ury of such notes or other obligations shall be treated as public debt transactions of the United States. Funds borrowed under this section shall be deposited in the Federal Ship Mortgage Insurance Fund and redemptions of such notes and obligations shall be made by the Secretary of Commerce from such Fund.34 (c) (1) In the event the Secretary of Commerce shall accept the assignment of a mortgage upon the default of the mortgagor pursuant to subsection (a) (1) of this section, he may institute foreclosure proceedings and in connection therewith repossess the mortgaged vessel forthwith and, subject to the provisions of section 1104(a) (10) (46 U.S.C. 1274(a) (10)), take such other action against the mortgagor that, in his discretion, may be required to protect the interests of the United States and of the mortgagee, as they may appear. Any suit may be brought in the name of the United States or in the name of the mortgagee and the mortgagee shall make available to the United States all records and evidence necessary to prosecute any such suit. If the Secretary of Commerce shall determine that the interests of the United States do not require foreclosure of the mortgage, he may make such agreement with the mortgagor as in the opinion of the Secretary of Commerce will result in remedying the defaults. The Secretary of Commerce shall have the right in his discretion to accept a conveyance of title to and possession of the vessel from the mortgagor, and in the event of a sale under foreclosure proceedings, may purchase the vessel for an amount not greater than the unpaid principal amount of such mortgage and unpaid interest thereon. In the event the Secretary of Commerce shall receive through the sale of the vessel an amount of cash in excess of any payment made to the mortgagee under subsection (a) (1) of this section, and the expenses of collection of such amount, he shall pay such excess to the borrower. [§ 1105(c) Foreclosure proceedings. 70 Stat. 1087. (2) In the event the Secretary of Commerce shall ac- Action against cept the assignment of a loan agreement upon the default borrower. of a borrower pursuant to subsection (a)(2) of this section, he shall take such action against the borrower or any other parties liable under the loan agreement or the obligations evidencing such loan thereunder that, in his discretion, may be required to protect the interests of the United States and of the lender as they may appear. Any suit may be brought in the name of the United States or in the name of the lender and the lender shall make available to the United States all records and evidence necessary to prosecute any such suit. The Secretary Public Law 85–352 (72 Stat. 52) and Public Law 85-469 (72 Stat. 231) authorized advances from the "Vessel operations revolving fund" (see note 16, supra) to the Federal Ship Mortgage Insurance Fund for payments required pursuant to section 1105. 59-075 066- -8 [§ 1105(c) (2)] Right of Secretary to complete, operate, or sell property. 46 U.S.C. 1101 et seq. of Commerce shall have the right in his discretion to accept a conveyance of title to and possession of the property from the borrower, and may purchase the property for an amount not greater than the unpaid principal amount of such loan and unpaid interest thereon. In the event the Secretary of Commerce shall receive through the sale of the property an amount of cash in excess of any payment made to the lender under subsection (a) (2) of this section and the expenses of collection of such amount, he shall pay such excess to the borrower. (d) Notwithstanding any other provision of law relating to the acquisition, handling or disposal of property by the United States, the Secretary of Commerce shall have the right in his discretion to complete, recondition, reconstruct, renovate, repair, maintain, operate, charter, or sell any property acquired by him pursuant to the assignment as provided in this section and may place the mortgaged vessel in the national defense reserve or may sell the same upon competitive bids for not less than the minimum sales price provided by the Merchant Marine Act, 1936, as amended. The buyer shall be required to make cash payment to the Secretary of Commerce of not less than 25 per centum of the sales price, and the balance shall be paid in equal annual installments over the remaining period of the expected useful life of such vessel. Interest at the rate of 312 per centum per annum shall be paid on all such installments of the purchase price remaining unpaid. (e) Any contract or commitment of insurance entered into by the Secretary of Commerce under the provisions of this title shall not be terminated, canceled, or otherwise 46 U.S.C. 1275. revoked for any reason, except as provided in section 1105 of this title, and shall be conclusive evidence that the mortgage or loan complies fully with the provisions of this title and of the approval of the principal amount, interest rate, and all other terms of the mortgage or loan and of the mortgagor or borrower and of the mortgagee or lender; and any contract or commitment of insurance so entered into shall be incontestable from the date as of which such contract or commitment is entered into, except for fraud, duress, or mutual mistake of fact. 46 U.S.C. 1276. SEC. 1106. No provision of this title shall be construed to authorize the Secretary of Commerce to insure a mortgage securing any loan or advance made prior to the enactment of this title, and no mortgage shall be insured for refinancing in whole or in part any existing mortgage indebtedness except as provided in section 1107, or (1) where a substantial portion of the total amount to be secured by the new mortgage, not to extend beyond twenty-five 35 years from the date of the original mortgage, shall be applied to new con 35 See footnote 3, p. 24, supra. struction, reconditioning, or reconstruction of one or (2) where the Secretary of Commerce has insured (3) where the Secretary of Commerce has insured a mortgage under the provisions of this title, the Secretary of Commerce may insure a new mortgage for the purpose of refunding such mortgage: Provided, That the