
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document affected by Public Law 106-569 Section 701]
[Document affected by Public Law 106-387 Section 1(a)[739]]
[Document affected by Public Law 106-387 Section 1(a)[751]]
[CITE: 42USC1472]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
       CHAPTER 8A--SLUM CLEARANCE, URBAN RENEWAL, AND FARM HOUSING
 
                      SUBCHAPTER III--FARM HOUSING
 
Sec. 1472. Loans for housing and buildings on adequate farms


(a) Terms of loan

    (1) If the Secretary determines that an applicant is eligible for 
assistance as provided in section 1471 of this title and that the 
applicant has the ability to repay in full the sum to be loaned, with 
interest, giving due consideration to the income and earning capacity of 
the applicant and his family from the farm and other sources, and the 
maintenance of a reasonable standard of living for the owner and the 
occupants of said farm, a loan may be made by the Secretary to said 
applicant for a period of not to exceed thirty-three years from the 
making of the loan with interest. The Secretary may accept the personal 
liability of any person with adequate repayment ability who will cosign 
the applicant's note to compensate for any deficiency in the applicant's 
repayment ability. At the borrower's option, the borrower may prepay to 
the Secretary as escrow agent, on terms and conditions prescribed by 
him, such taxes, insurance, and other expenses as the Secretary may 
require in accordance with section 1471(e) of this title.
    (2) The Secretary may extend the period of any loan made under this 
section if the Secretary determines that such extension is necessary to 
permit the making of such loan to any person whose income does not 
exceed 60 per centum of the median income for the area and who would 
otherwise be denied such loan because the payments required under a 
shorter period would exceed the financial capacity of such person. The 
aggregate period for which any loan may be extended under this paragraph 
may not exceed 5 years.
    (3)(A) Notwithstanding any other provision of this subchapter, a 
loan may be made under this section for the purchase of a dwelling 
located on land owned by a community land trust, if the borrower and the 
loan otherwise meet the requirements applicable to loans under this 
section.
    (B) For purposes of this paragraph, the term ``community land 
trust'' means a community housing development organization as such term 
is defined in section 12704 of this title (except that the requirements 
under section 12704(6)(C) of this title and section 12704(6)(D) of this 
title shall not apply for purposes of this paragraph)--
        (i) that is not sponsored by a for-profit organization;
        (ii) that is established to carry out the activities under 
    clause (iii);
        (iii) that--
            (I) acquires parcels of land, held in perpetuity, primarily 
        for conveyance under long-term ground leases;
            (II) transfers ownership of any structural improvements 
        located on such leased parcels to the lessees; and
            (III) retains a preemptive option to purchase any such 
        structural improvement at a price determined by formula that is 
        designed to ensure that the improvement remains affordable to 
        low- and moderate-income families in perpetuity; and

        (iv) that has its corporate membership open to any adult 
    resident of a particular geographic area specified in the bylaws of 
    the organization.

(b) Provisions of loan instrument

    The instruments under which the loan is made and the security given 
shall--
        (1) provide for security upon the applicant's equity in the farm 
    or such other security or collateral, if any, as may be found 
    necessary by the Secretary reasonably to assure repayment of the 
    indebtedness;
        (2) provide for the repayment of principal and interest in 
    accordance with schedules and repayment plans prescribed by the 
    Secretary, except that any prepayment of a loan made or insured 
    under section 1484 or 1485 of this title shall be subject to the 
    provisions of subsection (c) of this section;
        (3) except for guaranteed loans, contain the agreement of the 
    borrower that he will, at the request of the Secretary, proceed with 
    diligence to refinance the balance of the indebtedness through 
    cooperative or other responsible private credit sources whenever the 
    Secretary determines, in the light of the borrower's circumstances, 
    including his earning capacity and the income from the farm, that he 
    is able to do so upon reasonable terms and conditions;
        (4) be in such form and contain such covenants as the Secretary 
    shall prescribe to secure the payment of the loan with interest, 
    protect the security, and assure that the farm will be maintained in 
    repair and that waste and exhaustion of the farm will be prevented.

(c) Prepayment and refinancing provisions

    (1)(A) The Secretary may not accept an offer to prepay, or request 
refinancing in accordance with subsection (b)(3) of this section of, any 
loan made or insured under section 1484 or 1485 of this title pursuant 
to a contract entered into after December 21, 1979, but before December 
15, 1989, unless the Secretary takes appropriate action which will 
obligate the borrower (and successors in interest thereof) to utilize 
the assisted housing and related facilities for the purposes specified 
in section 1484 or 1485 of this title, as the case may be, for a period 
of--
        (i) fifteen years from the date on which the loan was made in 
    the case of a loan made or insured pursuant to a contract entered 
    into after December 21, 1979, but before December 15, 1989, and 
    utilized for housing and related facilities which have not received 
    assistance under section 1490a(a)(1)(B), (a)(2), or (5) of this 
    title or section 1437f of this title; or
        (ii) twenty years from the date on which the loan was made in 
    the case of any other such loan;

