§1747a — Title 12 Banks and Banking | U.S. Code

Summary

To get insurance under this program, a project must meet two tests. The Secretary must find there is a local need for new rental units at the rents planned. The project must be financially sound and the homes must meet the Secretary’s standards for quality, design, size, and type. An insurance contract signed by the Secretary proves the project and investor were eligible and generally can’t be challenged later, unless the investor lied. After the project is finished, the investor must show there are no legal claims or unpaid construction debts left, except taxes and any claims the Secretary allows. Debentures (investor loans repaid from the project’s net income and the insurance benefits) do not count as unpaid debts under this rule.

Title 12, §1747a

Banks and Banking — Source: USLM XML via OLRC

(a)To be eligible for insurance under this subchapter, a project shall meet the following conditions:

(1)The Secretary shall be satisfied that there is, in the locality or metropolitan area of such project, a need for new rental dwellings at rents comparable to the rents proposed to be charged for the dwellings in such project.

(2)Such project shall be economically sound, and the dwellings in such project shall be acceptable to the Secretary as to quality, design, size, and type.

(b)Any insurance contract executed by the Secretary under this subchapter shall be conclusive evidence of the eligibility of the project and the investor for such insurance, and the validity of any insurance contract so executed shall be incontestable in the hands of an investor from the date of the execution of such contract, except for fraud or misrepresentation on the part of such investor.

(c)After completion of the project the investor must establish in a manner satisfactory to the Secretary that the project is free and clear of liens and that there are no other outstanding unpaid obligations contracted in connection with the construction of the project, except taxes and such other liens and obligations as may be approved or prescribed by the Secretary. Debentures issued by the investor which are payable out of net income from the project and from the benefits of the insurance contract shall not be construed as “unpaid obligations” as such term is used in this subsection.

Notes & Related Subsidiaries

Editorial Notes

Amendments

1967—Pub. L. 90–19 substituted “Secretary” for “Commissioner” wherever appearing in subsecs. (a)(1), (2), (b), and (c). 1951—Subsec. (c). Act Sept. 1, 1951, added subsec. (c). 1950—Act Apr. 20, 1950, substituted “Commissioner” for “Administrator” wherever appearing.

§1747a Eligibility for insurance

Summary

Title 12, §1747a

Notes & Related Subsidiaries

Editorial Notes

Amendments

Citations & Metadata