condominium and cooperative ownership for low and moderate income families

condominium and cooperative ownership for low and moderate income families Sec. 105. (a) Section 221 of the National Housing Act is amended by adding at the end thereof two new subsections as follows: “(i) (1) The Secretary is authorized, with respect to any project involving a mortgage insured under subsection (d)(3) which bears interest at. the below-market interest rate prescribed in the proviso of subsection (d) (5), to permit a conversion of the ownership of such project to a plan of family unit ownership. Under such plan, each family unit shall be eligible for individual ownership and provision shall be included for the sale of the family units, together with an undivided interest in the common areas and facilities which serve the project, to low or moderate income purchasers. The Secretary shall obtain such agreements as he determines to be necessary to assure continued maintenance of the common areas and facilities. Upon such sale, the family unit and the undivided interest in the common areas shall be released from the lien of the project mortgage. “(2) (A) The Secretary is authorized, upon application by the mortgagee, to insure under this subsection mortgages financing the purchase of individual family units under the plan prescribed in paragraph (1). Commitments may be issued by the Secretary for the insurance of such mortgages prior to the date, of their execution or disbursement thereon, upon such terms and conditions as the Secretary may prescribe. To be eligible for such insurance, the mortgage shall— “(i) be executed by a mortgagor having an income within the limits prescribed by the Secretary for occupants of projects financed with a mortgage insured under subsection (d)(3) which bears interest at the below-market rate prescribed in the proviso of subsection (d)(5); “(ii) involve a principal obligation (including such initial service charges, and such appraisal, inspection, and other fees, as the Secretary shall approve) in an amount not to exceed the Secretary’s estimate of the appraised value of the family unit, including the mortgagor’s interest in the common areas and facilities, as of the date the mortgage is accepted for insurance; “(iii) bear interest at a rate determined by the Secretary (which may vary in accordance with the regulations of the Secretary promulgated pursuant to the last sentence of paragraph (4) of this subsection) but not less than the below-market rate in effect under the proviso of subsection (d)(5) at the date of the commitment for insurance;and “(iv) provide for complete amortization by periodic payments within such term as the Secretary may prescribe, but not to exceed the lesser of forty years from the beginning of amortization of the mortgage or three-quarters of the Secretary’s estimate of the remaining economic life of the building improvements. 82 Stat. 489 “(B) The price for which the individual family unit is sold to the low or moderate income purchaser shall not exceed the appraised value of the property, as determined under subparagraph (A)(ii), except that the purchaser shall be required to pay on account of the property at the time of purchase at least such amount, in cash or its equivalent (which shall be not less than 3 per centum of such price, but. which may be applied in whole or in part toward closing costs), as the Secretary may determine to be reasonable and appropriate. “(3) Upon the sale of all of the family units covered by the project mortgage, and the release of all of the family units (including the undivided interest allocable to each unit in the common areas and facilities) from the lien of the project mortgage, the insurance of the project mortgage shall be terminated and no adjusted premium charge shall be collected by the Secretary upon such termination. “(4) Any mortgage covering an individual family unit insured under this subsection shall contain a provision that, if the original mortgagor does not continue to occupy the property, the interest rate shall increase to the highest rate permissible under this section and the regulations of the Secretary effective at the time the commitment was issued for the insurance of the project mortgage; except that the requirement for an increase in interest rate shall not be applicable if the property is sold and the purchaser is (i) a nonprofit purchaser approved by the Secretary, or (ii) a low or moderate income purchaser who has an income within the limits prescribed by the Secretary for occupants of projects financed with a mortgage insured under subsection (d)(3) which bears interest at the below-market rate prescribed in the proviso of subsection (d)(5). The mortgage shall also contain a provision that, if the Secretary determines that the annual income of the original mortgagor (or a purchaser described in clause (ii) of the preceding sentence) has increased to an amount enabling payment of a greater rate of interest, the interest rate of the individual mortgage may be increased up to the highest rate permissible under the regulations of the Secretary for mortgages insured under this section, effective at the time the commitment was issued for the insurance of the mortgage. “(5) For the purose of this subsection— “(i) the term ‘mortgage’, when used in relation to a mortgage insured under paragraph (2) of this subsection, includes a first mortgage given to secure the unpaid purchase price of a fee interest in, or a long-term lease-hold interest in, a one-family unit in a multi family project and an undivided interest in the common areas and facilities which serve the project; and “(ii) the term ‘common areas and facilities’ includes the land and such commercial, community, and other facilities as are approved by the Secretary. “(l) (1) The Secretary is authorized, with respect to any rental project, involving a mortgage insured under subsection (d) (3) which bears interest at the below-market interest rate prescribed in the proviso of subsection (d) (5), to permit a conversion of the ownership of such project to a cooperative approved by the Secretary. Membership in such cooperative shall be made available only to those families having an income within the limits prescribed by the Secretary for occupants of projects financed with a mortgage insured under subsection (d) (3) which bears interest at such below-market rate: Provided, That families residing in the rental project at the time of its conversion to a cooperative who do not meet such income limits may lie permitted to become members in the cooperative under such special terms and conditions as the Secretary may prescribe. 82 Stat. 490 “(2) The Secretary is authorized, upon application by the mortgagee, to insure under this subsection cooperative mortgages financing the purchase of projects meeting the requirements of paragraph (1). Commitments may be issued by the Secretary for the insurance of such mortgages prior to the date of their execution or disbursement thereon, upon such terms and conditions as the Secretary may prescribe. To be eligible for such insurance, the mortgage shall— “(i) involve a principal obligation (including such initial service charges and appraisal, inspection, and other fees as the Secretary shall approve) in an amount not exceeding the appraised value of the property for continued use as a cooperative, which value shall lie based upon a mortgage amount on which the debt service can be met from the income of the property when operated on a nonprofit basis, after the payment of all operating expenses, taxes, and required reserves; “(ii) bear Interest at the below-market rate prescribed in the proviso of subsection (d) (5); and “(iii) provide for complete amortization within such term as the Secretary may prescribe.” (b) Section 221 (g) (1) of such Act is amended by striking out “or paragraph (5) of subsection (h) of this section” and inserting in lieu thereof “paragraph (5) of subsection (h) of this section, or paragraph (2) of subsection (i) of this section”. (c) Section 221 (g) (2) of such Act is amended by striking out “or paragraph (1) of subsection (h)” and inserting in lieu thereof “paragraph (1) of subsection (h) of this section, or paragraph (2) of subsection (j).”. (d) Section 221(f) of such Act is amended by inserting after “subsection (h)” in I he third sentence of the second paragraph the following: “, (i), or (j)”.