403. Increase in authorization for annual contributions.. 404. Payments in lieu of taxes by local housing authorities; local con- 405. Relocation of families and individuals displaced from project sites__ 407. Low-income housing demonstration program authorization.. 902. Exception from area restriction-Participations.. 903. Urban renewal investments_ 905. Investments in certain State corporations_ 906. Federal home loan bank advances.. 907. Investments in Government obligations.. 908. Property and home improvement loans. SECTION-BY-SECTION ANALYSIS OF THE PROVISIONS OF S. 3049, THE HOUSING ACT OF 1964 (PUBLIC LAW 88-560) TITLE I-AMENDMENTS TO THE NATIONAL HOUSING ACT Time limit on FHA recoupment of title I insurance payments Section 101 amends section 2(g) of the National Housing Act to remove FHA's authority to demand return by lenders of insurance benefits they have received on title I defaulted property improvement loans where claims were certified for payment prior to December 31, 1957, and FHA finds detects in the loans. Under previous law, where claims of lenders were certified for payment arter December 31, 1957, FHA could not demand return of payment if 2 years had passed after the certification, but the 2-year limit for demand of return did not apply to loans certified prior to that date. Mortgage limits for homes under section 203 programs Section 102(a) amends section 203(b)(2) of such act to increase the dollar limit on the amount of a home mortgage which can be insured by FHA under its regular section 203 home mortgage insurance program from $25,000 to $30,000 in the case of a one-family home; from $27,500 to $32,500 in the case of a two- or three-family home; and from $35,000 to $37,500 in the case of a four-family home. (Secs. 110 and 119 make corresponding changes in the dollar limits on sec. 220 urban renewal housing mortgages and mortgages for the purchase of units in condominium, respectively.) Subsection (b) amends section 203 (i) of such act to increase the dollar limit on the amount of a mortgage which can be insured under the FHA program of mortgage insurance for low-cost housing in outlying areas from $9,000 to $11,000. Home improvement loans outside of urban renewal areas Section 103 amends section 203(k) of such act (the FHA home improvement loan insurance program for homes outside of urban renewal areas) to provide that the Commissioner may insure a loan. under the program if he finds the property to be improved is an "acceptable risk." Under previous law the Commissioner was required to find that the property was "economically sound." This section also authorizes the Commissioner to pay insurance claims in cash on the home improvement loans in cases of default. Prior to this provision claims could only be paid in 10-year deben tures. Additional relief for home mortgagors in default due to circumstances beyond their control Section 104 amends the provisions of the National Housing Act which permit relief to home mortgagors whose payments on FHAinsured mortgages are in default due to circumstances beyond their control. The amendments are designed to provide additional relief 1 to such mortgagors and to make lenders more willing to extend forbearance to them rather than proceeding to immediate foreclosure. Subsection (a) amends section 204(a) of such act to provide that a lender, in recasting or reamortizing a mortgage in default, may include delinquent interest and extend the time beyond the maximum statutory maturity of the mortgage, neither of which could be done without this amendment. Where a lender mortgagee has entered into a forbearance agreement in a case of default, FHA may include in the debentures issued to pay insurance benefits, if the default finally results in foreclosure, the interest on all of the mortgage payments which had become due and unpaid prior to foreclosure. Without this amendment the mortgage interest unpaid prior to the time the lender agreed to extend forbearance relief could not be taken into consideration in computing! the insurance payment. Subsection (b) amends section 230 of such act to make it clear that the Commissioner can accept assignment of a mortgage in default even though the lender had previously granted forbearance relief to the mortgagor. In addition, the payment of insurance benefits to the lender in such cases may include not only the unpaid mortgage interest but also such costs and attorneys' fees as are properly incurred by the lender in making the assignment. Changes in FHA insurance benefits and simplification of payment procedures Section 105 amends the provisions of the National Housing Act which govern the payment to mortgage lenders by FHA of insurance claims on home mortgages in default in order to make the procedures more simple and expeditious. Under the usual FHA insurance contract for home mortgages, insurance benefits are payable in "debentures" which cover prescribed items of the mortgagees' losses. In addition, the mortgagee, under previous law, received a "certificate of claim" which entitled him to additional payments for his remaining losses if sufficient amounts were eventually realized by the FHA from the property acquired. Certificates of claims will be eliminated in future contracts of insurance and instead certain compensating increases will be inIcluded in the debentures or other insurance benefits. The issuance of a certificate of claim may also be discontinued with respect to existing home mortgage insurance unless the mortgagee specifically requests that he receive the certificate. Increased allowances for foreclosure costs can be included in the debentures to the extent the Commissioner prescribes. Under previous law, this allowance was two-thirds of foreclosure costs, or $75, whichever is the greater. In addition, authority is granted to the Commissioner to date debentures as of the date of default or such later date as the Commissioner, in his discretion, may establish. This means that interest on debentures can start running at an earlier date than under prior law. The Federal Housing Commissioner is also given discretionary authority to include additional benefits in insurance payments on home mortgages. These include: 1. Amounts advanced by the mortgagee for mortgage insurance premiums prior to the institution of foreclosure for which reimburse ment has not been obtained from the mortgagor can be included in the benefits. Under previous law, debentures issued by FHA as insurance payments could include only insurance premiums paid by the lenders after the institution of foreclosure. 