Building and Loan Associations.
Section 20
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.