Page:United States Statutes at Large Volume 102 Part 5.djvu/737

 PUBLIC LAW 100-710—NOV. 23, 1988

102 STAT. 4743

filed under this section at the time an application for documentation is filed, is valid under this section from the time the mortgage or instrument representing financing became a preferred mortgage under section 31322(d). "(h) On full and final discharge of the indebtedness under a state and local mortgage deemed to be a preferred mortgage under section 31322(d) governments. of this title, a mortgagee, on request of the Secretary, a State, or mortgagor, shall provide the Secretary or the State, as appropriate, with an acknowledged certificate of discharge of the indebtedness in a form prescribed by the Secretary or the State, as applicable. If filed with the Secretary, the Secretary shall enter that information in the vessel identification system under chapter 125 of this title. "§ 31322. Preferred mortgages "(a)(1) A preferred mortgage is a mortgage, whenever made, that— "(A) includes the whole of a vessel; "(B) is filed in substantial compliance with section 31321 of this title; "(C)(i) covers a documented vessel; or "(ii) covers a vessel for which an application for documentation is filed that is in substantial compliance with the requirements of chapter 121 of this title and the regulations prescribed under that chapter; and "(D) has as the mortgagee— "(i) a State; "(ii) the United States Government; "(iii) a federally insured depository institution, unless disapproved by the Secretary; "(iv) an individual who is a citizen of the United States; "(v) a person qualifying as a citizen of the United States under section 2 of the Shipping Act, 1916 (46 App. U.S.C. 802); or "(vi) a person approved by the Secretary of Transportation. "(2) Paragraph (I)(D) of this subsection does not apply to a vessel Fish and fishing. operated only as a fishing vessel, fish processing vessel, or a fish tender vessel (as defined in section 2101 of this title) or to a vessel operated only for pleasure. "(b) A preferred mortgage filed or recorded under this chapter may have any rate of interest that the parties to the mortgage agree to. "(c)(1) If a preferred mortgage includes more than one vessel or property that is not a vessel, the mortgage may provide for the separate discharge of each vessel and all property not a vessel by the payment of a part of the mortgage indebtedness. '(2) If a vessel covered by a preferred mortgage that includes more than one vessel or property that is not a vessel is to be sold on the order of a district court in a civil action in rem, and the mortgage does not provide for separate discharge as provided under paragraph (1) of this subsection— "(A) the mortgage constitutes a lien on that vessel in the full amount of the outstanding mortgage indebtedness; and "(B) an allocation of mortgage indebtedness for purposes of separate discharge may not be made among the vessel and other property covered by the mortgage.

19-194 O—91—Part

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