An Act to aid in the provision and improvement of housing, the elimination and prevention of slums, and the conservation and development of urban communities
PL 83-560 (H.R.7839), enacted 08/02/1954

590 
PUBLIC LAW 560-AUG. 2, 1954 
[68 S T A T . 
Public Law 560 
CHAPTER 649 
AN ACT 
August 2,1954 
[H. R. 7839] 
To aid in the provision and impfovement of housing, the elimination and 
prevention of slums, and the conservation and development of urban 
communities. 
Be it enacted hy the Senate and House of Representatives 
of the 
^ jHousing A c t of United States of America in Congress assemhled^ That this Act ma.y bt 
cited as the "Housing Act of 1954". 
TITLE I—FEDEEAL HOUSING ADMINISTKATION 
Insurance of fi-
n a n c i a l 
institu-
tions. 
48 Stat. 1246. 
12 u s e 1703. 
Improvement and 
repair loans. 
Restriction. 
AMENDMENTS OF TITLE I OF NATIONAL HOUSING ACT 
SEC. 101. (a) Section 2 (a) of the National Housing Act, as 
amended, is hereby amended— 
(1) by striking out the period at the end of the second sentence 
and by inserting a colon and the following: ''''Provided^ That with 
respect to any loan, advance of credit, or purchase made after the 
effective date of the Housing Act of 1954, the amount of any claim 
for loss on any such individual loan, advance of credit, or pur-
chase paid by the Commissioner under the provisions of this 
section to a lending institution shall not exceed 90 per centum of 
such loss."; and 
(2) by inserting at the end thereof the following: 
"After the effective date of the Housing Act of 1954, (i) the Com-
missioner shall not enter into contracts for insurance pursuant to this 
section except with lending institutions which are subject to the 
inspection and supervision of a governmental agency required by law 
to make periodic examinations of their books and accounts, and which 
the Commissioner finds to be qualified by experience or facilities to 
make and service such loans, advances or purchases, and with such 
other lending institutions w^hich the Commissioner approves as eligi-
ble for insurance pursuant to this section on the basis of their credit 
and their experience or facilities to make and service such loans, 
advances or purchases; (ii) only such items as substantially protect 
or improve the basic livability or utility of properties shall be eligible 
for financing under this section, and therefore the Commissioner shall 
from time to time declare ineligible for financing under this section 
any item, product, alteration, repair, improvement, or class thereof 
which he determines would not substantially protect or improve the 
basiic livability or utility of such properties, and he may also declare 
ineligible for financing under this section any item which he deter-
mines is especially subject to selling abuses; and (iii) the Com-
missioner is hereby authorized and directed, by such regulations 
or procedures as he shall deem advisable, to prevent the use of any 
financial assistance under th,is section (1) with respect to new residen-
tial structures that have not been completed and occupied for at least 
six months, or (2) which would, through multiple loans, result in an 
outstanding aggregate loan balance with respect to the same structure 
exceeding the dollar amount limitation prescribed in this subsection for 
the type of loan involved." 
(b) As used in the amendments made by subsection (a) of this 
section "effective date of the. Housing Act of 1954" shall mean the 
first day after the first full calendar .month following the date of 
approval of the Housing Act of 1954. 
SEC. 102. Section 2 (f) of said Act, as amended, is hereby amended 
Account, ^ermlne^ by adding the following at the end thereof: "The account heretofore 
**°"' 
established in connection with insurance operations under this section 
Effective date. 
12 u s e 1703. 
Title I C l a i m s 
68 S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
591 
and identified in the accounting records of the Federal Housing 
Administration as the Title I Claims Account shall be terminated as 
of August 1, 1954, at which time all of the remaining assets of such 
account, together with deposits therein for the account of obligors, 
shall be transferred to and merged with the account established pur-
suant to this subsection. Moneys in the account established pursuant 
to this subsection not needed for the current operations of the Federal 
Housing Administration may be invested in bonds or other obligations 
of, or in bonds or other obligations guaranteed as to principal and 
interest by, the United States." 
SEC. 103. Section 8 of said Act, as amended, is hereby amended by 
striking the period at the end of subsection (a) and inserting a colon 
and the following: '•''And provided further, That no mortgage shall 
be insured under this section after the effective date of the Housing 
Act of 1954, except pursuant to a commitment to insure issued on or 
before such date." 
64 Stat. 48. 
12 u s e 1706c. 
Mortgage insur-
ance. 
Termination. 
AMENDMENTS OF TITLE II OF NATIONAL HOUSING ACT 
SEC. 104. Section 203 (b) (2) of said Act, as amended, is hereby 
amended to read as follows: 
"(2) Involve a principal obligation (including such initial service 
charges, appraisal, inspection, and other fees as the Commissioner 
shall approve) in an amount not to exceed $20,000 in the case of prop-
erty upon which there is located a dwelling designed principally 
(whether or not it may be intended to be rented temporarily for school 
purposes) for a one- or two-family residence; or $27,500 in the case 
of a three-family residence; or $35,000 in the case of a four-family 
residence; and not to exceed an amount equal to the sum of (i) 95 per 
centum (but, in any case where the dwelling is not approved for mort-
gage insurance prior to the beginning of construction, 90 per centum) 
of $9,000 of the appraised value (as of the date the mortgage is 
accepted for insurance), and (ii) 75 per centum of such value in excess 
of $9,000, except that the President may increase such dollar amounts 
up to not to exceed $10,000 if, after taking into consideration the gen-
eral effect of such higher dollar amounts upon conditions in the build-
ing industry and upon the national economy, he determines such action 
to be in the public interest: Provided, That if the mortgagor is not-
the occupant of the property the principal obligation of the mortgage 
shall not exceed an amount equal to 85 per centum of the amount 
computed under the foregoing provisions of this paragraph (2) : 
Provided further, That the mortgagor shall have paid on account of 
the property at least 5 per centum (or such larger amount as the 
Commissioner may determine) of the Commissioner's estimate of the 
cost of acquisition in cash or its equivalent." 
SEC. 105. Section 203 (b) (3) of said Act, as amended, is hereby 
amended to read as follows: 
"(3) Have a maturity satisfactory to the Commissioner, but not to 
exceed, in any event, thirty years from the date of the insurance of the 
mortgage or three-quarters of the Commissioner's estimate of the 
remaining economic life of the building improvements, whichever is 
the lesser." 
SEC. 106. Section 203 (b) (5) of said Act, as amended, is hereby 
amended to read as follows: 
"(5) Bear interest (exclusive of premium charges for insurance, 
and service charges if any) at not to exceed 5 per centum per annum 
on the amount of the principal obligation outstanding at any time, or 
not to exceed such per centum per annum not in excess of 6 per centum 
as the Commissioner finds necessary to meet the mortgage market." 
Sales housing. 
Insurance eligi-
bility. 
12 u s e 1709. 
Principal obliga-
tion. 
12 u s e 1709. 
Maturity. 
12 u s e 1709. 
592 
PUBLIC LAW 560-AUG. 2, 1954 
[68 S T A T . 
12 u s e 1709. 
Debentures. 
12 u s e 1709. 
Farm mortgages 
Termination. 
Repeals. 
12 u s e 1709. 
Disaster housing 
64 Stat. 1109. 
42 u s e 1855a. 
Single 
f a m i l y 
residence. 
Outlying areas. 
SEC. 107. Section 203 (c) of said Act, as amended, is amended by 
striking out of the second sentence the word ^''Provided''' and inserting: 
'•'•Provided^ That debentures presented in payment of premium charges 
shall represent obligations of the particular insurance fund to which 
such premium charges are to be credited: Provided 
further^\ 
SEC. 108. Section 203 (d) of said Act, as amended, is hereby amended 
by striking the period at the end thereof and inserting a colon and the 
following: " ^ n ^ provided further, That no mortgage shall be insured 
pursuant to this subsection after the effective date of the Housing 
Act of 1954, except pursuant to a commitment to insure issued on or 
before such date." 
SEC. 109. Subsections (f) and (g) of section 203 of said Act, as 
amended, are hereby repealed. 
SEC. 110. Section 203 of said Act, as amended, is hereby further 
amended by adding the following new subsections at the end thereof: 
"(h) Notwithstanding any other provision of this section, the 
Commissioner is authorized to insure any mortgage which involves a 
principal obligation not in excess of $7,000 and not in excess of 100 
per centum of the appraised value of a property upon which there is 
located a dwelling designed principally for a single-family residence, 
where the mortgagor is the owner and occupant and establishes (to 
the satisfaction of the Commissioner) that his home which he occupied 
as an owner or as a tenant was destroyed or damaged to such an extent 
that reconstruction is required as a result of a flood, fire, hurricane, 
earthquake, storm, or other catastrophe which the President, pursuant 
to section 2 (a) of the Act entitled 'An Act to authorize Federal 
assistance to States and local governments in major disasters and for 
other purposes' (Public Law 875, Eighty-first Congress, approved 
September 30, 1950), as amended, has determined to be a major 
disaster. 
"(i) Notwithstanding any other provision of this section, the Com-
missioner is authorized to insure any mortgage which involves a 
principal obligation not in excess of $6,650 and not in excess of 95 
per centum of the appraised value, as of the date the mortgage is 
accepted for insurance, of a property in an area where the Commis-
sioner finds it is not practicable to obtain conformity with many of the 
requirements essential to the insurance of mortgages on housing in 
built-up urban areas, upon which there is located a dwelling designed 
principally for a single family residence, and which is approved 
for mortgage insurance prior to the beginning of construction: Pro-
vided, That (1) the mortgagor shall be the owner and occupant of 
the property at the time of insurance and shall have paid on account 
of the property at least 5 per centum of the Commissioner's estimate 
of the cost of acquisition in cash or its equivalent, or (2) the mortgagor 
shall be the owner and occupant of the property at the time of 
insurance, regardless of his credit standing, with whom a person or 
corporation having a credit standing satisfactory to the Commissioner, 
shall have entered into a written contract (a) to pay on behalf of the 
prospective owner and occupant all or part of the downpayment 
required by this paragraph agreeing to take as security a note from 
the latter bearing interest at the rate of not more than 4 per centum 
per annum, maturing after the last maturity date of principal due on 
the insured mortgage, with a right in the holder to accelerate maturity 
to a date following prepayment of the entire mortgage debt, under 
the terms of which note all rights of such person or corporation are 
subordinated to the rights of the mortgagee or assignees of the mort-
gagee, and (b) to guarantee payment of the insured mortgage by the 
owner and occupant according to the terms of the mortgage, or (3) 
shall be the builder constructing the dwelling; in which case the 
68 
S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
593 
principal obligation shall not exceed 85 per centum of the appraised 
value of the property or $5,950: Provided 
further^ That the Com-
missioner finds that the project with respect to which the mortgage is 
executed is an acceptable risk, giving consideration to the need for 
providing adequate housing for families of low and moderate income 
particularly in suburban and outlying areas or small communities: 
Provided further^ That under the foregoing provisions of this sub-
section the Commissioner is authorized to insure any mortgage issued 
with respect to the construction of a farm home on a plot of land five 
or more acres in size adjacent to a public highway, the total amount 
of insurance outstanding at any one time under this proviso not to 
exceed $100,000,000." 
SEC. 111. Section 204 (a) of said Act, as amended, is hereby 
amended— 
(1) by striking out of the third sentence the words "any mort-
gage insurance premiums paid after either of such dates" and 
inserting "any mortgage insurance premiums paid after either 
of such dates, and any tax imposed by the United States upon 
any deed or other instrument by which said property was acquired 
by the mortgagee and transferred or conveyed to the Commis-
sioner" ; 
(2) by striking out of the second proviso the words "or under 
section 213 of this Act," and inserting the following: "or under 
section 213 of this Act, or with respect to any mortgage accepted 
for insurance under section 203 on or after the effective date of 
the Housing Act of 1954,"; and 
(3) by striking the period at the end thereof and inserting a 
colon and the following: '•''And provided further^ That, notwith-
standing any requirement contained in this Act that debentures 
may be issued only upon acquisition of title and possession by 
the mortgagee and its subsequent conveyance and transfer to the 
Commissioner, and for the purpose of avoiding unnecessary con-
veyance expense in connection with payment of insurance benefits 
under the provisions of this Act, the Commissioner is authorized, 
subject to such rules and regulations as he may prescribe, to 
permit the mortgagee to tender to the Commissioner a satisfactory 
conveyance of title and transfer of possession direct from the 
mortgagor or other appropriate grantor and to pay the insurance 
benefits to the mortgagee which it would otherwise be entitled to 
if such conveyance had been made to the mortgagee and from 
the mortgagee to the Commissioner." 
SEC. 112. (a) Section 204 (d) of said Act, as amended, is hereby 
amended by striking out of the second sentence thereof the words 
"three years after the 1st day of July following the maturity date 
of the mortgage on the property in exchange for which the debentures 
were issued, except that debentures issued with respect to mortgages 
insured under section 213 shall mature twenty years after the date of 
such debentures" and inserting "twenty years after the date thereof". 
(b) Section 207 (i) of said Act, as amended, is hereby amended 
by striking out of the second sentence thereof "ten" and inserting 
"twenty". 
(c) Section 803 (f) of said Act, as amended, is hereby amended 
by striking out of the second sentence thereof "ten" and inserting 
"twenty". 
(d) Section 904 (d) of said Act, as amended, is hereby amended 
by striking out of the third sentence thereof the word "ten" and 
insertir^ "twenty". 
(e) This section shall not apply in any case where the mortgage 
involved was insured or the commitment for such insurance was 
issued prior to the effective date of the Housing Act of 1954. 
Farm home. 
Payment of in-
surance. 
12 u s e 1710. 
Debentures. 
12 u s e 
1715e, 
1709. 
Direct convey-
ance. 
Debenture terms. 
12 u s e 1715e. 
12 u s e 1713. 
12 u s e 1748b. 
12 u s e 1750c. 
Nonapplic ability. 
39777 0—55—pt. 1-
-40 
594 
PUBLIC LAW 560-AUG. 2, 1954 
[68 S T A T , 
12 use 1710. 
Premium charge 
payment. 
C e s s a t i o n of 
obligation. 
12 u s e 1709. 
12 use 1711. 
General Surplus 
and Participating 
Reserve Accounts. 
12 u s e 1709. 
Rental housing. 
12 use 1713. 
Insurance eligi-
bUity. 
SEC. 113. Section 204 of said Act, as amended, is hereby amended by 
adding at the end thereof the following new subsection: 
"(j) In the event that any mortgagee under a mortgage insured 
under section 203 forecloses on the mortgaged property but does not 
convey such property to the Commissioner in accordance with this sec-
tion, and the Commissioner is given written notice thereof, or in the 
event that the mortgagor pays the obligation under the mortgage in 
full prior to the maturity thereof, and the mortgagee pays any adjusted 
premium charge required under the provisions of section 203 (c), and 
the Commissioner is given written notice by the mortgagee of the pay-
ment of such obligation, the obligation to pay any subsequent premium 
charge for insurance shall cease, and all rights of the mortgagee and 
the mortgagor under this section shall terminate as of the date of such 
notice." 
SEC. 114. Section 205 of said Act, as amended, is hereby amended to 
read as follows: 
"SEC. 205. (a) The Commissioner shall establish as of July 1,1954, 
in the Mutual Mortgage Insurance Fund a General Surplus Account 
tmd a Participating Reserve Account. 
All of the assets of the General 
Reinsurance Account shall be transferred to the General Surplus 
Account whereupon the General Reinsurance Account shall be 
abolished. 
There shall be transferred from the various group accounts 
to the Participating Reserve Account as of July 1, 1954, an amount 
equal to the aggregate amount which would have been distributed 
under the provisions of section 205 in effect on June 30, 1954, if all 
outstanding mortgages in such group accounts had been paid in full 
on said date. 
All of the remaining balances of said group accounts 
shall as of said date be transferred to the General Surplus Account 
whereupon all of said group accounts shall be abolished. 
"(b) The aggregate net income thereafter received or any net loss 
thereafter sustained by the Mutual Mortgage Insurance Fund in any 
semiannual period shall be credited or charged to the General Surplus 
Account and/or the Participating Reserve Account in such manner and 
amounts as the Commissioner may determine to be in accord with 
sound actuarial and accounting practice. 
"(c) Upon termination of the insurance obligation of the Mutual 
Mortgage Insurance Fund by payment of any mortgage insured there-
under, the Commissioner is authorized to distribute to the mortgagor 
a share of the Participating Reserve Account in such manner and 
amount as the Commissioner shall determine to be equitable and in 
accordance with sound actuarial and accounting practice: Provided^ 
That, in no event, shall any such distributable share exceed the aggre-
gate scheduled annual premiums of the mortgagor to the year of 
termination of the insurance. 
"(d) No mortgagor or mortgagee of any mortgage insured under 
section 203 shall have any vested right in a credit balance in any such 
account or be subject to any liability arising out of the mutuality of 
the Fund and the determination of the Commissioner as to the amount 
to be paid by him to any mortgagor shall be final and conclusive." 
SEC. 115. Section 207 (c) of said Act, as amended, is hereby 
amended— 
(1) by inserting before the semicolon at the end of paragraph 
numbered (2) a colon and the following: ''^And provided 
further, 
That nothing contained in this section shall preclude the insurance 
of mortgages covering existing construction located in slum or 
blighted areas, as defined in paragraph numbered (5) of subsection 
(a) of this section, and the Commissioner may require such repair 
or rehabilitation work to be completed as is, in his discretion, 
68 
S T A T . ] 
PUBLIC LAW 560~AUG. 2, 1954 
595 
necessary to remove conditions detrimental to safety, health, or 
morals"; 
(2) by striking out the word "Alaska," in paragraph numbered 
(2) and inserting "Alaska, or in Guam,"; and 
(3) by striking out paragraph numbered (3) and inserting the 
following: 
"(3) not to exceed, for such part of such property or project as 
may be attributable to dwelling use, $2,000 per room (or $7,200 
per family unit if the number of rooms in such property or project 
is less than four per family unit) : Provided^ That as to projects 
to consist of elevator type structures, the Commissioner may, in his 
discretion, increase the dollar amount limitation of $2,000 per 
room to not to exceed $2,400 per room and the dollar amount limi-
tation of $7,200 per family unit to not to exceed $7,500 per family 
unit, as the case may be, to compensate for the higher costs inci-
dent to the construction of elevator type structures of sound 
standards of construction and design." 
SEO, 116. Section 207 (d) of said Act, as amended, is hereby amended 
b)^ inserting the words "of the Housing Insurance Fund" between the 
words "debentures" and "issued" in the first sentence of such section. 
SEC. 117. Section 207 (h) of said Act, as amended, is hereby amended 
by striking out the period at the end of the first sentence and adding 
the following: "and a reasonable amount for necessary expenses 
incurred by the mortgagee in connection with the foreclosure proceed-
ings, or the acquisition of the mortgaged property otherwise, and the 
conveyance thereof to the Commissioner." 
SEC. 118. Section 212 (a) of said Act, as amended, is hereby amended 
by inserting at the end thereof the following new sentence: "The 
provisions of this section shall also apply to the insurance of any mort-
gage under section 220 which covers property on which there is located 
a dwelling or dwellings designed principally for residential use for 
tw^elve or more families." 
SEC. 119. (a) Section 213 (b) of said Act, as amended, is hereby 
amended by striking clauses (1) and (2) and inserting: 
"(1) not to exceed $5,000,000, or not to exceed $25,000,000 if the 
mortgage is executed by a mortgagor regulated or supervised 
under Federal or State laws or by political subdivisions of States 
or agencies thereof, as to re'^^s, charges, and methods of opera-
tions; and 
"(2) not to exceed, for sucT^^part of such property or project as 
may be attributable to dwelhtig use, $2,250 per room (or $8,100 
per family unit if the number Ijf rooms in such property or project 
is less than four per family unit), and not to exceed 90 per centum 
of the estimated value of the property or project when the 
proposed physical improvements are completed: Provided^ That 
if at least 65 per centum of the membership of the corporation or 
number of beneficiaries of the trust consists of veterans, the 
mortgage may involve a principal obligation not to exceed $2,375 
per room (or $8,550 per family unit if the number of rooms in 
such property or project is less than four per family unit), and 
not to exceed 95 per centum of the estimated value of the property 
or project when the proposed physical improvements are com-
pleted: Provided further. That as to projects which consist of 
elevator type structures, and to compensate for the higher costs 
incident to the construction of elevator type structures of sound 
standards of construction and design, the Commissioner may, in 
his discretion, increase the aforesaid dollar amount limitations 
per room or per family unit (as may be applicable to the particular 
case) within the following limits: (i) $2,250 per room to not to 
Guam. 
Mortgage limits. 
12 u s e 1713. 
Debentures. 
12 u s e 1713. 
F o r e c l o s u r e 
costs. 
12 u s e l7lSc. 
L a b o r s t a n d -
ards. 
Post, p. 596. 
e o op e r at i V e 
housing. 
12 u s e 1715e. 
Mortgage limits. 
Non-veteran. 
Veteran. 
596 
PUBLIC LAW 560-AUG. 2, 1954 
[68 S T A T . 
Definition. 
12 u s e I715e. 
Assistant Com-
missioner. 
12 u s e l71Sh. 
Insurance author-
ization. 
12 use 1715J. 
Transfer of in-
surance funds. 
exceed $2,700; (ii) $2,375 per room to not to exceed $2,860; (iii) 
$8,100 per family miit to not to exceed $8,400; and (iv) $8,550 per 
family unit to not to exceed $8,900: And promded further, 
That 
for the purposes of this section the word 'veteran' shall mean a 
person who has served in the active military or naval service of 
the United States at any time on or after September 16,1940, and 
prior to July 26, 1947, or on or after June 27, 1950, and prior to 
such date thereafter as shall be determined by the President." 
(b) Section 213 (c) of said Act, as amended, is hereby amended 
by striking from clause (1) "paragraph (A), paragraph (C), or 
paragraph (D) of". 
SEC. 120. Section 213 (f) of said Act, as amended, is hereby amended 
by striking the last sentence thereof. 
SEC. 121. Section 217 of said Act, as amended, is hereby amended 
to read as follows: 
"SEC. 217. Notwithstanding limitations contained in any other sec-
tion of this Act on the aggregate amount of principal obligations of 
mortgages or loans which may be insured (or insured and outstanding 
at any one time), the aggregate amount of principal obligations of 
all mortgages which may be insured and outstanding at any one time 
under insurance contracts or commitments to insure pursuant to any 
section or title of this Act (except section 2) shall not exceed the 
sum of (a) the outstanding principal balances, as of July 1, 1954, of 
all insured mortgages (as estimated by the Commissioner based on 
scheduled amortization payments without taking into account pre-
payments or delinquencies), (b) the principal amount of all outstand-
ing commitments to insure on that date, and (c) $1,500,000,000, except 
that with the approval of the President such aggregate amount may 
be increased by not to exceed $500,000,000. 
"It is the intent and purpose of this section to consolidate and merge 
all existing mortgage insurance authorizations or existing limitations 
with respect to any section or title of this Act (except section 2) into 
one general insurance authorization to take the place of all existing 
authorizations or limitations." 
SEC. 122. Section 219 of said Act, as amended, is hereby amended 
by striking out the words "or the Defense Housing Insurance Fund," 
and inserting "the Defense Housing Insurance Fund, or the Section 
220 Housing Insurance Fund,". 
* 
SEC. 123. Title I I of said Act, a;' amended, is hereby amended by 
adding at the end thereof the follov^ing new sections: 
" R E H A B I L I T A T I O N A N D NEIGHBcfellOOD CONSERVATION HOUSING 
INSURANCE 
Purpose. 
12 u s e 170 9, 
1713. 
Authority. 
"SEC. 220. (a) The purpose of this section is to aid in the elimination 
of slums and blighted conditions and the prevention of the deteriora-
tion of residential property by supplementing the insurance of mort-
gages under sections 203 and 207 of this title with a system of mort-
gage insurance designed to assist the financing required for the 
rehabilitation of existing dwelling accommodations and the construc-
tion of new dwelling accommodations where such dwelling accom-
modations are located in an area referred to in paragraph (1) of 
subsection (d) of this section. 
"(b) The Commissioner is authorized, upon application by the 
mortgagee, to insure, as hereinafter provided, any mortgage (includ-
ing advances during construction on mortgages covering property of 
the character described in paragraph (3) (B) of subsection (d) of this 
section) which is eligible for insurance as hereinafter provided, and, 
upon such terms and conditions as he may prescribe, to make commit-
68 
S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
597 
ments for the insurance of such mortgages prior to the date of their 
execution or disbursement thereon. 