or until the Secretary determines (prior to the end of such period) that 
there is no longer a need for such housing and related facilities to be 
so utilized or that Federal or other financial assistance provided to 
the residents of such housing will no longer be provided.
    (B) The Secretary may not accept an offer to prepay, or request 
refinancing in accordance with subsection (b)(3) of this section of, any 
initial loan made or insured under section 1485 of this title pursuant 
to a contract entered into on or after December 15, 1989.
    (2) If any loan which was made or insured under section 1484 or 1485 
of this title pursuant to a contract entered into prior to December 15, 
1989, is prepaid or refinanced on or after October 8, 1980, and tenants 
of the housing and related facilities financed with such loan are 
displaced due to a change in the use of the housing, or to an increase 
in rental or other charges, as a result of such prepayment or 
refinancing, the Secretary shall provide such tenants a priority for 
relocation in alternative housing assisted pursuant to this subchapter.
    (3) Notice of offer to prepay.--Not less than 30 days after 
receiving an offer to prepay any loan made or insured under section 1484 
or 1485 of this title, the Secretary shall provide written notice of the 
offer or request to the tenants of the housing and related facilities 
involved, to interested nonprofit organizations, and to any appropriate 
State and local agencies.
    (4)(A) Agreement by borrower to extend low income use.--Before 
accepting any offer to prepay, or requesting refinancing in accordance 
with subsection (b)(3) of this section of, any loan made or insured 
under section 1484 or 1485 of this title pursuant to a contract entered 
into prior to December 15, 1989, the Secretary shall make reasonable 
efforts to enter into an agreement with the borrower under which the 
borrower will make a binding commitment to extend the low income use of 
the assisted housing and related facilities involved for not less than 
the 20-year period beginning on the date on which the agreement is 
executed.
    (B) Assistance available to borrower to extend low income use.--To 
the extent of amounts provided in appropriation Acts, the agreement 
under subparagraph (A) may provide for 1 or more of the following forms 
of assistance that the Secretary, after taking into account local market 
conditions, determines to be necessary to extend the low income use of 
the housing and related facilities involved:
        (i) Increase in the rate of return on investment.
        (ii) Reduction of the interest rate on the loan through the 
    provision of interest credits under section 1490a(a)(1)(B) of this 
    title, or additional assistance or an increase in assistance 
    provided under section 1490a(a)(5) of this title.
        (iii) Additional rental assistance, or an increase in assistance 
    provided under existing contracts, under section 1490a(a)(2) or 
    1490a(a)(5) of this title or under section 1437f of this title.
        (iv) An equity loan to the borrower under paragraphs (1) and (2) 
    of section 1485(c) of this title or under paragraphs (1) and (2) of 
    section 1484(j) \1\ of this title, except that an equity loan 
    referred to in this clause may not be made available after August 6, 
    1996, unless the Secretary determines that the other incentives 
    available under this subparagraph are not adequate to provide a fair 
    return on the investment of the borrower, to prevent prepayment of 
    the loan insured under section 1484 or 1485 of this title, or to 
    prevent the displacement of tenants of the housing for which the 
    loan was made.
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    \1\ So in original. Section 1484(j) of this title does not contain 
paragraphs.
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        (v) Incremental rental assistance in connection with loans under 
    clauses (ii) and (iv) to the extent necessary to avoid increases in 
    the rental payments of current tenants not receiving rental 
    assistance under section 1490a(a)(2) of this title or under section 
    1437f of this title, or current tenants of projects not assisted 
    under section 1490a(a)(5) of this title.
        (vi) In the case of a project that has received rental 
    assistance under section 1437f of this title, permitting the owner 
    to receive rent in excess of the amount determined necessary by the 
    Secretary to defray the cost of long-term repair or maintenance of 
    such a project.

    (C) Approval of assistance.--The Secretary may approve assistance 
under subparagraph (B) for assisted housing only if the restrictive 
period has expired for any loan for the housing made or insured under 
section 1484 or 1485 of this title pursuant to a contract entered into 
after December 21, 1979, but before December 15, 1989, and the Secretary 
determines that the combination of assistance provided--
        (i) is necessary to provide a fair return on the investment of 
    the borrower; and
        (ii) is the least costly alternative for the Federal Government 
    that is consistent with carrying out the purposes of this 
    subsection.

    (5)(A) Offer to sell to nonprofit organizations and public 
agencies.--
        (i) In general.--If the Secretary determines after a reasonable 
    period that an agreement will not be entered into with a borrower 
    under paragraph (4), the Secretary shall require the borrower 
    (except as provided in subparagraph (G)) to offer to sell the 
    assisted housing and related facilities involved to any qualified 
    nonprofit organization or public agency at a fair market value 
    determined by 2 independent appraisers, one of whom shall be 
    selected by the Secretary and one of whom shall be selected by the 
    borrower. If the 2 appraisers fail to agree on the fair market 
    value, the Secretary and the borrower shall jointly select a third 
    appraiser, whose appraisal shall be binding on the Secretary and the 
    borrower.
        (ii) Period for which requirement applicable.--If, upon the 
    expiration of 180 days after an offer is made to sell housing and 
    related facilities under clause (i), no qualified nonprofit 
    organization or public agency has made a bona fide offer to 
    purchase, the Secretary may accept the offer to prepay, or may 
    request refinancing in accordance with subsection (b)(3) of this 
    section of, the loan. This clause shall apply only when funds are 
    available for purposes of carrying out a transfer under this 
    paragraph.

    (B) Qualified nonprofit organizations and public agencies.--
        (i) Local nonprofit organization or public agency.--A local 
    nonprofit organization or public agency may purchase housing and 
    related facilities under this paragraph only if--
            (I) the organization or agency is determined by the 
        Secretary to be capable of managing the housing and related 
        facilities (either directly or through a contract) for the 
        remaining useful life of the housing and related facilities; and
            (II) the organization or agency has entered into an 
        agreement that obligates it (and successors in interest thereof) 
        to maintain the housing and related facilities as affordable for 
        very low-income families or persons and low income families or 
        persons for the remaining useful life of the housing and related 
        facilities.

