23 & 13,50 At the end of March 1969, 1,626 mortgages had been insured under section 235, in an aggregate amount of $21,856,100. The entire $25 million in contract authority available at that time for interest subsidy payments had been used. Additional applications had been received for payments amounting to $40 million. Rental housing for lower-income families-interest subsidy (sec. 236) The Housing and Urban Development Act of 1968 authorized a new program (sec. 236) of Federal assistance for rental and cooperative housing for lower-income families. The assistance is in the form of periodic payments to the mortgagee financing the housing to reduce the mortgagor's interest costs on a market rate FHA-insured project mortgage, thus making possible lower rentals or charges to be paid by the occupants of the housing. The interest-reduction payments will reduce payments on the project mortgage from that required for principal, interest, and mortgage insurance premium on a market rate mortgage to that required for principal and interest on a mortgage bearing an interest rate of 1 percent. The interest-reduction payments will reduce rentals to a basic charge, and a tenant or cooperative member will either pay the basic charge or such greater amount as represents 25 percent of his income, but not in excess of the charges which would be necessary without any interestreduction payments. Rental charges collected by the project owner in excess of the basic charges are to be returned to the Secretary for deposit in a revolving fund to offset payments made to the mortgagee and for the purpose of making other interest-reduction payments.. Tenants of these projects who pay less than the fair market rental charge for their units will generally have to have incomes, at the time of the initial rentup of the projects, not in excess of 135 percent of the maximum income limits that can be established in the area for initial occupancy in public housing dwellings. However, up to 20 percent of the contract funds authorized in appropriation acts for interest reduction payments may be made available for projects in which some or all of the units will be occupied, at the time of the initial rentup, by tenants whose incomes exceed the above limit but do not exceed 90 percent of the income limits for occupancy of section 221(d) (3) below-market interest rate rental housing. In determining income for the purpose of eligibility as well as the amount of rent to be paid, a $300 deduction is permitted for each minor person in the family and any income of such minor is not counted. Incomes of tenants will be reexamined at least every 2 years for the purpose of adjusting rentals. Rental charges collected by the project owner in excess of the basic charges are to be returned to the Secretary for deposit in a revolving fund for the purpose of making other interest-reduction payments. To qualify for mortgage insurance under the new program, a mortgagor must be a nonprofit organization, a cooperative, or a limiteddividend entity of the types permitted under the FHA section be made by private lenders to lower-income families at market rates of interest. The Secretary of HUD enters into contracts with the lenders to make periodic payments to the lenders in the amounts necessary to make up the difference between 20 percent of the family's monthly income and the required monthly payment under the mortgage for principal, interest, taxes, insurance, and the mortgage insurance premium. In no case, however, can the payment on a mortgage exceed the difference between the required payment under the mortgage for principal, interest, and mortgage insurance premium and the payment that would be required for principal and interest if the mortgage bore an interest rate of 1 percent. The family's income is required to be recertified at least every 2 years and appropriate adjustments made in the assistance payment to reflect any changes. The assistance payment is available for a purchaser having an income, at the time of his initial occupancy, not in excess of 135 percent of the maximum income limits that can be established in the area for initial occupancy in public housing. However, up to 20 percent of the funds authorized in appropriation acts for the program can be used to assist families with incomes above these limits but which are not in excess of 90 percent of the income limits for occupancy in a section 221(d) (3) below-market interest rate housing project. In calculating the income of the homeowner for the purpose of determining eligibility as well as the amount on which the 20-percent computation will be made, there will be deducted $300 for each minor child who is a member of the homeowner's immediate family and living with him. Also, income of minors will not be included in the homeowner's income for this computation. The amount of a home mortgage cannot exceed $15,000 ($17,500 in high-cost areas). These limits are increased to $17,500 ($20,000 in high-cost areas) for families with five or more members. The same limits apply to cooperative and condominium units. The minimum downpayment is $200 for families with incomes up to 135 percent of the maximum income limits that can be established in the area for initial occupancy in public housing and 3 percent of acquisition cost in other cases. The downpayment can be applied to closing costs. In addition to the foregoing provisions, a mortgage executed by a nonprofit organization or a public body or agency can be insured where it finances the purchase (and rehabilitation if necessary) of housing in viable, or potentially viable, areas for resale to lower income families. The housing must include at least four or more onefamily dwellings (or two-family dwellings, one unit of which is to be occupied by the owner), or at least four or more one-family units in a condominium project, in the cases where rehabilitation is involved. The individual mortgages given to finance the resale of the housing to lower income families will also be insured by FHA and assistance payments made on behalf of the purchasers. At the end of March 1969, 1,626 mortgages had been insured under section 235, in an aggregate amount of $21,856,100. The entire $25 million in contract authority available at that time for interest subsidy payments had been used. Additional applications had been received for payments amounting to $40 million. Rental housing for lower-income families-interest subsidy (sec. 236) The Housing and Urban Development Act of 1968 authorized a new program (sec. 236) of Federal assistance for rental and cooperative housing for lower-income families. The assistance is in the form of periodic payments to the mortgagee financing the housing to reduce the mortgagor's interest costs on a market rate FHA-insured project mortgage, thus making possible lower rentals or charges to be paid by the occupants of the housing. The interest-reduction payments will reduce payments on the project mortgage from that required for principal, interest, and mortgage insurance premium on a market rate mortgage to that required for principal and interest on a mortgage bearing an interest rate of 1 percent. The interest-reduction payments will reduce rentals to a basic charge, and a tenant or cooperative member will either pay the basic charge or such greater amount as represents 25 percent of his income, but not in