Open space land program

The contract authorization of $310 million for grants under the open space land program is changed to a $310 million authorization of appropriations prior to July 1, 1969, with $150 million in additional appropriations authorized for fiscal year 1970. The limit on the amount of the funds that can be used for studies and publishing of information is increased from $50,000 to $125,000 per year.

Feasibility studies-Public works planning advances

It is made clear that the Secretary of HUD has authority to make advances for feasibility studies under the public works planning advances program.

TITLE VII-URBAN MASS TRANSPORTATION

Authorization

The authorization of appropriations for grants and other assistance to urban mass transportation is increased by $190 million for fiscal year 1970. The amount of funds which can be used for research, development, and demonstration projects is increased by $6 million, commencing July 1, 1968, and the statutory limit on the funds available for this purpose is removed, commencing July 1, 1969. Emergency program extended

The emergency mass transportation capital grant program expiration date is extended from November 1, 1968, to July 1, 1970. Definition

The definition of "mass transportation" in the Urban Mass Transportation Act of 1964 is amended to allow greater flexibility and opportunity for application of new concepts and systems.

Non-Federal share of net project cost

Not more than half of the non-Federal share of the net project cost of a mass transportation project is permitted to be paid from private sources, except in certain cases of demonstrated fiscal inability. Any public or private transit system funds provided for the non-Federal share must be solely from undistributed cash surpluses, replacement or depreciation funds or reserves available in cash, or new capital.

TITLE VIII-SECONDARY MORTGAGE MARKET

The existing Federal National Mortgage Association (FNMA) is directed to be partitioned into two separate corporations. One will be a Government-sponsored private corporation, to be known as the Federal National Mortgage Association (FNMA), to operate the secondary mortgage market operations. The other will remain in the Government and continue to operate the special assistance functions for special federally aided housing programs, and the management and liquidating functions of the old FNMA. The new corporation will be known as the Government National Mortgage Association (GNMA). FNMA is authorized to issue and sell securities backed by a portion of its mortgage portfolio, with GNMA guaranteeing payment on such securities. GNMA can also guarantee similar securities issued by other private issuers where they are backed by FHA, VA, and some Farmers Home Administration mortgages or loans.

The special assistance authorization of GNMA is increased by $500 million on July 1, 1969.

The provisions of this title will become effective after a date, no more than 120 days following its enactment, established by the Secretary of HUD. The Secretary has established this date as September 1, 1968.

Provisions are made with respect to the capital stock of FNMA and its board of directors during a transitional period. The transitional period will end when one-third of the FNMA common stock is owned by persons or organizations in the mortgage lending, home building, real estate, or related businesses, but not sooner than May 1, 1970, nor later than May 1, 1973. The majority of FNMA's board of directors are to be appointed by the Secretary of HUD during the tra sitional period. The president of FNMA during this period will be appointed by the President of the United States and confirmed by the Senate. One of the Secretary's appointees to the board will be the president of FNMA.

After the transitional period FNMA will be governed by a 15member board of directors, five of whom will be appointed by the President of the United States.

The new FNMA will be subject to the general regulatory control of the Secretary of HUD, who also must approve the issuance of all stocks and other obligations by FNMA and may require it to allocate a reasonable portion of its mortgage purchases to mortgages in low and moderate income housing.

TITLE IX-NATIONAL HOUSING PARTNERSHIPS

A national housing partnership is to be created for the purpose of securing the participation of private investors in programs and projects to provide housing for low- and moderate-income families. Initially, a federally chartered, privately funded corporation will be organized under the District of Columbia Business Corporation Act. The corporation in turn will organize the national partnership under the District of Columbia Uniform Limited Partnership Act.

The corporation will serve as the general partner and managing agent of the national partnership and each of its stockholders can be limited partners. It will provide the staff and expertise for the partnership in organizing and planning project undertakings in which the partnership has an interest, and receive a fee for such services.

Both the corporation and the national partnership are authorized to engage in a broad range of activities appropriate to the provision of housing and related facilities primarily for low- or moderate-income families, with or without the use of Federal programs, and may enter into and participate in all forms of partnerships and associations. The national partnership is expected to form partnership ventures with local investors for the purpose of building low- and moderate-income housing projects throughout the Nation. Normally, it will be a limited partner in such undertakings, with an interest of not more than 25 percent of the aggregate initial equity investment for the project.

The President will appoint the incorporators of the corporation and three of the 15 members of the board of directors. The incorporators will serve as the initial board of directors and arrange for the initial offering of shares of stock in the corporation and interests in the na tional partnership.

The President is authorized to create additional partnerships when he determines it to be in the national interest.

National banks are authorized to invest in a corporation and other entities formed under this title.

TITLE X-RURAL HOUSING

Housing for low- and moderate-income persons and families

The Secretary of Agriculture is authorized to provide direct and insured loans for housing in rural areas to low- and moderate-income persons and families and to provide rental or cooperative housing for such persons where assistance is not available under the new interest reduction programs authorized by the law. The interest rate on the loans can be at a rate set by the Secretary after considering the cost of money to the Treasury and the payment ability of the applicants, but not less than 1 percent per annum. An interest supplement necessary to market the insured loans will be paid from, and reimbursed by annual appropriations to, the rural housing insurance fund. Housing for rural trainees

The Secretary of Agriculture is authorized to provide financial and technical assistance to the provision of housing and related facilities in rural areas for rural trainees (and their families) enrolled in federally assisted training courses to improve their employment capability.

Advances for land purchase for the housing will be repayable within 33 years and bear interest at a rate (not less than 1 percent) determined by the Secretary of the Treasury taking into consideration the current average market yield on outstanding Federal obligations. Other advances would be nonrepayable, or repayable with or without interest, depending on the applicant's payment ability, from project net income and any other available sources.

