Public Law 90-448 - Housing and Urban Development Act of 1968

476

PUBLIC LAW 90-448-AUG. 1, 1968

[82

STAT.

Public Law 90-448
August 1,1968
[S.3497]

Housing and
Urban Developmv.it Act of 1968.

AN A C T
To assist in the provision of housing for low and m o d e r a t e income families, and
to extend and amend l a w s relating to housing and u r b a n development.

Be It enacted hy the JSetiate and House of I?eprexentafhe.S' of the
I'n'tted States of America hi ('Ongress ansenihJed. That this Act may
be cited as the ""Housing and Urban Development Act of 1908''.
DECLAKATION OF POLICY

63 Stat. 4 1 3 .
42 u s e 1441.

SEC. 2. The (^ongress affirms the national goal, as set forth in section 2 of the Housing Act of 1949, of "a decent home and a suitable
living environment for every American family".
The Congress finds that this goal has not been fully realized for
many of the Nation's lower income families; that this is a matter of
grave national concern; and that there exist in the public and private
sectors of the economy the resources and capabilities necessary to the
full realization of this goal.
The Congress declares that in the administration of those housing
programs authorized by this Act which are designed to assist families
with incomes so low that they could not otherwise decently house themselves, and of other Government programs designed to assist in the
provision of housing for such families, the highest priority and
emphasis should be given to meeting the housing needs of those families for which the national goal has not become a reality; and in the
carrying out of such programs there should be the fullest practicable
utilization of the resources and capabilities of private enteri)rise and
of individual self-help techniques.
JOBS I N H O U S I N G ; E M P L O Y M E N T O P P O R T U N I T I E S FOR LOWER I N C O M E P E R SONS I N CONNE Cr r iON W I T H ASSISIT.D P R O J E C T S

Post, pp. 477,
498.
75 Stat. 150.
12 u s e 1715^.
50 Stat. 888.
42 u s e 1430.
79 Stat. 4 5 1 .
12 u s e 1749aa
note.

V

SEC. 3. I n the administration of the programs authorized by sections 235 and 236 of the National Housing Act, the below-market
interest rate program under section 221(d) (3) of such Act, the lowrent public housing program under the United States Housing Act
of 1937, and the rent supplement program under section 101 of the
Housing and Urban Development Act of 1965, the Secretary of Housing and LTrban Development shall—
(1) require, in consultation with the Secretary of Labor, that
to the greatest extent feasible opportunities for training and
employment arising in connection with the planning, construction, rehabilitation, and operation of housing assisted under such
programs be given to lower income persons residing in the area
of such housing; and
(2) require, in consultation with the Administrator of the
Small Business Administration, that to the greatest extent feasible contracts for work to be performed pursuant to such programs
shall, where appropriate, be awarded to business concerns, including but not limited to individuals or firms doing business in the
fields of design, architecture, building construction, rehabilitation, maintenance, or repair, located in or owned in substantial
part by persons residing in the area of such housing.

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

477

IMPROVED A R C H I T E C T U R A L DESIGN I N GOVERNMENT ITOUSIN(} PROGRAMS

SEC, 4. The Congress finds tliat Federal aids to housing liave not
(•ontribiited fully to improvement in architectural standards. This
objective has been contemplated in Federal housing legislation since
the establishment of mortgage insurance through tlie Federal Housing Administration,
The Congress commends the Department of Housing and Urban
Development for its recent efforts to impix)ve architectural standards
through competitive design awards and in otlier ways but at the same
time recogiiizes that this important objective requires high priority if
Federal aid is to make its full connnunitywide contribution toward
improving our urban environment.
The Congress further finds that even within the necessary budget
limitations on housing for low and moderate income families architectural design could be improved not only to make the housing more
attractive, but to make it better suited to the needs of occupants.
The Congress declares that in the administration of housing programs which assist in the provision of housing for IOAV and moderate
nicome families, emphasis should be given to encouraging good design
as an essential component of such housing and to developing housing
which will be of such quality as to reflect its important relationship to
the architectural standards of the neighborhood and community in
which it is situated, consistent with prudent budgeting.
A N N U A L REPORT ON AREAS OK PRCKJRAM A D M I N I S T R A T I O N
M A N A G E M E N T W H I C H REQUIRE I M P R O V E M E N T

AND

SEC, 5. The Secretary shall, as early as practicable in the calendar Rep°" \° conyear 1969 and in the calendar year 19 rO, make a report to the mittees.
respective Committees on Banking and Currency of the House of
Kei)resentatives and the Senate identifying specific areas of program
administration and management which require improvement,
describing actions taken and proposed for the purpose of making such
improvements, and recommending such legislation as may be necessary to accomplish such improvements. Each such report shall include,
but not be limited to, the following areas of program administration
and management: uniformity antl standardization in program requirements, simplification of program procedures, ways and means
of expediting consideration of proposed projects and applications for
assistance, the provision of more useful and specific assistance to communities, organizations and individuals seeking to utilize the Department's programs, and ways and means of combining or otherwise
ada})ting the Department's programs to increase their usefulness in
meeting the individual needs of applicants.
T I T L E I — L O W E R INCOME H O U S I N G
H O M E O W N E R S H I P FOR LOWER I N C O M E

FAMILIES

SEC, 101. (a) Title I I of the National Housing Act is amended by \ 52 stat. 9.
adding at the end thereof the following: new section:
xl^,^^^ ^^°^'
'15y.

J I O M E O W N E R S H I P FOR LOWER I N C O M E

FAMILIES

"SEC. 235. (a) For the purpose of assisting lower income families in
acquiring homeownership or in acquiring membership in a cooperative
association operating a housing project, the Secretary is authorized
to make, and to contract to make, periodic assistance payments on behalf of such homeowners and cooperative members. The assistance shall

;
i
/
'

478

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

I be accomplished through payments to moitgagees holding mortgages
meeting the special requirements specified in this section.
" ( b ) To qualify for assistance payments, the homeowner or the
cooperative member shall be of lower income and satisfy eligibility
requirements prescribed by the Secretary, and—
"(1) the homeowner shall be a mortgagor under a mortgage
which meets the requirements of and is insured under subsection
(i) or (j)(4) of this section: Provided, That a mortgage meeting
the requirements of subsection (i) (3) (A) of this section but
Post, p . 485.
insured under section 237 may qualify for assistance payments if
such mortgage was executed by a mortgagor who is determined
not to be an acceptable credit risk for mortgage insurance purposes (but otherwise eligible) under subsection ( j ) ( 4 ) of this
Ts^star^e^o^^'
section or under section 221(d) (2) or 234(c) and accepted as a
12 use 1715^,
reasonably satisfactory credit risk under section 237; or
^7i5y.
"(2) the cooperative association of which the family is a member shall operate a housing project the construction or substantial
rehabilitation of which has been financed with a mortgage insured
12 u^c nise.
under section 213 and which has been completed within two years
prior to the filing of the application for assistance payments and
the dwelling unit has had no previous occupant other than the
,/
I f'^imi\y[]Proolded, That if the initial cooperative member receiv(y^^'^'
I ing assistance payments transfers his membership and occupancy
•' I A \
I rights to another person who satisfies the eligibility requirements
,.. \ ^ ^
\ prescribed by the Secretary, such new cooperative member may
\
I qualify for assistance payments upon the filing of an application
L with respect to the dwelling unit involved to be occupied by himT]
Provided further. That assistance payments may be made witlii
respect to a dwelling unit in an existing cooperative project
which meets such standards as the Secretary may prescribe, if
the family qualifies as a displaced family as defined in section
80^8131^*13^1^7^'
^21 (f), or a family which includes five or more minor persons,
or a family occupying low-rent public housing: Provided further.
That the amount of the mortgage attributable to the dwelling unit
shall involve a principal obligation not in excess of $15,000
($17,500 in any geographical area where the Secretary authorizes
an increase on the basis of a finding that cost levels so require),
except that with respect to any family with five or more persons
the foregoing limits shall be $17,500 and $20,000, respectively.
"(c) The assistance payments to a mortgagee by the Secretary on
behalf of a mortgagor shall be made during such time as the mortgagor
shall continue to occupy the property which secures the mortgage:
Provided, That assistance payments may be made on behalf of a
homeowner who assumes a mortgage insured under subsection (j) (4)
with respect to which assistance payments have been made on behalf
of the previous owner, if the homeowner is approved by the Secretary
as eligible for receiving such assistance. The payment shall be in an
amount not exceeding the lesser of—
"(1) the balance of the monthly payment for principal, interest, taxes, insurance, and mortgage insurance premium due under
the mortgage remaining unpaid after applying 20 per centum of
the mortgagor's income; or
"(2) the difference between the amount of the monthly payment for principal, interest, and mortgage insurance premium
which the mortgagor is obligated to pay under the mortgage and
the monthly payment for principal and interest which the mortgagor would be obligated to pay if the mortgage were to bear
interest at the rate of 1 per centum per annum.

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

479

" ( d ) Assistance payments to a mortgagee by the Secretary on behalf of a family holding membership in a cooperative association operating a housing project shall be made only during such time as the
family is an occupant of such project and shall be in amounts computed on the basis of the formula set forth in subsection (c) applying
the cooperative member's proportionate share of the obligations under
the project mortgage to the items specified in the formula.
"(e) The Secretary may include in the payment to the mortgagee
such amount, in addition to the amount computed under subsection
(c), ( d ) , or (j) (7), as he deems appropriate to reimburse the mortgagee for its expenses in handling the mortgage.
"(f) Procedures shall be adopted by the Secretary for recertifications of the mortgagor's (or cooperative member's) income at intervals
of two years (or at shorter intervals where the Secretary deems it
desirable) for the purpose of adjusting the amount of such assistance
payments within the limits of the formula described in subsection (c).
" ( g ) The Secretary shall prescribe such regulations as he deems
necessary to assure that the sales price of, or other consideration paid
in connection with, the purchase by a homeowner of the property with
respect to which assistance payments are to be made is not increased
above the appraised value on which the maximum mortgage which the
Secretary will insure is computed.
" ( h ) (1) There are authorized to be appropriated such sums as may Appropriation.
be necessary to carry out the provisions of this section, including such
sums as may be necessary to make the assistance payments under contracts entered into under this section. The aggregate amount of contracts to make such payments shall not exceed amounts approved in
appropriation Acts, and payments pursuant to such contracts shall
not exceed $75,000,000 per annum prior to July 1, 1969, which maximum dollar amount shall be increased by $100,000,000 on July 1, 1969,
and by $125,000,000 on July 1,1970.
" (2) Not more than 20 per centum of the total amount of assistance
payments authorized to be contracted to be made pui-suant to appropriation Acts shall be contracted to be made on behalf of families
whose incomes at the time of their initial occupancy exceed 135 per
centum of the maximum income limits which can be established in
the area, pursuant to the limitations prescribed in sections 2(2) and
15(7) (b) (ii) of the United States Housing Act of 1987, for initial 79 stat. 457;
occupancy in public housing dAvellings, but the incomes of such fam- ^^42*usc ^1402,
ilies at the time of their initial occupancy shall in no case exceed 90 i4is.
l>er centum of the limits prescribed by the Secretary for occupants of
projects financed with mortgages insured under section 221(d)(3) 75 Stat. 150.
which bear interest at the below-market interest rate prescribed in the 12 u s e 1715^
proviso of section 221(d) (5). The limitations prescribed in this para- 75 Stat. 152;
graph shall be administered by the Secreta-ry so as to accord a prefer- 79 Stat. 454.
ence to those families whose incomes are within the lowest practicable
limits for achieving homeownership with assistance under this section.
The Secretary shall report annually to the respective Committees on Report to conBanking and Currency of the Senate and House of Representatives gressional comwith respect to the income levels of families on behalf of which assist- mittees.
ance payments have been made under this section.
"(3) Notwithstanding the provisions of subsections (b)(2) and
(i) (3) (A) with respect to the prior construction or rehabilitation
of a dwelling, or of the project in which there is a dwelling unit, for
which assistance payments may be made, and notwithstanding the
provisions of subsection ( j ) ( l ) authorizing the purchase of housing which is neither deteriorating nor substandard, not more than—
" ( A ) 25 per centum of the total amount of contracts for as-

480

75*'star\6o^^'
\ 2 use 1715^,
'7'5y.

68 Stat. 599;
80 Stat. 1317.

Post, p. 498.
;9 st^^^-45\-

12 u s e 1701s.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

sistaiice payments authorized by appropriation Acts to be made
prior to July 1, 1969,
" ( B ) 15 per centum of the total additional amount of contracts for assistance payments authorized by appropriation Acts
to be made prior to July 1, 1970, and
"'(C) 10 per centum of the total additional amount of contracts
for assistance i)ayments authorized by appropriations Acts to be
made prior to July 1,1971,
may be nnide with respect to existing dwellings, or dwelling units in
existing projects.
"(i) (1) The Secretary is authorized, upon application by the mortgagee, to insure a mortgage executed by a mortgagor who meets the
eligibility requirements for assistance payments prescribed by the
Secretary under subsection (b). Commitments for the insurance of
such mortgages may be issued by the Secretary prior to the date of
their execution or disbursement thereon, upon such terms and conditions as the Secretary may prescribe.
"(2) To be eligible for insurance under this subsection, a moi-tgage
sball meet the requirements of section 221(d) (2) or 2:M(c), except as
such requirements are modified by this subsection.
"(3) X mortgage to be insured under this subsection shall—
" (A) invol ve a single-family dwelling which has been approved
by the Secretary prior to the beginning of construction or substantial rehabilitation, or a two-family dwelling one of the units
of which is to be occupied by the owner if the dwelling is purchased with the assistance of a nonprofit organization and is
approved by the Secretary prior to the beginning of substantial
rehabilitation, or a one-family unit in a condominium project
(together with an undivided interest in the common areas and
facilities serving the project) which is released from a multifamily project, the construction or substantial rehabilitation of
which has been completed within two years prior to the filing of
the application for assistance payments with respect to such family unit and the unit has had no previous occupant other than the
mortgagor: Provided, That the mortgage may involve an existing
dwelling or a family unit in an existing condominium project
which meets such standards as the Secretary may prescribe, if the
mortgagor qualifies as a displaced family as denned in section
221(f), Or a family which includes five or more minor persons,
^^ ,^ family occupying low-rent public housing: Provided further.
That the mortgage may involve an existing dwelling or a family
unit in an existing condominium project if assistance payments
have been made on behalf of the previous owner of the dwelling
or family unit with respect to a mortgage insured under subsection
( j ) ( 4 ) : Provided further, That the mortgage may involve a
dwelling unit in an existing project covered by a mortgage insured under section 236 or in an existing project receiving the benefits of financial assistance under section 101 of the Housing and
Urban Development Act of 1965;
" ( B ) where it is to cover a one-family unit in a condominium
project, have a principal obligation not exceeding $15,000 ($17,500 in any geographical area wdiere the Secretary authorizes an
increase on the basis of a finding that cost levels so require), except
that with respect to any family wuth five or more persons the
foregoing limits shall be $17,500 and $20,000, respectively; and
" ( C ) l:>e executed by a mortgagor who shall have paid (i) in
the case of any family whose income is not in excess of 135 per
centum of the maximum income limits which can be established

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

481

in the area, pursuant to the limitations prescribed in sections 2(2)
and 15(7) (b) (ii) of the United States Housing Act of 1987, for
Jl^ll%'^'''
initial occupancy in public housing dwellings, at least $200, or
42 use 1402,
(ii) in the case of any other family, at least 3 per centum (or such 1415.
larger amount as the Secretary may require) of the Secretary's
estimate of the cost of acquisition, which amount (in cash or its
equivalent) in either instance may be applied for the payment
of settlement costs and initial payments for taxes, hazard insurance, mortgage insurance premiums, and other prepaid expenses,
" ( j ) (1) I n addition to mortgages insured under the provisions of
subsection ( i ) , the Secretary is authorized, upon application by the
mortgagee, to insure a mortgage (including advances under such
mortgage during rehabilitation) which is executed by a nonprofit organization or public body or agency to finance the purchase of housing,
and the rehabilitation of such housing if it is deteriorating or substandard, for subsequent resale to lower income home purchasers who
meet the eligibility requirements for assistance payments prescribed by
the Secretary under subsection (b). Commitments for the insurance of
such mortgages may be issued by the Secretary prior to the date of
their execution or disbursement thereon, upon such terms and conditions as the Secretary may prescribe.
"(2) To be eligible for insurance under paragraph (1) of this subsection, a mortgage shall—
" (A) be executed by a private nonprofit organization or public
body or agency, approved by the Secretary, for the purpose of
financing the purchase (with the intention of subsequent resale),
and rehabilitation where the housing involved is deteriorating or
substandard, of property comprising one or more tracts or parcels, whether or not contiguous, consisting of (i) four or more
single-family dw^ellings of detached, semidetached, or row construction, or (ii) four or more one-family units in a structure or
structures for w^liich a plan of family unit ownership approved
by the Secretary is established; except that in a case not involving
the rehabilitation of deteriorating or substandard housing the
property purchased may consist of one or more such dwellings
or units ;
" ( B ) be in a principal amount not exceeding the appraised
value of the property at the time of its purchase under the mortgage plus the estimated cost of any rehabilitation;
'•(C) bear interest (exclusive of premium charges for insurance
and service charge, if any) at not to exceed such per centum per
annum (not in excess of 6 per centum), on the amount of the
princij)al obligation outstanding at any time, as the Secretary
finds necessary to meet the mortgage market ;
" ( D ) provide for complete amortization (subject to paragraph ( 4 ) ( E ) ) by periodic payments within such term as the
Secretary may prescribe; and
" ( E ) provide for the release of individual single-family dwellings from the lien of the mortgage upon their sale in accordance
wnth paragraph (4).
"(3) No mortgage shall be insured under paragraph (1) unless the
mortgagor shall have demonstrated to the satisfaction of the Secretary that (A) the property involved is located in a neighborhood
which is sufficiently stable and contains sufficient public facilities and
amenities to support long-term values, or (B) the purchase or rehabilitation of such property plus the mortgagor's related activities and
the activities of other owners of housing in the neighborhood, together
with actions to be taken by public authorities, will be of such scope

482

Definitions.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

and quality as to give reasonable promise that a stable enviroiinieut
will be created in the neighborhood.
"(4) (A) No mortgage shall be insured under paragraph (1) unless the mortgagor enters into an agreement, satisfactory to the Secretary, that it will oft'er to sell the dwellings involved, after purchase
and upon completion of any rehabilitation, to lower income individuals or families meeting the eligibility requirements established by
the Secretary under sul)section ( b ) .
" ( B ) The Secretary is authorized to insure under this paragraph
moi"tgages executed to tinance tlie sale of individual dwellings to lower
income purchasers as provided in subparagraph ( A ) . Any such mortgage shall—
"(i) be in a principal amount not in excess of that ix>rtion of
the unpaid principal balance of the blanket mortgage covering
the property which is allocable to the individual dwelling
involved;
•'(ii) l)ear interest at the same rate as tlie blanket mortgage;
and
"(iii) provide for complete amortization by periodic ]>ayments
within a term equal to the remaining term (determinecl without
regard to subparagraph ( E ) ) of sucli blanket mortgage.
' ' ( C ) The price for which any individual dwelling is sold under this
paragraph shall be in an amount eqvuil to that portion of the unpaid
principal balance of the blanket mortgage covering the property which
is allocable to the dwelling plus such additional amount, not less than
$200 (which may be applied in whole or in part toward closing costs
and may be paid in cash or its equivalent), as the Secretary may
determine to be reasonable.
"'(D) Upon the sale under this paragraph of any individual dwelling, such dwelling shall be released from the lien of the blanket mortgage. I'ntil all of the individual dwellings in the property covered by
the blanket mortgage have been sold, the mortgagor shall hold and
operate the dwellings remaining unsold at any given time, in such
manner and under such terms as the Secretary may prescribe, as
though they constituted rental units.
'"(E) Upon the sale under this paragraph of all the individual
dwellings in the property covered by the blanket mortgage and the
release of all individual dwellings from the lien of the blanket mortgage, the insurance of the blanket mortgage shall be terminated and
no adjusted i)remium charge shall be charged by the Secretary upon
such termination.
"(5) Where the Secretary has approved a plan of family unit ownership the terms 'single-family dwelling-, 'single-family dwellings',
'individual dwelling', and 'individual dwellings" shall mean a family
unit or family units, together with the undivided interest (or interests) in the common areas and facilities.
"(6) For purposes of this subsection, the terms 'single-family
dwelling' and 'single-family dwellings' (except for purj>oses of paragraph (5)) shall include a two-family dwelling which has been
approved by the Secretary if one of the units is to be occupied by the
owner.
"(7) I n addition to the assistance payments authorized under subsection ( b ) , the Secretary may make such payments to a mortgagee on
behalf of a nonprofit organization or public body or agency which is a
mortgagor under the provisions of paragraph (1) in an amount not
exceeding the difference between the monthly payment for principal,
interest, and mortgage insurance premium which the mortgagor is
obligated to pay under the mortgage and the monthly payment for

82 STAT. ] •

PUBLIC LAW 90-448-AUG. 1, 1968

principal and interest such mortgagor would be obligated to pay if
tlie mortgage were to bear interest at the rate of 1 per centum per
annum.
"(8) A mortgage covering property which is not deteriorating or
substandard may be insured under this subsection only if it is situated
in an area in which mortgages may be insured under section 221(h).
'"(k) The Secretary shall from time to time allocate and transfer
to the Secretary of Agriculture, for use (in accordance with the terms
and conditions of this section) in rural areas and small towns, a reasonable portion of the total authority to contract to make assistance
payments as approved in appropriation Acts under subsection (h) (1).
"(l) In determining the income of any person for the purposes of
this section, there shall be deducted an amount equal to $800 for each
minor person who is a member of the immediate family of such person
and living with such family, and the earnings of any such minor person
shall not be included in the income of such person or his family."
(b)(1) Section 2 2 1 ( d ) ( 2 ) ( A ) of the National Housing Act is
1 1

amended—
. . .
(A) by striking out "not to exceed (i) $12,500" and inserting in
lieu thereof "not to exceed (i) $15,000 (or $17,500, if the mortgagor's family includes five or more persons)"'; and
(B) by striking out "not to exceed $15,0(M)" in the second
proviso and inserting in lieu thereof "not to exceed $17,500 (or
$20,000 if the mortgagor's family includes five or more persons)".
(2) Section 221(d) (2) (B) of such Act is amended—
(A) by inserting ", in cash or its equivalent" before the semicolon after "acquisition cost" in the first proviso; and
(B) by inserting before the semicolon after "appraised value"
at the end thereof the following: " : Provided further, That, if
the mortgagor is the owner and an occupant of the property, such
mortgagor shall to the maximum extent feasible be given the opportunity to contribute the value of his labor as equity in such
dwelling".
(c) (1) Section 221(h) (5) (B) (ii) of such Act is amended to read
as follows:
"(ii) bear interest at the same rate as the principal mortgage or such lower rate, not less than 1 per centum, as the
Secretary may prescribe if in his judgment the purchaser's
income is sufficiently low to justify the lower rate, and provide for complete amortization within a term equal to the remaining term (determined without regard to subparagra})!!
( E ) ) of such principal mortgage: Provided, That, if the
rate of interest mitially prescribed is less than the rate borne
by the principal mortgage and the purchaser's income (as
determined on the basis of periodic review) subsequently
rises, the rate of interest so prescribed shall be increased (but
not above the rate borne by such principal mortgage), under
regulations of the Secretary, to the extent appropriate to reflect the increase in such income, and the mortgage shall so
provide."
"(2) Section 221(h)(4) of such Act is amended by striking out
"$20,000,000" and inserting in lieu thereof "$50,000,000".
(3) Section 221(h) of such Act is further amended by adding at
the end thereof the following new paragraph:
" (6) I n addition to the mortgages that may be insured under paragraphs (1) and (5), the Secretary is authorized to insure under this
subsection at any time within one year after the date of the enactment
of this paragraph, upon such terms and conditions as he may prescribe,

483

^"^'•«-

75 stat. i49;
80 Stat. 1268.

12 use 1715^.

8° ^tat. 1269.

(484

42 u'sc f ^^0

80 Stat. 1269^.
Ante, p. 477.
53 Stat. 807;
^ iruscV7i5c.
Counseling
services.
°
"

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

inortgages which are executed by individuals or families that meet the
income criteria prescribed in paragraph (5) (A) and are executed for
the purj:)ose of financing the rehabilitation or improvement of singlefamily dwellings of detached, semidetached, or row construction that
are owned and occupied in each instance by a mortgagor who has
purchased the dwelling from a nonprofit organization of the tyj>e
described in this subsection. To be eligible for such insurance, a mortgage shall—
" (A) be in a principal amount not exceeding the lesser of $15,000 or the sum of the estimated cost of repair and rehabilitation
and the Secretary's estimate of the value of the property before
repair and rehabilitation, except that in no case involving refinancing shall such mortgage exceed such estimated cost of repair
and rehabilitation and the amount (as determined by the Secretary) required to refinance existing indebtedness secured by the
property;
" ( B ) bear interest (exclusive of premium charges for insurance
and service charge, if any) at 3 per centum per annum or such
lower rate, not less than 1 per centum, as the Secretary may
prescribe if in his judgment the mortgagor's income is sufficiently
low to justify the lower rate: Provided^ That, if the rate of interest
initially prescribed is less than 3 per centum per annum and the
mortgagor's income (as determined on the basis of periodic
review) subsequently rises, the rate shall be increased (but not
above 3 per centum), under regulations of the Secretary, to the
extent appropriate to reflect the increase in such income, and the
mortgage shall so provide;
" ( C ) involve a mortgagor that shall have paid on account of
the property at the time of the rehabilitation such amount (which
shall not be less than $200 in cash or its equivalent, but which may
be applied in whole or in part toward closing costs) as the Secretary may determine to be reasonable and appropriate under the
circumstances; and
" ( D ) contain a provision that, if the low-income mortgagor
does not continue to occupy the property, the interest rate shall
increase to the highest rate permissible under this section and the
regulations of the Secretary effective at the time the commitment
was issued for insurance of the mortgage; except that the
increase in interest rate shall not be applicable if the property is
sold and the purchaser is (i) a nonprofit organization which has
been engaged in purchasing and rehabilitating deteriorating and
substandard housing with financing under a mortgage insured
under paragraph (1) of this subsection, (ii) a public housing
agency having jurisdiction under the United States Housing Act
^^^"^ ^^®^ ^ ^^^^ where the dwelling is located, or (iii) a lowincome purchaser approved for the purposes of this paragraph
by the Secretary."
(4) The purchase of any individual dwelling, sold by a nonprofit
organization pursuant to the provisions of section 221(h) (5) of the
National Housing Act after the date of enactment of this section, may
be financed with a mortgage insured under the provisions of section
235(j) (4) of such Act, but such mortgage shall bear interest at the
rate provided in section 235 (j ) ( 2 ) ( C ) of such Act.
(,^) Sectioii 212(a) of such Act is amended by inserting "or section
2 3 5 ( j ) ( l ) " after "subsection ( h ) ( 1 ) " each place it appears.
(e) The Secretary of Housing and Urban Development is authorized to provide, or contract w^ith public or private organizations to
provide, such budget, debt management, and related counseling

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

services to mortgagors whose mortgages are insured under section
235(i) or 235(j) (4) of the National Housing Act as he determines to
be necessary to assist such mortgagors in meeting the responsibilities
of homeownership. There are authorized to be appropriated such sums
as may be necessary to carry out the provisions of this subsection.

485
Ante,

p . 477.

Appropriation.

CREDIT ASSISTANCE

SEC. 102. (a) Title I I of the National Housing Act is amended by 12 use 1707adding after section 236 (as added by section 201 of this Act) the fol- ^^^^^
lowing new section:
"SPECIAL MORTGAGE INSURANCE ASSISTANCE

"SEC. 237. (a) The purpose of this section is to help provide adequate housing for families of low and moderate income, including those
who, for reasons of credit history, irregular income patterns caused by
seasonal employment, or other factors, are unable to meet tlie credit
requirements of the Secretary for the purchase of a single-family
home financed by a mortgage insured under section 203, 220, 221, 234,
or 235(j) (4), but who, through the incentive of homeownership and 12 use 17^09,
counseling assistance, appear to be able to achieve homeownership.
msy- Ante,'p.
"(b) The Secretary is authorized upon application by the mort- ^77.
gagee to insure under this section any mortgage meeting the requirements of this section.
"(c) To be eligible for insurance under this section, a mortgage
shall—
"(1) meet the requirements of section 203 (except subsection
( m ) ) , 220(d) (3) ( A ) , .221(d) (2), 221(h) (5), 221 (i), 234(c), or
235(j) (4), except as such requirements are modified by this
section;
"(2) involve a principal obligation (including such initial service charges, and such appraisal, inspection, and other fees, as the
Secretary shall approve) in an amount not to exceed $15,000:
Provided, That the Secretary may increase the amount to not
exceed $17,500 in any geographical area where he finds that cost
levels so require: Provided further, That no mortgage meeting
the requirements of section 203(h) or 203(i) shall be eligible for
insurance under this section if its principal obligation is in excess
of the maximum limits prescribed in such section;
"(3) be executed by a mortgagor who the Secretary has determined, after a full and complete study of the case, would not be
an acceptable credit risk for mortgage insurance purposes under
sections 203, 220, 221, 234, or 235(j) (4), because of his credit
standing, debt obligations, total annual income, or income characteristics, but who the Secretary is satisfied would be a reasonably satisfactory credit risk, consistent with the objectives stated
in subsection ( a ) , if he were to receive budget, debt management,
and related counseling: Provided, That, in determining whether
the mortgagor is a reasonably satisfactory credit risk, the Secretary shall review the credit history of the applicant giving special
consideration to those delinquent accounts which were ultimately
paid by the applicant and to extenuating factors which may have
caused credit accounts of the applicant to become delinquent; and
the Secretary shall also give special consideration to income characteristics of applicants whose total income over the two yeai's
prior to their applications has remained at levels of eligibility
(as required under paragraph (4) of this subsection), but who,

486

Application
preferences.

Counseling
services.

Appropriation.
68 Stat. 607.
12 u s e 1715q.

PUBLIC LAW 90-448-AUG. 1, 1968

because of the character of their seasonal employment or for other
reasons, have not maintained continuous employment under one
employer during that time; and
"(4) require monthly payments which, in combination with
local real estate taxes on the property involved, do not exceed 25
per centum of the applicant's income, based on his average
monthly income during the year prior to his application or the
average monthly income during the three years prior to his
application, whichever is higher.
" ( d ) The Secretary shall give preference in approving mortgage
insurance applications under this section to families living in public
housing units, especially those families required to leave public housing because their incomes have risen beyond the maximum prescribed
income limits, and families eligible for residence in public housing
who have been displaced from federally assisted urban renewal areas.
"(e) The Secretary is authorized to provide, or contract with public or private organizations to provide, such budget, debt management, and rehited counseling services to mortgagors whose mortgages
are insured under this section as he determines to be necessary to meet
the objectives of this section. The Secretary may also provide such
counseling to otherwise eligible families who lack sufficient funds to
supply a down payment to help them to save an amount necessary for
that purpose.
" ( f ) The aggregate principal balance of all mortgages insured
under this section and outstanding at one time shall not exceed
$200,000,000.
" ( g ) There are authorized to be appropriated such sums as may be
necessary to carry out the provisions or subsection (e) of this section."
(b) Section 226 of the National Housing Act is amended by inserting "235(i), 237," after "234,".
RELAXATION

68 Stat. 605.
12 u s e 1715n.
53 Stat. 807.
12 u s e 1715c.

Repeal.
80 Stat. 1266.
12 u s e 1709.

[82 STAT.

OF

MORTGAGE INSURANCE REQUIREMENTS
URBAN NEIGHBORHOODS

IN

CERTAIN

SEC. 103. (a) Section 223 of the National Housing Act is amended
by adding at the end thereof a new subsection as follows:
" (e) Notwithstanding any of the provisions of this title except section 212, and without regard to limitations upon eligibility contained
in any section of this title, the Secretary is authorized, upon application by the mortgagee, to insure under any section of this title a
mortgage executed in connection with the repair, rehabilitation, construction, or purchase of property located in an older, declining urban
area in which the conditions are such that one or more of the eligibility
requirements applicable to the section of this title under which insurance is sought could not be met, if the Secretary finds that (1) the area
is reasonably viable, giving consideration to the need for providing
adequate housing for families of low and moderate income in such
area, and (2) the property is an acceptable risk in view of such consideration. The insurance of a mortgage pursuant to this subsection
shall be the obligation of the Special Risk Insurance Fund."
(b) Section 203(1) of such Act is repealed.
SPEX:;iAL. RISK INSURANCE FUND

12 u s e 17071715y.

SEC. 104. (a) Title I I of the National Housing Act is amended by
adding after section 237 (as added by section 102 of this Act) the following new section:

82 STAT. ]
uP A Y M E N T

PUBLIC LAW 90-448-AUG. 1, 1968
OF I N S U R A N C E — S P E C I A L R I S K I N S U R A N C E

487
FUND

"SEC. 238. (a) (1) Any mortgagee under a mortgage insured under
section 235(i), 235(j) (4), or 237 shall be entitled to receive the bene- ^g^"'*' ^^- ^^^'
fits of the insurance as provided in section 204(a) with respect to 12 use 1710.
mortgages insured. under section 203. The provisions of subsections ^2 use 1709.
( b ) , (c), ( d ) , ( g ) , ( j ) , and (k) of section 204 shall be applicable to
mortgages insurm under section 235 ( i ) , 235 (j) (4), or 237, except that
all references therein to the 'Mutual Mortgage Insurance Fund' shall
be construed to refer to the 'Special Risk Insurance Fund', and all
references therein to section 203 shall be construed to refer to section
235 ( i ) , 235 (j) (4), or 237, as may be appropriate.
"(2) Any mortgagee under a mortgage insured under section 235
(j) (1) or 236 shall be entitled to receive the benefits of insurance as ^°®'' P- '^^^•
provided in section 207(g) with respect to mortgages insured under
section 207. The provisions of subsections ( d ) , (e), ( h ) , (i), ( j ) , ( k ) , 52 stat. 9
(1), and (n) of section 207 shall be applicable to mortgages insured 12 u s e 1713.
under section 235 (j) (1) or 236, except that all references therein to the
'General Insurance Fund' shall be construed to refer to the 'Special
Risk Insurance Fund' and the premium charge provided in section
207(d) shall be payable only in cash or debentures of the Special Risk
Insurance Fund.
" (3) I n lieu of the amount of insurance benefits computed pursuant
to paragraph (1) or (2) of this subsection the Secretary, in his discretion and in accordance with such regulations as he may prescribe, may
(with respect to any mortgage loan acquired by him) compute and
pay insurance benefits to the mortgagee in a total amount equal to the
unpaid principal balance of the loan plus any accrued interest and
any advances approved by the Secretary and made previously by the
mortgagee under the provisions of the mortgage.
"(b) There is hereby created a Special Risk Insurance Fund (hereinafter referred to as the 'fund') which shall be used by the Secretary
as a revolving fund for carrying out the mortgage insurance obligations of sections 223(e), 233(a) (2), 235, 236, and 237, and the Secre- Ante, p. 486;
tary is hereby authorized to advance to the fund the sum of $5,000,000 Post, p . 496.
from the General Insurance Fund established pursuant to the provisions of section 519. Such advance shall be repayable at such times and 79 stat. 471.
a;t such rates of interest as the Secretary deems appropriate. Premium 12" use
""" 1735c.
""
charges, adjusted premium charges, inspection and other fees, service
charges, and any other income received by the Secretary under sections 223(e), 233(a) (2), 235, 236, and 237, together with all earnings
on the assets of the fund, shall be credited to the fund. All payments
made pursuant to claims of mortgagees with respect to mortgages
insured under sections 233(a) (2), 235, 236, and 237 or pursuant to section 223(e), cash adjustments, the principal of and interest paid on
debentures which are the obligation of the fund, expenses incurred in
connection with or as a consequence of the acquisition and disposal of
property acquired under such sections, and all administrative expenses
in connection with the mortgage insurance operations under such sections shall be paid out of the fund. There is authorized to be appropriated such sums as may be needed from time to time to cover losses
sustained by the fund in carrying out the mortgage insurance obligations of sections 223(e), 233(a) (2), 235, 236, and 237. Moneys in the
fund not needed for current operations of the fund shall be deposited
with the Treasurer of the United States to the credit of the fund or
invested in bonds or other obligations of, or in bonds or other obligations guaranteed by, the United States. The Secretary, with the
approval of the Secretary of the Treasury, may purchase in the open

- 6 0 0 O - 69 - 34

488

68 Stat. 606.
12 use 17150.
1^ us°c ^^^
^^'''

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

market debei-itures which are the obligation of the fund. Such purchases shall be made at a price which will provide an investment yield
of not less than the yield obtained from other investments authorized
by this section. Debentures so purchased shall be canceled and not
reissued."
(b) Seotiou 224 of such Act is amended by striking out "or section
233" and inserting in lieu thereof "section 233, or section 238-'.
^'^^ Section 519 (e) of such Act is amended by inserting after "section
213(k)" the following: ", or the provisions of sections 223(e), 233 (a)
(2), 235, 236 and 237".
CONDOMINIUM AND CCX)PERATIVE OWNERSHIP FOR LOW AND MODERATE
INCOME FAMILIES

68 stait. 599^^

12 u s e 1715^.

SEC. 105. (a) Sectiou 221 of the National Housing Act is amended
by adding at the end thereof two new subsections as follows:
"(i) (1) The Secretary is authorized, with respect to any project
involving a mortgage insured under subsection (d) (3) which beai-s
interest at the below-market interest rate prescribed in the proviso
of subsection (d) (5), to permit a conversion of the ownership of such
project to a plan of family unit ownership. Under such plan, each
family unit shall be eligible for individual ownership and provision
shall be included for the sale of the family units, together with an
undivided interest in the common areas and facilities which serve the
project, to low or moderate income purchasers. The Secretary shall
obtain such agreements as he determines to be necessary to assure continued maintenance of the common areas and facilities. Upon such
sale, the family unit and the undivided interest in the common areas
shall be released from the lien of the project mortgage.
" (2) (A) The Secretary is authorized, upon application by the mortgagee, to insure under this subsection mortgages financing the purchase of individual family units under the plan prescribed in paragraph (1). Commitments may be issued by the Secretary for the
insurance of such mortgages prior to the date of their execution or
disbursement thereon, upon such terms and conditions as the Secretary
may prescribe. To be eligible for such insurance, the mortgage shall—
" ( i ) be executed by a mortgagor having an income within the
limits prescribed by the Secretary for occupants of projects
financed with a mortgage insured under subsection (d) (3) which
bears interest at the below-market rate prescribed in the proviso
of subsection (d) ( 5 ) ;
" (ii) involve a principal obligation (including such initial service charges, and such appraisal, inspection, and other fees, as the
Secretary shall approve) in an amount not to exceed the Secretary's estimate of the appraised value of the family unit, including
the mortgagor's interest in the common areas and facilities, as of
the date the mortgage is accepted for insurance;
" (iii) bear interest at a rate determined by the Secretary (which
may vary in accordance with the regulations of the Secretary
promulgated pursuant to the last sentence of paragraph (4) of
this subsection) but not less than the below-market rate in effect
under the proviso of subsection (d) (5) at the date of the commitment for insurance; and
"(iv) provide for complete amortization by periodic payments
within such term as the Secretary may prescribe, but not to exceed
the lesser of forty years from the beginning of amortization of the
mortgage or three-quarters of the Secretary's estimate of the remaining economic life of the building improvements.

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

489

" ( B ) The price for which the individual family unit is sold to the
low or moderate income purchaser shall not exceed the appraised
value of the property, as determined under subparagraph ( A ) ( i i ) ,
except that the purchaser shall be required to pay on account of the
l^roperty at the time of purchase at least such amount, in cash or its
equivalent (which shall be not less than 3 per centum of such price,
but which may be applied in whole or in part toward closing costs),
as the Secretary may determine to be reasonable and appropriate.
"(3) Upon the sale of all of the family units covered by the project
mortgage, and the release of all of the family units (including the
undivided interest allocable to each unit in the common areas and facilities) from the lien of the project mortgage, the insurance of the project mortgage shall be terminated and no adjusted premium charge
shall be collected by the Secretary upon such termination.
"(4) Any mortgage covering an individual family unit insured interest rate,
under this subsection shall contain a provision that, if the original ^"'''•^^^^•
mortgagor does not continue to occupy the property, the interest rate
sliall increase to the highest rate permissible under this section and the
regulations of the Secretary effective at the time the commitment was
issued for the insurance of the project mortgage; except that the
I'equirement for an increase in interest rate shall not be applicable if
the property is sold and the purchaser is (i) a nonprofit purchaser
approved by the Secretary, or (ii) a low or moderate income purchaser
A\'ho has an income within the limits prescribed by the Secretary for
occupants of projects financed with a mortgage insured under subsection (d) (3) which bears interest at the beloAv-market rate prescribed in the proviso of subsection (d) (5). The mortgage shall also
contain a provision that, if the Secretary determines that the annual
income of the original mortgagor (or a purchaser described in clause
(ii) of the preceding sentence) has increased to an amount enabling
payment of a greater rate of interest, the interest rate of the individual
mortgage may be increased up to the highest rate permissible under
the regulations of the Secretary for mortgages insured under this section, effective at the time the commitment was issued for the insurance
of the mortgage.
" (5) For the purpose of this subsection—
" ( i ) the term 'mortgage', when used in relation to a mortgage "Mortgage."
insured under paragraph (2) of this subsection, includes a first
mortgage given to secure the unpaid purchase price of a fee interest in, or a long-term lease-hold interest in, a one-family unit in
a multifamily project and an undivided interest in the common
areas and facilities which serve the project; and
"(ii) the term 'common areas and facilities' includes the land "common areas
and such commercial, community, and other facilities as are ^"'^ facilities."
approved by the Secretary.
"<'])(!) The Secretary is authorized, with respect to any rental ^ ^""^^ff'^"^
conproject involving a mortgage insured under subsection (d) (3) which ownership,
version.
bears interest at the below-market interest rate prescribed in the proviso of subsection (d) (5), to permit a conversion of the ownership of
such project to a cooperative approved by the Secretary. Membership
in such cooperative shall be made available only to those families having an income within the limits prescribed by the Secretary for
occupants of projects financed with a mortgage insured under subsection (d) (3) which bears interest at such below-market rate: Provided,
That families residing in the rental project at the time of its conversion to a cooperative who do not meet such income limits may be
permitted to become members in the cooperative under such special
terms and conditions as the Secretary may prescribe.

490
Cooperative
Turlncf*^' "

68 Stat. 599.^

PUBLIC LAW 90-448-AUG. 1, 1968

"(2) The Secretary is authorized, upon application by the mortg^g66, to insure under this subsection cooperative mortgages financing
the purchase of projects meeting the requirements of paragraph (1).
Commitments may be issued by the Secretary for the insurance of such
mortgages prior to the date of their execution or disbursement thereon,
upon such terms and conditions as the Secretary may prescribe. To be
eligible for such insurance, the mortgage shall—
"(i) involve a principal obligation (including such initial service charges and appraisal, inspection, and other fees as the Secretary shall approve) in an amount not exceeding the appraised
value of the property for continued use as a cooperative, which
value shall be based uix>n a mortgage amount on which the debt
service can be met from the income of the pro|>erty when operated
on a nonprofit basis, after the payment of all operating expenses,
taxes, and required reserves;
'*(ii) bear interest at the below-market rate prescribed in the
proviso of subsection (d) ( 5 ) ; and
"(iii) provide for complete amortization within such term as
the Secretary may prescribe."
^b) Sectiou 221 (g) (1) of such Act is amended by striking out "or
paragraph (5) of subsection (h) of this section" and inserting in lieu
thereof "paragraph (5) of subsection (h) of this section, or paragraph
(2) of subsection (i) of this section".
(c) Section 221(g) (2) of such Act is amended by striking out "or
paragraph (1) of subsection ( h ) " and inserting in lieu thereof
"paragraph (1) of subsection (h) of this section, or paragraph (2) of
subsection (j).".
(d) Section 221(f) of such Act is amended by inserting after "subsection ( h ) " in the third sentence of the second paragraph the
following: ", ( i ) , or ( j ) " .
ASSISTANCE

Loans.