excess of the charges which would be necessary without any interestreduction payments. Rental charges collected by the project owner in excess of the basic charges are to be returned to the Secretary for deposit in a revolving fund to offset payments made to the mortgagee and for the purpose of making other interest-reduction payments.. Tenants of these projects who pay less than the fair market rental charge for their units will generally have to have incomes, at the time of the initial rentup of the projects, not in excess of 135 percent of the maximum income limits that can be established in the area for initial occupancy in public housing dwellings. However, up to 20 percent of the contract funds authorized in appropriation acts for interest reduction payments may be made available for projects in which some or all of the units will be occupied, at the time of the initial rentup, by tenants whose incomes exceed the above limit but do not exceed 90 percent of the income limits for occupancy of section 221(d) (3) below-market interest rate rental housing. In determining income for the purpose of eligibility as well as the amount of rent to be paid, a $300 deduction is permitted for each minor person in the family and any income of such minor is not counted. Incomes of tenants will be reexamined at least every 2 years for the purpose of adjusting rentals. Rental charges collected by the project owner in excess of the basic charges are to be returned to the Secretary for deposit in a revolving fund for the purpose of making other interest-reduction payments. To qualify for mortgage insurance under the new program, a mortgagor must be a nonprofit organization, a cooperative, or a limiteddividend entity of the types permitted under the FHA section 24 221(d)(3) rental housing program. The mortgage limitations with respect to maximum mortgage amount are the same as for mortgages insured under the (d) (3) program. Until late January 1969, when the FHA interest rate maximum was raised to 72 percent, there was very little action in the section 236 program. By the end of March 1969, applications had been received for the insurance of mortgages on 21 projects containing 2,635 dwelling units. The applications involved interest reduction payments of nearly $100 million. Only $25 million in contract authority for these payments was available. Credit assistance for homeownership-counseling services (sec. 237) FHA mortgage insurance is authorized (under a new sec. 237 of the National Housing Act added by the Housing and Urban Development Act of 1968) for families of low and moderate income who, through the incentive of homeownership, and counseling assistance, appear to be able to achieve homeownership but who, for reasons of credit history, irregular income patterns caused by seasonal employment, or other factors, are unable to meet the credit requirements generally applicable for the purchase of a home under the regular FHA mortgage insurance program. A mortgage must meet the basic requirements under one of the various FHA home mortgage programs. The credit and income requirements of the particular program do not apply, however, and the principal obligation of the mortgage cannot exceed $15,000 ($17,500 in high-cost areas). However, if the limit on the amount of a mortgage is lower under a particular program, the lower limit is applicable. The monthly payments, combined with local real estate taxes on the property, may not exceed 25 percent of the home purchaser's income, computed over the previous year or the previous 3 years, whichever is higher. The interest rates and mortgage insurance premiums are the same as under the program involved for other mortgagors. Debt management and related counseling services are required to be provided to mortgagors whose mortgages are insured under these new more liberal provisions. The Secretary of HUD can provide these services. He can also provide counseling to otherwise eligible families who lack a downpayment on a home in order to help them to save money for a downpayment. No funds have been appropriated to implement the counseling services required for mortgagors whose mortgages are insured under this section. However, in a limited way, this section has been implemented where counseling can be obtained for the mortgagors either on a voluntary basis or funded by other public or private organizations. As of the end of March 1969, 12 mortgages had been insured under the section 237 program. One of these mortgages was a combination section 235-237 mortgage under which interest rate subsidy payments will be made. Loans for purchase of fee simple title (sec. 240) The Housing and Urban Development Act of 1968 authorized a new program (sec. 240) to finance the purchase by a homeowner of fee simple title to property on which his one-, two-, three-, or four-family home is located, in cases where the homeowner has only a leasehold interest in the land. An insurable loan may not exceed $10,000 per family unit and (when added to any outstanding indebtedness) may not create a total indebtedness in excess of the applicable section 203 (b) limit. Supplemental loans for projects financed with FHA mortgages (sec. 241) The Housing and Urban Development Act of 1968 authorized a new program (sec. 241) to provide FHA insurance of supplemental loans to finance improvements and additions to FHA-insured multifamily projects, including nursing homes and group practice facilities and their equipment. Such a loan may not exceed 90 percent of the estimated value of the required improvements, additions, and equipment, and may not, when added to the outstanding balance of the project mortgage, exceed the maximum mortgage amount permitted under the section or title pursuant to which the original mortgage was insured. Mortgage insurance for nonprofit hospitals (sec. 242) The Housing and Urban Development Act of 1968 authorized a new program (sec. 242) under which the Secretary of HUD will insure mortgages covering new or rehabilitated hospitals (including initial equipment). The mortgage may not exceed $25 million or 90 percent of replacement cost and the hospital must be owned and operated by one or more nonprofit organizations. (Hospitals completed just before the program became effective and not yet permanently financed are eligible subject to a limit of $20 million on the aggregate of such mortgages.) Land development and new communities (title X) FHA insures mortgages (under its title X program) financing the purchase of raw land and the development of improved building sites or the development of new communities. This program was initiated by the Housing and Urban Development Act of 1965. The maximum mortgage amount for any one land development undertaking is $25 million, or 75 percent of value of the developed land, or 50 percent of land value before development and 90 percent of estimated development cost. The maximum term is 10 years, or such longer period as FHA deems reasonable in the case of a privately owned system for water or sewerage, or a new community. The current maximum interest rate is 71/2 percent. The development must be characterized by sound land use patterns and consistent with a comprehensive plan or planning for the area in which the land is situated. In the case of a new community, the development must make a substantial contribution to the sound and eco |