        (ii) National or regional nonprofit organization.--If the 
    Secretary determines that there is no local nonprofit organization 
    or public agency qualified to purchase the housing and related 
    facilities involved, the Secretary shall require the borrower to 
    offer to sell the assisted housing and related facilities to an 
    existing qualified national or regional nonprofit organization.
        (iii) Selection of qualified purchaser.--The Secretary shall 
    promulgate regulations that establish criteria for selecting a 
    qualified nonprofit organization or public agency to purchase 
    housing and related facilities when more than 1 such organization or 
    agency has made a bona fide offer. Such regulations shall give a 
    priority to those organizations or agencies with the greatest 
    experience in developing or managing low income housing or community 
    development projects and with the longest record of service to the 
    community.

    (C) Financing of sale.--To facilitate the sale described in 
subparagraph (A), the Secretary shall--
        (i) to the extent provided in appropriation Acts, make an 
    advance to the nonprofit organization or public agency whose offer 
    to purchase is accepted under this paragraph to cover any direct 
    costs (other than the purchase price) incurred by the organization 
    or agency in purchasing and assuming responsibility for the housing 
    and related facilities involved;
        (ii) approve the assumption, by the nonprofit organization or 
    public agency involved, of the loan made or insured under section 
    1484 or 1485 of this title;
        (iii) to the extent provided in appropriation Acts, transfer any 
    rental assistance payments that are received under section 
    1490a(a)(2)(A) of this title or under section 1437f of this title, 
    or any assistance payments received under section 1490a(a)(5) of 
    this title, with respect to the housing and related facilities 
    involved; and
        (iv) to the extent provided in appropriation Acts, provide a 
    loan under section 1485(c)(3) of this title to the nonprofit 
    organization or public agency whose offer to purchase is accepted 
    under this paragraph to enable the organization or agency to 
    purchase the housing and related facilities involved.

    (D) Rent limitation and assistance.--The Secretary shall, to the 
extent provided in appropriation Acts, provide to each nonprofit 
organization or public agency purchasing housing and related facilities 
under this paragraph financial assistance (in the form of monthly 
payments or forgiveness of debt) in an amount necessary to ensure that 
the monthly rent payment made by each low income family or person 
residing in the housing does not exceed the maximum rent permitted under 
section 1490a(a)(2)(A) of this title or, in the case of housing assisted 
under section 1490a(a)(5) of this title, does not exceed the rents 
established for the project under such section.
    (E) Restriction on subsequent transfers.--Except as provided in 
subparagraph (B)(ii), the Secretary may not approve the transfer of any 
housing and related facilities purchased under this paragraph during the 
remaining useful life of the housing and related facilities, unless the 
Secretary determines that--
        (i) the transfer will further the provision of housing and 
    related facilities for low income families or persons; or
        (ii) there is no longer a need for such housing and related 
    facilities by low income families or persons.

    (F) General restriction on prepayments and refinancings.--Following 
the transfer of the maximum number of dwelling units set forth in 
subparagraph (H)(i) in any fiscal year or the maximum number of dwelling 
units for which budget authority is available in any fiscal year, the 
Secretary may not accept in such fiscal year any offer to prepay, or 
request refinancing in accordance with subsection (b)(3) of this section 
of, any loan made or insured under section 1484 or 1485 of this title 
pursuant to a contract entered into prior to December 15, 1989, except 
in accordance with subparagraph (G). The limitation established in this 
subparagraph shall not apply to an offer to prepay, or request to 
refinance, if, following the date on which such offer or request is made 
(or following February 5, 1988, whichever occurs later) a 15-month 
period expires during which no budget authority is available to carry 
out this paragraph. For purposes of this subparagraph, the Secretary 
shall allocate budget authority under this paragraph in the order in 
which offers to prepay, or request to refinance, are made.
    (G) Exception.--This paragraph shall not apply to any offer to 
prepay, or any request to refinance in accordance with subsection (b)(3) 
of this section, any loan made or insured under section 1484 or 1485 of 
this title pursuant to a contract entered into prior to December 15, 
1989, if--
        (i) the borrower enters into an agreement with the Secretary 
    that obligates the borrower (and successors in interest thereof)--
            (I) to utilize the assisted housing and related facilities 
        for the purposes specified in section 1484 or 1485 of this 
        title, as the case may be, for a period determined by the 
        Secretary (but not less than the period described in paragraph 
        (1)(B) calculated from the date on which the loan is made or 
        insured); and
            (II) upon termination of the period described in paragraph 
        (1)(B), to offer to sell the assisted housing and related 
        facilities to a qualified nonprofit organization or public 
        agency in accordance with this paragraph; or

        (ii) the Secretary determines that housing opportunities of 
    minorities will not be materially affected as a result of the 
    prepayment or refinancing, and that--
            (I) the borrower (and any successor in interest thereof) are 
        obligated to ensure that tenants of the housing and related 
        facilities financed with the loan will not be displaced due to a 
        change in the use of the housing, or to an increase in rental or 
        other charges, as a result of the prepayment or refinancing; or
            (II) there is an adequate supply of safe, decent, and 
        affordable rental housing within the market area of the housing 
        and related facilities and sufficient actions have been taken to 
        ensure that the rental housing will be made available to each 
        tenant upon displacement.

