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be determined in accordance with rules and regulations prescribed by the Commissioner, by adding to the amount of the original principal obligation of the mortgage which was unpaid on the date of default, the amount the mortgagee may have paid for (A) taxes, special assessments, and water rates, which are liens prior to the mortgage; (B) insurance on the property; and (C) reasonable expenses for the completion and preservation of the property and any mortgage insurance premiums paid after default; less the sum of (i) an amount equivalent to 1 per centum of the unpaid amount of such principal obligation on the date of default; (ii) any amount received on account of the mortgage after such date; and (iii) any net income received by the mortgagee from the property after such date: Provided, That the mortgagee in event of a default under the mortgage may, at its option and in accordance with regulations of, and in a period to be determined by the Commissioner, proceed to foreclose on and obtain possession of or otherwise acquire such property from the mortgagor after default, and receive the benefits of the insurance as herein provided, upon (1) the prompt conveyance to the Commissioner of title to the property which meets the requirements of the rules and regulations of the Commissioner in force at the time the mortgage was insured, and which is evidenced in the manner prescribed by such rules and regulations; and (2) the assignment to him of all claims of the mortgagee against the mortgagor or others, arising out of the mortgage transaction or foreclosure proceedings, except such claims that may have been released with the consent of the Commissioner. Upon such conveyance and assignment, the obligation of the mortgagee to pay the premium charges for insurance shall cease and the mortgagee shall be entitled to receive the benefits of the insurance as provided in this subsection, except that in such event the 1 per centum deduction, set out in (i) hereof, shall not apply.

(e) Debentures issued under this title shall be in such form and denominations in multiples of $50, shall be subject to such terms and conditions, and shall include such provisions for redemption, if any, as may be prescribed by the Commissioner with the approval of the Secretary of the Treasury, and may be in coupon or registered form. Any difference between the value of the mortgage determined as herein provided and the aggregate face value of the debentures issued, not to exceed $50, shall be adjusted by the payment of cash by the Commissioner to the mortgagee from the Military Housing Insurance Fund.

“(f) Debentures issued under this section upon assignment of an insured mortgage to the Commissioner shall be executed in the name of the Military Housing Insurance Fund as obligor, shall be signed by the Commissioner, by either his written or engraved signature, and shall be negotiable. All such debentures shall be dated as of the date of default as determined in accordance with subsection (d) of this section, and shall bear interest from such date at a rate determined by the Commissioner with the approval of the Secretary of the Treasury, at the time the mortgage was accepted for insurance, but not to exceed 3 per centum per annum, payable semiannually on the 1st day of January and the 1st day of July of each year, and shall mature ten years after the date thereof. Such debentures shall be exempt, both as to principal and interest, from all taxation (except surtaxes, estate, inheritance, and gift taxes) now or hereafter imposed by any Territory, dependency, or possession of the United States or by the District of Columbia, or by any State, county, municipality, or local taxing authority. They shall be paid out of the Military Housing Insurance Fund, which shall be primarily liable therefor, and they shall be fully and unconditionally guaranteed as to principal and interest by the United States, and such guaranty shall be expressed on the face of the debentures. In the event the Military Housing Insurance Fund fails to pay upon demand, when due, the principal of or interest on any debentures so guaranteed, the Secretary of the Treasury shall pay to the holders the amount thereof which is hereby authorized to be appropriated, and thereupon to the extent of the amount so paid the Secretary of the Treasury shall succeed to all the rights of the holders of such debentures.

“(g) The certificate of claim issued by the Commissioner to any mortgagee shall be for an amount which the Commissioner determines to be sufficient, when added to the face value of the debentures issued and the cash adjustment paid to the mortgagee, to equal the amount which the mortgagee would have received if, at the time of the conveyance to the Commissioner of the property covered by the mortgage, the mortgagor had redeemed the property and paid in full all obligations under the mortgage and a reasonable amount for necessary expenses incurred by the mortgagee in connection with the foreclosure proceedings, for the acquisition of the mortgaged property otherwise, and the conveyance thereof to the Commissioner. The amount to which the holder of any such certificate shall be entitled shall be determined as provided in subsection (h).

“(h) If the net amount realized from any property conveyed to the Commissioner under this section and the claim assigned therewith, after deducting all expenses incurred by the Commissioner in handling, dealing with, and disposing of such property and in collecting such claims, exceeds the face value of the debentures issued and the cash paid in exchange for such property plus all interest paid on such debentures, such excess shall be divided as follows:

(1) If such excess is greater than the total amount payable under the certificate of claim issued in connection with such property, the Commissioner shall pay to the holder of such certificate the full amount so payable, and any excess remaining thereafter shall be paid to the mortgagor of such property; and

(2) If such excess is equal to or less than the total amount payable under such certificate of claim, the Commissioner shall pay to the holder of such certificate the full amount of such excess.

