42 U.S.C. § 5308 : US Code - Section 5308: Guarantee and commitment to guarantee loans for acquisition of property

Search 42 U.S.C. § 5308 : US Code - Section 5308: Guarantee and commitment to guarantee loans for acquisition of property

(a) Authority of Secretary; issuance of obligations by eligible
public entities or designated public agencies; form,
denomination, maturity, and conditions of notes or other
obligations; percentage allocation requirements
The Secretary is authorized, upon such terms and conditions as
the Secretary may prescribe, to guarantee and make commitments to
guarantee, only to such extent or in such amounts as provided in
appropriation Acts, the notes or other obligations issued by
eligible public entities, or by public agencies designated by such
eligible public entities, for the purposes of financing (1)
acquisition of real property or the rehabilitation of real property
owned by the eligible public entity (including such related
expenses as the Secretary may permit by regulation); (2) housing
rehabilitation; (3) economic development activities permitted under
paragraphs (14), (15), and (17) of section 5305(a) of this title;
(4) construction of housing by nonprofit organizations for
homeownership under section 1437o(d) (!1) of this title or title VI
of the Housing and Community Development Act of 1987; (5) the
acquisition, construction, reconstruction, or installation of
public facilities (except for buildings for the general conduct of
government); or (6) in the case of colonias (as such term is
defined in section 916 of the Cranston-Gonzalez National Affordable
Housing Act), public works and site or other improvements. A
guarantee under this section may be used to assist a grantee in
obtaining financing only if the grantee has made efforts to obtain
such financing without the use of such guarantee and cannot
complete such financing consistent with the timely execution of the
program plans without such guarantee. Notes or other obligations
guaranteed pursuant to this section shall be in such form and
denominations, have such maturities, and be subject to such
conditions as may be prescribed by regulations issued by the
Secretary. The Secretary may not deny a guarantee under this
section on the basis of the proposed repayment period for the note
or other obligation, unless the period is more than 20 years or the
Secretary determines that the period causes the guarantee to
constitute an unacceptable financial risk. Notwithstanding any
other provision of law and subject only to the absence of qualified
applicants or proposed activities and to the authority provided in
this section, to the extent approved or provided in appropriation
Acts, the Secretary shall enter into commitments to guarantee notes
and obligations under this section with an aggregate principal
amount of $2,000,000,000 for fiscal year 1993 and $2,000,000,000
for fiscal year 1994. Of the amount approved in any appropriation
Act for guarantees under this section in any fiscal year, the
Secretary shall allocate 70 percent for guarantees for metropolitan
cities, urban counties, and Indian tribes and 30 percent for
guarantees for units of general local government in nonentitlement
areas. The Secretary may waive the percentage requirements of the
preceding sentence in any fiscal year only to the extent that there
is an absence of qualified applicants or proposed activities from
metropolitan cities, urban counties, and Indian tribes or units of
general local government in nonentitlement areas.
(b) Prerequisites
No guarantee or commitment to guarantee shall be made with
respect to any note or other obligation if the issuer's total
outstanding notes or obligations guaranteed under this section
(excluding any amount defeased under the contract entered into
under subsection (d)(1)(A) of this section) would thereby exceed an
amount equal to 5 times the amount of the grant approval for the
issuer pursuant to section 5306 or 5307 of this title.
(c) Payment of principal, interest and costs
Notwithstanding any other provision of this chapter, grants
allocated to an issuer pursuant to this chapter (including program
income derived therefrom) are authorized for use in the payment of
principal and interest due (including such servicing, underwriting,
or other costs as may be specified in regulations of the Secretary)
on the notes or other obligations guaranteed pursuant to this
section.