[82 STAT.

TO N O N P R O F I T

SPONSORS O F LOW
HOUSING

AND

MODERATE

INCOME

SEC. 106. (a) The Secretary of Housing and Urban Development is
authorized to provide, or contract with public or private organizations
to provide, information, advice, and technical assistance with respect
to the construction, rehabilitation, and operation by nonprofit organizations of housing for low^ or moderate income families. Assistance
by the Secretary may include—
(1) the assembly, correlation, publication, and dissemination of
information with respect to the construction, rehabilitation, and
operation of low and moderate income housing, and
(2) the provision of advice and technical assistance with respect
to the construction, rehabilitation, and operation of low and
moderate income housing.
( b ) ( 1 ) The Secretary is authorized to make loans to nonprofit
organizations for the necessary expenses, prior to construction, in
planning, and obtaining financing for, the rehabilitation or construction of housing for low or moderate income families under any federally assisted program. Such loans shall be made without interest and
shall not exceed 80 per centum of the reasonable costs expected to be
incurred in planning, and in obtaining financing for, such housing prior
to the availability of financing, including, but not limited to, preliminary surveys and analyses of market needs, preliminary site engineering and architectual fees, site acquisition, application and mortgage
commitment fees, and construction loan fees and discounts. The Secretary shall require repayment of loans made under this subsection, under

82 STAT. ]

PUBLIC LAW 90-44S-A\]G. I, 196ff

491

such terms and conditions as lie may require, upon completion of the
project or sooner, and may cancel any part or all of a loan if he determines that it cannot be recovered from the proceeds of any permanent
loan made to finance the rehabilitation or construction of the housing.
(2) The Secretary shall determine prior to the making of any loan
that the nonprofit organization meets such requirements with respect
to financial responsibility and stability jvs he may prescribe.
(3) There are authorized to be appropriated for the purposes of this Appropriation,
subsection not to exceed $7,500,000 for the fiscal year ending June 80,
1969, and not to exceed $10,000,000 for the fiscal year ending J u n e 30,
1970. Any amounts so appropriated shall remain available until
expended, and any amounts authorized for any fiscal year under this
paragraph but not appropriated may be appropriated for any succeeding fiscal year.
(4) All funds appropriated for the purposes of this subsection shall LOW and Modl>e deposited in a fund which shall be known as the IJOW and Modemte sponso^'^Fund.
Income Sponsor Fund, and which shall be available without fiscal
year limitation and be administered by the Secretary as a revolving
fund for carrying out the purfjoses of this subsection. Sums received
in repayment of loans made under this subsection shall be deposited
in such fund.
NATIONAL IIOMEOWNERSIIIP

FOUNDATION

S/r^x^

SEC. 107. ( a ) ( 1 ) There is hereby created a body corporate to be
known as the "National Homeownei'ship Foundation" (hereinafter
referred to as the ''Foundation") to carry out a continuing program of
encouraging private and ]>ublic organizations at the national, community, and neighborhood levels to provide increased homeownership
and housing oppoi-tunities in urban and rural areas for lower income
families through such means as—
(A) encoui'aging the investment in, and spcmsoring of, housing for lower income families;
(B) encouraging the establisihment of programs of assistance
and counseling to lower income families to enable them better to
achieve and afford adequate housing;
(C) providing a broad range of technical assistance through
publications and advisory services to public and private organizations which are carrynig out, or are desirous of carrying out,
programs to expand homeownership and housing opportunities
for lower income families; and
(D) providing grants and loans to public and private organizations carrying out homeownership and housing opportunity
programs for lower income families to help cover some of the
expenses of such programs.
(2) The Foundation shall be deemed to be a corporation without
members organized and established under the provisions of the Dis76 Stat. 265.
trict of C^olumbia Nonprofit Corporation Act, with all the rights, D.C.
Code 29powers, and responsibilities thereof except as limited by this section looi
and any amendments thereto. This section shall constitute the articles
of incorporation and charter of the Foundation, which shall not be an
ngency or instrumentality of the United States Government. The
(^ongress expressly reserves the exclusive right to alter or amend this
charter. The Foundation shall have succession until dissolved by Act
of Congress. The Foundation shall maintain its principal office in the
District of Columbia.
(3) No part of the net earnings of the Foundation shall inure to the Administration
benefit of any private person, and no substantial part of its activities and^educati^o^nai
shall be devoted to attempting to influence legislation. The Founda- foundation.

492

Contract authority.

Acceptance
of grants, e t c .

Board of
Directors.

Terms of
office.

Compensation,
travel e x p e n s e s .

80 Stat. 499.
Executive
Director.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

tion shall not participjDte or intervene in any political campaign on
behalf of any candidate for public office. The Foundation shall be
operated and administered at all times as a charitable and educational
foundation.
(4) No employee or officer of the Foundation shall receive compensation in excess of that received by or hereafter prescribed by law for
heads of executive departments.
(5) The Foundation shall make maximum use of existing public and
private agencies and programs, and in carrying out its functions the
Foundation is authorized to contract with individuals, private corporations, organizations, and associations, and with agencies of the Federal, State, and local governments.
(6) The Foundation is authorized to receive donations and grants
from individuals and from public and private organizations, foundations, and agencies.
(7) The Foundation may use only donated funds, or funds derived
from payment of interest on loans made by it, for the principal and
interest payments on any borrowings.
(b) (1) The Foundation shall have a Board of Directors consisting
of eighteen members, fifteen of whom shall be appointed by the President of the United States, with the advice and consent of the Senate.
The other three members shall be, ex officio, the Secretary of Housing
and Urban Development, the Secretary of Agriculture, and the Director of the Office of Economic Opportunity. The President shall appoint
one of the fifteen appointed members to serve as Chairman of the Board
during his term of office as a member.
(2) Within thirty days after the date of enactment of this Act,
the President shall appoint the fifteen appointed members of the
Board. Not more than five of such members shall, at the time of their
appointment, be serving full time as officers or employees of the
Federal Government, or as officers or employees of any State or local
government. Each appointed member of the Board shall hold office
for a term of three years, except that (A) any member appointed to
fill a vacancy prior to the expiration of the term for which his
predecessor was appointed shall be appointed for the remainder of
such term, and (B) the terms of the members first taking office shall
expire, as designated by the President at the time of appointment,
five at the end of the first year, five at the end of the second year,
and five at the end of the third year after the date of appointment.
Members of the Board, however appointed, shall be eligible for
reappointment, but at no time shall there be more than five members
of the Board who at the time of their appointment or reappointment
were full-time officers or employees of the Federal Government or
of any State or local government.
(3) Appointed members of the Board who are not employees of the
Federal Government, while attending meetings or conferences of the
Board or otherwise serving on business of the Board, shall be entitled
to receive compensation at rates fixed by the President, but not exceeding $100 per day, including travel time, and while so serving away
from their homes or regular places of business they may be allowed
travel expenses, including per diem in lieu of subsistence, as authorized by section 5703 of title 5, United States Code, for persons in the
Government service employed intermittently.
(4) The Board shall appoint an Executive Director of the Foundation. The Executive Director shall be the chief executive officer of
tlie Foundation and shall serve at the pleasure of the Board, and
all other executive officers and employees of the Board shall be responsible to him. The Board shall also cause to be appointed a secretary,
a treasurer, and such other officers as may be necessary to conduct

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

properly the business of the Foundation, and shall provide for fillini^
vacancies in such offices,
(5) The Board shall adopt bylaws for the Foundation which shall
be made available for public inspection upon request.
(c)(1) The Foundation shall assist public and private organizations, at their request, in initiatin;[^, developing, and conducting programs to expand homeownership and housing opportunities for lower
income families. To provide such assistance and to carry out the pui])oses of this section, the Foundation is authorized to—
(A) carry out a continuing program of encouraging private
and public organizations at the national, community, and neigliborhood levels in the establishment of such programs;
(B) assist in the formation of organizations the purpose of
which is the development and carrying out of such programs,
including the establishment of local development funds for financing housing for lower income families through the pooling of
moneys from private sources;
{C) identify and arrange for the technical and managerial
assistance and personnel needed for the successful operation of
such programs by public and private organizations;
(I)) assist public and private organizations in obtaining the
mortgage financing, insurance, and other requirements or aids
necessary for conducting programs of housing construction,
rehabilitation, or improvement for lower income families;
( E ) arrange for, or provide on a limited basis, training for
jjersons in the skills needed in administering programs of homeownership and housing opportunity for lower income families;
( F ) encourage research and innovation, and collect and make
available such information as may be desirable to further the purposes of this section, including but not limited to such activities
as the sponsoring of seminars, conferences, and meetings and the
establishment of a continuing informatioii 2)rogram to acquaint
lower income families with the means they can use to improve the
quality of their housing and the homeownership and housing
opportunities available to them;
(G) assist private and public organizations in establishing, in
connection with their homeownership and housing opportunity
programs for lower income families, counseling and similar activities designed to advise lower income families of the means available to better themselves economically through job training and
manpower development programs; and
( H ) perform other similar services in order to further the purposes of this section.
(2) The Foundation may, if it deems it appropriate, charge a reasonable fee for any assistance or service provided under this subsection.
( d ) ( 1 ) In order to assist public and private organizations which
are carrying out homeownership and housing opportunity programs
for lower income families to fill unmet needs, initiate exceptional
programs, and experiment with new approaches and programs, the
Foundation is authorized, subject to such terms and conditions as it
may prescribe, to make grants and loans to such organizations to help
defray the following expenses :
(A) organizational and administrative expenses incurred in
commencing the operation of a program, or in expanding an existing program, to the extent that the activities are related to providing homeownership and housing opportunities for lower income
families;
(B) necessary preconstruction costs incurred for architectural
assistance, land options, application fees, and similar items; and

493

Functions.

f'ees.
Grant and loan

authority.

494

Report to
President and
Congress.
Contents.

GAO audit.

A c c e s s to
records, etc.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

(C) the cost of carrying- out programs providing counseling
or similar services to lower income families for whom housing
is being provided, in order to enable those families better to achieve
and afford adequate housing, in such matters as home management, budget management, and home maintenance.
(2) I n order to be eligible for a grant or loan under this subsection, the organization seeking such assistance shall demonstrate to
the satisfaction of the Foundation that the funds requested are not
otherwise available from Federal sources: Provided^ That a grant or
loan under this subsection may be provided to help cover that portion
of the cost of an eligible activity not covered by Federal funds.
(3) The Foundation shall encourage cooperation between public
and private organizations carrying out programs of homeownership
and housing opportunity for lower income families and the neighborhoods and communities affected by such programs. To help assure
such cooperation and in order to coordinate, to the maximum extent
feasible, any construction or rehabilitation activities with the development goals of the neighborhood or community affected, no application for a loan or grant under this subsection shall be considered
unless such application has been submitted to the governing body of
the community affected, or to such other entity of local government
as may be designated by the governing body, for such recommendations as the local governing body or its designee may desire to make.
Any recommendations so made shall be given careful consideration
by the Foundation before taking final action on any such application.
If, upon the expiration of thirty days after any such application has
been submitted to such governing body or its designee, such body or
designee fails to provide such recommendations, the application may
be considered without the benefit of such recommendations.
(e) The Foundation shall coordinate its activities and consult
with the Department of Housing and Urban Development and other
Federal departments and agencies engaged in providing homeownership and housing opportunities for lower income families.
(f) (1) Not later than one hundred and twenty days after the close
of each fiscal year, the Foundation shall prepare and submit to the
President and to the Congress a full report of its activities during
such year. Such report shall include an account of the Foundation's
experiences with the efforts of private and public organizations to
expand homeownership and housing opportunities for lower income
families, together with such recommendations as it deems appropriate.
(2) Whenever in its judgment the general unavailability of mortgage funds is sufficiently serious to deter the Foundation from carrying out its objective of expanding homeownership and housing opportunities for lower income families, the Foundation shall, in its annual
report or in a separate report to the President and the Congress, state
its findings and make such recommendations for alternate means of
financing housing for such families as it deems appropriate.
( g ) ( 1 ) The financial transactions of the Foundation shall be
audited by the General Accounting Office in accordance with the principles and procedures applicable to commercial corporate transactions
and under such rules and regulations as may be presc^ribed by the
Comptroller General of the ITnited States. The representatives of the
General Accounting Office shall have access to all books, accounts, financial records, reports, files, and all other papers, things, or property
l>elonging to or in use by the Foundation and necessary to facilitate the
audit, and they shall be afforded full facilities for verifying transactions with the balances or securities held by depositories, fiscal agents,
and custodians. The audit shall cover the fiscal yeiir corresponding to
tliat of the United States Government.

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

495

(2) A report of each such audit shall be made by the Comptroller gresT°and p^eTiGeneral to the Congress not later than January 15 following the close dent.
of the fiscal year for which the audit was made. The report shall set
forth the scope of the audit and shall include a statement of assets and
liabilities, capital, and surplus or deficit; a statement of sources and
application of funds; and such comments and information as may be
deemed necessary to keep the (\mgress informed of the operations and
financial condition of the Foundation, together with such recommendations with respect thereto as the Comptroller General may deem
advisable. The report shall also show specifically any program, expenditure, or other financial transaction or undertaking, observed in
the course of the audit, which, in the opinion of the Comptroller General, has been carried on or made without authority of law. A copy of
each report shall be furnished to the President and to the Foundation
at the time submitted to the Congress.
(h) Funds of the Foundation shall be deposited, to the extent practicable, in accounts with financial institutions which are actively
engaged in making loans or are otherwise carrying on activities in
furtherance of homeownership and housing opportunities for lower
income families.
(i) Tliere is authorized to be appropriated to the Foundation not to Appropriation.
exceed $10,000,000 to carry out the purposes of this section. Appropri,
ations made hereunder shall remain available until expended.
I
NEW

TECHNOLOGIES

IN

T H E DEVFXOPMENT O r
INCOME FAMILIES

HOUSING

FOR

LOWER

SEC. 108. (a) I n order to encourage the use of new housing technologies in providing decent, safe, and sanitary housing for lower
income families; to encourage large-scale experimentation in the use
of such technologies; to provide a basis for comparison of such technologies with existing housing technologies in providing such housing; and to evaluate the effect of local housing codes and zoning
regulations on the lar^e-scale use of new housing technologies in the
provision of such housing, the Secretary of Housing and LTrban Development (hereinafter referred to as the "Secretary") shall institute a
program under which qualified organizations, public and private, will
submit plans for the development of housing for lower income families,
using new and advanced technologies, on Federal land which has been
made available by the Secretary for the purposes of this section, or on
other land where (1) local building regulations permit the construction
of experimental housing, or (2) State or local law permits variances
from building regulations in the construction of experimental housing
for the purpose of testing and developing new building technologies.
(b) The Secretary shall approve not more than five plans utilizing consideration7^^'
new housing t^echnologies which are submitted to him pursuant to the
" ' ^"^ ^ "^
program referred to in subsection (a) and which he determines are
most promising in furtherance of the purposes of this section. I n
making such determination the Secretary shall consider—
(1) the potential of the technology employed for producing
housing for lower income families on a large scale at a moderate
cost;
(2) the extent to which the plan envisages environmental
quality;
(3) the possibility of mass production of the technology; and
(4) the financial soundness of the organization submitting the
plan, and the ability of such organization, alone or in combination
with other organizations, to produce at least one thousand dwelling
units a year utilizing the technology proposed.

PUBLIC LAW 90-448-AUG. 1, 1968

496

Surplus property.
63 Stat. 377.
40 u s e 471
note.
Report of findings, legislative
recommendations.

75 Stat. 158.
12 u s e 1715X.

Ante,

p . 495.

[82

STAT.

(c) I n approving projects for mortgage insurance under section 233
(a) (2) of the National Housing Act (as added by subsection (f) of
this section), the Secretary shall seek to achieve the construction of at
least one thousand dwelling units a year over a five-year period for
each of the various types of technologies proposed in approved plans
under subsection (b). The Secretary shall evaluate each project with
respect to which assistance is extended pursuant to this section with
a view to determining (1) the detailed cost breakdown per dwelling
unit, (2) the environmental quality achieved in each such unit, and
(3) the etfect which local housing codes and zoning regulations have,
or would have if applicable, on the cost per dwelling unit.
(d) Notwithstanding the provisions of the Federal Property and
Administrative Services Act of 1949, any land which is excess property within the meaning of such Act and which is determined by the
Secretary to be suitable in furtherance of the purposes of this section
may be transferred to the Secretary upon his request.
(e) The Secretary shall, at the earliest practicable date, report his
lindings with respect to projects assisted pursuant to this section
(including evaluations of each such project in accordance with subsection ( c ) ) , together with such recommendations for additional legislation as he determines to be necessary or desirable to expand the available supply of decent, safe, and sanitary housing for lower income
families through the use of technologies the efficacy of which has been
demonstrated under this section.
(f) (1) Section 233(a) of the National Housing Act is amended—
(A) by inserting " ( 1 ) ' ' after " ( a ) " ,
(B) by redesignating clauses (1), (2), and (3) as clauses ( A ) ,
( B ) , and ( C ) , respectively, and
(C) by adding at the end thereof the following new paragraph :
"(2) The Secretary is further authorized to insure and to make
commitments to insure, under this section, mortgages (including
advances on mortgages during construction) secured by properties in
projects to be carried out in accordance with plans approved by the
Secretary under section 108 of the Housing and Urban Development
Act of 1968.".
(2) Section 233(c) of such Act is amended by inserting at the end
thereof the following new sentence: "Any authority which the Secretary may exercise in connection with a mortgage, or property covered
by a mortgage, insured under any other section of this title (including
payments to reduce rentals for, or to facilitate homeownership by,
lower income families) may be exercised in connection with a mortgage, or property covered by a mortgage, meeting the requirements of
such other section (except as specified in subsection ( b ) ) , which is
insured under this section to the same extent and in the same manner
as if the mortgage insured under this section was insured under such
other section."
I N S U R A N C E PROTECTION FOR

HOMEOWNERS

SEC. 109. (a) The Secretary of Housing and Urban Development is
authorized, in cooperation with the private insurance industry, to
develop a plan for the establishment at the earliest practicable date of
an insurance program to help homeowners in meeting mortgage payments in times of personal economic adversity. Such insurance program shall be designed to protect mortgagors against foreclosure due
to curtailment of income resulting from factors beyond their effective
control, including such factors as death, disability, illness, and unemployment. Such insurance program shall also be designed to be actuarially sound through the use of premiums, fees, extended or increased

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

497

payment schedules, or other simihir methods, in conjunction with such
Federal participation as may be necessary.
(b) Within six months following the date of enactment of this Report to conAct, the Secretary shall report to the Congress on his actions under fJcommt^ndalfors^
this section, and shall recommend to the Congress such legislation
as he deems appropriate to authorize him to enter into agreements
with any insurance company, or any corporation or joint enterprise
formed to provide home mortgage insurance protection, for the purpose of reinsuring insurance reserve funds, subsidizing premium payments (m l)ehalf of lower income mortgagors, or otherwise making
possible the insurance protection of homeowners in accordance with
subsection ( a ) . In preparing such recommendations the Secretary
shall consult with other agencies or instrumentalities of the United
States which insure or guarantee home mortgages iii order that such
legislation as may he recommended atl'oi'ds equal benefits to mortgagors participating in their programs.
N A T I O N A L ADVISORY COMMISSION ON LOW INCOMP: H O U S I N G

SEC. 110. (a) (1) There is hereby established the National Advisory
(\)mmissioii on Low Income Housing (hereinafter referred to as the
''Commission'"). The Commission shall be composed of twenty-one Membership.
members as follows:
(A) Four members appointed by the President of the Senate,
two from the majority party and two from the minority party;
(B) Four members appointed by the Speaker of the House of
Representatives, two from the majority party and two from the
minority party; and
(C) Thirteen members appointed by the President, not more
than three of whom shall be from the Federal Government, and
of whom four shall berepresentative of £^^
^ -f ^4-"^
i iicome~TiotlEfi^
M'h^nevSFpracncable, after consultation with the ranking majority and minority members of the Housing Subcommittees of the
Committees on Banking and Currency of the Senate and House
of Representatives.
(2) Any vacancy in the Commission shall not affect its powers, but
shall be filled in the same manner in which the original appointment
w as made.
(3) Eleven members of the Commission shall constitute a quorum,
but a lesser number may conduct hearings.
(4) The members of the Commission shall elect a Chairman and a
Vice Chairman from the membership of the Commission.
( b ) ( 1 ) The Commission shall undertake a comprehensive study and ^ commission
investigation, to further the policy set forth in section 2 of this Act, of functions.
practicable and effective ways of bringing decent, safe, and sanitary
housing Avithin the reach of low income families. Such study shall
evaluate existing housing programs designed to assist such families,
and explore new ways by which public and private resources may be
more effectively utilized in meeting the housing needs of such families.
In the carrying out of such studj, the Commission may, where necessary or desirable, utilize the services of private research orga,nizations,
and shall, insofar as is practicable, seek to coordinate its investigation
with studies undertaken, or being undertaken by the Banking and
Currency Committees of the Senate and House of Representatives.
(2) The Commission shall be organized and begin its functions at „'^^?°''l^°
the earliest possible date, and shall submit to the President and to PC° roensgi ^dr eesnst. and
the Congress an interim report with respect to its findings and recommendations not later than July 1, 1969. A final report of its findings

498

Hearings, etc.

80 Stat. 443,
467.
5 u s e 5101,
5331.
5 u s e 5332
note.
Experts and
consultants.
80 Stat. 416.

Compensation,
travel expenses.

Appropriation.

Termination.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

and recommendations shall be submitted to the President and the
Congress not later than July 1, 1970.
(c)(1) The Commission or, on the authorization of the Commission,
any subcommittee or members thereof, may, for the purpose of carrying out the provisions of this section, hold such hearings, take such
testimony, and sit and act at such times and places as the Commission
deems advisable. Any member authorized by the Commission may
administer oaths or affirmations to witnesses appearing before the Commission or any subcommittee or members thereof.
(2) Each department, agency, and instrumentality of the executive
branch of the Government is authorized and directed to furnish to the
Commission, upon request made by the Chairman or Vice Chairman,
such information as the Commission deems necessary to carry out its
functions under this section.
(3) Subject to such rules and regulations as may be adopted by the
Commission, the Chairman, without regard to the provisions of title 5,
LTnited States Code, governing appointments in the competitive service, and without regard to the provisions of chapter 51 and subchapter
I I I of chapter 53 of such title relating to classification and General
Schedule pay rates, shall have the power—
(1) to appoint and fix the compensation of such staff personnel
as he deems necessary, and
(2) to procure temporary and intermittent services to the same
extent as is authorized by section 3109 of title 5, United States
Code, but at rates not to exceed $50 a day for individuals.
(d) (1) Any member of the Commission who is appointed from the
executive or legislative branch of the Government shall serve without
compensation in addition to that received in his regular employment,
but shall be entitled to reimbursement for travel, subsistence, and
other necessary expenses incurred by him in the performance of duties
vested in the Commission.
(2) Members of the Commission, other than those referred to in
paragraph (1), shall receive compensation at the rate of $75 per day
for each day they are engaged in the performance of their duties as
menibers of the Commission and sihall be entitled to reimbursement for
travel, subsistence, and other necessary expenses incurred by them in
the performance of their duties as members of the Commission.
(e) There are authorized to be appropriated, out of any money in
the Treasury not otherwise appropriated, such sums as may be necessary to carry out this section.
(f) The Commission shall cease to exist thirty days after the submission of its final report.
TITLE

II—RENTAL

HOUSING FOR
FAMILIES

LOWER

INCOME

PART A—PRIVATE HOUSING
RENTAL A N D COOPERATIVE HOUSING FOR LOWER INCOME FAMILIES
12 u s e 17071715y.

SEC. 201. (a) Title I I of the National Housing Act is amended by
adding after section 235 (as added by section 101 of this Act) the
f ollowinff new^ section:
" R E N T A L AND COOPERATIVE HOUSING FOR LOWER INCOME FAMILIES

"SEC. 236. (a) For the purpose of reducing rentals for lower income
families, the Secretary is authorized to make, and to contract to make,
periodic interest reduction payments on behalf of the owner of a

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

499

rental housing project designed for occupancy by lower income families, Avliich shall be accomplished through payments to morgagees
holding mortgages meeting the sj^ecial requirements specified in this
section.
" (b) Interest reduction payments with respect to a project shall only
be made during such time as the project is operated as a rental housing
project and is subject to a mortgage which meets the mjuirements of,,„^
and is insured under, subsection (j) of this section-^Provided, That
interest reduction payments may be made with respect to a rental or
cooperative housing project owned by a private nonprofit corporation"^
-2 4, •
completion of construction or rehabilitation is approved for receiving
*"
the benefits of this section?^
"(c) The interest reducfion payments to a mortgagee by the Secretary on behalf of a project owner shall l)e in an amount not exceeding
the difference between the monthly payment for principal, interest, and
mortgage insurance premium which the project owner as a mortgagor
is obligated to pay under the mortgage and the monthly payment for
principal and interest such project owner would be obligated to pay
if the mortgage were to bear interest at the rate of 1 per centum per
annum.
" ( d ) The Secretary may include in the payment to the mortgagee Mortgage
such amount, in addition to the amount computed under subsection ^" ^"^ expenses.
.(c), as he deems appropriate to reimburse the mortgagee for its
expenses in handling the mortgage.
"(e) As a condition for receiving the benefits of interest reduction
payments, the project owner shall operate the project in accordance
with such requirements with respect to tenant eligibility and rents as
the Secretary may prescribe. Procedures shall be adopted by the Secretary for review of tenant incomes at intervals of two years (or at
shorter intervals where the Secretary deems it desirable).
"(f) For each dwelling unit there shall be established with the approval of the Secretary (1) a basic rental charge determined on the
basis of operating the project with payments of principal and interest
due under a mortgage bearing interest at the rate of 1 per centum per
annum; and (2) a fair market rental charge determined on the basis
of operating the project with payments of principal, interest, and
mortgage insurance premium which the mortgagor is obligated to pay
under the mortgage covering the project. The rental for each dwelling
unit shall be at tlie basic rental charge or such greater amount, not
exceeding the fair market rental charge, as represents 25 per centum
of the tenant's income.
" ( g ) The project owner shall, as required by the Secretary, ac- char^s^^co^Uec^cumulate, safeguard, and periodically pay to the Secretary all rental tion and deposit,
charges collected in excess of the basic rental charges. Such excess
charges shall be deposited by the Secretary in a fund which may be
used by him as a revolving fund for the purpose of making interest
reduction payments with respect to any rental housing project receiving assistance under this section, subject to limits approved in appropriation Acts pursuant to subsection ( i ) . Moneys in such fund not investment of
needed for current operations may be invested in bonds or other obligations of the United States or in bonds or other obligations guaranteed as to principal and interest by the United States.
" ( h ) In addition to establishing the requirements specified in subsection (e), the Secretary is authorized to make such rules and regulations, to enter into such agreements, and to adopt such procedures as

500

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

he may deem necessary or desirable to carry out the provisions of this
section.
Appropriation.
" ( i ) (1) Thcrc are authorized to be appropriated such sums as may
l)e necessary to carry out the provisions of this section, includinjr such
sums as may be necessary to make interest reduction payments under
contracts entered into under this section. The ae increased by
$40,000,000, on July 1,1969, and by $100,000,000 on July 1, 1970." _
(b) Section 101(b) of such Act is amended by inserting after the ~i.. I * ^ Xfirst sentence the following: "Such term also includes a private nonprofit corporation or other private nonprofit legal entity, a limited
dividend corjwration or other limited dividend legal entity, or a cooperativ'e housing corporation, which is the owner of a rental or cooperative housing projecit financed under a State or local program providing
assistance through loans, loan insurance, or tax abatement and which i
prior to completion of construction or rehabilitation is approved for i
receiving the oenefits of this section."
|
PART B—^LOW-REXT PUBLIC

HOUSING

INCREASED LOW-RENT PUBLIC HOUSING AUTHORIZATION

SEC. 203. (a) Section 10(e) of the United States Housing Act of
1937 is amended by striking out "$366,250,000 per annum, which limit
shall be increased by $47,000,000 on the date of enactment of the Housing and Urban Development Act of 1965, and by further amounts of
$47,000,000 on July 1 in each of the years 1966,1,967, and 1968, respectively," in the first sentence and inserting in lieu thereof the following:
"$554,250,000 per annum, which limit shall be increased by $100,000,000
on the date of enactment of the Housing and Urban Development Act
of 1968 and by further amounts of $150,000,000 on July 1 in each of
the years 1969 and 1970,".
(b) Section 20 of such Act is amended—
(1) by striking out "not to exceed $1,500,000,000" in the firet
sentence and inserting in lieu thereof "which shall not, unless
authorized by the President, exceed $1,500,000,000"; and
(2) by inserting after the first sentence the following: "For the
purpose of determining obligations incurred to make loans pursuant to this Act against any limitation otherwise applicable with
respect to such loans, the Secretary shall estimate the maximum
amount to be loaned at any one time pursuant to loan agreements
then outstanding with public housing agencies."
UPGRADING M A N A G E M E N T A N D SERVICES I N P U B L I C H O U S I N G

52 Stat. 820;
78 Stat. 795;
79 Stat. 4 8 7 .
42 u s e 1410.

63 Stat. 427.
42 u s e 1420.

PROJECTS

SEC. 204. Section 15 of the United States Housing Act of 1937 is Contracts and
ants.
amended by adding at the end thereof the following new paragraph: g r50
Stat. 895.
"(10) The Secretary is authorized to enter into contracts to make 42 u s e 1415.
grants to public housing agencies to assist, where necessary, in financing tenant services for families living in low-rent housing projects.
I n making such contracts and grants, the Secretary shall give preference to programs providing for the maximum feasible participation
of the tenants in the development and operation of such tenant services.

96-600 O -

504

PUBLIC LAW 90-448-AUG. 1, 1968

Tenant serv-

xces

Appropriation.

[82 STAT.

p^j.. pyrposes of tlils paragraph the term 'tenant services' inckides the
following services and activities for families living in low-rent housing
projects: counseling on household management, housekeeping, budgeting, money management, child care, and similar matters; advice as to
resources for job training and placement, education, welfare, health,
and other community services; services which are directly related to
meeting tenant needs and providing a wholesome living environment;
and referral to appropriate ag'encies when necessary for the provision
of such services. To the maxnnum extent available and appropriate,
existing public and private agencies in the community shall be \ised for
the provision of such services. There are authorized to be appropriated
for the purposes of this paragraph not to exceed $15,000,000 for the
fiscal year ending June 80,1969, and not to exceed $30,000,000 for the
fiscal year ending June 30, 1970. Any amounts so appropriated shall
remain available until expended, and any amounts authorized for any
fiscal year under this paragraph but not appropriated may be appropriated for any succeeding fiscal year commencing prior to July 1,
1970.''
P U R C H A S E OF U N I T S BY T E N A N T S

79 Stat. 488.
42 u s e 1415.

SEC. 205. Section 15(9) of the Ignited States Housing Act of 1937
is amended by striking out "which is suitable by reason of its detached
or semidetached construction" and inserting in lieu thereof '', if the
property to be acquired is sufficiently separable from other property
retained by the public housing agency to make it suitable".

5o^st^t^2^g88;
42 use 1401.

S E C . 206. ( a ) Section 1 of t h e U n i t e d S t a t e s H o u s i n g A c t of 1937
is a m e n d e d by s t r i k i n g o u t " u r b a n a n d r u r a l nonfarm'" in t h e first

PUBLIC HOUSING I N INDIAN

42 use ui°o

AREAS

sentence and inserting in lieu thereof "urban, rural nonfarm, and
Indian".
(^^ Section 10(a) of such Act is amended by inserting "or Indian"
after "nonfarm" in the fourth proviso.
LIMITATION

ON H K J l l - R I S E STRUCTURES I N L O W - R E N T P U B L I C
PROJECTS

HOUSING

S E C 207. Section 15 of the United States Housing Act of 1937
is amended by adding at the end thereof (after the new paragraf>h
added by section 204 of this Act) the following new^ paragraph:
"(11) Except in the case of housing predominantly for the elderly,
upon enactment of this paragraph, the Secretary shall not approve
high-rise elevator projects for families with children unless he makes
a determination that there is no practical alternative."
SALE TO T E N A N T S OF L O W - R E N T H O U S I N G I N PRIVATE

^2 u'sc M2ib

ACCOMMODATIONS

SEC. 208. (a) Section 23(f) of the United States Housing Act of
^*^'^^ ^^ amended by inserting " ( 1 ) " after "sliall not apply to", and by
inserting l)efore the period at the end thereof the following: ", or (2)
housing purchased (or in the process of purchase) by the public housing agency for resale to tenants as provided in subsection ( g ) " .
(b) Section 23 of such Act is further amended by adding at the end
thereof the following new subsection:
" ( g ) To the extent authorized in contracts entered into by the
Authority with a public housing agency, such agency may purchase
any structure containing one or more dwelling units leased to provide
low-rent housing in private ac-commodations under this section for the
purpose of reselling the structure to the tenant or tenants of the struc-

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

505

ture or to a group of such tenants occupying units aggregating in
value at least 80 per centum of the structure's total value. Any such
resale shall be made subject to such terms and conditions (including
provision for deferment of the required downpayment and for elimination of or adjustments in the required interest payments during a
temporary period) as may be necessary to enable the tenants involved
to make the purchase without undue financial hardship."
ADDITIONAL SUBSIDY FOR LARGE F A M I L I E S A N D F A M I L I E S OF F N U S U A L L Y
LOW I N C O M E

SEC. 209. (a) Section 2 (2) of the United States Housing Act of 1937
is amended by inserting at the end thereof the following new sentences: "The term 'large families' means families which include four or
more minors. The term 'families of unusually low income' means families with incomes below the income level established by the public
housing agency, as approved by the Authority, who could not be
housed without the additional subsidy authorized under section 10

^g^"Sf Ts^y
42 us^c 1402.

(b) The first proviso in section 10(a) of such Act is amended—
(1) by inserting after "an elderly family," the following: "or
a large lamily, or a family of unusually low income,";
(2) by striking out "to lease the dwelling unit to an elderly or
displaced family at a rental it could afford and"; and
(3) by striking out ", and, in the case of displaced families, if
and to the extent that the average or estimated average rental
for units so occupied by such families was less than the rental
which the Authority determines, on the basis of the average or
estimated average project rentals, would have been established
in leasing the units to families which were neither elderly nor
similarly displaced".

^s stat. 794.

r R O H I B m O N AGAINST C E R T A I N L I M I T A T I O N S ON T Y P E S OR CATEGORIES OF
L O W - R E N T H O U S I N G I N P R R ^ i T E ACCOMMODATIONS

SEC. 210. The first sentence of section 23(d) of the United States
Housing Act of 1937 is amended by inserting before the period at the
end thereof the following: "(and no limitation not specifically provided for in this section shall be imposed by regulations of the Authority on the types or categories of structures or dwelling units, qualifying under subsection (a) (3) and approved under subsection (c), which
may be so used in any community)".

^^ ^'^' '•^e.
'*^

TITLE III—FEDERAL HOUSING ADMINISTRATION
INSURANCE OPERATIONS
MORTGAGE I N S U R A N C E P R E M I U M S FOR SERVICE3IEN A N D T H E I R

WIDOWS

SEC. 301. Section 222 of the National Housing Act is amended—
(1) by striking out "Secretary of the Treasury" each place it
appears and inserting in lieu thereof "Secretary of Transportation"; and
(2) by adding at the end thereof two new subsections as follows:
" ( f ) The Secretary is authorized to transfer to this section the
insurance on any mortgage covering a single-family dwelling or a onefamily unit in a condominium project insured under this Act, if the
mortgage indebtedness thereof has been assumed by a serviceman who
at the tmie of assumption is the owner of the property and either occupies the property or certifies that his failure to do so is the result of his

J^ ^*|^ tu'm
^'"'

506

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

military assignment, or, in the case of the United States Coast Guard,
other assignment.
"(g) Where a serviceman dies while on active duty in the Armed
Forces of the United States or in the United States Coast Guard, leaving a surviving widow as owner of the property, the period of ownership by the serviceman (within the meaning of subsection (c) of this
section) shall extend for two years beyond the date of the serviceman's
death or until the date the widow disposes of the property, whichever
date occurs first. The Secretary of Defense or the Secretary of Transportation, as the case may be, shall notify such widow promptly following the serviceman's death of the additional costs to be borne by
the mortgagor following termination of the two-year period."
MOninCATIONS IN TKRMS OF INSURED MORTGAGES COVERING MULTIFAMILY
PROJECTS

17^5 "^^ ^^°'
^

^^^' '^^^' Title I I of the National Housing Act is amended by adding after section 238 (as added by section 104 of this Act) the following new section :
" M O D I F I C A T I O N S I N TERMS OF INSURED MORTGAGES COVERING MULTIFAMILY PROJECTS
''SEC. 289. (a) The Secretary shall not consent to any request for an
extension of the time for curing a default under any mortgage covering multifamily housing, as defined in the regulations of the Secretary,
or for a modification of the terms of such mortgage, except in conformity with regulations prescribed by the Secretary in accordance
with the provisions of this section. Such regulations shall require, as a
condition to the granting of any such request, that, during the period
of such extension or modification, any part of the rents or other funds
derived by the mortgagor from the property covered by the mortgage
which is not required to meet actual and necessary expenses arising in
connection with the operation of such ])ropei'ty, including amortization charges under the mortgage, be held in trust by the mortgagor
and distributed only with the consent of the Secretary; except that
the Secretary may provide for the granting of consent to any request
for an extension of the time for curing a default under any mortgage
cov'erlng multifamily housing, or for a modification of the terms of
such mortgage, without regard to the foregoing requirement, in any
case or class of cases in which an exemption from such requirement
does not (as determined by th-e Secretary) jeopardize the interests of
the ITnited States.
"(b) Whoever, as an owner of a property which is security for a
mortgage described in subsection ( a ) , or as a stockholder of a corj)oration owning such property, or as a beneficial owner under any business
organization or trust owning such property, or as an officer, director,
or agent of any such owner, (1) willfully uses or authorizes the use of
any part of the rents or other funds derived from property covered
by such mortgage in violation of a regula-tion prescribed by the Secretary under subsection ( a ) , or (2) if such mortgage is determined, as
provided in subsection ( a ) , to be exempt from the requirement of any
such regulation or is not otherwise covered by such regulation, willfully and knowingly uses or authorizes the use, while such mortgage
is in default, of any part of the rents or other funds derived from
the propei'ty covered by such mortgage for any purpose other than to
meet actual and necessary expenses arising in connection with such
oroner^y (including amor-Hzation charges under the mortgage), shall
be fined not more than $5,000 or imprisoned not more than three years,
or both."

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

507

CONDOMINIUMS

SEC. 303 (a) Seotion 234 (c) of the National Housing Act is amended ^s stat. leo;
by striking out "rental housing, and ( 3 ) " in the first sentence and ^^2*usc^m5y.
inserting m lieu thereof the following: "rental housing: Provided,
That a one-family unit in a multifamily project involving eleven or
less units ^hall be eligible for insurance without having been covered
by a project mortgage, and (3)".
(b) Section 234(c) of such Act is further amended by striking out
" (iii) 75 per centum" in the third sentence and inserting m lieu thereof
" (iii) 80 per centum".
(c) Section 234(f) of such Act is amended by striking "five" and ^^ ^***- '^^^•
inserting in lieu thereof "four".
I N S U R A N C E OF LOANS FOR P U R C H A S E OF F E E S I M P L E T I T L E FROM LESSORS

SEC. 304. (a) Title I I of the National Housing Act is amended by 12 use 1707adding after section 239 (as added by section 302 of this Act) the ^^^^yfollowing new section:
u P U R C H A S E O F F E E S I M P L E T I T L E FROM LESSORS

"SEC. 240. (a) The Secretary is authorized, upon such terms and
conditions as he may prescribe, to make commitments to insure and
to insure loans made by financial institutions for the purpose of financing purchasers by homeowners of the fee simple title to property on
which their homes are located.
" ( b ) As used in this section—"(1) the term 'financial institution' means a lender approved stituu^n""'^^'"
by the Secretary as eligible for insurance under section 2 or a 12 use 1703.
mortgagee approved under section 203(b) ( 1 ) ; and
52 stat. 10.
"(2) the term 'homeowner' means a lessee under a long-term "Homeowner!'
ground lease.
"(c) To be eligible for insurance under this section, a loan shall—
"(1) relate to property on which there is located a dwelling
designed principally for a one-, two-, three-, or four-family
residence;
"(2) not exceed the cost of purchasing the fee simple title, or
$10,000 per family unit, whichever is the lesser;
"(3) be limited to an amount which when added to any outstanding indebtedness related to the property (as determined by
the Secretary) creates a total outstanding indebtedness which does
not exceed the applicable mortgage limit prescribed in section
203(b);
"(4) bear interest at not to exceed such per centum per annum
(not in excess of 6 per centum), on the amount of the prmcipal obligation outstanding at any time, as the Secretary finds necessary
to meet market conditions, and such other charges (including
service charges and appraisal, inspection, and other fees) as may
be approved by the Secretary;
"(5) have a maturity satisfactory to the Secretary, but not to
exceed twenty years from the beginning of amortization of the
loan or three-quarters of the remaining economic life of the home,
whichever is the lesser; and
" (6) comply with such other terms, conditions, and restrictions
as the Secretarj^ may prescribe.
" ( d ) The provisions of paragraphs (3), (5), (6), (7), (8), and
Stat. 155.
(10) of section 220(h) shall be applicable to loans insured under this 75
12 u s e 1715k.
section and, as applied to loans insured under this section, references

508

48 Stat. 132;
79 Stat. 465.

Ante, p. 5 07.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

in those paragraphs to 'home imporvement loans' and 'this subsection'
shall be construed to refer to loans under this section."
(b) Section 5 (c) of the Home Owners' Loan Act of 1933 (12 U.S.C.
1464(c)) is amended by adding immediately after the next to the last
paragraph the following new paragraph:
"Notwithstanding any other i)rovision of this subsection, an association may invest in loans or obligations, or interests therein, as to which
the association has the benefit of insurance under section 240 of the
National Housing Act, or of a commitment or agreement therefor, and
such investments shall not l)e included in any percentage of assets or
other percentage referred to in this subsection.''
E X T E N S I O N o r SECTION 2 2 1 ( d ) ( 2 ) SALES H O U S I N G PROGRAM FOR T W O - ,
T H R E E - , A N D F O U R - F A M I L Y RESIDENCES TO ALL LOW AND MODERA'IT-:
INCOME FAMILIES

73 Stat. 659.
12 use 1715

SEC. 305. Sectiou 221(d)(2) of the National Housing Act is
amended by striking out "a displaced family" at the end of the first
proviso and inserting in lieu thereof "the morigagor".
REMOVAL

68 Stat. 599.

73 Stat. 658.^
12 u s e 1715k.
,o TTcr^ ,mri,

OF DIVIDEND RESTRICTION FOR N O N D W E L L I N G
S E C r n O N 2 2 1 PROJECl^S

FACILITIES

SEC. 306. Section 221(f) of the National Housing Act is amended
by striking out in the first sentence all that follows the word
"mortgage" in the proviso and inserting in lieu thereof " : Provided
further, That, in the case of a mortgage which bears interest at the
below-market interest rate prescribed in the proviso of subsection
((J) (5), the pTovisioiis of section 220(d) (3) (B) (iv) shall only apply
^^ ^^^^ mortgagor waives the right to receive dividends on its equity
investment in the portion thereof devoted to commercial facilities."
S U P P L E M E N T A L LOAN PROGRAM FOR PROJECTS F I N A N C E D W I T H
H O U S I N G A D M I N I S T R A T I O N I N S U R E D MORTGAGES

12 use 1707^"^^^y-

IN

FEDFJtAL

S E C 307. Title I I of the National Housing Act is amended by adding after section 240 (as added by section 304 of this Act) the following new section:
" S U P P L E M E N T A L L O A N S FOR M U L T I F A M I L Y

PROJECTS

"SEC. 241. (a) With respect to a multifamily project or group practice facility covered by a mortgage insured under any section or title
of this Act, the Secretary is authorized, upon such terms and conditions as he may prescribe, to made commitments to insure, and to insure, supplemental loans (including advances during construction or
improvement) made by financial institutions approved by the Secretary. As used in this section, 'supplemental loan' means a loan, advance of credit, or purchase of an obligation representing a loan or
advance of credit made for the purpose of financing improvements
or additions to such project or facility: Provided, That a loan involv73 Stat. 663.
ij^nr a iiursiug home covered by a mortgage insured under section 232
1715W. ^j. ^ loan involving a group practice facility covered by a mortgage
80 Stat. 1274. insured under title X I may also be made for the purpose of financing
e/f "^^ i749aaa gq^ipj^^gj^^ j^o be used in the operation of such nursing home or facility.
" (b) To be eligible for insurance under this section, a supplemental
loan shall—
"(1) be limited to 90 per centum of the amount which the Secretary estimates will be the value of such improvements, additions, and equipment, except that such amount when added to the

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

509

outstanding balance of the mortgage covering the project or facility, shall not exceed the maximum mortgage amount insurable
under the section or title pursuant to which the mortgage covering such project of facility is insured;
"(2) have a maturity satisfactory to the Secretary but not to
exceed the remaining term of the mortgage;
"(3) bear interest (exclusive of premium charges for insurance and service charges, if any) at not to exceed such per centum
per annum (not in excess of 6 per centum), on the amount of the
principal obligation outstanding at any time, as the Secretary
finds necessary to meet market conditions ;
"(4) be secured in such manner as the Secretary may require;
"(5) be governed by the labor standards provisions of section
212 that are applicable to the section or title pursuant to which the
mortgage covering the project or facility is insured; and
"(6) contain such other terms, conditions, and restrictions as
the Secretary may prescribe.
"(c) The provisions of subsections ( d ) , (e), ( g ) , ( h ) , ( i ) , (j), ( k ) ,
(1), and (n) of section 207 shall be applicable to loans insured under
this section, except that (1) all references to the term 'mortgage' shall
be construed to refer to the term 'loan' as used in this section, (2) loans
involving projects covered by a mortgage insured under section 218
that is the obligation of the Cooperative Management Housing Insurance Fund shall be insured under and shall be the obligation of such
fund, and (3) loans involving projects covered by a mortgage insured
under section 236 shall be insured under and shall be the obligation of
the Special Risk Insurance Fund."
H O M E I M P R O V E M E N T LOANS
INCREASE I N M A X I M U M
r i N A N C E CHARGE, A N D LOAN A M O U N T

53 Stat. 807.
12 u s e 1715c.

52 stat. is.
^'* ^'^t- ^^-^
^ ^''^'
^"^''' P- '^^^•

MATURITY,

SEC. 308. Section 2(b) of the National Housing Act is amended— 7o^stat^''o9°i^'
(1) by striking out "$3,600" and insertnig in lieu thereof 12 use 1703
"$5,000";
(2) by striking out "five years'" and inserting in lieu thereof
"seven years";
(3) by striking out "$5 discount" and inserting in lieu thereof
"$5.50 discount"; and
(4) by striking out "$1 discount" and inserting in lieu thereof
"$4.50 discount".
EXPERIMENTAL

HOUSING

PROGRAM

SEC. 309. Section 233 of the National Housing Act is amended—
(1) by striking out "of this title" immediately before the semicolon in subsection (b) and inserting in lieu thereof "or titles of
this Act"; and
(2) by striking out "of this title" in subsection (e) and inserting in lieu thereof "or title of this Act",

H ^'^^ //^^^

T E R M OF FEDERAL H O U S I N G A D M I N I S T R A T I O N MORTGAGES FOR LAND
DEVELOPMENT

SEC. 310. Section 1002(d)(1) of the National Housing Act is
amended—
(1) by striking out "seven" and inserting in lieu thereof "ten";
and
(2) by striking out tlie semicolon and inserting in lieu thereof
the following: " : Provided, That the Secretary may agree to a
reasonable extension of the term of a mortgage, the maturity of

]lf'i^:t^^a,

12 u s e 1749bb.

