new system (A) which he finds consistent with other existing or prospective systems within the area, (B) which during the period of such ownership will be regulated or supervised by the State or political subdivision or an agency thereof, or (in the absence of such State or local regulation or supervision) will be otherwise regulated in a manner acceptable to the Secretary, with respect to user rates and charges, capital structure, methods of operation, and rate of return, and (C) regarding which he receives assurances, satisfactory to him, with respect to eventual public ownership and operation of the system and with respect to the conditions and terms of any sale or transfer.

RELEASES

SEC. 1007. The Secretary may, on such terms and conditions as he may prescribe, consent to the release or subordination of a part or parts of the mortgaged property from the lien of the mortgage.

PREMIUMS AND FEES

SEC. 1008. The Secretary shall collect reasonable premiums for the insurance of any mortgage under this title and make such charges as he determines are reasonable for the analysis of the land development plan and the appraisal and inspection of the property and improvements. On or before January 1, 1967, the Secretary shall make a report to the Congress concerning the premium rates and other charges under this title that he estimates will be adequate to provide income sufficient for a self-supporting program.

INSURANCE BENEFITS

SEC. 1009. The provisions of subsections (e), (g), (h), (i), (j), (k), (1), and (n) of section 207 of this Act shall be applicable to mortgages insured under this title, except that as applied to such mortgages (1) any reference therein to section 207 shall be deemed to refer to this title, and (2) any reference to an annual premium shall be deemed to refer to such premiums as the Secretary may designate under this title.

INCONTESTABILITY PROVISIONS

SEC. 1010. Any contract of insurance executed by the Secretary under this title shall be conclusive evidence of the eligibility of the mortgage for insurance, and the validity of any contract of insurance so executed shall be incontestable in the hands of an approved mortgagee from the date of the execution of such contract, except for fraud or material misrepresentation on the part of such approved mortgagee.

RULES AND REGULATIONS

SEC. 1011. The Secretary is authorized to make such rules and regulations and to require such agreements as he may deem necessary or desirable to carry out the provisions of this title.

TAXATION PROVISIONS

SEC. 1012. Nothing in this title shall be construed to exempt any real property acquired and held by the Secretary under this title from taxation by any State or political subdivision thereof to the same extent, according to its value, as the other real property is taxed.

COST CERTIFICATION

SEC. 1013. (a) The Secretary shall adopt such requirements as he determines necessary to assure, at reasonable intervals of time. during land development and upon completion of such development, that the amount of the mortgage loan outstanding at each such interval does not exceed with respect to that portion of the land remaining under the lien of the mortgage (1) 50 per centum of the Secretary's estimate of the value of such remaining land before development, plus (2) 90 per centum of the actual costs of the development allocated by the Secretary to such remaining land.

(b) From time to time during, and upon completion of, the development, the Secretary shall require the mortgagor to certify as to the actual costs of development of the land.

(c) Certifications required pursuant to this section shall be accompanied by such data and records as the Secretary shall prescribe. (d) A mortgagor's certification approved by the Secretary shall be final and incontestable except for fraud or material misrepresentation on the part of the mortgagor.

(e) As used in this section, the term "actual costs" means the costs (exclusive of kickbacks, rebates, or trade discounts) to the mortgagor of the improvements involved. These costs include amounts paid for labor, materials, construction contracts, land planning, engineers' and architect's fees, surveys, taxes, and interest during development, organizational and legal expenses, such allocation of general overhead expenses as are acceptable to the Secretary, and other items of expense incidental to development which may be approved by the Secretary. If the Secretary determines there is an identity of interest between the mortgagor and the contractor, there may be included an allowance for the contractor's profit in an amount deemed reasonable by the Secretary.

TITLE XI-MORTGAGE INSURANCE FOR GROUP

PRACTICE FACILITIES 1

INSURANCE OF MORTGAGES

SEC. 1101. (a) The Secretary is authorized (1) to insure mortgages (including advances on such mortgages during construction), upon such terms and conditions as he may prescribe, in accordance with the provisions of this title, and (2) to make commitments for the insuring

1 Title XI was added by sec. 502, Demonstration Cities and Metropolitan Development Act of 1966, Public Law 89-754, approved November 3, 1966, SO Stat. 1255, 1274. Sec. 501 of the Demonstration Cities and Metropolitan Development Act of 1966 states that it is the purpose of title XI "to assure the availability of credit on reasonable terms to units or organizations engaged in the group practice of medicine, optometry, or dentistry, particularly those in smaller communities and those sponsored by cooperative or other nonprofit organizations, to assist in financing the construction and equipment of group practice facilities.

of such mortgages prior to the date of their execution or disbursement thereon. No mortgage shall be insured under this title after June 30, 1977, except pursuant to a commitment to insure issued before that date.