    (H) Funding.--
        (i) Budget limitation.--Not more than 5,000 dwelling units may 
    be transferred under this paragraph in any fiscal year, and the 
    budget authority that may be provided under this paragraph for any 
    fiscal year may not exceed the amounts required to carry out this 
    paragraph with respect to such number.
        (ii) Reimbursement of rural housing insurance fund.--There are 
    authorized to be appropriated to the Rural Housing Insurance Fund 
    such sums as may be necessary to reimburse the Fund for financial 
    assistance provided under this paragraph, paragraph (4), and section 
    1487(j)(7) of this title.

    (I) Definitions.--For purposes of this paragraph:
        (i) Local nonprofit organization.--The term ``local nonprofit 
    organization'' means a nonprofit organization that--
            (I) has a broad based board reflecting various interests in 
        the community or trade area; and
            (II) is a not-for-profit charitable organization whose 
        principal purposes include developing or managing low income 
        housing or community development projects.

        (ii) Nonprofit organization.--The term ``nonprofit 
    organization'' means any private organization--
            (I) no part of the net earnings of which inures to the 
        benefit of any member, founder, contributor, or individual;
            (II) that is approved by the Secretary as to financial 
        responsibility; and
            (III) that does not have among its officers or directorate 
        persons or parties with a material interest (or persons or 
        parties related to any person or party with such an interest) in 
        loans financed under section 1485 of this title that have been 
        prepaid.

    (J) Regulations.--Notwithstanding section 1490n of this title, the 
Secretary shall issue final regulations to carry out this paragraph not 
later than 60 days after February 5, 1988. The Secretary shall provide 
for the regulations to take effect not later than 45 days after the date 
on which the regulations are issued.

(d) Dwelling units available to very low-income families or persons

    On and after November 30, 1983--
        (1) not less than 40 percent of the funds approved in 
    appropriation Acts for use under this section shall be set aside and 
    made available only for very low-income families or persons; and
        (2) not less than 30 percent of the funds allocated to each 
    State under this section shall be available only for very low-income 
    families or persons.

(e) Manufactured homes; qualifications for loans made or insured; energy 
        conservation requirements

    (1) A loan which may be made or insured under this section with 
respect to housing shall be made or insured with respect to a 
manufactured home or with respect to a manufactured home and lot, 
whether such home or such home and lot is real property, personal 
property, or mixed real and personal property, if--
        (A) the manufactured home meets the standards prescribed 
    pursuant to title VI of the Housing and Community Development Act of 
    1974 [42 U.S.C. 5401 et seq.];
        (B) the manufactured home, or the manufactured home and lot, 
    meets the installation, structural, and site requirements which 
    would apply under title II of the National Housing Act [12 U.S.C. 
    1707 et seq.]; and
        (C) the manufactured home meets the energy conserving 
    requirements established under paragraph (2), or until the energy 
    conserving requirements are established under paragraph (2), the 
    manufactured home meets the energy conserving requirements 
    applicable to housing other than manufactured housing financed under 
    this subchapter.

    (2) Energy conserving requirements established by the Secretary for 
the purpose of paragraph (1)(C) shall--
        (A) reduce the operating costs for a borrower by maximizing the 
    energy savings and be cost-effective over the life of the 
    manufactured home or the term of the loan, whichever is shorter, 
    taking into account variations in climate, types of energy used, the 
    cost to modify the home to meet such requirements, and the estimated 
    value of the energy saved over the term of the mortgage; and
        (B) be established so that the increase in the annual loan 
    payment resulting from the added energy conserving requirements in 
    excess of those required by the standards prescribed under title VI 
    of the Housing and Community Development Act of 1974 [42 U.S.C. 5401 
    et seq.] shall not exceed the projected savings in annual energy 
    costs.

    (3) A loan that may be made or insured under this section with 
respect to a manufactured home on a permanent foundation, or a 
manufactured home on a permanent foundation and a lot, shall be 
repayable over the same period as would be applicable under section 
203(b) of the National Housing Act [12 U.S.C. 1709(b)].

(f) Remote rural areas

                        (1) Loan supplements

        The Secretary may supplement any loan under this section to 
    finance housing located in a remote rural area or on tribal allotted 
    or Indian trust land with a grant in an amount not greater than the 
    amount by which the reasonable land acquisition and construction 
    costs of the security property exceeds the appraised value of such 
    property.

                           (2) Prohibition

        The Secretary may not refuse to make, insure, or guarantee a 
    loan that otherwise meets the requirements under this section solely 
    on the basis that the housing involved is located in an area that is 
    excessively rural in character or excessively remote or on tribal 
    allotted or Indian trust land.

(g) Deferred mortgage demonstration

                            (1) Authority

        With respect to families or persons otherwise eligible for 
    assistance under subsection (d) of this section but having incomes 
    below the amount determined to qualify for a loan under this 
    section, the Secretary may defer mortgage payments beyond the amount 
    affordable at 1 percent interest, taking into consideration income, 
    taxes and insurance. Deferred mortgage payments shall be converted 
    to payment status when the ability of the borrower to repay 
    improves. Deferred amounts shall not exceed 25 percent of the amount 
    of the payment due at 1 percent interest and shall be subject to 
    recapture.