510

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

which is limited by this paragraph to not more than ten years, if
he determines that unusual or unforeseen circumstances make
such extension necessary to avoid undue hardship to the
mortgagor;".
R E H A B I L I T A T E D M U L T I F A M I L Y P R O J E C T S I N U R B A N R E N E W A L AREAS

68 Stat. 596.

70 Stat. 1097;
42*usc 1460.
12 use \i\si

SEC. 311. (a) Section 220(d) (3) (B) (ii) of the National Housing
^.ct is amended by inserting immediately before the semicolon at the
end thereof " : Provided further^ That the mortgage may involve the
financing of the purchase of property which has been rehabilitated by
a local public agency with Federal assistance pursuant to section
110(c) (8) of the Housing Act of 1949, and, in such case the foregoing
limitations upon the amount of the mortgage shall be based upon the
appraised value of the property as of the date the mortgage is accepted
for insurance''.
^^^ Section 221 (d) (3) (iii) of such Act is amended by inserting immediately before the colon at the end of the first proviso " : Provided
further. That the mortgage may involve the financing of the purchase
of property which has been rehabilited by a local public agency
with Federal assistance pursuant to section 110(c) (8) of the Housing
Act of 1949, and, in such case, the amount of the mortgage shall not
exceed the appraised value of the property as of the date the mortgage
is accepted for insurance".
MISCELLANEOUS HOUSING

68 Stat. 605.
12 u s e 1715n.

69^stat^48^4°^'

75•^L^!^Vc^^°^'
Stat. 154.
^ Stat.

( S4-

75 Stat. 182.

INSURANCE

SEC. 312. (a) Section 223 of the National Housing Act is amended—
(1) by striking out so much of subsection (a) as precedes paragraph (1) and inserting in lieu thereof the following:
" ( a ) Notwithstanding any of the provisions of this Act and
without regard to limitations upon eligibility contained in any
section or title of this Act, the Secretary is authorized, upon application by the mortgagee, to insure or make commitments to insure under
any section or title of this Act any mortgage—";
(2) by striking out "applicable to loans insured under section
203, 207, 213, 220, 221, 222, 231, 232, or 233, as the case may be"
^^ ^^^^ ^'^^^ ^^^ secoud provisos of subsection (a) (7) and inserting in lieu thereof "prescribed under the applicable section or
title of this Act";
(3) by striking out "this title" each time it appears in subsection (c) and inserting in lieu thereof "this Act";
(4) by striking out "title I, title I I , title V I , title V I I , title
V I I I , or title I X " in subsection (c) and inserting in lieu thereof
"any section or title of this Act"; and
(5) by striking out "(except that in any case the payment of
insurance shall be in debentures)" at the end of subsection (c).
(b) Section 223(d) of such Act is amended by striking out all
that follows "as he may prescribe," and inserting m lieu thereof the
following: "insure under the same section as the original mortgage
a loan by the mortgagee in an amount not exceeding the excess of
the foregoing expenses over the project income. Such loan shall (1)
bear interest (exclusive of premium charges for insurance) at not to
exceed the per centum per annum currently permitted for mortgages
insured under the section under which it is to be insured, (2) be
secured in such manner as the Secretary shall require, and (3) be
limited to a term not exceeding the unexpired term of the original
mortgage. The Secretary is authorized to collect a premium charge
for insurance of loans pursuant to this subsection in an amount computed at the same premium rate as is applicable to the original mort,.s.

,^

^

.•••

,*P •

..

---

.

,

-^-^

.

«

^-«-^

•

1

-r-^-w-w-

. •

-•

82

STAT.

]

PUBLIC LAW 90-448-AUG. 1, 1968

511

gage. This premium shall be payable in cash or in debentures of the
insurance fund under which the loan is insured at par plus accrued
interest. I n the event of a failure of the borrower to make any payment due under such loan or under the original mortgage, both the
loan and original mortgage shall be considered in default, and if such
default contmues for a period of thirty days, the lender shall be entitled to insurance benefits, computed in the same manner as for tlie
original mortgage, except that in determining the interest rate under
section 224 for the debentures representing the portion of the claim es stat. eoe;
applicable to the loan, the date of the commitment to insure the ^^f^usc^mso
loan and the insurance date of the loan shall be taken into consideration rather than the commitment or insurance date for the original
mortgage."
S U P P L E M E N T A R Y LOANS FOR COOPERATIVE H O U S I N G P U R C H A S E D FROM T H E
FEDERAL (JOVERNMENT

SEC. 313. Section 213(j) of the National Housing Act is amended—
(1) by inserting after the first sentence of paragraph (1) the
following sentence: "The Secretary is further authorized to make
commitments to insure and to insure supplementary cooperative
loans (including advances during construction or improvement)
with respect to any property purchased from the Federal Government by a nonprofit corporation or trust of the character described in paragraph (1) of subsection ( a ) , if the property is
covered by an uninsured mortgage representing a part of the
purchase price."; and
(2) by adding before the semicolon at the end of paragraph
(2) (B) the following: " ; except that, in the case of repairs or
improvements to a property covered by an uninsured mortgage
dated more than twenty years prior to the date of the commitment to insure, of such magnitude that the Secretary deems them
to be a major rehabilitation or modernization of such property,
the loan may have a maturity date up to ten years in excess of
the remaining term of the uninsured mortgage"'.
EQUIPMENT IN NURSING

75 stat. 179.
^^ ^^^ i7i5e.

64 stat. 54.

HOMES

SEC. 314. Section 232 of the National Housing Act is amended—
(1) by striking out subsection (b)(2) and inserting in lieu
thereof the following:
"(2) the term 'mortgage' means a first mortgage on real estate
in fee simple, or on the interest of either the lessor or lessee thereof (A) under a lease for not less than ninety-nine years which is
renewable, or (B) under a lease having a period of not less than
fifty years to run from the date the mortgage was executed. Tlie
term 'first mortgage' means such classes of first liens as are commonly given to secure advances (including but not limited to
advances during construction) on, or the unpaid purchase price
of, real estate under the laws of the State in which the real estate
is located, together with the credit instrument or instruments, if
any, secured thereby, and any mortgage may be in the form of one
or more trust mortgages or mortgage indentures or deeds of trust,
securing notes, bonds, or other credit instruments, and, by the
same instrument or by a separate instrument, may create a security interest in initial equipment, whether or not attached to the
realty. The term 'mortgagor' shall have the meaning set forth in
section 207 (a) of this Act.";
(2) by striking out so much of subsection (d) as precedes paragraph (1) and inserting in lieu thereof the following:

J3 stat. 663.^
^^^"''

52 stat. le.
^ '^^

512

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

" (d) I n order to carry out the purposes of this section, the Secretary
is authorized to insure any mortgage which covers a new or rehabilitated nursing home, including equipment to be used in its operation,
subject to the following conditions:"; and
(3) by striking out "when the proposed improvements are completed" before the period at the end of subsection (d) (2) and
inserting in lieu thereof the following: ", including equipment to
be used in the operation of the nursing home, when the proposed
improvements are completed and the equipment is installed".
F L E X I B L E I N T E R E S T RATES FOR C E R T A I N F H A I N S U R A N C E PROGRAMS

Ante,

p . 113.

SEC. 315. Section 3 (a) of the Act entitled "An Act to amend chapter
37 of title 38 of the United States Code with respect to the veterans'
home loan program, to amend the National Housing Act w^ith respect
to interest rates on insured mortgages, and for other purposes",
approved May 7, 1968, is amended by inserting "235(3) (2) ( C ) , 236
U ) ( 4 ) ( B ) , 240(c)(4), 241(b)(3), 2 4 2 ( d ) ( 3 ) ( B ) , " after "234(f),".
F H A SECTION

80 Stat. 1268^.
1715.

O U T L Y I N G AREAS

?^?- ^^'^- Section 203(i) of the National Housing Act is amended by
striking out "not in excess of $12,500" and inserting in lieu thereof
"not in excess of $13,500".
,',

80^stat^\266'

PROGRAM

QEC. 316. (a) Scctiou 221(h) (2) (A) of the National Housing Act
is amended to read as follows:
" ( A ) be executed by a private nonprofit corporation or association, approved by the Secretary, for financing the purchase
and rehabilitation (with the intention of subsequent resale) of
property comprising one or more tracts or parcels, whether or not
contiguous, upon which there is located deteriorating or substandard housing consisting of (i) four or more single-family
dw^ellings of detached, semidetached, or row construction, or (ii)
four or more one-family units in a structure or structures for
which a plan of family unit ownership approved by the Secretary
is established;",
(b) Section 221(h) of such Act is amended by adding at the end
thereof (after the new paragraph added by section 101(c) (3) of this
Act) two new paragraphs as follows:
"(7) Where the Secretary has approved a plan of family unit
ownership, the terms 'single-family dwelling', 'single-family dwellings', 'individual dwelling', an 'individual dwellings' shall mean a
family unit or family units, together with the undivided interest (or
interests) in the common areas and facilities.
"(8) For purposes of this subsection, the terms 'single-family
dwelling' and 'single-family dwellings' (except for purposes of paragraph (7)) shall include a two-family dwelling which has been
approved by the Secretary if one of the units is to be occupied by the
owner."
HOUSING I N

JltTu^eV^'
12 use 1709

221(h)

SEASONAL H O M E S

'^^*^" ^^^' ^ectiou 203 of the National Housing Act is amended by
adding at the end thereof the following new subsection:
"(m) The Secretary is authorized to insure under this section any
mortgage meeting the requirements of subsection (b) of this section,
except as modified by this subsection. To be eligible, the mortgage
shall involve a principal obligation not in excess of $15,000 and not

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

513

in excess of 75 per centum of the appraised value of the property, as
of the date the mortgage is accepted for insurance. The mortgage shall
cover a dwelling for single-family occupancy which is approved for
mortgage insurance prior to the beginning of construction. The dwelling need not be designed for year-round occupancy, but it shall (1)
meet standards prescribed by the Secretary, and (2) be located in an
area where the Secretary finds it is not practicable to obtain conformity with many of the requirements essential to the insuring of mortgages on housing in built-up urban areas. The development of the
property with respect to which the mortgage is executed shall be
consistent with the conservation of water and other natural resources
of the area, and such property shall be an acceptable risk, giving consideration to the economic potential of the area in which the dw^elling
is located and the contribution that the housing will make toward
improving the area. The Secretary may suspend the issuance of commitments under this subsection for the msurance of mortgages secured
by properties situated in any area, whenever he determines that (i)
there is a serious and unusual shortage of mortgage funds for residential construction in such area, (ii) such insurance would affect
materially and adversely the availability of mortgage funds for residential construction in such area, and (iii) such suspension would not
have an adverse impact upon the balanced economic development of
the area."
TITLE IV—GUARANTEES FOR FINANCING NEW
COMMUNITY LAND DEVELOPMENT
CITATION

SEC. 401. This title may be referred to as the "New Communities
Act of 1968''.
PURPOSE

SEC. 402. It is the purpose of this title, by facilitating the enlistment
of private capital in new community development, to encourage the
development of new communities that—
(1) contribute to the general betterment of living conditions
through the improved quality of community development made
possible by a consistent design for the provision of homes, commercial and industrial facilities, public and community facilities,
and open spaces;
(2) make substantial contributions to the sound and economic
growth of the areas in which they are located;
(3) provide needed additions to the general housing supply;
(4) provide opportunities for innovation in housing and community development technology and in land use planning;
(5) enlarge housing and employment opportunities by increasing the range of housing choice and providing new investment
opportunities for industry and commerce;
(6) encourage the maintenance and growth of a diversified
local homebuilding industry; and
(7) include, to the greatest extent feasible, the employment of
new and imj)roved technology, techniques, materials, and methods in housing construction, rehabilitation, and maintenance
under programs administered by the Department of Housing and
Urban Development with a view to reducing the cost of such construction, rehabilitation, and maintenance, and stimulating the
increased and sustained production of housing under such
programs.

citation of title.

514

PUBLIC LAW 90-448-AUG. 1, 1968
GUARANTEE

[82 STAT.

AUTHORITY

SEC. 403. To carry out the purposes of this title the Secretary is
authorized to guarantee, and enter into commitments to j*;uarantee, the
bonds, debentures, notes, and other obligations issued by new community developers to help finance new community development projects. The Secretary may make such guarantees and enter into such
commitments, subject to the limitations contained in sections 404 and
405, upon such terms and conditions as he may prescribe, taking into
account (1) the large initial capital investment required to finance
sound new communities, (2) the extended period before initial returns
on this type of investment can be expected, (8) the irregular
pattern of cash returns characteristic of such investment, and (4) the
financial and security interests of the United States in connection with
guarantees made under this title.
ELIGIBLE N E W

COMMUNITY

DEVEIvOPMENT

SEC. 404. No guarantee or commitment to guarantee may be made
under this title unless the Secretary has determined that—
(1) the proposed new community (A) will be economically
feasible in terms of economic base or potential for growth, and
(B) will contribute to the orderly growth and development of the
area of which it is a p a r t ;
(2) there is a practicable plan (including appropriate time
schedules) for financing the land acquisition and land development costs of the proposed new community and for improving and
marketing the land which, giving due consideration to the public
purposes of this title and the special problems involved in financing new communities, represents an acceptable financial risk to the
United States;
(3) there is a sound internal development plan for the new community which (A) has received all governmental approvals
required by State or local law or by the Secretary; and (B) is
'acceptable to the Secretary as providing reasonable assurance that
the development will contribute to good living conditions in the
area being developed, wdll be characterized by sound land use patterns, will include a proper balance of housing for families of low
and moderate income, and will include or be served by such shopping, school, recreational, transporta.tion, and other facilities as
the Secretary deems satisfactory; and
(4) the internal development plan is consistent with a comprehensive plan which covers, or with, comprehensive planning being
carried on for, the area in w^hich the land is situated, and which
meets criteria established by the Secretary for such comprehensive
plans or planning.
ELIGIBI>E OBLIGATIONS

SEC. 405. (a) Any bond, debenture, note or other obligation guaranteed under this title shall—
(1) be issued by a new community developer, other than a public body, approved by the Secretary on the basis of financial,
technical and administrative ability which demonstrates his capacity to carry out the proposed project;
(2) be issued to and held by investors approved by, or meeting
requirements prescribed by, the Secretary, or if an offering to
the public is contemplated, be underwritten upon terms and conditions approved by the Secretary;

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

515

(3) be issued to finance a program of land development (including acquisition or use of land) approved by the Secretary:
Provided, That the Secretary shall, through cost certification
procedures, escrow or trusteeship requirements, or other means,
insure that all proceeds from the sale of obligations guaranteed
under this title are expended pursuant to such program;
(4) involve a principal obligation in an amount not to exceed
the lesser of (A) 80 per centum of the Secretary's estimate of
the value of the property upon completion of the land development or (B) the sum of 75 per centum of the Secretary's estimate
of the value of the land before development and 90 per centum
of his estimate of the actual cost of the land development;
(5) bear interest at a rate satisfactory to the Secretary, such
interest to be exclusive of any service charges and fees that may
be approved by the Secretary ;
(6) contain repayment and maturity provisions satisfactory to
the Secretary; and
(7) contain provisions which the Secretary shall prescribe with
respect to the protection of the security interests of the United
States (includnig subrogation provisions), liens and releases of
liens, payment of taxes, and such other matters as the Secretary
may, in his discretion, prescribe.
(b) The outstanding principal obligations guaranteed under this
title with respect to a single new community development project
shall at no time exceed $50,000,000.
F E E S A N D CHARGES

SEC. 406. The Secretary is authorized to establish and collect fees
for guarantees made under this title and may make such charges as
he considers reasonable for the analysis of development and financing
plans and for appraisals and inspections related to new community
development projects. On or before January 1, 1970, the Secretary ^^^1°^^'° *^°"'
shall make a report to the Congress concerning the fees and other gress.
charges under this title that he estimates will be adequate to provide
income sufficient for a self-supporting program.
GUARANTEE

FUND

SEC. 407. (a) To provide for the payment of any liabilities incurred
as a result of guarantees made under this title, the Secretary is authorized to establish a revolving fund which shall be comprised of
(1) receipts from fees and charges; (2) recoveries under security or
subrogation rights or other rights, and any other receipts obtained
in connection with such guarantees; and (3) such sums, which are
hereby authorized to be appropriated, as may be required for program operations and nonadministrative expenses and to make any
and all payments guaranteed under this title.
(b) The full faith and credit of the United States is pledged to
the payment of all guarantees made under this title with respect to
both principal and interest, including (1) interest, as may be provided
for in the guarantee, accruing between the date of default under a
guaranteed obligation and the payment in full of the guarantee, and
(2) principal and interest due under any debentures issued by the
Secretary toward payment of guarantees made under this title.
(c) Notwithstanding any other provision of law relating to the
acquisition, handling, improvement, or disposal of real and other
I)roperty by the United States, the Secretary shall have power, for
the protection of the interests of the guarantee fund authorized under
this section, to pay out of such fund all expenses or charges in con-

516

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

nection with the acquisition, handling, improvement, or disposal of
any property acquired by him under this title; and notwithstanding
any other provision of law, the Secretary shall also have power to pursue to final collection by way of compromise or otherwise all claims
acquired by him in connection with any security, subrogaticm, or
other rights obtained by him in carrying out this title.
(d) The aggregate of the outstanding principal obligations guaranteed under this title shall at no time exceed $250,0()0,()00.
INCONTESTABILITY

SEC. 408. Any guarantee made by the Secretary under this title shall
be conclusive evidence of the eligibility of the obligations for such
guarantee, and the validity of any guarantee so made shall be incontestable in the hands of a qualified holder of the guaranteed obligation except for fraud or material misrepresentation on the pail of
such holder.
ENCOURAGEMENT

OF SMALL

BUILDERS

SEC. 409. The Secretary shall adopt such requirements as he deems
necessary to assure that new community construction assisted under
this title will encourage the maintenance of a diversified local homebuilding industry and broad participation by builders, particularly
small builders.
LABOR

49 Stat. 1011;

63 Stat. 108.

SEC. 410. All laborers and mechanics employed by contractors or
subcontractors in land development assisted under section 403 shall be
paid wages at rates not less than those prevailing on similar construction in the locality as determined by the Secretary of Labor in accordance with the Davis-Bacon Act, as amended (40 U.S.C. 276a^—
276a-5). No assistance shall be extended under section 408 for land
development without first obtaining adequate assurance that these
labor standards will be maintained upon the construction work
involved in such development. The Secretary of Labor shall have,
with respect to the labor standards specified in this section, the authority and functions set forth in Reorganization Plan Numbered 14 of
1950 (64 Stat. 1267), and section 2 of the Act of June 13, 1934 (40
U.S.C. 276c).
REAL PROPERTY

TAXATION

SEC. 411. Nothing in this title shall be construed to exempt any real
property that may be acquired and held by the Secretary as a result
of the exercise of lien or subrogation rights from real property taxation to the same extent, according to its value, as other real property
is taxed.
S U P P L E M E N T A R Y GRANTS

Federal contribution.

SEC. 412. (a) The Secretary is authorized to make supplementary
grants to State and local public bodies and agencies carrying out new
community assistance projects, as defined in section 415(c), if the
Secretary determines that such grants are necessary or desirable for
carrying out a new community development project approved for
assistance under section 403, and that a substantial number of housing
units for low and moderate income persons is to be made available
through such development project.
(b) I n no case shall any grant under this section exceed 20 per
centum of the cost of the new community assistance project for which
the grant is made; and in no case shall the total Federal contributions
to the cost of such project be more than 80 per centum.

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

517

(c) In carrying out his authority under this section the Secretary
shall consult with the Secretary oi Agriculture with respect to new
community assistance projects assisted by that Department, and he
shall, for the purpose of subsection ( b ) , accept that Department's
certifications as to the cost of such projects.
(d) There are authorized to be appropriated for grants under this Appropriations.
section not to exceed $5,000,000 for the fiscal year ending J u n e 30,
1969, and not to exceed $25,000,000 for the fiscal year ending J u n e 30,
1970. Any amounts so appropriated shall remain available until exl^ended, and any amounts authorized for any fiscal year under this
subsection but not appropriated may be appropriated for any succeeding fiscal year commencing prior to July 1, 1970.
(lENEKAL PROVISIONS AND RULES AND REGULATIONS

SEC. 413. I n the performance of, and with respect to, the functions,
powers, and duties vested in him by this title, the Secretary shall
(in addition to any authority otherwise vested in him) have the
functions, powers, and duties (including the authority to issue rules
and regulations) set forth in section 402, except subsections (c) (2),
(d), and ( f ) , of the Housing Act of 1950: Provided, That subsection ^^ stat. 78;
( a ) ( 1 ) of section 402 shall not apply with respect to functions, powers, ^^Tusc V749a.
and duties under section 412 of this title.
A U D I T BY G E N E R A L A C C O U N T I N G

OFFICE

SEC. 414. Insofar as they relate to any grants or guarantees made
pursuant to this title, the financial transactions of recipients of Federal grants or of developers whose obligations are guaranteed by the
United States pursuant to this title may be audited by the General
Accounting Office under such rules and regulations as may be
prescribed by the Comptroller General of the United States. The °^° access to
representatives of the General Accounting Office shall have access to all '^^""'^ ^' ^''''
books, account, records, reports, files, and all other papers, things, or
property belonging to or m use by such developers or recipients of
grants pertainnig to such financial transactions and necessary to
facilitate the audit.
DEFINITIONS

SEC. 415. As used in this title—
(a) The term "land development" means the process of grading
land, making, installing, or constructing water lines and water supply
installations, sewer lines and sewage disposal installations, steam, gas,
and electric lines and installations, roads, streets, curbs, gutters, sidewalks, storm drainage facilities, and other installations or work,
whether on or off the site, which the Secretary deems necessary or
desirable to prepare land for residential, commercial, industrial, or
other uses, or to provide facilities for public or common use. The term
"land development" shall not include any building unless it is (1) a
building which is needed in connection with a water supply or sewage
disposal installation or a steam, gas, or electric line or installation, or
(2) a building, other than a school, which is to be owned and maintained jointly by the residents of the new community or is to be transferred to public ownership, but not prior to its completion.
(b) The term "actual costs" means the costs (exclusive of rebaites
or discounts) incurred by a new community developer in carrying out
the land development assisted under this title. These costs may include
amounts paid for labor, materials, construction contracts, land planning, engineers' and architects' fees, surveys, taxes, and interest during
development, organizational and legal expenses, such allocation of gen-

518

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

11 vTc 3^^o2
79 Stat. 931.

eral overhead expenses as are acceptable to the Secretary, and other
items of expense incidental to development which may be approved
by the Secretary. If the Secretary determines that there is an identity
of interest between the new community developer and a contractor,
there may be included as a part of actual costs an allowance for the
contractor's profit in an amount deemed reasonable by the Secretary,
(c) The term "new community assistance projects" means projects
assisted by grants made under section 70^ of the Housing and Urban
I^velopment Act of 1965, section 306 (a) (2) of the Consolidated Farm^rs' Home Administration Act, or title V I I of the Housing Act of

7 use 1926.

1961.

7S Stat 1 8"^*
79 Stat. 494
42 u s e 1500-

isooe.
75 Stat. 174;
^°42*usc^i492
69 Stat. 633.
12 u s e 3 7 1 .

79 Stat. 4 6 1 .
12 u s e 1749aa.

12 us^c 1^^^

CONFORMING

AMENDMENTS

SEC. 416. (a) Section 202(b)(4) of the Housing Amendments of
1955 is amended by adding before the period at the end of the second
sentence "or under title I V of the Housing and Ur'ban Development
Act of 1968".
(b) The first paragraph of section 24 of the Federal Reserve Act
is amended by striking out all that follows "national banking association" in the fourth sentence and adding "may make loans or purchase
obligations for land development which are secured by mortgages
insured under title X of the National Housing Act or guaranteed
under title I V of the Housing and Urban Development Act of 1968.".
(c) The paragraph which, prior to the amendments made by this
Act, was the next to last paragraph of section 5(c) of the Home
Owners' I ^ a n Act of 1933 is amended by adding at the end thereof the
following new sentence: "Without regard to any other provision of
this subsection, an association may invest in loans or obligations, or
interests therein, as to which the association has the benefit of any
guaranty under title I V of the Housing and Urban Development Act
of 19()8, as now or hereafter in effect, or of a commitment or agreement therefor, and such investments shall not be included in any percentage of assets or other percentage referred to in this subsection."
T I T L E V—URBAN R E N E W A L
NEIGHBORHOOD D E V E L O P M E N T

79^star45V^477
42 use 1450-

PROGRAMS

^ ^ - ^^^' ^^^ ^^^^^ ^ ^^ ^^^ Houslug Act of 1949 is amended by adding after the title heading the following new subheading:

1468.

"PART A—URBAN RENEWAL PROJECTS, DEMOLITION PROGRAMS,
AND CODE ENFORCEMENT PROGRAMS"

(b) Title I of such Act is further amended by adding at the end
thereof the following new p a r t :
" P A R T B—NEIGHBORHOOD DEVELOPMENT PROGRAMS
"PURPOSE AND AUTHORITY

"SEC. 131. (a) To facilitate more rapid renewal and development of
urban areas on an effective scale, and to encourage more efficient and
flexible utilization of public and private development opportunities
by local communities in such areas, the Secretary is authorized to make
financial assistance available under this title to local public agencies
for undertakings and activities which are carried out under a neighborhood development program approved by him pursuant to this part.
"(b) A neighborhood development program shall consist of urban
renewal project undertakings and activities in one or more urban re-

82 STAT. J

PUBLIC LAW 90-448-AUG. 1, 1968

519

newal areas which are planned and carried out on the basis of annual
increments in accordance with the provisions of this title for planning
and carrying out urban renewal projects, except as modified by the
provisions of this part.
"(c) No application for financial assistance in planning and carrying out a neighborhood development program shall be approved by tlie
Secretary unless—
''(1) the governing body of the locality has, by resolution or
ordinance, approved the proi>osed program and the annual increment covered by the application and authorized the filing of the
application for financial assistance; and
"(2) the Secretary has concluded that there is the necessary
capacity to carry out the undertakings and activities included
under the program.
"FINANCIAL PROVISIONS

"SEC. le^2. (a) Upon the approval of a neighborhood de\elopment
program by the Secretary, the cost of any undertakings and activities
authorized as part of the program shall be financed in accordance witli
the loan, capital grant, and project cost provisions of part A, excej)t
• 1

j_

*

^2 use 14501468.

1 hat—
"(1) net project cost may be calculated on the basis of costs
incurred and proceeds derived for the account of the program
during a specified twelve-month period, and may be recalculated
for succeeding periods of twelve months to reflect additional costs
and additional proceeds since the date of the last computation or
recomputation; and
"(2) if property has been acquired but not disposed of prior
to the computation or recomputation of net project cost, temporary loans made or secured under this title to finance undertakings or activities included in the program may remain outstanding until the property has been disposed of and the
proceeds thereof together with additional funds becoming available to the program, are sufficient to permit repayment of the loans.
"(b) In the event that gross project cost as computed for a specified twelve-month period is exceeded, with respect to that period, by
the sum of (1) the sales price of land or other property sold, and (2)
the imputed capital value of land or other proj^erty leased or retained
by the local public agency in accordance with the provisions of the
urban renewal plan, the local public agency shall pay to the Secretary
two-thirds of the excess (or three-fourths in the case of a program on
a three-fourths grant basis), which amount shall be available to the
Secretary for grant payments under section 103.
63 stat. 416;
-^

'^

^ ''
LOCAL GRANTS-IN-AID

"SEC. 133. (a) F o r the purpose of determining the eligibility of
local grants-in-aid in connection with undertakings and activities carried out under a neighborhood development pi-ogram, the tliree-year
period referred to in the second paragraph of section 110(d) shall be
deemed to be a period of three years prior to the authorization by the
Secretary of the first contract for financial assistance under the program which includes the urban i-enewal area which is benefited by the
public improvement or facility for which credit is claimed; and the
seven-year iperiod referred to m clause (1) of section 112(b) shall be
deemed to be a period of seven years prior to the date of authorization
by the Secretary of the first contract for financial assistance under the
program which includes the urban renewal area which is benefited by
the expenditures for which credit is claimed.

S-600 O - 69 - 36

7342Stat.
u s e672.
1453.

^^ ^g^'- ^^^^_

35 stat. 169.
42 u s""
e 1463.

520

42 use U5°4.

PUBLIC LAW 90-448-AUG. 1, 1968

" (b) No portion of the cost of a public improvement or public facility (to the extent otherwise eligible) may be included as a local
grant-in-aid in computing the gross project cost of an approved program for any twelve-month period—
"(1) prior to commencement of construction of the improvement or facility, or
" (2) in excess of the amount actually expended or obligated by
contract.
"(<^) The provisions of section 104 with respect to the pooling of
local grants-m-aid among the various projects undertaken by a local
public agency shall not be applicable with respect to any excess local
grants-in-aid resulting from the urban renewal projects contained in
a neighborhood development program.
((GENERAL

^2 u^* ^^^

II use U53
79 Stat. 475.
42 use 1455.
42 us^c i^^e

42 us^c 14^6^0'

71 Stat. 3 0 1 .

60 Stat. 794
68 Stat. 630

D^c". coX 5705,5-717a.

[82 STAT.

PROVISIONS

"SEC. 134. (a) For purposes of this part—
'^i^) ^^® workable program requirement in section 101(c) shall
apply to the authorization, rather than the execution, of any contract for loans or capital grants;
"(2) capital grants on a three-fourths basis may only be made
"^^^^^«^^ti«^ 10^(^) (2) (B).;
"(3) the relocatiou requirements specified in section 105(c)
shall apply to each annual increment of an approved program;
" ( ^ ) section 106(g) (relating to transient housing) shall apply
to activities undertaken under approved programs, except that
the determination as to need for transient housing shall be made
with respect to any sale or lease of land for construction of such
housing prior to such sale or lease; and
"(5) the requirement concerning demolition and removal of
buildings and improvements stated in clause (A) of the sentence
following paragraph (10) of section 110(c) shall apply to each
annual increment of an approved program.
" ( b ) The approval by the Secretary of financial assistance for one
or more annual increments of a neighborhood development program
shall not be considered as obligating him to provide financial assistance
for any subsequent annual increments.
"(c) The urban renewal plan referred to in section 110(b) may
cover one or more of the urban renewal areas covered by a neighborhood development program and such plan may be modified from time
to time to cover additional urban renewal areas added to the program.
The Secretary may establish such requirements as he deems appropriate prescribing the scope and content of such plan, taking into consideration, among other matters, the degree of detail needed in the
plan to properly and expeditiously carry out the activities and undertakings proposed in any annual increment of a neighborhood development program."
(c) Notwithstanding any requirement or condition to the contrary
in section 6 or 20(i) of the District of Columbia Redevelopment Act
of 1945 or in any other provision of law, the District of Columbia
Redevelopment Land Agency may plan and undertake neighborhood
development programs under p a r t B of title I of the Housing Act
of 1949 (as added by this section), subject to all of the provisions of
such Act of 1945 to the extent not inconsistent with such part B, and
any such program shall be regarded as complying with the requirements of such sections 6 and 20(i) and of such other provision of law
if it meets the applicable requirements established under such part B.

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968
INCREASED

521

AUTHORIZATION

SEC. 502. (a) Section 103(b) of the Housing Act of 1949 is amended
by striking out everything in the first sentence after "exceed" and inserting in lieu thereof "$7,600,000,000, which amount shall be increased
by $1,400,000,000 on J u l y 1, 1969".
(b) Section 103(b) of such Act is further amended by striking out
"$250,000,000" in the second sentence and inserting in lieu thereof
"$600,000,000".
REHABILITATION

GRANTS

63 stat. 4i6;
42 use 1453.
^° ^*°'- ^26o.
rt^p Q
hJ^^

SEC. 503. (a) The second sentence of section 115(a) of the Housing
Act of 1949 is amended by striking out the words "a structure" and ^^ ^^^- '*57
"such structure" and inserting in lieu thereof "real property" and
^'*^^'
"such real property", respectively.
(b) Section 115 (b) of such Act is amended by striking out "$1,500"
and inserting in lieu thereof "$3,000".
(c) Section 115(a) of such Act is amended by inserting " ( 1 ) " after
" ( a ) " , and by adding at the end thereof a new paragraph as follows:
"(2) I n addition to the authority conferred by paragraph (1), and
notwithstanding any other provision of this title, the Secretary is
authorized, through the utilization of local public agencies where
feasible, to make grants (payable from any grant funds provided
under section 103(b)) to an individual or family, as described in
subsection (b), to cover the cost of repairs and improvements necessary to make real property owned and occupied by such individual or
family conform to public standards for decent, safe, and sanitary
housing. No grants shall be made under this paragraph in the case
of any property, unless (A) such property is in an area within a
locality (other than an urban renewal or code enforcement area) which
the governing body of the localitj^ has determined, and so certifies to
the Secretary, contains a substantial number of structures in need of
such repairs and improvements, (B) there is in effect for the locality a
workable program meeting the requirements of section 101 (c), and (C) ^^ stat. 623.
the area is definitely planned for rehabilitation or concentrated code
^'*^^
enforcement within a reasonable time, and such repairs and improvements to such property are consistent with the plan for rehabilitation
or concentrated code enforcement."
(d) Section 115 of such Act is further amended—
(1) by redesignating subsection (b) as su})section (c) and
inserting after subsection (a) a new subsection (b) as follows:
" ( b ) The Secretary is authorized to make grants (payable from
any grant funds provided under section 103(b)), through the utilization of local public and private agencies where feasible, to an individual or family, as described in subsection (c), who owns and occupies
real property which has been determined to be uninsurable because of
physical hazards after an inspection pursuant to a statewide property
insurance plan approved by the Secretary under title X I I or the
National Housing Act. Such grants may only be made to rehabilitate ^°^'' P- sse.
such property to the extent which the Secretary determines to be necessary to make it meet reasonable underwriting standards imposed by
such plan."; and
(2) by striking out "subsection ( b ) " in subsection (a) and
inserting in lieu thereof "subsection (c)".
\
R E H A B I L I T A T I O N I N U R B A N R E N E W A L AREAS

SEC. 504. Section 110(c) (8) of the Housing Act of 1949 is amended
by striking out (1) "guidance purposes, and", and (2) the proviso at
the end thereof.

7o stat. 1097;
42 use ueo.

522

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

DISPOSITION OF PROPERTY FOR LOW AND MODERATE INCOME HOUSING

78 Stat. 786.

SEC. 505. Section 107(a) of the Housing Act of 1949 is amended—
(1) by inserting after "public body or agency, the following:
"or other approved purchaser or lessee,";
(2) by inserting ", section 221(h)(1), section 2 3 5 ( j ) ( l ) , or
section 286" after "or (d) ( 4 ) " ;
(3) by inserting "or lessee'* after "a purchaser" and after "such
purchaser", and "or lease" after "purchase";
(4) by striking out "rental or cooperative";
(5) by striking out "moderate" and inserting in lieu thereof
"low or moderate"; and
(6) by inserting before the period at the end thereof the following: " : Provided, That when property is made available under
clause (1) to an approved purchaser or lessee other than a limited
dividend corporation, nonprofit corporation or association, cooperative, or public body or agency, the Secretary shall assure that
the benefits of this subsection will go to the occupant of the property rather than to such purchaser or lessee".
(JRANTS FOR LOW AND MODERATE INCOME HOUSING IN OPEN LAND PROJECTS

^^63 stat^.^416;
42 use 1453.

gpy. 506. Sectiou 103(a) (1) of the Housing Act of 1949 is amended
by inserting before the period at the end thereof the following: ",
except that he may contract for a grant in an amount not to exceed
two-thirds of the difference between the proceeds from any land disposed of pursuant to section 107 and the fair value of the land without
regard to such section".
URBAN RENEWAL IX)AN CONTRACTS

63 Stat. 414.
42 u s e 1452.1

68 Stat. 626.
42 u s e 1460

gjx^, 507. (a) Scctiou 102(c) of the Housing Act of 1949 is
J J

^

amended—
(1) by striking out "at interest rates lower than provided in
the loan contract" in the first sentence; and
(2) by inserting before the period at the end of the first sentence the following: " : Provided^ That, if at any time during the
undertaking of the project, the interest rate on such a loan from
a source other than the Federal Government is greater than the
rate at which funds could be made available under the Federal
loan contract, the Secretary may make a supplemental grant to
the local public agency in the amount of the difference between
the interest cost from such sources and the interest cost at the contract rate, and no part of the amount of any such grant shall be
required to be contributed as a part of the local grant-in-aid".
(b) Loan contracts outstanding on the date of enactment of this
section may be amended to incorporate the provisions authorized by
the amendment contained in subsection (a) without regard to the proviso in section 110(g) of the Housing Act of 1949.
PROJECT COMPLETION PRIOR TO DISPOSITION OF CERTAIN PROPERTY

63 Stat. 417.
42 u s e 1456.

SEC. 508. (a) Section 106 of the Housing Act of 1949 is amended
by adding at the end thereof the following new subsection:
"(i) Upon a determination by the Secretary that (1) not more than
5 per centum of the total area of land acquired as p a r t of an urban
renewal project remains to be disposed of, (2) the local public agency
does not expect to be able, due to circumstances beyond its control, to
dispose of such land in the near future, (3) all other project activities
are completed, and (4) the local public agency has agreed to dispose

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

of or retain such land for uses in accordance witli the urban renewal
plan, the urban renewal project may be deemed completed, and the
net project cost may be computed and the capital grant paid."
(b) Section 110(f) of such Act is amended by inserting before the
period at the end thereof the following: "or for subsequent disposition
or retention as provided under section 106 ( i ) " .
REHABILITATION

523

^^ ^^^^- f^^^
42 u s e 1460.