3

(b) To be eligible for insurance under this title, the mortgage shall (1) be executed by a mortgagor that is a group practice unit or organization or other mortgagor," approved by the Secretary, (2) be made to and held by a mortgagee approved by the Secretary as responsible and able to service the mortgage properly, and (3) cover a property or project which is approved for mortgage insurance prior to the beginning of construction or rehabilitation and is designed for use as a group practice facility or medical practice facility which the Secretary finds will be constructed in an economical manner, will not be of elaborate or extravagant design or materials, and will be adequate and suitable for carrying out the purposes of this title. No mortgage shall be insured under this title unless it is shown to the satisfaction of the Secretary that the applicant would be unable to obtain the mortgage loan without such insurance on terms comparable to those specified in subsection (c).

(c) The mortgage shall—

(1) 4

(2) not exceed 90 per centum of the amount which the Secretary estimates will be the replacement cost of the property or project when construction or rehabilitation is completed. The replacement cost of the property may include the land the proposed physical improvements, equipment, utilities with the boundaries of the property, architects' fees, taxes, and interest accruing during construction or rehabilitation, and other miscellaneous charges incident to construction or rehabilitation and approved by the Secretary;

(3) have a maturity satisfactory to the Secretary but not to exceed twenty-five years from the beginning of amortization of the mortgage, and provide for complete amortization of the prin

6

1 Sec. 2(g) of Public Law 91-78, approved September 30, 1969, 83 Stat. 125, extended title XI from October 1, 1969, to January 1, 1970, and sec. 101 (i), Housing and Urban Development Act of 1969, Public Law 91-152, approved December 24, 1969, 83 Stat. 379, further extended title XI to October 1, 1970. Title XI was subsequently extended as follows: (1) to November 1, 1970, by sec. 1(g) of Public Law 91-432, approved October 2. 1970, 84 Stat. 886; (2) to December 1, 1970, by sec. 1(g) of Public Law 91-473, approved October 21, 1970, 84 Stat. 1064; (3) to January 1, 1971, by sec. 1(g) of Public Law 91525, approved December 1, 1970, 84 Stat. 1384; (4) to October 1, 1972, by sec. 101(1), Housing and Urban Development Act of 1970, Public Law 91-609, approved December 31, 1970, 84 Stat. 1770; (5) to June 30, 1973, by sec. 1(i) of Public Law 92-503, approved October 18, 1972, 86 Stat. 906; (6) to October 1, 1973, by sec. 1(i) of Public Law 93-85, approved August 10, 1973, 87 Stat. 220; (7) to October 1, 1974, by sec. 1(i) of Public Law 93-117, approved October 2, 1973, 87 Stat. 421; and (8) by sec. 316(g) of Housing and Community Development Act of 1974, 88 Stat. 633, approved August 22, 1974, substituted "June 30, 1977" for "October 1, 1974".

2 Sec. 312(a)(1) of Housing and Community Development Act of 1974, Public Law 93-383, 88 Stat. 633, approved August 22, 1974, added the words "or other mortgagor", following "unit or organization".

3 Sec. 312(a) (2) of Housing and Community Development Act of 1974, Public Law 93-383, 88 Stat. 633, approved August 22, 1974, inserted the words "or medical practice facility" immediately following "group practice facility".

4 Sec. 304 (1) of Housing and Community Development Act of 1974. Public Law 93-383. 88 Stat. 633, approved August 22, 1974, struck para. (1) of section 1101 (c) of the National Housing Act, but did not renumber the following paragraphs.

5 Sec. 418 (f), Housing and Urban Development Act of 1969, Public Law 91-152, approved December 24, 1969, 83 Stat. 379, 402, substituted "replacement cost" for "value". • Sec. 1722 (d), Housing and Urban Development Act of 1968, Public Law 90-448. approved August 1, 1968, 82 Stat. 476, 610 added "from the beginning of amortization of the mortgage".

cipal obligation by periodic payments within such term as the Secretary shall prescribe; and

(4) bear interest (exclusive of premium charges for insurance, and service charges if any) at a rate of not to exceed 5 per centum per annum of the amount of the principal obligation outstanding at any time, or not to exceed such rate (not in excess of 6 per centum per annum) as the Secretary finds necessary to meet the mortgage market.

(d) Any contract of insurance executed by the Secretary under this title shall be conclusive evidence of the eligibility of the mortgage for insurance, and the validity of any contract for insurance so executed shall be incontestable in the hands of an approved mortgagee from the date of the execution of such contract, except for fraud or misrepresentation on the part of such approved mortgagee.