"(c) As used in this section, the terms 'mortgage', 'first mortgage', 
'mortgagee', 'mortgagor', 'maturity date', and 'State' shall have the 
same meaning as in section 201 of this Act. 
"(d) To be eligible for insurance under this section a mortgage shall 
meet the following conditions: 
"(1) The mortgaged property shall— 
"(A) be located in (i) the area of a slum clearance and urban 
redevelopment project covered by a Federal-aid contract executed, 
or a prior approval granted, pursuant to title I of the Housing 
Act of 1949, as amended, before the effective date of the Housing 
Act of 1954, or (ii) an urban renewal area (as defined in title I 
of the Housing Act of 1949, as amended) in a community respect-
ing which the Housing and Home Finance Administrator has 
made the certification to the Commissioner provided for by sub-
section 101 (c) of the Housing Act of 1949, as amended: Provided^ 
That a redevelopment plan or an urban renewal plan (as defined 
in title I of the Housing Act of 1949, as amended), as the case 
may be, has been approved for such area by the governing body 
of the locality involved and by the Housing and Home Finance 
Administrator, and said Administrator has certified to the Com-
missioner that such plan conforms to a general plan for the 
locality as a whole and that there exist the necessary authority 
and financial capacity to assure the completion of such redevelop-
ment or urban renewal plan, and 
"(B) meet such standards and conditions as the Commissioner 
shall prescribe to establish the acceptability of such property for 
mortgage insurance under this section. 
"(2) The mortgaged property shall be held by— 
"(A) a mortgagor approved by the Commissioner, and the 
Commissioner may in his discretion require such mortgagor to be 
regulated or restricted as to rents or sales, charges, capital struc-
ture, rate of return and methods of operation, and for such 
purpose the Commissioner may make such contracts with and 
acquire for not to exceed $100 stock or interest in any such 
mortgagor as the Commissioner may deem necessary to render 
effective such restriction or regulations. 
Such stock or interest 
shall be paid for out of the Section 220 Housing Insurance Fund 
and shall be redeemed by the mortgagor at par upon the termina-
tion of all obligations of the Commissioner under the insurance; or 
"(B) by Federal or State instrumentalities, municipal corpo-
rate instrumentalities of one or more States, or limited dividend 
or redevelopment or housing corporations restricted by Federal or 
State laws or regulations of State banking or insurance depart-
ments as to rents, charges, capital structure, rate of return, or 
methods of operation. 
"(3) The mortgage shall involve a principal obligation (including 
such initial service charges, appraisal, inspection and other fees as 
the Commissioner shall approve) in an amount— 
"(A) not to exceed $20,000 in the case of property upon which 
there is located a dwelling designed principally for a one- or two-
family residence; or $27,500 in the case of a three-family resi-
dence ; or $35,000 in the case of a four-family residence; or in the 
case of a dwelling designed principally for residential use for 
more than four families (but not exceeding such additional num-
ber of family units as the Commissioner may prescribe) $35,000 
plus not to exceed $7,000 for each additional family unit in 
excess of four located on such property; and not to exceed an 
Definitions. 
12 u s e 1707. 
Eligibility. 
Location. 
63 Stat. 413. 
4 2 u s e 
145 1-
1460. 
42 u s e 1451. 
Plan. 
eertification. 
Standards. 
Mortgagor. 
Federal or State 
instrumentalities, 
etc. 
Mortgage limits. 
598 
PXJBLIC LAW 560-AUG. 2, 1954 
[68 S T A T . 
Amortization. 
12 u s e 1709. 
Interest. 
amount equal to the sum of (i) 95 per centum (but, in any case 
where the dwelling is not approved for mortgage insurance prior 
to the beginning of construction, 90 per centum) of $9,000 of 
the appraised value (as of the date the mortgage is accepted for 
insurance), and (ii) 75 per centum of such value ,in excess of 
$9,000, except that the President may increase such dollar amounts 
up to not to exceed $10,000 if, after taking into consideration the 
general effect of such higher dollar amounts upon conditions in 
the building industry and upon the national economy, he deter-
mines such action to be in the public interest: Provided, That if 
the mortgagor is not the occupant of the property the principal 
obligation of the mortgage shall not exceed an amount equal to 
85 per centum of the amount computed under the foregoing pro-
visions of this paragraph (A); or 
"(B) (i) not to exceed $5,000,000, or, if executed by a mort-
gagor coming within the provisions of paragraph (2) (B) of this 
subsection (d), not to exceed $50,000,000; and 
"(,ii) not to exceed 90 per centum of the estimated value of the 
property or project when the proposed improvements are com-
pleted (the value of the property or project may include the 
land, the proposed physical improvements, utilities within the 
boundaries of the property or project, architect's fees, taxes, and 
interest during construction, and other miscellaneous charges 
incident to construction and approved by the Commissioner) ; and 
"(iii) not to exceed, for such part of such property or project 
as may be attributable to dwelling use, $2,250 per room (or $8,100 
per family unit if the number of rooms in such property or project 
is less than four per family unit) : Provided, That as to projects 
to consist of elevator-type structures, the Commissioner may, in 
his discretion, increase the dollar amount limitation of $2,250 
per room to not to exceed $2,700 per room and the dollar amount 
limitation of $8,100 per family unit to not to exceed $8,400 per 
family unit, as the case may be, to compensate for the higher costs 
incident to the construction of elevator-type structures of sound 
standards of construction and design, except that the Commis-
sioner may, by regulation, increase the foregoing limits by not 
to exceed $1,000 per room in any geographical area where he finds 
that cost levels so require: And provided further, That nothing 
contained in this paragraph (B) shall preclude the insurance of 
mortgages covering existing multifamily dwellings to be reha-
bilitated or reconstructed for the purposes set forth in subsection 
(a) of this section. 
"(4) The mortgage shall provide for complete amortization by 
periodic payments within such terms as the Commissioner may pre-
scribe, but as to mortgages coming within the provisions of paragraph 
(3) (A.) of this subsection (d) not to exceed the maximum maturity 
prescribed by the provisions of section 203 (b) (3). 
The mortgage 
shall bear interest (exclusive of premium charges for insurance and 
service charge, if any) at not to exceed 5 per centum per annum on the 
amount of the principal obligation outstanding at any time, or not to 
exceed such per centum per annum not in excess of 6 per centum as the 
Commissioner finds necessary to meet the mortgage market; contain 
such terms and provisions with respect to the application of the mort-
gagor's periodic payment to amortization of the principal of the 
mortgage, insurance, repairs, alterations, payment of taxes, default 
reserves, delinquency charges, foreclosure proceedings, anticipation of 
maturity, additional and secondary liens, and other matters as the 
Commissioner may in his discretion prescribe. 
68 
S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
599 
"(e) The Commissioner may at any time, under such terms and 
conditions as he may prescribe, consent to the release of the mortgagor 
from his liability under the mortgage or the credit instrument secured 
thereby, or consent to the release of parts of the mortgaged property 
from the lien of the mortgage. 
"(f) The mortgagee shall be entitled to receive the benefits of the 
insurance as hereinafter provided— 
"(1) as to mortgages meeting the requirements of paragraph 
(3) (A) of subsection (d) of this section, as provided in section 
204 (a) of this Act with respect to mortgages insured under section 
203; and the provisions of subsections (b), (c), (d), (e), (f), (g), 
and (h) of section 204 of this Act shall be applicable to such mort-
gages insured under this section, except that all references therein 
to the Mutual Mortgage Insurance Fund or the Fund shall be 
construed to refer to the Section 220 Housing Insurance Fund and 
all references therein to section 203 shall be construed to refer to 
this section; or 
"(2) as to mortgages meeting the requirements of paragraph 
(3) (B) of subsection (d) of this section, as provided in section 
207 (g) of this Act with respect to mortgages insured under said 
section 207, and the provisions of subsections (h), (i), (j), (k), 
and (1) of section 207 of this Act shall be applicable to such 
mortgages insured under this section, and all references therein 
to the Housing Insurance Fund or the Housing Fund shall be 
construed to refer to the Section 220 Housing Insurance Fund. 
"(g) There is hereby created a Section 220 Housing Insurance Fund 
which shall be used by the Commissioner as a revolving fund for 
carrying out the provisions of this section, and the Commissioner is 
liereby authorized to transfer to such Fund the sum of $1,000,000 from 
the War Housing Insurance Fund established pursuant to the provi-
sions of section 602 of this Act, General expenses of operation of the 
Federal Housing Administration under this section may be charged 
to the Section 220 Housing Insurance Fund. 
"Moneys in the Section 220 Housing Insurance Fund not needed for 
the current operations of the Federal Housing Administration under 
this section shall be deposited with the Treasurer of the United States 
to the credit of such Fund, or invested in bonds or other obligations 
of, or in bonds or other obligations guaranteed as to principal and 
interest by, the United States. 
The Commissioner may, with the 
approval of the Secretary of the Treasury, purchase in the open market 
debentures issued under the provisions of this section. Such purchases 
shall be made at a price which will provide an investment yield of not 
less than the yield obtainable from other investments authorized by 
this section. 
Debentures so purchased shall be canceled and not 
reissued. 
"Premium charges, adjusted premium charges, and appraisal and 
other fees received on account of the insurance of any mortgage 
accepted for insurance under this section, the receipts derived from the 
property covered by such mortgage and claims assigned to the Commis-
sioner in connection therewith shall be credited to the Section 220 
Housing Insurance Fund. 
The principal of, and interest paid and to 
be paid on, debentures issued under this section, cash adjustments, and 
expenses incurred in the handling, management, renovation, and dis-
posal of properties acquired under this section shall be charged to such 
Fund. 
"SEC. 221. (a) This section is designed to supplement systems of 
mortgage insurance under other provisions of tlie National Housing 
Act in order to assist in relocating families to be displaced as the result 
of governmental action in a community respecting which (1) the 
Release. 
B e n e f i t provi-
sions. 
1 2 u s e 
1709. 
17 10, 
12 u s e 1713. 
Section 220 Hous-
i n g 
I n s u r a n c e 
Fund. 
ereation. 
12 u s e 1737. 
Relocation hous-
ing. 
600 
PUBLIC LAW 560-AUG. 2, 1954 
[68 ST A T , 
42 u s e 1451. 
42 u s e 
145 l-
1460. 
e o m m u n i t y re-
quest. 
Priority. 
Limitation. 
Restriction. 
Limitation. 
Authority. 
Definitions. 
12 u s e 1707. 
Eligibility. 
Mortgage limits. 
Housing and Home Finance Administrator has made the certification 
to the Commissioner provided for by subsection 101 (c) of the Housing 
Act of 1949, as amended, or (2) there is being carried out a project 
covered by a Federal aid contract executed, or prior approval granted, 
by the Housing and Home Finance Administrator under title I of 
the Housing Act of 1949, as amended, before the effective date of the 
Housing Act of 1954. Mortgage insurance under this section shall be 
available only in those localities or communities which shall have 
requested such mortgage insurance to be provided: Promded^ That 
the Commissioner shall prescribe such procedures as in his judg-
ment are necessary to secure to the families to be so displaced, referred 
to above, a preference or priority of opportunity to purchase or rent 
such dwelling units: Provided further^ That the total number of dwell-
ing units in properties covered by mortgage insurance under this sec-
tion in any such community shall not exceed the aggregate number 
of such dwelling units which the Housing and Home Finance Admin-
istrator, from time to time, certifies to the Commissioner to be needed 
for the relocation of families to be so displaced and who would be 
eligible to rent or purchase dwelling accommodations in properties 
covered by mortgage insurance authorized by this section: Provided 
further^ That, with respect to any community referred to in clause 
(1) of this subsection, said Administrator shall not certify any dwell-
ing units during any period when, in his opinion, the locality fails to 
carry out the workable program upon which said Administrator based 
the certification to the Commissioner that mortgage insurance under 
this section may be made available in such community: And 
provided 
further^ That with respect to any community referred to in clause (2) 
of this subsection (but not clause (1) thereof), the number of dwelling 
units certified by said Administrator shall not exceed the number 
which he estimates to be needed for the relocation of such displaced 
families during the period when the project referred to in said clause 
(2) is being carried out. 
"(b) The Commissioner is authorized, upon application by the 
mortgagee, to insure under this section as hereinafter provided any 
mortgage which is eligible for insurance as provided herein and, 
upon such terms and conditions as the Commissioner may prescribe, 
to make commitments for the insurance of such mortgages prior to the 
date of their execution or disbursement thereon. 
"(c) As used in this section, the terms 'mortgage', 'first mortgage', 
'mortgagee', 'mortgagor', 'maturity date' and 'State' shall have the 
same meaning as in section 201 of this Act. 
"(d) To be eligible for insurance under this section, a mortgage 
shall— 
"(1) have been made to and be held by a mortgagee approved 
by the Commissioner as responsible and able to service the mort-
gage properly; 
"(2) involve a principal obligation (including such initial 
service charges, appraisal, inspection, and other fees as the 
Commissioner shall approve) in an amount not to exceed $7,600, 
except that the Commissioner may by regulation increase this 
amount to not to exceed $8,600 in any geographical area where he 
finds that cost levels so require, and not to exceed 95 per centum 
of the appraised value (as of the date the mortgage is accepted 
for insurance) of a property, upon which there is located a 
dwelling designed principally for a single-family residence: 
Provided^ That the mortgagor shall be the owner and occupant 
of the property at the time of the insurance and shall have paid 
on account of the property at least 5 per centum of the Commis-
sioner's estimate of the cost of acquisition in cash or its equiva-
68 
S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
601 
lent: Provided further, That nothing contained herein shall pre-
clude the Commissioner from issuing a commitment to insure and 
insuring a mortgage pursuant thereto where the mortgagor is 
not the owner and occupant and the property is to be built or 
acquired and repaired or rehabilitated for sale and the insured 
mortgage financing is required to facilitate the construction or the 
repair or rehabilitation of the dwelling and provide financing 
pending the subsequent sale thereof to a qualified ow^ner-occupant, 
and in such instances the mortgage shall not exceed 85 per centum 
of the appraised value; or 
"(3) if executed by a mortgagor which is a private nonprofit 
corporation or association or other acceptable private nonprofit 
organization, regulated or supervised under Federal or State 
laws or by political subdivisions of States or agencies thereof, as 
to rents, charges, and methods of operation, in such form and 
such manner as, in the opinion of the Commissioner, will 
Commitment. 
m 
effectuate the purposes of this section, the mortgage may involve 
a principal obligation not in excess of $5,000,000; and not in 
excess of $7,600 per family unit for such part of such property 
or project as may be attributable to dwelling use, except that 
the Commissioner may by regulation increase this amount to not 
to exceed $8,600 in any geographical area where he finds that cost 
levels so require, and not in excess of 95 per centum of the Com-
missioner's estimate of the value of the property or project when 
constructed, or repaired and rehabilitated, for use as rental 
accommodations for ten or more families eligible for occu-
pancy as provided in this section; and 
"(4) provide for complete amortization by periodic payments 
within such terms as the Commissioner may prescribe, but not to 
exceed thirty years from the date of insurance of the mortgage 
or three-quarters of the Commissioner's estimate of the remaining 
economic life of the building improvements, whichever is the 
lesser; bear interest (exclusive of premium charges for insurance 
and service charge, if any) at not to exceed 5 per centum per 
annum on the amount of the principal obligation outstanding at 
any time, or not to exceed such per centum per annum not in excess 
of 6 per centum as the Commissioner finds necessary to meet the 
mortgage market; and contain such terms and provisions with 
respect to the application of the mortgagor's periodic payment to 
amortization of the principal of the mortgage, insurance, repairs, 
alterations, payment of taxes, default reserves, delinquency 
charges, foreclosure proceedings, anticipation of maturity, addi-
tional and secondary liens, and other matters as the Commis-
sioner may in his discretion prescribe. 
"(e) The Commissioner may at any time, under such terms and 
conditions as he may prescribe, consent to the release of the mortgagor 
from his liability under the mortgage or the credit instrument secured 
thereby, or consent to the release of parts of the mortgaged property 
from the lien of the mortgage. 
"(f) The property or project shall comply Avith such standards 
nnd conditions as the Commissioner may prescribe to establish the 
acceptability of such property for mortgage insurance. 
"(g) The mortgagee shall be entitled to receive the benefits of the 
insurance as hereinafter provided— 
"(1) as to mortgages meeting the requirements of paragraph 
(2) of subsection (d) of this section, as provided in section 
204 (a) of this Act with respect to mortgages insured under section 
203, and the provisions of subsections (b), (c), (d), (e), (f), (g), 
and (h) of section 204 of this Act shall be applicable to such 
Amortization. 
Release. 
Standards. 
B e n e f i t 
provi-
sions. 
12 u s e 
17 10, 
1709. 
602 
PUBLIC LAW 560-AUG. 2, 1954 
[68 S T A T . 
12 use 1709. 
12 use 1713. 
Debenttires. 
Definition. 
12 use 1713. 
mortgages insured under this section, except that all references 
therein to the Mutual Mortgage Insurance Fund or the Fund shall 
be construed to refer to the Section 221 Housing Insurance Fund 
and all references therein to section 203 shall be construed to refer 
to this section; or 
"(2) as to mortgages meeting the requirements of paragraph 
(3) of subsection (d) of this section, as provided in section 207 (g) 
of this Act with respect to mortgages insured under said section 
207, and the provisions of subsections (h), (i), (j), (k),and (1) of 
section 207 of this Act shall be applicable to such mortgages 
insured under this section, and all references therein to the Hous-
ing Insurance Fund or the Housing Fund shall be construed to 
refer to the Section 221 Housing Insurance Fund; or 
"(3) in the event any mortgage insured under this section is 
not in default at the expiration of twenty years from the date the 
mortgage was endorsed for insurance, the mortgagee shall, within 
a period thereafter to be determined by the Commissioner, have 
the option to assign, transfer, and deliver to the (Commissioner 
the original credit instrument and the mortgage securing the 
same and receive the benefits of the insurance as hereinafter 
provided in this paragraph, upon compliance with such require-
ments and conditions as to the validity of the mortgage as a first 
lien and such other matters as may be prescribed by the Commis-
sioner at the time the loan is endorsed for insurance. 
Upon such 
assignment, transfer, and delivery the obligation of the mortgagee 
to pay the premium charges for insurance shall cease, and the 
Commissioner shall, subject to the cash adjustment provided 
herein, issue to the mortgagee debentures having a total face 
Value equal to the amount of the original principal obligation of 
the mortgage which was unpaid on the date of the assignment, 
plus accrued interest to such date. 
Debentures issued pursuant 
to this paragraph (3) shall be issued in the same manner and 
subject to the same terms and conditions as debentures issued 
under paragraph (1) of this subsection, except that the debentures 
issued pursuant to this paragraph (3) shall be dated as of the 
date the mortgage is assigned to the Commissioner, shall mature 
ten years after such date, and shall bear interest from such date 
at the going Federal rate determined at the time of issuance. 
The 
term 'going Federal rate' as used herein means the annual rate of 
interest which the Secretary of the Treasury shall specify as 
applicable to the six-month period (consisting of January through 
June or July through December) which includes the issuance date 
of such debentures, which applicable rate for each such six-month 
period shall be determined by the Secretary of the Treasury by 
estimating the average yield to maturity, on the basis of daily 
closing market bid quotations or prices during the month of May 
or the month of November, as the case may be, next preceding 
such six-month period, on all outstanding marketable obligations 
of the United States having a maturity date of eight to twelve 
years from the first day of such month of May or November (or, 
if no such obligations are outstanding, the obligation next shorter 
than eight years and the obligation next longer than twelve years, 
respectively, shall be used), and by adjusting such estimated 
average annual yield to the nearest one-eighth of 1 per centum. 
The Commissioner shall have the same authority with respect 
to mortgages assigned to him under this paragraph as contained 
in section 207 (k) and section 207 (1) as to mortgages insured 
by the Commissioner and assigned to him under section 207 of 
this Act. 
68 S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
603 
" (h) There is hereby created a Section 221 Housing Insurance Fund Housing* in°siS-anci 
which shall be used by the Commissioner as a revolving fund for carry- Fmid 
ing out the provisions of this section, and the Commissioner is hereby 
authorized to transfer to such Fund the sum of $1,000,000 from the 
War Housing Insurance Fund established pursuant to the provisions 
of section 602 of this Act. 
General expenses of operation of the 
Federal Housing Administration under this section may be charged to 
the Section 221 Housing Insurance Fund. 
"Moneys in the Section 221 Housing Insurance Fund not needed 
for the current operations of the Federal Housing Administration 
under this section shall be deposited with the Treasurer of the United 
States to the credit of such Fund, or invested in bonds or other obliga-
tions of, or in bonds or other obligations guaranteed as to principal 
and interest by, the United States. The Commissioner may, with the 
approval of the Secretary of the Treasury, purchase in the open 
market debentures issued under the provisions of this section. Such 
purchases shall be made at a price which will provide an investment 
yield of not less than the yield obtainable from other investments 
authorized by this section. Debentures so purchased shall be canceled 
and not reissued. 
"Premium charges, adjusted premium charges, and appraisal and 
other fees received on account of the insurance of any mortgage 
accepted for insurance under this section, the receipts derived from 
the property covered by such mortgage and claims assigned to the 
Commissioner in connection therewith shall be credited to the Section 
221 Housing Insurance Fund. The principal of, and interest paid and 
to be paid on, debentures issued under this section, cash adjustments, 
and expenses incurred in the handling, management, renovation, and 
disposal of properties acquired under this section shall be charged to 
such Fund." 
SEC. 124. Title I I of said Act, as amended, is further amended by 
adding at the end thereof the following new section: 
Creation. 
12 u s e 1737. 
12 u s e 1709. 
Definition. 
MORTGAGE INSURANCE FOR SERVICEMEN 
"SEC. 222. (a) The purpose of this section is to aid in the provision 
Purpose, 
of housing accommodations for servicemen in the Armed Forces of the 
United States and their families, and servicemen in the United States 
Coast Guard and their families, by supplementing the insurance of 
mortgages under section 203 of this title with a system of mortgage 
insurance specially designed to assist the financing required for the 
construction or purchase of dwellings by those persons. As used in 
this section, a 'serviceman' means a person to whom the Secretary of 
Defense (or any officer or employee designated by him), or the Secre-
tary of the Treasury (or any officer or employee designated by him), 
as the case may be, has issued a certificate hereunder indicating that 
such person requires housing, is serving on active duty in the Armed 
Forces of the United States or in the United States Coast Guard and 
has served on active duty for more than two years, but a certificate 
shall not be issued hereunder to any person ordered to active duty for 
training purposes only. The Secretary of Defense and the Secretary 
of the Treasury, respectively, are authorized to prescribe rules and 
regulations governing the issuance of such certificates and may with-
hold issuance of more than one such certificate to a serviceman when-
ever in his discretion issuance is not justified due to circumstances 
resulting from military assignment, or, in the case of the United States 
Coast Guard, other assignment. 
"(b) In addition to mortgages insured under section 203, the Com-
missioner may, for the purpose of this section, insure any mortgage gayest 
under this section which would be eligible for insurance under section 
12 u s e 1709. 
Additional mort-
604 
PUBLIC LAW 560-AUG. 2, 1954 
[68 S T A T . 
12 u s e 1709. 
Definition. 
12 u s e 
1 7 1 0 , 
1709. 
S e r v i c e me n's 
M o r t g a g e Insui^ 
ance Fund. 
Creation. 
12 u s e 1737. 
203, except that as to mortgages so insured the maximum ratio of 
loan to value may, in the discretion of the Commissioner, exceed the 
maximum ratio of loan to value prescribed in section 203 but not to 
exceed in any event 95 per centum of the appraised value of the 
property and not to exceed $17,100: Provided, That a mortgage insured 
under this section shall have been executed by a mortgagor who is 
a serviceman and who, at the time of insurance, is the owner of the 
property and either occupies the property or certifies that his failure 
to do so is the result of his military assignment, or, in the case of the 
United States Coast Guard, other assignment. 
"(c) The Commissioner may prescribe the manner in which a 
mortgage may be accepted for insurance under this section. 
Pre-
miums fixed by the Commissioner under section 203 with respect to, 
or payable during, the period of ownership by a serviceman of the 
property involved shall not be payable by the mortgagee but shall be 
paid not less frequently than once each year, upon request of the Com-
missioner to the Secretary of Defense or the Secretary of the Treas-
ury, as the case may be, from the respective appropriations available 
for pay and allowances of persons eligible for mortgage insurance 
under this section. 
