### TERE A~TOKNEY GENERAL OFTEXAS

AUWFIN. Trwc~n 78711 February 5, 1968 IimpFable Jesse James opinion No. M-197 staCe meaeurer State Capital BuAldlng Aucltln, Texao 78711

DearMr.Jaw: Rsr Authonlty of the State depoeltorg board to acoept “prellm*ary loan r&tea,isaued bypublic howing author$tlea” and
“p8M.oipatlon oertlflOatoti isrued bythe Federr1 NetIonaL ,Nortgage Amooiation” ae aollateral for Statq deposits, You,heivesubmitted .printed ‘material.8 def$oMaing oertaln obllgatlone~ 18syod ‘bJi -pub110housing ai!thorltiea, to-wit: 1;. “Preliminary loan notee”; and’, -~2 . “Partlolptlon oertifloates ierued by the Federal National Mortgage A8soolrtlon;” Based uponthe lnfornntlon furnirhed, you have requested our opinion.as to whethbr auoh obligation8 maybeaccepted as collateral for State depoalte. Attomep Oeneralc~e Opinion WW-11 -(lW)‘~tieads, In part,’ aa follower

..

“Your reaent letter tireeente ,ths ‘qtieetiop of whether bond@lsmed by8 FubLlaHourlng~Authorlty &?iybe uaed aa collateral to oeaure the deposit of State funds, “Artlale 2520, V.OIS,, lo the st@tute whloh permlta a deporltory of State funds to ‘poet a eurety bond or pledge certain type8 or eeaurltiee ae,oollateral for State deposits. Noneof the enumerated types of seaurltlee will oovar the obllgatlone leeued or to be iesued by a Publia Houelng Authority unless the language ‘all other bonds which are guaranteed ae to both prlncipal and interest by the United Statee’ la applicable.

-948-Exczeble Jesse James, page 2 M-197

I,

. . . “The State Depository Law, Insofar a8 the enumerated ellgl’ble eecur1,tle.e .are concerned, is the general law, and where a apeolal act a-dtea that an additional security maybe uaed aa coliatere.1, tha.t special aot wlll.be treated ESan exception to the normal rule In order .., -at both enactments mayapply to their ap-: proprlate~.spberes .: i&O (Tex. .Clv. v. Booth; 163 S,W.id

App.
‘Statu.tes’ Se &La tu.re .ofTexa rror ref.; 39s. In 1939 the 427(.cod.lfled. byVe glalature ‘pa e tlcle 126$k-i 7 passed quch.a special statute, which reads, in prt:

.: ~,t&,with~etandlng any reatrlotlona on lnvestment6 contained In any lawa of this. state, the state and all public offlcere

. . ,may iegaily .inyeat any sinking funds

. . in any bond

. lsaued by.a hcuelng :uthorlty pureuant’to ihe Housing Authority Law(Article 1269k, V.C.S.) .,.or.issued byany other public houslng &ihorlty or .agency l.n.the United States, when auoh bonds are seoured by a pledge’-oPannual contrib;tlon to be paid by the United States Government :or.any agency thereof, .and euch bond8

. . . shall be authorized. secur’lty for all publla deposits

. . .I @mphaals supplied). “The caption of.the aat. reada,, ,ln part a.8 foliows:

‘Anaot to provide that bonds and other ‘, i obilgat~lona :laeued by any public housing :authorlty.or ‘age.ncy,In the..Unlted Statee., when aeoured by:a pledge, of annual contrlsupplied-) .I :_

., “The,effeat. ofthe i939 statute & to add, by special engctme,nt, ,an additional type of eligible

-949-Honorable Jeeee James, page 3 M-197

security a8 collateral for state deposita. In no other manner are the provisions of Article 2529, V.C.S. affected

. . . . 4,

. . . you and the State Depository Board are respectfully advised that the obligations may be accepted a8 collateral for state deposits only if the Federal Government guarantees that annual cQntributiOnz will be made, aufflclent to eupplement looal funds, 80a8 to meet the principal and Interest requirements of the pertlcular bonds tendered ae the came ahall become due. Each bond transorlpt will have to be examined lndlvldually to determine If this requirement has been met

.” Acopy of one 

### ofthe “Preliminary Loan consideration hae been submitted ,to ua with The following guarantee appears therein:

“PAYMENT

AGREEMENT Notea” under

your request.

..nPureuant to section 102 c) of the Houein Act of 1949, a8 amended 42~U.S.C. t 1452(c ), the United State6 hereby unconditionally agrees that on the Ueturlty Date of the within Preliminary Loan Note It will pay or cause to be paid to the bearer thereof the principal -of and interest thereon, upon the prei3entatiOn and surrender oftsuch Note to the Peylng Agent designated therein, and the full faith and credit of the United States is pledged to such payment. Under eectlon 102(a) of the Aot, this Agreement &all be oonetrued separate and apart from the loan oontract referred to In the within Note and shall be lnoontestable In the handa of a bearer.

“INWITNESSWHEREOF,thla Agreement haz been eaut es fd on behalf of the United States by e du yauthorized facelmlle signature of the Secretary of Housing and Urban Development, a8 of the Date of Issue of the within Note. UNITEDSTATESOFAMERICA Byz/ Robert C. Weaver Secretary of Housing and Urban Development” -950-Honorable Jesse James, page 4 M-197

It Is our understanding that all other "preliminary loan notes" which are under consideration aa collateral for State deposita, and that all "partlclpatlon certificates lsaued by the Federal Mortgage Association" which are under consideration a8 collateral for State deposits, are similarly guaranteed by the United States Government or an agency thereof a8 to the entire principal and interest. Each of said obligations must be examined lndlvldually to determine If this requirement has been met. Assuming that each of the Qblig8tiQnf4 in question is found on Individual examination to be guaranteed by the United States Qovernment or an egency thereof a8 to the entire prlnclpal and Intereat, t,he State Depository same ae collateral for State depoalts. Board mayaccept the

SUMMARY --w---- accept both .-. . . The State Deooaitory Board may "prellmlnar~ loan notes issued by pu~llc nouslng authorities and"participatiQn certificates issued by the Federal National Mortgage Assoolatlon" a8 collateral for State deposits, If upon Individual examination, each of the obl$gatlona proves to be guaranteed by the United States GQvernment, or an agency thereof, at! to the entire principal and Intereat.

General of Texas Prepared by Larry Craddock Aeeletant Attorney Qeneral APPROVED: OPINIONCOMMITTEE -,I Hawthorne Phillips, Chairman Kerns Taylor, Co-Chairman Hal Sharpley W.V. Geppert John Reeves Alvin Zimmerman Executive Assistant A. J. Carubbl, Jr.

-951-