(e) Each mortgage insured under this title shall contain an undertaking (in accordance with regulations prescribed under this title and in force at the time the mortgage is approved for insurance) to the effect that, except as authorized by the Secretary and the mortgagee, the property will be used as a group practice facility or medical practice facility until the mortgage has been paid in full or the contract of insurance otherwise terminated.

(f) No mortgage shall be insured under this title unless the mortgagor and the mortgagee certify (1) that they will keep such records relating to the mortgage transaction and indebtedness, to the construction of the facility covered by the mortgage, and to the use of such facility as a group practice facility or medical practice facility1 as are prescribed by the Secretary at the time of such certification, (2) that they will make such reports as may from time to time be required by the Secretary pertaining to such matters, and (3) that the Secretary shall have access to and the right to examine and audit such records.

PREMIUMS

SEC. 1102. The Secretary shall fix premium charges for the insurance of mortgages under this title, but such charges shall not be more than 1 per centum per annum of the amount of the principal obligation of the mortgage outstanding at any time, without taking into account delinquent payments or prepayments. In addition to the premium charge, the Secretary is authorized to charge and collect such amounts as he may deem reasonable for the analysis of a proposed project and the appraisal and inspection of the property and improvements. Where the principal obligation of any mortgage accepted for insurance under this title is paid in full prior to the maturity date, the Secretary is authorized to require the payment by the mortgagee of an adjusted premium charge. This charge shall be in such amount as the Secretary determines to be equitable, but not in excess of the aggregate amount of the premium charges that the mortgagee would otherwise have been required to pay if the mortgage had continued to be insured until the maturity date. Where such prepayment occurs,

1 Sec. 312(a)(3) of Housing and Community Development Act of 1974, Public Law 93-383, 88 Stat. 633, approved August 22, 1974 amended sec. 1101 (e) by inserting the words "or medical practice facility" immediately following "group practice facility"; sec. 312(a) (4) of such Act amended sec. 1101 (f) by inserting the words "or medical practice facility" immediately following the words "group practice facility".

the Secretary is authorized to refund to the mortgagee for the account of the mortgagor all, or such portion as he shall determine to be equitable, of the current unearned premium charges theretofore paid. Premium charges fixed under this section shall be payable by the mortgagee either in cash, or in debentures which are the obligation of the General Insurance Fund at par plus accrued interest, at such times and in such manner as may be prescribed by the Secretary.

PAYMENT OF INSURANCE BENEFITS

SEC. 1103. The mortgagee shall be entitled to receive the benefits of the insurance under this title in the manner provided in subsection (g) of section 207 with respect to mortgages insured under that section. For such purpose the provisions of subsections (g), (h), (i), (j), (k), (1), and (n) of section 207 shall apply to mortgages insured under this title and all references in such subsections to section 207 shall be deemed to refer to this title.

REGULATIONS

SEC. 1104. The Secretary shall prescribe such regulations as may be necessary to carry out this title, after consulting with the Secretary of Health, Education, and Welfare with respect to any health or medical aspects of the program under this title which may be involved in such regulations.

ADMINISTRATION

SEC. 1105. (a) At the request of individuals or organizations operating or contemplating the operation of group practice facilities or medical practice facility (as defined in section 1106),1 the Secretary may provide or obtain technical asistance in the planning for and construction of such facilities.

(b) With a view to avoiding unnecessary duplication of existing staffs and facilities of the Federal Government, the Secretary is authorized to utilize available services and facilities of any agency of the Federal Government in carrying out the provisions of this title, and to pay for such services and facilities, either in advance or by way of reimbursement, in accordance with an agreement between the Secretary and the head of such agency.

DEFINITIONS

SEC. 1106. For the purposes of this title-

(1) The term "group practice facility" means a facility in a State for the provision of preventive, diagnostic, and treatment services to ambulatory patients (in which patient care is under the professional supervision of persons licensed to practice medicine or osteopathy 2 in

1 Sec. 312(a) (5) of Housing and Community Development Act of 1974, Public Law 93-383, 88 Stat. 633, approved August 22, 1974, substituted "or medical practice facility (as defined in section 1106)" for "(as defined in section 1106 (1))".

2 Sec. 312(b)(1) of Housing and Community Development Act of 1974, Public Law 93-383, 88 Stat. 633, approved August 22, 1974, inserted the words "or osteopathy" after the words "practice medicine"; and also added after the word "State" ", or, in the case of podiatric care or treatment, is under the professional supervision of persons licensed to practice podiatry in the State".