As used herein, 'the period of ownership by a 
serviceman' means the period, for which premiums are fixed, prior 
to the date that the Secretary of Defense (or any officer or employee 
or other person designated by him) or the Secretary of the Treasury 
(or any officer or employee or other person designated by him), as 
the case may be, furnishes the Commissioner with a certification that 
such ownership (as defined by the Commissioner) has terminated. 
"(d) Any mortgagee under a mortgage insured under this section is 
entitled to the benefits of the insurance as provided in section 204 (a) 
with respect to mortgages insured under section 203. 
"(e) The provisions of subsections (b), (c), (d), (e), (f), (g),and 
(h) of section 204 shall apply to mortgages insured under this section, 
except that as applied to those mortgages (1) all references to the 
'Fund', or 'Mutual Mortgage Insurance Fund', shall refer to the 
'Servicemen's Mortgage Insurance Fund', and (2) all references to 
'section 203' shall refer to this section. 
"(f) There is hereby created a Servicemen's Mortgage Insurance 
Fund to be used by the Commissioner as a revolving fund to carry out 
the provisions of this section, and the Commissioner is directed to 
transfer the sum of $1,000,000 to such Fund from the War Housing 
Insurance Fund created by section 602 of this Act. Any premium 
charges, adjusted premium charges, and appraisal and other fees 
received on account of the insurance of any mortgage accepted for 
insurance under this section, the receipts derived from the property 
covered by such mortgage and claims assigned to the Commissioner 
in connection therewith shall be credited to the Servicemen's Mortgage 
Insurance Fund. The principal of, and interest paid and to be paid 
on, debentures issued under this section, and cash adjustments and 
expenses incurred in the handling, management, renovation, and dis-
posal of properties acquired under this section shall be charged to the 
Servicemen's Mortgage Insurance Fund. General expenses of opera-
tion of the Federal Housing Administration incurred under this sec-
tion may be charged to the Servicemen's Mortgage Insurance Fund. 
Moneys in that Fund not needed for the current operation of the 
Federal Housing Administration under this section shall be deposited 
with the Treasurer of the United States to the credit of that Fund, or 
invested in bonds or other obligations of, or in bonds or other obli-
gations guaranteed as to principal and interest by, the United States. 
The Commissioner may, with the approval of the Secretary of the 
Treasury, purchase in the open market debentures issued under this 
68 S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
605 
section. Those purchases shall be made at a price which will provide 
an investment yield of not less than the yield obtainable from other 
investments authorized by this section. Debentures so purchased shall 
be canceled and not reissued." 
SEC. 125. Title I I of said Act, as amended, is hereby further amended ^ a^^^lu^ho^ft "^f" 
by adding at the end thereof the following new section to transfer to Title ii. 
title II the mortgage insurance program in connection with the sale 
^^ "^^ ^^^^' 
of certain publicly owned property as contained in section 610 of title 
V I ; the insurance of mortgages to refinance existing loans insured 
under section 608 of title VI and sections 903 and 908 of title I X ; ly^s^byfrsbg.^'*^' 
and to authorize the insurance under title II of mortgages assigned 
to the Commissioner under insurance contracts and mortgages held 
by the Commissioner in connection with the sale of property acquired 
under insurance contracts: 
a MISCELLANEOUS HOUSING 
INSURANCE 
"SEC. 223, (a) Notwithstanding any of the provisions of this title^ 
and without regard to limitations upon eligibility contained in section 
203 or section 207, the Commissioner is authorized, upon application 
12 use 1709, 
by the mortgagee, to insure or make commitments to insure under ^ ^^* 
section 203 or section 207 of this title any mortgage— 
"(1) executed in connection with the sale by the Government, 
or any agency or official thereof, of any housing acquired or con-
structed under Public Law 849, Seventy-sixth Congress, as 
4 2^u^sc^i"2i-
amended; Public Law 781, Seventy-sixth Congress, as amended; 1590. 
or Public Laws 9, 73, or 353, Seventy-seventh Congress, as stat. 14, '197, sio. 
amended (including any property acquired, held, or constructed 
in connection with such housing or to serve the inhabitants 
thereof); or 
"(2) executed in connection with the sale by the Public Hous-
ing Administration, or by any public housing agency with the 
approval of the said Administration, of any housing (including 
any property acquired, held, or constructed in connection with 
such housing or to serve the inhabitants thereof) owned or finan-
cially assisted pursuant to the provisions of Public Law 671, 
i o ^u°s c^l's 01-
Seventy-sixth Congress; or 
isos. 
"(3) executed in connection with the sale by the Government, 
or any agency or official thereof, of any of the so-called Greenbelt 
towns, or parts thereof, including projects, or parts thereof, known 
as Greenhills, Ohio; Greenbelt, Maryland; and Greendale, Wis-
consin, developed under the Emergency Relief Appropriation 
Act of 1935, or of any of the village properties or employee's 
49 stat. 115. 
housing under the jurisdiction of the Tennessee Valley Authority; 
or 
"(4) executed in connection with the sale by a State or munici-
pality, or an agency, instrumentality, or political subdivision of 
either, of a project consisting of any permanent housing (includ-
ing any property acquired, held, or constructed in connection 
therewith or to serve the inhabitants thereof), constructed by or 
on behalf of such State, mvmicipality, agency, instrumentality, 
or political subdivision, for the occupancy of veterans of World 
War II, or Korean veterans, their families, and others; or 
"(5) executed in connection with the first resale, within two 
years from the date of its acquisition from the Government, of 
any portion of a project or property of the character described 
in paragraphs (1), (2), and (3) above; or 
''(6) given to refinance an existing mortgage insured under 
section 608 of title VI prior to the effective date of the Housing 
12 use 1743. 
12 u s e 1 709. 
1713. 
606 
PUBLIC LAW 560-AUG. 2, 1954 
[68 S T A T . 
i750gy^^ 1750b, 
Act of 1954 or under section 903 or section 908 of title I X : 
Provided, That the principal amount of any such refinancing 
mortgage shall not exceed the original principal amount or the 
unexpired term of such existing mortgage and shall bear interest 
at a rate not in excess of the maximum rate applicable to loans 
insured under section 203 or section 207, as the case may be, except 
that in any case involving the refinancing of a loan insured under 
section 608 or 908 in which the Commissioner determines that the 
insurance of a mortgage for an additional term will inure to the 
benefit of the applicable insurance fund, taking into consideration 
the outstanding insurance liability under the existing insured 
mortgage, such refinancing mortgage may have a term not more 
than twelve years in excess of the unexpired term of such existing 
insured mortgage: Provided, That a mortgage of the character 
described in paragraph (1), (2), (3), (4), or (5) shall have a 
maturity satisfactory to the Commissioner, but not to exceed the 
maximum term applicable to loans insured under section 203 or 
section 207, as the case may be, and shall involve a principal 
obligation (including such initial service charges, appraisal, 
inspection, and other fees as the Commissioner shall approve) in 
an amount not exceeding 90 per centum of the appraised value of 
the mortgaged property, as determined by the Commissioner, and 
bear interest (exclusive of premium charges and service charges, 
if any) at not to exceed the maximum rate applicable to loans 
insured under section 203 or section 207, as the case may be, except 
that where a mortgage of a character described in paragraph (1), 
(2), (3), or (5) covers property held by a nonprofit cooperative 
ownership housing corporation or nonprofit cooperative ownership 
housing trust, the permanent occupancy of the dwellings of which 
is restricted to members of such corporation or to beneficiaries of 
such trust, if at least 65 per centum of such members or bene-
ficiaries are veterans, such principal obligation may be in an 
amount not exceeding 95 per centum of such appraised value. 
"(b) The Commissioner shall also have authority to insure under 
this title any mortgage assigned to him in connection with payment 
under a contract of mortgage insurance or executed in connection with 
the sale by him of any property acquired under title I, title II, title VI, 
title VII, title VIII, or title I X without regard to any limitation 
upon eligibility contained in this title II." 
SEC. 126. Title I I of said Act, as amended, is hereby amended by 
adding at the end thereof the following new sections: 
u 
DEBENTURE INTEREST RATE 
"SEC. 224. Notw,ithstandiiig any other provisions of this Act, deben-
tures issued under any section of this Act with respect to a mortgage 
accepted for insurance on or after thirty days following the effective 
date of the Housing Act of 1954 (except debentures issued pursuant 
Ante, p. 601. 
to paragraph (3) of section 221 (g) hereof) shall bear interest at the 
rate in effect at the time the mortgage is insured. The Commissioner 
shall from time to time, with the approval of the Secretary of the 
Treasury, establish such interest rate in an amount not in excess of 
the annual rate of interest determined by the Secretary of the Treas-
ury, at the request of the Commissioner, by estimating the average 
yield to maturity, on the basis of daily closing market bid quotations 
or prices during the calendar month next preceding the establishment 
of such rate of interest, on all outstanding marketable obligations of 
the United States having a maturity date of fifteen years or more from 
the first day of such next preceding month, and by adjusting such 
68 S T A T , ] 
PUBLIC LAW 560-AUG. 2, 1954 
607 
estimated average annual yield to the nearest one-eighth of 1 per 
centum. 
a, 
OPEN-END MORTGAGES 
"SEC. 225. Notwithstanding any other provisions of this Act, in 
connection with any mortgage insured pursuant to any section of this 
Act which covers a property upon which there is located a dwelling 
designed principally for residential use for not more than four fami-
lies in the aggregate, the Commissioner is authorized, upon such terms 
and conditions as he may prescribe, to insure under said section the 
amount of any advance for the improvement or repair of such prop-
erty made to the mortgagor pursuant to an *open-end' provision in 
the mortgage, and to add the amount of such advance to the original 
principal obligation in determining the value of the mortgage for the 
purpose of computing the amounts of debentures and certificate of 
claim to which the mortgagee may be entitled: Provided, That the 
Commissioner may require the payment of such charges, including 
charges in lieu of insurance premiums, as he may consider appro-
priate for the insurance of such 'open-end' advances: Provided 
fur-
ther, That only advances for such .improvements or repairs as sub-
stantially protect or improve the basic livability or utility of the prop-
erty involved shall be eligible for insurance under this section: Pro-
vided further, That no such advance shall be insured under this section 
if the amount thereof plus the amount of the unpaid balance of the 
original principal obligation of the mortgage would exceed the amount 
of such original principal obligation unless the mortgagor certifies 
that the proceeds of such advance will be used to finance the construc-
tion of additional rooms or other enclosed space as a part of the 
dwelling: And provided 
further, 
That the insurance of 'open-end' 
advances shall not be taken into account in determining the aggregate 
amount of principal obligations of mortgages which may be insured 
under this Act. 
Charges. 
Eli gib ility 
quire me nt. 
Restrictions. 
;( 
FHA APPRAISAL AVAILABLE TO HOME BUYERS 
"SEC. 226, The Commissioner is hereby authorized and directed to 
require that, in connection with any property upon which there is 
located a dwelling designed principally for a single-family residence 
or a two-family residence and which is approved for mortgage insur-
ance under section 203, 213 with respect to any property or project of a 
corporation or trust of the character described in paragraph numbered 
(2) of subsection (a) thereof, 220, 221, 222, or 903 of this Act, the 
seller or builder or such other person as may be designated by 
the Commissioner shall agree to deliver, prior to the sale of the 
property, tp the person purchasing such dwelling for his own occu-
pancy, a written statement setting forth the amount of the appraised 
value of the property as determined by the Commissioner, 
This 
section shall not apply in any case where the mortgage involved was 
insured or the commitment for such insurance was issued prior to 
the effective date of the Housing Act of 1954. 
" B U I L D E R ' S COST CERTIFICATION 
"SEC. 227. Notwithstanding any other provisions of this Act, no 
mortgage covering new or rehabilitated multifamily housing shall be 
insured under this Act unless the mortgagor has agreed (a) to certify, 
upon completion of the physical improvements on the mortgaged 
property or project and pfior to final endorsement of the mortgage, 
either (i) that the approved percentage of actual cost (as those terms 
are herein defined) equaled or exceeded the proceeds of the mortgage 
12 u s e 1709, 
1715e. 
Ante, p p . 596, 
599, 603. 
12 u s e 1750b. 
N o n a p plic abil-
ity. 
608 
PUBLIC LAW 560-AUG. 2, 1954 
[68 S T A T , 
Definitions. 
12 u s e 171 3, 
17l5e. 
Ante, p.596. 
Ante, p. 599. 
loan or (ii) the amount by which the proceeds of the mortgage loan 
exceeded such approved percentage of actual cost, as the case may be, 
and (b) to pay forthwith to the mortgagee, for application to the 
reduction of the principal obligation of such mortgage, the amount, 
if any, certified to be in excess of such approved percentage of actual 
cost. As used in this section— 
"(a) The term 'new or rehabilitated multifamily housing' means 
a project or property approved for mortgage insurance prior to the 
construction or the repair and rehabilitation involved and covered 
by a mortgage insured or to be insured (i) under section 207, (ii) 
under section 213 with respect to any property or project of a cor-
poration or trust of the character described in paragraph numbered 
(1) of subsection (a) thereof, (iii) under section 220 if the mortgage 
meets the requirements of paragraph (3) (B) of subsection (d) 
thereof, (iv) under section 221, (v) under section 803, or (vi) under 
nsob^^rl ^^'*^''' sections 903 and 908; 
' ^ °^" 
"(b) The term 'approved percentage' means the percentage figure 
which, under applicable provisions of this Act, the Commissioner is 
authorized to apply to his estimate of value or replacement cost, as the 
case may be, of the property or project in determining the maximum 
insurable mortgage amount; and 
"(c) The term 'actual cost' has the following meaning: (i) in case 
the mortgage is to assist the financing of new construction, the term 
means the actual cost to the mortgagor of such construction, including 
amounts paid for labor, materials, construction contracts, off-site 
public utilities, streets, organizational and legal expenses, and other 
items of expense approved by the Commissioner, plus (1) a reason-
able allowance for builder's profit if the mortgagor is also the builder 
as defined by the Commissioner, and (2) an amount equal to the Com-
missioner's estimate of the fair market value of any land (prior to 
the construction of the improvements built as a part of the project) 
in the property or project owned by the mortgagor in fee (or, in case 
the land in the property or project is held by the mortgagor under a 
leasehold or other interest less than a fee, such amount as the mortgagor 
paid for the acquisition of such leasehold or other interest but, in no 
event, in excess of the fair market value of such leasehold or other 
interest exclusive of the proposed improvements), but excluding the 
amount of any kickbacks, rebates, or trade discounts received in con-
nection with the construction of the improvements, or (ii) in case the 
mortgage is to assist the financing of repair or rehabilitation, the term 
means the actual cost to the mortgagor of such repair or rehabilitation, 
including the amounts paid for labor, materials, construction contracts, 
off-site public utilities, streets, organization and legal expenses, and 
other items of expense approved by the Commissioner, plus (1) a rea-
sonable allowance for builder's profit if the mortgagor is also the 
builder as defined by the Commissioner, and (2) an additional amount 
equal to (A) in case the land and improvements are to be acquired by 
the mortgagor and the purchase price thereof is to be financed with part 
of the proceeds of the mortgage, the purchase price of such land and 
improvements prior to such repair or rehabilitation, or (B) in case 
the land and improvements are owned by the mortgagor subject to 
an outstanding indebtedness to be refinanced with part of the proceeds 
of the mortgage, the amount of such outstanding indebtedness (with-
out reduction by reason of the application of the approved percentage 
requirements of this section) secured by such land and improvements, 
but excluding (for the purposes of this clause (ii)) the amount of 
any kickbacks, rebates, or trade discounts received in connection with 
the construction of the improvements: Provided, 
That such addi-
tional amount under either (A) or (B) of this clause (ii) shall in no 
event exceed the Commissioner's estimate of the fair market value of 
such land and improvements prior to such repair or rehabilitation. 
68 
S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
609 
"SEC. 228. Notwithstanding section 505 of the Classification Act of 
1949, as amended, the Commissioner may establish and place one 
position in grade GS-18, four positions in grade GS-17, and eight 
positions in grade GS-16 in the Federal Housing Administration, 
which positions shall be in lieu of any positions presently allocated 
in the Federal Housing Administration under said section 505." 
GS-16, 17 and 18 
positions. 
63 Stat. 959. 
5 u s e 1105. 
ADDITIONAL AMENDMENTS RELATING TO FEDERAL HOUSING ADMINISTRATION 
SEC. 127. Title VI of said Act, as amended, is hereby amended by 
adding the following new section at the end thereof: 
"SEC. 612. Notwithstanding any other provision of this title, no 
mortgage or loan shall be insured under any section of this title after 
the effective date of the Housing Act of 1954 except pursuant to a 
commitment to insure issued on or before such date." 
SEC. 128. (a) Section 803 (a) of said Act, as amended, is amended 
by striking out "July 31, 1954" and substituting therefor "June 30, 
1955". 
(b) Section 903 (a) of said Act, as amended, is hereby amended by 
adding the following before the last proviso thereof: ^''Provided fur-
ther, That the Commissioner shall require each dwelling covered by 
a mortgage insured under this section, for which a commitment to 
insure is issued after the effective date of the Housing Act of 1954, 
to be held for rental for a period of not less than three years after the 
dwelling is made available for initial occupancy:". 
SEC. 129. Section 104 of the Defense Housing and Community 
Facilities and Services Act of 1951, as amended, is hereby amended as 
follows: (1) by striking out the material within the parentheses in 
clause (a) and substituting therefor "except (i) pursuant to a com-
mitment to insure issued on or before such date or (ii) after July 31, 
1954, and until July 1,1955, during such period, or for such project or 
projects, as the President may designate hereunder", and (2) by 
adding after the last comma in clause (b) "except after July 31, 1954, 
and until July 1, 1955, during such period, or for such project or 
projects, as the President may designate hereunder: Provided, That, 
to the extent necessary to assure the adequate completion of any 
facilities for which prior agreements have been made under title III, 
the Housing and Home Finance Administrator may, at any time after 
July 31, 1954, enter into amendatory agreements under such title 
involving the expenditure of additional Federal funds within the 
balance available therefor on or before such date". 
SEC. 130. The paragraph following paragraph numbered (3) of 
section 803 (b) of the National Housing Act, as amended, and para-
graph numbered (3) of section 908 (b) of said Act, as amended, are 
hereby amended to read as follows: "The mortgagor shall enter into 
the agreement required by section 227 of this Act, as amended." 
SEC. 131. The eighth paragraph of section 709 of title 18 of the 
United States Code is hereby amended to read as follows: 
"Whoever uses as a firm or business name the words 'Housing and 
Home Finance Agency', 'Federal Housing Administration', 'Federal 
National Mortgage Association', or 'Public Housing Administration' 
or the letters 'FHA' or any combination or variation of those words or 
the letters 'FHA' alone or with other words or letters reasonably 
calculated to convey the false impression that such name or business 
has some connection with, or authorization from, the Housing and 
Home Finance Agency, the Federal Housing Administration, the 
Federal National Mortgage Association, the Public Housing Admin-
istration, the Government of the United States or any agency thereof, 
which does not in fact exist, or falsely claims that any repair, improve-
War housing in-
surance. 
Termination. 
12 u s e 1748b. 
Military housing 
insurance. 
Extension. 
12 u s e 1750b. 
R e n t a l require-
ment. 
65 Stat. 295. 
42 u s e 1591c. 
Expiration date. 
Agreement. 
1 2 u s e 
1748b, 
1750g. 
Ante, p. 607. 
62 Stat. 734. 
F a l s e advertis-
ing or m i s u s e of 
names. 
39777 O—55—pt. 1-
-41 
610 
PUBLIC LAW 560-AUG. 2, 1954 
[68 S T A T . 
49 u s e 22. 
58 Stat. 291. 
3 8 u s e 
6 9 4 -
694n. 
Hotel purposes. 
I n t e n t of Con^ 
gress. 
Prohibitions. 
ment, or alteration of any existing structure is required or rec-
ommended by the Housing and Home Finance Agency, 
the 
Federal Housing Administration, the Federal National Mortgage 
Association, the Public Housing Administration, the Government of 
the United States or any agency thereof, for the purpose of inducing 
any person to enter into a contract for the making of such repairs, 
alterations, or improvements, or falsely advertises or falsely represents 
by any device whatsoever that any housing unit, project, business, 
or product has been in any way endorsed, authorized, inspected, 
appraised, or approved by the Housing and Home Finance Agency, 
the Federal Housing Administration, the Federal National Mortgage 
Association, the Public Housing Administration, the Government 
of the United States or any agency thereof; or". 
SEC. 132. Title V of the National Housing Act, as amended, is 
hereby amended by adding the following new sections after section 511: 
"SEC. 512. Notwithstanding any other provision of law, the Com-
missioner is authorized to refuse the benefits of participation (either 
directly as an insured lender or as a borrower, or indirectly as a 
builder, contractor, or dealer, or salesman or sales agent for a builder, 
contractor or dealer) under title I, II, VI, VII, VIII, or I X of this 
Act to any person or firm (including but not limited to any individual, 
partnership, association, trust, or corporation) if the Commissioner 
has determined that such person or firm (1) has knowingly or willfully 
violated any provision of this Act or of title I I I of the Servicemen s 
Readjustment Act of 1944, as amended, or of any regulation issued 
by the Commissioner under this Act or by the Administrator of Vet-
erans' Affairs under said title III, or (2) has, in connection with any 
construction, alteration, repair or improvement work financed with 
assistance under this Act or under said title I I I , or in connection 
with contracts or financing relating to such work, violated any Federal 
or State penal statute, or (3) has failed materially to properly carry 
out contractual obligations with respect to the completion of con-
struction, alteration, repair, or improvement work financed with assist-
ance under this Act or under title I I I of the Servicemen's Readjust-
ment Act of 1944, as amended. 
Before any such determination is made 
any person or firm with respect to whom such a determination is 
proposed shall be notified in writing by the Commissioner and shall 
be entitled, upon making a written request to the Commissioner, to a 
written notice specifying charges in reasonable detail and an oppor-
tunity to be heard and to be represented by counsel. Determinations 
made by the Commissioner under this section shall be based on the 
preponderance of the evidence. 
"SEO. 513. (a) The Congress hereby declares that it has been its 
intent since the enactment of the National Housing Act that housing 
built with the aid of mortgages insured under that Act is to be used 
principally for residential use; and that this intent excludes the use of 
such housing for transient or hotel purposes while such insurance on 
the mortgage remains outstanding. 
"(b) Notwithstanding any other provisions of this Act, no new, 
existing, or rehabilitated multifamily housing with respect to which 
a mortgage is insured under this Act shall be operated for transient or 
hotel purposes unless (1) on or before May 28,1954, the Commissioner 
has agreed in writing to the rental of all or a portion of the accommo-
dations in the project for transient or hotel purposes (in which case no 
accommodations in excess of the number so agreed to by the Commis-
sioner shall be rented on such basis), or (2) the project covered by the 
insured mortgage is located in an area which the Commissioner deter-
mines to be a resort area, and the Commissioner finds that prior to May 
28,1954, a portion of the accommodations in the project had been made 
68 
S T A T . ] 
PUBLIC LAW 560"AUG. 2, 1954 
611 
available for rent for transient or hotel purposes (in which case no 
accommodations in excess of the number which had been made avail-
able for such use shall be rented on such basis). 
"(c) Notwithstanding any other provisions of this Act, no mortgage 
with respect to multif amily housing shall be insured under this Act 
(except pursuant to a commitment to insure issued prior to the effective 
date of the Housing Act of 1954), and (except as to housing coming 
within the provisions of clause (1) or clause (2) of the preceding 
subsection) no mortgage with respect to multif amily housing shall be 
insured for an additional term, unless (1) the mortgagor certifies under 
oath that while such insurance remains outstanding he will not rent, 
or permit the rental of, such housing or any part thereof for transient 
or hotel purposes, and (2) the Commissioner has entered into such 
contract with, or purchased such stock of, the mortgagor as the Com-
missioner deems necessary to enable him to prevent or terminate any 
use of such property or project for transient or hotel purposes while 
the mortgage insurance remains outstanding. 
"(d) The Commissioner is hereby authorized and directed to enforce 
the provisions of this section by all appropriate means at his disposal, 
as to all existing multif amily housing with respect to which a mortgage 
was insured under this Act prior to the effective date of the Housing 
x^ct of 1954 as well as to all multif amily housing with respect to which 
a mortgage is hereafter insured under this Act: Provided^ That no 
criminal penalty shall, by reason of enactment of this section, be 
applicable to the rental or operation of any such existing multifamily 
housing in violation of any provision of subsection (b) of this section 
at any time prior to the effective date of the Housing Act of 1954. 
