pooling of mortgages for sale

pooling of mortgages for sale Sec. 701. (a) Section 302 of the National Housing Act is amended by adding at the end thereof a new subsection as follows: “(c) Notwithstanding any other provision of this Act or of any other law, the Association is authorized under section 306 to create, accept, execute, and otherwise administer in all respects such trusts, receiverships, conservatorships, liquidating or other agencies, or other fiduciary and representative undertakings and activities as might be appropriate for financing purposes; and in relation thereto the Association may acquire, hold and manage, dispose of, and otherwise deal in any first mortgages in which the United States or any agency or instrumentality thereof may have a financial interest. The Association may join in any such undertakings and activities notwithstanding that it is also serving in a fiduciary or representative capacity; and is authorized, consistent with section 307, to guarantee any participations or other instruments, whether evidence of property rights or debt, issued for such financing purposes. Any participations or other instruments so guaranteed shall to the same extent as securities issued or guaranteed by the United States or its instrumentalities be deemed to be exempt securities within the meaning of laws administered by the Securities and Exchange Commission. The amounts of any mortgages acquired by the Association under section 306, pursuant to this subsection, shall not be included in the total amounts set forth in section 306(c).” (b) (1) Section 311 of such Act is amended by inserting after “obligations” the following: “, participations, or other instruments”. (2) Sections 304(b) and 306(b) of such Act are amended respectively by striking out “or obligations which are lawful investments” and inserting in lieu thereof “or obligations, participations, or other instruments which are lawful investments”. (3) Section 310 of such Act is amended by striking out “or in obligations which are lawful investments” and inserting in lieu thereof “or in obligations, participations, or other instruments which are lawful investments”. (c) The penultimate sentence of paragraph Seventh of section 5136 of the Revised Statutes is amended by striking out “or obligations of the Federal National Mortgage Association” and inserting in lieu thereof “or obligations, participations, or other instruments of or issued by the Federal National Mortgage Association”. (d) (1) Section 11(h) of the Federal Home Loan Bank Act is amended by striking out “in obligations of the Federal National Mortgage Association” and inserting in lieu thereof “in obligations, participations, or other instruments of or issued by the Federal National Mortgage Association”. (2) The last sentence of section 16 of such Act is amended by striking out “in obligations of the Federal National Mortgage Association” and inserting in lieu thereof “in obligations, participations, or other instruments of or issued by the Federal National Mortgage Association”. (e) (1) Section 1820 of title 38, United States Code, is amended by adding at the end thereof the following new subsection: “(e) (1) The Administrator is authorized from time to time, as he determines advisable, to set aside first mortgage loans, and installment sale contracts, owned and held by him under this chapter as the basis for the sale of participation certificates as herein provided. 78 Stat. 801For this purpose the Administrator may enter into agreements, including trust agreements, with the Federal National Mortgage Association, and any other Federal agency, under which the Association as fiduciary may sell certificates of participation based on principal and interest collections to be received by the Administrator and the Association or any other such agency on first mortgage loans and installment sale contracts comprising mortgage pools established by them. The agreement may provide for substitution or withdrawal of mortgage loans, or installment sale contracts, or for substitution of cash for mortgages in the pool. The agreement shall provide that the Federal National Mortgage Association shall promptly pay to the Administrator the entire proceeds of any sale of certificates of participation to the extent such certificates are based on mortgages, including installment sale contracts, set aside by the Administrator and he shall periodically pay to the Association, as fiduciary, such funds as are required for payment of interest and principal due on outstanding certificates of participation to the extent of the pro rata amount allocated to the Administrator pursuant to the agreement. The agreement shall also provide that the Administrator shall retain ownership of mortgage loans and installment sale contracts set aside by him pursuant to the agreement unless transfer of ownership to the fiduciary is required in the event of default or probable default in the payment of participation certificates. The Administrator is authorized to purchase outstanding certificates of participation to the extent of the amount of his commitment to the fiduciary on participations outstanding and to pay his proper share of the costs and expenses incurred by the Federal National Mortgage Association as fiduciary pursuant to the agreement. “(2) The Administrator shall proportionately allocate and deposit the entire proceeds received from the sale of participations into the funds established pursuant to sections 1823 and 1824 of this chapter, as determined on an estimated basis, and the amounts so deposited shall be available for the purposes of the funds. The Administrator may nevertheless make such allocations of that part of the proceeds of participation sales representing anticipated interest collections on mortgage loans, including installment sale contracts, on other than an estimated proportionate basis if determined necessary to assure payment, of interest on advances theretofore made to the Administrator by the Secretary of the Treasury for direct loan purposes. The Administrator shall set aside and maintain necessary reserves in the funds established pursuant to sections 1823 and 1824 of this chapter to be used for meeting commitments pursuant to this subsection and, as he determines to be necessary, for meeting interest payments on advances by the Secretary of the Treasury for direct loan purposes.” (2) Section 1823 of title 38, United States Code, is amended by— (1) inserting before the period at the end of the last sentence of subsection (a) the following: “, and a reasonable reserve for meeting commitments pursuant to subsection 1820(e) of this title”; and (2) inserting before the period at the end of the last sentence of subsection (c) the following: “and for the purposes of meeting commitments under subsection 1820(e) of this title”.