LOANS

SEC. 509, (a) The first sentence of section 812(d) of the Housing
Act of 1964 is amended to read as follows: ''There is authorized to be 7/5131^479^°'
appropriated not to exceed $150,000,000 for each fiscal year which 42 use 1452b.
shall constitute a revolving fund to be used by the Secretary in carrying out this section."
(b) Section 312(h) of such Act is amended by striking out "October 1,1969" and inserting in lieu thereof ''June 30,1973".
(c) Section 312(a) of such Act is amended to read as follows:
" ( a ) The Secretary is authorized, through the utilization of local
public and private agencies where feasible, to make loans as herein
provided to the owners and tenants of property to finance the rehabilitation of such property. No loan shall be made under this section
unless—
"(1) (A) the property is situated in an urban renewal area or
an area in which a program of concentrated code enforcement
activity is being carried out pursuant to section 117 of the Housing
Act of 1949, and the rehabilitation is required to make the prop- ^^ us^c iles
erty conform to applicable code requirements or to carry out the
objectives of the urban renewal plan for the area and, in addition,
to generally improve the condition of the property; or
" ( B ) (i) the property is in an area (other than an area
described in subparagraph (A) which the governing body of the
locality has determined, and so certifies to the Secretary, contains
a substantial number of structures in need of rehabilitation, (ii)
there is in effect for the locality a workable program meeting the
requirements of section 101(c) of the Housing Act of 1949, (iii) ^^usc' ''^^
the property is residential and owner-occupied, (iv) the property
^^
is in need of rehabilitation and is in violation of the local minimum housing or similar code, and (v) the area is definitely
planned for rehabilitation or concentrated code enforcement
within a reasonable time, and the rehabilitation of such property
is consistent with the plan for rehabilitation or code enforcement;
" (2) the applicant is unable to secure the necessary funds from
other sources upon comparable terms and conditions; and
" (3) the loan is an acceptable risk taking into consideration the
need for the rehabilitation, the security available for the loan, and
the ability of the applicant to repay the loan."
(d) Section 312 of such Act is further amended—
(1) by inserting "or" after the semicolon at the end of paragraph ( 1 ) ( B ) in subsection (a) (as amended by subsection (c)
of this section), and by inserting after such paragraph (1) (B)
the following new subparagraph:
" ( C ) (i) the property has been determined to be uninsurable
because of physical hazards after an inspection pursuant to a
statewide property insurance plan approved by the Secretary
under title X I I of the National Housing Act, and (ii) the loan Post, p . 556.
is made to the owner or tenant of the property to finance rehabilitation which the Secretary determines to be necessary to make the
property meet reasonable underwriting standards: " ; and

524

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

(2) by striking out "or" after "applicable codes" in subsection
(b) (1) and inserting in lieu thereof a comma, and by inserting
after "urban renewal plan" in such subsection ", or a statewide
property insurance plan".
(e) Section 312(a) of such Act (as amended by the preceding provisions of this section) is amended by adding at the end thereof the
following new sentence: "Notwithstanding tne preceding provisions
of this subsection, no loan with respect to residential property shall
be made under this section to any person w^hose annual income, as
determined pursuant to criteria and procedures established by the
Secretary, exceeds the limits prescribed by the Secretary for occupants
of projects financed with below-market interest rate mortgages insured (in the area involved) under section 221(d) (3) of the National
12 \jsc 17151. Housing Act: Provided, That the provisions of this sentence shall
not apply to property in the area of an urban renewal project or a code
enforcement project for which the city or other local public body or
agency is receiving financial assistance under title I of the Housing
i468-"Anti^^°
Act of 1949 if, prior to the date of enactment of the Housing and
518.' " ^'
Urban Development Act of 1968, such local public body or agency
specifically developed plans for such project in reliance upon the
availability of loans under this section."
DEMOLITION GRANTS

42 use 1*^7

SEC. 510. (a) The first sentence of section 116(a) of the Housing Act
^^ ^^^^ ^^ amended by inserting after "unsound" the following: ", a
harborage or potential harborage of rats,".
(b) Section 116(b) of such Act is amended by inserting after the
comma at the end of clause (2) the following: "or will be consistent
with a systematic rodent control program being undertaken in the
neighborhood,".
AIR RIGHTS SITES I N URBAN RENEWAL AREAS

sJ sfaTu^r'
42 use 1460.

^^'^- '^11- (^) .Section 110(c) (1) (iy) of the Housing Act of 1949 is
amended by striking out "for use for industrial development" and
inserting in lieu thereof "for use for the development of industrial or
educational facilities".
(b) Section 110(c) (7) of such Act is amended by striking out "for
industrial development" and inserting in lieu thereof "for the development of industrial or educational facilities".
LOW^ AND MODERAlTi INCOME HOUSING IN RESIDENTIAL URBAN RENEWAL
AREAS

80 Stat. 1281.

SJ-C. 512. Sectiou 105(f) of the Housing Act of 1949 is amended to

42 u s e 1455.

1

» n,

read as lolmws:
"(f) A majority of the housing units provided in each community's
total of such approved urban renewal projects as will be redeveloped
for predominantly residential uses and which receive Federal recognition after the date of enactment of the Housing and Urban Development Act of 1968 shall be standard housing units for low and moderate
income families or individuals: Provided, That the units in each community's total of such approved urban renewal projects which are for
low-income families or individuals shall constitute at least 20 per cenReport of waiver ^ ^ j ^ Qf ^j^g uuits iu such pi'ojects, except that the Secretary may
to congressional

committees.

•

.i

•

j.

j : j.i *

•

•

••

•

.t

^ \_

waive the requirement oi this proviso in any community to the extent
that units for low-income families and individuals are not needed.
The Secretary shall promptly report any w^aiver under the proviso in

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

525

the preceding sentence to the Committees on Banking and Currency
of the Senate and the House of Representatives."
WORKABLE PROGRAM REQUIREMENT IN CASE OF INDIAN TRIBES

SEC. 513. Section 101(c) of the Housing Act of 1949 is amended by
•

•

"^

•

•

^^ f'Jf* '^8^.
42 u s e 14^1

inserting after "1964" in the second proviso the following: "or, in the
case of an Indian tribe, band, or nation, commencing January 1, 1970".
INTERIM ASSISTANCE FOR BLIGH'I'EI) AREAS

SEC. 514. Title I of the Housing Act of 1949 is amended by adding
after section 117 a new section as follows:

42 u s e 1450468.

" I N T E R I M ASSISTANCE FOR BLIGHTED AREAS

"SEC. 118. Notwithstanding any other provision of this title, the
Secretary is authorized to enter into contracts (in an aggregate amount
not to exceed $15,000,000 in any fiscal year) to make, and to make,
grants as provided in this section (payable from any grant funds provided under section 108 (b)) to cities, other municipalities, and counties ^^ sm. 4i6^
for the purpose of assisting such localities in carrying our programs to
alleviate harmful conditions in slum and blighted areas which are
planned for substantial clearance, rehabilitation, or federally assisted
code enforcement in the near future but in which some immediate public action is needed until clearance, rehabilitation, or code enforcement
activities can be undertaken. Such grants shall not exceed two-thirds
(or three-fourths in the case of any city, other municipality, or county
having a population of fifty thousand or less according to the most
recent decennial census) of the cost of planning and carrying out programs which may include (1) the repair of streets, sidewalks, parks,
playgrounds, publicly owned utilities, and public buildings to meet
needs consistent with the short-term continued use of the area prior
to the undertaking of the contemplated clearance or upgrading activities, (2) the improvement of private properties to the extent needed
to eliminate the most immediate dangers to public health and safety,
(3) the demolition of structures determined to be stiTicturally unsound
or unfit for human habitation and which constitute a public nuisance
and serious hazard to the public health and safety, (4) the establishment of temporary public playgrounds on vacant land within the area,
and (5) the improvement of garbage and trash collection, street cleaning, and similar activities. The Secretary shall encourage, wherever
feasible, the employment of otherwise unemployed or underemployed
residents of the area in carrying out the activities and undertakings
assisted under this section. The provisions of sections 101(c), 106, and
114 shall be applicable to activities and undertakings assisted under ^^ ^*^'- ^2^'
this section to the same extent as if such activities and undertakings 73 stat! 788.'
were being carried out in an urban renewal area as part of an urban
tl^f^^}'*^^'
renewal project."
1456, 1465.
UTILIZATION OF LOCAL PRIVATE NONPROFIT AGENCIES FOR REHABILITATION
GRANTS IN CODE ENFORCEMENT AREAS

SEC. 515. Section 117 of the Housing Act of 1949 is amended by
inserting the following before the period at the end thereof: " : Protuded, That the Secretary may, in addition to authorizing a local
public agency to make grants as prescribed in section 115, make such
grants through the utilization of local private nonprofit agencies".

^^ ^*^^ '•^s.
"^^ ^^^ ^^*'*
'^^ "^^ ^''^^

526

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

RELOCATION PAYMENTS

78 sm- 788^

^^ Tsr ^^°

SEC. 516. Section 114(c) of the Housing Act of 1949 is amended—
(1) by striking out the first sentence of paragraph (2) and
inserting in lieu thereof the following: ''In addition to any
amount under paragraph (1), a local public agency may pay to
or on behalf of any displaced family, displaced individual sixtytwo years of age or over, or displaced handicapped individual,
monthly payments over a period not to exceed twenty-four months
in an amount not to exceed $500 in the first twelve months and
$500 in the second twelve months to assist such displaced family
or individual to secure a decent, safe, and sanitary dwelling.";
(2) by striking out "relocation adjustment" in the second sentence of paragraph (2) and inserting in lieu thereof "additional"';
(8) by striking out the second proviso in paragraph (2) and
inserting in lieu thereof the following: " : Provided further^ That
additional payments under this paragraph may be paid on a lump
sum or other than monthly basis in cases in which the small size
of the payments that would otherwise be required do not warrant
a number of separate payments or in other cases in which other
than monthly payments are determined warranted by the Secret a r y : And proi'ided further. That no payment received under
this paragraph shall be considered as income for the purpose of
determining the eligibility or the extent of eligibility of any per^^^ ^^^ assistance under the Social Security Act or any other
Fedei'al Act"; and
(4) by inserting a new paragraph (8) as follows:
"(3) In addition to any amount under paragraph (1), a local public
agency may make a payment to a displaced family or individual, who
does not receive the additional payment authorized under paragraph
(2) and who is the owner of real property which is acquired for a
project assisted under this title and which is improved by a single- or
two-family dwelling occupied by the owner for a }>eriod of not less
than one year prior to the initiation of negotiations for the acquisition
of such pi^operty. Such payment, not to exceed $5,000, shall be an
amount which, when added to the acquisition payment, equals the average price required for a decent, safe, and sanitary dwelling of modest
standards adequate in size to accommodate the displaced owner, reasonably accessible to public services and places of employment and
available on the private market: Provided^ That such payment may
be made only to a displaced owner who purchases and occupies a dwelling within one year subsequent to the date on which he is required to
move from the dwelling acquired for the project: Provided further^
That no such payment may be made if the owner-occupant receives a
payment required by the State law of eminent domain which is determined by the Secretary to have substantially the same purpose and
effect as this j^aragraph and to be part of the cost of the project for
which Federal financial assistance is available."
T I T L E V I — U R B A N P L A N N I N G AND F A C I L I T I E S
COMPREHENSIVE PLANNING

73 Stat. 678.

40 u s e 461.

SRC. 601. Section 701 of the Housing Act of 1954 is amended to read
j; n
'^
as follows:
" C O M P R E H E N S I V E PLANNING

"SEC. 701. (a) I n order to assist State and local governments in
solving planning problems, including those resulting from the increasing concentration of population in metropolitan and other urban areas

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1068

527

and the out-migration from and lack of coordinated development of
resources and services in rural areas; to facilitate comprehensive
planning for urban and rural development, including coordinated
transportation systems, on a continuing basis by such governments;
and to encourage such governments to establish and improve planning
staffs and techniques on an area wide basis, and to engage private consultants where their professional services are deemed appropriate by
the assisted governments, the Secretary is authorized to make planning grants to—
"(1) State planning agencies for the provision of planning
assistance to (A) cities and other municipalities having a population of less than 50,000 according to the latest decennial census,
and counties without regard to population: Provided^ That grants
shall be made under this paragraph for planning assistance to
counties having a population of 50,000 or more, according to the
latest decennial census, which are within metropolitan areas, only
if (i) the Secreftary finds that planning and plans for such county
will be coordinated with the program of comprehensive planning,
if any, which is being carried out for the metropolitan area of
which the county is a part, and (ii) the aggregate amount of the
grants made subject to this proviso does not exceed 15 per centum
of the aggregate amount appropriated, after September 2, 1964,
for the purposes of this section, (B) any group of adjacent communities, either incorporated or unincorporated, having a total
population of less than 50,000 according to the latest decennial
census and having common or related urban planning problems,
(C) cities, other municipalities, and coimties referred to in paragraph (3) of this subsection, and areas referred to in paragraph
(4) of this subsection, and (D) Indian reservations;
"(2) State, metropolitan, and regional planning agencies for
metropolitan or regional planning, and to cities, within metropolitan areas, for planning which is part of comprehensive metropolitan planning and which shall supplement and be coordinated
with State, metropolitan, and regional planning;
" (3) (A) economic development districts designated by the Secretary of Commerce under title I V of the Public Works and Economic Development Act of 1965, and
^^ s*^'- s^o" ( B ) cities, other municipalities, and counties which (i) are a m ancfnote.^
situated in redevelopment areas or economic development districts
desigriated by the Secretarj^ of Commerce under title I V of the
Public Works and Economic Development Act of 1965, or (ii)
have suffered substantial damage as a result of catastrophe which
the President, pursuant to section 2(a) of the Act entitled 'An
Act to authorize Federal assistance to States and local governments in major disasters, and for other purposes', approved September 30, 1950, as amended (42 U.S.C. 1855a), has determined ^4 stat. 1109.
to be a major disaster;
"(4) official governmental planning agencies for areas where
rapid urbanization has resulted or is expected to result from the
establishment or rapid and substantial expansion of a Federal
installation, or for areas where rapid urbanization is expected to
result on land developed or to be developed as a new community
approved under section 1004 of the National Housing Act or title ^° s*^*- 1271.
I V of the Housing and Urban Development Act of 1968;
in/^^^.Vu""^'
"(5) States for State and interstate comprehensive planning
and for research and coordination activity related thereto, including technical and other assistance for the establishment and operation of intrastate and interstate planning agencies;

528

40 use I p 1
79 Stat. 55 2.
42 use 3121

note

72 Stat. 913.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

" (6) State planning agencies for assistance to district planning,
or planning for areas within districts, carried on by or for district
planning agencies;
"(7) metropolitan and regional planning agencies, with the
approval of the State planning agency or (in States where no such
planning agency exists) of the Governor of the State, for the
provision of planning assistance within the metropolitan area or
region to cities, other municipalities, counties, groups of adjacent
communities, or Indian reservations described in clauses ( A ) ,
( B ) , ( C ) , and (D) of paragraph (1) of this subsection;
" (8) official governmental planning agencies for any area where
there has occurred a substantial reduction in employment opportunities as the result of (A) the closing (in whole or in part) of a
Federal installation, or (B) a decline in the volume of Government orders for the procurement of articles or materials produced
or manufactured in such area;
"(9) tribal planning councils or other tribal bodies designated
by the Secretary of the Interior for planning for an Indian
reservation;
"(10) the various regional commissions established by the
Appalachian Regional Development Act of 1965 or under the
Public Woi'ks and Economic Development Act of 1965 for comprehensive planning for the regions established under such Acts
(or State agencies or instrumentalities participating in such
planning); and
"(11) local development districts, certified under section 801
of the Appalachian Regional Development Act of 1965, for comprehensive planning for their entire areas, or for metropolitan
planning, urban planning, county planning, or small municipality planning within such areas in the Appalachian region, and
for planning for Appalachian regional programs.
Planning assisted under this section shall, to the maximum extent
feasible, cover entire areas having common or related development
problems. The Secretary shall encourage cooperation in preparing
and carrying out plans among all interested municipalities, political
subdivisions, public agencies, and other parties in order to achieve
coordinated development of entire areas. To the maximum extent
feasible, pertinent plans and studies already made for areas shall be
utilized so as to avoid unnecessary repetition of effort and expense.
Planning which may be assisted under this section includes the preparation of comprehensive transportation surveys, studies, and plans
to aid in solving problems of traffic congestion, facilitating the circulation of people and goods in metropolitan and other areas and reducing transportation needs. Planning carried out with assistance under
this section shall also include a housing element as part of the preparation of comprehensive land use plans, and this consideration of
the housing needs and land use requirements for housing in each
comprehensive plan shall take into account all available evidence of
the assumptions and statistical bases upon which the projection of
zoning, community facilities, and population growth is based, so that
the housing needs of both the region and the local communities
studied in the planning will be adequately covered in terms of existing
and prospective in-migrant population growth. Funds available under
this section shall be in addition to and may be used jointly with funds
available for planning surveys and investigations under other federally aided programs, and nothing contained in this section shall be
construed as affecting the authority of the Secretary of Transporta^j^^j^ under section 307 of title 23, United States Code.

82

STAT.]

PUBLIC LAW 90-448-AUG. 1, 1968

" ( b ) A planning grant made under subsection (a) shall not exceed
two-thirds of the estimated cost of the work for which the grant is
made: Provided^ That such a grant may be made for up to 75 per
centum of such estimated cost when made for planning primarily for
(1) redevelopment areas, local development districts, or economic
development districts, or portions thereof, described in paragraph (8)
(A) and ( B ) ( i ) and paragraph (11) of subsection ( a ) , (2) areas
described in subsection ( a ) ( 8 ) , and (3) the various regions, as
described in subsection (a) (10). All grants made under this section
shall be subject to terms and conditions prescribed by the Secretary.
No portion of any grant made under this section shall be used for the
preparation of plans for specific public works. Tlie Secretary is authorized, notwithstanding the provisions of section 3648 of the Revised
Statutes, as amended, to make advance or progress payments on
account of any grant made under this section. There are authorized to
be appropriated for the purposes of this section not to exceed $265,000,000 prior to July 1, 1969, and not to exceed $;^90.000,fX)0 prior to
July 1,1970. Of the amount available prior to July 1,1969, $20,000,000
may be used only for district planning gi-^nts under subsection ( a ) ( 6 ) ,
which amount shall be increased by $10,000,000 on July 1, 1969. Any
amounts appropriated under this section shall remain available until
expended: Provided. That, of any funds appropriated under this section, not to exceed an aggregate of $10,000,(X)0 plus 5 per centum of the
funds so appropriated may be used by the Secretary for studies,
research, and demonstration projects, undertaken independently or by
contract, for the development and improvement of techniques and
methods for comprehensive planning and for the advancement of the
purposes of this section, and for grants to assist in the conduct of
studies and research relating to needed revisions in State statutes which
create, govern, or control local governments and local governmental
operations.
"(c) The Secretary is authorized, in areas embracing several municipalities or other political subdivisions, to encourage planning on a
unified regional, district, or metropolitan basis and to provide technical
assistance for such planning and the solution of problems relating
thereto.
" ( d ) I t is the further intent of this section to encourage comprehensive planning, including transportation plaiming, for States, cities,
counties, metropolitan areas, districts, regions, and Indian reservations and the establishment and development of the organizational
units needed therefor. In extending financial assistance under this
section, the Secretary may require such assurances as he deems adequate that the appropriate State and local agencies are making reasonable progress in the development of the elements of comprehensive
planning. The Secretary is authorized to provide technical assistance
to State and local governments and their agencies and instrumentalities, and to Indian tribal bodies, undertaking such planning and, by
contract or otherwise, to make studies and publish information on
related problems.
"(e) I n the exercise of his responsibilities under this section, the
Secretary shall consult with those officials of the Federal Government
responsible for the administration of programs of Federal assistance
to the States and municipalities for various categories of public facilities and other comprehensively planned activities. He shall, particularly, consult with the Secretary of Agriculture prior to his approval
of any district planning grants under subsections ( a ) ( 6 ) and ( g ) ,
and with the Secretary of Commerce prior to his approval of any
planning grants which include any part of an economic development
district as defined and designated under the Public Works and Eco-

529

31 u s e 529.
Appropriation.

Consultation
with other Government officials.

530
79 Stat. 552.
42 u s e 3121
note.

Interstate compacts.

Historical s i t e s
and structures,
study.

80 Stat. 915.
16 u s e 470a.

Definitions.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

iiomic Development Act of 1965. The Secretary of Agriculture and
the Secretary of Commerce, as appropriate, may provide technical
assistance, with or without reimbursement, in connection with the
establishment of districts by the Secretary of Housing and Urban
Development and the carrying out of planning by such districts.
"(f) The consent of the Congress is hereby given to any two or
more States to enter into agreements or compacts, not in conflict with
any law of the United States, for cooperative effort and mutual
assistance in the comprehensive planning for the growth and development of interstate, metropolitan, or other urban areas, and to establish
such agencies, joint or otherwise, as they may deem desirable for making effective such agreements and compacts.
" ( g ) I n addition to the planning grants authorized by subsection
( a ) , the Secretary is further authorized to make grants to organizations composed of public officials representative of the political jurisdictions within the metropolitan area, region, or district for the
purpose of assisting such organizations to undertake studies, collect
data, develop metropolitan, regional, and district plans and programs,
and engage m such other activities, including implementation of such
plans, as the Secretary finds necessary or desirable for the solution of
the metropolitan, regional, or district problems in such areas, regions,
or districts. To the maximum extent feasible, all grants under this subsection shall be for activities relating to all the developmental aspects
of the total metropolitan area, region, or district including, but not
limited to, land use, transportation, housing, economic development,
natural resources development, community facilities, and the general
improvement of living environments. A grant under this subsection
shall not exceed two-thirds of the estimated cost of the work for which
the grant is made.
" ( h ) I n addition to the other grants authorized by this section,
the Secretary is authorized to make grants to assist any city, other
municipality, or county in making a survey of the structures and
sites in such locality which are determined by its appropriate authorities to be of historic or architectural value. Any such survey shall be
designed to identify the historic structures and sites in the locality,
determine the cost of their rehabilitation or restoration, and provide
such other information as may be necessary or appropriate to serve
as a foundation for a balanced and effective program of historic
preservation in such locality. The aspects of any such survey which
relate to the identification of historic and architectural values shall
be conducted in accordance w^ith criteria found by the Secretary to be
comparable to those used in establishing the national register maintained by the Secretary of the Interior under other provisions of law;
and the results of each such survey shall be made available to the
Secretary of the Interior. A grant under this subsection shall not
exceed two-thirds of the cost of the survey for which it is made, and
shall be made to the appropriate agency or entity specified in paragraphs (1) through (11) of subsection (a) or, if there is no such
agency or entity which is qualified and willing to receive the grant
and provide for its utilization in accordance with this subsection,
directly to the city, other municipality, or county involved.
"(i) As used in this section—
" (1) The term 'metropolitan area' means a standard metropolitan
statistical area, as established by the Bureau of the Budget, subject,
however, to such modifications or extensions as the Secretary deems
to be apnropriate for the purposes of this section.
"(2) The term 'region' includes (A) all or part of the area of jurisdiction of one or more units of general local government, and (B) one
or more metropolitan areas.

82 STAT. ]

PUBLIC LAW 90-44S-AUG. 1, 1968

531

"(3) The term 'district' includes all or part of the area of jurisdiction of (A) one or more counties, and (B) one or more other units
of g-eneral local government, but does not include any portion of a
metropolitan area.
''(4) The term 'comprehensive planning' includes the following:
" ( A ) preparation, as a guide for governmental policies and
action, or general plans with respect to (i) the pattern and intensity of land use, (ii) the provision of public facilities (including
transportation facilities) and other government services, and
(iii) the effective development and utilization of human and
natural resources;
" ( B ) long-range physical and fiscal plans for such action;
" ( C ) programing of capital improvements and other major
expenditures, based on a determination of relative urgency,
together with definite financing plans for such expenditures in
the earlier years of the program;
" ( I ) ) coordination of all related plans and activities of the
State and local governments and agencies concerned; and
" ( E ) preparation of regulatory and administrative measur-es
in support of the foregoing.
(Comprehensive planning for the purpose of districts shall not
include planning for or assistance to establishments in relocating
from one area to another or assist subcontractors whose purpose is to
divest, or whose economic success is dependent upon divesting, other
contractors or subcontractors of contracts theretofore customarily performed by them: Provided^ That this limitation shall not be construed
to prohibit assistance for the expansion of an existing business entity
through the establishment of a new branch, affiliate, or subsidiary of
such entity, if the Secretary finds that the establishment of such
branch, affiliate, or subsidiary will not result in an increase in unemployment in the area of original location or in any other area where
such entity conducts business operations, unless the Secretary has
reason to believe that such branch, affiliate, or subsidiary is being
established with the intention of closing down the operations of the
existing business entity in the area of its original location or in any
other area where it conducts such operations.
"(5) The term 'State planning agencies' includes official State
planning agencies and (in States where no such planning agency
exists) agencies or instrumentalities of State government designated
by the Governor of the State and acceptable to the Secretary.
"(6) The terms 'metropolitan planning agencies', 'regional planning agencies', and 'district planning agencies' mean official metropolitan, regional, and district planning agencies, or other agencies and
instrumentalities designated by the Governor (or Governors in the
case of interstate planning), and acceptable to the Secretary, empowered under State or local law or interstate compact to perform metro])olitan, regional, or district planning, respectively: Provided^ That
such agencies and instrumentalities shall, to the greatest practicable
extent, be composed of or responsible to the elected officials of the unit
or units of general local government for whose jur'isdictions they are
empowered to engage in planning."
PLANNED AREA WIDE DEVELOPMENT

SEC. 602. (a) The heading of title I I of the Demonstration Cities
and Metropolitan Development Act of 1966 is amended to read as
follows: " T I T L E I I — P L A N N E D A R E A W I D E D E V E L O P MENT".
(b) Section 201 of such Act is amended to read as follows:
^ '

?? E*f'- ^^^^
42 u s e 3331.

532

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

"FINDINGS AND DECLARATION OF PURPOSE

80 Stat. 1261.
42 use 3332.
42 use 3335.

42 use 3338.

42 use 3336.

"SEC. 201. (a) The Congress hereby finds that the welfare of the
Xation and of its people is directly dependent upon the sound and
orderly development and the effective organization and functioning of
our State and local governments.
" I t further finds that it is essential that our State and local governments prepare, keep current, and carry out comprehensive plans and
jirograms for their orderly physical development with a view to meeting efficiently all their economic and social needs.
" I t further finds that our State and local governments are especially
handicapped in this task by the complexity and scope of governmental
services required, the multiplicity of political jurisdictions and agencies involved, and the inadequacy of the operational and administrative arrangements available for cooperation among them.
"It further finds that present requirements for areawide planning
and programing in connection with various Federal programs have
materially assisted in the solution of areawide problems, but that
greater coordination of Federal programs and additional participation and cooperation are needed from the States and localities in perfecting and carrying out such efforts.
" ( b ) It is the purpose of this title to provide through greater coordination of Federal programs, and through supplementary grants
for certain federally assisted development projects, additional encouragement and assistance to States and localities for making comprehensive areawide planning and programing effective.""
(c) Section 202 of such Act is amended by striking out "metropolitan'* each place it appears and inserting in lieu thereof "areawide".
(d) (1) Section 205 of such Act is amended by striking out "metropolitan development" each pla(^ it appears and inserting in lieu
thereof "areawide develo))ment''.
(2) Such section is further amended by striking out "metropolitan
areas'' and "metropolitan area'' and inserting in lieu thereof "areas''
and "area", respectively.
(B) Such section is further amended by striking out "metropolitanwide" each place it ap})ears, and inserting in lieu thereof "areawide''.
(4) Such section is further amended by striking out "metropolitan
planning" each place it appears and inserting in lieu thereof "areawide planning''.
(5) Such section is further amended by inserting "where appropriate,'' after " ( B ) " in subsection ( c ) ( 1 ) .
(6) Such section is further amended by striking out "within the
metropolitanwide area" in subsection (f).
(e)(1) Paragraphs (1) and (2) of section 208 of such Act are
amended by striking out "Metropolitan'' and inserting in lieu thereof
"Areawide''.
(2) Paragraph (7) of such sectitm is amended—
(A) by striking out "or metropolitan or regional'' and inserting
in lieu thereof ", metropolitan, regional, or district''; and
(B) by striking out "metropolitan"' in the parenthetical phrase,
(f) Section 206(b) of such Act is amended by striking out the second sentence and inserting in lieu thereof the following: "Any
amounts appropriated under this section shall remain available untd
expended, and any amounts authorized for any fiscal year under this
section but not appropriated may be appropriated for any succeeding
fiscal year commencing prior to July 1,1970."

82 STAT. ]

PUBLIC LAW 90-448-AUG. I, 1968

533

ADVAXCE ACQUISITION OF LAND

SEC. 603. (a) Section 701 of the Housing and Urban Development
Act of 1965 is amended by striking out "in connection with the future
construction of public works and facilities'' in clause (3) and inserting
in lieu thereof "m the future for public purposes".
(b) Section 704 of such Act is amended to read as follows:

^^ s*^*- ^^^''2 use 3104.

" A D V A N C E ACQUISITION OF LAND

"SEC. 704. (a) In order to encourage and assist the timely acquisition of land planned to be utilized in the future for public purposes,
the Secretary is authorized to make grants to States and local public
bodies and agencies to assist in financing the acquisition of a fee simple
estate or other interest in such land.
"(b) The amount of any grant made under this section shall not
exceed the aggregate amount of reasonable intei'est charges on the
loans or other financial obligations incurred to finance the acquisition
of such land for a period not in excess of the lesser of (1) five years
from the date of acquisition of such land or (2) the period of time
between the date on which the land was acquired and the date its use
began for the purpose for which it was acquired: Provided. That where
all or any portion of the cost of such land is not financed through -borrowings, the amount of the grant shall be computed on the basis of the
aggregate amount of reasonable interest charges that the Secretary
,
determines would have been required.
"(c) No grant shall be made under this section unless tlie Secretary
. determines that the laud will be utilized for a public purpose within a
reasonable period of time and that such utilization will contribute to
economy, efficiency, and the comprehensively planned development of
the area. The Secretary shall in all cases require that land acquired
with the assistance of a grant under this section be utilized for a public
purpose within five years after the date on which a contract to make
such grant is entered into, unless the Secretary (1) determines that due
to unusual circumstances a longer period of time is necessary and in
the public interest, and (2) reports such detennination promptly to g rReport
to con
e s s i o n a l comthe Committees on Banking and C urrency 01 tne Senate and House of m i t t e e s .
Representatives.
" ( d ) No land acquired with assistance under tliis section shall, without approval of the Secretary, be diverted from the purpose originally
approved. The Secretary shall approve no such diversion unless he
finds that the diversion is in accord with the then applicable comprehensive plan for the area. In cases of a diversion of land to other than
a public purpose, the Secretary may require repayment of the grant, or
suD^titution of land of approximately equal fair market value, whichever he deems appropriate. An interim use of the land for a public or
private purpose in accordance with standards prescribed by the Secretary, or approved by him, shall not constitute a diversion within the
meaning of this subsection.
"(e) Notwithstanding any other provision of law, no project for
which land is acquired with assistance under this section shall, solely
as a result of such advance acquisition, be considered ineligible for the
purpose of any other Federal loan or grant program, and the amount
of the purchase price paid for the land by the recipient of a grant
under this section may he considered an eligible cost for the purpose
of such other Federal loan or grant program."'

534

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

WATER A N D SEWER F A C I L I T I E S PROGRAM

79 Stat. 490.
42 u s e 3102.

ff*^

SEC. 604. (a) Section 702(c) of the Housing and Urban Development Act of 1965 is amended by striking out "July 1,1968" and inserting in lieu thereof "October 1,1969".
(b) Section 702 (b) of such Act is amended—
(1) by striking out "a basic public sewer facility"' and inserting in lieu thereof "a basic public water or sewer facility"; and
(2) by striking out "a public or other adequate sewer facility''
and inserting in lieu thereof "a public or other adequate water
or sewer facility".
(c) Section 702 of such Act is amended by adding at the end thereof
a new subsection as follows:
" ( d ) I n the administration of this section the Secretary shall require that, to the greatest extent practicable, new job opportunities be
provided for unemployed or underemployed persons in connection
with projects the financing of which is assisted under this section."
A U T H O R I Z A T I O N S FOR T H E WATER AND SEWER F A C I L I T I E S , NEIGHBORIKK)D
F A C I L I T I E S . AND ADVANCE A C Q U I S I T I O N OF LAND PROGRAMS

42 u s e 3108.

SEC. 605. (a) Section 708(b) of the Housing and Urban Development Act of 1965 is amended by striking out "July 1,1969'' and inserting in lieu thereof "July 1, 1970".
(b) Section 708(a) of such Act is amended—
(1) by striking out "$200,000,000 for grants under section 702"
and inserting in lieu thereof "$20<),0(X),000 (or $350,000,000 in the
case of the fiscal year commencing July 1,1968) for grants under
sections 702"; and
(2) by adding at the end thereof the following new sentence:
"In addition, there is authorized to be appropriated for grants
under section 702 not to exceed $115,000,000 for the fiscal year
commencing July 1,1969."
OPEN-SPACE LAND

75 Stat. 184.
42 u s e 1500a.

75 Stat. 185;
79 Stat. 495, 497;
80 Stat. 1280.
42 u s e 1500d.

PROGRAM

SEC. 606. (a) Section 702(b) of the Housing Act of 1961 is amended
to read as follows:
" ( b ) There are authorized to be appropriated, for the purpose of
making grants under this title, not to exceed $310,000,0(K) prior to
July 1, 1969, and not to exceed $460,000,000 prior to July 1,1970. Any
amounts appropriated under this section shall remain available until
expended."
(b) Section 708(b) of such Act is amended by striking out "$50,000"'
and inserting in lieu thereof "$125,000".
A U T H O R I Z A T I O N TO M A K E F E A S I B I L I T Y STUDIES I N T H E P U B L I C
P L A N N I N G ADVANCr>S PROGRAM

69 Stat. 6 4 1 .
40 u s e 462.

WORKS

SEC. 607. Section 702(a) of the Housing Act of 1954 is amended by
inserting after "to aid in financing the cost o f the following: "feasibility studies,".
T I T L E V I I — U R B A N MASS T R A N S P O R T A T I O N
GRANT

78 Stat. 304;
80 Stat. 715.
49 u s e 1603.

AUTHORIZATIONS

SEC. 701. (a) Section 4(b) of the Urban Mass Transportation Act
of 1964 is amended (1) by striking out the word "and" where it first
appears in the first sentence, and (2) by inserting before the period
at the end of the first sentence " ; and $190,000,000 for fiscal year 1970".

82

STAT.}

PUBLIC LAW 90-448-AUG. 1, 1968

535

(b) Section 6(c) of such Act is amended (1) by striking out "$50,- oJL^l^^j^i'^^''
000,000" and inserting in lieu thereof "$56,000,000", and (2) by in- 49 use 1605.
serting at the end thereof the following: "On or after July 1, 1969,
the Secretary may make available to finance projects under this section
such additional sums out of the grant authorization provided in section 4 (b) as he deems appropriate."
D E F I N I T I O N O F MASS TRANSPORTATION

SEC. 702. Section 12(c) (5) of the Urban Mass Transportation Act
of 1964 is amended to read as follows:
y/stlt^^so^r^'
"(5) the term 'mass transportation' means transportation by go stat. 715.'
bus, rail, or other conveyance, either publicly or privately owned, 49 use leos.
which provides to the public general or special service (but not
including school buses or charter or sightseeing service) on a
regular and continuing basis."
E X T E N S I O N OF E M E R G E N C Y PROGRAM U N D E R T H E URBAN MASS
TRANSPORTATION ACT

SEC. 708. Section 5 of the Urban Mass Transportation Act of 1964 ^^^l^H^^^^f^'
is amended by striking out "November 1, 1968" and inserting in lieu 49 use 1604
thereof "July 1,1970".
N O N - F E D E R A L S H A R E O F N E T P R O J E C T COST

SEC. 704. (a) Section 4(a) of the Urban Mass Transportation Act
78 Stat. 304.
of 1964 is amended by striking out the last sentence and inserting in 49
u s e 1603.
lieu thereof of following: "The remainder of the net project cost shall
be provided, in cash, from sources other than Federal funds. Not more
than 50 per centum of such remainder may be provided from other
than public sources, and any public or private transit system funds
shall be provided solely from undistributed cash surpluses, replacement or depreciation funds or reserves available in cash, or new
capital; except that in cases of demonstrated fiscal inability of an
applicant actively engaged in preparing and effectuating a program for
a unified or officially coordinated urban transportation system as part
of the comprehensively planned development of the urban area, such
remainder may be provided from other than public sources. No refund
or reduction of the remainder of the net project cost shall be made at
any time unless there is at the same time a refund of a proportional
amount of the Federal grant."
(b) Section 5 of such Act is amended by striking out the last sen- '^^ ^^^ ^^^^"^
tence and inserting in lieu thereof the following: "The remainder of
the net project cost shall be provided, in cash, from sources other than
Federal funds. Not more than 50 per centum of such remainder may
be provided from other than public sources, and any public or private
transit system funds shall be proyided solely from undistributed cash
surpluses, replacement or depreciation funds or reserves available in
cash, or new capital; except that in cases of demonstrated fiscal
inability of an applicant actively engaged in preparing and effectuating a program for a unified or officiallj^ coordinated urban transportation system as p a r t of the comprehensively planned development of
the urban area, such remainder may be provided from other than public
sources. No refund or reduction of the remainder of the net project
cost shall be made at any time unless there is at the same time a refund
of a proportional amount of the Federal grant."

9B-Knn r> -

536

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

T I T L E VIII—SECONDARY MORTGAGE MARKET
PURPOSES

Federal National Mortgage
Association.
68 Stat. 615.
12 u s e 1719.
Government National Mortgage
Association.

12 u s e 1720,
1721.

SEC. 801. The purposes of this title include the partition of the Federal National Mortgage Association as heretofore existing into two
separate and distinct corporations, each of which shall have continuity and corporate succession as a separated portion of the previously existing corporation. One of such corporations, to be known as
Federal National Mortgage Association, will be a Government-sponsored private corporation, will retain the assets and liabilities of the
previously existing corporation accounted for under section 304 of the
Federal National Mortgage Association Charter Act, and will continue to operate the secondary market operations authorized by such
section 304. The other, to be known as Government National Mortgage
Association, will remain in the Government, will retain the assets and
liabilities of the previously existing corporation accounted for under
sections 305 and 306 of such Act, and will continue to operate the
special assistance functions and management and liquidating functions authorized by such sections 305 and 306.
AMENDMENTS TO THE FEDERAL NATIONAL MORTGAGE ASSOCIATION
CHARTER ACT

68 Stat. 612.
12 u s e 1716.

12 u s e 1717.

SEC. 802. (a) The heading of title I I I of the National Housing Act
is amended by striking out " F E D E R A L N A T I O N A L M O R T G A G E
A S S O C I A T I O N " and inserting in lieu thereof " N A T I O N A L MORTGAGE ASSOCIATIONS".
(b) Section 301 of such Act is amended—
(1) by striking out "in the Federal GoveiTiment a";
(2) by striking out "facility for" and inserting in lieu thereof
"facilities for";
(3) by striking out "of such facility" and inserting in lieu
thereof "thereof";
(4) by striking out "facility t o " and inserting in lieu thereof
"facilities t o " ; and
(5) by striking out "the existing mortgage portfolio of the Federal National Mortgage Association" and inserting in lieu thereof
"federally owned mortgage portfolios".
(c) Section 302(a) of such Act is amended—
(1) by inserting " ( 1 ) " immediately following " ( a ) " ;
(2) by striking out "(hereinafter referred to as the 'Associat i o n ' ) " ; and
(3) by adding at the end thereof the following new paragraph:
" (2) On the effective date established pursuant to section 808 of the
Housing and Urban Development Act of 1968, the body corporate described in the foregoing paragraph shall cease to exist in that form and
is hereby partitioned into two separate and distinct bodies corporate,
each of which shall have continuity and corporate succession as a
separated portion of the previously existing body corporate, as follows:
" (A) One of such separated portions shall be a body corporate without capital stock to be known as Government National Mortgage Association (hereinater referred to as the 'Association'), which shall be in
the I>epartment of Housing and Urban Development and which shall
retain the assets and liabilities acquired and incurred under sections 305
and 306 prior to such effective date, including any and all liabilities
incurred pursuant to section 302(c). The Association shall have succession until dissolved by Act of Congress. I t shall maintain its principal office in the District of Columbia and shall be deemed, for
purposes of venue in civil actions, to be a resident thereof. Agencies or

82 STAT. ]

PUBLIC LAW 90^48-AUG. 1, 1968

537

offices may be established by the Association in such other place or
places as it may deem necessary or appropriate in the conduct of its
business.
" ( B ) The other such separated portion shall be a body corporate to
be known as Federal National Mprtgage Association (hereinafter referred to as the 'corporation'), which shall retain the assets and
liabilities acquired and incurred under sections 303 and 304 prior to ^^ ^^^ ^J;^such effective date. The corporation shall have succession until dis- 1719.
solved by Act of Congress. I t shall maintain its principal office in the
District of Columbia and shall be deemed, for purposes of venue in civil
actions, to be a resident thereof."
(d) Section 302 (b) of such Act is amended—
12 use 1717.
(1) b ^ striking out "the Association is authorized"' and inserting in lieu thereof "each of the bodies corporate hamed in subsection (a) (2) is authorized";
(2) by striking out "lend (under section 304) on the security
(3) by inserting immediately before the colon in the first sentence " ; and the corporation is authorized to lend on the security
of any such mortgages and to purchase, sell, or otherwise deal in
any securities guaranteed by the Association under section
306(g)"; and
(4) by striking out "no mortgage may be purchased" and inserting in lieu thereof "the Association may not purchase any
mortgage".
(e) Section 302(c)(1) of such Act is amended by striking out
", consistent with section 307,".
(f) Section 3 0 2 ( c ) ( 2 ) ( C ) of such Act is amended to read as
follows:
" ( C ) The Department of Housing and Urban Development."
(g) Section 302(c)(2) of such Act is amended by striking out
"incurred by the Federal National Mortgage" and inserting in lieu
thereof "incurred by the".
(h) The heading of section 303 of such Act is amended to read as

78 stat. soo.

follows: "CAPITALIZATION—FEDERAL NATIONAL MORTGAGE ASSOCIATION".

(i) Section 303(a) of such Act is amended—
^,0^*0^ ^ih
12 ""'^
u s e 1718.
(1) by striking out "nonvoting common stock" and inserting in '^
'"'°
lieu thereof "common stock, without par value, which shall be
vested with all voting rights, each share being entitled to one vote
with rights of cumulative voting at all elections of directors";
(2) by striking out "nonvoting preferred stock" and inserting
in lieu thereof "nonvoting preferred stock, with a par value of
$100 per share,";
(3) by striking out the second and third sentences thereof and
inserting in lieu thereof "The free transferability of the common
stock at all times to any person, firm, corporation, or other entity
shall not be restricted except that, as to the corporation, it shall be
transferable only on the books of the corporation.";
(4) by striking out "of the capital surplus and the general surplus accounts";
(5) by striking out "retire" and inserting in lieu thereof "retire,
at par,"; and
(6) by striking out "the Association shall deem feasible" and
inserting in lieu thereof "possible subsequent to the effective date
established pursuant to section 808 of the Housing and Urban
Development Act of 1968".
(j) Section 303(b) of such Act is amended—
(1) by striking out "for its services" and inserting in lieu thereof ", which may be regarded as elements of pricing,"; and

538

12 us^c tns

R^p^ai-

PUBLIC LAW 90-448-AUG. 1, 1968

(2) by striking out the last sentence.
(^) Section 303 (c) of such Act is amended—
(1) by striking out "(only in denominations of $100 or multiples thereof)";
(2) by inserting immediately after the first sentence the following : " I n addition to the shares of common stock issued under the
foregoing sentence, the corporation may issue additional shares
in return for appropriate payments into capital or capital and
surplus. The corporation shall at all times require each servicer of
its mortgages to own a minimum amount of common stock of the
corporation, measured by its stated value. Such minimum amount
sha;ll not exceed 2 per centum, as determined from time to time
by the corporation with the approval of the Secretary of Housing
and LTrban Development, of the aggregate outstanding principal
balances of all mortgages of the corporation which have been
purchased subsequent to the effective date established pursuant
to section 808 of the Housing and Urban Development Act of
1968 and which are then serviced by such servicer for the corporation."; and
(3) by striking out "the general surplus account of the Association shall not be reduced through the payment of dividends
applicable to such common stock which exceed in the aggregate
5 per centum of the par value of the outstanding common stock
of the Association" and inserting in lieu thereof "the aggregate
amount of cash dividends paid on account of any share of such
stock shall not exceed any rate which may be determined from
time to time by the Secretary of Housing and Urban Development to be a fair rate of return after consideration of the current
earnings and capital condition of the corporation".
(1) Section 303(d) of such Act is amended bv striking out "$22-5,000,000" and inserting in lieu thereof "$225,000,000; but no such stock
may be issued subsequent to the effective date established pursuant to
section 808 of the Housing and Urban Development Act of 1968".
(m) Section 303(f) of such Act is amended by striking out "contributions, and" inserting in lieu thereof "contributions, to purchase
additional shares of such stock, and".
(n) Section 303(g) of such Act is repealed.
(o) The heading of section 304 of such Act is amended to read as
f o l l o w s : "SECONDARY M A R K E T OPERATIONS
GAGE ASSOCIATION".

