Page:United States Statutes at Large Volume 92 Part 2.djvu/802

 92 STAT. 2082 Commitments to insure loans.

Ante, p. 2080.

"Rehabilitation loan."

'Rehabilitation.

Eligibility.

PUBLIC LAW 95-557—OCT. 31, 1978 "(k)(1) The Secretary may, in order to assist in the rehabilitation of one- to four-family structures used primarily for residential purposes, insure and make commitments to insure rehabilitation loans (including advances made during rehabilitation) made by financial institutions on and after 180 days following the date of the enactment of the Housing and Community Development Amendments of 1978. Such commitments to insure and such insurance shall be made upon such terms and conditions which the Secretary may prescribe and which are consistent with the provisions of subsections (h), (c), (e), (i), and (j) of this section, except as modified by the provisions of this subsection. "(2) For the purpose of this subsection— "(A) the term 'rehabilitation loan' means a loan, advance of credit, or purchase of an obligation representing a loan or advance of credit, made for the purpose of financing— "(i) the rehabilitation of an existing one- to four-unit structure which will be used primarily for residential purposes; "(ii) the rehabilitation of such a structure and the refinancing of the outstanding indebtedness on such structure and the real property on which the structure is located; or "(iii) the rehabilitation of such a structure and the purchase of the structure and the real property on which it is located; and "(B) the term 'rehabilitation'means the improvement (including improvements designed to meet cost-effective energy conservation standards prescribed by the Secretary) or repair of a structure, or facilities in connection with a structure, and may include the provision of such sanitary or other facilities as are required by applicable codes, a community development plan, or a statewide property insurance plan to be provided by'the owner or tenant of the project. "(3) To be eligible for insurance under this subsection, a rehabilitation loan shall— "(A) involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve) in an amount which does not exceed, when added to any outstanding indebtedness of the borrower which is secured by the structure and the property on which it is located, the amount specified in subsection (b)(2); except that, in determining the amount of the principal obligation for purposes of this subsection, the Secretary shall establish as the appraised value of the property an amount not to exceed the sum of the estimated cost of rehabilitation and the Secretary's estimate of the value of the property before rehabilitation; "(B) bear interest at a rate permitted by the Secretary for mortgages insured under this section; except that the Secretary may permit a higher rate of interest to be applied to the loan with respect to the period beginning with the making of the loan and ending with the completion of the rehabilitation or such earlier time as the Secretary may determine; "(C) be an acceptable risk, as determined by the Secretary; and " (D) comply with such other terms, conditions, and restrictions as the Secretary may prescribe. "(4) Any rehabilitation loan insured under this subsection may be refinanced and extended in accordance with such terms and conditions as the Secretary may prescribe, but in no event for an additional

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