“(i) The provisions of section 207 (k) of this Act shall be applicable to mortgages insured under this section, except that as applied to such mortgages (1) all references in such section 207 (k) to the ‘Housing Fund' shall be construed to refer to the ‘Military Housing Insurance Fund' and (2) the reference therein to 'subsection (g)'shall be construed to refer to 'subsection (d)’ of this section.

“(j) Notwithstanding any other provision of law relating to the acquisition, handling, or disposal of real property by the United States, the Commissioner shall have power to deal with, complete, rent, renovate, modernize, insure, make contracts, or establish suitable agencies for the management of, or sell for cash or credit, in his discretion, any properties conveyed to him in exchange for debentures and certificates of claim as provided in this section; and, notwithstanding any other provision of law, the Commissioner shall also have power to pursue to final collection, by way of compromise or otherwise, all claims against mortgagors assigned by mortgagees to the Commissioner as provided in this section, except that no suit or action shall be commenced by the Commissioner against any such mortgagor on account of any claim so assigned unless such suit or action is commenced within six months after the assignment of such claim to the Commissioner, or within six months after the last payment was made to the Comissioner with respect to the claim so assigned, whichever is later : Provided, That section 3709 of the Revised Statutes shall not be construed to apply to any contract for hazard insurance, or to any purchase or contract for services or supplies on account of such property if the amount thereof does not exceed $1,000.

“(k) No mortgagee or mortgagor shall have, and no certificate of claim shall be construed to give to any mortgagee or mortgagor, any right or interest in any property conveyed to the Commissioner or in any claim assigned to him; nor shall the Commissioner owe any duty to any mortgagee or mortgagor with respect to the handling or disposal of any such property or the collection of any such claim.

“SEC. 804. (a) Moneys in the Military Housing Insurance Fund not needed for current operations under this title shall be deposited with the Treasurer of the United States to the credit of the Military 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 Commissioner may, with the approval of the Secretary of the Treasury, purchase in the open market debentures issued under the provisions of this title. 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 section. Debentures so purchased shall be canceled and not reissued.

“(b) Premium charges, adjusted premium charges, and appraisal and other fees, received on account of the insurance of any mortgage accepted for insurance under this title, the receipts derived from the property covered by such mortgage, and claims assigned to the Commissioner in connection therewith shall be credited to the Military Housing Insurance Fund. The principal of and interest paid and to be paid on debentures issued under this subchapter, cash adjustments, and expenses incurred in the handling, management, renovation, and disposal of properties acquired under this title shall be charged to the Military Housing Insurance Fund.

"SEO. 805. Whenever the Secretary of the Army, Navy, or Air Force determines that it is desirable to lease real property within the meaning of the Act of August 5, 1947 (61 Stat, 774), to effectuate the purposes of this title, the Secretary concerned is authorized to lease such property under the authority of said Act upon such terms and conditions as in his opinion will best serve the national

interest without regard to the limitations imposed by said Act in respect to the term or duration of the lease, and the power vested in the Secretary of the Department concerned to revoke any lease made pursuant to said Act in the event of a national emergency declared by the President shall not apply.

"SEC. 806. Nothing in this title shall be construed to exempt any real property acquired and held by the Commissioner under this title from taxation by any State or political subdivision thereof, to the same extent, according to its value, as other real property is taxed.

"SEC. 807. The Commissioner is authorized and directed to make such rules and regulations as may be necessary to carry out the provisions of this title.”

SEC. 2. Paragraph (1) of section 301 (a) of the National Housing Act, as amended, is amended

(a) By striking out “or title VI” and inserting in lieu thereof the following: "title VI, or title VIII”; and

(b) By inserting after the words “no mortgage,” where they appear at the beginning of subparagraph “(E)”, the words "insured under section 204, section 603, or section 803 of this Act or guaranteed under section 501, 502, or 505 (a) of the Servicemen's Readjustment Act of 1944, as amended,”.

SEC. 3. (a) The Internal Revenue Code is amended by inserting therein, immediately after the heading preceding section 111, the following new section : "SEC. 110. AMORTIZATION DEDUCTION.