68 Stat. 615;
^^2*usc ^m9.

12 use 1720.

[82 STAT.

FEDERAL NATIONAL MORT-

(p) Scctlon 304(a) (1) of such Act is amended by striking out "and
^1"^^ Association shall not purchase any mortgage insured or guaranteed
prior to the effective date of the Housing Act of 1954".
(q) Section 304 (b) of such Act is amended by striking out "earnings
and in" and inserting in lieu thereof "earnings unless a greater ratio
shall be fixed at any time or from time to time by the Secretary of
Housing and Urban Development. In".
(r) Section 304(c) of such Act is amended by striking out " ( 1 ) all
of the preferred stock of the Association held by the Secretary of the
Treasury has been retired, or ( 2 ) " .
(s) Sections 303 and 304 of such Act, as amended by the foregoing
subsections of this section, are further amended—
(1) by striking out "Association" each place it appears and
inserting in lieu thereof, in each such place, "corporation"; and
(2) by striking out "Association's each place it appears and
inserting in lieu thereof, in each such place, "corporation's".
(t) T h e heading of section 305 of such Act is amended t o read as
follows:

"SPECIAL

ASSISTANCE

MORTGAGE ASSOCIATION".

FUNCTIONS

GOVERNMENT

NATIONAL

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

539

(u) The heading of section 306 of such Act is amended to read as
follows:

"MANAGEMENT

AND

LIQUIDATING

FUNCTIONS

GOVERNMENT

68 stat. eis.
12USC1721.

NATIONAL MORTGAGE ASSOCIATION".

(v) Subsections (a) and (b) of section 307 of such Act are repealed,
(vv) Section 307 of such Act is further amended—
(1) by striking out "SEC. 307." ;
(2) by striking out "(c) All of the benefits and burdens incident
to the administration of" and inserting in lieu thereof the follow-

^^^^i,'

"SEC. 307. All of the benefits and burdens incident to the administration of"; and
(3) by striking out "board of directors of the Association" and
inserting in lieu thereof "Secretary of Housing and Urban Development".
(x) The heading of section 308 of such Act is amended to read as
follows: "MANAGEMENT".

(y) Section 308 of such Act is amended—
12 use 1723.
(1) by inserting " ( a ) " immediately following "308";
(2) by striking out the first two sentences and inserting in lieu
tliereof "All the powers and duties of the Government National
Mortgage Association shall be vested in the Secretary of Housing
and ITpban Development and the Association shall be administered
under the direction of the Secretary." ;
(3) by striking out "the board shall determine" and inserting in
lieu thereof "the Secretary shall determine";
(4) by striking out "Association. Tlie chairman of the board"
and inserting in lieu thereof "Association, and shall have power to
adopt, amend, and repeal bylaws governing the performance of the
fKJw ers and duties granted to or imposed upon it by law. The Secretary" ;
(5) by striking out "by the board of directors," and inserting in
lieu thereof "by the Secretary,";
(6) by striking out the last sentence; and
(7) by adding at the end thereof the following new subsection: FNMA, Board of
"(b) The JFederal National Mortgage Association shall have a board ^Yl'^us'c 1723.
of directors which shall consist of fifteen persons, one-third of whom
shall be appointed annually by the President of the United States, and
the remainder of whom shall be elected annually by the common
stockholders. The board shall at all times have as members appointed
by the President at least one person from the homebuilding industry,
at least one person from the mortgage lending industry, and at least
one person from the real estate industry. Each member of the board of
directors shall be appointed or elected for a term ending on the date of
the next annual meeting of the stockholders, except that any such member may be removed from office by the President for good cause. Any
elective seat on the board which becomes vacant after the annual election of the directors shall be filled by the board, but only for the unexpired portion of the term. Any appointive seat which becomes vacant
shall be filled by appointment of the President, but only for the unexpired portion of the term. Within the limitations of law and regulation,
the board shall determine the general policies which shall govern the
operations of the corporation, and shall have power to adopt, amend,
and repeal bylaws governing the performance of the powers and duties
g r a n t ^ to or imposed upon it by law. The board of directors shall
select and effect the appointment of qualified persons to fill the offices
of president and vice president, and such other offices as may be provided for in the bylaws. Any member of the board who is a full-time
officer or employee of the Federal Government shall not, as such member, receive compensation for his services."

540
68 Stat. 620.
12 u s e 1723a.

FNMA, exemption from taxation.

Officers and
employees.

Post, p. 546.
80 Stat. 564.
5 u s e 83318348.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

(z) Section 309 (a) of such Act is amended—
(1) by striking out "The Association" and inserting in lieu
thereof "Each of the bodies corporate named in section
302(a)(2)";
(2) by striking out "by its board of directors, to adopt, amend,
and repeal bylaws governing the performance of the powers and
duties granted to or imposed upon it by law;";
(3) by striking out "conduct its business" and inserting in lieu
thereof "conduct its business without regard to any qualification
or similar statute";
(4) by striking out "the Association may deem" and inserting
in lieu thereof "it may deem"; and
(5) by striking out "the purposes of the Association" and
inserting in lieu thereof "its purposes".
(aa) Section 309 (c) of such Act is amended—
(1) by striking out " ( 1 ) " ;
(2) by striking out "The Association" and inserting in lieu
thereof " (1) The Association";
(3) by striking out ", and (2) the Association shall, with
respect to its secondary market operations under section 304 after
the cutoff date referred to in section 303(d) of this title, pay
annually to the Secretary of the Treasury, for covering into miscellaneous receipts, an amount equivalent to the amount of Federal income taxes for which it would be subject if it were not
exempt from such taxes with respect to such secondary market
operations"; and
(4) by adding at the end thereof the following new paragraph:
"(2) The corporation, including its franchise, capital, reserves,
surplus, mortgages or other security holdings, and income, shall be
exempt from all taxation now or hereafter imposed by any State, territory, possession. Commonwealth, or dependency of the United States,
or by the District of Columbia, or by any county, municipality, or
local taxing authority, except that any real property of the corporation shall be subject to State, territorial, county, municipal, or local
taxation to the same extent as other real property is taxed."
(bb) Section 309 (d) of such Act is amended—
(1) by inserting " ( 1 ) " immediately following " ( d ) " ;
(2) by striking out "Chairman of the Board" and inserting in
lieu thereof "Secretary of Housing and L^rban Development";
(3) by striking out "agents," and inserting in lieu thereof
"agents of the Association,"; and
(4) by adding at the end thereof the following new
paragraph:
" (2) The board of directors of the corporation shall have the power
to select and appoint or employ such officers, attorneys, employees, and
agents, to vest them with such powers and duties, and to fix and to cause
the corporation to pay such compensation to them for their services, as
it may determine; and any such action shall be without regard to the
Federal civil service and classification laws. Appointments, promotions, and separations so made shall be based on merit and efficiency,
and no political tests or qualifications shall be permitted or given consideration. Each officer and employee of the corporation who is
employed by the corporation prior to the termination of the transitional period referred to in section 810(b) of the Housing and Urban
Development Act of 1968 and who on the day previous to the beginning
of such employment will have been subject to the civil service retirement law (subch. I l l of ch. 83 of title 5, United States Code) shall,
so lon^ as his employment by the corporation continues without a
break in continuity of service, continue to be subject to such law; and

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

541

for the purpose of such law his employment by the corporation without a break in continuity of service shall be deemed to be employment by the Government of the Ignited States. The corporation shall
contribute to the Civil Service Retirement and Disability Fund a sum
as provided by section 8334(a) of title 5, Ignited States Code, except so stat. seg.
that such sum shall be determined by applying to the total basic pav
(as defined in 5 U.S.C. 8331(3) and except as hereinafter provided)
^^ s'^'- -'64.
paid to the employees of the corporation who are covered by the civil
service retirement law, the per centum rate determined annually by
the United States Civil Service Commission to be the excess of the
total normal cost per centum rate of the civil service retirement system
over the employee deduction rate specified in section 8334(a) oif title
5, United States Code. The corporation shall also pay into the Civil
Service Retirement and Disability Fund such portion of the cost of
administration of the fund as is determined by the United States Civil
Service Commission to be attributable to its employees. Notwithstanding the foregoing provisions, there shall not be considered for the
purposes of the civil service retirement law that portion of the basic
pay in any one year of any officer or employee of the corporation which
exceeds the basic pay provided for in section 5312 of title 5, United
States Code, on the last day of such year. Except as provided in this 8° ^tat. 46o.
subsection, the corporation shall not be subject to the provisions of
title 5, United States Code."
'
so stat. 378.
(cc) Section 309(e) of such Act is amended—
es stat. 620.
(1) by striking out "body corporate created by section 302 and 12 u s e 1723a.
inserting in lieu thereof "bodies corporate named in section
302(a)(2)";
(2) by inserting ", 'Government National Mortgage Association'," immediately following " 'Federal National Mortgage Association' "; and
(3) by striking out the second sentence and inserting in lieu
thereof the following: "Violations of the foregoing sentence may
be enjoined by any court of general jurisdiction at the suit of the
proper body corporate. I n any such suit, the plaintiff may recover
any actual damages flowing from such violation, and, in addition,
shall be entitled to punitive damages (regardless of the existence
or nonexistence of actual damages) of not exceeding $100 for each
day during which such violation is committed or repeated."
(dd) Section 309 (g) of such Act is amended to read as follows:
y.Ztt"^!,!^!^^"^^
" ( g ) The Federal Reserve banks are authorized and directed to act banks, custodians.
as depositaries, custodians, and fiscal agents for each of the bodies corporate named in section 302(a) (2), for its own account or as fiduciary, Ante, p. 536.
and such banks shall be reimbursed for such services in such manner
as may be agreed upon; and each of such bodies corporate may itself act
in such capacities, for its own account or as fiduciary, and for the
account of others."
(ee) Section 309 of such Act is amended by adding at the end thereof
the following new subsection:
" ( h ) The Secretary of Housing and Urban Development shall have
general regulatory power over the Federal National Mortgage Association and shall make such rules and regulations as shall be necessary
and proper to insure that the purj)oses of this title are accomplished.
No stock, obligation, security, or other instrument shall be issued by
the corporation without the prior approval of the Secretary. The Secretary may require that a reasonable portion of the corporation's
mortgage purchases be related to the national goal of providing adequate housing for low and moderate income families, but with reasonable economic return to the corporation. The Secretary may examine
and audit the books and financial transactions of the corporation, and

542

68 Stat. 622.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

he may require the corporation to make such reports on its activities
as he deems advisable."
(ff) Scctiou 311 of such Act is amended—
(1) by striking out "the Association" and inserting in heu thereof "either of the bodies corporate named in section 302(a) ( 2 ) " ;
and
(2) by adding at the end thereof the following: "All stock, obligations, securities, participations, or other instruments issued
pursuant to this title shall, to the same extent as securities which
are direct obligations of or obligations guaranteed as to principal
or interest by the United States, be deemed to be exempt securities
within the meaning of laws administered by the Securities and
Exchange Commission; but all such issuances shall be made only
with the approval of the Secretary of Housing atid Urban
Development."
PARTICIPATIONS

soltlTieT'
12 use 1717.

^^^^^- ^^^''^^ .Section 302(c)(5) of the National Housing Act is
amended by inserting at the end thereof the following: "In the event
that the insufficiency required by the trustee is on account of principal
maturities of outstanding beneficial interests or participations authorized to be issued pursuant to paragraph (4) of this subsection, or
pursuant hereto, the trustee is authorized to elect to issue additional
beneficial interests or participations for refinancing purposes in lieu
of requiring any trustor or trustors to make payments to the trustee
from appropriated funds or other sources. Each such issue of beneficial
interests or participations shall be in an amount determined by the
trustee but not in excess of the aggregate amount which the trustee
would otherwise require the trustor or trustors to pay from appropriated funds or other sources, and may be issued without regard to the
provisions of paragraph (4) of this subsection. All refinancing issues
of beneficial interests or participations shall be deemed to have been
issued pursuant to the authority contained in the appropriation Act or
Acts under which the beneficial interests or participations were
originally issued."
MORTGAGE-BACKED

12 u*sc f7^9

12 use 1721.

SECURITIES

^^^* ^^^' ^^^ Section 304 of the National Housing Act is amended
by adding at the end thereof the following new^ subsection:
" ( d ) To provide a greater degree of liquidity to the mortgage
investment market and an additional means of financing its operations
under this section, the corporation is authorized to set aside any mortgages held by it under this section, and, upon approval of the Secretary
of the Treasury, to issue and sell securities based upon the mortgages
so set aside. Securities issued under this subsection may be in the form
of debt obligations or trust certificates of beneficial interest, or both.
Securities issued under this subsection shall have such maturities and
bear such rate or rates of interest as may be determined by the corporation with the approval of the Secretary of the Treasury. Securities
issued by the corporation under this subsection shall, to the same extent
as securities which are direct obligations of or obligations guaranteed
as to principal and interest by the United States, be deemed to be
exempt securities wdthin the meaning of laws administered by the
Securities and Exchange Commission. Mortgages set aside pursuant
to this subsection shall at all times be adequate to enable the corporation to make timely principal and interest payments on the securities
issued and sold pursuant to this subsection."
(I3) Section 306 of such Act is amended by adding at the end thereof
the following new subsection:

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

" (g) The Association is authorized, upon such terms and conditions
jis it may deem appropriate, to guarantee the timely payment of principal of and interest on such trust certificates or other securities as sliall
(1) be issued by the corporation under section 304(d), or by any other
issuer approved for the purposes of this subsection by the Association,
and (2) be based on and backed by a trust or pool composed of mortgages which are insured under the National Housing Act or title V of
the Housing Act of 1949, or which are insured or guaranteed under the
Servicemen's Readjustment Act of 1944 or chapter 37 of title 38,
United States Code. The Association shall collect from the issuer a
reasonable fee for any guaranty under this subsection and shall make
such charges as it may determine to he reasonable for the analysis of
any trust or other security arrangement proposed by the issuer. I n
the event the issuer is unable to make any payment of principal of or
interest on any security guaranteed under this subsection, the Association shall make such payment as and when due in cash, and thereupon
shall be subrogated fully to the rights satisfied by such payment. Any
Federal, State, or other law to the contrary notwithstanding, the Association is hereby empowered, in connection with any guaranty under
tliis subsection, whether before or after any default, to provide by
contract with the issuer for the extinguishment, upon default by the
issuer, of any redemption, equitable, legal, or other right, title, or interest of the issuer in any mortgage or mortgages constituting the
trust or jx)ol against which the guaranteed securities are issued; and
with respect to any issue of guaranteed securities, in the event of
default and pursuant otherwise to the terms of the contract, the mortgages that constitute such trust or pool shall become the absolute propert}^ of the Association subject only to the unsatisfied rights of the
holders of the securities based on and backed by such trust or pool.
The full faith and credit of the United States is pledged to the payment of all amounts Avhich may be required to be paid under any
guaranty under this subsection. There shall be excluded from the total
amounts set forth in subsection (c) the amounts of any mortgages
acquired by the Association as a result of its operations under this
subsection."
(c) Section 5136 of the Revised Statutes (12 U.S.C. 24) is amended
by adding at the end thereof the following:
"Ninth. To issue and sell securities which are guaranteed pursuant
to section 306(g) of the National Housing Act."
(d) The first proviso of section 21(aj (1) of the Banking Act of
1933 (12 U.S.C. 3 7 8 ( a ) ( 1 ) ) is amended by inserting ", or issuing
securities," immediately following "investment securities".
(e) Section 5(c) of the Home Owners' Loan Act of 1933 (12 U.S.C.
1464(c)) is amended by adding at the end thereof a new paragraph
as follows:
"Any such association may issue and sell securities which are guaranteed pursuant to section 306 (g) of the National Housing Act."

543

^"'e- P- 542.
^8 stat. m e .
and note.
63 stat. 432.
1490."^^ ^^^^
, ss stat. 284;
^^7f*|tat^Y2^63
38 use isoi.

^g^l^^J^^Jy^'^'
'^^ s*^* ^32.

SUBORDINATED AND (ONVERTIBLE OBLIGATIONS

SEC. 805. Section 304 of the National Housing Act is amended by
adding thereto (after subsection (d) as added by section 804 of this
Act) the following new subsection:
"(e) For the purposes of this section, the corporation is authorized
to issue, upon the approval of the Secretary of the Treasury, obligations which are subordinated to any or all other obligations of the corporation, including subsequent obligations. The obligations issued
under this subsection shall have such maturities and bear such rate or
rates of interest as may be determined by the corporation with the
approvaf of the Secretary of the Treasury and may be made redeem-

^^ stat. eis.
^^ "^^ ^^^^'

544

PUBLIC LAW 90-448-AUG.

1,JL968

\&2 SmL

able at the option of the corporation before maturity in such manner
as may be stipulated in such obligations. Any of such obligations may
be made convertible into shares of common stock in such manner, at
such price or prices, and at such time or times as may be stipulated
therein. The total principal amount of such subordinated obligations
which may be outstanding at any one time shall not exceed two times
the sum of (1) the capital of the corporation represented by its outstanding common stock and (2) its surplus and undistributed earnings
at such time. The outstanding total principal amount of such obligations, w^hich are entirely subordinated to the obligations of the corporation issued or to be issued under subsection ( b ) , shall be deemed to be
capital of the corporation for the purpose of determining the aggregate
amount of obligations issued under subsection (b) which may be outstanding at any one time. Obligations issued by the corporation under
this subsection shall, to the same extent as securities which are direct
obligations of or obligations guaranteed as to.principal or interest by
the United States, be deemed to be exempt securities within the meaning of laws administered by the Securities and Exchange Commission.
The corporation shall insert appropriate language in all of its obligations issued under this subsection clearly indicating that such obligations, together with the interest thereon, are not guaranteed by the
United States and do not constitute a debt or obligation of the United
States or of any agency or instrumentality thereof other than the corporation. The corporation is authorized to purchase in the open market
any of its obligations outstanding under this subsection at any time
and at any price."
SPECIAL ASSISTANCE

79^stat°493^^'
12 use 1720.

AUTHORIZATION

^^^- ^^^- Sectiou 305(c) of the National Housing Act is amended—
(1) by striking out "and" after "July 1, 1967,"; and
(2) by striking out the period and inserting in lieu thereof ",
and by $500,000,000 on July 1, 1969."
A M E N D M E N T S TO O T H E R

u us^c f72^i
note.
jJltVt^^'^'
42 use 1452b.
79 Stat. 669.
42 u s e 3534.

^2^^sc
31 u^c 846^

73sta^482.

LAWS

^^^- ^P"^- (^) Section 306 (b) of the Housing Act of 1959 is amended
by striking out "Federal National Mortgage Association pursuant"
and inserting in lieu thereof "Government National Mortgage Association pursuant".
(^) Section 312 (d) of the Housing Act of 1964 is amended by striking out "Federal" and inserting in lieu thereof "Government".
(c) Section 5(b) of the Department of Housing and Urban Development Act is amended—
(1) by striking out "The Federal" and inserting in lieu thereof
"The Government"; and
(2) by striking out ", and the position of the President of said
Association is hereby allocated among the positions referred to in
section 7(c) hereof".
(^^ Section 7(b) of the Department of Housing and Urban Development Act is repealed.
(^) Section 101 of the Government Corporation Control Act is
amended by striking out "Federal National Mortgage Association"
and inserting in lieu thereof "Government National Mortgage
(f) Scctiou 13(4) ( F ) of the Public Buildings Act of 1959 is
amended by striking out "Federal" and inserting in lieu thereof
"Government".

82 STAT. J

PUBLIC LAW 90H48-AUG. 1,1968

545

(g) Section '6 (b) of the Participation Sales Act of 1966 is amended »« sta^ le?.
by striking out "secondary market operations carried on by the Fed- note.
*^^^
eral" and inserting in lieu thereof "the Government".
(h) Section 1820(e) of title 38, United States Code, is amended by 78 stat. soo.
striking out "Federal National" in three places and inserting in lieu
thereof, in each such place, "Government National".
(i) Section 709 of title 18, United States Code, is amended by strik- es stat. 609.
ing out "Federal National Mortgage Association" each place it appears
and inserting in lieu thereof, in each such place, "Government National
Mortgage Association".
(j) Section 5136 of the Revised Statutes is amended by inserting 12 use 24.
"or the Government National Mortgage Association" immediately following "Federal National Mortgage Association".
(k) Section 11 (h) of the Federal Home Ix)an Bank Act is amended 6o'*star622^^'
by inserting "or the Government National Mortgage Association, in 12 use 1431.
the stock of the Federal National Mortgage Association" immediately
following "Federal National Mortgage Association".
(1) Section 16 of the Federal Home Tx>an Bank Act is amended by
inserting "or the Government National Mortgage Association" immediately following "Federal National Mortgage Association".
(m) Section 5(c) of the Home Owners' I ^ a n Act of 1933 is amended "^^ ^ta^ 132.
by inserting "or the Government National Mortgage Association,"
immediately following "Federal National Mortgage Association" and
by inserting "or the stock of the Federal National Mortgage Association" immediately after "any other agency of the United States".
(n) Section 8(8) ( E ) of the Federal Credit Union Act is amended g/gtaj^n""'
by inserting "or the Government National Mortgage Association" 12 use 1757.
immediately following "Federal National Mortgage Association".
E F F E C T I V E DATE

SEC. 808. The amendments made by this title shall be effective from
and after a date, no more than one hundred and twenty days following the date of enactment of this Act, as established by the Secretary
of Housing and Urban Development. Notice of the establishment of
such effective date shall be published in the Federal Register at least
thirty days prior thereto.

P u b l i c a t i o n in
Federal Register.

SAVINGS PROVISIONS

SEC. 809. (a) No cause of action by or against the Federal National
Mortgage Association existing prior to the effective date established
pursuant to section 808 shall abate by reason of the enactment of this
title. Any such cause of action may thereafter be asserted by or against
the appropriate corporate body named in section 302(a)(2) of the
National Housing Act.
(b) No suit, action, or other proceeding commenced by or against
the Federal National Mortgage Association, or any officer thereof in
his official capacity, prior to the effective date established pursuant to
section 808 shall abate by reason of the enactment of this title. A court
may at any time thereafter during the pendency of any such litigation,
on its own motion or that of any party, order that the litigation may
be maintained by or against the appropriate corporate body named in
section 302(a) (2) of the National Housing Act or the appropriate corresponding officer thereof.
TRANSITIONAL

PROVISIONS

SEC. 810. (a) On the effective date established pursuant to section
808 of this Act, each share of outstanding nonvoting common stock,
with a par value of $100 per share, of the Federal National Mortgage

^"'e- p- 536.

546

Ante, p. 539.
FNMA, Board of
Directors.
Transitional
period.

59 Stat. 597.
31 u s e 841
note.
GAO audit.

PUBLIC LAW 90-448-:AUG. 1, 1968

[82 STAT-

Association shall be changed into and shall become one share of voting
common stock, without par value, of such corporation.
(b) (1) The provisions of section 308(b) of the National Housing
Act (as added by section 802(y) (7) of this Act) shall be applicable
only to the extent that its provisions do not conflict with this subsection.
(2) For a transitional period after the effective date established
pursuant to section 808 of this Act, the board of directors of the
Federal National Mortgage Association shall consist of nine persons.
For a term expiring on the date of the first annual meeting of the
corporation's stockholders, all members of the board shall be appointed
by the Secretary of Housing and Urban Development. For a term
beginning on such date, seven members of the board shall be appointed
by the Secretary, and two members shall be elected by the common
stockholdei^s. For subsequent terms beginning prior to the termination
of the transitional period, five members shall be appointed by the
Secretary, and four members shall be elected by the common stockholders. For each term beginning prior to the termination of the
transitional period, the Secretary shall appoint as a member of the
board the president of the corporation. During the transitional period,
the president of the corporation shall be appointed by the President,
by and with the advice and consent of the Senate, and may be removed
from office by the President for good cause.
(3) The transitional period referred to in paragraph (2) shall come
to an end at such time as the board of directors shall find, with the
approval of the Secretary, that not less than one-third of the corporation's common stock is owned by persons or institutions in the mortgage lending, homebuilding, real estate, or related businesses; but in
no event shall it end sooner than May 1,1970, or later than May 1,1973.
(c) From the effective date established pursuant to section 808 and
until the retirement of the last of the outstanding shares of its preferred stock, the Federal National Mortgage Association shall be
deemed to be a wholly owned corporation for the purposes of the
Government Corporation Control Act. Notwithstanding the foregoing
provisions of this paragraph, the financial transactions of the Federal
National Mortgage Association shall continue to be subject to audit
by the General Accounting Office for such period as there may be outstanding obligations of the Federal National Mortgage Association
which are guaranteed as to principal or interest by the Government
National Mortgage Association.
(d) Those persons who are the officers and employees of the Federal National Mortgage Association immediately prior to the effective
date established pursuant to section 808 shall become the officers and
employees of the Government National Mortgage Association on such
date. The Federal National Mortgage Association and the Government
National Mortgage Association shall provide by contract for the conditions and methods under which and by which the Federal National
Mortgage Association during the transitional period may employ those
individuals who are employees of the Government National Mortgage
Association on such effective date; and may provide by contract for the
operation by either of such corporations of anv of the functions of the
other. The Secretary of Housing and Urban Development shall make
every reasonable effort to place in other comparable Federal positions
any individuals w^ho are career or career-conditional employees of the
Government National Mortgage Association on such effective date and
who are subsequently during the transitional period neither employed
by the Federal National Mortgage Association nor retained by the
Government National Mortgage Association.

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

TITLE IX—NATIONAL HOUSING PARTNERSHIPS
S T A T E M E N T OF PURPOSE

SEC. 90L The Congress finds that the vi)lume of housing being produced for families and individuals of low or moderate income must
be increased to meet the national goal of a decent home and a suitable
living environment for every American family, and declares that it is
the policy of the United States to encourage the widest possible participation by private enterprise in the provision of housing for low
or moderate income families. The Congress has therefore determined
that one or more private organizations should be created to encourage
maximum participation by private investors in programs and projects
to provide low and moderate income housing.
CREATION OF CORPORATIONS

SEC. 902. (a) There is hereby authorized to be created a private corporation for profit (hereinafter in this title referred to as the "corporation"). The corporation will not be an agency or establishment
of the United States Government. The corporation shall be subject to
the provisions of this title and, to the extent consistent with this title,
to the District of Columbia Business Corporation Act (D.C. Code, sec.
29-901 etseq.).
. . . .
es stat. 179.
(b) Whenever the President finds it in the national interest to do
so, he may cause the creation of an additional corporation or additional corporations to carry out the purposes of this title. All the provisions of this title shall thereupon become applicable to each such
corporation, and to the limited partnership formed by it pursuant to
section 907.
(c) Nothing in this title shall be construed to preclude private persons from creating other corporations and organizing other partnerships, joint ventures, or associations for the purposes set forth in this
1 itle as the purposes of the corporation and the partnership described
in section 907.
PROCESS OF ORGANIZATION

SEC. 908. (a) The President of the United States shall appoint, by
and with the advice and consent of the Senate, incorporators of the
corporation, one of whom shall be designated by the President to serve
as chairman. The incorporators shall serve as the initial board of
directors until the first annual meeting of stockholders or until their
successors are elected and have qualified.
(b) The incorporators shall take whatever actions are necessary or
appropriate to establish the corporation, including the filing of articles
of incorporation as approved by the President.
(c) The incorporators shall also arrange for an initial offering of
shares of stock in the corporation and of interests in the partnership
described in section 907 of this title. If the incorporators deem it advisable in order to carry out the purposes of this title, the initial offering
may be made upon terms which require the purchase of other securi
ties of the corporation or of interests in such partnership.
DIRECTORS

SEC. 904. The corporation shall have a board of directoi-s (hereinafter in this section referred to as the "board"), consisting of fifteen
members. Three members of the board shall be appointed by the
President of the United States, by and with the advice and consent of
the Senate, effective on the date on which the other members are

547

548

PUBLIC LAW 90-448^UG. 1, 1968

[82 STAT.

elected, and for terms of three years or until their successors have been
appointed and have qualified, except that the first three members of the
board so appointed shall continue in office for terms of one, two, and
three years, respectively, and any memlber so appointed to fill a vacancy shall be appointed only for the unexpired term of the director
whom he succeeds. Twelve members of the board shall be elected by
the stockholders.
FINANCING THE CORPORATION

SEC. 905. The corporation shall have the power to create and issue
the number of shares stated in its articles of incorporation. Such
shares may be divided into one or more classes, any or all of which
classes may consist of shares with par value or shares without par
value, with such designations, preferences, voting powers, and special
or relative rights and such limitations, restrictions, or qualifications
thereof as shall be stated in the articles of incorporation. The articles
of incorporation may limit or deny the voting power of the shares of
any class.
PURPOSES AND POWERS OF THE CORPORATION

SEC. 906. (a) I n order to achieve the objectives and carry out the
purposes of this title, the corporation is authorized to—
(1) plan, initiate, and carry out, pursuant to Federal programs
or otherwise, the building or rehabilitation of housing and related
facilities primarily for the benefit of families and individuals of
low or moderate income;
(2) buy, own, manage, lease, or otherwise acquire or dispose
of property in connection with the developments, projects, or
undertakings referred to in paragraph ( 1 ) ; and
(3) provide such funds as may be necessary to accomplish the
developments, projects, or undertakings referred to m paragraph (1).
(b) Included in the activities authorized to the corporation for
the accomplishment of the purposes indicated in subsection (a) of
this action are, among^ others not specifically named—
(1) to enter nito partnerships, limited partnerships, joint
ventures, and other associations with individuals, corporations,
and private and governmental agencies, organizations, and
institutions;
(2) to act as manager or general partner of any such partnership, venture, or association;
Research con
(3) to conduct or contract for research and studies related to
tracts.
the development, demonstration, and evaluation of improved techniques and methods of constructing, rehabilitating, and maintaining housing;
(4) to provide technical assistance to nonprofit corporations,
limited dividend corporations, and others with respect to the
planning, financing, construction, rehabilitation, maintenance,
and management of housing for low and moderate income families
and individuals;
Loans or grants.
(5) ^Q make loans or gTauts including grants of interests in
housing and related facilities, to nonprofit corporations, limited
dividend corporations, and others, in carrying out its activities
under subsection (a) of this section; and
(6) to hire or accept the voluntary services of consultants,
experts, advisory boards, and panels to aid the corporation in
carrying out the purposes of this title.
(c) To carry out the foregoing purposes and engage in the foregoing activities, the corporation shall have the usual powers conferred

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

549

upon a stock corporation by the District of Columbia Business Corporation Act.
(d) Nothing in this title shall have the effect of waiving or otherwise affecting the applicability of the provisions of the Davis-Bacon
Act (40 r . S . C . 267a—276a-5), or any other law rec^uiring compliance 49 stat. lou;
with labor standards, in the case of any construction to which such ^* ^'^*' ^^*'
provisions would otherwise apply.
NATIONAL

HOUSING

PARTNERSHIP

SEC. 907. (a) The corporation is authorized to arrange for the
formation, as a separate organization, of a limited partnership (hereinafter in this title referred to as the "partnership") under the District of Columbia Uniform Limited Partnership Act (D.C. Code,
sec. 41-401 et seq.) for the purpose of engaging in any of the activities
authorized for the corporation under section 906 of this title, and
to enter into a partnership agreement governing the affairs of such
limited partnership.
(b) The partnership shall be subject to the provisions, to the extent
consistent with this title, of (1) the District of Columbia Uniform
Limited Partnership Act and (2) those provisions of the District of
Columbia Uniform Partnership Act (D.C. Code, sec. 41-301 et seq.)
made applicable by section 6(2) of that Act (D.C. Code, sec. 4 1 305(2)). Notwithstanding any inconsistency between the provisions
of such Acts, or of any other law, and the provisions of this section,
the partnership organized pursuant to this section shall be deemed
to have the legal status of a limited partnership.
(c) The partnership is authorized to enter into partnerships, limited partnerships, or joint ventures organized under applicable State
or local law for the purpose of engaging in low and moderate income
housing developments, projects, or undertakings in particular
localities.
(d) The corporation shall be the general partner in the partnership. The capital of the partnership and the contributions of the
partners shall be in such amounts and at such times as are set forth
in or pursuant to the partnership agreement.
(e) The partnership agreement shall include provisions designed
to assure that (1) the partnership shall participate in low and moderate
income housing developments, projects, or undertakings in a manner
designed to encourage the participation therein of local interests, and
(2) in any such development, project, or undertaking the partnership
shall not subscribe to more than 25 per centum (including equity
investments made in services or property) of the aggregate initial
equity investment unless, in the judgment of the corporation as general
partner, the balance of the required equity investment is not readily
obtainable from other responsible investors residing or doing business
in the local community.
(f) The partnership agreement may without limitation (1) permit
each of the stockholders of the corporation to become a member of the
partnership as a limited partner, (2) authorize the inclusion of other
limited partners in addition to the stockholders of the corporation,
(3) provide that the assignee of the partnership interest of a limited
partner of the partnership who is also a stockholder of the corporation
may not become a substituted limited partner unless he also acquires
the assignor's stock of the corporation, and (4) include provisions
requiring that the corporation as a general partner approve the substitution or addition of a member of the partnership.
(g) A corporation which is a limited partner in the partnership
shall not become liable as a general partner by reason of the fact that

76 stat. ess.

76 stat. 636.

550

rf c^* c*ode^4i401.
° ^

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

(1) such corporation is a holder of shares of voting stock of the corporation constituting not more than 5 per centum of the total number
of outstanding shares of such stock and exercises any of the rights
(including voting rights) of a holder of such shares, and/or (2) a
person who is an officer or director of such corporation (or of another
corporation which controls or is subject to the control of, or is under
common control with, such corporation) is a director of the corporation and performs the duties of that office. The interest of a limited
partner in the partnership shall not be treated as a stock interest in the
corporation, notwithstanding that such interest of a limited partner
may be proportionate to his stock interest in the corporation.
(h) The certificate of the partnership and any amendment thereof
required by the District of Columbia Uniform Limited Partnership
'^^^ shall be executed and acknowledged by the corporation as member
and by each other member of the partnership or his attorney-in-fact
duly authorized by power of attorney in writing. The corporation may
execute and acknowledge the certificate and any amendment thereof
as attorney-in-fact for any member, member to be substituted or added,
or assigning member, by whom the certificate or amendment is required
to be executed and acknowledged and who has appointed the corporation as such attorney.
REPORT TO CONGRESS A N D RECORDS

SEC. 908. (a) The corporation shall submit an annual report to the
President for transmittal to the Congress within six months after the
end of its fiscal year. The report shall include a comprehensive and
detailed report of the operations, activities, and financial condition of
the corporation and the partnership under this title.
(b) The accounts of the corporation and of the partnership shall
be audited annually in accordance with generally accepted auditing
standards by independent certified public accountants or independent
licensed public accountants certified or licensed by a regulatory authority of a State or other political subdivision of the United States.
ANTITRUST LAWS

38 Stat. 730.
^^'

SEC. 909. Nothing contained herein shall affect the applicability
^f ^\^Q Federal antitrust laws to the activities of the corporation and
the partnership created under this title and of the persons participating therein or in partnerships, limited partnerships, or joint ventures
with either of them.
R I G H T TO R E P E A L , ALTER, OR A M E N D

SEC. 910. The right to repeal, alter, or amend this title at any time
is expressly reserved.
A M E N D M E N T TO B A N K I N G

Ante, p. 547.

LAWS

SEC. 911. Paragraph "Seventh" of section 5136 of the Revised Statutes (12 U.S.C. 24) is amended by adding at the end thereof the following : "Notwithstanding any other provision in this paragraph, the
association may purchase for its own account shares of stock issued by
a corporation authorized to be created pursuant to title I X of the
Housiiig and Urban Development Act of 1968, and may make investments in a partnership, limited partnership, or joint venture formed
l>ursuant to section 907 (a) or 907 (c) of that Act."

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

551

TITLE X—RUEAL HOUSING
HOUSING

FOR LOW AND MODERATE I N C O M E

PERSONS AND

FAMILIES

SEC. 1001. Title V of the Housinsr Act of 1949 is amended by addiiis:
at the end thereof the following new section:

63 stat. 432.
^^ "^^ ^ '*'^ ^"
1490.

' ' L O A N S T O PROVIDE O C C U P A N T - O W N E D , R E N T A L , A N D COOPERATIVE H O U S I N G
FOR LOW A N D MODERATE I N C O M E PERSONS AND F A M I L I E S

"SEC. 521. (a) Notwithstanding the provisions of sections 502, 517
(a) and 515, loans to persons of low or moderate income under section 42 use 1472,
502 or 517(a)(1), and loans under section 515 to provide rental or ^'*^^' ^^^^'
cooperative housing and related facilities for persons and families of
low or moderate income or elderly persons and elderly families, shall
bear interest at a rate prescribed by the Secretary at not less than a
rate determined annually by the Secretary of the Treasury taking into
consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans, adjusted to
the nearest one-eighth of 1 per centum, less not to exceed the difference
between the adjusted rat^. determined by the Secretary of the Treasury
and 1 per centum per annum: Provided, That such a loan may be
made only when the Secretary determines that the needs of the applicant for necessary housing cannot be met with financial assistance
from other sources including assistance under section 235 or 236 of the
National Housing Act: Provided further, That interest on loans under Ante, v>p. ^n,
section 502 or 517(a) to victims of natural disaster shall not exceed ^'^^'
the rate which would be applicable to such loans under section 502
without regard to this section.
"(b) Housing and related facilities provided with loans described
in subsection (a) shall be located in rural areas; and applicants eligible for such loans under section 502 or 517(a) (1), or for occupancy ^^^^^f^^l^'^'^'
of housing provided with such loans under section 515, shall include 1487, 1485.
otherwise qualified nonrural residents who will become rural residents.
"(c) There shall be reimbursed to the Rural Housing Insurance
Fund by annual appropriations the amounts by which nonprincipal
payments made from the fund during each fiscal year to the holders
of insured loans described in subsection (a) exceed interest due from
the borrowers during each year; and the Secretary from time to time
may issue notes to the Secretary of the Treasury under section 517(h)
to obtain amounts equal to such unreimbursed excess payments, pending the annual reimbursement by appropriation,"
HOUSING

FOR RURAL

TRAINEES

SEC. 1002. Title V of the Housing Act of 1949 is amended by adding
after section 521 (as added by section 1001 of this Act) the following
new section:
" H O U S I N G F O R R U R A L TRAINEES

"SEC. 522, (a) Upon the application of any State or political subdivision thereof, or any public or private nonprofit organization, the
Secretary is authorized, after consultation with the Secretary of
Labor, the Secretary of Health, Education, and Welfare, the Secretary of Housing and Urban Development, and the Di^e<^tor of the
Office of Economic Opportunity, and after the Secretary determines
that the housing and related facilities cannot reasonably be provided
in any other way, to provide financial and technical assistance for

- 6 0 0 O - 69 - 38

552

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

the establishment, in rural areas, of housing and related facilities for
trainees and their families who are residents of a rural area and have
a rural background, while such trainees are enrolled and participating
in training courses designed to improve their employment capability.
The selection of training sites and location of housing shall be made
with due regard to the economic viability of the area, and only after
consideration of a labor area survey and full coordination among all
(xovernment agencies having primary responsibility for administering related programs.
'•(b) Housing and related facilities assisted under this section shall
be safe and sanitary, constructed in the most economical manner, and
of modest design, giving due consideration to the ])urposes to be served
and the needs of the occupants, and may, in the discretion of the Secretary, include mobile family quarters. I)esign and location shall be
such as to facilitate, as feasible, the use of such housing and related
facilities for other purposes when no longer needed for the primary
purpose.
"(c) The applicant shall contribute the necessary land, or funds to
acquire such land, from its own resources, including land acquired by
donation or from funds repayable under subsection (e) or borrowed
from other sources.
" ( d ) No financial assistance shall be made available under this section unless, to the extent and for the periods required by the Secretary,
the applicant agrees that^—
"(1) such housing will be maintained at all times in a safe and
sanitary condition m accordance with standards prescribed by
State or local law, or, in the absence of such standards, with
requirements prescribed by the Secretary;
"(2) priority shall be given at all times, in granting occupancy
of such housing and facilities, to the trainees and their families
described in subsection ( a ) ; and
"(3) rentals charged them shall not exceed amounts approved
by the Secretary after considering the portion of the actual total
family income which the family can afford to pay for rent while
meeting its other immediate needs during occupancy.
"(e) The Secretary may make advances pursuant to any contract
for financial assistance under this section at such times and in such
manner as may be specified in the contract. Such advances for the purchase of land shall be repayable with interest and within a period not
to exceed thirty-three years and may be made upon such security, if
any, as the Secretary requires. Advances for other purposes may bo
made repayable with or without interest or nonrepayable, as determined by the Secretary on the basis of the anticipated income and cost
of operation of the housing and related facilities and the ability of
each applicant to finance such facilities. Any advances shall be limited
to cover the capital costs of constructing such facilities, plus interest
on borrowings to cover such costs.
"(f) Should housing and related facilities assisted pursuant to a
contract under this section be sold to an ineligible transferee or
diverted to a use other than its primary purpose within a period specified in the contract, all advances made under such contract shall be
repaid to the Secretary, up to the amount of the sales price or the fair
value of the property as determined by the Secretary, whichever is
higher, with interest from the date of the sale or diversion. If no suitable alternate use of the property is available, as determined by the
Secretary, after the purpose of this section can no longer be served,
the property shall be returned to its original condition by the recipient
of the assistance.
" ( g ) Interest charged on advances made under this section shall be
at a rate, prescribed by the Secretary, which shall be not less than a

82 STAT. 1

PUBLIC LAW 90-448-AUG. 1, 1%8

553

rate determined by the Secretary of the Treasury taking into consideration the current average market yield on outstanding marketable
obligations of the United States with remaining periods to maturity
comparable to the average maturities of such loans, adjusted to the
nearest one-eighth of 1 per centum, less not to exceed the difference
between the adjusted rate determined by the Secretary of the Treasury
and 1 per centum per annum, as determined by the Secretary.
" ( h ) The Secretary shall prescribe regulations to insure that Federal funds expended under this section are not wasted or dissipated.
"(i) As used in this section (1) the term 'related facilities' shall "Related faciiiinclude any necessary community rooms or buildings, infirmaries, utili- ''^^'
ties, access roads, water and sewer services, and the minimum fixed or
movable equipment determined by the Secretary to be necessary to
make the housing reasonably habitable by trainees and their families;
and (2) the term 'trainee' means any person receiving training under "Trainee."
any federally assisted training program.
" ( j ) There are authorized to be appropriated such sums as may be Appropriation.
necessary to carry out this section."
APPROPRIATIONS

SEC. 1003. Section 513 of the Housing Act of 1949 is amended—
%ll^^- ^^^'
(1) by striking out "and ( e ) " and inserting in lieu thereof yg stat! 793'
" ( e ) " ; and
42 use usa.
(2) by inserting before the period at the end thereof the following: " ; and (f) such sums as may be required by the Secretary
to administer the provisions of sections 235 and 236 of the National
Housing: Act".
Ante, pp. 477,
•=

498.
P U R C H A S E OF LAND FOR B U I L D I N G

SITES

SEC. 1004. Section 514(f)(2) of the Housing Act of 1949 is 75 stat. ise.
amended^^ "^^ ''''•
(1) by striking out "and" before " ( B ) " , and
(2) by inserting before the semicolon at the end thereof the
following: "and (C) land necessary for an adequate site".
MUTUAL AND SELF-HELP

HOUSING

SEC. 1005. Title V of the Housing Act of 1949 is amended by adding 42 use 1471after section 522 (as added by section 1002 of this Act) the following ^'*^°'
new section:
"MUTUAL AND SELF-HEI>P HOUSING

"SEC. 523. (a) The purposes of this section are (1) to make financial
assistance available on reasonable terms and conditions in rural areas
and small towns to needy low-income individuals and their families
who, with the benefit of technical assistance and overall guidance and
supervision, participate in approved programs of mutual or self-help
housing by acquiring and developing necessary land, acquiring building materials, providing their own Tabor, and working cooperatively
with others for the provision of decent, safe, and sanitary dwellings
for themselves, their families, and others in the area or town involved,
and (2) to facilitate the efforts of both public and private nonprofit
organizations providing assistance to such individuals to contribute
their technical and supervisory skills toward more effective and comprehensive programs of mutual or self-help housing in rural areas
and small towns wherever necessary.