"(e) As used in this section, (1) the term 'rental for transient or 
hotel purposes' shall have such meaning as prescribed by the Commis-
sioner but rental for any period less than thirty days shall in any event 
constitute rental for such purposes, and (2) the term 'multifamily 
housing' shall mean (i) a property held by a mortgagor upon which 
there are located five or more single family dwellings, or upon which 
there is located a two-, three-, or four-family dwelling, or (ii) a prop-
erty or project covered by mortgage insured or to be insured under 
section 207, under section 213 with respect to any property or project 
of a corporation or trust of the character described in paragraph num-
bered (1) of subsection (a) thereof, under section 220 if the mortgage 
is within the provisions of paragraph (3) (B) of subsection (d) 
thereof, under section 221 if the mortgage is within the provisions of 
paragraph (3) of subsection (d) thereof, under section 608, under 
section 803, or under section 908, or (iii) a project with respect to 
which an insurance contract pursuant to title VII is outstanding. 
"(f) Promptly after receipt of written notice that any portion of 
any building is being rented or operated in violation of any provision 
of this section or of any rule or regulation lawfully issued thereunder, 
the Commissioner shall investigate the existence of the facts alleged 
in the written notice and shall order such violation, if found to exist, 
to cease forthwith. 
"(g) If such violation does not cease in accordance with such order, 
thg Commissioner shall forward the complaint to the Attorney Gen-
eral of the United States for prosecution of such civil or criminal 
action, if any, which the Attorney General may find to be involved 
in such violation. 
"(h) Whenever he finds a violation of any provision of this section 
has occurred or is about to occur, the Attorney General shall petition 
the district court of the United States or the district court of any 
Territory or other place subject to United States jurisdiction within 
whose jurisdictional limits the person doing or committing the acts 
Certification. 
Enforcement. 
Definitions. 
1 2 u s e 
1 7 1 3 , 
1715e. 
Ante, p. 596. 
Ante, p. 599. 
12 u s e 17 43, 
1748b, 1750K. 
Inve stigation. 
Violation. 
Authority of At-
torney General. 
Injunctions. 
612 
PUBLIC LAW 560-AUG. 2, 1954 
[68 S T A T , 
In June t Ive re-
lief. 
District courts. 
Jurisdiction. 
Federal National 
Mortgage Associa-
tion Charter Act. 
or practices constituting the alleged violation of this section shall be 
found, for an order enjoining such acts or practices, and upon a show-
ing by the Attorney General that such acts or practices constituting 
such violation have been engaged in or are about to be engaged in. 
a permanent or temporary injunction, restraining order, or other 
order, with or without such injunction or restraining order, shall be 
granted without bond. 
"(i) Any person owning or operating a hotel within a radius of 
fifty miles of a place where a violation of any provision of this section 
has occurred or is about to occur, or any group or association of hotel 
owners or operators within said fifty-mile radius, at his or their sole 
charge or cost, may petition any district court of the United States 
or the district court of any Territory or other place subject to United 
States jurisdiction within whose jurisdictional limits the person doing 
or committing the acts or practices constituting the alleged violation 
of this section shall be found, for an order enjoining such acts or 
practices, and, upon a showing that such acts or practices constituting 
such violation have been engaged in or are about to be engaged in, 
a permanent or temporary injunction, restraining order, or other 
order, with or without such injunction or restraining order, shall be 
granted. 
"(j) The several district courts of the United States and the sev-
eral district courts of the Territories of the United States or other 
place subject to United States jurisdiction, within whose jurisdic-
tional limits the person doing or committing the acts or practices 
constituting the alleged violation shall be found, shall, wheresoever 
such acts or practices may have been done or committed, have full 
power and jurisdiction to near, try, and determine such matter under 
subsections (h) and (i) of this section." 
TITLE II—FEDERAL NATIONAL MORTGAGE 
ASSOCIATION 
SEC. 201. Title I I I of the National Housing Act, as amended, is 
hereby amended to read as foUow^s: 
"TITLE III—FEDERAL NATIONAL MORTGAGE 
ASSOCIATION 
"PURPOSES 
"SEC. 301. The Congress hereby declares that the purposes of this 
title are to establish in the Federal Government a secondary market 
facility for home mortgages, to provide that the operations of such 
facility shall be financed by private capital to the maximum extent 
feasible, and to authorize such facility to— 
"(a) provide supplementary assistance to the secondary market 
for home mortgages by providing a degree of liquidity for 
mortgage investments, thereby improving the distribution of 
investment capital available for home mortgage financing; 
"(b) provide special assistance (when, and to the extent that, 
the President has determined that it is in the public interest) 
for the financing of (1) selected types of home mortgages (pend-
ing the establishment of their marketability) originated under 
special housing programs designed to provide housing of accept-
able standards at full economic costs for segments of the national 
population which are unable to obtain adequate housing under 
established home financing programs, and (2) home mortgages 
generally as a means of retarding or stopping a decline in mort-
68 
S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
613 
gage lending and home building activities which threatens 
materially the stability of a high level national economy; and 
"(c) manage and liquidate the existing mortgage portfolio 
of the Federal National Mortgage Association in an orderly 
manner, with a minimum of adverse effect upon the home mort-
gage market and minimum loss to the Federal Government. 
"CREATION OF ASSOCIATION 
"SEC. 302. (a) There is hereby created a body corporate to be 
known as the 'Federal National Mortgage Association' (hereinafter 
referred to as the 'Association'), which shall be a constituent agency 
of the Housing and Home Finance Agency. 
The Association shall 
have succession until dissolved by Act of Congress. 
It shall maintain 
its principal office in the District of Columbia and shall be deemed, 
for purposes of venue in civil actions, to be a resident thereof. 
Agen-
cies or offices may be established by the Association in such other place 
or places as it may deem necessary or appropriate in the conduct of 
its business. 
"(b) For the purposes set forth in section 301 and subject to the 
limitations and restrictions of this title, the Association is authorized 
to make commitments to purchase and to purchase, service, or sell, 
any residential or home mortgages (or participations therein) which 
are insured under this Act, as amended, or which are insured or guar-
anteed under the Servicemen's Readjustment Act of 1944, as amended: 
Provided^ That (1) no mortgage may be purchased at a price exceed-
ing 100 per centum of the unpaid principal amount thereof at the 
time of purchase, with adjustments for interest and any comparable 
items; and (2) the Association may not purchase any mortgage if (i) 
it is offered by, or covers property held by, a Federal, State, terri-
torial, or municipal instrumentality or (ii) the original principal 
obligation thereof exceeds or exceeded $15,000 for each family resi-
dence or dwelling unit covered by the mortgage. 
"CAPITALIZATION 
"SEC. 303. (a) The Association shall have nonvoting common stock; 
and initially shall also have nonvoting preferred stock to which the 
Secretary of the Treasury shall subscribe as provided in subsections 
(d) and (e) of this section. 
All stock of the Association shall have a 
par value of $100 per share, and shall not be transferable except on the 
books of the Association. 
At the option of the Association all such 
stock shall be retirable at par value at any time, except that retirements 
of common stock shall not be made if, as a consequence, the amount 
thereof remaining outstanding would be less than $100,000,000. 
With 
respect to the preferred stock held by him, the Secretary of the Treas-
ury shall be entitled to cumulative dividends for each fiscal year or 
portion thereof, from the date or dates the capital represented by such 
preferred stock is initially utilized until such preferred stock is retired, 
at rates determined by him at the beginning of each such fiscal year, 
taking into consideration the current average interest rate on outstand-
ing marketable obligations of the United States as of the last day of 
the preceding fiscal year. 
The Secretary of the Treasury shall permit 
the retirement of the preferred stock held by him in the manner 
provided in this section. 
Funds of the capital surplus and the general 
surplus accounts of the Association shall be available to retire the 
preferred stock held by the Secretary of the Treasury as rapidly as the 
Association shall deem feasible. 
Concurrently with the retirement of 
the last of such outstanding shares of preferred stock, the Association 
shall pay to the Secretary of the Treasury for covering into mis-
Federal National 
Mortgage Associ-
ation. 
58 Stat. 284. 
38 u s e 693note. 
614 
PUBLIC LAW 560-AUG. 2, 1954 
[68 STAT. 
cellaneous receipts an amount equal to that part of the general surplus 
and reserves of the Association (other than reserves established to 
provide for any depreciation in value of its assets, including mort-
gages) which shall be deemed to have been earned through the use of 
the capital represented by the shares held by him from time to time. 
The amount of such payment shall be determined by applying to such 
surplus and reserves that percentage which is equivalent to the pro-
portion borne by the employed capital represented by the Secretary's 
stock to the total employed capital of the Association, computed 
monthly for the period from the cutoff date determined pursuant to 
section 303 (d) of this title to the aforesaid retirement of the last of 
the outstanding shares of preferred stock of the Association. 
"(b) The Association shall accumulate funds for its capital surplus 
account from private sources by requiring each mortgage seller to make 
payments of nonrefundable capital contributions equal to not less than 
3 per centum of the unpaid principal amount of mortgages therein 
involved in purchases or contracts for purchases between such seller 
and the Association, or such greater percentage as may from time to 
time be determined by the Association. 
In addition, the Association 
may impose charges or fees for its services with the objective that all 
costs and expenses of its operations should be within its income derived 
from such operations and that such operations should be fully self-
supporting. 
All earnings from the operations of the Association shall 
annually be transferred to its general surplus account. 
At any time, 
funds of the general surplus account may, in the discretion of the board 
of directors, be transferred to reserves. AH dividends shall be charged 
against the general surplus account. 
This subsection (b) shall be 
Poat, p. 619. 
subject to the exceptions set forth in section 307 of this title. 
"(c) The Association shall issue, from time to time, to each mort-
gage seller its common stock (only in denominations of $100 or multi-
ples thereof) evidencing any capital contributions made by such seller 
pursuant to subsection (b) of this section. Such dividends as may be 
declared by the board of directors in its discretion shall be paid by the 
Association to the holders of its common stock, but in any one fiscal 
year the general surplus account of the Association shall not be reduced 
through the payment of dividends applicable to such common stock 
which exceed in the aggregate 5 per centum of the par value of the 
outstanding common stock of the Association: Provided, That pend-
ing the retirement of all the outstanding preferred stock of the Asso-
ciation such percentage with respect to any one fiscal year shall not 
exceed the percentage rate of the cumulative dividend applicable to 
the preferred stock of the Association for that fiscal year. 
" (d) Within ninety days following the effective date of the Housing 
Act of 1954, as of the day following a cutoff date to be determined by 
the Association, the Association is authorized and directed to issue 
and deliver to the Secretary of the Treasury, and the Secretary of the 
Treasury is authorized and directed to accept, preferred stock of the 
dissociation having an aggregate par value equal to the sum of (1) 
the amount of $21,000,000 (being the amount of the original subscrip-
tion for capital stock of $20,000,000 and paid-in surplus of $1,000,000 
of the Association) and (2) an amount equal to the Association's sur-
plus, surplus reserves, and undistributed earnings, computed as of the 
close of the cutoff date. 
"(e) The preferred stock of the Association delivered to the Secre-
tary of the Treasury pursuant to subsection (d) of this section shall 
be in exchange for (1) the note or notes evidencing the aforesaid 
original $21,000,000 (upon which the accrued interest shall have been 
paid through the cutoff date referred to in subsection (d) of this 
section), and (2) the release to the Association of any and all rights 
68 
S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
615 
or claims which the United States might otherwise have or claim in 
and to the Association's capital, surplus, surplus reserves, and undis-
tributed earnings, computed as of the close of the aforesaid cutoff 
date. 
"(f) Notwithstanding any other provision of law, any institution, 
including a national bank or State member bank of the Federal Reserve 
System or any member of the Federal Deposit Insurance Corporation, 
trust company, or other banking organization, organized under any 
law of the United States, including the laws relating to the District 
of Columbia, shall be authorized to make payments to the Association 
of the nonrefundable capital contributions referred to in subsection 
(b) of this section, to receive stock of the Association evidencing such 
capital contributions, and to hold or dispose of such stock, subject to 
the provisions of this title. 
" (g) As promptly as practicable after all of the preferred stock of 
the Association held by the Secretary of the Treasury has been retired, 
the Housing and Home Finance Administrator shall transmit to the 
President for submission to the Congress recommendations for such 
legislation as may be necessary or desirable to make appropriate 
provisions to transfer to the owners of the outstanding common stock 
of the Association the assets and liabilities of the Association in 
connection with, and the control and management of, the secondary 
market operations of the Association under section 304 of this title 
in order that such operations may thereafter be carried out by a 
privately owned and privately financed corporation. 
Legislation. 
Recommendation 
to President a n d 
Congress. 
Infra. 
SECONDARY MARKET OPERATIONS 
"SEC. 304. (a) To carry out the purposes set forth in paragraph 
(a) of section 301, the operations of the Association under this 
section shall be confined, so far as practicable, to mortgages which are 
deemed by the Association to be of such quality, type, and class as 
to meet, generally, the purchase standards imposed by private institu-
tional mortgage investors and the Association shall not purchase any 
mortgage insured or guaranteed prior to the effective date of the 
Housing Act of 1954. In the interest of assuring sound operation, the 
prices to be paid by the Association for mortgages purchased in its 
secondary market operations under this section, should be established, 
from time to time, at the market price for the particular class of 
mortgages involved, as determined by the Association. The volume 
of the Association's purchases and sales, and the establishment of the 
purchase prices, sale prices, and charges or fees, in its secondary 
market operations under this section, should be determined by the 
Association from time to time, and such determinations should be 
consistent with the objectives that such purchases and sales should be 
effected only at such prices and on such terms as will reasonably pre-
vent excessive use of the Association's facilities, and that the operations 
of the Association under this section should be within its income 
derived from such operations and that such operations should be 
fully self-supporting. 
"(b) For the purposes of this section, the Association is authorized 
to issue, upon the approval of the Secretary of the Treasury, and 
have outstanding at any one time obligations having such maturities 
and bearing such rate or rates of interest as may be determined by 
the Association with the approval of the Secretary of the Treasury, 
to be redeemable at the option of the Association before maturity in 
such manner as may be stipulated in such obligations; but the 
aggregate amount of obligations of the Association under this sub-
section outstanding at any one time shall not exceed ten times the sum 
of its capital, capital surplus, general surplus, reserves, and undis-
Ante, p. 612. 
616 
PXJBLIC LAW 560-AUG. 2, 1954 
[68 STAT. 
tributed earnings, and in no event shall any such obligations be issued 
if, at the time of such proposed issuance, and as a consequence thereof, 
the resulting aggregate amount of its outstanding obligations under 
this subsection would exceed the amount of the Association's owner-
ship pursuant to this section, free from any liens or encumbrances, 
of cash, mortgages, and bonds or other obligations of, or bonds or 
other obligations guaranteed as to principal and interest by, the 
United States. The Association shall insert appropriate language in 
all of its obligations issued under this subsection clearly indicating 
that such obligations, together with the interest thereon, are not 
guaranteed by the United States and do not constitute a debt or 
obligation of the United States or of any agency or instrumentality 
thereof other than the Association. The Association is authorized to 
purchase in the open market any of its obligations outstanding under 
this subsection at any time and at any price. 
"(c) The Secretary of the Treasury is authorized in his discretion 
to purchase any obligations issued pursuant to subsection (b) of this 
section, as now or hereafter in force, and for such purpose the Secre-
tary of the Treasury is authorized to use as a public debt transaction 
the proceeds of the sale of any securities hereafter issued under the 
31 use 774(2). Second Liberty Bond Act, as now or hereafter in force, and the pur-
poses for which securities may be issued under the Second Liberty 
Bond Act, as now or hereafter in force, are extended to include such 
purchases. The Secretary of the Treasury shall not at any time pur-
chase any obligations under this subsection if (1) all of the preferred 
stock of the Association held by the Secretary of the Treasury has 
been retired, or (2) such purchase would increase the aggregate prin-
cipal amount of his then outstanding holdings of such obligations 
under this subsection to an amount greater than $500,000,000 plus an 
amount equal to the total of such reductions in the maximum dollar 
amount prescribed by section 306 (c) as have theretofore been effected 
pursuant to that section: Provided^ That such aggregate principal 
amount under this subsection (c) shall in no event exceed $1,000,000,000. 
Each purchase of obligations by the Secretary of the Treasury under 
this subsection shall be upon such terms and conditions as to yield 
a return at a rate determined by the Secretary of the Treasury, taking 
into consideration the current average rate on outstanding market-
able obligations of the United States as of the last day of the month 
preceding the making of such purchase. The Secretary of the Treas-
ury may, at any time, sell, upon such terms and conditions and at such 
price or prices as he shall determine, any of the obligations acquired 
by him under this subsection. All redemptions, purchases, and sales 
by the Secretary of the Treasury of such obligations under this sub-
section shall be treated as public debt transactions of the United States. 
"(d) The Association may not purchase participations or make any 
advance contracts or commitments to purchase mortgages for its opera-
tions under this section, except that the Association may, in the dis-
cretion of its board of directors, issue a purchase contract (which shall 
not be assignable or transferable except with the consent of the Asso-
ciation) in an amount not exceeding the amount of the sale of mort-
gages purchased from the Association, entitling the holder thereof 
to sell to the Association mortgages in the amount of the contract, 
upon such terms and conditions as the Association may prescribe. 
Post, p. 618. 
u 
SPECIAL ASSISTANCE FUNCTIONS 
"SEC. 305. (a) To carry out the purposes set forth in paragraph (b) 
Ante, p. 612. 
of sectiou 301, the President, after taking into account (1) the condi-
tions in the building industry and the national economy and (2) con-
ditions affecting the home mortgage investment market, generally, or 
68 S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
617 
affecting various types or classifications of home mortgages, or both, 
and after determining that such action is in the public interest, may 
under this section authorize the Association, for such period of time 
and to such extent as he shall prescribe, to exercise its powers to make 
commitments to purchase and to purchase such types, classes, or cate-
gories of home mortgages (including participations therein) as he 
shall determine. 
"(b) The operations of the Association under this section shall be 
connned, so far as practicable, to mortgages (including participations) 
which are deemed by the Association to be of such quality as to meet, 
substantially and generally, the purchase standards imposed by private 
institutional mortgage investors but which, at the time of submission 
of the mortgages to the Association for purchase, are not necessarily 
readily acceptable to such investors. Subject to the provisions of this 
section, the prices to be paid by the Association for mortgages pur-
chased in its operations under this section shall be established from 
time to time by the Association. The Association shall impose charges 
or fees for its services under this section with the objective that all 
costs and expenses of its operations under this section should be within 
its income derived from such operations and that such operations 
should be fully self-supporting. 
"(c) The total amount of purchasers and commitments authorized 
by the President pursuant to subsection (a) of this section shall not 
exceed $200,000,000 outstanding at any one time: Provided^ That 
notwithstanding such limitation, the President pursuant to subsection 
(a) of this section may also authorize the Association to exercise its 
powers to enter into commitments to purchase immediate participa-
tions and to make related deferred participation agreements as here-
inafter in this subsection provided, but only to the extent that the total 
amount of such immediate participation commitments and purchases 
pursuant thereto (but not including the amount of any related 
deferred participation agreements or purchases pursuant thereto) 
shall not in any event exceed $100,000,000 outstanding at any one time, 
and any such deferred participation agreements shall be made by the 
Association only on the basis of a commitment by it to purchase an 
immediate participation of a 20 per centum undivided interest in 
each mortgage and a related deferred participation agreement by 
the Association to purchase the remaining outstanding interest in 
such mortgage conditional upon the occurrence of such a default as 
gives rise to the right to foreclose. 
"(d) The Association may issue to the Secretary of the Treasury its 
obligations in an amount outstanding at any one time sufficient to 
enable the Association to carry out its functions under this section, 
such obligations to mature not more than five years from their respec-
tive dates of issue, to be redeemable at the option of the Association 
before maturity in such manner as may be stipulated in such obliga-
tions. Each such obligation shall bear interest at a rate determined 
by the Secretary of the Treasury, taking into consideration the current 
average rate on outstanding marketable obligations of the United 
States as of the last day of the month preceding the issuance of the 
obligation of the Association. 
The Secretary of the Treasury is 
authorized to purchase any obligations of the Association to be issued 
under this section, and for such purpose the Secretary of the Treasury 
is authorized to use as a public debt transaction the proceeds from the 
sale of any securities issued under the Second Liberty Bond Act, as 
4o stet. 288. 
now or hereafter in force, and the purposes for which securities may 
be issued under the Second Liberty Bond Act, as now or hereafter in 
force, are extended to include any purchases of the Association's obli-
gations hereunder. 
618 
PUBLIC LAW 560-AUG. 2, 1954 
[68 S T A T , 
Ante, p. 612. 
Ante, p. 614. 
Ante, p. 614. 
"MANAGEMENT AND LIQUIDATING FUNCTIONS 
"SEC. 306. (a) To carry out the purposes set forth in paragraph (c) 
of section 301, the Association is authorized and directed, as of the 
close of the cutoff date determined by the Association pursuant to 
section 303 (d) of this title, to establish separate accountability for 
all of its assets and liabilities (exclusive of capital, surplus, surplus 
reserves, and undistributed earnings to be evidenced by preferred 
stock as provided in section 303 (d) hereof, but inclusive of all rights 
and obligations under any outstanding contracts), and to maintain 
such separate accountability for the management and orderly liquida-
tion of such assets and liabilities as provided in this section. 
"(b) For the purposes of this section and to assure that, to the 
maximum extent, and as rapidly as possible, private financing will 
be substituted for Treasury borrowings otherwise required to carry 
mortgages held under the aforesaid separate accountability, the 
Association is authorized to issue, upon the approval of the Secretary 
of the Treasury, and have outstanding at any one time obligations 
having such maturities and bearing such rate or rates of interest as 
may be determined by the Association with the approval of the Secre-
tary of the Treasury, to be redeemable at the option of the Association 
before maturity in such manner as may be stipulated in such obliga-
tions; but in no event shall any such obligations be issued if, at the 
time of such proposed issuance, and as a consequence thereof, the 
resulting aggregate amount of its outstanding obligations under this 
subsection would exceed the amount of the Association's ownership 
under the aforesaid separate accountability, free from any liens or 
encumbrances, of cash, mortgages, and bonds or other obligations of, 
or bonds or other obligations guaranteed as to principal and interest 
by, the United States. 
The proceeds of any private financing effected 
under this subsection shall be paid to the Secretary of the Treasury 
in reduction of the indebtedness of the Association to the Secretary 
of the Treasury under the aforesaid separate accountability. 
The 
Association shall insert appropriate language in all of its obligations 
issued under this subsection clearly indicating that such obligations, 
together with the interest thereon, are not guaranteed by the United 
States and do not constitute a debt or obligation of the United States 
or of any agency or instrumentality thereof other than the Associa-
tion. 
The Association is authorized to purchase in the open market 
any of its obligations outstanding under this subsection at any time 
and at any price. 
"(c) No mortgage shall be purchased by the Association in its 
operations under this section except pursuant to and in accordance 
with the terms of a contract or commitment to purchase the same 
made prior to the cutoff date provided for in section 303 (d), which 
contract or commitment became a part of the aforesaid separate 
accountability, and the total amount of mortgages and commitments 
held by the Association under this section shall not, in any event, 
exceed $3,350,000,000: Provided, 
That such maximum amount shall 
be progressively reduced by the amount of cash realizations on account 
of principal of mortgages held under the aforesaid separate account-
ability and by cancellation of any commitments to purchase mort-
gages thereunder, as reflected by the books of the Association, with 
the objective that the entire aforesaid maximum amount shall be 
eliminated with the orderly liquidation of all mortgages held under 
the aforesaid separate accountability: And provided further, 
That 
nothing in this subsection shall preclude the Association from grant-
ing such usual and customary increases in the amounts of outstanding 
commitments (resulting from increased costs or otherwise) as have 
theretofore been covered by like increases in commitments granted by 
68 S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
619 
the agencies of the Federal Government insuring or guaranteeing 
the mortgages. 
There shall be excluded from the total amounts set 
forth in this subsection and subsection (e) of this section the amounts 
of any mortgages which, subsequent to May 31, 1964, are transferred 
by law to the Association and held under the aforesaid separate 
accountability. 
"(d) The Association may issue to the Secretary of the Treasury its 
obligations in an amount outstanding at any one time sufficient to 
enable the Association to carry out its functions under this section, 
such obligations to mature not more than five years from their respec-
tive dates of issue, to be redeemable at the option of the Association 
before maturity in such manner as may be stipulated in such obliga- 
,-. 
tions. 
Each such obligation shall bear interest at a rate determined 
by the Secretary of the Treasury, taking into consideration the current 
average rate on outstanding marketable obligations of the United 
States as of the last day of the month preceding the issuance of the 
obligation of the Association. 
