413, inclusive, of such Act shall remain in full force and SEC. 904. Whenever the words "United States Shipping Board" or the words "the Board" are used in any prior Act, such Acts are hereby amended so that such words shall be applicable to the United States Maritime Commission. SEC. 905. When used in this Act (a) The words "foreign commerce" or "foreign trade" mean commerce or trade between the United States, its Territories or possessions, or the District of Columbia, and a foreign country. (b) The term "person" includes corporations, partnerships, and associations existing under or authorized by the laws of the United States, or any State, Territory, District, or possession thereof, or of any foreign country. (c) The words "citizen of the United States" include a corporation, partnership, or association only if it is a citizen of the United States within the meaning of section 2 of the Shipping Act, 1916, as amended (U.S.C. title 46, sec. 802), and with respect to a corporation under title VI of this Act, all directors of the corporation are citizens of the United States, and, in the case of a corporation, partnership, or association operating a vessel on the Great Lakes, or on bays, sounds, rivers, harbors, or inland lakes of the United States the amount of interest required to be owned by a citizen of the United States shall be not less than 75 per centum. (d) The word "construction" includes outfitting and equipping. (e) The terms "United States Maritime Commission" and "Commission" shall mean the Secretary of Commerce, the Maritime Administrator, or the Federal Maritime Board as the context may require to conform to Reorganization Plan Numbered 21 of 1950, effective May 24, 1950. SEC. 906. If any provisions of this Act, or the application thereof to any person or circumstances, is held invalid, the remainder of the Act, and the application of such provisions to other persons or circumstances, shall not be affected thereby. This Act may be cited as the Merchant Marine Act, 1936. SEC. 907. Except as otherwise provided herein this Act shall take effect thirty days after a majority of the members of the Commission have taken the oath of office. [§ 1101] [Title X] 32 TITLE XI-FEDERAL SHIP MORTGAGE INSURANCE 46 U.S.C. 1271. SEC. 1101. As used in this title 52 Stat. 969. (a) The term "mortgage" includes a preferred mortgage as defined in the Ship Mortgage Act, 1920, as amended, on any vessel of the United States (other than a towboat, barge, scow, lighter, car float, canal boat, or tank vessel, of less than two hundred gross tons), and a mortgage on such a vessel which will become a preferred mortgage when recorded and endorsed as required by the Ship Mortgage Act, 1920, as amended; (b) The term "loan" includes any loan or advance of credit other than a mortgage loan; (c) The term "vessel" includes all types of passenger, cargo, and combination passenger-cargo carrying vessels, tankers, tugs, towboats, barges, and dredges documented under the laws of the United States, fishing vessels, and floating drydocks which have a capacity of thirty-five thousand or more lifting tons and a beam of one hundred and twenty-five feet or more between the wing walls owned by citizens of the United States; (d) The term "mortgagee" includes the original maker of a loan secured by a mortgage and his successors and assigns, except that in the case of a mortgage involving a trust indenture and an issue of bonds or notes thereunder, it means the trustee designated in such trust indenture and his successors and assigns as trustee, but does not include the holders of the bonds or notes issued under such trust indenture; and the term "lender" includes the original maker of any loan or advance of credit other than a loan secured by a mortgage, and his successors and assigns, except that in the case of a loan or advance of credit involving a trust indenture and an issue of bonds or notes thereunder, it means the trustee designated in such trust indenture and his successors and assigns as trustee, but does not include the holders of the bonds or notes issued under such trust indenture; (e) The term "mortgagor' includes the original borrower under a mortgage and his successors and assigns approved by the Commission; and (f) The term "actual cost" of a vessel as of any specified date means the aggregate as determined by the Secretary of Commerce of (i) all amounts paid by or for the account of the mortgagor or borrower on or before that date, and (ii) all amounts which the mortgagor or bor 32 Title X was added by the Act of June 23, 1938 (52 Stat. 953, 965), and under the terms of this statute, as amended by the Act of June 23, 1941 (55 Stat. 259), it expired by limitation June 23, 1942. rower is then obligated to pay from time to time thereafter, for the construction, reconstruction or reconditioning (including designing, inspecting, outfitting, and equipping) of such vessel: Provided, That in no event shall the Secretary of Commerce pay as insurance under this title in respect of the unpaid balance of the principal of a mortgage or loan an amount in excess of 75 per centum, or 872 per centum, as the case may be, of the amount paid by or for the account of the mortgagor or borrower for the construction, reconstruction, or reconditioning (including designing, inspecting, outfitting, and equipping) of such vessel except that if the mortgagor or borrower creates an escrow fund as authorized by section 1111 of this Act, the amount that shall be paid as insurance is the interest on and the unpaid balance of the principal of such loan or mortgage. SEC. 1102. There is hereby created a Federal Ship Mortgage Insurance Fund (hereinafter referred to as the "fund") which shall be used by the Secretary of Com merce as a revolving fund for the purpose of carrying out the provisions of this title, and there shall be allocated to such fund the sum of $1,000,000 out of funds made available to the Secretary of Commerce under the appropriation authorized by section 1110 (46 U.S.C. 1279). Moneys in the fund shall be deposited in the Treasury of the United States to the credit of