554

Contract
authority.

Self-Help Fund.

Ante, pp. 477,
498.
Ante, p. 551.

Loans.

Considerations.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

" ( b ) I n order to carry out the purposes of this section, the Secretary
of Agriculture (in this section referred to as the 'Secretary') is
authorized—
"(1) (A) to make grants to, or contract with, public or private
nonprofit corporations, agencies, institutions, organizations, and
other associations approved by him, to pay part or all of the costs
of developing, conducting, administering, or coordinating effective
and comprehensive programs of technical and supervisory assistance which will aid needy low-income individuals and their families in carrying out mutual or self-help housing efforts; and
" ( B ) to establish the Self-Help Housing Land Development
Fund, referred to herein as the Self-Help Fund, to be used by the
Secretary as a revolving fund for making loans, on such terms
and conditions and in such amounts as he deems necessary, to public or private nonprofit organizations for the acquisition and
development of land as building sites to be subdivided and sold to
families, nonprofit organizations, and cooperatives eligible for
assistance under section 235 or 236 of the National Housing Act
or section 521 of this Act. Such a loan, with interest at a rate not
to exceed 3 percent per annum, shall be repaid within a period not
to exceed two years from the making of the loan, or within such
additional period as may be authorized by the Secretary in any
case as being necessary to carry out the purposes hereof; and
"(2) to make loans, on such terms and conditions and in such
amounts as he 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 such other building materials as may be necessary in order to enable them, by providing substantially all of
their own labor, and by cooperating with others participating in
such programs, to carry out to completion the construction of
decent, safe, and sanitary dwellings for such individuals and their
families, subject to the following limitations:
" ( A ) there is reasonable assurance of repayment of the
loan;
" ( B ) the amount of the loan, together with other funds
which may be available, is adequate to achieve the purpose
for which the loan is made;
" ( C ) the credit assistance is not otherwise available on like
terms or conditions from private sources or through other
Federal, State, or local programs;
" ( D ) the loan bears interest at a rate not to exceed 3 per
centum per annum on the unpaid balance of principal, plus
such additional charge, if any, toward covering other costs of
the loan program as the Secretary may determine to be consistent with its purposes; and
" ( E ) the loan is repayable within not more than thirtythree years.
"(c) I n determining whether to extend financial assistance under
paragraph (1) or (2) of subsection (b), the Secretary shall take into
consideration, among other factors, the suitability of the area within
which construction will be carried out to the type of dwelling which
can be provided under mutual or self-help housing j^rograms, the
extent to which the assistance will facilitate the provision of more
decent, safe, and sanitary housing conditions than presently exist in
the area, the extent to which the assistance will be utilized efficiently
and expeditiously, the extent to which the assistance will effect an
increase in the standard of living of low-income individuals participating in the mutual or self-help housing program, and whether the

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

555

assistance will fulfill a need in the area which is not otherwise being
met through other programs, including those carried out by other
Federal, State, or local agencies.
" ( d ) As used in this section, the term 'construction' includes the "construction."
erection of new dwellings, and the rehabilitation, alteration, conversion, or improvement of existing structures.
"(e) The Secretary is authorized to establish appropriate criteria applicants,
„„^J|^i^'/"^ °^
and procedures in order to determine the eligibility of applicants for criteria.
""" ' " " "
the financial assistance provided under this section, including criteria
and procedures with respect to the periodic review of any construction carried out with such financial assistance.
" ( f ) There are hereby authorized to be appropriated for each fiscal Appropriation.
year commencing after J u n e 30,1968, and ending prior to July 1,1973,
such sums, not in excess of $5,000,000 for any such fiscal year, as may
be necessary to carry out the provisions of this section. No grant or
loan may be made or contract entered into under the authority of this
section after June 30,1973, except pursuant to a commitment or other
obligation entered into pursuant to this section before that date.
" ( g ) There are hereby authorized to be appropriated for the pur]X)ses of subsection (b) (1) (B) not to exceed $1,000,000 for the fiscal
year ending June 30, 1969. and not to exceed $2,000,000 for the fiscal
year ending J u n e 30, 1970. Any amount so authorized to be appropriated for any fiscal vear which is not appropriated may be appropriated for any succeeding fiscal year or years. Amounts appropriated
under this subsection shall be deposited in the Self-Help Fund, which
shall be available without fiscal year limitation for making loans under
subsection (b) (1) ( B ) . Instruments and property acquired by the Secretary in or as a result of making such loans shall be assets of the SelfHelp Fund. Sums received from the repayment of such loans shall be
deposited in and be a part of the Self-Help Fund."
T I T L E XI—URBAN P R O P E R T Y PROTECTION AND
REINSURANCE
SHORT TITLE

SEC. 1101. This title may be cited as the "Urban Property Protection
and Reinsurance Act of 1968."
FINDINGS AND DECLARATION OF PURPOSE

SEC. 1102. (a) The Congress finds that (1) the vitality of many
American cities is being threatened by the deterioration of their inner
city areas; responsible owners of well-maintained residential, business,
and other properties in many of these areas are unable to obtain adequate property insurance coverage against fire, crime, and other perils;
the lack of such insurance coverage accelerates the deterioration of
these areas by discouraging private investment and restricting the
availability of credit to repair and improve property therein; and this
deterioration poses a serious threat to the national economy; (2) recent
riots and other civil commotion in many American cities have brought
about abnormally high losses to the private property insurance industry for which adequate reinsurance cannot be obtained at reasonable
cost, and the risk of such losses will make most lines of property
insurance even more difficult to obtain; (3) the capacity of the private
property insurance industry to provide adequate insurance is threatened, and the continuity of such property insurance protection is
essentia] to the extension of credit in these areas; and (4) the national
interest demands urgent action by the Congress to assure that essential
lines of property insurance, including lines providing protection

556

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

against riot and civil commotion damage will be available to property
owners at reasonable cost.
(b) The purposes of this title are, therefore, to (1) encourage and
assist the various State insurance authorities and the property insurance industry to develop and carry out statewide programs which will
make necessary property insurance coverage against the fire, crime, and
other perils more readily available for residential, business, and other
properties meeting reasonable underwriting standards; and (2) provide a Federal program of reinsurance against abnormally high property insurance losses resulting from riots and other civil commotion,
placing appropriate financial responsibility upon the States to share
in such losses.
AMENDMENT OF THE NATIONAL HOUSING ACT

SEC. 1103. The National Housing Act is amended by adding at the
end thereof the following new title:
"TITLE XII—NATIONAL INSURANCE DEVELOPMENT
PROGRAM
"PROGRAM AUTHORITY

^°^'^^pp 558,

560, 563.

Rj'P°'"t t° Congress

"SEC. 1201. (a) The Secretary is authorized to establish and carry
out the programs provided for in parts A, B, and C of this title.
" (b) (1) The powers of the Secretary under this title shall terminate
on April 30, 1973, except to the extent necessary—
" ( A ) to continue reinsurance in accordance with the provisions
of section 1223 (b) until April 30,1976;
" ( B ) to process, verify, and pay claims for reinsured losses and
perform other necessary functions in connection therewith; and
" ( C ) to complete the liquidation and termination of the reinsurance program.
"(2) On April 30,1976, or as soon thereafter as possible, the Secretary shall submit to the Congress, for its approval, a plan for the liquidation and termination of the reinsurance program.
"ADVISORY BOARD; MEETINGS, DUTIES, COMPENSATION, AND EXPENSES

"SEC. 1202. (a) (1) There is established an Advisory Board (hereinafter called the 'Board') consisting of nineteen members appointed
by the Secretary. Members of the Board shall be selected from among
representatives of the ^ n e r a l public, the insurance industry, State
and local governments including State insurance authorities, and the
Federal Government. Of these members of the Board, not more than
six shall be regular full-time employees of the Federal Government,
and not less than four shall be representatives of the private insurance
industry and not less than four shall be representatives of State
insurance authorities.
"(2) The Secretary shall designate a Chairman and a Vice Chairman of the Board.
"(3) Each member shall serve for a term of two years or until his
successor has been appointed, except that no person who is appointed
while a full-time employee of a State or the Federal Government shall
serve in such position after he ceases to be so employed, unless he is
reappointed.
" (4) Any member appointed to fill a vacancy occurring prior to the
expiration of the term for which his predecessor was appointed shall
be appointed for the remainder of that term.

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

" ( b ) The Chairman shall preside at all meetings, and the Vice
Chairman shall preside in the absence or disability of the Chairman.
I n the absence of both the Chairman and Vice Chairman, the Secretary may appoint any member to act as Chairman pro tempore. The
Board shall meet at such times and places as it or the Secretary may
fix and determine, but shall hold at least four regularly scheduled
meetings a year. Special meetings may be held at the call of the Chairman or any three members of the Board, or at the call of the Secretary.
"(c) The Board shall review general policies and shall advise the
Secretary with respect thereto, and perform such other functions as
are specified in this title.
" ( d ) The members of the Board shall not, by reason of such membership, be deemed to be employees of the United States, and such
members, except those who are regular full-time employees of the
Government, shall receive for their services, as members, the per diem
equivalent to the rate for grade GS-18 of the General Schedule under
section 5332 of title 5, United States Code, when engaged in the per- s use 5332
formance of their duties, and each member of the Board shall be
allowed travel expenses, including per diem in lieu of subsistence, as
authorized by section 5703 of such title for persons in the Government so stat. 499.
service employed intermittently.
"DEFINITIONS

"SEC. 1203. (a) When used in this title, unless the context otherwise requires, the term—
"(1) 'environmental hazard' means any hazardous condition
that might give rise to loss under an insurance contract, but which
is beyond the control of the property owner;
"(2) 'essential property insurance' means insurance against
direct loss to property as defined and limited in standard fire
policies and extended coverage endorsement thereon, as approved
by the State insurance authority, and insurance for such types,
classes, and locations of property against the perils of vandalism,
malicious mischief, burglary, or theft, as the Secretary by rule
shall designate. Such insurance shall not include automobile
insurance tind shall not include insurance on such types of manufacturing risks as may be excluded by the State insurance
authority;
"(3) 'inspection facility', with respect to any State, means any
rating bureau or other person designated b j the State insurance
authority to perform inspections under fair access to insurance
requirements plans under part A ;
" (4) 'insurer' includes any insurance company or group of companies under common ownership which is authorized to engage
in the insurance business under the laws of any State;
"(5) 'pool' means any pool or association of insurance companies in any State which is formed, associated, or otherwise
created for the purpose of making property insurance more
readily available;
" (6) 'losses resulting from riots or civil disorders' means losses
resulting from riots or civil disorders under policies for standard
lines of property insurance for which reinsurance is offered under
section 1221, as determined under regulations of the Secretary;
"(7) 'property owner', with respect to any real, personal, or
mixed real and personal property, means any person having an
insurable interest in such property;
"(8) 'person' includes any individual or group of individuals,
corporation, partnership, or association, or any other organized
group of persons;

557

558

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

"(9) 'reinsured losses' means losses on reinsurance claims and
all direct expenses incurred in connection therewith including, but
not limited to, expenses for processing, verifying, and paying
such losses;
" (10) 'standard line of property insurance' includes—
" (A) fire and extended coverage;
" ( B ) vandalism and malicious mischief;
" ( C ) other allied lines of fire insurance;
" ( D ) burglary and theft;
" ( E ) those portions of multiple peril policies covering
perils similar to those provided for in subparagraphs ( A ) ,
(B), (C),and ( D ) ;
" ( F ) inland marine;
" ( G ) glass;
" ( H ) boiler and machinery;
" ( I ) ocean marine;
" ( J ) aircraft physical damage; and
" ( K ) such other lines generally offered to the public which
include protection against damage from riot or civil commotion as the Secretary by regulation may designate;
" (11) 'State' means the several States, the District of Columbia,
the Commonwealth of Puerto Rico, the territories and possessions, and the Trust Territory of the Pacific Islands;
"(12) 'urban area' includes any municipality or other j)olitical
subdivision of a State, subject to population or other limitations
defined in rules and regulations of the Secretary and such additional areas as may be designated by the State insurance authority; and
"(18) 'year' means a calendar year, fiscal year of a company,
or such other period of twelve months as may be designated by
the Secretaiy.
"(b) The Secretary is authorized to define, by rules and regulations,
any technical or trade term, insofar as such definition is not inconsistent with the provisions of this title.
"PART A—STATEWIDE PLANS To ASSURE FAIR ACCESS TO INSURANCE
REQUIREMENTS
"FAIR PLANS

"SEC. 1211. (a) Each insurer reinsured under this title shall cooperate with the State insurance authority in each State in which it is
to acquire such reinsurance in establishing and carrying out statewide
plans to assure fair access to insurance requirements ( F A I R plans).
" ( b ) Such plans must be approved by, and administered under the
supervision of, the State insurance authority, or be authorized or
required by State law, and shall be designed to make essential property
insurance more readily available in, but not necessarily limited to,
urban areas. Such plans may vary in detail from State to State because
of local conditions, but all plans shall contain provisions that—
"(1) no risk shall be written at surcharged rates or be denied
insurance coverage for essential property insurance unless there
has first been an inspection of the risk, without cost to the owner,
by an inspection facility and a determination by the insurer, based
on information in the inspection report and other sources, that the
risk does not meet reasonable underwriting standards at the applicable premium rate;
"(2) inspections under the plan may be requested by the property owner or his representative, the insurer, or the insurance

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

agent, broker or other producer, and such requests need not be
made in writing;
"(3) the absence of a building owner or his representative during an inspection shall not preclude a tenant seeking insurance
from obtaining an inspection under the plan;
"(4) following the inspection, a copy of the inspection report
shall be promptly sent by the inspection facility to the insurer or
insurers, or to an all-industrv placement facility referred to under
section 1212, as may be designated by the person requesting the
inspection ;
"(5) after the inspection report is received by an insurer, it
shall promptly determine if the risk meets reasonable underwriting standards at the applicable premium rate, and shall promptly
return to the inspection facility the inspection report and provide
an action report setting forth—
" ( A ) (i) the amount of coverage it agrees to write; and if
the insurer agrees to write the coverage with a surcharge (if
such a surcharge is authorized by the State insurance authority), the improvements necessary before it will provide
coverage at an unsurcharged premium rate; and
"(ii) the amount of coverage it agrees to write if certain
improvements specified in the action report are made; or
" ( B ) the specific reasons it declines to write coverage;
"(6) if the insurer declines the risk, or agrees to write the
coverage sought on condition that the property will be improved,
it shall also promptly send a copy of both the inspection and action
reports to the property owner and the State insurance authority,
and at the time the insurer sends such reports to the property
owner, it shall also explain his right, under applicable State laws,
to appeal the decision of the insurer to the State insurance authority, setting forth the procedures to be followed for such
appeal;
" (7) all policies written pursuant to the plan shall be promptly
written after inspection or reinspection and shall be separately
coded so that appropriate records may be compiled for purposes
of performing loss prevention and other studies of the operation
of the plan;
"(8) the inspection facility shall submit to the State insurance
authority and to the Secretary periodic reports setting forth
information, by individual insurers, including the number of risks
inspected under the plan, the number of risks accepted, the number
of risks conditionally accepted and reinspections made, the number
of risks decHned, and such other information as the State insurance authority may request;
"(0) notice will be given to any policyholder a reasonable time
prior to the cancellation or nonrenewal of any risk eligible under
the plan (except in case of nonpayment of premium or evidence
of incendiarism), to allow ample time for an application for new
coverage to be made and a new policy to be written under the plan,
and the insurer shall, in writing, explain to the policvholder the
procedures for obtaining an inspection under the plan in the notice
of cancellation or nonrenewal; and
"(10) a continuing public education program will be undertaken by the participating insurers, agents, and brokers to assure
that the plan receives adequate public attention.

559

560

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

"ALL-INDUSTRY PLACEMENT FACILITY

"SEC. 1212. Any plan under this part shall include an all-industry
placement facility doing business with every insurer participating in
the plan in the State, and shall provide that this facility shall perform
certain functions including, but not limited to, the following:
"(1) seeking, upon request by or on behalf of any property
owner requesting an inspection under the plan, to distribute the
risks involved equitably among the insurers with which it is doing
business; and
"(2) seeking to place insurance up to the full insurable value
of the risk to be insured with one or more insurers with which it
is doing business, except to the extent that deductibles, percentage participation clauses, and other underwriting devices are
employed to meet special problems of insurability.
"INDUSTRY COOPERATION

"SEC. 1213. (a) Each insurer seeking reinsurance under this title
shall file a statement with the State insurance authority in each State
in which it is participating in a plan under this part, pledging its full
participation and cooperation in carrying out the plan, and shall file
a copy of such statement with the Secretary.
"(b) No insurer acquiring reinsurance under this title shall direct
any agent or broker or other producer not to solicit business through
such a plan, nor shall any agent, broker, or other producer be penalized
by such insurer in any way for submitting applications for insurance
to an insurer under the plan.
"PLAN EVALUATION

"SEC. 1214. (a) I n accordance with such rules and regulations as
the Secretary may prescribe, each State insurance authority shall—
"(1) transmit to the Secretary any proposed or adopted plan,
or amendments thereto; and
"(2) advise the Secretary, from time to time, concerning the
operation of the plan, its effectiveness in providing essential property insurance, and the need to form a pool of insurers or adopt
other programs to make essential property insurance more readily
available in urban areas of the State.
"(b) The Secretary may, after full consultation with the Board, by
rules and regulations, modify the plan criteria set forth under this
part, if he finds, on the basis of experience, that such action is necessary or desirable to carry out the purposes of this title. The Secretary
may also, with respect to any State, waive compliance with one or
more of the plan criteria, upon certification by the State insurance
authority that compliance is unnecessary or inadvisable under local
conditions or State law.
" P A R T B—REINSURANCE COVERAGE
"REINSURANCE OF LOSSES FROM RIOTS OR CIVIL DISORDERS

"SEC. 1221. ( a ) ( 1 ) The Secretary is authorized to offer to any
insurer or pool, subject to the conditions set forth in section 1228,
reinsurance against property losses resulting from riots or civil disorders in any one or more States.
"(2) Reinsurance shall be offered to any such insurer or pool only
on all standard lines of property insurance enumerated under subparagraphs (A) through ( E ) of section 1203(a) (10) together, and
any insurer or pool purchasing such reinsurance shall also be eligible,

82 STAT. J

PUBLIC LAW 90*448-AUG. 1, 1968

to purchase reinsurance on any one or more standard lines of property
insurance enumerated under subparagraphs ( F ) through ( J ) of section 1203(a) (10) or which may be designated by regulation pursuant
to subparagraph (K) of that section.
" ( b ) Reinsurance coverage under this section may be provided
immediately following the enactment of this title to any insurer or
pool in any State on a temporary basis, and on such terms and conditions as may be agreed upon, and coverage under such terms and conditions may be bound with respect to any such insurer or pool by
means of a written binder w^hich shall remain in force not more than
ninety days and shall expire at the earlier of either—
" (1) the termination of such ninety-day period, or
"(2) the effective date of any governmg contract, agreement,
treaty, or other arrangement entered into between the insurer or
pool and the Secretary under section 1222 for the purpose of providing reinsurance coverage against losses resulting from riots
or civil disorders.
" (c) No reinsurance shall be offered to any insurer or pool in a State
after the expiration of the written binder entered into under subsection
(b), unless there is in effect in such State a plan as set forth under
part A and the insurer or pool is participating in such plan, and unless,
in the case of an insurer m a State where a pool has been established
pursuant to State law, the insurer is participating in such a pool.
"REINSURANCE AGREEMENTS AND PREMIUMS

"SEC. 1222. (a) During the first year following the date of the
enactment of this title, the Secretary is authorized to enter into any
contract, agreement, treaty, or other arrangement with any insurer or
pool for reinsurance coverage, in consideration of payment of such
premiums, fees, or other charges by insurers or pools which the Secretary, after full consultation w^th the Board, deems to be adequate to
obtain aggregate reinsurance premiums for deposit in the National
Insurance Development Fund established under section 1233 in excess
of the estimated amount of insured riot losses during the calendar year
1967, on the assumption that a substantial proportion of the property
insurance written will be reinsured under this title, and thereafter the
Secretary may increase or decrease such premiums for reinsurance if
it is found after full consultation with the Board and the National
Association of Insurance Commissioners that such action is necessary
or appropriate to carry out the purposes of this title.
"(b) Reinsurance offered under this title shall reimburse an insurer
or pool for its total proved and approved claims for covered losses
resulting from riots or civil disorders during the term of the reinsurance contract, agreement, treaty, or other arrangement, over and above
the amount of the insurer's or pool's retention of such losses as provided in sucli reinsurance contract, agreement, treaty, or other
arrangement entered into under this section.
"(c) Such contracts, agreements, treaties, or other arrangements
may be made without regard to section 3679 (a) of the Revised Statutes
of the United States (31 U.S.C. 665(a)), and shall include any terms
and conditions which the Secretary deems necessary to carry out the
purposes of this title. The premium rates, terms, and conditions of such
contracts with insurers or pools, throughout the country, in any one
year shall be uniform.
" ( d ) Any contract, agreement, treaty, or other arrangement for
reinsurance under this section shall be for a term expiring on April 30,
1969, and on April 30 each year thereafter, and shall be entered into
within ninety daj^s after the date of the enactment of this title or within ninety days prior to April 30 each year thereafter, or within ninety

561

562

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

days after an insurer is authorized to write insurance eligible for reinsurance in a State which it was not authorized to write in the
preceding year.
"CONDITIONS or

REINSURANCE

"SEC. 1223. (a) Subject to the provisions of subsection (b), reinsurance shall not be offered by the Secretary in a State or be applicable
to insurance policies written in that State by an insurer—
" (1) after one year following the date of the enactment of this
title, or, if the appropriate State legislative body has not met in
regular session during that year, by the close of its next regular
session, in any State which has nc^t adopted appropriate legislation, retroactive to the date of the enactment of this title, under
which the State, its political subdivisions, or a governmental corporation or fund established pursuant to State law, will reimburse
the Secretary, in an amount up to 5 per centum of the aggregate
property insurance premiums earned in that State during the preceding calendar year on those lines of insurance reinsured by the
Secretary in that State during the current year, such that the Secretary may be reimbursed for amounts paid by him in respect to
reinsured losses that occurred in that State during a calendar
year in excess of (A) reinsurance premiums received in that State
during the same calendar year plus (B) the excess of (i) the total
premiums received by the Secretary for reinsurance in that State
during a preceding period measured from the end of the most
recent calendar year wdth respect to which the Secretary was reimbursed for losses under this title over (ii) any amounts paid by
the Secretary for reinsured losses that occurred during this same
period;
" (2) after thirty days following notification to the insurer that
the Secretary finds (after consultation with the State insurance
authority) that there has not been adopted by the State, or the
property insurance industry in that State, a suitable program or
programs, in addition to plans under part A, to make essential
property insurance available without regard to environmental
hazards, and that such action is necessary to carry out the purposes of this title; except that this paragraph shall not become
effective until two years after the date of the enactment of this
title, or at such earlier date as the Secretary, after consultation
with the State insurance authority, may determine;
" (8) after thirty days following notification to the insurer that
the Secretary, or the State insurance authority, finds that such
insurer is not fully participating—
" (A) in the plan in the State;
" ( B ) where it exists, in a pool; and
" ( C ) where it exists, in any other program found by the
Secretary to aid in making essential property insurance more
readily available in the State:
Provided^ That the Secretary shall not make any such finding
with respect to any insurer unless (i) prior to making such finding the Secretary has requested and considered the views of the
State insurance authority as to whether such finding should be
made, or (ii) the Secretary has made such a request in writing to
the State insurance authority and such authority has failed to
respond thereto within a reasonable period of time after receiving such request;
"(4) following a merger, acquisition, consolidation or reorganization involving one or more insurers having lines of property
insurance in the State reinsured under this title and one or more

82

STAT.]

PUBLIC LAW 90-448-AUG. 1, 1968

563

insurers with or without such reinsurance, unless the surviving
company—
" (A) meets the criteria of eligibility for reinsurance, other
than as provided under section 1222(d); and
" ( B ) within ten days pays any reinsurance premiums due;
or
"(5) upon receipt of notice from the insurer or pool that it
desires to cancel its reinsurance agreement with the Secretary in
the State.
" ( b ) Notwithstanding the foregoing provisions of this section, reinsurance may be continued for the term of the policies written prior
to the date of termination or nonrenewal of reinsurance under this
section, for as long as the insurer pays reinsurance premiums annually
in such amounts as are determined under section 1222, based on the
annual premiums earned on such reinsured policies, and for the purpose of this subsection, the renewal, extension, modification, or other
(hange in a policy, for which any additional premium is charged, shall
be deemed to be a policy written on the date such change was made.
"RECOVERY OF P R E M I U M S ; STATUTE OF L I M I T A T I O N S

"SEC. 1224. (a) The Secretary, in a suit brought in the appropriate
United States district court, shall be entitled to recover from any
insurer the amount of any unpaid premiums lawfully payable by
such insurer to the Secretary.
" ( b ) No action or proceeding shall be brought for the recovery of
any premium due to the Secretary for reinsurance, or for the recovery
of any premium paid to the Secretary in excess of the amount due to
him, unless such action or proceeding shall have been brought within
five years after the right accrued for which the claim is made, except
that, where the insurer has made or filed with the Secretary a false or
fraudulent annual statement, or other document with the intent to
evade, in whole or in part, the payment of premiums, the claim shall
not be deemed to have accrued until its discovery by the Secretary.
" P A R T C—PROVISIONS or GENERAL APPLICABILITY
"CLAIMS AND JUDICIAL REVIEW

"SEC. 1231. (a) All reinsurance claims for losses under this title
shall be submitted by insurers in accordance with such terms and conditions as may be established by the Secretary.
" ( b ) (1) Upon disallowance of any claim under color of reinsurance
made available under this title, or upon refusal of the claimant to
accept the amount allowed upon any such claim, the claimant may
institute an action against the Secretary on such claim in the United
States district court for the district in which a major portion (in
terms of value) of the claim arose.
"(2) Any such action must be begun within one year after the date
upon which the claimant received written notice of disallowance or
partial disallowance of the claim, and exclusive jurisdiction is hereby
conferred upon U^nited States district courts to hear and determine
such actions without regard to the amount in controversy.

U.S. district
courts, jurisdiction.

u FISCAL I N T E R M E D I A R I E S AND SERVICING AGENTS

"SEC. 1232. (a) I n order to provide for maximum efficiency in the
administration of the reinsurance program under this title, and in
order to facilitate the expeditious payment of any funds under such
jjrogram, the Secretary may enter into contracts with any insurer, pool,

Contract authority.

564

PUBLIC LAW 90-448-AUG. 1, 1968

,

[82 STAT.

or other person, for tlie purpose of providing for the performance of
any or all of the following functions:
"(1) estimating or determining any amounts of payments for
reinsurance claims;
" (2) receiving and disbursing and accounting for funds in making payments for reinsurance claims;
"(3) auditing the records of any insurer, pool, or other person
to the extent necessary to assure that proper payments are made;
"(4) establishing the basis of liability for reinsurance payments, including the total amount of proved and approved claims
which may be payable to any insurer, and the total amount of
premiums earned by any insurer in the respective States for reinsured lines of property insurance; and
" (5) otherwise assistmg in any manner provided in the contract
to further the purposes of this title.
"(b) (1) Any such contract may require the insurer, pool, or other
person, or any of its officers or employees certifying payments or disbursing funds pursuant to the contract, or otherwise participating in
carrying out the contract, to give surety bond to the United States in
such amounts as the Secretary may deem appropriate.
"(2) In the absence of gross negligence or intent to defraud the
United States—
" ( A ) no individual designated pursuant to a contract under
this section to certify payments shall be liable with respect to any
payment certified by him under this section; and
" ( B ) no officer of the United States disbursing funds shall be
liable with respect to any otherwise proper payment by him if it
was based on a voucher signed by an individual designated pursuant to a contract under this section to certify payments.
a NATIONAL INSURANCE DEVELOPMENT F U N D

79
• - Stat.
— 472.
-"•

12 use i735d.

"SEC. 1233. (a) To carry out the programs authorized under this
title, the Secretary is authorized to establish a National Insurance
l>evelopment F u n d (hereinafter called the 'fund') which shall be
available, without fiscal year limitations—
"(1) to make such payments as may, from time to time, be
required under reinsurance contracts under this title;
"(2) to pay such administrative expenses as may be necessary
or appropriate to carry out the purposes of this title; and
"(3) to repay to the Secretary of the Treasury such sums,
including interest thereon, as may be borrowed from" him for purposes of such programs under section 520 (b).
„ ^^^ r^^^ ^^^^^^ ^j^ J j ^^ Credited with—
"(1) reinsurance premiums, fees, and other charges which may
be paid or collected m connection with reinsurance provided under
part B ;
" (2) interest which may be earned on investments of the fund;
" (3) such amounts as may be advanced to the fund from appropriations in order to maintain the fund in an operative condition
adequate to meet its liabilities;
"(4) receipts from any other source which may, from time to
time, be credited to the fund; and
"(5) funds borrowed by the Secretary under section 520(b)
and deposited in the fund.
"(c) If, after any amounts which may have been advanced to the
fund from appropriations have been credited to the appropriation
from which advanced (including interest thereon at the rate prescribed
under section 520(b)), the Secretary determines that the moneys of
the fund are in excess of current needs, he may request the investment
of such amounts as he deems advisable by the Secretary of the Treasury
in obligations issued or guaranteed by tfie United States.

82

STAT.J

PUBLIC

LAW 90-448-AUG. 1, 1968

" ( d ) A n annual business-type budget for the fund shall be prepared, transmitted to the Congress, considered, and enacted in the
manner prescribed by law (sections 102, 103, and 104 of the Government Corporation Control Act (31 U.S.C. 847-849)) for wholly-owned
Government corporations.

565

59 Stat. 597;
61 Stat. 584.

"RECORDS, A N N U A L STATEMENT, A N D AUDITS

"SEC. 1234. (a) Any insurer or pool acquiring reinsurance under
this title shall furnish ithe Secretary with such summaries and analyses
of information in its records as may be necessary to carry out the purposes of this title, in such form as the Secretary, in cooperation with
the State insurance authority, shall, by rules and regulations, prescribe. The Secretary shall make use of State insurance authority
examination reports and facilities to the maximum extent feasible.
" ( b ) Any insurer or pool acquiring reinsurance under this title
shall file with the Secretary a true and correct copy of any annual
statement, or amendment thereof, filed with the State insurance
authority of its domiciUary State, at the time it files such statement or
amendment with such State insurance authority.
" (c) Any insurer or other person executing any contract, agreement. Recordkeeping
requirements.
or other appropriate arrangement with the Secretary under section """"'""""""
°
1222 or section 1232 shall keep reasonable records which fully disclose
the total costs of the programs undertaken or the services being rendered, and such other records as will facilitate an effective audit of
liability for reinsurance payments by the Secretary.
A c c e s s to rec" ( d ) The Secretary and the Comptroller General of the United ords,
etc.
States, or any of their duly authorized representatives, shall have
access for the purpose of investigation, audit, and examination to any
books, documents, papers, and records of any insurer or other person
that are pertinent to the costs of any program undertaken for, or services rendered to, the Secretary. Such audits shall be conducted to the
maximum extent feasible in cooperation with the State insurance
authorities and through the use of their examining facilities.
"STUDY OF REINSURANCE AND OTHER PROGRAMS

"SEC. 1235. (a) The Secretary is authorized and directed to conduct
a study of i-einsurance and other means to help assure—
" (1) an adequate market for burglary and theft and other property insurance in urban areas; and
"(2) adequate availability of surety bonds for construction contractors in urban areas.
"(b) The Secretary shall submit the results of this study, together
with appropriate recommendations, to the President and Congress no
later than one year following the date of the enactment of this title.
UOTHER STUDIES

"SEC. 1236, (a) The Secretary is authorized to undertake such studies as may be necessary to carry out the purposes of this title including,
but not limited to, inquiries concerning—
" (1) the operation of plans under part A ;
" (2) the extent to which essential property insurance is unavailable in urban areas;
" (3) the market for private reinsurance; and
"(4) loss prevention methods and procedures, insurance marketing methods, and underwriting techniques.
" ( b ) To such extent and under such circumstances as may be practicable and feasible, the Secretary shall conduct any study authorized

566

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

under this section in cooperation with State insurance authorities and
the private insurance industry.
"GENERAL POWERS

64 Stat. 78;
12 use 1749a.
60 Stat. 237.
5 u s e 551

"SEC. 1237. I n the performance of, and with respect to, the functions,
powers, and duties vested in him by this title, the Secretary shall (in
addition to any authority otherwise vested in him) have the functions,
powers, and duties (including the authority to issue rules and regul^ttions) set forth in section 402, except subsections (c) (2), ( d ) , and (f),
of the Housiug Act of 1950. Any rules or regulations of the Secretary
shall ouly be issued after full consultation with the Board and after
notice and hearing, if granted, as required by the Administrative
Procedurc Act.

et seq.
" S E R V I C E S A N D F A C I L I T I E S O F O T H E R A G E N C I E S — U T I L I Z A T I O N OF

PERSONNEL, SERVICES, FACILITIES, x\ND INFORMATION

"SEC. 1238. The Secretary may, with the consent of the agency concerned, accept and utilize, on a reimbursable basis, the officers, employees, services, facilities, and information of any agency of the Federal
Government, except that any such agency having custody of any data
relating to any of the matters within the jurisdiction of the Secretary
shall, to the extent permitted by law, upon request of the Secretary,
make such data available to the Secretary.
"ADVANCE PAYMENTS

"SEC. 1239. Any payments which are made under the authority of
this title may be made, after necessary adjustments on account of previously made underpayments or overpayments in advance or by way
of reimbursement. Payments may be made in such installments and on
such conditions as the Secretary may determine.
">TAXATION
"SEC, 1240, (a) The National Insurance Development Fund, including its reserves, surplus, and income, shall be exempt from all taxation
now or hereafter imposed by the United States, or by any State, or any
subdivision thereof, except that any real property acquired by the
Secretary as a result of reinsurance shall be subject to taxation by any
State or political subdivision thereof, to the same extent, according
to its value, as other real property is taxed.
" ( b ) Any measures undertaken by any State t o meet or to fund its
obligations under section 1223(a) (1) shall not be the subject of any
retaliatory or fiscal imposition by any other State.
;;APPROPRIATIONS
"SEC. 1241. There are hereby authorized to be appropriated such
sums as may be necessary to carry out this title."
FINANCING

79 Stat. 472.
12 use i735d.

SEC. 1104. Sectlou 520(b) of the National Housing Act is amended
i^y. inserting " ( 1 ) " after "necessary" in the first sentence, and hj striking out the period at the end of such sentence and inserting in lieu
thereof ", and (2) to make payments for reinsured losses under title
X I I of this A c t : Provided, however, That borrowings to make payments for reinsured losses under title X I I shall be limited to

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

567

$250,000,000 or such further sum as tlie Congress, by joint resolution,
may from time to time determine."
FEDEILVL I N S U R A N C E

ADMINISTEATOR

SEC. 1105. (a) There is hereby established in the Department of
Housing and LTrban Development the position of Federal Insurance
Administrator.
(b) Section 5815 of title 5, United Sterations;
(B) establishment of necessary facilities;
(C) management and operation of the association;
(D) assessment of members to defray losses and expenses;
(E) commission arrangements;
( F ) reasonable underwriting standards;
((T) assumj)tion and cession of reinsurance; and
( H ) such other matters as the Commissioner may designate.
(2) The plan of operation shall not take effect until approved by
the Commissioner. If the Commissioner disapproves the proposed plan
of operation (or any part thereof), he shall state the reasons for so
doing, and the association shall within thirty days thereafter submit
for his review an appropriately revised plan of operation. During
such time, the Commissioner and the association shall consult regarding the disapproved plan or part thereof. If the association fails to
submit a revised plan of operation, or if the revised plan so submitted
is unacceptable to the Commissioner, the Commissioner shall ]>romulgate a plan of operation.
(3) The association may, on its own initiative, amend such plan,
subject to approval by the Commissioner, and shall amend such plan
at the direction of the Commissioner if he finds such action is necessary to carry out the purposes of this title.
(d) All members of the association shall participate in its writings,
expenses, profits, and losses, or in such categories thereof as may be
separately established by the association, subject to approval by the
Commissioner, in the proportion that the premiums written by each
such member during the preceding calendar year bear to the aggregate
premiums written in the District of Columbia by all members of the
association, or in accordance with such other formula as the association
may devise with the approval of the Commissioner. Such participation
by each insurer in the association shall be determined annually on the
basis of such premiums written during the preceding calendar year
as disclosed in the annual statements and other reports filed by the
insurer with the Commissioner.
(e) The association shall be governed by a board of eleven directors,
elected annually by cumulative voting by the members of the association, whose votes in such election shall be weighted in accordance with
the proportionate amount of each member's net direct premiums written in the District of Columbia during the preceding calendar year.

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

571

The first board shall be elected at a meeting of the members or their
authorized representatives, which shall be held within thirty days
after the effective date of the order under this section establishing the
association, at a time and place designated by the Commissioner.
EXAMIXATIOX BY

COMMISSIONER

SEC. 1207. The operation of any inspection bureau, the Industry
Placement Facility, and the joint underwriting association shall at
all times be subject to the supervision and regulation of the Commissioner. The Commissioner shall have the power of visitation of and
examination into such operations and free access to all the books, records, files, papers, and documents that relate to such operations, may
summon and qualify witnesses under oath, and may examine directors,
officers, agents, employees or, any other person having knowledge of
such operations.

A c c e s s to records.

WAIVER o r L I A B I L I T Y

SEC. 1208. There shall be no liability on the part of, and no cause
of action of any nature shall arise against, insurers, any inspection
bureau, the Industry Placement Facility, the joint underwriting association, the agents or employees of such bureau, I'acility, or association,
or any officer or employee of the District of Columbia, for any statements made in good faith by them concerning the insurability of property (A) in any reports or other communications, (B) at the time of
the hearings conducted in connection therewith, or (C) in the findings
Avith respect thereto required by the provisions of this title. The reports
and communications of any inspection bureau, the Industry Placement
Facility, and the joint underwriting association with respect to individual properties shall not be open to inspection by, or otherwise
available to, the public.
A N N U A L REPORTS BY J O I N T U N D E R W R I T I N G ASSOCIATION

SEC. 1209. The joint underwriting association shall file with the
Commissioner, annually on or before the 1st day of March, a statement
which shall contain information with respect to its transactions, condition, operations, and affairs during the preceding year. Such statement shall contain such matters and information as are prescribed by
the Commissioner and shall be in such form as is approved by him. The
Commissioner may at any time require the association to furnish him
with additional information with respect to its transactions, condition,
or any matter connected therewith which he considers to be material
and which will assist him in evaluating the scope, operation, and
experience of the association.
APPEALS

SEC. 1210. (a) Any api)licant for insurance and any affected insurer
may appeal to the Commissioner within ninety days after any final
ruling, action, or decision by or on behalf of any inspection bureau, the
Industry Placement Facility, or the joint underwriting association,
following exhaustion of remedies available within such bureau. Facility, or association.
(b) All final orders or decisions of tlie Commissioner made under
this title shall be subject to review by the District of Columbia Court
of Appeals under section 11-742 of the District of Columbia Code.

'''^ ^*^'- '^^'^-

572

PUBLIC LAW 90-448-AUG. 1, 1968
REIMBURSEMENT FOR REINSURANCE PROVIDED UNDER
I N S U R A N C E DEVELOPMENT PROGRAM

Ante, P. 560.

[82 STAT.
NATIONAL

SEC. 1211. (a) In order to carry out the purposes of this title and to
make available to insurers who particii^ate hereunder the reinsurance
afforded under part B of title X I I of the National Housing Act
against losses to property resulting from riots or civil disorders, the
C/ommissioner is authorized to assess each insurance company authorized to do business in the District of Columbia an amount, in the proportion that the premiums earned by each such company in the District
of Columbia, on lines reinsured in the District of Columbia by the
Secretary of Housing and Urban Development, during the preceding
calendar year bear to the aggregate premiums earned on those lines
iri the District of Columbia by all insurance companies, sufficient to
l^rovide a fund to reimburse the Secretary of Housing and ITrban
Development in the manner set forth in section 1223(a)(1) of such
part B. Such fund mav be added to or such fund may be created by
moneys appropriated therefor by the Congress.
(b) Insurers shall add to the premium rate an amount, to be
approved by the Commissioner, sufficient to recover, within not more
than three years, any amounts assessed under subsection (a) of this
section durnig the preceding calendar year. Such amount shall be a
separate charge to the insured in addition to the premium to be paid
and shall be reflected as such in the policy of insurance. No commission shall be paid thereon to any agent or broker producing or selling
the policy of insurance Avherein such amount is added.
DELEGATION

SEC. 1212. The Commissioner is authorized to delegate any of the
functions vested in him by this title.
JUDICIAL REVIEW

77 Stat. 485;
78 Stat. 633.

SEC. 1213. Scctiou 11-742(a) of the District of Columbia Code is
amended (1) by striking out "and" immediately following paragraph
(10); (2) by striking out the period following paragraph (11) and
inserting in lieu thereof " ; and"; and (3) by adding at the end thereof
the following new paragraph:
" (12) final orders and decisions of the Commissioner of the District of Columbia under the provisions of the District of Columbia
Insurance Placement Act."
T I T L E X I I I — N A T I O N A L FIX)OD I N S U R A N C E
SHORT TITI.E

SEC. 1301. This title may be cited as the "National Flood Insurance
Act of 1968".
FINDINGS A N D DECLARATION OF PURPOSE

SEC. 1302. (a) The Congress finds that (1) from time to time flood
disasters have created personal hardships and economic distress which
have required unforeseen disaster relief measures and have placed ah
increasing burden on the Nation's resources; (2) despite the installation of preventive and protective works and the adoption of other
public programs designed to reduce losses caused by flood damage,
these methods have not been sufficient to protect adequately against
growing exposure to future flood losses; (3) as a matter of national
policy, a reasonable method of sharing the risk of flood losses is

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

573

through a program of flood insurance which can complement and
encourage preventive and protective measures; and (4) if such a program is initiated and carried out <>Taduall|^, it can be expanded as
knowledge is gained and experience is appraised, thus eventually making flood insurance coverage available on reasonable terms and conditions to persons who have need for such protection.
(b) The Congress also finds that (1) many factors have made it
uneconomic for the private insurance industry alone to make flood
insurance available to those in need of such protection on reasonable
terms and conditions; but (2) a program of flood insurance with largescale participation of the Federal (xovernment and carried out to the
maximum extent practicable by the private insurance industry is feasible and can be initiated.
(c) The Congress further finds that (1) a program of flood insurance can promote the public interest by providing appropriate protection against the perils of flood losses and encouraging sound land use
by minimizing exposure of property to flood losses; and (2) the objectives of a flood insurance program should be integrally related to a
unified national program for flood plain management and, to this end,
it is the sense of Congress that within two years following the effective
date of this title the President should transmit to the Congress for its Proposals
consideration any further proposals necessary for such a unified cong|^'"s^'^ *°
program, including proposals for the allocation of costs among beneficiaries of flood protection.
(d) I t is therefore the purpose of this title to (1) authorize a flood
insurance program by means of which flood insurance, over a period of
time, can be made available on a nationwide basis through the cooperative efforts of the Federal Government and the private insurance
industry, and (2) provide flexibility in the program so that such flood
insurance may be based on workable methods of pooling risks, minimizing costs, and distributing burdens equitably among those who
will be protected by flood insurance and the general public.
(e) It is the further purpose of this title to (1) encourage State and
local governments to make appropriate land UFB adjustments to constrict the development of land which is exposed to flood damage and
minimize damage caused by flood losses, (2) guide the development
of proposed future construction, where practicable, away from locations which are threatened by flood hazards, (3) encourage lending
and credit institutions, as a matter of national policy, to assist in
furthering the' objectives of the flood insurance program, (4) assure
that any Federal assistance provided under the program will be related
closely to all flood-related programs and activities of the Federal Government, and (5) authorize continuing studies of flood hazards in
order to provide for a constant reappraisal of the flood insurance program and its eflFect on land use requirements.
A M E N D M E N T S TO T H E

FEDERAL FLOOD I N S U R A N C E ACT OF 1 9 5 6

SEC. 1303. (a) The second sentence of section 15(e) of the Federal
Flood Insurance Act of 1956 (79 Stat. 1078) is amended—
7o stat. io84.
(1) by striking out "rate" the second time it appears in such "*^ ^^^ ^'*^'^'
sentence, and inserting in lieu thereof "market yield", and
(2) by striking out "as of the last day of", and inserting in lieu
thereof "during".
(b) Section 15(e) of such Act is further amended by striking out
the last sentence thereof.
(c) Sections 2 through 14, subsections (a) through ( d ) , and (f)
Repeal.
and (g) of section 15, and sections 16 through 23 of such Act are et seq.
hereby repealed.