                            (2) Interest

        Interest on principal deferred shall be set at 1 percent and any 
    interest payments deferred under this subsection shall not be 
    treated as principal in calculating indebtedness.

                             (3) Funding

        Subject to approval in appropriations Acts, not more than 10 
    percent of the amount approved for each of fiscal years 1993 and 
    1994 for loans under this section may be used to carry out this 
    subsection.

(h) Guaranteed loans

                            (1) Authority

        The Secretary shall, to the extent provided in appropriation 
    Acts, provide guaranteed loans in accordance with this section, 
    section 1487(d) of this title, and the last sentence of section 
    1490a(a)(1)(A) of this title, except as modified by the provisions 
    of this subsection. Loans shall be guaranteed under this subsection 
    in an amount equal to 90 percent of the loan.

                       (2) Eligible borrowers

        Loans guaranteed pursuant to this subsection shall be made only 
    to borrowers who are low or moderate income families or persons, 
    whose incomes do not exceed 115 percent of the median income of the 
    area, as determined by the Secretary.

                        (3) Eligible housing

        Loans may be guaranteed pursuant to this subsection only if the 
    loan is used to acquire or construct a single-family residence that 
    is--
            (A) to be used as the principal residence of the borrower;
            (B) eligible for assistance under this section, section 
        203(b) of the National Housing Act [12 U.S.C. 1709(b)], or 
        chapter 37 of title 38; and
            (C) located in a rural area.

        (4) Priority and counseling for first-time homebuyers

        (A) In providing guaranteed loans under this subsection, the 
    Secretary shall give priority to first-time homebuyers (as defined 
    in paragraph (12)(A)).\2\
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    \2\ So in original. Probably should be paragraph ``(12)(B)).''
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        (B) The Secretary may require that, as a condition of receiving 
    a guaranteed loan pursuant to this subsection, a borrower who is a 
    first-time homebuyer successfully complete a program of 
    homeownership counseling under section 1701x(a)(1)(iii) of title 12 
    and obtain certification from the provider of the program that the 
    borrower is adequately prepared for the obligations of 
    homeownership.

                        (5) Eligible lenders

        Guaranteed loans pursuant to this subsection may be made only by 
    lenders approved by and meeting qualifications established by the 
    Secretary.

                           (6) Loan terms

        Loans guaranteed pursuant to this subsection shall--
            (A) be made for a term not to exceed 30 years;
            (B) involve a rate of interest that is fixed over the term 
        of the loan and does not exceed the rate for loans guaranteed 
        under chapter 37 of title 38 or comparable loans in the area 
        that are not guaranteed; and
            (C) involve a principal obligation (including initial 
        service charges, appraisal, inspection, and other fees as the 
        Secretary may approve)--
                (i) for a first-time homebuyer, in any amount not in 
            excess of 100 percent of the appraised value of the property 
            as of the date the loan is accepted or the acquisition cost 
            of the property, whichever is less; and
                (ii) for any borrower other than a first-time homebuyer, 
            in an amount not in excess of the percentage of the property 
            or the acquisition cost of the property that the Secretary 
            shall determine, such percentage or cost in any event not to 
            exceed 100 percent of the appraised value of the property as 
            of the date the loan is accepted or the acquisition cost of 
            the property, whichever is less.

                          (7) Guarantee fee

        With respect to a guaranteed loan under this subsection, the 
    Secretary may collect from the lender at the time of issuance of the 
    guarantee a fee equal to not more than 1 percent of the principal 
    obligation of the loan.

                           (8) Refinancing

        Any guaranteed loan under this subsection may be refinanced and 
    extended in accordance with terms and conditions that the Secretary 
    shall prescribe, but in no event for an additional amount or term 
    which exceeds the limitations under this subsection.

                          (9) Nonassumption

        Notwithstanding the transfer of property for which a guaranteed 
    loan under this subsection was made, the borrower of a guaranteed 
    loan under this subsection may not be relieved of liability with 
    respect to the loan.

                     (10) Geographical targeting

        In providing guaranteed loans under this subsection, the 
    Secretary shall establish standards to target and give priority to 
    areas that have a demonstrated need for additional sources of 
    mortgage financing for low and moderate income families.

                           (11) Allocation

        The Secretary shall provide that, in each fiscal year, 
    guaranteed loans under this subsection shall be allocated among the 
    States on the basis of the need of eligible borrowers in each State 
    for such loans in comparison with the need of eligible borrowers for 
    such loans among all States.

                          (12) Definitions

        For purposes of this subsection:
            (A) The term ``displaced homemaker'' means an individual 
        who--
                (i) is an adult;
                (ii) has not worked full-time full-year in the labor 
            force for a number of years but has, during such years, 
            worked primarily without remuneration to care for the home 
            and family; and
                (iii) is unemployed or underemployed and is experiencing 
            difficulty in obtaining or upgrading employment.

            (B) The term ``first-time homebuyer'' means any individual 
        who (and whose spouse) has had no present ownership in a 
        principal residence during the 3-year period ending on the date 
        of purchase of the property acquired with a guaranteed loan 
        under this subsection except that--
                (i) any individual who is a displaced homemaker may not 
            be excluded from consideration as a first-time homebuyer 
            under this subparagraph on the basis that the individual, 
            while a homemaker, owned a home with his or her spouse or 
            resided in a home owned by the spouse; and
                (ii) any individual who is a single parent may not be 
            excluded from consideration as a first-time homebuyer under 
            this subparagraph on the basis that the individual, while 
            married, owned a home with his or her spouse or resided in a 
            home owned by the spouse.

