§ 1750b. — Insurance in critical areas.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 12USC1750b]
TITLE 12--BANKS AND BANKING
CHAPTER 13--NATIONAL HOUSING
SUBCHAPTER X--NATIONAL DEFENSE HOUSING INSURANCE
Sec. 1750b. Insurance in critical areas
(a) Limitations; termination of certain commitments; requirements;
discrimination against children
This subchapter is designed to supplement systems of mortgage
insurance under other provisions of this chapter in order to assist in
providing adequate housing in areas which the President, pursuant to
section 1591 of title 42, shall have determined to be critical defense
housing areas. The Secretary is authorized, upon application by the
mortgagee, to insure under this section or section 1750g of this title
as hereinafter provided any mortgage which is eligible for insurance as
hereinafter provided and upon such terms as the Secretary may prescribe
to make commitments for the insuring of such mortgages prior to the date
of their execution or disbursement thereon: Provided, That the property
covered by the mortgage is in an area which the President, pursuant to
section 1591 of title 42, shall have determined to be a critical defense
housing area, and that the total number of dwelling units in properties
covered by mortgages insured under this subchapter in any such area does
not exceed the number authorized by the Secretary of Housing and Urban
Development from time to time as needed in such area for defense
purposes and to be insured pursuant to this subchapter: Provided
further, That in the event the Secretary has issued a commitment to
insure a mortgage under this section, which commitment was in force and
effect on June 1, 1953, and the Secretary determines that, because of
changes in defense requirements, there is reasonable doubt that such
housing is needed for defense purposes and that it is probable that the
mortgage would become immediately in default and claim made for payment
under the mortgage insurance contract if the unit or units are completed
and the mortgage insured, the Secretary is authorized, in the interest
of conserving the General Insurance Fund, to pay (in cash from the
General Insurance Fund) to the mortgagee for the account of the
mortgagor such amount as the Secretary shall determine to be necessary
to reimburse the mortgagor the amounts paid or to be paid by the
mortgagor on account of labor performed and materials in place, less the
Secretary's estimate of the reasonable salvage value of such materials,
plus an allowance for development costs equal to 4 per centum of the
principal amount of the mortgage specified in such commitment, and no
payments shall be made pursuant to this proviso unless a claim therefor
is filed not later than six months from date of the determination of
lack of need and the claim is in such form and contains such supporting
information, documents, and data as the Secretary may require: Provided
further, That the aggregate amount of principal obligations of all
mortgages insured under this subchapter shall not exceed such sum as may
be authorized by the President from time to time for the purposes of
this subchapter pursuant to his authority under section 1715h \1\ of
this title: Provided further, That the Secretary shall have power to
require properties covered by mortgages insured under this subchapter to
be held for rental for such periods of time and at such rentals or other
charges as he may prescribe; and, with respect to such properties being
held for rental, (1) to require that the property be held by a mortgagor
approved by him, and (2) to prescribe such requirements as he deems to
be reasonable governing the method of operation and prohibiting or
restricting sales of such properties or interests therein or agreements
relating to such sales: Provided further, That the Secretary shall
require each dwelling covered by a mortgage insured under this section,
for which a commitment to insure is issued after August 2, 1954, to be
held for rental for a period of not less than three years after the
dwelling is made available for initial occupancy: And provided further,
That no mortgage shall be insured under this subchapter unless the
mortgagor certifies under oath that in selecting tenants for any
property covered by the mortgage he will not discriminate against any
family by reason of the fact that there are children in the family, and
that he will not sell the property while the insurance is in effect
unless the purchaser so certifies, such certification to be filed with
the Secretary. Violation of any such certification shall be a
misdemeanor punishable by a fine of not to exceed $500.
---------------------------------------------------------------------------
\1\ See References in Text note below.