(a) GENERAL RULE.—Every person, at his election, shall be entitled to a deduction with respect to the amortization of the adjusted basis (for determing gain) of any military housing facility (as defined in subsection (d)) based on an amortization period of three hundred months. Such amortization deduction shall be an amount, with respect to each month of such period within the taxable year, equal to the adjusted basis of the facility at the end of such month divided by the number of months (including the month for which the deduction is computed) remaining in the period. Such adjusted basis at the end of the month shall be computed without regard to the amortization deduction for such month. The amortization deduction above provided with respect to any month shall be in lieu of the deduction with respect to such facility for such month provided by section 23 (1), relating to exhaustion, wear and tear, and obsolescence. The three-hundred-month period shall begin as to any such facility, at the election of the taxpayer, with the month following the month in which the facility was completed, or with the succeeding taxable year.

“(b) ELECTION OF AMORTIZATION.--The election of the taxpayer to take the amortization deduction shall be made only by a statement to that effect in its return for the taxable year in which the facility was completed. The election shall be irrevocable.

"(c) TERMINATION OF AMORTIZATION PERIOD.—Upon the termination of the three-hundred-month period, the taxpayer shall be allowed the deduction provided under section 23 (1), beginning with the first month as to which the amortization deduction is not applicable, and the taxpayer shall not be entitled to any further amortization deductions with respect to the military housing facility.

“(d) DEFINITION OF MILITARY HOUSING FACILITY.—As used in this section, the term ‘military housing facility' means any property the necessity for which shall have been certified by the Secretary concerned in accordance with section 803 (b) (2) of the National Housing Act, as amended.

“(e) TAXABILITY ON SALE OF MILITARY HOUSING FACILITY.–Anything to the contrary in this title notwithstanding, any gain realized upon the sale or other disposition of any property with respect to which any amortization deduction has been claimed shall to the extent of any such amortization deduction be considered gain recognized and taxable as ordinary income.

"(f) LIFE TENANT AND REMAINDERMAN.-In the case of property held by one person for life with remainder to another person, the deduction shall be computed as if the life tenant were the absolute owner of the property and shall be allowable to the life tenant."

(b) The amendment made by subsection (a) shall be effective with respect to taxable years beginning after December 31, 1950.

SEC. 4. (a) Section 1 of the Act of July 30, 1947 (61 Stat. 675) is hereby amended to read as follows:

“The Secretary of the Army, the Secreaary of the Navy, and the Secretary of the Air Force, or their designees within their respective establishments, are authorized to sell and contract to sell, under such regulations and at such prices and for such periods of time, as the Secretary concerned may prescribe, to purchasers within, or in the immediate vicinity of, naval or military activities, such utilities and related services as are not otherwise available from local, private, or public sources."

(b) Section 2 of said Act is hereby amended to read as follows: "The utilities and related services authorized to be sold under this Act are: (1) Electric power, (2) steam, (3) compressed air, (4) water, (5) sewage and garbage disposal services, (6) gas (natural, manufactured, or mixed), (7) ice, (8) mechanical refrigeration, and (9) telephone service; and the proceeds received for any such utilities and related services sold pursuant to the authority of this Act shall be credited to the appropriation or appropriations currently available for the supply of such services: Provided, That any utility or related service provided and sold under the authority of this Act shall not be so provided unless it is determined that the utility or related service is not at the time of such sale or contract to sell available from a private or other public source, and that the furnishing thereof is in the interest of national defense.

(c) Section 3 of said Act is hereby amended by deleting the words "The Secretary of the Navy and Secretary of War” and substituting therfor the words "The Secretary of the Army, the Secretary of the Navy, and the Secretary of the Air Force."

(d) Section 5 of said Act is hereby deleted.

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[S. 1184, 81st Cong., 1st sess.] A BILL To encourage construction of rental housing at or in areas adjacent to military

and naval installations Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled. That the National Housing Act, as amended, is amended by adding at the end thereof a new title as follows:

"TITLE VIII–MILITARY HOUSING INSURANCE

"SEC. 801. As used in this title

“(a) The term 'mortgage' means a first mortgage on real estate, in fee simple, or on a leasehold (1) under a lease for not less than ninety-nine years which is renewable; or (2) under a lease for a period of not less than fifty years to run from the date the mortgage was executed: Provided, That such term does not include a mortgage on a leasehold under a lease on property owned by the United States if the lease has longer than seventy-five years to run from the date the mortgage was executed; and the term 'first mortgage' means such classes of first liens as are commonly given to secure advances 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 instruments, if any, secured thereby.

“(b) The term 'mortgagee' includes the original lender under a mortgage, and his successors and assigns approved by the Commissioner; and the term “mortgagor' includes the original borrower under a mortgage, his successors and assigns.

"(c) The term 'maturity date' means the date on which the mortgage indebtedness would be extinguished if paid in accordance with periodic payments provided for in the mortgage.

“(d) The term ‘rental housing' means housing, the occupancy of which is premitted by the owner thereof in consideration of the payment of agreed charges, whether or not by the termination of the agreement, such payment over a period of time will entitle the occupant to the ownership of the premises.