(d) Repayment contract; security; pledge by State
(1) To assure the repayment of notes or other obligations and
charges incurred under this section and as a condition for
receiving such guarantees, the Secretary shall require the issuer
to -
(A) enter into a contract, in a form acceptable to the
Secretary, for repayment of notes or other obligations guaranteed
hereunder;
(B) pledge any grant for which the issuer may become eligible
under this chapter; and
(C) furnish, at the discretion of the Secretary, such other
security as may be deemed appropriate by the Secretary in making
such guarantees, including increments in local tax receipts
generated by the activities assisted under this chapter or
dispositions proceeds from the sale of land or rehabilitated
property.
(2) To assist in assuring the repayment of notes or other
obligations and charges incurred under this section, a State shall
pledge any grant for which the State may become eligible under this
chapter as security for notes or other obligations and charges
issued under this section by any unit of general local government
in a nonentitlement area in the State.
(e) Pledged grants for repayments
The Secretary is authorized, notwithstanding any other provision
of this chapter, to apply grants pledged pursuant to paragraphs
(1)(B) and (2) of subsection (d) of this section to any repayments
due the United States as a result of such guarantees.
(f) Full faith and credit of United States pledged for payment;
conclusiveness and validity of guarantee
The full faith and credit of the United States is pledged to the
payment of all guarantees made under this section. Any such
guarantee made by the Secretary shall be conclusive evidence of the
eligibility of the obligations for such guarantee with respect to
principal and interest, and the validity of any such guarantee so
made shall be incontestable in the hands of a holder of the
guaranteed obligations.
(g) Issuance of obligations by Secretary to Secretary of the
Treasury to satisfy authorized guarantee obligations;
establishment of maturities and rates of interest and purchase of
obligations by Secretary of the Treasury
The Secretary may issue obligations to the Secretary of the
Treasury in an amount outstanding at any one time sufficient to
enable the Secretary to carry out his obligations under guarantees
authorized by this section. The obligations issued under this
subsection shall have such maturities and bear such rate or rates
of interest as shall be determined by the Secretary of the
Treasury. The Secretary of the Treasury is authorized and directed
to purchase any obligations of the Secretary issued under this
section, and for such purposes is authorized to use as a public
debt transaction the proceeds from the sale of any securities
issued under chapter 31 of title 31, and the purposes for which
such securities may be issued under such chapter are extended to
include the purchases of the Secretary's obligations hereunder.
(h) Federal taxation of guaranteed obligations; grants to borrowing
entity or agency of taxable obligations for net interest costs,
etc.; limitation on amount of grant; assistance to issuer in
hardship cases
Obligations guaranteed under this section shall be subject to
Federal taxation as provided in subsection (j) of this section. The
Secretary is authorized to make, and to contract to make, grants,
in such amounts as may be approved in appropriations Acts, to or on
behalf of the issuing eligible public entity or public agency to
cover not to exceed 30 per centum of the net interest cost
(including such servicing, underwriting, or other costs as may be
specified in regulations of the Secretary) to the borrowing entity
or agency of such obligations. The Secretary may also, to the
extent approved in appropriation Acts, assist the issuer of a note
or other obligation guaranteed under this section in the payment of
all or a portion of the principal and interest amount due under the
note or other obligation, if the Secretary determines that the
issuer is unable to pay the amount because of circumstances of
extreme hardship beyond the control of the issuer.
(i) Omitted
(j) Inclusion within gross income for purpose of chapter 1 of title
26 of interest paid on taxable obligations
With respect to any obligation issued by a (!2) eligible public
entity or designated agency which is guaranteed pursuant to this
section, the interest paid on such obligation shall be included in
gross income for the purpose of chapter 1 of title 26.
(k) Outstanding obligations; limitation; monitoring use of
guarantees under this section
(1) The total amount of outstanding obligations guaranteed on a
cumulative basis by the Secretary pursuant to subsection (a) of
this section shall not at any time exceed $4,500,000,000 or such
higher amount as may be authorized to be appropriated for sections
5306 and 5307 of this title for any fiscal year.
