Page:United States Statutes at Large Volume 106 Part 5.djvu/102

 106 STAT. 3740 PUBLIC LAW 102-550—OCT. 28, 1992 (D) Any other lender that is supervised, approved, regulated, or insured by any agency of the Federal Government. (5) TERMS.—The loan shall— (A) be made for a term not exceeding 30 years; (B) bear interest (exclusive of the guarantee fee under section 404 and service charges, if any) at a rate agreed upon by the borrower and the lender and determined by the Secretary to be reasonable, which may not exceed the rate generally charged in the area (as determined by the Secretary) for home mortgage loans not guaranteed or insured by any agency or instrumentality of the Federal (jovernment; (C) involve a principal obligation not exceeding— (i) an amount equal to the sum of (I) 97 percent of $25,000 of the appraised value of the property, as of the date the loan is accepted for guarantee, and (II) 95 percent of such value in excess of $25,000; and (ii) the amount approved by the Secretary under this section; and (D) involve a payment on account of the property (i) in cash or ite equivalent, or (ii) through the value of any improvements to the property made through the skilled or imskilled labor of the borrower, as the Secretary shall provide. (c) CERTIFICATE OF GUARANTEE.— (1) APPROVAL PROCESS.— Before the Secretary approves any loan for guarantee under this section, the lender shall submit the application for the loan to the Secretary for examination. If the Secretary approves the loan for guarantee, the Secretary shall issue a certiiicato under this paragraph as evidence of the guarantee. (2) STANDARD FOR APPROVAL.—The Secretary may approve a loan for guarantee under this section and issue a certificate under this paragraph only if the Secretary determines there is a reasonable prospect of repayment of the loan. (3) EFFECT. — ^A certificate of guarantee issued under this paragraph by the Secretary shall be conclusive evidence of the eligibility of the loan for guarantee under the provisions of this section and the amount of such guarantee. Such evidence shall be incontestable in the hands of the bearer and the full faith and credit of the United Stotes is pledged to the payment of all amounto agreed to be paid by the Secretary as security for such obligations. (4) FRAUD AND MISREPRESENTATION.—This subsection may not be construed to preclude the Secretary from estoblishing defenses against the original lender based on fraud or material misrepresentotion or to bar the Secretary from estoblishing by regulations in effect on the date of issuance or disbursement, whichever is earlier, partial defenses to the amount payable on the guarantee. (d) GUARANTEE FEE. — The Secretary shall fix and collect a guarantee fee for the guarantee of loans under this section, which may not exceed the amount equal to 1 percent of the principal obligation of the loan. The fee shall be paid by the lender at time of issuance of the guarantee and shall be adequate, in the

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