“(e) The term 'military' includes Army, Navy, and Air Force.

“ (f) The term “State includes the several States and Alaska, Hawaii, Puerto Rico, the District of Columbia, and the Virgin Islands.

"SEC. 802. There is hereby created a Military Housing Insurance Fund which shall be used by the Commissioner as a revolving fund for carrying out the provisions of this title, and mortgages insured under this title shall be known and referred to as 'military housing insured mortg:iges.' General expenses of operation of the Federal Housing Administration under this title may be changed to the Military Housing Insurance Fund.

"SEC. 803. (a) In order to assist in relieving the acute shortage of housing which now exists at or in areas adjacent to military installations because of uncertainty as to the permanence of such installations and to increase the supply of rental housing accommodations available to military and civilian

personnel at such installations, the Commission is authorized, upon application of the mortgagee, to insure against default due to deactivation of, or substantial curtailment of activities at, any such installation in any State, any mortgage which is eligible for insurance as hereinafter provided, and, upon such terms as the Commissioner may prescribe, to make commitments for so insuring such mortgages prior to the date of their execution or disbursement thereon: Provided, That the aggregate amount of principal obligations of all mortgages insured under this title shall not exceed $500,000,000 except that with the approval of the President such aggregate amount may be increased to not to exceed $1,000,000,000 Provided further, That no mortgage shall be insured under this title after July 1, 1950, except (A) pursuant to a commitment to insure issued on or before such .date, or (B) a mortgage given to refinance an existing mortgage insured under this title and which does not exceed the original principal amount and unexpired term of such existing mortgage.

“(b) To be eligible for insurance under this title a mortgage shall meet the following conditions:

“(1) The mortgaged property shall be held by a mortgagor approved by the Commissioner. The Commissioner may, in his discretion, require such mortgagor to be regulated or restricted as to rents or sales, charges, capital structure, rate of return, and methods of operation. The Commissioner may make such contracts with, and acquire for not to exceed $100 stock or interest in any such mortgagor, as the Commissioner may deem necessary to render effective such restriction or regulation. Such stock or interest shall be paid for out of the Military Housing Insurance Fund, and shall be redeemed by the mortgagor at par upon the termination of all obligations of the Commissioner under the insurance.

“(2) The mortgaged property shall be designed for rent for residential use by military personnel and civilian employees assigned to duty at the military installation at or in the area of which such property is constructed. Preference or priority of opportunity in the occupancy of the mortgaged property for such personnel and employees and their immediate families shall be provided under such regulations and procedures as may be prescribed by the Commissioner. No mortgage shall be insured unless the Secretary of the Army, Navy, or Air Force, as the case may be, shall have certified to the Commissioner that the mortgaged property is necessary to provide adequate housing for such personnel and employees, that such installation is deemed to be a permanent part of the Military Establishment, and that there is no present intention to substantially curtail activities at such installation. “(3) The mortgage shall involve a principal obligation in an amount

“(A) not to exceed $5,000,000; and

(B) not to exceed the amount which the Commissioner estimates will be the necessary current cost of the completed property or project, including the land; the proposed physical improvements; utilities within the boundaries of the property or project; architect fees; taxes and interest accruing during construction; and her miscellaneous charges incidental to construction and approved by the Commissioner; and

(C) not to exceed an average of $9,000 per family unit for such part

of such property or project as may be attributable to dwelling use. The mortgage shall provide for complete amortization by periodic payment within such term as the Commissioner shall prescribe, and shall bear interest (exclusvie of premium charges for insurance) at not to exceed 4 per centum per annum of the amount of the principal obligation outstanding at any time. The Commissioner may consent to the release of a part or parts of the mortgaged property from the lien of the mortgage upon such terms and conditions as he may prescribe and the mortgage may provide for such release.

“(c) The Commissioner is authorized to fix a premium charge for the insurance of mortgages under this title but in the case of any mortgage such charge shall not be less than an amount equivalent to one-half of 1 per centum per annum nor more than an amount equivalent to 112 per centum per annum of the amount of the principal obligation of the mortgage outstanding at any time, without taking into account delinquent payments or prepayments. Such, premium charges shall be payable by the mortgagee, either in cash, or in debentures issued by the Commisisoner under this title at par plus accrued interest, in such manner as may be prescribed by the Commissioner : Provided, That the Commissioner may require the payment of one or more such premium charges at the time the mortgage is insured, at such discount rate as he may prescribe not in excess of the interest rate specfied in the mortgage. If the Commissioner finds, upon the presentation of a mortgage for insurance and the

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