(2) The Secretary shall monitor the use of guarantees under this
section by eligible public entities. If the Secretary finds that 50
percent of the aggregate guarantee authority has been committed,
the Secretary may -
(A) impose limitations on the amount of guarantees any one
entity may receive in any fiscal year of $35,000,000 for units of
general local government receiving grants under section 5306(b)
of this title and $7,000,000 for units of general local
government receiving grants under section 5306(d) of this title;
or
(B) request the enactment of legislation increasing the
aggregate limitation on guarantees under this section.
(l) Purchase of guaranteed obligations by Federal Financing Bank
Notes or other obligations guaranteed under this section may not
be purchased by the Federal Financing Bank.
(m) Limitation on imposition of fee or charge
No fee or charge may be imposed by the Secretary or any other
Federal agency on or with respect to a guarantee made by the
Secretary under this section after February 5, 1988.
(n) State assistance in submission of applications
Any State that has elected under section 5306(d)(2)(A) of this
title to distribute funds to units of general local government in
nonentitlement areas may assist such units in the submission of
applications for guarantees under this section.
(o) "Eligible public entity" defined
For purposes of this section, the term "eligible public entity"
means any unit of general local government, including units of
general local government in nonentitlement areas.
(p) Training and information activities relating to home guarantee
program
(1) The Secretary, in cooperation with eligible public entities,
shall carry out training and information activities with respect to
the guarantee program under this section. Such activities shall
commence not later than 1 year after November 28, 1990.(!3)
(2) The Secretary may use amounts set aside under section 5307 of
this title to carry out this subsection.
(q) Economic development grants
(1) Authorization
The Secretary may make grants in connection with notes or other
obligations guaranteed under this section to eligible public
entities for the purpose of enhancing the security of loans
guaranteed under this section or improving the viability of
projects financed with loans guaranteed under this section.
(2) Eligible activities
Assistance under this subsection may be used only for the
purposes of and in conjunction with projects and activities
assisted under subsection (a) of this section.
(3) Applications
Applications for assistance under this subsection may be
submitted only by eligible public entities, and shall be in the
form and in accordance with the procedures established by the
Secretary. Eligible public entities may apply for grants only in
conjunction with requests for guarantees under subsection (a) of
this section.
(4) Selection criteria
The Secretary shall establish criteria for awarding assistance
under this subsection. Such criteria shall include -
(A) the extent of need for such assistance;
(B) the level of distress in the community to be served and
in the jurisdiction applying for assistance;
(C) the quality of the plan proposed and the capacity or
potential capacity of the applicant to successfully carry out
the plan; and
(D) such other factors as the Secretary determines to be
appropriate.
(r) Guarantee of obligations backed by loans
(1) Authority
The Secretary may, upon such terms and conditions as the
Secretary considers appropriate, guarantee the timely payment of
the principal of and interest on such trust certificates or other
obligations as may -
(A) be offered by the Secretary or by any other offeror
approved for purposes of this subsection by the Secretary; and
(B) be based on and backed by a trust or pool composed of
notes or other obligations guaranteed or eligible for guarantee
by the Secretary under this section.
(2) Full faith and credit
To the same extent as provided in subsection (f) of this
section, the full faith and credit of the United States is
pledged to the payment of all amounts that may be required to be
paid under any guarantee made by the Secretary under this
subsection.
(3) Subrogation
If the Secretary pays a claim under a guarantee made under this
section, the Secretary shall be subrogated for all the rights of
the holder of the guaranteed certificate or obligation with
respect to such certificate or obligation.
(4) Effect of laws
No State or local law, and no Federal law, shall preclude or
limit the exercise by the Secretary of -
(A) the power to contract with respect to public offerings
and other sales of notes, trust certificates, and other
obligations guaranteed under this section upon such terms and
conditions as the Secretary deems appropriate;
(B) the right to enforce any such contract by any means
deemed appropriate by the Secretary; and
(C) any ownership rights of the Secretary, as applicable, in
notes, certificates, or other obligations guaranteed under this
section, or constituting the trust or pool against which trust
certificates, or other obligations guaranteed under this
section, are offered.