The Secretary of the Treasury is 
authorized to purchase any obligations of the Association to be issued 
under this section, and for such purpose the Secretary of the Treasury 
is authorized to use as a public debt transaction the proceeds from the 
sale of any securities issued under the Second Liberty Bond Act, as now 
^° ^*|^- yf^2). 
or hereafter in force, and the purposes for which securities may be 
issued under the Second Liberty Bond Act, as now or hereafter in 
force, are extended to include any purchases of the Association's 
obligations hereunder. 
"(e) Of the $3,650,000,000 total amount of investments, loans, pur-
chases, and commitments heretofore authorized to be outstanding at 
any one time under this title I I I prior to the enactment of the Housing 
Act of 1954, a total of not to exceed $300,000,000 shall be applicable as 
provided in section 305 of this title, and a total of not to exceed 
'*"'®' P- *^^-
$3,350,000,000 shall be applicable as provided in subsection (c) of this 
section. 
"SEPARATE ACCOUNTABILITY 
"SEC. 307. (a) The Association shall establish and at all times 
maintain separate accountability for (1^ its secondary market opera-
tions authorized by section 304 hereof, (2) its special assistance func- ^^^"If^ ^P* ^^^' 
tions authorized by section 305 hereof, and (3) its management and 
liquidating functions authorized by section 306 hereof. 
"(b) With respect to the functions or operations of the Association 
under sections 305 and 306, respectively, of this title, (1) there shall be gf^"'** PP* ^^^' 
no recourse to the capitalization of the Association provided for by 
section 303 of this title, and (2) mortgage sellers shall not be required 
^"*^' P- ^^3-
to make payment to the Association of the capital contributions pro-
vided for by section 303 (b) of this title. 
"(c) All of the benefits and burdens incident to the administration 
of the functions and operations of the Association under sections 305 
and 306, respectively, of this title, after allowance for related obliga- g/l"'®' PP- ^^^' 
tions of the Association, its prorated expenses, and the like, including 
amounts required for the establishment of such reserves as the board of 
directors of the Association shall deem appropriate, shall inure solely 
to the Secretary of the Treasury, and such related earnings or other 
amounts as become available shall be paid annually by the Association 
to the Secretary of the Treasury for covering into miscellaneous 
receipts. 
620 
PUBLIC LAW 560-AUG. 2, J954 
[68 S T A T , 
a 
Chairman. 
Condensation. 
BOARD OF DIRECTORS 
"SEC. 308. (a) The Association shall have a Board of Directors con-
sisting of five persons, one of whom shall be the Housing and Home 
Finance Administrator as Chairman of the Board, and four of whom 
shall be appointed by said Administrator from among the officers or 
employees of the Association, of the immediate office of said Adminis-
trator, or (with the consent of the head of such department or agency) 
of any other department or agency of the Federal Government. The 
board of directors shall meet at the call of its chairman, who shall 
require it to meet not less often than once each month. Within the 
limitations of law, the board shall determine the general policies which 
shall govern the operations of the Association. The chairman of the 
board shall select and effect the appointment of qualified persons to 
fill the offices of president and vice president, and such other offices 
as may be provided for in the bylaws, with such executive functions, 
powers, and duties as may be prescribed by the bylaws or by the board 
of directors, and such persons shall be the executive officers of the 
Association and shall discharge all such executive functions, powers, 
and duties. The basic rate of compensation of the position of president 
of the Association shall be the same as the basic rate of compensation 
established for the heads of the constituent agencies of the Housing 
and Home Finance Agency. The members of the board, as such, shall 
not receive compensation for their services. 
li 
59 Stat. 597. 
31 u s e 841 note. 
GENERAL POWERS 
"SEC. 309. (a) The Association shall have power to adopt, alter, and 
use a corporate seal, which shall be judicially noticed; by its board of 
directors, to adopt, amend, and repeal bylaws governing the perform-
ance of the powers and duties granted to or imposed upon it by law; 
to enter into and perform contracts, leases, cooperative agreements, or 
other transactions, on such terms as it may deem appropriate, with 
any agency or instrumentality of the United States, or with any State, 
Territory, or possession, or the Commonwealth of Puerto Rico, or with 
any political subdivision thereof, or with any person, firm, association, 
or corporation; to execute, in accordance with its bylaws, all instru-
ments necessary or appropriate in the exercise of any of its powers; 
in its corporate name, to sue and to be sued, and to complain and to 
defend, in any court of competent jurisdiction, State or Federal, but 
no attachment, injunction, or other similar process, mesne or final, 
shall be issued against the property of the Association or against the 
Association with respect to its property; to conduct its business in any 
State of the United States, including the District of Columbia, the 
Commonwealth of Puerto Rico, and the Territories and possessions of 
the United States; to lease, purchase, or acquire any property, real, 
personal, or mixed, or any interest therein, to hold, rent, maintain, 
modernize, renovate, improve, use, and operate such property, and to 
sell, for cash or credit, lease, or otherwise dispose of the same, at such 
time and in such manner as and to the extent that the Association may 
deem necessary or appropriate; to prescribe, repeal, and amend or 
modify, rules, regulations, or requirements, governing the manner in 
which its general business may be conducted; to accept gifts or dona-
tions of services, or of property, real, personal, or mixed, tangible, or 
intangible, in aid of any of the purposes of the Association; and to do 
all things as are necessary or incidental to the proper management 
of its affairs and the proper conduct of its business. 
"(b) Except as may be otherwise provided in this title, in the Gov-
ernment Corporation Control Act, or in other laws specifically appli-
cable to Government corporations, the Association shall determine 
68 
S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
621 
the necessity for and the character and amount of its obligations and 
expenditures and the manner in which they shall be incurred, allowed, 
paid, and accounted for, 
"(c) The Association, including its franchise, capital, reserves, sur-
plus, mortgages, and income shall be exempt from all taxation now 
or hereafter imposed by the United States, by any territory, depend-
ency, or possession thereof, or by any State, county, municipality, or 
local taxing authority, except that (1) any real property of the 
Association shall be subject to State, territorial, county, municipal, 
or local taxation to the same extent according to its value as other 
real property is taxed, and (2) the Association shall, with respect 
to its secondary market operations under section 304 after the cutoff 
date referred to in section 303 (d) of this title, pay annually to the 
Secretary of the Treasury, for covering into miscellaneous receipts, 
an amount equivalent to the amount of Federal income taxes for 
which it would be subject if it were not exempt from such taxes with 
respect to such secondary market operations. 
"(d) The Chairman of the Board shall have power to select and 
appoint or employ such officers, attorneys, employees, and agents, 
to vest them with such powers and duties, and to fix and to cause the 
Association to pay such compensation to them for their services, as 
he may determine, subject to the civil service and classification laws. 
Bonds may be required for the faithful performance of their duties, 
and the Association may pay the premiums therefor. With the con-
sent of any Government corporation or Federal Reserve bank, or of 
any board, commission, independent establishment, or executive 
department of the Government, the Association may avail itself on a 
reimbursable basis of the use of information, services, facilities, officers, 
and employees thereof, including any field service thereof, in carrying 
out the provisions of this title. 
"(e) 
No individual, association, partnership, or 
corporation, 
except the body corporate created by section 302 of this title, shall 
hereafter use the words 'Federal National Mortgage Association' or 
any combination of such words, as the name or a part thereof under 
which he or it shall do business. 
Every individual, partnership, 
association, or corporation violating this prohibition shall be guilty 
of a misdemeanor and shall be punished by a fine of not exceeding 
$100 or imprisonment not exceeding thirty days, or both, for each day 
during which such violation is committed or repeated. 
"(f) In order that the Association may be supplied with such forms 
of obligations or certificates as it may need for issuance under this 
title, the Secretary of the Treasury is authorized, upon request of the 
Association, to prepare such forms as shall be suitable and approved 
by the Association, to be held in the Treasury subject to delivery, 
upon order of the Association. The engraved plates, dies, bed pieces, 
and other material executed in connection therewith shall remain in 
the custody of the Secretary of the Treasury. The Association shall 
reimburse the Secretary of the Treasury for any expenses incurred in 
the preparation, custody, and delivery of such forms. 
" (g) The Federal Reserve banks are authorized and directed to act 
as depositaries, custodians, and fiscal agents for the Association in the 
general performance of its powers, and the Association shall reim-
burse such Federal Reserve banks for such services in such manner 
as may be agreed upon. 
'INVESTMENT OF FUNDS 
"SEC. 310. Moneys of the Association not invested in mortgages or in 
operating facilities shall be kept in cash on hand or on deposit, or 
invested in bonds or other obligations of, or in bonds or other obliga-
tions guaranteed as to principal and interest by, the United States. 
Ante, 
pp. 615, 
613. 
Prohibition. 
Ante, p. 61 3. 
Penalty. 
622 
PUBLIC LAW 560-AUG. 2, 1954 
[68 ST A T , 
"OBLIGATIONS OF ASSOCIATION LEGAL INVESTMENTS 
"SEO. 311. All obligations issued by the Association shall be lawful 
investments, and may be accepted as security for all fiduciary, trust, 
and public funds, the investment or deposit of which shall be under 
the authority and control of the United States or any officer or 
officers thereof. 
"SHORT TITLE 
59 Stat. 597. 
31 u s e 846. 
Ante, p. 613. 
12 u s e 24. 
47 Stat. 734. 
12 u s e 1431. 
12 u s e 1436. 
48 Stat. 132. 
12 u s e 1464. 
Repeals. 
63 Stat. 58. 
48 u s e 484e. 
65 S t a t . 6 9 9 , 
315. 
1 2 U S e 1716-1, 
1716a. 
Transfer of fimc-
tions. 
64 Stat. 1277. 
1 2 U S e 1716 
note. 
"SEC. 312. This title I I I may be referred to as the 'Federal National 
Mortgage Association Charter Act'." 
SEC. 202. The Federal National Mortgage Association, established 
pursuant to the provisions of title I I I of the National Housing Act 
as in effect prior to July 1, 1948, and named in section 101 of the 
Government Corporation Control Act, as amended, shall be the body 
corporate referred to in section 302 of title I I I of the National 
Housing Act, as amended by the Housing Act of 1954. 
SEC. 203. The penultimate sentence of paragraph Seventh of section 
5136 of the Revised Statutes, as amended, is hereby amended by 
striking "or obligations of national mortgage associations" and insert-
ing "or obligations of the Federal National Mortgage Association". 
SEC. 204. (a) Subsection (h) of section 11 of the Federal Home 
Loan Bank Act, as amended, is hereby amended by inserting after 
"in obligations of the United States" a comma and the following: 
"in obligations of the Federal National Mortgage Association,". 
The last sentence of section 16 of said Act is amended by inserting 
after "in direct obligations of the United States" a comma and 
the following: "in obligations of the Federal National Mortgage 
Association,". 
(b) The first paragraph of subsection (c) of section 5 of the Home 
Owners' Loan Act of 1933, as amended, is hereby amended by insert-
ing in the second proviso before the colon and after "Federal Home 
Loan Bank" the following: "or in the obligations of the Federal 
National Mortgage Association". 
SEC. 205. Subsection (b) of section 2 of the Alaska Housing Act, 
as amended, is hereby repealed. 
SEC. 206. Public Law 243, Eighty-second Congress, approved 
October 30, 1951, as amended, is hereby repealed. 
Subsection (a) 
of section 608 of Public Law 139, Eighty-second Congress, approved 
September 1,1951, is hereby repealed. 
SEC. 207. The functions of the Housing and Home Finance Admin-
istrator (including the function of making payments to the Secretary 
of the Treasury) under section 2 of Reorganization Plan Numbered 
22 of 1950, together with the notes and capital stock of the Federal 
National Mortgage Association held by said Administrator thereunder, 
are hereby transferred to the Federal National Mortgage Association. 
TITLE III—SLUM CLEARANCE AND URBAN RENEWAL 
63 Stat. 416. 
4 2 u s e 1 4 5 1-
1460. 
Poat, p. 624. 
SEC. 301. The heading of title I of the Housing Act of 1949, as 
amended, is hereby amended to read "TITLE I—SLUM CLEAR-
ANCE AND URBAN RENEWAL". 
SEC. 302. Title I of said Act, as amended, is hereby amended by in-
serting the folloAving new section immediatelv after the heading of 
title I : 
u 
URBAN R E N E W A L FUND 
"SEC. 100. The authorizations, funds, and appropriations available 
pursuant to sections 102 and 103 hereof shall constitute a fund, to be 
known as the 'Urban Renewal Fund', and shall be available for ad-
68 
S T A T . ] 
PUBLIC LAW 560--AUG. 2, 1954 
623 
vances, loans, and capital grants to local public agencies for urban 
renewal projects in accordance with the provisions of this title, and 
all contracts, obligations, assets, and liabilities existing under or pur-
suant to said sections prior to the enactment of the Housing Act of 
1954 are hereby transferred to said Fund." 
SEC. 303. Section 101 of said Act, as amended, is hereby amended 
to read as follows: 
"SEC. 101. (a) In entering into any contract for advances for sur-
veys, plans, and other preliminary work for projects under this title, 
the Administrator shall give consideration to the extent to which 
appropriate local public bodies have undertaken positive programs 
(through the adoption, modernization, administration, and enforce-
ment of housing, zoning, building and other local laws, codes and regu-
lations relating to land use and adequate standards of health, sani-
tation, and safety for buildings, including the use and occupancy 
of dwellings) for (1) preventing the spread or recurrence in the com-
munity of slums and blighted areas, and (2) encouraging housing cost 
reductions through the use of appropriate new materials, techniques, 
and methods in land and residential planning, design, and construc-
tion, the increase of efficiency in residential construction, and the 
elimination of restrictive practices which unnecessarily increase hous-
ing costs. 
"(b) In the administration of this title, the Administrator shall 
encourage the operations of such local public agencies as are estab-
lished on a State, or regional (within a State), or unified metropolitan 
basis or as are established on such other basis as permits such agencies 
to contribute effectively toward the solution of community develop-
ment or redevelopment problems on a State, or regional (within a 
State), or unified metropolitan basis. 
"(c) No contract shall be entered into for any loan or capital grant 
under this title, or for annual contributions or capital grants pursuant 
to the United States Housing Act of 1937, as amended, for any project 
or projects not constructed or covered by a contract for annual con-
tributions prior to the effective date of the Housing Act of 1954, and 
no mortgage shall be insured, and no commitment to insure a mortgage 
shall be issued, under section 220 or 221 of the National Housing Act, 
as amended, unless (1) there is presented to the Administrator by the 
locality a workable program (which shall include an official plan of 
action, as it exists from time to time, for effectively dealing with the 
problem of urban slums and blight within the community and for the 
establishment and preservation of a well-planned community with 
well-organized residential neighborhoods of decent homes and suitable 
living environment for adequate family life) for utilizing appropriate 
private and public resources to eliminate, and prevent the development 
or spread of, slums and urban blight, to encourage needed urban 
rehabilitation, to provide for the redevelopment of blighted, deteri-
orated, or slum areas, or to undertake such of the aforesaid activities or 
other feasible community activities as may be suitably employed to 
achieve the objectives of such a program, and (2) on the basis of his 
review of such program, the Administrator determines that such pro-
gram meets the requirements of this subsection and certifies to the 
constituent agencies affected that the Federal assistance may be made 
available in such community: Provided^ That this sentence shall not 
apply to the insurance of, or commitment to insure, a mortgage under 
section 220 of the National Housing Act, as amended, if the mortgaged 
property is in an area referred to in clause (A) (i) of paragraph (1) 
of section 220 (d), or under section 221 of the National Housing Act, 
as amended, if the mortgaged property is in a community referred to 
in clause (2) of section 221 (a) of said Act: And provided 
further, 
42 u s e 1451. 
Local programs. 
Requirements. 
SO Stat. 888. 
42 u s e 1430. 
A n t e , pp. 
599. 
596. 
624 
PUBLIC LAW 560-AUG. 2, 1954 
[68 S T A T . 
Ante, p. 599. 
Poat, p. 625. 
Urb an 
service. 
42 u s e 1452. 
Temporary 
a n d 
definitive plans. 
A d v a n c e s for 
surveys and plans. 
Repayment. 
That, notwithstanding any other provisions of law which would 
authorize such delegation or transfer, there shall not be delegated or 
transferred to any other official (except an officer or employee of the 
Housing and Home Finance Agency serving as Acting Administrator 
during the absence or disability of the Administrator or in the event of 
a vacancy in that office) the final authority vested in the Administra-
tor (i) to determine whether any such workable program meets the 
requirements of this subsection, (ii) to make the certification that 
Federal assistance of the types enumerated in this subsection may be 
made available in such community, (iii) to make the certifications as to 
the maximum number of dwelling units needed for the relocation of 
families to be displaced as a result of governmental action in a commu-
nity and who would be eligible to rent or purchase dwelling accommo-
dations in properties covered by mortgage insurance under section 221 
of the National Housing Act, as amended, or (iv) to determine that 
the relocation requirements of section 105 (c) of this title have been 
met. 
"(d) The Administrator is authorized to establish facilities (1) for 
furnishing to communities, at their request, an urban renewal service 
to assist them in the preparation of a workable program as referred to 
in the preceding subsection and to provide them with technical and 
professional assistance for planning and developing local urban 
renewal programs, and (2) for the assembly, analysis and reporting 
of information pertaining to such programs." 
SEC. 304. Section 102 of said Act, as amended, is hereby amended— 
(1) by amending the first sentence in subsection (a) to read 
as follows: "To assist local communities in the elimination of 
slums and blighted or deteriorated or deteriorating areas, in pre-
venting the spread of slums, blight or deterioration, and in 
providing maximum opportunity for the redevelopment, reha-
bilitation, and conservation of such areas by private enterprise, 
the Administrator may make temporary and definitive loans to 
local public agencies in accordance with the provisions of this 
title for the undertaking of urban renewal projects."; 
(2) by inserting in the second sentence of subsection (a) before 
the word "expenditures" the word "estimated" and by inserting 
after the word "bonds" the words "or other obligations"; 
(3) by striking out "new uses of land in the project area" at 
the end of the first sentence of subsection (b) and inserting "new 
uses of such land in the project area"; 
(4) by striking out the words "bear interest as such rate" in 
the second sentence of subsection (b) and inserting "bear interest 
at such rate"; and 
(5) by amending subsection (d) to read as follows: 
"(d) The Administrator may make advances of funds to local pub-
lic agencies for surveys and plans for urban renewal projects which 
may be assisted under this title, including, but not limited to, (i) 
plans for carrying out a program of voluntary repair and rehabili-
tation of buildings and improvements, (ii) plans for the enforcement 
of State and local laws, codes, and regulations relating to the use of 
land and the use and occupancy of buildings and improvements, and 
to the compulsory repair, rehabilitation, demolition, or removal of 
buildings and improvements, and (iii) appraisals, title searches, and 
other preliminary work necessary to prepare for the acquisition of 
land in connection with the undertaking of such projects. 
The con-
tract for any such advance of funds shall be made upon the condition 
that such advance of funds shall be repaid, with interest at not less 
than the applicable going Federal rate, out of any moneys which 
become available to the local public agency for the undertaking of 
68 S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
625 
the project involved. 
No contract for any such advances of funds 
for surveys and plans for urban renewal projects which may be 
assisted under this title shall be made unless the governing body of 
the locality involved has by resolution or ordinance approved the 
undertaking of such surveys and plans and the submission by the 
local public agency of an application for such advance of funds." 
SEC. 305. Subsection (a) of section 103 of said Act, as amended, 
is hereby amended to read as follows: 
"(a) The Administrator may make capital grants to local public 
agencies in accordance with the provisions of this title for urban 
renewal projects: Provided^ That the Administrator shall not make 
any contract for capital grant with respect to a project which consists 
of open land. 
The aggregate of such capital grants with respect to 
all the projects of a local public agency on which contracts for capital 
grants have been made under this title shall not exceed two-thirds 
of the aggregate of the net project costs of such projects, and the 
capital grant with respect to any individual project shall not exceed 
the difference between the net project cost and the local grants-in-aid 
actually made with respect to the project.". 
SEC. 306. Section 104 of said Act, as amended, is hereby amended by 
striking "section 110 (f) of land" and inserting "section 110 (f) of the 
property". 
SEC. 307. Section 105 of said Act, as amended, is hereby amended— 
(1) by striking "Contracts for financial aid" and inserting 
"Contracts for loans or capital grants"; 
(2) by amending subsections (a) and (b) to read as follows: 
"(a) The urban renewal plan (including any redevelopment 
plan constituting a part thereof) for the urban renewal area be 
approved by the governing body of the locality in which the 
project is situated, and that such approval include findings by the 
governing body that (i) the financial aid to be provided in the 
contract is necessary to enable the project to be undertaken in 
accordance with the urban renewal plan; (ii) the urban renewal 
plan will afford maximum opportunity, consistent with the sound 
needs of the locality as a whole, for the rehabilitation or redevel-
opment of the urban renewal area by private enterprise; and 
(iii) the urban renewal plan conforms to a general plan for the 
development of the locality as a whole; 
"(b) When real property acquired or held by the local public 
agency in connection with the project is sold or leased, the pur-
chasers or lessees and their assignees shall be obligated (i) to 
devote such property to the uses specified in the urban renewal 
plan for the project area; (ii) to begin within a reasonable time 
any improvements on such property required by the urban renewal 
plan; and (iii) to comply with such other conditions as the 
Administrator finds, prior to the execution of the contract for loan 
or capital grant pursuant to this title, are necessary to carry out the 
purposes of this title: Proy*6?ec?, That clause (ii) of this subsection 
shall not apply to mortgagees and others who acquire an interest 
in such property as the result of the enforcement of any lien or 
claim thereon;"; 
(3) by striking the word "project" wherever it appears in sub-
section (c) and inserting the term "urban renewal"; and 
(4) by striking out the proviso at the end of subsection (c), and 
substituting a period for the colon preceding said proviso. 
SEC. 308. Section 106 of said Act, as amended, is hereby amended by 
inserting the following proviso before the period at the end of sub-
section (b) : ": Provided^ That necessary expenses of inspections and 
audits, and of providing representatives at the site, of projects being 
Application. 
42 u s e 1453. 
Capital grants. 
42 u s e 1454. 
Local grants-in» 
aid. 
42 u s e 1455. 
Loans or capital 
grants. 
Requirements. 
Approval plan. 
Ob l i g a t i o n of 
purchasers, etc. 
42 u s e 1456. 
Audit and in-
spection fees. 
39777 o—55—pt. 1-
-42 
626 
PUBLIC LAW 560-AUG. 2, 1954 
[68 
S T A T . 
42 u s e 1457. 
42 u s e 1459. 
P r o t e c t i o n of 
labor standards. 
4 0 u s e 
2 7 6a-
276a-S. 
62 Stat. 740; 48 
Stat. 948. 
42 u s e 1460. 
Definitions. 
"Urban renewal 
areas." 
"Urban renewal 
plan." 
Ante, p. 623. 
planned or undertaken by local public agencies pursuant to this title 
shall be compensated by such agencies by the payment of fixed fees 
which in the aggregate will cover the costs of rendering such services, 
and such expenses shall be considered nonadministrative; and for the 
purpose of providing such inspections and audits and of providing 
representatives at the sites, the Administrator may utilize any agency 
and such agency may accept reimbursement or payment for such 
services from such local public agencies or the Administrator, and 
credit such amounts to the appropriations or funds against which such 
charges have been made". 
SEC. 309. Section 107 of said Act, as amended, is hereby amended by 
striking out the words "redevelopment plan" and inserting "urban 
renewal plan". 
SEC. 310. Section 109 of said Act, as amended, is hereby amended to 
read as follows: 
"SEC, 109. In order to protect labor standards— 
"(a) any contract for loan or capital grant pursuant to this 
title shall contain a provision requiring that not less than the 
salaries prevailing in the locality, as determined or adopted (sub-
sequent to a determination under applicable State or local law) 
by the Administrator, shall be paid to all architects, technical 
engineers, draftsmen, and technicians employed in the develop-
ment of the project involved and shall also contain a provision 
that not less than the wages prevailing in the locality, as pre-
determined by the Secretary of Labor pursuant to the Davis-
Bacon Act (49 Stat. 1011), shall be paid to all laborers and 
mechanics, except such laborers or mechanics who are employees 
of municipalities or other local public bodies, employed in the 
development of the project involved for work financed in whole 
or in part with funds made available pursuant to this title; and 
the Administrator shall require certification as to compliance with 
; 
the provisions of this paragraph prior to making any payment 
under such contract; and 
"(b) the provisions of title 18, United States Code, section 
874, and of title 40, United States Code, section 276c, shall apply 
to work financed in whole or in part with funds made available 
for the development of a project pursuant to this title ". 