---------------------------------------------------------------------------
(b) Eligibility requirements
To be eligible for insurance under this section a mortgage shall--
(1) have been made to, and be held by, a mortgagee approved by
the Secretary as responsible and able to service the mortgage
properly;
(2) involve a principal obligation (including such initial
service charges, appraisal, inspection, and other fees as the
Secretary shall approve) in an amount not to exceed 90 per centum of
the appraised value (as of the date the mortgage is accepted for
insurance) of a property, urban, suburban, or rural, upon which
there is located a dwelling designed principally for residential use
for not more than two families in the aggregate, which is approved
for mortgage insurance prior to the beginning of construction, the
construction of which is begun after September 1, 1951. The
principal obligation of such mortgage shall not, however, exceed
$8,100 if such dwelling is designed for a single-family residence,
or $15,000 if such dwelling is designed for a two-family residence
except that the Secretary may by regulation increase these amounts
to not to exceed $9,000 and $16,000, respectively, in any
geographical area where he finds that cost levels so require:
Provided, That if the Secretary finds that it is not feasible within
the aforesaid dollar amount limitations to construct dwellings
containing three or four bedrooms per family unit without sacrifice
of sound standards of construction, design, and livability, he may
increase such dollar amount limitations by not exceeding $1,080 for
each additional bedroom (as defined by the Secretary) in excess of
two contained in such family unit if he finds that such unit meets
sound standards of livability as a three-bedroom or a four-bedroom
unit as the case may be;
(3) have a maturity satisfactory to the Secretary but not to
exceed thirty years from the date of the insurance of the mortgage;
(4) contain complete amortization provisions satisfactory to the
Secretary;
(5) bear interest (exclusive of premium charges for insurance)
at not to exceed 4\1/2\ per centum per annum on the amount of the
principal obligation outstanding at any time;
(6) provide, in a manner satisfactory to the Secretary, for the
application of the mortgagor's periodic payments (exclusive of the
amount allocated to interest and to the premium charge which is
required for mortgage insurance as herein provided) to amortization
of the principal of the mortgage; and
(7) contain such terms and provisions with respect to insurance,
repairs, alterations, payment of taxes, default reserves,
delinquency charges, foreclosure proceedings, anticipation of
maturity, additional and secondary liens, and other matters as the
Secretary may in his discretion prescribe.
(c) Premium charges; payments; needs of national defense as
prerequisite; adjustments and refunds
The Secretary is authorized to fix a premium charge for the
insurance of mortgages under this subchapter but in the case of any
mortgage such charge shall not be less than an amount equivalent to one-
half of 1 per centum per annum nor more than an amount equivalent to
1\1/2\ per centum per annum of the amount of the principal obligation of
the mortgage outstanding at any time, without taking into account
delinquent payments or prepayments. Such premium charges shall be
payable by the mortgagee, either in cash or in debentures issued by the
Secretary under this subchapter at par plus accrued interest, in such
manner as may be prescribed by the Secretary: Provided, That the
Secretary may require the payment of one or more such premium charges at
the time the mortgage is insured, at such discount rate as he may
prescribe not in excess of the interest rate specified in the mortgage.
If the Secretary finds upon the presentation of a mortgage for insurance
and the tender of the initial premium charge or charges so required that
the mortgage complies with the provisions of this subchapter, such
mortgage may be accepted for insurance by endorsement or otherwise as
the Secretary may prescribe; but no mortgage shall be accepted for
insurance under this subchapter unless the Secretary finds that
the project with respect to which the mortgage is executed is an
acceptable risk in view of the needs of national defense. In the event
that the principal obligation of any mortgage accepted for insurance
under this subchapter is paid in full prior to the maturity date, the
Secretary is further authorized in his discretion to require the payment
by the mortgagee of an adjusted premium charge in such amount as the
Secretary determines to be equitable, but not in excess of the aggregate
amount of the premium charges that the mortgagee would otherwise have
been required to pay if the mortgage has continued to be insured under
this subchapter until such maturity date; and in the event that the
principal obligation is paid in full as herein set forth the Secretary
is authorized to refund to the mortgagee for the account of the
mortgagor all, or such portion as he shall determine to be equitable, of
the current unearned premium charges theretofore paid. Upon application
of the mortgagee with the consent of the mortgagor of a mortgage for
which a commitment to insure has been issued pursuant to section 1709 of
this title covering property on which the construction of the dwellings
thereon was begun prior to the enactment of this subchapter and the
determination of prevailing wages in the locality in accordance with
section 1715c of this title, the Secretary is authorized,
notwithstanding such beginning of construction, to convert such
commitment to a commitment under section 1750g of this title; any
charges or fees paid to the Secretary with respect to such insurance
under section 1709 of this title shall be credited to charges or fees
due the Secretary with respect to such insurance under section 1750g of
this title; and the determination of prevailing wages in the locality
for purposes of section 1715c of this title may be made by the Secretary
of Labor at any time prior to the insurance under section 1750g of this
title: Provided, That such mortgage, or the mortgage covering the same
property executed in substitution therefor, is otherwise eligible for
insurance under section 1750g of this title.