            (C) The term ``single parent'' means an individual who--
                (i) is unmarried or legally separated from a spouse; and
                (ii)(I) has 1 or more minor children for whom the 
            individual has custody or joint custody; or
                (II) is pregnant.

            (D) The term ``State'' means the States of the United 
        States, the Commonwealth of Puerto Rico, the District of 
        Columbia, the Commonwealth of the Northern Mariana Islands, 
        Guam, the Virgin Islands, American Samoa, the Trust Territories 
        of the Pacific, and any other possession of the United States.

(July 15, 1949, ch. 338, title V, Sec. 502, 63 Stat. 433; Pub. L. 87-70, 
title VIII, Sec. 801(b), June 30, 1961, 75 Stat. 186; Pub. L. 87-723, 
Sec. 4(a)(2), Sept. 28, 1962, 76 Stat. 671; Pub. L. 89-117, title X, 
Sec. 1002, Aug. 10, 1965, 79 Stat. 497; Pub. L. 89-754, title VIII, 
Sec. 802, Nov. 3, 1966, 80 Stat. 1282; Pub. L. 93-383, title V, 
Sec. 505(b), Aug. 22, 1974, 88 Stat. 693; Pub. L. 95-128, title V, 
Sec. 502(a), Oct. 12, 1977, 91 Stat. 1139; Pub. L. 96-153, title V, 
Sec. 503, Dec. 21, 1979, 93 Stat. 1134; Pub. L. 96-399, title V, 
Sec. 514(a), Oct. 8, 1980, 94 Stat. 1671; Pub. L. 98-181, title V, 
Sec. 503(a), (d), Nov. 30, 1983, 97 Stat. 1240, 1241; Pub. L. 98-479, 
title I, Sec. 105(b)(1), Oct. 17, 1984, 98 Stat. 2226; Pub. L. 100-242, 
title II, Sec. 241, title III, Sec. 314, Feb. 5, 1988, 101 Stat. 1886, 
1897; Pub. L. 100-628, title X, Sec. 1028, Nov. 7, 1988, 102 Stat. 3271; 
Pub. L. 101-235, title II, Sec. 206, Dec. 15, 1989, 103 Stat. 2041; Pub. 
L. 101-625, title VII, Secs. 704(a), 705(a), 706(b), 719(b), Nov. 28, 
1990, 104 Stat. 4283, 4284, 4297; Pub. L. 102-142, title VII, 
Sec. 743(b), Oct. 28, 1991, 105 Stat. 915; Pub. L. 102-550, title VII, 
Secs. 701(g), 702(a), 703, 704, 712(a), (b), Oct. 28, 1992, 106 Stat. 
3834, 3835, 3841; Pub. L. 104-180, title VII, Sec. 734(c)(3)(A), (B), 
Aug. 6, 1996, 110 Stat. 1602; Pub. L. 105-276, title V, 
Sec. 599C(e)(2)(A), (f), Oct. 21, 1998, 112 Stat. 2662, 2663.)

                       References in Text

    The Housing and Community Development Act of 1974, referred to in 
subsec. (e)(1)(A), (2)(B), is Pub. L. 93-383, Aug. 22, 1974, 88 Stat. 
633, as amended. Title VI of the Housing and Community Development Act 
of 1974 is known as the National Manufactured Housing Construction and 
Safety Standards Act of 1974 and is classified generally to chapter 70 
(Sec. 5401 et seq.) of this title. For complete classification of this 
Act to the Code, see Short Title note set out under section 5301 of this 
title and Tables.
    The National Housing Act, referred to in subsec. (e)(1)(B), is act 
June 27, 1934, ch. 847, 48 Stat. 1246, as amended. Title II of the 
National Housing Act is classified principally to subchapter II 
(Sec. 1707 et seq.) of chapter 13 of Title 12, Banks and Banking. For 
complete classification of this Act to the Code, see section 1701 of 
Title 12 and Tables.