principal amount of the new mortgage shall not exceed the then unpaid principal amount of the original mortgage; that the interest rate on the new mortgage shall not be higher than the interest rate on the original mortgage; that the maturity date of the new mortgage shall not be later than twenty-five years from the date of the original mortgage; and that the new mortgage shall otherwise conform to the eligibility requirements of subsection (a) of section 1104 (46 U.S.C. 1274); or (4) the Secretary of Commerce may insure mortgages given to finance the purchase of vessels theretofore acquired by the fund under the provisions of section 1105 (46 U.S.C. 1275) and to secure loans or advances made for reconditioning and reconstruction of such vessels. SEC. 1107. The Secretary of Commerce is authorized, upon such terms as he may prescribe, to make a commitment to the prospective owner of a vessel who is a citizen of the United States, prior to the time when the keel of such vessel is laid under a contract which such prospective owner has made with the shipbuilder for the construction of the vessel (or if the keel of the vessel was [§ 1107] laid under such contract prior to the enactment of this Act, and the vessel owner or prospective owner has an unexpired commitment from the Secretary of Commerce to insure a mortgage on the vessel, issued prior to enactment of this Act under the law then existing, then prior to the expiration of such commitment), to insure the interest on and the unpaid balance of the principal of a mortgage or mortgages which such prospective owner, as mortgagor, may at any time place on the vessel in order to finance the construction, reconstruction, or reconditioning of other vessels or both to refinance a mortgage insured by the Secretary of Commerce on the vessel and to finance the construction, reconstruction, or reconditioning of other vessels, subject to the following conditions (1) the commitment shall not be assignable without the prior written approval of the Secretary of Commerce; (2) the vessel is not, at the time of insuring the mortgage pursuant to the commitment, subject to a mortgage which has not been insured by the Secretary of Commerce; (3) within a reasonable period priod to, or at the time of, insuring the mortgage pursuant to the commitment, the Secretary of Commerce makes the finding required by section 1104 (c) of this Act (which requires a finding that the mortgaged vessel or the project with respect to which the mortgaged vessel is to be operated will be, in the opinion of the Secretary of Commerce, economically sound); (4) 36 the mortgage involves a principal obligation which when added to the unpaid balance of the principal obligations of prior mortgages on the vessel (other than mortgages that are being refinanced by this mortgage) will result in a sum which will not, (a) if the vessel was not built with the aid of construction-differential subsidy and complies with the requirements of section 509 of this Act exceed (A) if the vessel has not been reconstructed or reconditioned before such mortgage is executed, 8712 percentum of all amounts the mortgagor has paid or is obligated to pay for the construction (including designing, inspecting, outfitting, or equipping) of the vessel, depreciated at the rate of 4 per centum per annum from the date the vessel was delivered by the shipbuilder to the date such mortgage is executed, or (B) if the vessel has been reconstructed or reconditioned before such mortgage is executed, 872 per centum of all amounts the mortgagor has 36 See footnote 3, p. 24, supra. paid or is obligated to pay for the construction (including designing, inspecting, outfitting, and equipping) of the vessel, depreciated at the rate of 4 per centum per annum from the date the vessel was delivered by the shipbuilder to the date of such reconstruction or reconditioning, and depreciated, from the date of such reconstruction or reconditioning to the date such mortgage is executed, on a straightline basis and on the basis of a useful life of the vessel determined jointly by the Secretary of Commerce and the Secretary of the Treasury, plus 87/2 per centum of all amounts the mortgagor has paid or is obligated to pay for the reconstruction or reconditioning of the vessel (if such reconstruction or reconditioning was done without aid of construction subsidy and the vessel complies with the requirements of section 509 of this Act; otherwise, 75 per centum of such amount), depreciated, from the date of such reconstruction or reconditioning to the date such mortgage is executed, on a straight-line basis and on the basis of a useful life of the vessel determined jointly by the Secretary of Commerce and the Secretary of the Treasury, and (b) if the vessel was built with the aid of construction-differential subsidy, or does not comply with the requirements of section 509 of this Act, exceed the amount computed under (a) above except that, where (a) above provides for 872 per centum of the construction cost of the vessel, the percentage shall be 75 per centum; (5) 37 the mortgage has maturity dates which, if the vessel has not been reconstructed or reconditioned, do not exceed the remaining years of a useful life of the mortgaged vessel of twenty-five years computed from the date the vessel was delivered by the shipbuilder or, if the vessel has been reconstructed or reconditioned, do not exceed the remaining years of a useful life of the vessel determined jointly by the Secretary of the Treasury and the Secretary of Commerce; (6) the loan agreement for the making of the loan secured by the mortgage, or the mortgage, provides that the underwriter or mortgagee will disburse the loan for one or more of the following purposes: (a) to pay one of the components of actual cost of the vessels to be constructed, reconstructed, or reconditioned and, if any such payment is to reimburse the operator for payments made from his capital reserve fund, to deposit such payment in his capital reserve fund, or (b) to pay part of the loan to discharge an existing mortgage which is insured by the Secretary 87 See footnote 3, p. 24, supra. [§ 1107(6)] |