SEC. 311. Section 110 of said Act, as amended, is hereby amended 
to read as follows: 
"SEC. 110. The following terms shall have the meanings, respec-
tively, ascribed to them below, and, unless the context clearly indicates 
otherwise, shall include the plural as well as the singular number: 
"(a) 'Urban renewal area' means a slum area or a blighted, deterio-
rated, or deteriorating area in the locality involved which the Admin-
istrator approves as appropriate for an urban renewal project. 
"(b) 'Urban renewal plan' means a plan, as it exists from time to 
time, for an urban renewal project, which plan (1) shall conform to 
the general plan of the locality as a whole and to the workable pro-
gram referred to in section 101 hereof; (2) shall be sufficiently com-
plete to indicate such land acquisition, demolition and removal of 
structures, redevelopment, improvements, and rehabilitation as may 
be proposed to be carried out in the urban renewal area, zoning and 
planning changes, if any, land uses, maximum densities, building 
requirements, and the plan's relationship to definite local objectives 
respecting appropriate land uses, improved traffic, public transporta-
tion, public utilities, recreational and community facilities, and other 
public improvements; and (3) shall include, for any part of the urban 
renewal area proposed to be acquired and redeveloped in accordance 
with clause (1) of the second sentence of subsection (c) of this 
"Urban 
project," 
68 S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
627 
section, a redevelopment plan approved by the governing body of the 
locality. 
"(c) 'Urban renewal project' or 'project' may include undertakings 
and activities of a local public agency in an urban renewal area for 
the elimination and for the prevention of the development or spread 
of slums and blight, and may involve slum clearance and redevelop-
ment in an urban renewal area, or rehabilitation or conservation in an 
urban renewal area, or any combination or part thereof, in accordance 
with such urban renewal plan. 
For the purposes of this subsection, 
'slum clearance and redevelopment' may include (1) acq^uisition of (i) 
a slum area or a deteriorated or deteriorating area, or (li) land which 
is predominantly open and which because of obsolete platting, diver-
sity of ownership, deterioration of structures or of site improvements, 
or otherwise, substantially impairs or arrests the sound growth of 
the community, or (iii) open land necessary for sound community 
growth which is to be developed for predominantly residential uses: 
Provided^ That the requirement in paragraph (a) of this section that 
the area be a slum area or a blighted, deteriorated, or deteriorating 
area shall not be applicable in the case of an open land project: And 
provided further^ That financial assistance shall not be extended under 
this title for any project involving slum clearance and redevelopment 
of an area which is not clearly predominantly residential in character 
unless such area is to be redeveloped for predominantly residential 
uses, except that, where such an area which is not predominantly 
residential in character contains a substantial number of slum, 
blighted, deteriorated, or deteriorating dwellings or other living 
accommodations, the elimination of which would tend to promote the 
public health, safety and welfare in the locality involved and such 
area is not appropriate for redevelopment for predominantly resi-
dential uses, the Administrator may extend financial assistance for 
such a project, but the aggregate of the capital grants made pursuant to 
this title with respect to such projects shall not exceed 10 per centum 
of the total amount of capital grants authorized by this title; (2) 
demolition and removal of buildings and improvements; (3) instal-
lation, construction, or reconstruction of streets, utilities, parks, play-
grounds, and other improvements necessary for carrying out in the 
area the urban renewal objectives of this title in accordance with the 
urban renewal plan; and (4) making the land available for develop-
ment or redevelopment by private enterprise or public agencies (includ-
ing sale, initial leasing, or retention by the local public agency itself) 
at its fair value for uses in accordance with the urban renewal plan. 
For the purposes of this subsection, 'rehabilitation' or 'conservation' 
may include the restoration and renewal of a blighted, deteriorated, or 
deteriorating area by (1) carrying out plans for a program of volun-
tary repair and rehabilitation of buildings or other improvements in 
accordance with the urban renewal plan; (2) acquisition of real 
property and demolition or removal of buildings and improvements 
thereon where necessary to eliminate unhealthful, insanitary or unsafe 
conditions, lessen density, eliminate obsolete or other uses detrimental 
to the public welfare, or to otherwise remove or prevent the spread 
of blight or deterioration, or to provide land for needed public 
facilities; (3) installation, construction, or reconstruction, of such 
improA^ements as are described in clause (3) of the preceding sentence; 
and (4) the disposition of any property acquired in such urban 
renewal area (including sale, initial leasing, or retention by the local 
public agency itself) at its fair value for uses in accordance with the 
urban renewal plan. 
"For the purposes of this title, the term 'project' shall not include 
"Project." 
the construction or improvement of any building, and the term 'rede-
628 
PUBLIC LAW 560-AUG. 2, 1954 
[68 STAT. 
velopment' and derivatives thereof shall mean development as well as 
Ante, p. 626. 
redevelopment. 
For any of the purposes of section 109 hereof, the 
term 'project' shall not include any donations or provisions made as 
local grants-in-aid and eligible as such pursuant to clauses (2) and (3) 
of section 110 (d) hereof, 
in-'aw*.''^* grants- 
«((j^ 'Local grauts-iu-aid' shall mean assistance by a State, munici-
pality, or other public body, or (in the case of cash grants or donations 
of land or other real property) any other entity, in connection with 
any project on which a contract for capital grant has been made under 
this title, in the form of (1) cash grants; (2) donations, at cash value, 
of land or other real property (exclusive of land in streets, alleys, and 
other public rights-of-way which may be vacated in connection with 
the project) in the urban renewal area, and demolition, removal, or 
other work or improvements in the urban renewal area, at the cost 
thereof, of the types described in clause (2) and clause (3) of either 
the second or third sentence of section 110 (c) : and (3) the provision, 
at their cost, of public buildings or other public facilities (other than 
publicly owned housing, public facilities financed by special assess-
ments against land in the project area, and revenue producing public 
utilities the capital cost of which is wholly financed with local bonds 
or obligations payable solely out of revenues derived from service 
charges) which are necessary for carrying out in the area the urban 
renewal objectives of this title in accordance with the urban renewal 
plan: Provided, That in any case where, in the deterpiination of the 
Administrator, any park, playground, public building, or other public 
facility is of direct benefit both to the urban renewal area and to other 
areas, and the approximate degree of the benefit to such other areas is 
estimated by the Administrator at 20 per centum or more of the 
total benefits, the Administrator shall provide that, for the purpose 
of computing the amount of the local grants-in-aid for the project, 
there shall be included only such portion of the cost of such facility 
as the Administrator estimates to be proportionate to the approximate 
degree of the benefit of such facility to the urban renewal area: And 
provided further, That for the purpose of computing the amount of 
local grants-in-aid under this section 110 (d), the estimated cost (as 
determined by the Administrator) of parks, playgrounds, public 
buildings, or other public facilities may be deemed to be the actual cost 
thereof if (i) the construction or provision thereof is not completed 
at the time of final disposition of land in the project to be acquired and 
disposed of under the urban renewal plan, and (ii) the Administrator 
has received assurances satisfactory to him that such park, play-
ground, public building, or other public facility will be constructed 
or completed when needed and within a time prescribed by him. 
With 
respect to any demolition or removal work, improvement or facility for 
which a State, municipality, or other public body has received or has 
contracted to receive any grant or subsidy from the United States, or 
any agency or instrumentality thereof, the portion of the cost thereof 
defrayed or estimated by the Administrator to be defrayed with such 
subsidy or grant shall not be eligible for inclusion as a local grant-
in-aid. 
"Grossproject 
«^e) 'Gross project cost' shall comprise (1) the amount of the 
expenditures by the local public agency with respect to any and all 
undertakings necessary to carry out the project (including the pay-
ment of carrying charges, but not beyond the point where the project 
is completed), and (2) the amount of such local grants-in-aid as are 
furnished in forms other than cash. 
"Net project 
"(f) 'Jfet project cost' shall mean the difference between the gross 
project cost and the aggregate of (1) the total sales prices of all land 
or other property sold, and (2) the total capital values (i) imputed, 
68 
S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
629 
on a basis approved by the Administrator, to all land or other prop-
erty leased, and (ii) used as a basis for determining the amounts to 
be transferred to the project from other funds of the local public 
agency to compensate for any land or other property retained by it 
for use in accordance with the urban renewal plan. 
"(g) 'Going Federal rate' means (with respect to any contract for 
a loan or advance entered into after the first annual rate has been 
specified as provided in this sentence) the annual rate of interest 
which the Secretary of the Treasury shall specify as applicable to 
the six-month period (beginning with the six-month period ending 
December 31, 1953) during which the contract for loan or advance is 
approved by the Administrator, which applicable rate for each six-
month period shall be determined by the Secretary of the Treasury 
by estimating the average yield to maturity, on the basis of daily 
closing market bid quotations or prices during the month of May or 
the month of November, as the case may be, next preceding such six-
month period, on all outstanding marketable obligations of the United 
States having a maturity date of fifteen or more years from the first 
day of such month of May or November, and by adjusting such esti-
mated average annual yield to the nearest one-eighth of 1 per centum. 
Any contract for loan made may be revised or superseded by a later 
contract, so that the going Federal rate, on the basis of which the 
interest rate on the loan is fixed, shall mean the going Federal rate, 
as herein defined, on the date that such contract is revised or super-
seded by such later contract. 
"(h) 'Local public agency' means any State, county, municipality, 
or other governmental entity or public body, or two or more such 
entities or bodies, authorized to undertake the project for which assist-
ance is sought. 
'State' includes the several States, the District of 
Columbia, the Commonwealth of Puerto Bico, and the Territories and 
possessions of the United States. 
"(i) 'Land' means any real property, including improved or unim-
proved land, structures, improvements, easements, incorporeal heredit-
aments, estates, and other rights in land, legal or equitable. 
"(j) 'Administrator' means the Housing and Home 
Finance 
Administrator." 
SEC. 312. Notwithstanding the amendments of this title to title I 
of the Housing Act of 1949, as amended, the Administrator, with 
respect to any project covered by any Federal aid contract executed, 
or prior approval granted, by him under said title I before the effec-
tive date of this Act, upon request of the local public agency, shall 
continue to extend financial assistance for the completion of such 
project in accordance with the provisions of said title I in force 
immediately prior to the effective date of this Act. 
SEC. 313. The provisos with respect to the appropriation for capital 
grants for slum clearance and urban redevelopment contained in title I 
of the First Independent Offices Appropriation Act, 1954 (Public 
Law 176, Eighty-third Congress) and in title I of the Independent 
Offices Appropriation Act, 1955 (Public Law 428, Eighty-third Con-
gress) are hereby repealed. 
SEC. 314. The Housing and Home Finance Administrator is author-
ized to make grants, subject to such terms and conditions as he shall 
prescribe, to public bodies, including cities and other political subdivi-
sions, to assist them in developing, testing, and reporting methods and 
techniques, and carrjdng out demonstrations and other activities for 
the prevention and the elimination of slums and urban blight. 
No 
such grant shall exceed two-thirds of the cost, as determined or esti-
mated by said Administrator, of such activities or undertakings. In 
administering this section, said Administrator shall give preference to 
"Going Federal 
rate." 
"Local p u b l i c 
agency." 
•Land.' 
"Administrator." 
Com pi e t i o n of 
prior projects. 
Repeals. 
67 Stat. 305. 
Ante, p. 283. 
Grants for test-
ing and reporting 
methods, etc. 
Limitation. 
630 
PUBLIC LAW 560-AUG. 2, 1954 
[68 S T A T . 
Advances. 
31 u s e 529. 
Limitation. 
42 u s e 1453. 
D. C. urban ri 
newal activities. 
60 Stat. 801. 
D. e. 
e o d e 
717. 
D. 
718. 
5-
those undertakings which in his judgment can reasonably be expected 
to (1) contribute most significantly to the improvement of methods 
and techniques for the elimination and prevention of slums and blight, 
and (2) best serve to guide renewal programs in other communities. 
Said Administrator may make advance or progress payments on 
account of any grant contracted to be made pursuant to this section, 
notwithstanding the provisions of section 3648 of the Kevised Statutes, 
as amended. The aggregate amount of grants made under this section 
shall not exceed $5,000,000 and shall be payable from the capital grant 
funds provided under and authorized by section 103 (b) of the Housing 
Act of 1949, as amended. 
SEC. 315. Section 19 of the District of Columbia Redevelopment 
Act of 1945, as amended, is hereby amended by striking "$2,000" in 
subsection (a) and subsection (b) and inserting in each instance 
"$2,500 unless insured as provided in title I of the National Housing 
Act, as amended", 
c. Code 5- 
SEC. 316. Section 20 of the District of Columbia Redevelopment 
Act of 1945, as amended, is hereby amended— 
(1) by striking "1949" wherever it appears in said section and 
inserting "1949, as amended": Provided^ That this clause (1) 
shall not limit or restrict any authority under said section 20; and 
(2) by adding the following new subsections at the end of 
said section: 
"(i) In addition to its authority under any other provision of this 
Act, the Agency is hereby authorized to plan and undertake urban 
renewal projects (as such projects are defined in title I of the Housing 
Act of 1949, as amended), and in connection therewith the Agency, 
the District Commissioners, the National Capital Planning Commis-
sion, and the other appropriate agencies operating within the District 
of Columbia shall have all of the rights and powers which they have 
with respect to a project or projects financed in accordance with the 
preceding subsections of this section: Provided^ That for the purpose 
of this subsection the word 'redevelopment' wherever found in this Act 
(except in section 3 (n)) shall mean 'urban renewal', and the refer-
ences in section 6 to the acquisition, disposition, or assembly of real 
property for a project shall mean the undertaking of an urban renewal 
project. 
"(j) The District Commissioners are hereby authorized to prepare 
a workable program as prescribed by section 101 (c) of the Housing 
Act of 1949, as amended, and are also authorized to request the neces-
sary funds for the preparation of said workable program. The Com-
missioners may request the participation of the Agency in the prepa-
ration of said workable program and may include in their annual 
estimates of appropriations such funds as may be required by the 
Commissioners or the Agency, or both, for this purpose. The District 
Commissioners are hereby authorized, with or without reimbursement, 
to cooperate with the Agency in carrying out urban renewal projects 
and to utilize for that purpose the facilities and personnel of the Dis-
trict of Columbia under agreement with the Agency," 
Program p M 
ration. 
Ant6, p. 623. 
TITLE IV—LOW-RENT PUBLIC HOUSING 
50 Stat. 888. 
42 u s e 1430. 
42 u s e 1410. 
Additional units. 
SEC. 401, The United States Housing Act of 1937, as amended, is 
hereby amended— 
(1) by adding at the end of section 10 the following new 
subsection: 
"(i) Notwithstanding the provisions of any other law, the Public 
Housing Administration may, with respect to low-rent housing 
projects initiated after March 1,1949, enter into new contracts, agree-
68 S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
631 
ments, or other arrangements during the fiscal year 1955 for loans and 
annual contributions pursuant to the United States Housing Act of 
1937, as amended, with respect to not exceeding thirty-five thousand 
additional units: Provided^ That no such new contract, agreement, or 
other arrangement shall be made except with respect to low-rent hous-
ing projects to be undertaken in a community in which there is being 
carried out a slum clearance and urban redevelopment project, or a 
slum clearance and urban renewal project, assisted under title I of the 
Housing Act of 1949, as amended, and the local governing body of the 
community undertaking such slum clearance and urban redevelopment 
project, or slum clearance and urban renewal project, certifies that 
such low-rent housing project is necessary to assist in meeting the 
relocation requirements of section 105 (c) of title I of the Housing Act 
of 1949, as amended: And promded further^ That the total number of 
dwelling units in low-rent housing projects covered by such new con-
tracts, agreements, or other arrangements shall not exceed the total 
number of such dwelling units which the Administrator determines to 
be needed for the relocation of families to be displaced as a result of 
Federal, State, or local governmental action in such community."; 
(2) by striking from subsection 10 (g) the words following the 
colon up to and including the words "such families" and inserting 
the following: "First, to families which are to be displaced by any 
low-rent housing project or by any public slum-clearance, redevel-
opment or urban renewal project, or through action of a public 
body or court, either through the enforcement of housing stand-
ards or through the demolition, closing, or improvement of 
dwelling units, or which were so displaced within three years prior 
to making application to such public housing agency for admis-
sion to any low-rent housing: Provided^ That as among such 
projects or actions the public housing agency may from time to 
time extend a prior preference or preferences: And 
provided 
further^ That, as among families within any such preference 
". 
group 
(3) by striking the words "or was to be displaced by another 
low-rent housing project or by a public slum-clearance or rede-
velopment project" in clause (ii) of subsection 15 (8) (b) and 
inserting the following: "or was to be displaced by any low-rent 
housing project or by any public slum-clearance, redevelopment 
or urban renewal project, or through action of a public body or 
court, either through the enforcement of housing standards or 
through the demolition, closing, or improvement of a dwelling unit 
or units"; and 
(4) by striking the words "not later than five years after March 
1, 1949" in subsection 15 (8) (b) and inserting "not later than 
March 1,1959". 
SEC. 402. Subsection 10 (h) of said Act, as amended, is hereby 
amended to read as follows: 
"(h) Every contract made pursuant to this Act for annual con-
tributions for any low-rent housing project initiated after March 1, 
1949, shall provide that no annual contributions by the Authority shall 
be made available for such project unless such project is exempt from 
all real and personal property taxes levied or imposed by the State, 
city, county, or other political subdivisions, but such contract shall 
require the public housing agency to make payments in lieu of taxes 
equal to 10 per centum of the annual shelter rents charged in such 
project or such lesser amount as (i) is prescribed by State law, or 
(ii) is agreed to by the local governing body in its agreement for local 
cooperation with the public housing agency required under subsection 
15 (7) (b) (i) of this Act, or (iii) is due to failure of a local public 
42 u s e 1430. 
Certification. 
Ante, p. 622. 
Ante, p. 625. 
Limitation. 
Preferences for 
admission. 
Low income fam-
ilies. 
42 u s e 1415. 
42 u s e 1410. 
E X e m p t i o n of 
property irom taxe & 
Payments in lieu 
of taxes. 
632 
PUBLIC LAW 560-AUG. 2, 1954 
[68 S T A T , 
Limitation. 
S t a t e contribu' 
tion. 
body or bodies other than the public housing agency to perform any 
obligation under such agreement: Provided, That, if at the time such 
agreement for local cooperation is entered into it appears that such 
10 per centum payments in lieu of taxes will not result in a contribution 
to the project through tax exemption by the State, city, county, or 
other political subdivisions in which the project is situated of at least 
20 per centum of the annual contributions to be paid by the Authority, 
the amounts of such payments in lieu of taxes shall be limited by the 
agreement to amounts, if any, which would not reduce the local con-
tribution below such 20 per centum: Provided further, 
That, with 
respect to any such project which is not exempt from all real and 
personal property taxes levied or imposed by the State, city, county, 
or other political subdivisions, such contract shall provide, in lieu of 
the requirement for tax exemption and payments in lieu of taxes, that 
no annual contributions by the Authority shall be made available for 
such project unless and until the State, city, county, or other political 
subdivisions in which such project is situated shall contribute, in the 
form of cash or tax remission, an amount equal to the greater of (i) 
the amount by which the taxes paid with respect to the project exceed 
10 per centum of the annual shelter rents charged in such project or 
(ii) 20 per centum of the annual contributions paid by the Authority 
es«mate''s°*^°" °' ^^^ ^^^ ^^ cxcess of the taxes levied) : And provided further. That, 
prior to execution of the contract for annual contributions the public 
housing agency shall, in the case of a tax-exempt project, notify the 
governing body of the locality of its estimate of the annual amount 
of such payments in lieu of taxes and of the amount of taxes which 
would be levied if the property were privately owned, or, in the case 
where the project is taxed, its estimate of the annual amount of the 
local cash contribution, and shall thereafter include the actual amounts 
in its annual reports. Contracts for annual contributions entered into 
prior to the effective date of the Housing Act of 1954 may be amended 
in accordance with the first sentence of this subsection." 
SEC. 403, Section 10 of said Act, as amended, is hereby amended by 
adding the following new subsection: 
"(j) Every contract made pursuant to this Act for annual contribu-
tions for any low-rent housing project for which no such contract 
has been entered into prior to the enactment of the Housing Act of 
1954 shall provide that— 
"(1) after payment in full of all obligations of the public 
housing agency in connection with the project for which any 
annual contributions are pledged, and until the total amount of 
annual contributions paid by the Authority in respect to such 
project has been repaid pursuant to the provisions of this sub-
section, (a) all receipts in connection with the project in excess 
of expenditures necessary for management, operation, mainte-
nance, or financing, and for reasonable reserves therefor, shall be 
paid annually to the Authority and to local public bodies which 
have contributed to the project in the form of tax exemption 
or otherwise, in proportion to the aggregate contribution which 
the Authority and such local public bodies have made to the 
project, and (b) no debt in respect to the project, except for 
necessary expenditures for the project, shall be incurred by the 
public housing agency; 
"(2) if, at any time, the project or any part thereof is sold, 
such sale shall be to the highest responsible bidder after adver-
tising, or at fair market value, and the proceeds of such sale 
together with any reserves, after application to any outstanding 
debt of the public housing agency in respect to such project, shall 
be paid to the Authority and local public bodies as provided in 
Annual report. 
Prior c o n t r a c t 
amendment. 
42 u s e 1410. 
Self-liquidation. 
68 S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
633 
clause 1 (a) of this subsection: Provided^ That the amounts to 
be paid to the Authority and the local public bodies shall not 
exceed their respective total contribution to the project.". 
SEC. 404. Paragraph (6) of section 16 of said Act, as amended, is 
Re^a? lf\^ibor 
h e r e b y r e p e a l e d . 
reporting require-
SEC. 405. Section 10 of the United States Housing Act of 1937, ad '"*42'usc 1410. 
amended, is hereby amended by adding the following subsection: 
se?tte^en'tf" ^^^ 
"(k) All expenditures of appropriations for the payment of annual 
42 stat. 20. 
contributions shall be subject to audit and final settlement by the 
Comptroller General of the United States under the provisions of the 
Budget and Accounting Act of 1921, as amended." 
SEC. 406. Section 10 of said Act, as amended, is hereby amended by 
adding the following new subsection: 
"(1) In any community where it has been determined by resolution o^^Jg^f" P'^^'^*'^ 
or ordinance, or by referendum, that a project shall be liquidated by 
sale thereof to private ownership, such community may negotiate 
with the Federal Government with respect to the sale of the project, 
and the Authority shall agree that sale of the project may be made 
after public advertisement to the highest bidder upon (1) payment 
and retirement of all outstanding obligations (together with any 
interest payable thereon and any premiums prescribed for the redemp-
tion of any bonds, notes, or other obligations prior to maturity) in 
connection with the project, and (2) payment of any proceeds received 
from the sale of the project in excess of the amounts required to 
comply with the requirements of the preceding clause numbered (1) 
to the Authority and to local public bodies in proportion to the 
aggregate contribution which the Authority and such local public 
bodies have made to the project." 
TITLE V—HOME LOAN BANK BOARD 
SEC. 501. The National Housing Act, as amended, is hereby and^fjan \V^t~ 
amended— 
ance corp 
(1) by amending section 402 (c) (4) to read as follows: 
"(4) To sue and be sued, complain and defend, in any court of 
competent jurisdiction in the United States or its Territories or 
possessions or the Commonwealth of Puerto Rico, and may be 
served by serving a copy of process on any of its agents or any 
agent of the Home Loan Bank Board and mailing a copy of such 
process by registered mail to the Corporation at Washington, 
District of Columbia."; 
(2) by adding the following new subsection to section 405: 
ciaYmf ^''^*' 
"(c) No action against the Corporation to enforce a claim for 
statute* of iinii.-
payment of insurance upon an insured account of an insured *®"°"*' 
institution in default shall be brought after the expiration of 
three years from the date of default unless, within such three-year 
period, the conservator, receiver, or other legal custodian of the 
insured institution shall have recognized such insured account 
as a valid claim against the insured institution and the claim for 
payment of insurance shall have been presented to the Corpora-
tion and its validity denied, in which event the action may be 
brought within two years from the date of such denial."; and 
(3) by striking the first four sentences of section 407 and V- ^^f- ^J^°- . 
^ ' . ' ' • , » , • , ' ' . 
/, • 
. 
,
.
.
. 
, 
. 
1 erm 1 n at i on o:f 
mserting the lollowing: "Any insured institution other than a insurance. 