574

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

CHAPTER I—THE NATIONAL FLOOD INSURANCE
PROGRAM
BASIC A U T H O R I T Y

Post,

p. 5 8 1 .

SEC. 1304. (a) To carry out the purposes of this title, tlie Secretary
of Housing and Urban Development is authorized to establish and
carry out a national flood insurance program which will enable interested persons to purchase insurance against loss resulting from physical
damage to or loss of real property or personal property related thereto
arising from any flood occurring in the United States.
(b) I n carrying out the flood insurance program the Secretary shall,
to the maximum extent practicable, encourage and arrange for—
(1) appropriate flnancial participation and risk sharing in the
program by insurance companies and other insurers, and
(2) other appropriate participation, on other than a risk-sharing basis, by insurance companies and other insurei-s, insurance
agents and brokers, and insurance adjustment organizations,
in accordance with the provisions of chapter XL
SCOPE OF PROGRAM A N D PRIORITIES

SEC. 1305. (a) In carrying out the flood insurance program the
Secretary shall afford a priority to making flood insurance available
to cover residential properties which are designed for the occupancy
of from one to four families and business properties which are owned
or leased and operated by small business concerns.
(b) If on the basis of—
(1) studies and investigations undertaken and carried out and
information received or exchanged under section 1307, and
(2) such other information as may be necessary,
the Secretary determines that it would be feasible to extend the flood
insurance program to cover other properties, he may take such action
under this title as from time to time may be necessary in order to make
flood insurance available to cover, on such basis as may be feasible,
any types and classes of—
(A) other residential properties,
(B) other business properties,
(C) agricultural properties,
(D) properties occupied by private nonprofit organizations, and
( E ) properties owned by State and local governments and
agencies thereof,
and any such extensions of the program to any types and classes of
these properties shall from time to time be prescribed in regulations.
(c) The Secretary shall make flood insurance available in only those
States or areas (or subdivisions thereof) which he has determined
have—
(1) evidenced a positive interest in securing flood insurance
coverage under the flood insurance program, and
(2) given satisfactory assurance that by June 30, 1970, permanent land use and control measures wdll have been adopted for
the State or area (or subdivision) which are consistent with the
comprehensive criteria for land management and use developed
under section 1361, and that the application and enforcement of
such measures will commence as soon as technical information on
floodways and on controlling flood elevations is available.

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968
N A T U K E A N D L I M I T A T I O N O F I N S U R A N C E COVERAOE

SEC. 1306. (a) The Secretary shall from time to time, after consultation M'ith the advisory committee authorized under section 1818,
appropriate representatives of the pool formed or otherwise created
under section 1331, and appropriate representatives of the insurance
authorities of the respective States, provide by regulation for gfeneral
terms and conditions of insurability which shall be applicable to
properties eligible for flood insurance coverage under section 1305,
including—
(1) the types, classes, and locations of any such j^roperties
Avhich shall be eligible for flood insurance;
(2) the nature and limits of loss or damage in any areas (or
subdivisions thereof) which may be covered by such insurance;
(3) the classification, limitation, and rejection of any risks
which may be advisable;
(4) appropriate minimum premiums;
(5) appropriate loss-deductibles; and
(6) any other terms and conditions relating to insurance coverage or exclusion which may be necessary to carry out the purposes of this title.
(b) In addition to any other tenns and conditions under subsection
( a ) , such regulations shall provide that—
(1) any flood insurance coverage based on chargeable premium
rates under section 1308 which are less than the estimated premium rates under section 1307(a) (1) shall not exceed—
(A) in the case of residential properties which are designed
for the occupancy of from cne to four families—
(i) $17,500 aggregate liability for any dwelling unit,
and $30,000 for any single dwelling structure containing
more than one dwelling unit, and
(ii) $5,000 aggregate liability per dwelling unit for
any contents related to such unit;
(B) in the case of business properties Avhich are owned or
leased and operated by small business concerns, an aggregate
liability with respect to any single structure, including any
contents thereof related to premises of small business occupants (as that term is defined bv the Secretary), which shall
be equal to (i) $30,000 plus (li) $5,000 multiplied by the
number of such occupants and shall be allocated among such
occupants (or amon^ the occupant or occupants and the
owner) under regulatjons prescribed by the Secretary; except
that the aggregate liability for the structure itself may in
no case exceed $30,000; and
(C) in the case of any other properties which may become
eligible for flood insurance coverage under section 1305—
(i) $30,000 aggregate liability for any single structuie,
and
(ii) $5,000 aggregate liability per dwelling unit for
any contents related to such unit in the case of residential
properties, or per occupant (as that term is defined by
the Secretary) for any contents related to the premises
occupied in the case of any other properties; and
(2) any flood insurance coA^erage which may be made available
in excess of any of the limits specified in subparagraph ( A ) , ( B ) ,
or (C) of paragraph (1) (or allocated to any person under subparagraph (B) of such paragraph) shall be based only on chargeable premium rates under section 1308 which are not less than
the estimated premium rates under section 1307(a) (1), and the

575

576

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

amount of such excess coverage shall not in any case exceed an
amount which is equal to the applicable limit so specified (or
allocated).
E S T I M A T E S OF P R E M I U M

RATES

SEC. 1307. (a) The Secretary is authorized to undertake and carry
out such studies and investigations and recei>e or exchange such information as may be necessary to estimate, and shall from time to time
estimate, on an area, subdivision, or other appropriate basis—
(1) the risk premium rates for flood insurance which—
(A) based on consideration of the risk involved and
accepted actuarial principles, and
(B) including—
(i) the applicable operating costs and allowances set
forth in the schedules prescribed under section 1311 and
reflected in such rates, and
(ii) any administrative exj>enses (or portion of such
expenses) of carrying out the flood insurance program
which, in his discretion, should properly be reflected in
such rates,
would be required in order to make such insurance available on
an actuarial basis for any types and classes of properties for
which insurance coverage is available under section 1305(a) (or
is recommended to the C^ongress under section 1305(b)) ;
(2) the rates, if less than the rates estimated under paragraph
(1), which would be reasonable, would encourage prospective
insureds to purchase flood insurance, and would be consistent with
the purposes of this title; and
(3) the extent, if any, to which federally assisted or other
flood protection measures initiated after the date of the enactment of this title affect such rates.
(b) I n carrying out subsection ( a ) , the Secretary shall, to the
maximum extent feasible and on a reimbursement basis, utilize the
services of the Department of the Army, the Department of the Interior, the Department of Agriculture, the Department of Commerce,
and the Tennessee Valley Authority, and, as appro])riate, other Federal departments or agencies, and for such purposes may enter into
agreements or other appropriate arrangements with any persons.
(c) The Secretary shall give priority to conducting studies and
investigations and making estimates under this section in those States
or areas (or subdivisions thereof) which he has determined have
evidenced a positive interest in securing flood insurance coverage
under the flood insurance program.
E S T A B L I S H M E N T OF CHARGEABLE P R E M I U M

RATES

SEC. 1308. (a) On the basis of estimates made under section 1307
and such other information as may be necessary, the Secretary shall
from time to time, after consultation with the advisory committee
authorized under section 1318, appropriate representatives of the pool
formed or otherwise created under section 1331, and appropriate representatives of the insurance authorities of the respective States, prescribe by regulation—
(1) chargeable premium rates for any types and classes of
properties for which insurance coverage shall be available under
section 1305 (at less than the estimated risk premium rates under
section 1307(a) (1), where necessary), and
(2) the terms and conditions under which, and the areas (including subdivisions thereof) within which, such rates shall apply.

82 STAT. I

PUBLIC LAW 90-448-AUG. 1, 1968

577

(b) Such rates shall, insofar as practicable, be—
(1) based on a consideration of the respective risks involved,
including differences in risks due to land use measures, floodproofing, flood forecasting, and similar measures.
(2) adequate, on the basis of accepted actuarial principles, to
provide reserves for anticipated losses, or, if less than such
amount, consistent with the objective of making flood insurance
available where necessary at reasonable rates so as to encourage
prospective insureds to purchase such insurance and with the
purposes of this title, and
(3) stated so as to reflect the basis for such rates, including the
differences (if any) between the estimated risk premium rates
under section 1307(a)(1) and the estimated rates under section
1307(a)(2).
(c) Notwithstanding any other provision of this title, the chargeable rate with respect to any property, the construction or substantial
improvement of which the Secretary determines has been started after
the identification of the area in which such property is located has been
published under paragraph (1) of section 1360, shall not be less than
tlie applicable estimated risk premium rate for such area (or subdivision thereof) under section 1307(a) (1).
(d) In the event any chargeable premium rate prescribed under this
section—
(1) is a rate which is not less than the applicable estimated risk
premium rate under section 1307(a) (1), and
(2) includes any amount for administrative expenses of carrying out the flood insurance program which have been estimated
under clause (ii) of section 1307(a) (1) ( B ) ,
a sum equal to such amount shall be paid to the Secretary, and he
shall deposit such sum in the National Flood Insurance Fund established under section 1310.
FINANCING

SEC. 1309. (a) All authority which was vested in the Housing and
Home Finance Administrator by virtue of section 15 (e) of the Federal Flood Insurance Act of 1956 (70 Stat. 1084) (pertaining to the ^^ use 24u.
issue of notes or other obligations to the Secretary of the Treasury),
as amended by subsections (a) and (b) of section 1303 of this x\ct,
shall be available to the Secretary for the purpose of carrying out the
flood insurance program under this title; except that the total amount
of notes and obligations which may be issued by the Secretary pursuant to such authority shall not exceed $250,000,000, and all authority
of the Secretary to issue notes and obligations under said section 15
(e) beyond such sum is hereby rescinded.
(b) Any funds borrowed by the Secretary under this authority shall,
from time to time, be deposited in the National Flood Insurance Fund
established under section 1310.
N A T I O N A L FLOOD I N S U R A N C E

FUND

SEC. 1310. (a) T o carry out the flood insurance program authorized
by this title, the Secretary is authorized to establish m the Treasury
of the United States a National Flood Insurance Fund (hereinafter
referred to as the "fund") which shall be available, without fiscal year
limitation—
(1) for making such payments as may, from time to time, be
required under section 1334;
(2) to pay reinsurance claims under the excess loss reinsurance
coverage provided under section 1335;

578

la use 2 ^4 •
"*
Investment of
*"°''''^^"

59 Stat. 597;
61 Stat. 584.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

(3) to repay to the Secretary of the Treasury such sums as may
be borrowed from him (together with interest) in accordance with
the authority provided in section 1309; and
(4) to pay such administrative expenses (or portion of such
expenses) of ca.rrying out the flood insurance program as he may
deem necessary; and
(5) for the purposes specified in subsection (d) under the conditions provided therein.
(b) The fund shall be credited with—
(1) such funds borrowed in accordance with the authority provided in section 1309 as may from time to time be deposited in the
fund;
(2) premiums, fees, or other charges which may be paid or
collected in connection with the excess loss reinsurance coverage
provided under section 1335;
(3) such amounts as may be advanced to the fund from appropriations in order to maintain the fund in an operative condition
adequate to meet its liabilities;
(4) interest which may be earned on investments of the fund
pursuant to subsection ( c ) ;
(5) such sums as are required to be paid to the Secretary under
section 1308 (d) ; and
(6) receipts from any other operations under this title (including premiums under the conditions specified in subsection ( d ) ,
and salvage proceeds, if any, resulting from reinsurance coverage).
(c) If, after—
(1) all outstanding obligations of the fund have been liquidated, and
(2) any outstanding amounts which may have been advanced
to the fund from appropriations authorized under section 1376
(a) (2) (B) have been credited to the appropriation from which
advanced, with interest accrued at the rate prescribed under sec^'^^^^ ^^ ^^^ ^* ^^^^ Federal Flood Insurance Act of 1956, as in effect
immediately prior to the enactment of this title.
the Secretary determines that the moneys of the fund are in excess of
current needs, he may request the investment of such amounts as he
deems advisable by the Secretary of the Treasury in obligations issued
or guaranteed by the United States.
(d) In the event the Secretary makes a determination in accordance
with the provisions of section 1340 that operation of the flood insurance
program, in whole or in part, should be carried out through the facilities of the Federal Government, the fund shall be available for all
purposes incident thereto, including—
(1) cost incurred in the adjustment and payment of any claims
for losses, and
(2) f)ayment of applicable operating costs set forth in the
schedules prescribed under section 1311,
for so long as the program is so carried out, and in such event any
premiums paid shall be deposited by the Secretary to the credit of the
fund.
(e) An annual business-type budget for the fund shall be prepared,
transmitted to the Congress, considered, and enacted in the manner
prescribed by law (sections 102, 103, and 104 of the Government Corporatiou Control Act (31 U.S.C. 847-849)) for wholly-owned Governmftut corporatious.

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

579

OPERATING COSTS AND ALLOWANCES

SEC. 1311. (a) The Secretary shall from time to time negotiate
with appropriate representatives of the insurance industry for the
purpose of establishing—
(1) a current schedule of operating costs applicable both to
risk-sharing insurance companies and other insurers and to insurance companies and other insurers, insurance agents and brokers,
and insurance adjustment organizations participating on other
than a risk-sharing basis, and
(2) a current schedule of operating allowances applicable to
risk-sharing insurance companies and other insurers,
Avhich may be payable in accordance with the provisions of chapter
I I , and such schedules shall from time to time be prescribed in
regulations.
(b) F o r purposes of subsection (a)—•
(1) the term "operating costs" shall (without limiting such
j_

\ "

1

1

^°s'' P- ssi.
"Operating
costs,

term) include—
(A) expense reimbursements covering the direct, actual,
and necessary expenses incurred in connection with selling
and servicing flood insurance coverage;
(B) reasonable compensation jDayable for selling and
servicing flood insurance coverage, or commissions or service
fees paid to producers;
(C) loss adjustment expenses; and
(D) other direct, actual, and necessary expenses which the
Secretary finds are incurred in connection with selling or
servicing flood insurance coverage; and
(2) the term "operating allowances" shall (without limiting i^'^^^^lfl?^ ^^'
such term) include amounts for profit and contingencies which
the Secretary finds reasonable and necessary to carry out the
purposes of this title.
PAYMENT OF CLAIMS

SEC. 1312. The Secretary is authorized to prescribe regulations
establishing the general method or methods by which proved and
approved claims for losses may be adjusted and paid for any damage
to or loss of property which is covered by flood insurance made available under the provisions of this title.
DISSEMINATION OF FLOOD INSURANCE INFORMATION

SEC. 1313. The Secretary shall from time to time take such action
as may be necessary in order to make information and data available
to the public, and to any State or local agency or official, with regard
to—
(1) the flood insurance program, its coverage and objectives,
and
(2) estimated and chargeable flood insurance premium rates,
including the basis for and differences between such rates in
accordance with the provisions of section 1308.
PROHIBITION AGAINST CERTAIN DUPLICATIONS OF BENEFITS

SEC. 1314. (a) Notwithstanding the provisions of any other law,
no Federal disaster assistance shall be made available to any person—
(1) for the physical loss, destruction, or damage of real or personal property, to the extent that such loss, destruction, or damage is covered by a valid claim which may be adjusted and paid

580

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

under flood insurance made available under the authority of
this title, or
(2) except in the situation provided for under subsection ( b ) ,
for the physical loss, destruction, or damage of real or personal
property, to the extent that such loss, destruction, or damage
could have been covered by a valid claim under flood insurance
which had been made available under the authority of this title,

"Federal disaster assistance."

64 Stat. 1109.

75 Stat. 311.
72 Stat. 389;
79 Stat. 206.
"Financial assistance."
42 u s e 1855ff.

(A) such loss, destruction, or damage occurred subsequent
to one year following the date flood insurance was made
available in the area (or subdivision thereof) in which such
property or the major part thereof was located, and
(B) such property was eligible for flood insurance under
this title at that date;
and in such circumstances the extent that .such loss, destruction,
or damage could have been covered shall be presumed (for purposes of this subsection) to be an amount not less than the maximum limit of insurable loss or damage applicable to .such property
in such area (or subdivision thereof), pursuant to regulations
under section 1306, at the time insurance was made available in
such area (or subdivision thereof).
(b) I n order to assure that the provisions of subsection (a) (2)
will not create undue hardship for low-income persons who might
otherwise benefit from the provision of Federal disaster assistance,
the Secretary shall provide by regulation for the circumstances in
which the provisions of subsection (a) (2) shall not be applicable to
any such persons.
(c) For purposes of this section, "Federal disaster assistance" shall
include any Federal financial assistance which may be made available
to any person as a result of—
(1) a major disaster (within the meaning of that term as determined by the President pursuant to the Act entitled "An Act to
authorize Federal assistance to State and local governments in
major disasters, and for other purposes"', as amended (42 U.S.C.
1855-1855g)),
(2) a natural disaster, as determined by the Secretary of Agriculture pursuant to section 321 of the Consolidated Farmers
Home Administration Act of 1961 (7 U.S.C. 1961), or
(3) a disaster with respect to which loans may be made under
section 7(b) of the Small Business Act (15 U.S.C. 636(b)).
(d) F o r purposes of section 10 of the Disaster Relief Act of 1966 (80
Stat. 1320), the term "financial assistance'' shall be deemed to include
any flood insurance which is made available under this title.
STATE AND LOCAL LAND USE CONTROLS

SEC. 1315. After June 30,1970, no new flood insurance coverage shall
be provided under this title in any a,rea (or subdivision thereof) unless
an appropriate public body shall have adopted permanent land use and
control measures (with eft'ective enforcement provisions) which the
Secretary finds are consistent with the comprehensive criteria for
land management and use under section 1361.
PROPERTIES I N VIOLATION OF STATE AND LOCAL LAW

SEC. 1316. No new flood insurance coverage shall be provided under
this title for any property which the Secretary finds has been declared
by a duly constituted State or local zoning authority, or other authorized public body, to be in violation of State or local laws, regulations,
or ordinances which are intended to discourage or otherwise restrict
land development or occupancy in flood-prone areas.

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

581

COORDINATION W I T H OTHER PROGRAMS

SEC. 1317. In carrying out this title, the Secretary shall consult with
other departments and agencies of the Federal Government, and with
interstate. State, and local agencies having responsibilities for flood
control, flood forecasting, or flood damage prevention, in order to
assure that the programs of such agencies and the flood insurance
program authorized under this title are mutually consistent.
ADVISORY C O M M I T T E E

SEC, 1318. (a) The Secretary shall appoint a flood insurance advisory
committee without regard to the provisions of title 5, United States
Code, governing appointments in the competitive service, and such c^us'^* io°f
committee shall advise the secretary in the preparation of any regula- et seq.
tions prescribed in accordance with this title and with respect to policy
matters arising in the administration of this title, and shall perform
such other responsibilities as the Secretary may, from time to time,
assign to such committee.
(b) Such committee shall consist of not more than fifteen persons
and such persons shall be selected from among representatives of—
(1) the insurance industry,
(2) State and local governments,
(3) lending institutions,
(4) the homebuilding industry, and
(5) the general public.
(c) Members of the committee shall, while attending conferences or compensation,
expenses.
meetings thereof, be entitled to receive compensation at a rate fixed by travel
"°""'' ——•"-the Secretary but not exceeding $100 per day, including traveltime, and
while so serving away from their homes or regular places of business
they may be allowed travel expenses, including per diem in lieu of
subsistence, as is authorized under section 5703 of title 5, United States
(/ode, for persons in the Government service employed intermittently. 80 Stat. 499.
I N I T I A L PROGRAM L I M I T A T I O N

SEC. 1319. The face amount of flood insurance coverage outstanding
and in force at any one time under this title shall not exceed the sum
of $2,500,000,000.
REPORT TO T H E P R E S I D E N T

SEC. 1320. The Secretary shall include a report of operations mider
this title in the annual report to the President for sulbmission to the
Congress required by section 8 of the Department of Housing and
Urban Development Act.

79 stat. 67o.
42 u s e 3536.

C H A P T E R I I — O R G A N I Z A T I O N AND A D M I N I S T R A T I O N
OF T H E FLOOD INSURANCE PROGRAM
ORGANIZATION A N D A D M I N I S T R A T I O N

SEC. 1330. Following such consultation with representatives of the
insurance industry as may be necessary, the Secretary shall implement
the flood insurance program authorized under chapter I in accordance ^n'e» P 574;
with the provisions of part A of this chapter and, if a determination 53°//' ^^ ^*^'
is made by him under section 1340, under part B of this chapter.

582

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

PART A—INDUSTRY PROGRAM W I T H FEDERAL FINANCIAL ASSISTANCE
I N D U S T R Y FLOOD I N S U R A N C E

Ante, p. 574.

POOL

SEC. 1331. (a) The Secretary is authorized to encourage and otherwise assist any insurance companies and other insurers which meet
the requirements prescribed under subsection (b) to form, associate,
or otherwise join together in a pool—
(1) in order to pix)vide the flood insurance coverage authorized
Under chapter I ; and
(2) for the purpose of assuming, on such terms and conditions
as may be agreed upon, such financial responsibility as will enable
such companies and other insurers, with the Federal financial and
other assistance available under this title, to assume a reasonable
proportion of responsibility for the adjustment and payment of
claims for losses under the flood insurance program.
(b) In order to promote the effective administration of the flood
insurance program under this part, and to assure that the objectives
of this title are furthered, the Secretary is authorized to prescribe
appropriate requirements for insurance companies and other insurers
participating in such pool including, but not limited to, minimum
requirements for capital or surplus or assets.
AGREEMENTS W I T H

FLOOD I N S U R A N C E

POOL

Srx!. 1332. (a) The Secretary is authorized to enter into such agreements with the pool formed or otherwise created under this part as he
deems necessary to carry out the purposes of this title.
(b) Such agreements shall specify—
(1) the terms and conditions under which risk capital will be
available for the adjustment and payment of claims,
(2) the terms and conditions under which the pool (and the
companies and other insurers participating therein) shall participate in premiums received and profits or losses realized or
sustained,
(3) the maximum amount of profit, established by the Secretary
and set forth in the schedules prescribed under section 1311, which
may be realized by such pool (and the companies and other
insurers participating therein),
(4) the terms and conditions under which operating costs and
allowances set forth in the schedules prescribed under section 1311
may be paid, and
(5) the terms and conditions under which premium equalization
payments under section 1334 wall be made and reinsurance claims
under section 1335 will be paid.
(c) In addition, such agreements shall contain such provisions as
tlie Secretary finds necessary to assure that—
(1) no insurance company or other insurer which meets the
requirements prescribed under section 1331(b), and which has
indicated an intention to participate in the flood insurance program on a risk-sharing basis, will be excluded from participating
in the pool,
(2) the insurance companies and other insurers participating
in the pool will take whatever action may be necessary to provide
continuity of flood insurance coverage by the pool, and
(3) any insurance companies and other insurers, insurance
agents and brokers, and insurance adjustment organizations will
be permitted to cooperate with the pool as fiscal agents or otherwise, on other than a risk-sharing basis, to the maximum extent
practicable.

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

A D J U S T M E N T AND P A Y M E N T OF CLAIMS AND J U D I C I A L

583
REVIEW

SEC. 18H3. The insurance companies and other insurers which form,
associate, or otherwise join together in the pool under tliis part may
adjust and pay all claims for proved and approved losses covered by
flood insurance in accordance with the provisions of this title and,
upon the disallowance by any such company or other insurer of any
such claim, or upon the refusal of the claimant to accept the amount
allowed upon any such claim, the claimant, within one year after the
date of mailing of notice of disallowance or partial disallowance of the
claim, may institute an action on such claim against such company
or other insurer in the United States district court for the district in
which the insured property or the major part thereof shall have been
situated, and jurisdiction is hereby conferred upon such court to hear
and determine such action without regard to the amount in controversy.
P R E M I U M EQUALIZATION P A Y M E N T S

SEC. 1334. (a) The Secretary, on such terms and conditions as he
may from time to time prescribe, shall make periodic payments to the
pool formed or otherwise created under section 1331, in recognition of
such reductions in chargeable premium rates under section 1308 below
estimated premium rates under section 1307(a) (1) as are required in
order to make flood insurance available on reasonable termsi and
conditions.
(b) Such payments shall be based only on the aggregate amount of
flood insurance retained by the pool after ceding reinsurance in
accordance with the provisions of section 1335, and shall not exceed
an aggregate amount in any payment period equal to the sum of
the following:
(1) an amount for los.ses which bears the same ratio to the
amount of all proved and approved claims for losses under this
title during any designated j^eriod as the amount equal to the difference between—
(A) the sum of all premium payments for flood insurance
coverage in force under this title during such designated
period which would have been payable during such period if
all .such coverage were based on estimated risk premium rates
under section 1307(a)(1) (excluding any administrative
exj^enses which may be reflected in such rates, as specified in
clause (ii) of section 1307(a) (^1) ( B ) ) , a n d
(B) the sum of the premium payments actually paid or
payable for such insurance under this title during .such period,
bears to the amount specified in clause ( A ) ; and
(2) subject to the terms and conditions specified in the agreements entered into with the pool under section 1332, a proportionate amount for appropriate operating costs and allowances (a.s
set forth in the schedules prescribed under section 1311) during
any designated period which bears the same ratio to the total
amount of such operating costs and allowances during .such period
as the ratio specified in paragraph (1).
(c) Designated periods under this section and the methods for
determining the sum of premiums paid or payable during such periods
.shall be established by the Secretary.
REINSURANCE

COVERAGE

SEC. 1335. (a) The Secretary is authorized to take such action as
may be necessary in order to make available, to the pool formed or
otherwise created under section 1331, reinsurance for losses (due to
claims for proved and approved losses covered by flood insurance)

96-600 O - 69 - 40

584

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

which are in excess of losses assumed by such pool in accordance with
the excess loss agreement entered into under subsection (c).
(b) Such reinsurance shall be made available pursuant to contract,
agreement, or any other arrangement, in consideration of such payment of a premium, fee, or other charge as the Secretary finds necessary to cover anticipated losses and other costs of providing such
reinsurance.
(c) The Secretary is authorized to negotiate an excess loss agreement, from time to time, under which the amount of flood insurance
retained by the pool, after ceding reinsurance, shall be adequate to
further the purposes of this title, consistent with the objective of maintaining appropriate financial participation and risk sharing to the
maximum extent practicable on the part of participating insurance
companies and other insurers.
(d) All reinsurance claims for losses in excess of losses assumed by
the pool shall be submitted on a portfolio basis by such pool in accordance with terms and conditions established by the Secretary.
PART B—GOVERNMENT PROGRAM W I T H INDUSTRY ASSISTANCE
FEDERAI, OPERATION OF THE PROGRAM

Ante, p. 574.

80 Stat. 379.

^^^°^ '° *^''"'

gress

SEC. 1840. (a) If at any time, after consultation with representatives of the insurance industry, the Secretary determines that operation of the flood insurance program as provided under part A cannot
be carried out, or that such operation, in itself, would be assisted materially by the Federal Government's assumption, in whole or in part, of
the operational responsibility for flood insurance under this title (on
a temporary or other basis) he shall promptly undertake any necessary
arrangements to carry out the program of flood insurance authorized
under chapter I through the facilities of the Federal Government, utilizing, for purposes of providing flood insurance coverage, either—
(1) insurance companies and other insurers, insurance agents
and brokers, and insurance adjustment organizations, as fiscal
agents of the United States,
(2) officers and employees of the Department of Housing and
Urban Development, and such other officers and employees of any
executive agency (as defined in section 105 of title 5 of the United
States Codc) as the Secretary and the head of any such agency
may from time to time, agree upon, on a reimbursement or other
basis, or
(3) both the alternatives specified in paragraphs (1) and (2).
(b) Upon making the determination referred to in subsection ( a ) ,
and at least thirty days prior to implementing the program of flood
insurance authorized under chapter I through the facilities of the
Federal Government, the Secretary shall make a report to the Congress and such report shall—
(1) state the reasons for such determination,
(2) be supported by pertinent findings,
(3) indicate the extent to which it is anticipated that the insurance industry will be utilized in providing flood insurance coverage
under the program, and
(4) contain such recommendations as the Secretary deems
advisable.
ADJUSTMENT AND PAYMENT OF CLAIMS AND JUDICIAL REVIEW

SEC. 1341. I n the event the program is carried out as provided in
section 1340, the Secretary shall be authorized to adjust and make
payment of any claims for proved and approved losses covered by

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

flood insurance, and upon the disallowance by the Secretary of any
such claim, or upon the refusal of the claimant to accept the amount
allowed upon any such claim, the claimant, within one year after the
date of mailing; of notice of disallowance or partial disallowance by
the Secretary, may institute an action against the Secretary on such
claim in the United States district court for the district in which the
insured property or the major part thereof shall have been situated, ^^^^ ttisdic'
and jurisdiction is hereby conferred upon such court to hear and deter- uon.' '""
mine such action without regard to the amount in controversy.
PART C—PROVISIONS OF GENERATE APPLICABILITY
SERVICES BY INSUILINCE INDTJSTRY

SEC. 1345. (a) I n administering the flood insurance program under ,t,^,°f^'"^'^* ^"
this chapter, the Secretary is authorized to enter into any contracts, thority.
agreements, or other appropriate arrangements which may, from time
to time, be necessary for the purpose of utilizing, on such terms and
conditions as may be agreed upon, the facilities and services of any
insurance companies or other insurers, insurance agents and brokers,
or insurance adjustment organizations; and such contracts, agreements, or arrangements may include provision for payment of applicable operating costs and allowances for such facilities and services as
set forth in the schedules prescribed under section 1811.
(b) Any such contracts, agreements, or other arrangements may be
entered into without regard to the provisions of sectjon 8709 of the
Revised Statutes (41 ILS.C. 5) or any other provision of law requiring
competitive bidding.
C S E O F I N S U R A N C E POOL, C O M P A N I E S , OR OTHER PRIVATE ORGANIZATIONS
FOR C E R T A I N P A Y M E N T S

SEC. 1346. (a) I n order to provide for maximum efficiency in the
administration of the flood insurance program and in order to facilitate
the expeditious payment of any Federal funds under such program,
the Secretary may enter into contracts with pool formed or otherwise
created under section 1831, or any insurance company or other private
organization, for the purpose of securing performance by such pool,
company, or organization of any or all of the following responsibilities :
(1) estimating and later determining any amounts of payments
to be made;
(2) receiving from the Secretary, disbursing, and accounting
for funds in making such payments;
(3) making such audits of the records of any insurance company or other insurer, insurance agent or broker, or insurance
adjustment organization as may be necessary to assure that proper
payments are made; and
(4) otherwise assisting in such manner as the contract may
provide to further the purposes of this title.
(b) Any contract with the pool or an insurance company or other
private organization under this section may contain such terms and
conditions as the Secretary finds necessary or appropriate for carrying out responsibilities under subsection ( a ) , and may provide for
payment of any costs which the Secretary determines are incidental
to carrying out such responsibilities which are covered by the contract.
(c) Any contract entered into under subsection (a) may be entered
into without regard to section 8709 of the Revised Statute (41 U.S.C.
5) or any other provision of law requiring competitive bidding.

585

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PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

(d) No contract may be entered into under this section unless the
Secretary finds that the pool, company, or organization will perform
its obligations under the contract efficiently and effectively, and will
meet such requirements as to financial responsibility, legal authority,
and other matters as he finds pertinent.
(e) (1) Any .such contract may require the pool, company, or organization or any of its officers or employees certifying payments or disbursing funds pursuant to the contract, or otherwise participating in
carrying out the contact, to give surety bond to the United States in
such amount as the Secretary may deem appropriate.
(2) No individual designated pursuant to a contract under this section to certify payments shall, m the absence of gross negligence or
intent to defraud the ITnited States, be liable with respect to any payment certified by him under this section.
(3) No officer disbursing funds shall in the absence of gross negligence or intent to defraud the United States, be liable with respect to
any payment by him under this section if it was based upon a voucher
signed by an individual designated to certify payments as provided
in paragraph (2) of this subsection.
(f) Any contract entered into under this section shall be for a term
of one year, and may be made automatically renewable from term to
term in the absence of notice by either party of an intention to terminate at the end of the current term; except that the Secretary may terminate any such contract at any time (after reasonable notice to the
pool, company, or organization involved) if he finds that the pool, coml)any, or organization has failed substantially to carry out the contract, or is carrying out the contract in a manner inconsistent with the
efficient and effective administration of the flood insurance program
authorized under this title.
S E T T L E M E N T AND AKBITRATION

SEC. 1347. (a) The Secretary is authorized to make final settlement
of any claims or demands which may arise as a result of any financial
transactions which he is authorized to carry out under this chapter,
and may, to assist him in making any such settlement, refer any disputes relating to such claims or demands to arbitration, with the consent of the parties concerned.
(b) Such arbitration shall be advisory in nature, and any award,
decision, or reconmiendation which may be made shall become final
only upon the approval of the Secretary.
RECORDS A N D AUDITS

Ante, p. 582.
Ante,

p. 584.

A c c e s s to rec
ords for audit.

SEC. 1348. (a) The flood insurance pool formed or otherwise created
vuidcr pait A of this chapter, and any insurance company or other
private organization executing any contract, agreement, or other
a])propriate arrangement with the Secretary under part B of this
chapter or this part, shall keep such records as the Secretary shall
prescribe, including records which fully disclose the total costs of the
program undertaken or the services being rendered, and such other
records as will facilitate an effective audit.
(b) The Secretary and the Comptroller General of the LTnited
Slates, or any of their duly authorized representatives, shall have
access for the purpose of audit and examination to any books, documents, papers, and records of the pool and any such insurance com])any or other private organization that are pertinent to the costs of
the program undertaken or the services being rendered.

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PUBLIC LAW 90-448-AUG. 1, 1968

587

(CHAPTER I I I — C O O R D I N A T I O N O F F L O O D I N S U R A N C E
W I T H LAND-MANAGEMENT PROGRAMS IN FLOODPRONE AREAS
IDENTIFICATION OF FLOOD-PRONE AREAS

SEC. 1360. The Secretary is authorized to consult with, receive iiifor- j,^^^°"''"^'" ^""
Illation from, and enter into any agreements or otlier arrangements
with the Secretaries of the Army, the Interior, Agriculture, and Commerce, the Tennessee Valley Authority, and the heads of other Federal
departments or agencies, on a reimbursement basis, or with the head
of any State or local agency, or enter into contracts with any persons
or private firms, in order that lie may—
(1) identify and publish information with respect to all flood . Publication of
plain areas, including coastal areas located in the United States,
which have special flood hazards, within five years following the
date of the enactment of this Act, and
(2) establish flood-risk zones in all such areas, and make esti- Fiood-risk
mates with respect to the rates of probable flood-caused loss for
the various flood-risk zones for each of these areas, within fifteen
years following such date.
C R I T E R I A F O R LAND MANAGEMENT AND USE

SEC. 1861. (a) The Secretary is authorized to carry out studies and
investigations, utilizing to the maximum extent practicable the existing facilities and services of other Federal departments or agencies,
and State and local governmental agencies, and any other organizations, with respect to the adequacy of State and local measures in flood])rone areas as to land management and use, flood control, flood zoning, and flood damage prevention, and may enter into any contracts,
agreements, or other appropriate arrangements to carry out such
authority.
(b) Such studies and investigations shall include, but not be limited
to, laws, regulations, or ordinances relating to encroachments and
obstructions on stream channels and floodways, the orderly development and use of flood plains of rivers or streams, floodway encroachment lines, and flood plain zoning, building codes, building permits,
and subdivision or other building restrictions.
(c) On the basis of such studies and investigations, and such other
information as he deems necessary, the Secretary shall from time to
time develop comprehensive criteria designed to encourage, where
necessary, the adoption of jKirmanent State and local measures which,
to the maximum extent feasible, w^ill—
(1) constrict the development of land which is exposed to flood
damage where appropriate,
(2) guide the development of proposed construction away from
locations which are threatened by flood hazards,
(3) assist in reducing damage caused by floods, and
(4) otherwise improve the long-range land management and
use of flood-prone areas,
and he shall work closely wath and provide any necessary technical
assistance to State, interstate, and local governmental agencies, to
encourage the application of such criteria and the adoption and
enforcement of such measures.

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PUBLIC LAW 90-448-AUG. 1, 1968
PURCHASE

OF CERTAIN

INSURED

fe2

STAT.

PROPERTIES

SEC. 1362. The Secretary may, when he determines that the public
interest would be served thereby, enter into negotiations with any
owner of real property or interest therein which—
(1) was located in any flood-risk area, as determined by the
Secretary,
(2) was covered by flood insurance under the flood insurance
program authorized under this title, and
(3) was damaged substantially beyond repair by flood while
so covered,
and may purchase such property or interests therein, for subsequent
transfer, by sale, lease, donation, or otherwise, to any State or local
agency w^hich enters into an agreement with the Secretary that such
property shall, for a period not less than forty years following transfer, be used for only such purposes as the Secretary may, by regulation, determine to be consistent with sound land management and use
in such area.
CHAPTER IV—APPROPRIATIONS AND MISCELLANEOUS
PROVISIONS
DEEINITIONS

SEC. 1370. As used in this title—
(1) the term "flood" shall have such moaning as may be prescribed in regulations of the Secretary, and may include inundation from rising waters or from the overflow of streams, rivers, or
other bodies of water, or from tidal surges, abnormally high tidal
water, tidal waves, tsunamis, hurricanes, or other severe storms
or deluge;
(2) the terms "United States" (when used in a geographic
sense) and "State" includes the several States, the District of
Columbia, the territories and possessions, the Commonwealth of
Puerto Rico, and the Trust Territory of the Pacific Islands;
(3) the terms "insurance company", "other insurer" and "insurance agent or broker" include any organizations and persons
authorized to engage in the insurance business under the laws of
any State;
(4) the term "insurance adjustment organization" includes any
organizations and persons engaged in the business of adjusting
loss claims arising under insurance policies issued by any insurance company or other insurer;
(5) the term "person" includes any individual or group of
individuals, corporation, partnership, association, or any other
organized group of persons, including State and local governments
and agencies thereof; and
(6) the term "Secretary" means the Secretary of Housing and
Urban Development.
STUDIES OF OTHER NATURAL DISASTERS

SEC. 1371. (a) The Secretary is authorized to undertake such studies
as may be necessary for the purpose of determining the extent to which
insurance protection against earthquakes or any other natural disaster
perils, other than flood, is not available from public or private sources,
and the feasibility of such insurance protection being made available.
(b) Studies under this section shall be carried out, to the maximum
extent practicable, with the cooperation of other Federal departments and agencies and State and local agencies, and the Secretary is

82 STAT, I

PUBLIC LAW 90-448-AUG. 1, 1968

589

authorized to consult with, receive information from, and enter into
any necessary agreements or other arrangements with such other
Federal departments and agencies (on a reimbursement basis) and
such State and local agencies.
PAYMENTS

SEC. 1372. Any payments under this title may be made (after necessary adjustment on account of previously made underpayments or
overpayments) in advance or by way of reimbursement, and in such
installments and on such conditions, as the Secretary may determine.
G O V E R N M E N T CORI'ORATION CONTROL ACT

SEC. 1373. The provisions of the Government (Corporation Control S9 stat. 597.
.Vet shall apply to the program authorized under this title to the no^tl.^^^ ^^^
same extent as they apply to wholly owned Government corporations.
F I N A L I T Y O F C E R T A I N F I N A N C I A L TRANSACTIONS

SEC. 1374. Notwithstanding the provisions of any other law—
(1) any financial transaction authorized to be carried out under
this title, and
(2) any payment authorized to be made or to be received in
connection with any such financial transaction,
shall be final and conclusive upon all officers of the Government.
ADMINISTRATIVE EXPENSES

SEO. 1375. Any administrative expenses which may be sustained
by the Federal Government in carrying out the flood insurance program authorized under this title may be paid out of appropriated
funds.
APPROPRIATIONS

SEC. 1376. (a) There are hereby authorized to be appropriated
such sums as may from time to time be necessary to carry out this title,
including sums—
(1) to cover administrative expenses authorized under section
1375;
(2) to reimburse the National Flood Insurance Fund established under section 1310 for—
(A) premium equalization payments under section 1334
which have been made from such fund; and
(B) reinsurance claims paid under the excess loss reinsurance coverage provided under section 1335; and
(3) to make such other payments as may be necessary to carry
out the purposes of this title.
(b) All such funds shall be available without fiscal year limitation.
EFFECTIVE DATE

SEC. 1377. This title shall take effect one hundred and twenty days
following the date of its enactment, except that the Secretary, on the
basis of a finding that conditions exist necessitating the prescribing
of an additional period, may prescribe a later effective date which in
no event shall be more than one hundred and eighty days following
such date of enactment.

^"'e- p- 577.

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PUBLIC LAW 90-448-AUG. 1, 1968

L82 STAT.

