mortgage-backed securities

mortgage-backed securities Sec. 804. (a) Section 304 of the National Housing Act is amended by adding at the end thereof the following new subsection: “(d) To provide a greater degree of liquidity to the mortgage investment market and an additional means of financing its operations under this section, the corporation is authorized to set aside any mortgages held by it under this section, and, upon approval of the Secretary of the Treasury, to issue and sell Securities based upon the mortgages so set aside. Securities issued under this Subsection may be in the form of debt obligations or trust certificates of beneficial interest, or both. Securities issued under this subsection shall have such maturities and bear such rate or rates of interest as may be determined by the corporation with the approval of the Secretary of the Treasury. Securities issued by the corporation under this subsection shall, to the same extent as securities which are direct obligations of or obligations guaranteed as to principal and interest by the United States, be deemed to be exempt securities within the meaning of laws administered by the Securities and Exchange Commission. Mortgages set aside pursuant to this subsection shall at all times be adequate to enable the corporation to make timely principal and interest payments on the securities issued and sold pursuant to this subsection.” (b) Section 306 of such Act is amended by adding at the end thereof the following new subsection: 82 Stat. 543 “(g) The Association is authorized, upon such terms and conditions as it may deem appropriate, to guarantee the timely payment of principal of and interest on such trust, certificates or other securities as shall (1) be issued by the corporation under section 304(d), or by any other issuer approved for the purposes of this subsection by the Association, and (2) be based on and backed by a trust or pool composed of mortgages which are insured under the National Housing Act or title V of the Housing Act of 1949, or which are insured or guaranteed under the Servicemens Readjustment Act of 1944 or chapter 37 of title 38, United States Code. The Association shall collect from the issuer a reasonable fee for any guaranty under this subsection and shall make such charges as it may determine to be reasonable for the analysis of any trust or other security arrangement proposed by the issuer. In the event the issuer is unable to make any payment of principal of or interest on any security guaranteed under this subsection, the Association shall make such payment, as and when due in cash, and thereupon shall be subrogated fully to the rights satisfied by such payment. Any Federal, State, or other law to the contrary notwithstanding, the Association is hereby empowered, in connection with any guaranty under this subsection, whether before or after any default, to provide by contract with the issuer for the extinguishment, upon default by the issuer, of any redemption, equitable, legal, or other right, title, or interest of the issuer in any mortgage or mortgages constituting the trust or pool against which the guaranteed securities are issued; and with respect to any issue of guaranteed securities, in the event of default and pursuant otherwise to the terms of the contract, the. mortgages that constitute such trust, or pool shall become the absolute property of the Association subject only to the unsatisfied rights of the holders of the securities based on and backed by such trust or pool. The full faith and credit of the United States is pledged to the payment of all amounts which may be required to lie paid under any guaranty under this subsection. There shall be excluded from the total amounts set forth in subsection (c) the amounts of any mortgages acquired by the Association as a result of its operations under this subsection.” (c) Section 5136 of the Revised Statutes ( 12 U.S.C. 24) is amended by adding at the end thereof the following: “Ninth. To issue and sell securities which are guaranteed pursuant to section 306(g) of the National Housing Act.” (d) The first proviso of section 21(a) (1) of the Banking Act of 1933 (12 U.S.C. 378(a)(1)) is amended by inserting “, or issuing securities,” immediately following “investment securities”. (e) Section 5(c) of the Home Owners’ Loan Act of 1933 ( 12 U.S.C. 1464(c)) is amended by adding at the end thereof a new paragraph as follows: “Any such association may issue and sell securities which are guaranteed pursuant to section 306(g) of the National Housing Act.”