Building and Loan Associations.
SEC. 20. Building and Loan Associations. - (a) In order to encourage the accumulation of savings and the financing of homes through the local mutual thrift institutions, the Corporation is authorized, under such rules and regulations as it may prescribe, to issue contracts of guaranty for the accounts of such building and loan associations in accordance with the best practices of known mutual thrift and home financing institutions.
(b) Whenever guaranteed by the Corporation and where the loan is intended for housing development, such associations shall lend their funds only on the security of first liens upon real estate located within an area to be determined by the Corporation.
(c) The Corporation is authorized to subscribe for preferred shares in such associations which shall be preferred as to the assets of the association and which shall be entitled to a dividend, if earned, after payment of expenses and provision for reasonable reserves, to the same extent as other shareholders: Provided, however, That no such subscription shall be made unless in the judgment of the Corporation the funds are necessary for the encouragement of reasonable local home financing in the community to be served. In case of the liquidation of any such association, the shares held by the Corporation shall be retired on the same basis as payments are made to other shareholders in accordance with existing laws.
(d) When guaranteed by the Corporation, such associations including their franchises, capital, reserves, surplus, and their loans, receipts, and incomes, shall be exempt from all taxation now or hereafter imposed by the Government.
Open-end Mortgages.
SEC. 21. Open-end Mortgages. - Notwithstanding any other provisions of this Act, in connection with any mortgage guaranteed pursuant to any Section of this Act which covers a property upon which there is located a dwelling designed for residential use, the Corporation is authorized, upon such terms and conditions as it may prescribe, to guaranty the amount of any advances for the improvement or repair of property 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 to which the mortgage may be entitled. The Corporation may require the payment of such charges, including charges in lieu of guaranty premiums, as it may consider appropriate for the guaranty of such "open-end" advances. Only advances for such improvements or repairs as will substantially protect or improve the basic liability or utility of the property involved shall be eligible for guaranty under this Section. No such advances shall be guaranteed 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 construction of additional rooms or other enclosed space as part of the dwelling. The guaranty of "open-end" advances shall not be taken into account in determining the aggregate amount of principal obligations of mortgages which may be guaranteed under this Act.
Investment of Funds.
SEC. 22. Investment of Funds. - Corporate funds not needed for the current operations of the Corporation, shall be deposited with any government bank as may be approved by the Board, or invested in bonds or other obligations guaranteed as to principal and interest by the Government. The Corporation may purchase in the open market debentures issued under the provisions of this Act which debentures shall be cancelled and not reissued.
CHAPTER VMISCELLANEOUS PROVISIONS