T I T L E XIV—INTERSTATE LAND SALES
SHORT TITLE

SEC. 1401. This title may be cited as the ''Interstate Land Sales
Full Disclosure Act".
DEFINITIONS

SEC. 1402. For the purposes of this title, the term—
(1) "Secretary" means the Secretary of Housing and Urban
Development;
(2) "person"' means an individual, or an unincorporated organization, partnership, association, corporation, trust, or estate;
(3) "subdivision'" means any land which i.s divided or proposed
to be divided into fifty or more lots, whether contiguous or not,
for the purpose of sale or lease as part of a common promotional
plan and where subdivided land is offered for sale or lease by a
single developer, or a group of developers acting in concert, and
such land is contiguous or is known, designated, or advertised as
a common unit or by a common name such land shall be presumed,
without regard to the number of lots covered by each individual
offering, as being offered for sale or lease as part of a common
promotional plan;
(4) "developer" means any person who, directly or indirectly,
sells or leases, or offers to .sell or lease, or advertises for sale or lease
any lots in a subdivision;
(5) "agent"' means any person who represents, or acts for or on
behalf of, a developer in selling or leasing, or offering to .sell or
lease, any lot or lots in a subdivision; but shall not include an
attorney at law whose representation of another person consists
solely of rendering legal .services;
(6) "blanket encumbrance" means a trust deed, mortgage, judgment, or any other lien or encumbrance, including an option or
contract to sell or a trust agreement, affecting a subdivision or
affecting more than one lot offered within a subdivision, except
that such term shall not include any lien or other encumbrance
arising as the result of the imposition of any tax assessment by any
public authority;
(7) "interstate commerce"' means trade or commerce among the
several States;
(8) "State"' includes the several States, the District of Columbia, the Commonwealth of Puerto Rico, and the territories and
possessions of the ITnited States;
(9) "purchaser" means an actual or prospective purchaser or
lessee of any lot in a subdivision;
(10) "offer" includes any inducement, solicitation, or attempt
to encourage a person to acquire a lot in a subdivision.
EXEMPTIONS

SEC. 1403. (a) Unless the method of disposition is adopted for the
purpose of evasion of this title, the provisions of this title shall not
apply to—
(1) the sale or lease of real estate not pursuant to a common
promotional plan to offer or sell fifty or more lots in a subdivision;
(2) the sale or lease of lots in a subdivision, all of which are
five acre^ or more in size;
(3) the sale or lease of any improved land on which there is a
residential, commercial, or industrial building, or to the sale or

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PUBLIC LAW 90-448-AUG. 1, 1968

lease of land under a contract obligating the seller to erect such a
building thereon within a period oi two years;
(4) the sale or lease of real estate under or pursuant to court
order;
(5) the sale of evidences of indebtedness secured by a mortgage
or deed of trust on real estate;
(6) the sale of securities issued by a real estate investment
trust;
(7) the sale or lease of real estate by any government or government agency;
(8) the sale or lease of cemetery lots;
(9) the sale or lease of lots to any person who acquires such
lots for the purpose of engaging in the business of constructing
residential, commercial, or industrial buildings or for the purpose
of resale or lease of such lots to persons engaged m such
business; or
(10) the sale or lease of real estate which is free and clear of
all liens, encumbrances, and adverse claims if each and every
purchaser or his or her spouse has personally inspected the lot
which he purchased and if the developer executes a written affirmation to that effect to be made a matter of record in accordance
with rules and regulations of the Secretary. As used in this subparagraph, the terms "liens," "encumbrances," and "adverse
claims'' are not intended to refer to property reservations which
land developers commonly convey or dedicate to local bodies or
public utilities for the purpose of bringing public services to the
land being developed nor to taxes and assessments which, under
applicable State or local law, constitute liens on the property
before they are due and payable.
(b) The Secretary may from time to time, pursuant to rules and
regulations issued by him, exempt from any of the provisions of this
title any subdivision or any lots in a subdivision, if he finds that the
enforcement of this title with respect to such subdivision or lots is not
necessary in the public interest and for the protection of purchasers by
reason of the small amount involved or the limited character of the
public offering.
PKOH TUITIONS R E L A T I N G TO T H E SALE OR LEASE OF LOTS I N
SUBDIVISIONS

SEC. 1404. (a) It shall be unlawful for any developer or agent,
directly or indirectly, to make use of any means or instruments of
transportation or communication in interstate commerce, or of the
mails—
(1) to sell or lease any lot in any subdivision unless a statement
of record with respect to such lot is in effect in accordance with
section 1407 and a printed property report, meeting the requirements of section 1408, is furnished to the purchaser in advance of
the signing of any contract or agreement for sale or lease by the
purchaser; and
(2) in selling or leasing, or offering to sell or lease, any lot in
a subdivision—
(A) to employ any device, scheme, or artifice to defraud, or
(B) to obtain money or property by means of a material
misrepresentation with respect to any information included
in the statement of record or the property report or with
respect to any other information pertinent to the lot or the
subdivision and upon which the purchaser relies, or

591

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PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

(C) to engage in any transaction, practice, or course of
business which operates or would operate as a fraud or deceit
upon a purchaser,
(b) Any contract or agreement for the purchase or leasing of a lot
in a subdivision covered by this title, where the property report has
not been given to the purchaser in advance or at the time of his signing, shall be voidable at the option of the purchaser. A purchaser may
revoke such contract or agreement within forty-eight hours, where he
has received the property report less than forty-eight hours before he
signed the contract or agreement, and the contract or agreement shall
so provide, except that the contract or agreement may stipvilate that
tlie foregoing revocation authority shall not apply in the case of a purchaser who (1) has received the property report and inspected the lot
to be purchased or leased in advance of signing the contract or agreement, and (2) acknowledges by his signature that he has made such
inspection and has read and understood such report.
REGISTRATION OF SUBDIVISIONS
Statement of
record.

Fees.

Information,
availability to
public.

SEC. 1405. (a) A subdivision may be registered by filing with the
Secretary a statement of record, meeting the requirements of this title
and such rules and regulations as may be prescribed by the Secretary
in furtherance of the provisions of this title. A .statement of record
shall be deemed effective only as to the lots specified therein.
(b) At the time of filing a statement of record, or any amendment
thereto, the developer shall pay to the Secretary a fee, not in excess
of $1,000, in accordance with a schedule to be fixed by the regulations
of the Secretary, which fees may be used by the Secretary to cover
all or part of the cost of rendering services under this title, and such
expenses as are paid from such fees shall be considered non-administrative.
(c) The filing with the Secretary of a statement of record, or of
an amendment thereto, shall be deemed to have taken place upon the
receipt thereof, accompanied by payment of the fee required by subsection ( b ) .
(d) The information contained in or filed with any statement of
record shall be made available to the public under .such regulations as
the Secretary may prescribe and copies thereof shall be furnished to
every applicant at such reasonable charge as the Secretary may
prescribe.
I N F O R M A T I O N REQUIRED I N S T A T E M E N T OF RECORD

SEC. 1406. The statement of record shall contain the information
and be accompanied by the documents specified hereinafter in this
section—
(1) the name and address of each person having an interest in
the lots in the subdivision to be covered by the statement of record
find the extent of such interest;
(2) a legal description of, and a statement of the total area
included in, the subdivision and a statement of the topography
thereof, together with a map showing the division proposed and
the dimensions of the lots to be covered by the statement of
record and their relation to existing streets and roads;
(3) a statement of the condition of the title to the land comprising the subdivision, including all encumbrances and deed
restrictions and covenants applicable thereto;
(4) a statement of the general terms and conditions, including
the range of selling prices or rents at w^hich it is proposed to dispose of the lots in the subdivision;

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PUBLIC LAW 90^448-AUG. 1, 1968

(5) a statement of the present condition of access to the subdivision, the availability of sewage disposal facilities and other
public utilities (including water, electricity, gas, and telephone
facilities) in the subdivision, the proximity in miles of the subdivision to nearby municipalities, and the nature of any improvements to be installed by the developer and his estimated schedule
for completion;
(6) in the case of any subdivision or portion thereof against
which there exists a blanket encumbrance, a statement of the consequences for an individual purchaser of a failure, by the person
or persons bound, to fulfill obligations under the instrument or
instruments creating such encumbrance and the steps, if any,
taken to protect the purchaser in such eventuality ;
(7) (A) copy of its articles of incorporation, with all amendments thereto, if the developer is a corporation; (B) copies of all
instruments by which the trust is created or declared, if the developer is a trust; (C) copies of its articles of partnership or
association and all other papers pertaining to its organization,
if the developer is a partnership, unincorporated association, joint
stock company, or any other form of organization; and (D) if
the purported holder of legal title is a person other than developer, copies of the above documents for such person;
(8) copies of the deed or other instrument establishing title to
the subdivision in the developer or other person and copies of any
instrument creating a lien or encumbrance upon the title of developer or other person or copies of the opinion or opinions of counsel in respect to the title to the subdivision in the developer or
other person or copies of the title insurance policy guaranteeing
such title;
(9) copies of all forms of conveyance to be used in selling or
leasing lots to purchasers;
(10) copies of instruments creating easements or other restrictions ;
(11) such certified and uncertified financial statements of the
developer as the Secretary may require; and
(12) such other information and such other documents and certifications as the Secretary may require as being reasonably necessary or appropriate for the protection of purchasers.
TAKING EFFECT OF STATEMENTS OF RECORD AND AMENDMENTS THERETO

SEC. 1407. (a) Except as hereinafter provided, the effective date of
a statement of record, or any amendment thereto, shall be the thirtieth
day after the filing thereof or such earlier date as the Secretary may
determine, having due regard to the public interest and the protection
of purchasers. If any amendment to any such statement is filed prior
to the effective date of the statement, the statement shall be deemed
to have been filed when such amendment was filed; except that such an
amendment filed with the consent of the Secretary, or filed pursuant
to an order of the Secretary, shall be treated as being filed as of the
date of the filing of the statement of record. When a developer records
additional lands to be offered for disposition, he may consolidate the
subsequent statement of record with any earlier recording offering
subdivided land for disposition under the same promotional plan. At
the time of consolidation the developer shall include in the consolidated statement of record any material changes in the information
contained in the earlier statement.
(b) I f it appears to the Secretary that a statement of record, or any
amendment thereto, is on its face incomplete or inaccurate in any
material respect, the Secretary shall so advise the developer within a

593

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Access to records, etc.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

reasonable time after the filing of the statement or the amendment,
but prior to the date the statement or amendment would otherwise be
effective. Such notification shall serve to suspend the effective date of
the statement or the amendment until thirty days after the developer
files such additional information as the Secretary shall require. Any
developer, upon receipt of such notice, may request a hearing, and such
hearing shall be held within twenty days of receipt of such request by
the Secretary.
(c) If, at any time subsequent to the eft'ective date of a statement of
record, a change shall occur affecting any material fact required to be
contained in the statement, the developer shall promptly file an amendment thereto. Upon receipt of any .such amendment, the Secretary
may, if he determines such action to be necessary or appropriate in
the public interest or for the protection of purchasers, suspend the
statement of record until the amendment becomes effective.
(d) If it appears to the Secretary at any time that a statement of
record, which is in effect, includes any untrue .statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, the Secretary
may, after notice, and after opportunity for hearing; (at a time fixed
by the Secretary) within fifteen days after such notice, issue an order
su.spending the statement of i-ecord. When such statement has been
amended in accordance with such order, the Secretary shall so declare
and thereupon the order shall cease to be effective.
(e) The Secretary is hereby empowered to make an examination in
any case to determine whether an order should issue under subsection
( d ) . I n making such examination, the Secretary or anyone designated
by him .shall have access to and may demand the production of any
books and papers of, and may administer oaths and affirmations to and
examine, the developer, any agents, or any other person, in respect of
any matter relevant to the examination. If the developer or any agents
shall fail to cooperate, or shall obstruct or refuse to permit the making
of an examination, such conduct shall be proper ground for the issuance of an order suspending the statement of record.
(f) Any notice required under this section shall be sent to or served
on the developer or his authorized agent.
INFORMATION REQUIRED IN rROPERTY REPORT

SEC. 1408. (a) A property report relating to the lots in a subdivision
shall contain such of the information contained in the statement of
record, and any amendments thereto, as the Secretary may deem necessary, but need not include the documents referred to in paragraphs
(7) to (11), inclusive, of section 1406. A property report shall also contain such other information as the Secretary may by rules or regulations require as being necessary or appropriate in the public interest
or for the protection of purchasers.
(b) The property report shall not be used for any promotional purposes before the statement of record becomes effective and then only if
it is used in its entirety. No person may advertise or represent that the
Secretary approves or recommends the subdivision or the sale or lease
of lots therein. No portion of the propertj^ report shall be underscored,
italicized, or printed in larger or bolder type than the balance of the
statement unless the Secretary requires or permits it.
COOPERATION WITH STATE AUTHORITIES

SEC. 1409. (a) In administering this title, the Secretary shall cooperate with State authorities charged with the responsibility of regulating the sale of lots in subdivisions which are also subject to tliis
title and may accept for filing under section 1405 and declare effective

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

595

as a statement of record, if he finds such action to be appropriate in
the public interest or for the protection of purchasei*s, material filed
with and found acceptable by such authorities.
(b) Nothinjif in this title shall affect the jurisdiction of the real
estate commission (or any agency or office performing like functions)
of any State over any subdivision or any person.
CIVIL LIABILITIES

SEC. 1410. (a) Where any part of the statement of record, when such
part became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be .stated therein,
any person acquiring a lot in the subdivision covered by such statement of record from the developer or his agent during such period
the statement remained uncorrected (unless it is proved that at the
time of such acquisition he knew of such untruth or omission) may,
either at law or in equity, in any court of competent jurisdiction, sue
the developer.
(b) Any developer or agent, who sells or leases a lot in a subdivision—
(1) in violation of section 1404, or
(2) by means of a property report which contained an untrue
statement of a material fact or omitted to state a material fact
required to be .stated therein, may be sued by the purchaser of
such lot.
(c) The suit authorized under subsection (a) or (b) may be to
recover such damages as shall represent the difference between the
amount paid for the lot and the reasonable cost of any improvements
thereto, and the lesser of (1) the value thereof as of the time .such
suit was brought, or (2) the price at which such lot shall have been
disposed of in a bona fide market transaction before suit, or (3) the
price at which such lot shall have been disposed of after suit in a bona
fide market transaction but before judgment.
(d) Every person who becomes liable to make any payment under
this section may recover contribution as in cases of contract from any
person who, if sued separately, would have been liable to make the
same payment.
(e) I n no case shall the amount recoverable under this section exceed
the sum of the purchase price of the lot, the reasonable cost of improvements, and reasonable court costs.
COURT REVIEW OF ORDERS

SEC. 1411. (a) Any person, aggrieved by an order or determination
of the Secretary issued after a hearing, may obtain a review of such
order or determination in the court of appeals of the United States,
within any circuit wherein such person resides or has his principal
jilace of business, or in the United States Court of Appeals for the
District of Columbia, by filing in such court, within sixty days after
the entry of such order or determination, a written petition praying
that the order or determination of the Secretary be modified or be set
aside in whole or in part. A copy of such petition shall be forthwith
transmitted by the clerk of the court to the Secretary, and thereupon
the Secretary shall file in the court the record upon which the order
or determination complained of was entered, as provided in section
2112 of title 28, United States Code. No objection to an order or
determination of the Secretary shall be considered by the court unless
such objection shall have been ur^ed before the Secretary. The finding
of the Secretary as to the facts, if supported by substantial evidence,
shall be conclusive. I f either party shall apply to the court for leave

72 stat. 941.

596

Findings,
modification.

62 Stat. 928.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

to adduce additional evidence, and shall show to the satisfaction of
the court that such additional evidence is material and that there
were reasonable grounds for failure to adduce such evidence in the
hearing before the Secretary, the court may order such additional
evidence to be taken before the Secretary and to be adduced upon a
hearing in such manner and upon such terms and conditions as to
the court may seem proper. The Secretary may modify his findings
as to the facts by reason of the additional evidence so taken, and shall
file such modified or new findings, which, if supported by substantial
evidence, shall be conclusive, and his recommendation, if any, for the
modification or setting aside of the original order. Upon the filing of
such petition, the jurisdiction of the court shall be exclusive and its
judgment and decree, affirming, modifying, or setting aside, in whole
or in part, any order of the Secretary, shall be final, subject to review
by the Supreme Court of the United States upon certiorari or certification as provided in section 1254 of title 28, United States Code.
(b) The commencement of proceedings under subsection (a) shall
not, unless specifically ordered by the court, operate as a stay of the
Secretary's order.
L I M I T A T I O N OF ACTIONS

SEC. 1412. No action shall be maintained to enforce any liability
created under section 1410(a) or (b)(2) unless brought within one
year after the discovery of the untrue statement or the omission, or
after such discovery should have been made by the exercise of reasonable diligence, or, if the action is to enforce a liability created under
section 1401 (b) (1), unless brought within two years after the violation
upon which it is based. In no event shall any such action be brought by
a purchaser more than three years after the sale or lease to such
purchaser.
CONTRARY S T I P U L A T I O N S VOID

SEC. 1413. Any condition, stipulation, or provision binding any person acquiring any lot in a subdivision to waive compliance with any
provision of this title or of the rules and regulations of the Secretary
shall be void.
ADDITIONAL

REMEDIES

SEC. 1414. The rights and remedies provided by this title shall be
in addition to any and all other rights and remedies that may exist at
law or in equity.
I N V E S T I G A T I O N S , I N J U N C T I O N S , A N D PROSECUTION OF O F F E N S E S

Investigation
authority.

SEC. 1415. (a) Whenever it shall appear to the Secretary that any
]jerson is engaged or about to engage in any acts or practices which
constitute or will constitute a violation of the provisions of this title,
or of any rule or regulation prescribed pursuant thereto, he may, in
his discretion, bring an action in any district court of the United
States, or the United States District Court for the District of Columbia to enjoin such acts or practices, and, upon a proper showing, a
permanent or temporary injunction or restraining order shall be
granted without bond. The Secretary may transmit such evidence as
may be available concerning such acts or practices to the Attorney
General who may, in his discretion, institute the appropriate criminal
proceedings under this title.
(b) The Secretary may, in his discretion, make such investigations
as he deems necessary to determine whether any person has violated
or is about to violate any provision of this title or any rule or regulation prescribed pursuant thereto, and may require or permit any

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

597

person to file with him a statement in writing, mider oath or otherwise as the Secretary shall determine, as to all the facts and circumstances concerning the matter to be investigated. The Secretary is Publication of
authorized, in his discretion, to publish information concerning any inf°'""'«ti°n
such violations, and to investigate any facts, conditions, practices, or
matters which he may deem necessary or proper to aid in the enforcement of the provisions of this title, in the prescribing of rules and
regulations thereunder, or in securing information to serve as a basis
for recommending further legislation concerning the matters to which
this title relates.
(c) For the purpose of any such investigation, or any other pro- subpena power.
ceeding under this title, the Secretary, or any officer designated by
him, is empowered to administer oaths and affirmations, subpena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memorandums, or other
records which the Secretary deems relevant or material to the inquiry.
Such attendance of witnesses and the production of any such records
may be required from any place in the United States or any State
at any designated place of hearing.
(d) I n case of contumacy by, or refusal to obey a subpena issued
to, any person, the Secretary may invoke the aid of any court of the
United States within the jurisdiction of which such investigation or
proceeding is carried on, or where such person resides or carries on
business, in requiring the attendance and testimony of witnesses and
the production of books, papers, correspondence, memorandums, and
other records and documents. And such court may issue an order ^J^i*"^,^^t^'
requiring such person to appear before the Secretary or any officer court order.
designated by the Secretary, there to produce records, if so ordered,
or to give testimony touching the matter under investigation or in
question; and any failure to obey such order of the court may be
punished by such court as a contempt thereof. All process in any such
case may be served in the judicial district whereof such person is an
inhabitant or wherever he may be found.
(e) No person shall be excused from attending and testifying or
from producing books, papers, correspondence, memorandums, and
other records and documents before the Secretary, or in obedience to
the subpena of the Secretary or any officer designated by him, or in
any cause or proceeding instituted by the Secretary, on the ground
that the testimony or evidence, documentary or otherwise, required
of him may tend to incriminate him or subject him to a penalty or
forfeiture; but no individual shall be prosecuted or subject to any
penalty or forfeiture for or on account of any transaction, matter,
or thing concerning which he is compelled, after having claimed his
privilege against self-incrimination, to testify or produce evidence,
documentary or otherwise, except that such individual so testifying
shall not be exempt from prosecution and punishment for perjury
committed in so testifying.
ADMIN ISTRATION"

SEC. 1416. (a) The authority and responsibility for administering
this title shall be in the Secretary of Housing and Urban Development who may delegate any of his functions, duties, and powers to
employees of the Department of Housing and Urban Development or
to boards of such employees, including functions, duties, and powers
with respect to investigating, hearing, determining, ordering, or otherwise acting as to any work, business, or matter under this title. The
persons to whom such delegations are made with respect to hearing
functions, duties, and powers shall be appointed and shall serve in the

598
80 Stat. 415-

528.

Records of

hearings.

60 Stat. 237.

5 u s e 551
et seq.

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

Department in compliance with sections 3105, 3344, 5362, and 7521 of
title 5 of the United States Code. The Secretary shall by rule prescribe
such rights of appeal from the decisions of his hearinjj examiners to
other hearing examiners or to other officers in the Department, to
boards of officers or to himself, as shall be appropriate and in accordance with law.
(b) All hearings shall be public and appro])riate records thereof
shall be kept, and any order issued after such hearing shall be based
on the record made in such hearing which shall be conducted in
accordaucc with the provisions of the Administrative Procedure Act.
^

UNLAWFUL REPRESENTATIONS

SEC. 1417. The fact that a statement of record Avith respect to a
subdivision has been filed or is in effect shall not be deemed a finding
by the Secretary that the statement of record is true and accurate on
its face, or be held to mean the Secretary has in any way ])assed u^)on
the merits of, or given approval to, such subdivision. It shall be unlawful to make, or cause to })e made, to any prospective purchaser any
rei)resentation contrary to the foregoing.
PENALTIES

SEC. 1418. Any person who willfully violates any of the provisions
of this title or the rules and regulations prescribed pursuant thereto,
or any person who willfully, in a statement of record filed under, or in
a property report issued pursuant to, this title, makes any untrue
statement of a material fact or omits to state any material fact required
to be stated therein, shall UJKJU conviction be fined not more than
?i>5,000 or imprisoned not more than five years, or both.
RULES, RE(U'LA'IIONS. AND ORDERS

SEC. 1419. The Secretary shall have authority from time to time
to make, issue, amend, and rescind such rules and regulations and such
orders as are necessary or appropriate to the exercise of the functions
and powers conferred upon him elsewhere in this title. For the pur[X)se
of his rules and regulations, the Secretary may classify persons and
matters within his jurisdiction and prescribe different requirements
for different classes of persons or mattei-s.
JURISDICTION o r

62 Stat. 928,
^^^'

OFFENSES AND SUITS

SEC. 1420. (a) The district courts of the United States, the United
States courts of any territory, and the United States District Court
for the District of Columbia shall have jurisdiction of offenses and
violations under this title and under the rules and regulations prescribed by the Secretary pursuant thereto, and concurrent with
State courts, of all suits in equity and actions at law brought to enforce
any liability or duty created by this title. Any such suit or action may
be brought to enforce any liability or duty created by this title. Any
such suit or action may be brought in the district wherein the defendant is found or is an inhabitant or transacts business, or in the district
where the offer or sale took place, if the defendant participated therein,
and process in such cases may be served in any other district of which
the defendant is an inhabitant or wherever the defendant may be
found. Judgments and decrees so rendered shall be subject to review as
provlded in sections 1254 and 1291 of title 28, United States Code. No
case arising under this title and brought in any State court of competent jurisdiction shall be removed to any court of the LTnited States,
except where the United States or any officer of employee of the United

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

599

L'tates in his official capacity is a party. No costs shall be assessed for
or against the Secretary in any proceeding under this title brought by
or against him in tlie Supreme Court or such other courts.
APPROPRIATIONS

SEC. 1421. Thei'e are authorized to be appropriated such sums as
may be necessary to carry out this title.
EFFECTIVE DATE

SEC. 1422. This title shall take effect upon the expiration of two
hundred and seventy days after the date of its enactment.
T I T L E XV—MORTGAGE INSURANCE FOR
NONPROFIT HOSPITALS
A M E N D M E N T TO N A T I O N A L H O U S I N G ACT

SEC. 1501. Title I I of the National Housing Act is amended by ,,^,25^0 1707adding at the end thereof (after the new section added by section 1715y.
807 of this Act) the following new section:
"MORTGAGE INSURANCE FOR NONPROFIT HOSPITALS

"SEC. 242. (a) The purpose of this section is to assist the provision
of urgently needed hospitals for the care and treatment or persons
who are acutely ill or who otherwise require medical care and related
services of the kind customarily furnished only (or most effectively)
by hospitals.
"(b) F o r the purposes of this section—
" (1) the term 'hospital' means a facility—
" (A) which provides community service for inpatient medical care of the sick or injured (including obstetrical care);
" ( B ) not more than 50 per centum of the total patient days
of which during any year are customarily assignable to the
categories of chronic convalescent and rest, drug and alcoholic, epileptic, mentally deficient, mental, nervous and
mental, and tuberculosis; and
" ( C ) which is owned and operated by one or more nonprofit corporations or associations no part of the net earnings
of which inures, or may lawfully inure, to the benefit of any
private shareholder or individual; and
" (2) the terms 'mortgage' and 'mortgagor' shall have the meanings respectfully set forth in section 207(a) of this Act.
"(c) The Secretary is authorized to insure any mortgage (including
advances on such mortagage during construction) in accordance with
the provisions of this section upon such terms and conditions as he may
prescribe and to make commitments for insurance of such mortgage
prior to the date of its execution or disbursement thereon.
" ( d ) I n order to carry out the purpose of this section, the Secretary
is authorized to insure any mortgage which covers a new or rehabilitated hospital, including equipment to be used in its operation,
subject to the following conditions:
" (1) The mortgage shall be executed by a mortgagor approved by
the Secretary. The Secretary may in his discretion require any such
mortgagor to be regulated or restricted as to charges and methods of
financing, and, in addition thereto, if the mortgagor is a corporate
entity, as to capital structure and rate of return. As an aid to the regulation or restriction of any mortgagor with respect to any of the fore-

600

78 Stat. 452.
42 u s e 291d.

12 use 1713.

PUBLIC LAW 90-448-AUG. 1, 1968

going matters, the Secretary may make such contracts with and
acquire for not to exceed $100 such stock or interest in such mortgagor
as he may deem necessary. Any stock or interest so purchased shall
be paid for out of the General Insurance Fund, and shall be redeemed
by the mortgagor at par upon the termination of all obligations of the
Secretary under the insurance.
"(2) The mortgage shall involve a principal obligation in an
amount not to exceed $25,000,000, and not to exceed 90 per centum of
the estimated replacement cost of the property or project, including
equipment to be used in the operation of the hospital, when the proposed improvements are completed and the equipment is installed.
"(3) The mortgage shall—
" ( A ) provide for complete amortization by periodic payments
within such term as the Secretary shall prescribe, and
" ( B ) bear interest (exclusive of premium charges for insurance and service charges, if any) at not to exceed such per centum
per annum (not in excess of 6 per centum), on the amount of the
principal obligation outstanding at any time, as the Secretary
finds necessary to meet the mortgage market.
"(4) The Secretary shall not insure any mortgage under this section
unless he has received, from the State agency designated in accordance with section 604(a) (1) of the Public Health Service Act for the
State in which is located the hospital covered by the mortgage, a certification that (A) there is a need for such hospital, and (B) there are in
force in such State or the political subdivision of the State in which
the proposed hospital would be located reasonable minimum standards
of licensure and methods of operation for hospitals. No such mortgage
shall be insured under this section unless the Secretary has received
such assurance as he may deem satisfactory from the State agency
that such standards w^ill be applied and enforced with respect to any
hospital located in the State for which mortgage insurance is provided under this section.
"(e) The Secretary may consent to the release of a part or parts of
the mortgaged property or project from the lien of any mortgage
insured under this section upon such terms and conditions as he may
prescribe.
" ( f ) The activities and functions provided for in this section shall
be carried out by the agencies involved so as to encourage programs
that undertake responsibility to provide comprehensive health care,
including outpatient and preventive care, as well as hospitalization,
to a defined population.
" ( g ) (1) Notwithstanding any of the other provisions of this title,
the Secretary maj^ insure under this section a mortgage which provides
permanent financing or refinancing of existing mortgage indebtedness
in the case of a hospital whose permanent financing is presently lacking, if the construction of such hospital was completed between January 1,1966, and the date of the enactment of this Act.
"(2) The aggregate principal balance of all mortgages insured
under paragraph (1) and outstanding at any one time shall not exceed
$20,000,000.
" ( h ) The provisions of subsections ( d ) , (e), ( g ) , ( h ) , ( i ) , (j), ( k ) ,
(1), and (n) of section 207 shall apply to mortgages insured under
this section and all references therein to section 207 shall be deemed to
refer to this section."
LABOR

12 use 1715c.

[82 STAT.

STANDARDS

gEC. 1502. Section 212(a) of the National Housing Act is amended
by inserting after the fifth sentence the following new sentence: "The
provisions of this section .shall also apply to the insurance of any mortgage under section 242, except that compliance with such provisions

82 STAT. ]

PUBUC LAW 90-448-AUG. 1, 1968

may be waived by the Secretary in cases or classes of cases where laborers or mechanics, not otherwise employed at any time on the project,
voluntarily donate their services without compensation for the purpose of lowering the costs of construction and the Secretary determines
that any amounts thereby saved are fully credited to the nonprofit corporation or association undertakhig the construction; and each laborer
or mechanic employed on any facility covered by a mortgage insured
under section 242 .shall receive compensation at a rate not less than
one and one-half times his basic rate of pay for all hours worked in
any workweek in excess of eight hours in any workday or forty hours
in the workweek, as the case may be."

601

^nte, p. 599.

TITLE XVI—HOUSING GOALS AND ANNUAL HOUSING
REPORT
REAFFIRMATION

OF GOAL

SEC. 1601. The Congress finds that the supply of the Nation's housing is not increasing rapidly enough to meet the national housing goal,
established in the Housing Act of 1949, of the "realization as soon as 63 stat. 413.
feasible of the goal of a decent home and a suitable living environment notl^^*^ '^^^
for every x\merican family". The Congress reaffirms this national housing goal and determines that it can be substantially achieved within
the next decade by the construction or rehabilitation of twenty-six million housing units, six million of these for low and moderate income
families.
REPORT O U T L I N I N G

PLAN

SEC. 1602. Not later than January 15,1969, the President shall make Report to cona report to the Congress setting forth a plan, to be carried out over ^'^contents.
a period of ten years (June 30, 1968, to June 30, 1978), for the elimination of all substandard housing and the realization of the goal
referred to in section 1601. Such plan shall—•
(1) indicate the number of new or rehabilitated housing un^ts
which it is anticipated will have to be provided, with or without
Government assistance, during each fiscal year of the ten-year
period, in order to achieve the objectives of the plan, showing the
number of such units which it is anticipated will have to be ])rovided under each of the various Federal programs designed to
assist in the provision of housing;
(2) indicate the reduction in the number of occupied substandard housing units which it is anticipated will have to occur during
each fiscal year of the ten-year period in order to achieve the
objectives of the plan;
(3) provide an estimate of the cost of carrying out the plan for
each of the various Federal programs and for each fiscal year
during the ten-year period to the extent that such costs will be
reflected in the Federal budget;
(4) make recommendations with respect to the legislative and
administrative actions necessary or desirable to achieve the objectives of the plan; and
(5) provide such other pertinent data, estimates, and recommendations as the President deems advisable.
Such 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 availability,
need, and flow of mortgage funds (particularly in declining urban
and rural areas) during such year, together with such recommendations as may be deemed appropriate for encouraging the availability
of such funds.

602

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

PERIODIC REPORTS

c P STUDIES

SEC. 1714. (a) Section 207 of the Housing Act of 1961 is amended 75 stat. 165;
by inserting after the words "improved means" the following: ^^42'^usc°i436.
", including the study of self-help in the construction, rehabilitation,
and maintenance of housing for low-income persons and families and
the methods of selecting, involving, and directing such persons and
families in self-help activities,".
(b) The Secretary of Housing and Urban Development shall make Report to cona report to the Congress, within one year after the date of enactment ^''^^^•
of this Act, setting forth the results of the self-help studies and demonstrations carried out under section 207 of the Housing Act of
1961, together with such recommendations as he deems appropriate.
EARTHQUAKE

STUDY

SEC. 1715. Section 5 of the Southeast Hurricane Disaster Relief
Act of 1965 is amended by striking out "three years after the appro})riation of funds for this study" and inserting in lieu thereof "June
30, 1969".

79 stat. 1301.

608

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

SAVINGS A N D LOAN ASSOCIATIONS

u us^c /^64
^'*^'*•

^^^- -^'^^^- (^) Section 5 (b) of the Home Owners' Loan Act of 1933
is amended to read as follows:
" ( b ) (1) An association may raise capital in the form of such savings deposits, shares, or other accounts, for fixed, minimum, or indefinite periods of time (all of which are referred to in this section as
savings accounts and all of which shall have the same priority upon
liquidation) as are authorized by its charter or by regulations of the
Board, and may issue such passoooks, time certificates of deposit, or
other evidence of savings accounts as are so authorized. Holders of
savings accounts and obligors of an association shall, to such extent as
may be provided by its charter or by regulations of the Board, be
members of the association, and shall have such voting rights and such
other rights as are thereby provided. Except as may be otherwise
authorized by the association's charter or regulation of the Board in the
case of savings accounts for fixed or minimum terms of not less than
thirty days, the payment of any savings account shall be subject to the
right of the association to require such advance notice, not less than
rliirty days, as shall be provided for by the charter of the association
or the regulations of the Board. The payment of withdrawals from
savings accounts in the event an association does not pay all withdrawals in full (subject to the right of the association to require notice)
shall be subject to such rules and procedures as may be prescribed by
the association's charter or by regulation of the Board, but any association which, except as authorized in writing by the Board, fails to
make full payment of any withdrawal when due shall be deemed to be
in an unsafe or unsound condition to transact business within the
meaning of subsection (d) of this section. Savings accounts shall not
be subject to check or to withdrawal or transfer on negotiable or transferable order or authorization to the association, but the Board may
by regulation provide for withdrawal or transfer of savings accounts
upon nontransferable order or authorization.
"(2) To such extent as the Board may authorize by regulation or
advice in writing, an association may borrow, may g'ive security, and
may issue such notes, bonds, debentures, or other obligations, or other
securities (except capital stock) as the Board may so authorize."
(b) Section 5(c) of the Home Owners' Loan Act of 1933 is
amended—
(1) by striking out "shares" in the first sentence and inserting
in lieu thereof "savings accounts"; and
(2) by inserting after the first .semicolon in the second proviso
the following words: "or in time deposits, certificates, or accounts
of any bank the deposits of which are insured by the Federal
Deposit Insurance Corporation;".
(c) Section 5(c) of such Act is amended by inserting in the .second
paragraph after "property alteration, repair, or improvement" the
following: ", including the construction of new structures related to
residential use of the property".
(d) Section 5(c) of such Act is amended by adding immediately
after the second paragraph thereof the following new" paragraph:
"Without regard to any other provision of this subsection, but .subject to such prohibitions, limitations, and conditions as the Board may
by regulation prescribe, any such association may make and invest in—
" (A) any loan not exceeding $5,000 made for the repair, equipping, alteration, or improvement of any real property, or
" ( B ) any loan made for the purpose of mobile home financing."
(e) The first sentence of the paragraph which, prior to the amendments made by this Act, was the next to the last paragraph of section
5(c) of such Act is amended—

82 STAT. ]

PUBLIC LAW 90-448-AUG. 1, 1968

(1) by inserting " (1)'' immediately before "invest";
(2) by striking out " ( 1 ) " before "secured";
(3) by inserting ", now or hereafter in effect,'' after "National
Housing Act"; and
(4) by striking out all that follows " ( 2 ) " and inserting in lieu
thereof the following: "acquire and hold investments in housing
project loans, or interests therein, having the benefit of any
guaranty under section 221 of the Foreign Assistance Act of 1961,
as now or hereafter in effect, or loans, or interests therein, having
the benefit of any guaranty under section 224 of such Act, or any
commitment or agreement with respect to such loans, or interests
therein, made pursuant to either of such sections."
(f) Section 5(c) of such Act i.s amended by adding immediately
before the last paragraph thereof the following new paragraph:
"Any such association may invest in loans, or interests ui loans, to
financial institutions with respect to which the United States or any
agency or instrumentality thereof ha.s any function of examination
or supervision, or to any broker or dealer registered with the Securities and Exchange Commission, secured by loans, obligations, or
investments in which it has any statutory authority to invest directly."
FEDERAL H O M E L 0 . \ N B A N K

609

^^ ?1^'- 46 5.
75 stat. 429.
^^ ^^^ ^^^'^'
^9 stat. ess.
"*'
12 use i464.

ACT

SEC. 1717. Section 12 of the Federal Home Loan Bank Act, as
amended (12 U.S.C. 1432), is amended by inserting " ( a ) " after "SEC. Jl,^^,^';J^^^'
80 Stat. 1293.
12.", and oy adding at the end thereof a new subsection as follows:
" ( b ) Subject to such regulations as may be prescribed by the Board,
one or more Federal home loans banks may acquire, hold, or dispose
of, in whole or in part, or facilitate such acquisition, holding, or disposition by members of any such bank of, housing project loans, or
interests therein, having the benefit of any guaranty under section 221
of the Foreign Assistance Act of 1961, as now or hereafter in effect,
or loans, or interests therein, having the benefit of any guaranty under
section 224 of such Act, or any commitment or agreement with respect
to such loans, or interests therein, made pursuant to either of such
sections."
FEDERAL RESERVE ACT

SEC. 1718. Section 24 of the Federal Reserve Act, as amended (12
U.S.C. 371), is amended—
(1) by striking out "twenty-four months", wherever it appears
in the third paragraph and inserting in lieu thereof "thirty-six
months";
(2) by striking out "when the entire amount of such obligation
is sold to the association", wherever it appears in the first and
second paragraphs, and inserting in lieu thereof "in whole or in
part and at any time or times prior to the maturity of such obligation" ; and
(3) by striking out the last paragraph and inserting in lieu
thereof the following:
"Loans made to any borrower (i) where the association looks for
repayment by relying primarily on the borrower's general credit
standing and forecast of income, with or without other security, or
(ii) where the association relies on other security as collateral for the
loans (including but not limited to a guaranty of a third p a r t y ) , and
where, in either case described in clause (i) or (ii) above, the association wishes to take a mortgage, deed of trust, or other instrument upon
real estate (whether or not constituting a first lien) as a precaution

73 stat. 489;
79 Stat. S09.

610

PUBLIC LAW 90-448-AUG. 1, 1968

[82 STAT.

against contingencies, such loans shall not be considered as real estate
loans within the meaning of this section but shall be classed as ordinary non-real-estate loans."
LOW-RENT PUBLIC HOUSING

42 u^c U03
fo^^at'. 897.
42 use 1417.

73^813^68^1^'
12 use 1749a.
31 u^c 8^6^'

CORPORATE STATUS

SEC. 1719. (a) The first sentence of section 3 of the United States
Housing Act of 1937 is amended by striking "a body corporate of perpetual duration to be known as".
(^) Section 17 of such Aot is repealed. The capital stock referred to
in such section shall be retired, and sum of $1,000,000 represented
b}^ such stock shall be returned to the Treasury of the United States,
(c) Such Act is amended by adding a new section 17 as follows:
"SEC. 17. I n the performance of, and with respect to, functions,
powers, and duties under this Act, the Secretary shall have (in addition to any authority otherwise vested in him) the functions, powers,
and duties set forth in subsections ( a ) , ( b ) , and (e) of section 402 of
the Housing Act of 1950."
(d) Section 101 of the Government Corporation Control Act is
amended by striking out "United States Housing Authority and
including public housing projects financed through appropriated funds
and operations thereof;".
S P E C I A L STUDIES OF SAVINGS A N D LOAN I N D U S T R Y

80 Stat. 143.

SEC. 1720. That part of chapter I V of the Second Supplemental
Appropriation Act, 1966, w^iich relates to expenses necessary for
special studies of the savings and loan industry is amended by striking
out "1968" and inserting "1969".
SMALL B U S I N E S S

15 us^c 6^3^3*'

^^^' ^'^'^^' Subsection (a) of section 4 of the Small Business Act
is amended by inserting immediately after "the Commonwealth of
Puerto Rico," the following: "the Trust Territory of the Pacific
Islands,".
TECHNICAL

79ltar477°"'
42*usc 1460.
68 Stat. 626.

i2usci7"aaa
79 Stat. 469.
12 u s e 1715e

ACT

AMENDMENTS

^^^' ^'^^^' ^^^ Sectiou 110(c) of the Housing Act of 1949 is
amended by striking out "paragraphs (7), (8), and ( 9 ) " in the second
unnumbered paragraph following the numbered paragraphs and
inserting in lieu thereof "paragraphs (7), ( 8 ) , (9), and (10)".
(b) Sectiou 110(d) of the Housing Act of 1949 is amended by
striking out "clauses (2), ( 3 ) " and inserting in lieu thereof "clauses
(2), (3), (7)".
(c) Section 110(e) of the Housing Act of 1949 is amended by striking out "and ( 9 ) " in clause (i) and inserting in lieu thereof " (9), and
(10)".
(^) Sectiou 1101(c) (3) of the National Housing Act is amended
by inserting "from the beginning of amortization of the mortgage"
immediately after "twenty-five years".
(e) Section 213(o) of the National Housing Act is amended by
adding at the end thereof four new sentences as follows: "Moneys
in the Cooperative Management Housing Insurance Fund not needed
for current operations of the fund shall be deposited with the Treasurer of the United States to the credit of the Cooperative Management Housing Insurance Fund or invested in bonds or other obligations of, or in bonds or other obligations guaranteed as to principal
and interest by, the United States. The Secretary may, with the

82 STAT. ]

PUBLIC LAW 90-449-AUG. 2, 1968

approval of the Secretary of the Treasury, purchase in the open market
debentures which are the obligations of the Cooperative Management
Housing Insurance Fund. Such purchases shall be made at a price
which will provide an investment yield of not less than the yield
obtainable from other investments authorized by this subsection.
Debentures so purchased shall be canceled and not reissued.''
(f) Section 810(e) of the National Housing Act is amended—
\ /

,v,/

,

cj

(1) by striking out "private corporation, association, cooj^erative society, or trust" in the first sentence and inserting in lieu
thereof "mortgagor approved by the Secretary", and
(2) by striking out "corporation, association, cooperative
society, or trust" in the third and fourth sentences and inserting
in lieu thereof "mortgagor".
(g) Section 220(d) (2) (B) of the National Housing Act is amended
by striking out "corporations restricted by ' and inserting in lieu
thereof "corporations or other legal entities restricted by or under".
Approved August 1, 1968, 11:52 a.m.

611

^3 stat. 684.
2 2 u s e 1 74fth 0

12 ustat.
s e 171Sk.
es
596.

Public Law 90-449
AN A C T
To amend title 89, United States Code, to provide for disciplinary action against
employees in the postal field service who assault other employees in such
service in the performance of official duties, and for other purposes.

August 2,1968
[ • • 15387]

Be it enacted l)y the Senate and House of Representatwes of the
Postal Service
United States of America in Congress assembled^ That (a) the portion employees.
of chapter 41 of title 39, L^nited States Code, under the heading ""yVstat^.^eos;
"EMPLOYEES GENERX\LLY" is amended by adding immediately following ^9 stat. m e .
section 3107 thereof the following new section:
**§ 3108. Disciplinary action against employees who assault other
employees
"The Postmaster General may take appropriate disciplinary action,
including, when circumstances warrant, suspension from duty without
pay, reduction in pay, demotion, or removal from the service, against
any employee who forcibly assaults any other employee while such
other employee is engaged in the performance of his ojfficial duties or
on account of the performance by such other employee of his official
duties.".
(b) That part of the table of contents of chapter 41 of title 39,
United States Code, under the heading "EMPLOYEES GENERALLY" is
amended by adding—
"3108. Disciplinary action against employees who assault other employees."
i m m e d i a t e l y below—
"3107. Postal employees relocation expenses.".

SEC. 2. Section 1114 of title 18, United States Code, is amended ^^ stat. 721.
by striking out "any post-office inspector," and inserting in lieu thereof
"any postal inspector, any postmaster, officer, or employee in the field
service of the Post Office Department,".
SEC. 3. Effective on the date of enactment of this A c t ^
sea^ch^nd^E^n^'i(1) the provisions of section 201 of the Revenue and Expendi- neering^umita^
ture Control Act of 1968 shall cease to apply with respect to 'i°"^' exemption.
officers and employees of the Bureau of Research and Engineering
" ^' Pof the Post Office Department, and officers and employees in the
postal field service except those in regional offices; and