Analysis of National Housing Act

(Continued from Page 20)

Provision is made for the investment of funds not need- scribed for by the Home Owners' Loan Corporation. The ed for the current operations of the Federal Housing Ad- Insurance Corpojation will have a Board of Trustees of ministration five mernbers. The members of the Federal Home Loan

Section 2O7-Low Cost Housing Insurance

Provision is made to insure first mortgages covering property held by Federal or State instrumentalities, private limited dividend corporations, or municipal corporate instrumentalities of one or more states formed for the purpose of providing housing for persons of low income which are to be regulated or restricted by law or by the Administrator as to rents, charges, capital structure, rate of return, or methods of operation. Such mortgages shall contain terms, conditions and provisions satisfactory to the Administrator, and the insurance with respect to any low cost housing project shall not exceed $10,000,000. The Administrator also may impose a premium charge for insurance in excess of or less than the amount specified for insurance on dwellings.

Section 208-'Taxation Provisions.

No real property acquired or held by the Administrator under thls title is to be exempt from taxation by any state or political subdivision thereof, to any greater extent than other real DroDertY.

Section ZOq-St"tittical and Economic Surveys'

The Administrator is given the power to cause to be made such statistical, legal and economic studies as may be deemed useful to guide the development of housing and the creation of a sound mortgage market.

TITLE III_NATIONAL MORTGAGE ASSOCIATIONS

Section 30l-Creation and Powers of National Mortgage Associations.

The Administrator is authorized to provide for the establishment of National Mortgage,Associations which will be authorized, subject to rules and regulations to be prescribed, (1) to purchase and sell first mortgages not exceeding 8O per cent of the appraised value of th.e.property as of t-ire dite the mortgage is purchased, and (2) to borrow money for such purposes through the issuance of notes. bonds and debentures.

Each such Association shall have a paid in capital stock of not less than $5.000,000.

Any number of persons, not less than five, may apply to the Administrator for the authority to establish a National Mortgage Association' Section 302-Obligations of National Mortgagc Associations.

Each National Mortgage Association is authorized to issue and have outstanding at any time notes, bonds or clebentures not to exceed ten times the aggregate par valtte of its outstanding capital stock.

Sections 303 through 308 provide for the investment of funds of mortgage associations; the management of acquired properties; for periodic examinations ; rules and regulations; that the associations be taxable to the same arnount as chartered corporations; and that the associations may be depositaries of public ryoley'

(These National Mortgage Associations will make no direct loans but will serve as rediscount agencies and as reservoirs of funds for financing institutions in localities where sufficient capital is not normally available.)

TITLE IV-INSURANCE OF SAVINGS AND LOAN

Accounts

Bank Board will constitute the Board of Trustees. Section 4o3-Insurance of Accounts and Eligibility Provisions.

Provides that it shall be the duty of the Corporation to insure the accounts of all Federal Savings and Loan Associations (about 3@ to date) and it may insure the accounts of building and loan, savings and loan, and homestead associations and cooperative banks organized and operated according to the laws of the state, district or territory in which they are chartered or organized.

Section 4o4-Premiums on Insurance.

Each institution whose application for insurance is approved by the corporation shall pay to the corporation a premium charge equal to one-fourth of one per cent of the total amount of all accounts of the insured members of such institution plus any creditor obligations of such institutions. Such premium shall be paid annually until a reserve fund equal to 5 per cent of all insured accounts and creditor obligations of all insured institutions is built up. If at any time the reserve fund falls below 5 per cent, the insurance premium charge shall be resumed until the reserve is brought back to 5 per cent.

The Corporation is further authorized to assess each insured institution additional premiums for insurance until the amount of such premiums equals the amount of all losses and expenses of the corporation. The total amount so assessed in any one year against any such institution shall not exceed one-fourth of one per cent of the total amount of the accounts of its 'insured members and its creditor obligations.

Section 4o5-Payment of Insurance.

Accounts not in excess of $500O may be insured. In the event of default by any insured institution the corporation shall make available to each m.ember a new insured account in an insured institution not in default or at the option of the insured member pay him 10 per cent in cash, 5O per cent of the remainder within one year and the balance within three years from the date of such default.

Section .lo6--Liquidation o{ Insured Institutions.

Provides the method by u'hich insured institutions may be liquidated.

Section at0T-Termination of Insurance.

Provides the method by which account insurance mav be terminated.

TITLE V_MISCELLANEOUS

Section SOl-(Amending Federal Home Loan Bank Act).

So that each Federal Ifome Loan Bank is authorized to make advances to its members upon the security of home mortgages with the following limitations:

"(1) If secured by a mortgage insured under the provisions of Title II of the National Housing Act, the advance may be for an amount not in excess of 9O per centum of the unpaid principal of the mortgage loan.

" (2) If secured by a home mortgage given in respect of an amortized home mortgage loan which was for an original term of eight years or more, or in cases where shares of stock. which are pledged as security for such loan, mature in a period of eight years or more, the advance may be for an amount not in excess of 65 per centum of the unpaid principal of the home mortgage loan. but in no case shall the amount of the advance exceed 60 per centum of the value of the real estate securing the home mortgage loan.

There is created a Federal Savings Corporation having a capital stock

Section 40?-Cteation of Federal Insurance Corporation. Savings and Loan and Loan Insurance of $100,00O,000 sub-

"(3) If secured by a home mortgage given in respect of anv other home mortgage loan, the advance shall not be for an amount in excess of 5O per centum of the unpaid principal of the home mortgage loan, but in no case shall the amount of such advance exceed 4O per centum of the value of the real estate securing the home mortgage loan."

Section SO2-(Amending Federal Home Loan Bank Act).

Authorizes the Federal Home Loan Banks to make advances to their members to enable them to finance home repairs, improvements and alterations, and provides that these advances may be made upon the security of notes representing obligations incurred pursuant to and insurable under Section 2 ol the National Housing Act.

Section 503-(Amending Federal Home Loan Bank Act).

Authorizes the Federal Home Loan Banks to issue consolidated Federal Home Loan Bank debentures which shall be the joint and several obligations of all Federal Home Loan Banks.

Section s04-(Amending Farm Credit Act of 1933).

So that with the approval of the Governor of the Farm Credit Administration and under rules and regulations to be prescribed by the Production Credit Commissioner, Production Credit Associations organized under the provisions of the Farm Credit Act of 1933 are authorized (1) to make loans to farmers for home alterations, repairs and improvements, (2) to sell, discount, assign and otherwise dispose of any loans made by them under the provisions of this section, and (3) to avail themselves of the benefits of insurance under the provisions of Section 2 of. the National Housing Act.

Section 505-(Federal Reserve Act).

By adding a provision to Section 24 authorizing the removal of the five-year maturity limit and the restriction as to the amount of the loan in relation to the actual value of the real estate on all real estate loans insured under the provisions of Title II of the National Housing Act' (Apblies to all member banks of Federal Reserve system.)

Section 24 is further amended to provide that loans made to finance the construction of residential or farm buildings