the fund or invested in bonds or other obligations of, or guaranteed as to principal and interest by, the United States. SEC. 1103. (a) The Secretary of Commerce, upon application by the mortgagor, is authorized, to insure as hereinafter provided the interest on, and the unpaid balance of the principal of, any mortgage offered to him which is eligible for insurance as hereinafter provided and, upon such terms as the Secretary of Commerce may prescribe, is authorized to make commitments to insure any such mortgage prior to the date of execution or disbursement thereon. (b) The Secretary of Commerce, upon application by the borrower, is authorized to insure as hereinafter provided the interest on and the unpaid balance of the principal of, any loan offered to him which is eligible for insurance as hereinafter provided and, upon such terms as the Secretary of Commerce may prescribe, is authorized to make commitments to insure any such loan prior to the date of execution or disbursement thereon. [§ 1103(c)] 46 U.S.C. 1272. 73 Stat. 269. Federal Ship Mortgage In 52 Stat. 969. surance Fund. 52 Stat. 969. Authorization 46 U.S.C. 1273. of Secretary to insure mortgages, 68 Stat. 1268. 70 Stat. 1087. contracts. (c) Each insurance contract made under this section Insurance shall run to the mortgagee or lender and be for the benefit of such mortgagee or lender and the holders of the obligations secured by the mortgage or evidencing the loan, and if the mortgagee or lender is a trustee under a [§ 1103(c)] Pledge of U.S. 70 Stat. 332. 70 Stat. 1087. Aggregate unpaid principal, limitation. trust indenture, for the benefit of the holders of the bonds or notes issued under such trust indenture. (d) The faith of the United States is solemnly pledged to the payment of interest on and the unpaid balance of the principal amount of each mortgage and loan insured under this title. (e) The aggregate unpaid principal amount of the mortgages and loans insured under this section and outstanding at any one time shall not exceed $1,000,000,000. SEC. 1104. (a) To be eligible for insurance under this 46 U.S.C. 1274. title a mortgage, excepting as otherwise provided in section 1106 (46 U.S.C. 1276) 52 Stat. 970. Eligibility. 46 U.S.C.1159. 60 Stat. 41. 50 U.S.C. app. 1735, note. 74 Stat. 216. P.L. 86-518. (1) shall have a mortgagee approved by the Secretary of Commerce as responsible and able to service the mortgage properly; and a mortgagor approved by the Secretary of Commerce as possessing the ability, experience, financial resources, and other qualifications necessary to the adequate operation and maintenance of the mortgaged property; (2) shall involve an obligation in a principal amount which does not exceed 75 per centum of the actual cost of the vessel, such actual cost to be determined by the Secretary of Commerce prior to the execution of the mortgage and such determination to be conclusive for the purpose of determining the principal amount of the mortgage: Provided, however, That in the case of a vessel, the size and speed of which are approved by the Secretary of Commerce, and which is, or in the case of a vessel to be reconstructed or reconditioned would have been, eligible for mortgage aid for construction under section 509 of this Act and in respect of which the minimum downpayment by the mortgagor required by that section would be 1212 per centum of the cost of such vessel, the obligation may be in an amount which does not exceed 872 per centum of such actual cost; or, in the case of vessels purchased pursuant to the Merchant Ship Sales Act of 1946, as amended, for exclusive use on the Great Lakes, involves an obligation in a principal amount which does not exceed 75 per centum of the net purchase price of such vessels plus 75 per centum of the amounts expended for altering, modifying, converting, and equipping such vessels in excess of that purchase price, or 75 per centum of the amount which the Secretary of Commerce estimates will be the value of such vessel so purchased for exclusive use on the Great Lakes when the reconstruction or reconditioning is completed, whichever is the lesser; (3) shall secure bonds, notes, or other obligations having maturity dates satisfactory to the Secretary sels under title V of this Act, as amended, or for the (3) shall be payable prior to or simultaneously (4) shall provide that no advance shall be made thereunder unless the sum of such advance and the principal amount of all other advances under insured loans then outstanding at the time of said advance shall be less than 75 per centum of the actual cost of such vessel, such actual cost to be determined by the Secretary of Commerce and such determination to be conclusive for the purpose of determining the principal amount of the loan; (5) shall provide that the borrower shall pay to the lender the amount required for the payment of each loan insurance premium charge at least sixty days before the payment of such premium charge to the Secretary of Commerce is due, and which shall further provide that the failure of the borrower to make such payment shall give the lender the right to mature the loan; [§ 1104(c)] (6) shall bear interest at an average interest rate Interest. not to exceed the maximum rate permitted by paragraph (5) of subsection (a) of this section; and (7) shall contain such other provisions as may be agreed upon between the borrower and the lender which are not inconsistent with the provisions of the preceding paragraphs of this subsection (b) and which are not disapproved by the Secretary of Com merce. (c) No commitment to insure a mortgage or loan shall Restrictions. be made by the Secretary of Commerce unless he finds, at or prior to the time such commitment is made, that the property or project with respect to which the mortgage or loan will be executed will be, in his opinion, economically sound, and no mortgage or loan, unless made pursuant to a prior commitment, shall be insured unless the Secretary of Commerce finds, at or prior to the time the insurance becomes effective, that the proproject with aspect to which the mortgage or ert |