Federal savings and loan association may terminate its status as 
an insured institution by written notice to the Corporation. 
Whenever in the opinion of the Home Loan Bank Board any 
insured institution has violated its duty as such or has continued 
unsafe or unsound practices in conducting the business of such 
12 u s e 1725. 
Service o f proc-
ess. 
634 
PUBLIC LAW 560-AUG. 2, 1954 
[68 STAT, 
institution, or has knowingly or negligently permitted any of its 
7 
officers or agents to violate any provi^on of any law or regula-
tion to which the insured institution is subject, said Board shall 
first give to the authority having supervision of the institution, 
if any, a statement with respect to such practices or violations 
for the purpose of securing the correction thereof and shall give a 
copy thereof to the institution. In the case of an institution of a 
State where there is no supervisory authority the statement shall 
be sent directly to the institution. 
Unless such correction shall 
be made within one hundred and twenty days or such shorter 
period of time as the supervisory authority, if any, shall require, 
the Home Loan Bank Board, if it shall determine to proceed 
further, shall give to the institution not less than thirty days' 
" " 
, ;\ 
written notice of intention to terminate the status of the institution 
as an insured institution, and shall fix a time and place for a hear-
ing before the Home Loan Bank Board, a member thereof, or a 
person designated by the Board. The Home Loan Bank Board 
Hearing. 
shall make written findings. Unless the institution shall appear 
at the hearing by a duly authorized representative, it shall be 
deemed to have consented to the termination of .its status as an 
insured institution. 
If the Home Loan Bank Board shall find 
that any unsafe or unsound practice or violation specified in such 
I 
notice has been established and has not been corrected within the 
time above prescribed in which to make such correction, the 
Home Loan Bank Board may issue its order terminating the 
insured status of the institution effective on a date subsequent to 
such finding and to the expiration of the time specified in such 
notice of intention. The hearing hereinabove provided for shall 
be held in accordance with the provisions of the Administrative 
5°Tjsc*i001 note 
Proccdure Act and shall be subject to review as therein provided 
and the review by the court shall be upon the weight of the evi-
dence. In the event of the termination of such status, insurance 
of its accounts to the extent that they were insured on the date 
of such notice by the institution to the Corporation or such order 
.; 
of termination, less any amounts thereafter withdrawn, repur-
chased, or redeemed which reduce the insured accounts of an 
insured member below the amount insured on the date of such 
notice or order, shall continue for a period of two years, but no 
investments or deposits made after the date of such notice or 
order of termination shall be insured. 
The Corporation shall 
have the right to examine such institution from time to time dur-
^. 
r.; 
ing the two-year period aforesaid. Such insured institution shall 
,. 
: 
' 
be obligated to pay, within thirty days after any such notice or 
order of termination, as a final insurance premium, a sum equiv-
alent to twice the last annual insurance premium paid by it." 
SEC. 502. The Federal Home Loan Bank Act, as amended, is hereby 
1
^
2 use 1430. 
amended by striking "$20,000" in section 10 (b) (2) and inserting 
as 8e?v^ity.° '^ ^* "$35,000". 
SEC. 503. The Home Owners' Loan Act of 1933, as amended, is 
hereby amended— 
(1) by striking "$20,000" wherever it appears in the first para-
12 use 1464. 
graph of subsection (c) of section 5 and inserting "$35,000"; 
(2) by amending subsection (d) of section 5 to read as follows: 
R^urs'^ISd^e u- 
" ( d ) ( 1 ) The Board shall have power to enforce this section 
lations. 
and rules and regulations made hereunder. 
In the enforcement 
of any provision of this section or rules and regulations made 
hereunder, or any other law or regulation, and in the administra-
j 
tion of conservatorships and receiverships as provided in sub-
section (d) (2) hereof, the Board is authorized to act in its own 
68 S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
635 
name and through its own attorneys. 
The Board shall have 
power to sue and be sued, complain and defend in any court of 
competent jurisdiction in the United States or its territories or 
possessions or the Commonwealth of Puerto Kico. It shall by 
formal resolution state any alleged violation of law or regulation 
and give written notice to the association concerned of the facts 
alleged to be such violation, except that the appointment of a 
Supervisory Representative in Charge, a conservator or a receiver 
shall be exclusively as provided in subsection (d) (2) hereof. 
Such association shall have thirty days within which to correct 
the alleged violation of law or regulation and to perform any 
legal duty. 
If the association concerned does not comply with 
the law or regulation within such period, then the Board shall 
give such association twenty days' written notice of the charges 
against it and of a time and place at which the Board will con-
duct a hearing as to such alleged violation of duty. 
Such hear-
ing shall be in the Federal judicial district of the association 
unless it consents to another place and shall be conducted by a 
hearing examiner as is provided by the Administrative Procedure 
Act. 
The Board or any member thereof or its designated repre-
sentative shall have power to administer oaths and affirmations 
and shall have power to issue subpenas and subpenas duces tecum, 
and shall issue such at the request of any interested party, and 
the Board or any interested party may apply to the United States 
district court of the district where such hearing is designated 
for the enforcement of such subpena or subpena duces tecum and 
such courts shall have power to order and require compliance 
therewith. 
A record shall be made of such hearing and any 
interested party shall be entitled to a copy of such record to be 
furnished by the Board at its reasonable cost. After such hear-
ing and adjudication by the Board, appeals shall lie as is pro-
vided by the Administrative Procedure Act, and the review by 
the court shall be upon the weight of the evidence. Upon the 
giving of notice of alleged violation of law or regulation as herein 
provided, either the Board or the association affected may, within 
thirty days after the service of said notice, apply to the United 
States district court for the district where the association is 
located for a declaratory judgment and an injunction or other 
relief with respect to such controversy, and said court shall have 
jurisdiction to adjudicate the same as in other cases and to enforce 
its orders. The Board may apply to the United States district 
court of the district where the association affected has its home 
office for the enforcement of any order of the Board and such 
court shall have power to enforce any such order which has 
become final. 
The Board shall be subject to suit by any Federal 
savings and loan association with respect to any matter under 
this section or regulations made thereunder, or any other law or 
regulation, in the United States district court for the district 
where the home office of such association is located, and may be 
served by serving a copy of process on any of its agents and mail-
ing a copy of such process by registered mail, to the Home Loan 
Bank Board, Washington, District of Columbia. 
"(2) The grounds for the appointment of a conservator or 
receiver for a Federal savings and loan association shall be one or 
more of the following: (i) insolvency in that the assets of such 
association are less than its obligations to its creditors and others, 
including its members; (ii) violation of law or of a regulation; 
(iii) the concealment of its books, records, or assets or the refusal 
to submit its books, papers, records, or affairs for inspection to any 
He aring. 
60 Stat. 237. 
5 u s e 1001 note,, 
U. S. d i s t r i c t 
court. 
Jurisdiction. 
Conservators and 
receivers. 
Appointment. 
636 
PUBLIC LAW 560-AUG. 2, 1954 
[68 
S T A T , 
Supervisory Rep-
r e s e n t a t i v e 
in 
Charge. 
Appointment. 
60 Stat. 537. 
5 u s e 1001 note. 
Powers. 
Violation. 
Penalty. 
12 u s e 1464. 
I n v e s t m e n t of 
assets. 
58 Stat. 284. 
38 u s e 693 note. 
examiner or lawful agent appointed by the Home Loan Bank 
Board; and (iv) unsafe or unsound operation. 
The Board shall 
have exclusive jurisdiction to appoint a Supervisory Representa-
tive in Charge, conservator, or receiver. 
If, in the opinion of the 
Board, a ground for the appointment of a conservator or receiver 
as herein provided exists and the Board determines that an emer-
gency exists requiring immediate action, the Board is authorized 
to appoint ex parte and without notice a Supervisory Representa-
tive in Charge to take charge of said association and its affairs 
who shall have and exercise all the powers herein provided for 
conservators and receivers. Unless sooner removed by the Board, 
such Supervisory Representative in Charge shall hold office 
until a conservator or receiver, appointed by the Board after 
notice as herein provided, takes charge of the association and its 
affairs, or for six months, or until thirty days after the termination 
of the administrative hearing and final proceedings herein pro-
vided, or until sixty days after the final termination of any litiga-
tion affecting such temporary appointment, whichever is longest. 
The Board shall have the power to appoint a conservator or 
receiver but no such appointment of a conservator or receiver shall 
be made except pursuant to a formal resolution of the Board stat-
ing the grounds therefor and except notice thereof is given to said 
association stating the grounds therefor and until an opportunity 
for an administrative hearing thereon is afforded to said associa-
tion. 
Such hearing shall be held in accordance with the provisions 
of the Administrative Procedure Act and shall be subject to 
review as therein provided and the review by the court shall be 
upon the weight of the evidence. A conservator shall have all 
the powers of the members, the directors, and officers of the 
Federal association and shall be authorized to operate it in its 
own name or conserve its assets in the manner and to the extent 
authorized by the Board. 
The Board shall appoint only the Fed-
eral Savings and Loan Insurance Corporation as receiver for any 
Federal savings and loan association, which shall have power as 
receiver to buy at its own sale subject to approval by the Board. 
With the consent of the association expressed by a resolution of 
the board of directors or of its members, the Board is authorized 
to appoint a conservator or receiver for a Federal association with-
out notice and without hearing. 
The Board shall have power to 
make rules and regulations for the reorganization, merger, and 
liquidation of Federal associations and for such associations in 
conservatorship and receivership and for the conduct of conserva-
torships and receiverships. Whenever a Supervisory Representa-
tive in Charge, conservator, or receiver, appointed by the Board 
pursuant to the provisions of this section, demands possession of 
the property, business and assets of any association, the refusal of 
any officer, agent, employee, or director of such association to 
comply with the demand shall be punishable by a fine of not more 
than $1,000 or by imprisonment for not more than one year or 
both by such fine and imprisonment."; and 
(3) by striking out the second paragraph of subsection (c) of 
section 5 and inserting in lieu thereof the following new 
paragraph: 
"Without regard to any other provision of this subsection except 
the area requirement such associations are authorized to invest 
a sum not in excess of 15 per centum of the assets of such asso-
ciation in loans insured under title I of the National Housing Act, 
as amended, in unsecured loans insured or guaranteed under the 
provisions of the Servicemen's Readjustment Act of 1944, as 
68 S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
637 
amended, and in other loans for property alteration, repair, or 
improvement: Provided, 
That no such loan shall be made in 
excess of $2,500." 
TITLE 
VI—VOLUNTAKY 
HOME MORTGAGE CREDIT 
PROGRAM 
DECLARATION OF POLICY 
SEC. 601. It is declared to be the policy of Congress-— 
(a) to seek the constant improvement of the living conditions 
of all the people under a strong, free, competitive economy, and 
to take such action as will facilitate the operation of that economy 
to provide adequate housing for all the people and to meet the 
demands for new building; 
(b) to provide a means of financing housing within the frame-
work of our private enterprise system and without vast expendi-
tures of public moneys; 
(c) to encourage and facilitate the flow of funds for housing 
credit into remote areas and small communities, where such funds 
are not available in adequate supply; and 
(d) to assist in the development of a program consonant with 
sound underwriting principles, whereby private financing insti-
tutions engaged in mortgage lending can make a maximum con-
tribution to the economic stability and growth of the Nation 
through extension of the market for insured or guaranteed 
mortgage loans. 
DEFINITIONS 
SEC. 602. As used in this title, the following terms shall have the 
meanings respectively ascribed to them below, and, unless the context 
clearly indicates otherwise, shall include the plural as well as the 
singular number: 
(a) "Insured or guaranteed mortgage loan" means any loan made 
for the construction or purchase of a family dwelling or dwellings and 
which is (1) guaranteed or insured under the Servicemen's Read-
justment Act of 1944, as amended, or (2) secured by a mortgage 
insured under the National Housing Act, as amended. 
(b) "Private financing institutions" means life-insurance com-
panies, savings banks, commercial banks, savings and loan associations 
(including cooperative banks, homestead association, and building 
and loan associations), and mortgage companies. 
(c) "Administrator" means the Housing and Home Finance 
Administrator. 
(d) "State" means the several States, the District of Columbia, the 
Commonwealth of Puerto Rico, and the Territories and possessions 
of the United States. 
NATIONAL VOLUNTARY MORTGAGE CREDIT EXTENSION COMMITTEE 
SEC, 603. There is hereby established a National Voluntary Mortgage 
Credit Extension Committee, hereinafter called the "National Com-
mittee", which shall consist of the Housing and Home Finance Admin-
istrator, who shall act as Chairman of the National Committee, and 
fourteen other persons appointed by the Administrator as follows: 
(a) Two representatives of each type of private financing institu-
tions ; 
(b) Two representatives of builders of residential properties; and 
(c) Two representatives of real estate boards. 
638 
PUBLIC LAW 560-AUG. 2, 1954 
[68 S T A T . 
The Administrator shall also request the Board of Governors of the 
Federal Reserve System to designate a representative of the Board to 
serve on the National Committee in an advisory capacity. 
The Administrator shall also request the Administrator of Veterans' 
Affairs to designate a representative to serve on the National Com-
mittee in an advisory capacity. 
The Administrator shall also request the Home Loan Bank Board 
to designate a representative of the Board to serve on the National 
Committee in an advisory capacity. 
In selecting and appointing the members of the National Committee, 
the Administrator shall have due regard to fair representation thereon 
for small, medium, and large private financing institutions and for 
different geographical areas. Members of the National Committee 
appointed by the Administrator shall serve on a voluntary basis. 
REGIONAL SUBCOMMITTEES 
SEC. 604. (a) As soon as practicable, the National Committee shall 
divide the United States into regions conforming generally to the 
Federal Reserve districts. The Administrator, after consultation with 
the other members of the National Committee, shall, for each such 
region, designate five or more persons representing private financing 
institutions and builders of residential properties in such region to 
serve as a regional subcommittee of the National Committee for the 
purpose of assisting in placing with private financing institutions 
insured or guaranteed mortgage loans as hereinafter set forth. 
In 
designating the members of each such regional subcommittee, the 
Administrator shall have due regard to fair representation thereon 
for small, medium, and large financing institutions and builders of 
residential properties and for different geographical areas within 
such regions. Members of each regional subcommittee shall serve on a 
voluntary basis. 
(b) The Administrator is authorized and directed, upon the request 
of a regional subcommittee, to provide such subcommittee with a suit-
able office and meeting place and to furnish to the subcommittee such 
staff assistance as may be reasonably necessary for the purpose of assist-
ing it in the performance of the functions hereinafter set forth. 
In 
complying with these requirements, the Administrator may act through 
and may utilize the services of the several Federal home-loan banks. 
FUNCTION OF NATIONAL COMMITTEE AND OF REGIONAL SUBCOMMITTEES 
^National Com- 
SEC. 605. It shall be the function of the National Committee and 
the regional subcommittees to facilitate the flow of funds for residen-
tial mortgage loans into areas or communities where there may be a 
shortage of local capital for, or inadequate facilities for access to, such 
loans, and to achieve the maximum utilization of the facilities of 
private financing institutions for this purpose by soliciting and 
obtaining the cooperation of all such private financing institutions in 
extending credit for insured or guaranteed mortgage loans wherever 
consistent with sound underwriting principles. 
SEC 606. The National Committee shall study and review the de-
mand and supply of funds for residential mortgage loans in all parts 
of the country, and shall receive reports from and correlate the activi-
ties of the regional subcommittees. It shall also periodically inform 
the Commissioner of the Federal Housing Administration and the 
Administrator of Veterans' Affairs concerning the results of the studies 
and of the progress of the National Committee and regional subcom-
mittees in performing their function, and shall to the extent practicable 
maintain liaison with State and local Government housing officials in 
R e g i o n a l sub-
committees. 
68 S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
639 
order that they may be fully apprized of the function and work of the 
National Committee and regional subcommittees. The Administrator gres*s?°'* *° ^°"" 
shall, not later than April 1 in each year, make a full report of the 
operations of the National Committee and the regional subcommit-
tees to the Congress, 
SEC. 607. (a) Each regional subcommittee shall study and review 
the demand and supply of funds for residential mortgage loans in its 
region, shall analyze cases of unsatisfied demand for mortgage credit, 
and shall report to the National Committee the results of its study and 
analysis. It shall also maintain liaison with officers of the Federal 
Housing Administration and of the Veterans' Administration within 
its region in order that such officers may be fully apprized of the func-
tion and work of the National Committee and regional subcommittees. 
It shall request such officers to supply to the subcommittee information 
regarding cases of unsatisfied demand for mortgage credit for loans 
eligible for insurance under the National Housing Act, as amended, 
12 use 1701. 
or for insurance or guaranty under the Servicemen's Readjustment 
Act of 1944, as amended. Such officers are authorized to furnish such 
ff T^olifiofl-.„ 
. 
' 
, 
. 
. 
38 Uot. 093 note 
information to such subcommittee. 
(b) A regional subcommittee shall render assistance to any appli-
cant for a loan, the proceeds of which are to be used for the construc-
tion or purchase of a family dwelling or dwellings, upon receipt of a 
certificate from such applicant, stating that— 
(1) application for such loan has been made to at least two 
private financing institutions, or in the alternative to such private 
financing institution or institutions as may be reasonably acces-
sible to the applicant; 
(2) the applicant has been informed by the above-mentioned 
private financing institution or institutions that funds for mort-
gage credit on the loan are unavailable; and 
(3) the applicant is eligible for insurance or guaranty under 
the Servicemen's Readjustment Act of 1944, as amended, or con-
sents that the mortgage to be issued as security for the loan 
be insured under the National Housing Act, as amended. 
Upon receipt of such certification from an applicant the regional 
subcommittee shall circularize private financing institutions in the 
region or elsewhere and shall use its best efforts to enable the appli-
cant to place the loan with a private financing institution. It shall 
render similar assistance to any applicant for a loan, the proceeds of 
which are to be used for the construction or purchase of a family 
dwelling or dwellings, upon receipt of information from the Veterans' 
Administration to the effect that the applicant has applied for a 
direct loan, if he is eligible for such a loan, and that he is eligible for 
insurance or guaranty, under the Servicemen's Readjustment Act 
of 1944, as amended. 
In order to encourage small or local private 
financing institutions to originate insured or guaranteed mortgage 
loans, it may also render similar assistance to private financing institu-
tions in locating other private financing institutions willing to repur-
chase such mortgage loans on a mutually satisfactory basis. 
(c) In the performance of its responsibilities under subsection (b) 
of this section, a regional subcommittee may at its discretion (1) 
request the National Committee to obtain for it the aid of other 
regional subcommittees in seeking sources of mortgage credit, and (2) 
request and obtain voluntary assurances from any one or more private 
financing institutions that they will make funds available for insured 
or guaranteed mortgage loans in any specified area or areas within its 
region in which the subcommittee finds that there is a lack of adequate 
credit facilities for such loans. 
640 
PUBLIC LAW 560-AUG. 2, 1954 
[68 ST A T . 
3 8 Stat. 717. 
15 u s e 58. 
Office. 
Staff assistance. 
Termination. 
REGULATIONS OF ADMINISTRATOR 
SEC. 608. The Administrator, after consultation with the National 
Committee, shall have power to issue general rules and procedures for 
the effective implementation of this title and for the functioning 
of the regional subcommittees, pursuant to the provisions hereof and 
not in conflict herewith. 
GENERAL PROVISIONS 
SEO. 609. No act pursuant to the provisions of this title and which 
occurs while this title is in effect shall be construed to be within the 
prohibitions of the antitrust laws or the Federal Trade Commission 
Act of the United States. 
Service as a member of the National 
Committee or of any regional subcommittee is not to be construed as 
holding any office or employment with the Government of the United 
States. The Administrator is authorized and directed, upon the 
request of the National Committee, to provide such Committee with a 
suitable office and meeting place and to furnish to the Committee such 
staff assistance as may be reasonably necessary for the purpose of 
assisting it in the performance of the functions of such Committee. 
Funds available to the Administrator for administrative expenses 
shall be available for all expenses necessary in carrying out the 
provisions of this title, including expenses of persons serving as 
members of any committee or subcommittee established pursuant to 
this title for communications, transportation, and not to exceed $25 
per diem in lieu of subsistence when away from their homes or regular 
places of business in connection with the business of such committee 
or subcommittee. 
SEC. 610. (a) This title and all authority conferred hereunder shall 
terminate at the close of June 30,1957. 
(b) Notwithstanding subsection (a). Congress, by concurrent reso-
lution, may terminate this title prior to the termination date herein-
above provided for. 
TITLE VII—UEBAN PLANNING AND EESERVE OF 
PLANNED PUBLIC WOEKS 
URBAN PLANNING 
Planning grants. 
QEC. 701. TO facilitate urbau planning for smaller communities 
lacking adequate planning resources, the Administrator is authorized 
to make planning grants to State planning agencies for the provision 
of planning assistance (including surveys, land use studies, urban 
renew^al plans, technical services and other planning work, but 
excluding plans for specific public works) to cities and other munici-
palities having a population of less than 25,000 according to the latest 
decennial census. The Administrator is further authorized to make 
planning grants for similar planning work in metropolitan and 
regional areas to official State, metropolitan, or regional plan-
ning agencies empowered under State or local laws to perform 
such planning. 
Any grant made under this section shall not 
exceed 50 per centum of the estimated cost of the work for which the 
grant is made and shall be subject to terms and conditions prescribed 
by the Administrator to carry out this section. 
The Administrator 
is authorized, notwithstanding the provisions of section 3648 of the 
Eevised Statutes, as amended, to make advance or progress payments 
Appropriation. 
QU accouut of any planning grant made under this section. There is 
hereby authorized to be appropriated not exceeding $5,000,000 to 
carry out the purposes of this section, and any amounts so appro-
priated shall remain available until expended. 
31 u s e 529. 
68 S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
641 
RESERVE OF PLANNED PUBLIC WORKS 
SEC. 702. (a) In order (1) to encourage municipalities and other 
public agencies to maintain a continuing and adequate reserve of 
planned public vrorks the construction of which can rapidly be com-
menced whenever the economic situation may make such action desir-
able, and (2) to attain maximum economy and efficiency in the plan-
ning and construction of local, State, and Federal public works, the 
Administrator is hereby authorized, during the period of three years 
commencing on July 1, 1954, to make advances to public agencies 
from funds available under this section (notwithstanding the provi-
sions of section 3648 of the Revised Statutes, as amended) to aid in 
financing the cost of engineering and architectural surveys, designs, 
plans, working drawings, specifications, or other action preliminary 
to and in preparation for the construction of public works: Provided^ 
That the making of advances hereunder shall not in any way commit 
the Congress to appropriate funds to assist in financing the construc-
tion of any public works so planned. 
(b) No advance shall be made hereunder with respect to any indi-
vidual project unless it conforms to an overall State, local, or regional 
plan approved by a competent State, local, or regional authority, and 
unless the public agency formally contracts with the Federal Govern-
ment to complete the plan preparation promptly and to repay such 
advance when due. 
Subsequent to approval and prior to disburse-
ment of any Federal funds for the purpose of advance planning, the 
applicant shall establish a separate planning account into which all 
Federal and applicant funds estimated to be required for plan prep-
aration shall be placed. 
(c) Advances under this section to any public agency shall be 
repaid without interest by such agency when the construction of the 
public works is undertaken or started: Provided^ That in the event 
repayment is not made promptly such unpaid sum shall bear interest 
at the rate of 4 per centum per annum from the date of the Govern-
ment's demand for repayment to the date of payment thereof by the 
public agency. 
All sums so repaid shall be covered into the Treasury 
as miscellaneous receipts. 
(d) The Administrator is authorized to prescribe rules and regu-
lations to carry out the purposes of this section. 
(e) There is hereby authorized to be appropriated not exceeding 
$10,000,000 to carry out the purposes of this section, and any amounts 
so appropriated shall remain available until expended: Promded^ 
That not to exceed 1 per centum of the funds appropriated under this 
section may be used for the purpose of surveying the status and cur-
rent volume of advanced public works planning among the several 
States and their subdivisions, such surveys to be carried out by the 
Administrator in cooperation with the Council of Economic Advisers 
in the Executive Office of the President. 
Not more than 5 per centum 
of the funds so appropriated shall be expended in any one State. 
31 u s e 529. 
Requirement. 
P 1 ann in g 
count. 
Repayment. 
Rules 
lations. and regu-
Appropri 
ation. 