                               Amendments

    1998--Subsec. (c)(1)(A)(i). Pub. L. 105-276, Sec. 599C(e)(2)(A)(i), 
substituted ``, (a)(2), or (5)'' for ``or (a)(2)''.
    Subsec. (c)(4)(B)(ii). Pub. L. 105-276, Sec. 599C(e)(2)(A)(ii), 
inserted before period at end ``, or additional assistance or an 
increase in assistance provided under section 1490a(a)(5) of this 
title''.
    Subsec. (c)(4)(B)(iii). Pub. L. 105-276, Sec. 599C(e)(2)(A)(iii), 
was executed by inserting ``or 1490a(a)(5)'' after ``section 
1490a(a)(2)'' to reflect the probable intent of Congress, 
notwithstanding the fact that the verb ``inserting'' was missing from 
the directory language.
    Subsec. (c)(4)(B)(v). Pub. L. 105-276, Sec. 599C(e)(2)(A)(iv), 
inserted before period at end ``, or current tenants of projects not 
assisted under section 1490a(a)(5) of this title''.
    Subsec. (c)(5)(C)(iii). Pub. L. 105-276, Sec. 599C(e)(2)(A)(v), 
struck out comma after ``1490a(a)(2)(A) of this title'' and inserted 
``or any assistance payments received under section 1490a(a)(5) of this 
title,'' before ``with respect''.
    Subsec. (c)(5)(D). Pub. L. 105-276, Sec. 599C(e)(2)(A)(vi), inserted 
before period at end ``or, in the case of housing assisted under section 
1490a(a)(5) of this title, does not exceed the rents established for the 
project under such section''.
    Subsec. (h)(6)(C). Pub. L. 105-276, Sec. 599C(f), which directed the 
striking out of ``, subject to the maximum dollar amount limitation of 
section 203(b)(2) of the National Housing Act'' each place it appeared, 
was executed by striking out ``, subject to the maximum dollar 
limitation of section 203(b)(2) of the National Housing Act'' after 
``whichever is less'' in cl. (i) and after ``Secretary shall determine'' 
in cl. (ii), to reflect the probable intent of Congress.
    1996--Subsec. (c)(4)(B)(iv). Pub. L. 104-180, Sec. 734(c)(3)(A), 
inserted before period at end ``or under paragraphs (1) and (2) of 
section 1484(j) of this title, except that an equity loan referred to in 
this clause may not be made available after August 6, 1996, unless the 
Secretary determines that the other incentives available under this 
subparagraph are not adequate to provide a fair return on the investment 
of the borrower, to prevent prepayment of the loan insured under section 
1484 or 1485 of this title, or to prevent the displacement of tenants of 
the housing for which the loan was made''.
    Subsec. (c)(4)(C). Pub. L. 104-180, Sec. 734(c)(3)(B), in 
introductory provisions substituted ``The Secretary may approve 
assistance under subparagraph (B) for assisted housing only if the 
restrictive period has expired for any loan for the housing made or 
insured under section 1484 or 1485 of this title pursuant to a contract 
entered into after December 21, 1979, but before December 15, 1989, and 
the Secretary determines that the combination of assistance provided--'' 
for ``The Secretary may approve assistance under subparagraph (B) only 
if the Secretary determines that the combination of assistance 
provided--''.
    1992--Subsec. (a)(3). Pub. L. 102-550, Sec. 702(a), added par. (3).
    Subsec. (c)(2), (4)(A). Pub. L. 102-550, Sec. 712(a)(1), (2), 
substituted ``prior to December 15, 1989'' for ``before December 21, 
1979''.
    Subsec. (e)(4)(B)(vi). Pub. L. 102-550, Sec. 712(b), added cl. (vi).
    Subsec. (e)(5)(F), (G). Pub. L. 102-550, Sec. 712(a)(3), (4), 
substituted ``prior to December 15, 1989'' for ``before December 21, 
1979''.
    Subsec. (f). Pub. L. 102-550, Sec. 704, inserted ``or on tribal 
allotted or Indian trust land'' in pars. (1) and (2).
    Subsec. (g)(3). Pub. L. 102-550, Sec. 701(g), substituted ``1993 and 
1994'' for ``1991 and 1992''.
    Subsec. (h)(2). Pub. L. 102-550, Sec. 703, inserted ``115 percent 
of'' after ``exceed''.
    1991--Subsec. (h)(3)(C). Pub. L. 102-142 struck out before period at 
end ``that is more than 25 miles from an urban area or densely populated 
area''.
    1990--Subsec. (c)(1)(B). Pub. L. 101-625, Sec. 719(b), inserted 
``initial'' after ``any''.
    Subsec. (f). Pub. L. 101-625, Sec. 704(a), added subsec. (f).
    Subsec. (g). Pub. L. 101-625, Sec. 705(a), added subsec. (g).
    Subsec. (h). Pub. L. 101-625, Sec. 706(b), added subsec. (h).
    1989--Subsec. (c)(1). Pub. L. 101-235, Sec. 206, designated existing 
provisions as subpar. (A), redesignated former subpars. (A) and (B) as 
cls. (i) and (ii), respectively, inserted ``but before December 15, 
1989,'' after ``December 21, 1979,'' in introductory provisions and cl. 
(i), and added subpar. (B).
    1988--Subsec. (c)(3). Pub. L. 100-242, Sec. 241, added par. (3).
    Subsec. (c)(4). Pub. L. 100-242, Sec. 241, added par. (4).
    Subsec. (c)(4)(B)(iv). Pub. L. 100-628, Sec. 1028(a), substituted 
``paragraphs (1) and (2) of section 1485(c)'' for ``paragraphs (7) and 
(8) of section 1485(b)''.
    Subsec. (c)(5). Pub. L. 100-242, Sec. 241, added par. (5).
    Subsec. (c)(5)(B)(iii). Pub. L. 100-628, Sec. 1028(b), added cl. 
(iii).
    Subsec. (c)(5)(I). Pub. L. 100-628, Sec. 1028(c), substituted 
``Definitions'' for ``Definition'' in heading and amended text 
generally. Prior to amendment, text read as follows: ``For purposes of 
this paragraph, the term `nonprofit organization' means any private 
organization--
        ``(i) no part of the net earnings of which inures to the benefit 
    of any member, founder, contributor, or individual; and
        ``(ii) that is approved by the Secretary as to financial 
    responsibility.''
    Subsec. (e)(3). Pub. L. 100-242, Sec. 314, added par. (3).
    1984--Subsec. (d)(1). Pub. L. 98-479 substituted ``percent of the 
funds approved in appropriation Acts for use under this section shall be 
set aside and made available only for very low-income families or 
persons'' for ``per centum of the dwelling units financed under this 
section shall be available only for occupancy by very low-income 
families or persons''.
    Subsec. (d)(2). Pub. L. 98-479 substituted ``percent of the funds 
allocated to each State under this section shall be available only for 
very low-income families or persons'' for ``per centum of the dwelling 
units in each State financed under this section shall be available only 
for occupancy by very low-income families or persons''.
    1983--Subsec. (a)(1). Pub. L. 98-181, Sec. 503(d)(1), (2), 
designated existing provisions as par. (1) and substituted ``The 
Secretary may accept the personal liability of any person with adequate 
repayment ability who will cosign the applicant's note to compensate for 
any deficiency in the applicant's repayment ability. At the borrower's 
option, the borrower may prepay to the Secretary as escrow agent, on 
terms and conditions prescribed by him, such taxes, insurance, and other 
expenses as the Secretary may require in accordance with section 1471(e) 
of this title'' for ``in the case of applicants described in clauses (1) 
and (2) of section 1471(a) of this title, at a rate not to exceed 5 per 
centum per annum on the unpaid balance of principal, and, in the case of 
applicants described in clause (3) of section 1471(a) of this title and 
applicants under sections 1473 and 1474 of this title, at a rate not to 
exceed 4 per centum per annum on such unpaid balance. Loans made or 
insured under this subchapter shall be conditioned on the borrower 
paying such fees and other charges as the Secretary may require and on 
the borrower prepaying to the Secretary as escrow agent, on terms and 
conditions prescribed by him, such taxes, insurance, and other expenses 
as the Secretary may require in accordance with section 1471(e) of this 
title. The Secretary may accept the personal liability of any person 
with adequate repayment ability who will cosign the applicant's note to 
compensate for any deficiency in the applicant's repayment ability''.
    Subsec. (a)(2). Pub. L. 98-181, Sec. 503(d)(3), added par. (2).
    Subsecs. (d), (e). Pub. L. 98-181, Sec. 503(a), added subsecs. (d) 
and (e).
    1980--Subsec. (c). Pub. L. 96-399, in par. (1), substituted ``The 
Secretary may not accept'' for ``Except as provided in paragraph (2), 
the Secretary may not accept'', and ``entered into after'' for ``entered 
into before or after'' in two places, and in par. (2) substituted 
provisions granting priority for relocation to tenants displaced by 
virtue of prepayment or refinancing of loans on or after Oct. 8, 1980, 
for provisions relating to acceptance of an offer to prepay unless, 
after examination of the consequences of such offer, the Secretary 
determines that prepayment will result in displacement of tenants, and 
in the case of facilities containing more than ten units, will have an 
adverse effect on the supply of affordable and decent housing for low 
and moderate income and elderly persons.
    1979--Subsec. (b)(2). Pub. L. 96-153, Sec. 503(a), inserted 
provisions that prepayment of loans made or insured under section 1484 
or 1485 of this title shall be subject to the provisions of subsec. (c) 
of this section.
    Subsec. (c). Pub. L. 96-153, Sec. 503(b), added subsec. (c).
    1977--Subsec. (b)(3). Pub. L. 95-128 inserted introductory phrase 
``except for guaranteed loans,''.
    1974--Subsec. (a). Pub. L. 93-383 inserted provisions relating to 
the borrower prepaying to the Secretary as escrow agent taxes, 
insurance, and other expenses required by the Secretary in accordance 
with section 1471(e) of this title.
    1966--Subsec. (a). Pub. L. 89-754 substituted ``The'' for ``In cases 
of applicants who are elderly persons, the'' in third sentence.
    1965--Subsec. (a). Pub. L. 89-117 increased to 5 per centum the 
interest rate in the case of applicants described in clauses (1) and (2) 
of section 1471(a) of this title and also authorized the Secretary to 
charge fees on loans made or insured under this subchapter.
    1962--Subsec. (a). Pub. L. 87-723 authorized the Secretary to 
accept, in the case of applicant's who are elderly persons, the personal 
liability of any person with adequate repayment ability who will cosign 
the applicant's note to compensate for any deficiency in the applicant's 
repayment ability.
    1961--Subsec. (b)(1). Pub. L. 87-70 substituted ``or such other 
security'' for ``and such additional security''.