2. Reimbursement can be included in insurance payment to a mortgagee for advances on payments for the maintenance and operation of community-owned property, or the maintenance and repair of the mortgaged property, where the obligation arises out of a recorded covenant which was approved by the Commissioner prior to insurance of the mortgage. This provision applies in the case of "cluster type" developments with commonly owned land or facilities usually under the control of a property owners' association. Under the previous law, when an insurance claim was filed the FHA had no way of reimbursing a mortgagee who had had to make payments of monthly charges to the property owners' association even though payment was made to protect the property which secured the mortgage. 3. Where the insurance settlement is made in cash, it can include an allowance to mortgagees equivalent to the debenture interest that would have accrued up to a date (relating to the insurance settlement) to be established by FHA regulations if payment had been made in debentures. Cash payment can be made under the section 220 urban renewal housing program, the section 221 program of housing for low- and moderate-income families, the section 233 experimental housing program, and the section 203 (k) home improvement loan program. Under other programs the insurance payment is in the form of debentures. Under previous law, mortgagees could receive interest on the debentures from the time of foreclosure, but where the claim was paid in cash, no allowance could be made for interest from the time of foreclosure or conveyance of property to FHA to the time of the settlement. Provisions in the prior law are deleted which permitted any proceeds from disposition of the property (acquired as a result of default) remaining after payment of the certificate of claim to be paid by FHA to the mortgagor of the property. With respect to certificates of claim outstanding at the time of enactment of this law, the Commissioner is given authority to settle the certificates with the consent of the holders without awaiting the final liquidation of the Commissioner's interest in the properties. These settlements can be made on the basis of a payment to the holder of such percentage of the face amount of the certificate of claim and accrued interest as the Commissioner considers appropriate to accomplish the settlement. This section also terminates the obligation of mortgagees to pay mortgage insurance premiums on multifamily housing mortgages in default upon receipt by FHA of the application for insurance benefits. Under the previous law, this obligation did not terminate until the property was conveyed to FHA or the mortgage was assigned to FHA. Maximum amount of section 207 rental housing mortgages Section 106 amends section 207(c) (2) of the National Housing Act to eliminate the provision presently limiting the amount of rental housing mortgages insured under section 207 to the cost of the physical improvements. This will permit the value of the land to be included in the computation of the maximum amount of the mortgage. Family unit limits on FHA rental housing Section 107 amends provisions of the National Housing Act, which limit the amount of a rental housing morgage that can be insured by FHA, to eliminate the previous per-room limitations and to substitute new limitations which are based instead on the number of family units in the project with the specific dollar amount limitations varying according to the number of bedrooms in each unit. Subsection (a) amends section 207 (c) (3) of such act (FHA's regular rental housing program) to limit the amount of a mortgage to $9,000 per family unit without a bedroom, $12,500 with one bedroom, $15,000 with two bedrooms, and $18,500 with three or more bedrooms, with authority in the Commissioner to increase these amounts to $10,500, $15,000, $18,000, and $22,500, respectively, for elevatortype structures. In addition, the Commissioner can increase any such amount by an additional 45 percent in high-cost areas. Subsections (b) through (f) make similar changes in the limits on the amounts of multifamily housing mortgages under the cooperative housing program (sec. 213), the urban renewal housing program (sec. 220), and the program for housing in defense-impacted areas (sec. 810), and housing for low- and moderate-income families (sec. 221), and housing for the elderly (sec. 231) are amended to provide slightly lower dollar amounts. These limits are $8,000 per family unit without a bedroom, $11,250 per family unit with one bedroom, $13,500 per family unit with two bedrooms, and $17,000 per family unit with three or more bedrooms. In the case of elevator projects the limits are $9,500, $13,500, $16,000, and $20,000, respectively. Subsection (g) amends such act to provide that the Federal Housing Commissioner may apply to projects under consideration at the time of enactment of the act the limitations on maximum mortgage amounts existing prior to enactment of the Housing Act of 1964, if he determines that it would be inequitable to apply the new limitations. Elimination of mandatory acquisition or foreclosure within 1 year of multifamily project in default Section 108 amends section 207(k) of such act to eliminate the previous requirement that the Federal Housing Commissioner acquire or foreclose a multifamily housing project within 1 year of default on the FHA-insured mortgage which financed the project. Supplementary cooperative loans under section 213(j) Section 109(a) amends section 213(j)(1) of such act to provide that supplemental loans made to consumer management-type cooperative mortgagors may be insured when made for the purpose of providing funds to finance cooperative purchases and resales of memberships. Subsection (b) amends section 305(e) of such act to authorize FNMA, in the exercise of its special assistance functions, to purchase (within the limits of available authorizations) supplementary cooperative loans eligible for insurance under section 213 (j) in cases where the cooperative involved is certified as a consumer cooperative. Mortgage limits under section 220 sales housing mortgage insurance program Section 110 amends section 220 (d) (3) (A) (i) of such act to increase the limits on home mortgages under FHA's section 220 sales housing program in a manner corresponding with the changes made in FHA's |