Mutual and self-help housing

A new program of grants and loans is authorized to provide assistance in rural areas and small towns to needy low-income individuals and their families for mutual or self-help housing. Grants can be made to public or private nonprofit organizations to pay part or all of the costs of developing comprehensive programs of technical and supervisory assistance to aid individuals and their families in carrying out mutual or self-help housing efforts.

Loans can be made on such terms and conditions and in such amounts as the Secretary of Agriculture deems necessary, to needy low-income individuals participating in programs of mutual or selfhelp housing approved by him, for the acquisition and development of land and for the purchase of building materials as may be necessary, for the construction of dwellings. Loans will bear interest at not more than 3 percent per annum, and be repayable within 33

years.

A self-help housing land development fund is authorized to provide a source of short-term loans to public or private nonprofit organizations to buy and develop building sites to be sold to families, nonprofit organizations, and cooperatives eligible for assistance under the new interest reduction programs for housing for lower income families.

TITLE XI-URBAN PROPERTY PROTECTION AND REINSURANCE

Under this Act the Secretary of HUD is authorized to provide private insurers with reinsurance against losses resulting from riots or civil disorders. The sale of reinsurance is limited to those insurers that cooperate with State insurance authorities in statewide plans to assure fair access to insurance requirements, called FAIR plans. Reinsurance may only be provided in States which have such plans. FAIR plans may vary among the States, but all plans must satisfy minimum statutory criteria. The principal requirement is that no risk can be written at the surcharged rate or denied coverage unless there has been an inspection of the property and a determination made that it does not meet reasonable underwriting standards at the applicable premium. Additional requirements relate to the procedures to be followed with respect to inspections, the provision of reasonable notice to property owners of cancellation or nonrenewal of policies, and the formation of an all-industry facility which will place the insurance in the regular market. Such FAIR plans are to be administered under the supervision of the State insurance authority. As a condition for providing reinsurance in a State, the Secretary can require additional programs to make property insurance available without regard to environmental hazards.

Reinsurance is offered in standards lines of property insurance coverage and can be provided immediately following enactment by means of a binder agreement, which expires after 90 days unless sooner replaced by a reinsurance contract.

Premium rates and the terms and conditions of reinsurance contracts are to be uniform throughout the country. The premiums for the first year must provide sufficient income to cover a level of riot losses in excess of the amount of insured riot losses in 1967.

A State is required to assume a portion of the losses reinsured by the Secretary within 1 year or by the close of its next regular legislative session. The ceiling on the share will be 5 percent of the property insurance premiums, earned in the State on reinsured lines of property insurance. Such sharing will only be required if reinsured losses exceed premiums paid for reinsurance by insurance companies in that State (premiums paid in the current year plus premiums paid in previous years in excess of reinsured claims).

A national insurance development fund is created to carry out the programs authorized. Treasury borrowings are authorized to make payments of claims for reinsured losses, limited to $250 million or such further sums as the Congress may authorize by joint resolution.

The Secretary is required to make a study concerning the availability of property insurance in urban areas and to submit the results to the President and the Congress no later than 1 year after the enactment of the law. He is also authorized to conduct other studies pertinent to his reinsurance and statewide plan responsibilities.

A 19-member advisory board is to be appointed by the Secretary with not less than four members to represent the insurance industry and not less than four members to represent the State insurance authorities.

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TITLE XII-DISTRICT OF COLUMBIA INSURANCE PLACEMENT ACT

The District of Columbia Insurance Placement Act establishes programs to assure the availability of basic property insurance protection against fire and other perils for residential and business properties in the District of Columbia. Such programs are subject to the supervision and regulation of the Commissioner of the District of Columbia. Within 30 days after enactment, all licensed insurers in the District who write basic property insurance are required to establish an industry placement facility which is to administer a program to provide for the equitable distribution of responsibility for insuring qualified property for which insurance cannot be obtained through the normal insurance market.

Rules and regulations are to be adopted by the facility to assure all property owners fair access to insurance requirements. Such rules and regulations, which must be approved by the Commissioner, are required to be consistent with the statewide plan requirements of the Urban Property Protection and Reinsurance Act of 1968 (title XI, supra).

The Commissioner is authorized to establish a joint underwriting association to provide for the reinsuring of basic property insurance without regard to environmental hazard, if he finds that such a program is necessary to carry out the purposes of the act.

The Commissioner is authorized to assess each insurance company authorized to do business in the District an amount sufficient to satisfy the State-sharing requirement for Federal reinsurance under the Urban Property Protection and Reinsurance Act. Such assessments would be based on a company's proportionate share of premiums earned on reinsured lines during the preceding year. In the event of such assessments, the companies will increase their premiums by an amount sufficient to recover the assessment within not more than a 3-year period.

TITLE XIII-NATIONAL FLOOD INSURANCE

Title XIII enacts the National Flood Insurance Act of 1968. Under this act, the Secretary of HUD is authorized to establish and carry out a national flood insurance program to enable persons to purchase insurance against losses resulting from physical damage to or loss of real property or personal property arising from any flood occurring in the United States. He is directed to encourage and arrange for maximum participation in the program by insurance companies and other insurers, and by related agents, brokers, and organizations.

The act provides for the operation of the flood insurance program as a joint venture between the Federal Government and the private insurance industry (with the industry participating on a risk-sharing basis). However, as an alternative, the Secretary may, if necessary, operate the program without the companies participating on other than a fiscal agency basis.

The Secretary is authorized to borrow up to $250 million from the Treasury to carry out the insurance program. A national flood insurance fund is established for making payments authorized by the bill, including premium equalization payments and reinsurance for losses in excess of losses assumed by insurance company pools formed to provide flood insurance.