits in such operating expenses
reimbursed from excess earnings as hereinbefore provided, shall at any
time equal or exceed 5 per centum of the established investment, the
investor shall thereafter have the right, after written notice to the
Secretary of his intention so to do, to convey to the Secretary, as of
the first day of any operating year, title to the project which meets
the requirements of the rules and regulations of the Secretary in force
at the time the insurance contract was executed and which is evidenced
in the manner prescribed by such rules and regulations, and to receive
from the Secretary debentures having a total face value equal to 90 per
centum of the outstanding investment for such operating year.
(c) Adjustment of difference between outstanding investment and total
face value of debentures
Any difference, not exceeding $50, between 90 per centum of the
outstanding investment for the operating year in which a project is
acquired by the Secretary pursuant to this section and the total face
value of the debentures to be issued and delivered to the investment
pursuant to this section shall be adjusted by the payment of cash by the
Secretary to the investor from the General Insurance Fund.
(d) Termination of insurance contract by Secretary
Upon the acquisition of a project by the Secretary pursuant to this
section, the insurance contract shall terminate.
(e) Issuance and execution of debentures
Debentures issued under this subchapter to any investor shall be
executed in the name of the General Insurance Fund as obligor, shall be
signed by the Secretary, by either his written or engraved signature,
and shall be negotiable. Such debentures shall be dated as of the first
day of the operating year in which the project for which such debentures
were issued was acquired by the Secretary, shall bear interest at a rate
to be determined by the Secretary, with the approval of the Secretary of
the Treasury, at the time the insurance contract was executed, but not
to exceed 2\3/4\ per centum per annum, payable semiannually on the 1st
day of January and the 1st day of July of each year, and shall mature on
the 1st day of July in such calendar year or years, not later than the
fortieth following the date of the issuance thereof, as shall be
determined by the Secretary and stated on the face of such debentures.
(f) Terms and conditions of debentures
Such debentures shall be in such form and in such denominations in
multiples of $50, shall be subject to such terms and conditions, and may
include such provisions of redemption as shall be prescribed by the
Secretary, with the approval of the Secretary of the Treasury, and may
be issued in either coupon or registered form.
(g) Exemption from taxation; exceptions; guaranty
Such debentures shall be exempt, both as to principal and interest,
from all taxation (except surtaxes, estate, inheritance, and gift taxes)
now or hereafter imposed by any Territory, dependency, or possession of
the United States, or by the District of Columbia, or by any State,
county, municipality, or local taxing authority, shall be payable out of
the General Insurance Fund, which shall be primarily liable therefor,
and shall be fully and unconditionally guaranteed, as to both the
principal thereof and the interest thereon, by the United States, and
such guaranty shall be expressed on the face thereof. In the event that
the General Insurance Fund fails to pay upon demand, when due, the
principal of or the interest on any debentures so guaranteed, the
Secretary of the Treasury shall pay to the holders the amount thereof,
which is authorized to be appropriated, out of any money in the Treasury
not otherwise appropriated, and thereupon, to the extent of the amount
so paid, the Secretary of the Treasury shall succeed to all the rights
of the holders of such debentures.
(h) Payment of expenses and charges; collection of claims
Notwithstanding any other provisions of law relating to the
acquisition, handling, or disposal of real and other property by the
United States, the Secretary shall have power, for the protection of the
General Insurance Fund, to pay out of said Fund all expenses or charges
in connection with, and to deal with, complete, reconstruct, rent,
renovate, modernize, insure, make contracts for the management of, or
establish suitable agencies for the management of, or sell for cash or
credit or lease in his discretion, in whole or in part, any project
acquired pursuant to this subchapter; and, notwithstanding any other
provisions of law, the Secretary shall also have power to pursue to
final collection by way of compromise or otherwise all claims acquired
by, or assigned or transferred to, him in connection with the
acquisition or disposal of any project pursuant to this subchapter:
Provided, That section 5 of title 41 shall not be construed to apply to
any contract for hazard insurance, or to any purchase or contract for
services or supplies on account of any project acquired pursuant to this
subchapter if the amount of such purchase or contract does not exceed
$1,000.
(June 27, 1934, ch. 847, title VII, Sec. 708, as added Aug. 10, 1948,
ch. 832, title IV, Sec. 401, 62 Stat. 1278; amended Apr. 20, 1950, ch.
94, title I, Sec. 122, 64 Stat. 59; Pub. L. 89-117, title XI,
Sec. 1108(t), Aug. 10, 1965, 79 Stat. 506; Pub. L. 90-19, Sec. 1(a)(3),
May 25, 1967, 81 Stat. 17.)
References in Text
The General Insurance Fund, referred to in text, was established by
section 1735c of this title.
Amendments
1967--Subsecs. (a) to (f), (h). Pub. L. 90-19 substituted
``Secretary'' for ``Commissioner'' wherever appearing.
1965--Subsecs. (c), (e), (g), (h). Pub. L. 89-117 substituted
``General Insurance Fund'' for ``Housing Investment Insurance Fund''
wherever appearing.
1950--Act Apr. 20, 1950, substituted ``Commissioner'' for
``Administrator'' wherever appearing.
Section Referred to in Other Sections
This section is referred to in sections 1747f, 1747h of this title.
