An Act to amend certain provisions of title XI of the Merchant Marine Act, 1936, as amended, to facilitate private financing of new ship construction, and for other purposes
PL 83-288 (H.R.6441), enacted 08/15/1953

626 
PUBLIC LAW 288-AUG. 15, 1953 
[67 S T A T . 
August 15, 1953 
[H. R. 6441] 
Public Law 288 
CHAPTER 513 
AN ACT 
To amend certain provisions of title XI of tlie Merchant Marine Act, 1936, as 
amended, to facilitate private financing of new ship construction, and for other 
purposes. 
Merchant Marine 
Act, 1936, amend-
ments. 
New ship con-
struction. 
Mortgage i n s ur-
ance. 
52 Stat. 969. 
46 u s e 1271-
1279. 
Eligibility re-
quirements. 
49 Stat. 1995. 
46 u s e 1 15 1-
1161. 
P a y m e n t after 
default. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That section 1103 of 
the Merchant Marine Act, 1936, as amended (U. S. C, title 46, sec. 
1273), is amended by inserting " ( a ) " after the section number; and 
by inserting after the word "provided" and before the words "any 
mortgage offered" the words "90 per centum of the unpaid balance of"; 
and by striking dut the last sentence thereof, and inserting at the end 
of the section the following: 
" (b) The Secretary of Commerce is further authorized under such 
terms and conditions as he may prescribe not inconsistent with the 
provisions of this title, to insure against loss not to exceed 90 per 
centum of the unpaid balance of principal of loans and advances of 
credit made to finance the construction, reconstruction, or recondition-
ing of vessels w^ith respect to which he is authorized to provide mort-
gage insurance under sections 1101 to 1109, inclusive: Provided^ how-
ever^ That the insurance authorized by this title may not be issued 
unless the Secretary of Commerce finds that the interest rate of the 
loan or mortgage to be insured is substantially less than the going 
interest rates generally charged for uninsured snip construction loans 
or ship mortgages of similar character and in the same area. 
" (c) The aggregate amount of insurance of principal obligations of 
all mortgages and loans under this title and outstanding at any one 
time shall not exceed $100,000,000." 
SEC. 2. Section 1104 (a) (2) and (8) of such Act, as amended 
(U. S. C, title 46, sec. 1274), is amended— 
(1) by inserting in paragraph (2) after the words "financed 
by the loan or advance" the following "or, in the case of vessels 
constructed under title V of this Act, involve an obligation in a 
principal amount which does not exceed 75 per centum of the cost 
of the vessel (exclusive of construction-differential subsidy and 
cost of national-defense features),"; 
(2) by inserting in paragraph (8) after the words "new loan 
or advance made to aid in financing" the words "construction of 
vessels under title V of this Act, as amended, or"; 
(3) by amending clause (c) of paragraph (8) to read as fol-
lows : "in foreign trade". 
SEC. 3. Section 1105 of such Act, as amended (U. S. C , title 46, sec. 
1275), is amended to read as follows: 
"SEC. 1105. (a) (1) In the event of the failure of the mortgagor to 
pay the principal or interest under an insured mortgage giving the 
mortgagee the right to foreclose, and failure on the part of the mort-
gagor to correct the default within thirty days, the mortgagee, pro-
vided an assignment of the mortgage and of the notes, bonds, or other 
evidences of indebtedness secured by the mortgage, and of all collat-
eral held by the mortgagee securing such mortgage be tendered to 
the Secretary of Commerce at or before the expiration of forty-five 
days from the date of such default, shall thereupon have the right to 
demand payment of the insured portion of the unpaid balance of 
principal of said mortgage. If within a period of sixty days from 
date of such default, the Secretary of Commerce finds that there has 
been a failure to pay principal or interest under the mortgage or that 
such failure has not been corrected within the said thirty days, he 
shall accept the assignment and promptly pay to the mortgagee the 
67 S T A T . ] 
PUBLIC LAW 288-AUG. 15, 1953 
627 
insured amount of the unpaid balance of principal of the said mort-
gage. Upon acceptance of such assignment, the obligations of the 
mortgagee to pay the premium charges for insurance shall cease. 
"(2) In the event of the failure of the borrower to pay principal 
or interest due under an insured loan, the lender shall have the benefits 
of insurance against loss provided under section 1103 (b) of this title 
Ante, p. 626. 
upon compliance with the terms and conditions of such insurance. 
"(b) Any amount required to be paid by the Secretary of Com-
merce pursuant to subsection (a) shall be paid out of the fund to the 
extent that funds are available therein at the time such payment 
becomes due, and to the extent such funds are not available, the Secre-
tary of Commerce shall pay to the assignor of the insured mortgage 
any amount required to fully satisfy the claim, which amount is hereby 
authorized to be appropriated out of any money in the Treasury not 
otherwise appropriated. 
"(c) The Secretary of Commerce shall cause the mortgage to be 
foreclosed and shall repossess the mortgaged vessel forthwith, and take 
such other action against the mortgagor or any other parties liable 
under the mortgage or the collateral, that, in his discretion, may be 
required to protect the interests of the United States and the insured 
lender, as they may appear, and such suits may be brought in the name 
of the United States, or in the name of the insured lender or assignee, 
and such lender or assignee shall make available to the United States 
all records and evidence necessary to prosecute any such suit. 
The 
Secretary of Commerce shall have the right in his discretion to accept 
a conveyance of title to and possession of the vessel from the mort-
gagor, and in the event of a sale under foreclosure proceedings, may 
purchase the vessel for an amount not greater than the insured por-
tion of the unpaid balance of such mortgage or loan. In the event 
the Secretary of Commerce shall receive through the sale of the vessel 
or other collateral assigned to him an amount of cash in excess of the 
amount of any payment under section 1105 (a) (1) and the expenses 
of collection of such amount, he shall pay to the insured lender such 
cash amount, but not in excess of 10 per centum of the unpaid prin-
cipal amount of such loan or mortgage, and unpaid interest to which 
the lender is entitled under the loan. 
"(d) Notwithstanding any other provision of law relating to the 
acquisition, handling or disposal of property by the United States, 
the Secretary of Commerce shall have the right in his discretion to 
complete, recondition, reconstruct, renovate, repair, maintain, operate, 
charter or sell any property acquired by him pursuant to the assign-
ment as provided in this section and may place the mortgaged vessel in 
the national defense reserve or may sell the same upon competitive 
bids for not less than the minimum sales price provided by the Mer-
chant Marine Act, 1936, as amended. 
The buyer shall be required to 
^l ^^^ ^^f^' 
make cash payment to the Secretary of Commerce of not less than 25 
per centum of the sale price, and the balance shall be paid in equal 
annual installments over the remaining period of the expected useful 
life of such vessel. Interest at the rate of 31/^ per centum per annum 
shall be paid on all such installments of the purchase price remaining 
unpaid. 
The Secretary shall also have the power to pursue to final 
collection, by way of compromise or otherwise, all claims against 
mortgagors or persons liable under collateral assigned to the Secre-
tary of Commerce as herein provided. 
"(e) Any contract or commitment of insurance entered into by the 
Secretary of Commerce under this title shall be final and conclusive 
and shall not be subject to avoidance bv any officer, employee, or agent 
of the United States, except in case of fraud, duress, or mutual mistake 
of fact." 
Approved August 15, 1953.