DEFINITIONS 
SEC. 703. As used in this title, (1) the term "State" shall mean any 
State, the District of Columbia, the Commonwealth of Puerto Rico, 
and any territory or possession of the United States; (2) the term 
"Administrator" shall mean the Housing and Home Finance Admin-
istrator; (3) the term "public works" shall include any public works 
other than housing; and (4) the term "public agency" or "public 
agencies" shall mean an}^ State, as herein defined, or any public 
agency or political subdivision therein. 
39777 O—55—pt. 1-
-43 
642 
PUBLIC LAW 560-AUG. 2, 1954 
[68 S T A T , 
Warranty require-
ments. 
Availability of 
plans and speci-
fications. 
Report to Presi-
dent and Congress. 
Repeals. 
54 Stat. 1128; 55 
Stat. 363. 
42 u s e 1551. 
63 Stat. 842. 
40 u s e 456. 
TITLE VIII—MISCELLANEOUS PROVISIONS 
SEC. 801. (a) The Federal Housing Commissioner and the Admin-
istrator of Veterans' Affairs, respectively, are hereby authorized and 
directed to require that, in connection with any property upon which 
there is located a dwelling designed principally for not more than a 
four-family residence and which is approved for mortgage insurance 
or guaranty prior to the beginning of construction, tne seller or 
builder, and such other person as may be required by the said Com-
missioner or Administrator to become warrantor, shall deliver to the 
purchaser or owner of such property a warranty that the dwelling is 
constructed in substantial conformity with the plans and specifications 
(including any amendments thereof, or changes and variations therein, 
which have been approved in writing by the Federal Housing Com-
missioner or the Administrator of Veterans' Affairs) on which the 
Federal Housing Commissioner or the Administrator of Veterans' 
Affairs based his valuation of the dwelling: Provided^ That the Fed-
eral Housging Commissioner or the Administrator of Veterans' Affairs 
shall deliver to the builder, seller, or other warrantor his written 
approval (which shall be conclusive evidence of such approval) of 
any amendment of, or change or variation in, such plans and speci-
fications which the Commissioner or the Administrator deems to be 
a substantial amendment thereof, or change or variation there^in, and 
shall file a copy of such written approval with such plans and vspeci-
fications: Provided further^ That such warranty shall apply only with 
respect to such instances of substantial nonconformity to such approved 
plans and specifications (including any amendments thereof, or 
changes or variations therein, which have been approved in writing, 
as provided herein, by the Federal Housing Commissioner or the 
Administrator of Veterans' Affairs) as to which the purchaser or 
homeowner has given written notice to the warrantor within one year 
from the date of conveyance of title to, or injtial occupancy of, the 
dwelling, whichever first occurs: Provided further^ That such war-
ranty shall be in addition to, and not in derogation of, all other rights 
and privileges which such purchaser or owner may have under any 
other law or instrument: And provided further. That the provisions 
of this section shall apply to any such property covered by a mortgage 
.insured or guaranteed by the Federal Housing Commissioner or the 
Administrator of Veterans' Affairs on and after October 1, 1954, 
unless such mortgage is insured or guaranteed pursuant to a commit-
ment therefor made prior to October 1, 1954. 
(b) The Federal Housing Commissioner and the Administrator of 
Veterans' Affairs, respectively, are further directed to permit copies of 
the plans and specifications (including written approvals of any 
amendments thereof, or changes or variations therein, as provided 
herein) for dwellings in connection with which warranties are required 
by subsection (a) of this section to be made available in their appro-
priate local offices for inspection or for copying by any purchaser, 
homeowner, or warrantor during such hours or periods of time as the 
said Commissioner and Administrator may determine to be reasonable. 
SEC. 802. (a) The Housing and Home Finance Administrator shall, 
as soon as practicable during each calendar year, make a report to the 
President for submission to the Congress on all operations under the 
jurisdiction of the Housing and Home Finance Agency during the 
previous calendar year. 
(b) Section 311 of "An Act to expedite the provision of housing in 
connection with national defense, and for other purposes", approved 
October 14,1940, as amended; section 6 of "An Act to provide for the 
advance planning of non-Federal public works", approved October 13, 
:n <-i. 
68 S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
643 
1949, as amended; and sections 5 and 402 (f) of the National Housing 
Act, as amended, are hereby repealed. 
(c) The National Housing Act, as amended, is hereby amended— 
(1) by striking the heading "ANNUAL REPORT" immediately after 
section 4 and inserting "TAXATION" ; and 
(2) by striking from subsection (e) of section 406 the word 
"Congress" and inserting "Housing and Home Finance Admin-
istrator". 
(d) The first sentence of section 7 (b) of the United States Housing 
Act of 1937, as amended, is hereby amended to read as follows: "The 
annual report of the Housing and Home Finance Administrator to the 
President for submission to the Congress on the operations of the 
Housing and Home Finance Agency shall include a report on the 
operations and expenses of the Authority, including loans, contribu-
tions, and grants made or contracted for, low-rent housing and slum 
clearance projects undertaken, and the assets and liabilities of the 
Authority. 
(e) Section 106 (a) of the Housing Act of 1949, as amended, is 
hereby amended by striking "; and" at the end of paragraph (3) 
thereof, inserting a period in lieu thereof, and striking paragraph (4). 
(f) The Federal Home Loan Bank Act, as amended, is hereby 
amended by striking the second sentence of section 20. 
SEC. 803. Section 501 (b) of the Servicemen's Readjustment Act of 
1944, as amended, is hereby amended to read as follows: 
"(b) Any loan made to a veteran for the purposes specified in sub-
section (a) of this section 501 may, notwithstanding the provisions of 
subsection (a) of section 500 of this title relating to the percentage or 
aggregate amount of loan to be guaranteed, be guaranteed, if otherwise 
made pursuant to the provisions of this title, in an amount not exceed-
ing 60 per centum of the loan: Provided^ That the aggregate amount 
of any guaranties to a veteran under this title shall not exceed $7,500, 
nor shall any gratuities payable under subsection (c) of section 500 
of this title exceed the amount which is payable on loans guaranteed 
in accordance with the maxima provided for in subsection (a) of 
section 500 of this title: And provided further, That no such loan for 
the repair, alteration, or improvement of property shall be insured or 
guaranteed under this Act unless such repair, alteration, or improve-
ment substantially protects or improves the basic livability or utility 
of the property involved." 
SEC. 804. Section 108 of the Reconstruction Finance Corporation 
Liquidation Act (67 Stat. 230) is amended as follows: 
(1) Strike out from subsection (a) thereof the words "the President, 
through such officer or agency of the Government (other than the 
Reconstruction Finance Corporation) as he may designate," and 
insert in lieu thereof the words "the Housing and Home Finance 
Administrator". 
(2) Strike out all of subsection (b) and insert in lieu thereof the 
following: 
"(b) For the purposes of this section, notwithstanding any other 
provision of law, the Housing and Home Finance Administrator is 
authorized to obtain from a revolving fund to be established in the 
Treasury of the United States not to exceed a total of $50,000,000 
outstanding at any one time. For this purpose there is hereby author-
ized to be appropriated to such revolving fund in the Treasury the 
amount of $50,000,000. Advances from the revolving fund shall be 
made to the Housing and Home Finance Administrator upon his 
request, and such advances together with receipts under this section 
shall be available for all necessary expenses, including administrative 
expenses, under this section. The Housing and Home Finance Admin-
12 u s e 1706, 
1725(f). 
12 use 1705. 
12 use 1729. 
Annual report. 
42 use 1407. 
42 use 1456. 
12 use 1440. 
38 use 694a. 
Home loan guar-
antee. 
38 use 694. 
Limitation. 
40 use 459. 
40 use 459. 
Revolving fund. 
Appropriation. 
Advances, 
644 
PUBLIC LAW 560-AUG. 2, 1954 
[68 ST A T , 
40 u s e 459. 
Powers. 
Termination. 
64 Stat. 59. 
42 u s e 1585. 
Temporary w 
housing. 
Disposal. 
42 u s e 1587. 
Permanent w 
housing. 
Disposal. 
istrator shall pay into the Treasury as miscellaneous receipts, at the 
close of each fiscal year, interest on the amount of advances outstand-
ing, at a rate determined by the Secretary of the Treasury, taking 
into consideration the current average rate on outstanding interest-
bearing marketable public debt obligations of the United States of 
comparable maturities. As the Housing and Home Finance Admin-
istrator repays principal sums advanced from the revolving fund 
pursuant to this section, such repayments shall be made to the revolv-
ing fund." 
(3) Strike out from subsection (c) thereof the words "officer 
or agency designated by the President" and insert in lieu thereof the 
words "Housing and Home Finance Administrator". 
(4) Strike out from subsection (d) thereof "1955" and insert in 
lieu thereof "1956". 
SEC. 805. The Act entitled "An Act to expedite the provision of 
housing in connection with national defense, and for other purposes", 
approved October 14, 1940, as amended, is hereby amended— 
(1) by adding the following at the end of section 605 (a) : 
"In any city in which, on March 1, 1953, there were more than ten 
thousand temporary housing units held by the United States of Amer-
ica, or in any two contiguous cities in one of which there were on such 
date more than ten thousand temporary housing units so held, the 
Administrator may acquire, by purchase or condemnation, a fee simple 
title to any lands in which the Administrator holds a leasehold 
interest, or other interest less than a fee simple, acquired by the Federal 
Government for national defense or war housing or for veterans' hous-
ing where (1) the Administrator finds that the acquisition by him of 
a fee simple title in the land will expedite the disposal or removal of 
temporary housing under his jurisdiction by facilitating the availa-
bility of improved sites for privately owned housing needed to replace 
such temporary housing, (2) the city or a local public agency has, 
in accordance with authority under State law, entered into a firm agree-
ment to purchase the land so acquired at a price determined by the 
Administrator to be fair, but in no event less than the estimated cost 
to the Federal Government of acquiring the fee simple title (includ-
ing an estimated amount to cover legal and overhead expenses of such 
acquisition) as determined by the Administrator, (3) the city or local 
public agency has furnished evidence satisfactory to the Administra-
tor that it has or will have funds available to make all agreed-upon 
payments to the Federal Government and to protect the Federal Gov-
ernment against any loss resulting from the acquisition of fee simple 
title, (4) the city or local public agency has furnished assurances satis-
factory to the Administrator that the land will be made available to 
private enterprise for development, in accordance with local zoning 
and other laws, for predominantly residential uses, and (5) the city 
or local public agency has furnished assurances satisfactory to the 
Administrator that no individual who is employed by, or is an official 
of, the government of the city in which the land is located, or any 
agency thereof, shall be permitted, directly or indirectly, to have any 
financial interest in the purchase or redevelopment of such land: 
Provided^ That such acquisitions by the Administrator pursuant to 
this sentence shall be limited to not exceeding four hundred and 
tw^enty-five acres of land in the general area in which approximately 
one thousand five hundred units of temporary housing held by the 
United States of America were unoccupied on said date."; 
(2) by adding the following new subsection at the end of 
section 607: 
"(g) The Administrator may dispose of any permanent war hous-
ing without regard to the preferences in subsections (b) and (c) of this 
68 S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
645 
section when he determines that (1) such housing, because of design 
or lack of amenities, is unsuitable for family dwelling use, or (2) it 
is being used at the time of disposition for other than dwelling pur-
poses, or (3) it was offered, with preferences substantially similar to 
those provided in the Housing Act of 1950 (64 Stat. 48), to veterans nJ^, "^^ i7oij 
and occupants prior to enactment of said Act."; and 
(3) by adding the following new section at the end of title V I : 
"SEO. 613. Upon a certification by the Secretary of the Interior 
l^rPsfef of cer: 
that any surplus housing, classified by the Administrator as demount- tf in hous ing to 
able, in the area of San Diego, California, is needed to provide dwell-
ing accommodations for members of a tribe of Indians in Riverside 
County or San Diego County or Imperial County, California, the 
Administrator is hereby authorized, notwithstanding any other pro-
vision of law, to transfer and convey such housing without considera-
tion to such tribe, the members thereof, or the Secretary of the Interior 
in trust therefor, as the Secretary may prescribe: Provided., That the 
term housing as used in this section shall not include land." 
SEC. 806. Subsection 302 (b) of Public Law 139, 82d Congress, as 
\\ f}^^ 304^^^ 
amended, is hereby amended by striking the second sentence thereof 
and adding the following: 
"Any temporary housing constructed or acquired under this title rafjT^housing.""''"' 
which the Administrator determines to be no longer needed for use 
under this title shall, unless transferred to the Department of Defense 
pursuant to section 306 hereof, or reported as excess to the Adminis- 
^^ "^^ i592e. 
trator of the General Services Administration pursuant to the Federal 
Property and Administrative Services Act of 1949, as amended, be 
40 use 471 note, 
sold as soon as practicable to the highest responsible bidder after 
public advertising, except that if one or more of such bidders is a 
\eteran purchasing a dwelling unit for his pwn occupancy the sale 
of such unit shall be made to the highest responsible bidder who is a 
veteran so purchasing: Provided, 
That the Housing and Home 
Finance Administrator may reject any bid for less than two-thirds of 
the appraised value as determined by him: Provided further, 
That 
the housing may be sold at fair value (as determined by the Housing 
and Home Finance Administrator) to a public body for public use: 
And provided further, That the housing structures shall be sold for 
removal from the site, except that they may be sold for use on the 
site if the governing body of the locality has adopted a resolution 
approving use of such structures on the site." 
SEC. 807. Section 601 of the Housing Act of 1949 is hereby amended 
^2 use i70ih. 
to read as follows: 
"SEC. 601. The Housing and Home Finance Administrator and the 
Advisory com-
head of each constituent agency of the Housing and Home Finance "
"
^ 
Agency is hereby authorized to establish such advisory committee or 
committees as each may deem necessary in carrying out any of his 
functions, powers, and duties under this or any other Act or authori-
zation. Service as a member of any such committee shall not constitute 
any form of service, employment, or action within the provisions of 
sections 281, 283, 284, or 1914 of title 18, United States Code, or within 
62 stat. 697. 793. 
the provisions of section 190 of the Revised Statutes (5 U. S. C. 99). 
Persons serving without compensation as members of any such com-
mittee may be paid transportation expenses and not to exceed $25 per 
diem in lieu of subsistence, as authorized by section 5 of the Act of 
August2,1946 (5 U. S. C. 73b-2)." 
eo stat. sos. 
SEO. 808. (a) Section 202 of the Act entitled "An Act relating to schooffa/iuties^' 
the construction of school facilities in areas affected by Federal activi-
ties, and for other purposes", approved September 23, 1950, as 
64 stat^. ^96j. 
amended, is hereby amended by adding the following new sentence at 
the end thereof: "In any case where such facilities are or have been 
20 use 272. 
PUBLIC LAW 560-AUG. 2, 1954 
[68 
S T A T 
12 u s e 1749. 
Educational in-
stitutions. 
Sale of property. 
Un i v e r s i t y of 
California. 
U n i v e r s i t y of 
South Carolina. 
S a i n t 
L o u i s 
County, Mo. 
Conveyance. 
Wether s f i e l d , 
Conn. 
Payment. 
Re d u e ti on of 
vulnerability 
to 
enemy attack. 
damaged or destroyed by fire or other casualty after they have become 
eligible for such transfer but before such transfer has been completed, 
the head of the Federal department or agency may assign or pay to 
such local educational agency, solely for use in repairing or recon-
structing such facilities, all or any part of any insurance receipts in 
connection with such casualty which are payable or have been paid 
in consideration of premiums which such local educational agency 
has advanced for the benefit of the United States." 
(b) The third sentence of section 401 (a) of title IV of the Housing 
Act of 1950, as amended, is hereby amended by striking out the word 
"made" and inserting the words "is approved by the Administrator". 
SEC. 809. Notwithstanding the provisions of any other law, (1) the 
Housing and Home Finance Administrator is authorized and directed 
to sell to the University of California, at fair market value as deter-
mined by him, all of the properties, including land, comprising war 
housing projects CAL-4041 and 4042 known as Canyon Crest Homes 
located in Riverside County, California; (2) the Public Housing 
Commissioner is authorized to permit the Housing Authority of the 
city of Columbia, South Carolina, to sell to^'the University of South 
Carolina, at fair market value as determined by him, all of the prop-
erty, including land, comprising the seventy-four unit housing project 
Numbered SC-2-5 known as University Terrace, located in Columbia, 
South Carolina, and to use, with the approval of the said Commis-
sioner, the proceeds of such sale as a loan for the development of other 
low-rent housing in the city of Columbia, South Carolina, in replace-
ment of said project Numbered SC-2-5, under terms and conditions 
which will be satisfactory to the Public Housing Commissioner and 
which will, in his opinion, protect the interest of the United States, 
and the annual contributions now contracted for in respect to project 
Numbered SC-2-5 shall continue to be available and may be con-
tracted for in respect to such oth.?r low-rent housing; and (3) the 
Housing and Home Finance Administrator is authorized and directed 
to convey, without monetary consideration, to the Housing Authority 
of Saint Louis County, Missouri, all of the right, title, and interest 
of the United States in and to the one hundred and fifty-six housing 
units in public housing project Numbered MO-V-23153. 
SEC. 810. Notwithstanding the provisions of any other law, the 
Housing and Home Finance Administrator is authorized to sell and 
convey all right, title and interest of the United States (including 
any off-site easements) at fair market value as determined by him, in 
and to war housing project CONN-6029, known as Westfield Heights, 
containing one hundred and thirty dwelling units on approximately 
twenty-three and nineteen one-hundredths acres of land in Wethers-
field, Connecticut, and CONN-6125, known as Drum Hill Park, con-
taining one hundred and twenty-five dwelling units on approximately 
fifty-two and thirty-three one-hundredths acres of land in Rocky 
Hill, Connecticut, to the housing authority of the town of Wethers-
field, Connecticut, for use in providing moderate rental housing. 
Any 
sale pursuant to this section shall be on such terms and conditions as 
the Administrator shall determine: Provided^ That full payment to 
the United States shall be required within a period of not to exceed 
thirty years with interest on unpaid balance at not to exceed 5 per 
centum per annum. 
SEC. 811. The Housing and Home Finance Agency, including its 
constituent agencies, and any other departments or agencies of the 
Federal Government having powers, functions, or duties with respect 
to housing under this or any other law shall exercise such powers, 
functions, or duties in such manner as, consistent with the require-
68 
S T A T . ] 
PUBLIC LAW 560-AUG. 2, 1954 
647 
ments thereof, will facilitate progress in the reduction of the vulner-
ability of congested urban areas to enemy attack. 
SEC. 812. Title V of the Housing Act of 1949, as amended, is hereby 
amended as follows: 
(a) At the end of the first sentence of section 511 strike "$8,500,000" 
and insert "$100,000,000". 
(b) In section 512, strike "$170,000" and insert "$2,000,000". 
(c) In section 513, strike "$850,000" and insert "$10,000,000". 
SEC. 813. Section 504 of the Housing Act of 1950, as amended, is 
hereby repealed. 
RECORDS 
SEC. 814. Every contract between the Housing and Home Finance 
Agency (or any official or constituent thereof) and any person or local 
body (including any corporation or public or private agency or body) 
for a loan, advance, grant, or contribution under the United States 
Housing Act of 1937, as amended, or the Housing Act of 1949, as 
amended, shall provide that such person or local body shall keep such 
records as the Housing and Home Finance Agency (or such official or 
constituent thereof) shall from time to time prescribe, including 
records which permit a speedy and effective audit and will fully 
disclose the amount and the disposition by such person or local body 
of the proceeds of the loan, advance, grant, or contribution, or any 
supplement thereto, the capital cost of any construction project for 
which any such loan, advance, grant, or contribution is made, and the 
amount of any private or other non-Federal funds used or grants-in-aid 
made for or in connection with any such project. 
No mortgage cover-
ing new or rehabilitated multifamily housing (as defined in section 
227 of the National Housing Act, as amended) shall be insured unless 
the mortgagor certifies that he will keep such records as are prescribed 
by the Federal Housing Commissioner at the time of the certification 
and that they will be kept in such form as to permit a speedy and 
effective audit. 
The Housing and Home Finance Agency or any 
official or constituent agency thereof shall have access to and the right 
to examine and audit such records. This section shall become effective 
on the first day after the first full calendar month following the date 
of approval of the Housing Act of 1954. 
Ante, p. 320. 
Funds for issu-
ance of notes, etc, 
12 u s e 1701J. 
Repeal. 
Ante, p. 607. 
Effective date. 
APPLICANTS FOR ASSISTANCE REQUIRED TO SUBMIT SPECIFICATIONS 
SEC. 815. Every contract for a loan, grant, or contribution under the 
United States Housing Act of 1937, as amended, or title I of the Hous- 
42 use i43o. 
ing Act of 1949, as amended, for the construction of a project shall i706d. 
° 
require the submission of specifications with respect to such construc-
tion prior to the authorization for the award of the construction 
contract and the submission of data with respect to the acquisition of 
land prior to the authorization to acquire such land. 
AUDITS UNDER PUBLIC HOUSING ACT OF 1937 ; COMPl'ROLLER GENERAL 
SEC. 816. Every contract for loans or annual contributions under 
the United States Housing Act of 1937, as amended, shall provide that 
the Public Housing Commissioner and the Comptroller General of 
the United States, or any of their duly authorized representatives, 
shall, for the purpose of audit and examination, have access to any 
books, documents, papers, and records of the public housing agency 
entering into such contract that are pertinent to its operations with 
respect to financial assistance under the United States Housing Act 
of 1937, as amended. 
40 u s e 1430. 
648 
PUBLIC LAW 561-AUG. 2, 1954 
[68 S T A T . 
Ante, 
p. 642. 
Ante, 
p. 607. 
REPORT TO CONGRESS OF INFORMATION ON HOUSING 
SEC. 817. The annual report made by the Housing and Home Finance 
Administrator to the President for submission to the Congress on ail 
operations provided for by section 802 hereof shall contain pertinerifc 
information with respect to all projects for which any loan, contribu-
tion, or grant has been made by the Housing and Home Finance 
Agency, including the amount of loans, contributions and grants con-
tracted for, and shall also contain pertinent information with respect 
to all builders' cost certifications required by section 227 of the National 
Housing Act, as amended, including information as to the amounts 
paid by niortgagors to mortgagees for application to the reduction of 
the principal obligations of the mortgages pursuant to that section. 
ACT CONTROLLING 
SEC. 818. Insofar as the provisions of any other law are inconsistent 
with the provisions of this Act, the provisions of this Act shall be 
controlling. 
SEPARABILITY 
SEC. 819. Except as may be otherwise expressly provided in this 
Act, all powers and authorities conferred by this Act shall be cumu-
lative and additional to and not in derogation of any powers and 
authorities otherwise existing. Notwithstanding any other evidences 
of the intention of Congress, it is hereby declared to be the controlling 
intent of Congress that if any provisions of this Act, or the application 
thereof to any persons or circumstances, shall be adjudged by any court 
of competent jurisdiction to be invalid, such judgment shall not affect, 
impair, or invalidate the remainder of this Act or its application to 
other persons and circumstances. 
Approved August 2, 1954. 
August 
2,1954 
[S. 2381] 
O i l 
a n d 
g a s 
l e a s e s . 
62 Stat. 291. 
Public Law 561 
CHAPTER 650 
AN ACT 
To amend section 27 of the Mineral Leasing Act of February 25,1920, as amended, 
in order to promote tlie development of oil and gas on the public domain. 
Be it eTiacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That section 27 of 
the Act of February 25,1920, as amended (30 U. S. C. 184), is further 
amended as follows: 
(1) Strike out all of the language preceding the semicolon of the 
second sentence of section 27, and insert the following in lieu thereof: 
Acreage hold- <-<-^Q persou, associatiou, or corporation, except as herein provided, 
ing restriction. 
^j^^jj ^^^^ ^^ ^^-^^ ^^ ^^^ ^.^^ ^.j ^^ ^^^ leascs exceeding in the aggre-
gate forty-six thousand and eighty acres granted hereunder in any 
one State, except that in the Territory of Alaska no person, associa-
tion, or corporation, except as herein provided, shall take or hold at 
one time oil or gas leases exceeding in the aggregate one hundred 
thousand acres granted hereunder;". 
(2) Strike out sentences 5 and 6 of section 27 and insert the follow-
ing in lieu thereof: "The interest of an optionee under a nonrenew-
able option to purchase or otherwise acquire one or more oil or gas 
leases (whether then or thereafter issued), or any interest therein, 
shall not, prior to the exercise of such option, be a taking or holding or 
control under the acreage limitations provisions of anj^ section of 
Time and acre- fj^jg ^(.^ 
J^Q g^ch optiou shall be entered into for a period of more 
age limitation. 
^ 
Alaska. 
60 Stat. 954. 
N on r e ne wa bl e 
option.