(d) Preference or priority in purchasing or renting properties
Notwithstanding any other provisions of this chapter or any other
Act, except provisions of law enacted hereafter expressly referring to
this subsection (d), the Secretary is further authorized to prescribe
such procedures as are necessary to secure to persons engaged or to be
engaged in national defense activities preference or priority of
opportunity to purchase or rent properties, or interests therein,
covered by mortgages insured under this subchapter.
(e) Conclusiveness of insurance contract as to eligibility
Any contract of insurance heretofore or hereafter executed by the
Secretary under this subchapter shall be conclusive evidence of the
eligibility of the mortgage for insurance, and the validity of any
contract of insurance so executed shall be incontestable in the hands of
an approved mortgagee from the date of the execution of such contract,
except for fraud or misrepresentation on the part of such approved
mortgagee.
(June 27, 1934, ch. 847, title IX, Sec. 903, as added Sept. 1, 1951, ch.
378, title II, Sec. 201, 65 Stat. 296; amended July 14, 1952, ch. 723,
Sec. 13, 66 Stat. 604; June 30, 1953, ch. 170, Sec. 11, 67 Stat. 124;
Aug. 2, 1954, ch. 649, title I, Sec. 128(b), 68 Stat. 609; Pub. L. 89-
117, title XI, Sec. 1108(x), Aug. 10, 1965, 79 Stat. 507; Pub. L. 90-19,
Sec. 1(a)(3), (4), (s), (t), May 25, 1967, 81 Stat. 17, 19.)
References in Text
The General Insurance Fund, referred to in text, was established by
section 1735c of this title.
Section 1715h of this title, referred to in subsec. (a), was
repealed by Pub. L. 100-242, title IV, Sec. 401(a)(1), Feb. 5, 1988, 101
Stat. 1898.
Amendments
1967--Pub. L. 90-19, Sec. 1(a)(3), substituted ``Secretary'' for
``Commissioner'' wherever appearing in subsecs. (a), (b)(1) to (4), (6),
(7), and (c) to (e).
Subsec. (a). Pub. L. 90-19, Sec. 1(a)(4), (s), substituted
``Secretary's'' and ``Secretary of Housing and Home Development'' for
``Commissioner's'' and ``Housing and Home Finance Administrator'',
respectively.
Subsec. (d). Pub. L. 90-19, Sec. 1(t), struck out ``, with the
approval of the Housing and Home Finance Administrator,'' before ``is
further authorized''.
1965--Subsec. (a). Pub. L. 89-117 substituted ``General Insurance
Fund'' for ``National Defense Housing Insurance Fund''.
1954--Subsec. (a). Act Aug. 2, 1954, inserted proviso relating to
requirement for rental for a period of not less than three years after
dwelling is made available for initial occupancy.
1953--Subsec. (a). Act June 30, 1953, inserted proviso commencing
``Provided further, That in the event''.
1952--Subsec. (c). Act July 14, 1952, inserted last sentence.
Section Referred to in Other Sections
This section is referred to in sections 1715q, 1750c, 1750g of this
title.