                    Effective Date of 1998 Amendment

    Pub. L. 105-276, title V, Sec. 599C(g), Oct. 21, 1998, 112 Stat. 
2663, provided that: ``The amendments made by this section [amending 
this section and sections 1479, 1483 to 1485, 1490a, 1490j, and 1490p-2 
of this title] are made on, and shall apply beginning upon, the date of 
the enactment of this Act [Oct. 21, 1998].''


                    Effective Date of 1984 Amendment

    Section 105(b)(2) of Pub. L. 98-479 provided that: ``Notwithstanding 
any other provision of law, the provisions of section 502(d) of the 
Housing Act of 1949 [subsec. (d) of this section], as amended by 
paragraph (1), shall apply with respect to fiscal year 1985 and 
thereafter, and the provisions of such section, as so amended, may not 
be changed or superseded except by another provision of law which amends 
such section.''


                               Regulations

    Section 704(b) of Pub. L. 101-625 provided that: ``Not later than 
the expiration of the 120-day period beginning on the date of enactment 
of this Act [Nov. 28, 1990], the Secretary of Agriculture shall issue 
any regulations necessary to carry out the amendment made by subsection 
(a) [amending this section].''
    Section 705(b) of Pub. L. 101-625 provided that: ``Not later than 
the expiration of the 120-day period beginning on the date of enactment 
of this Act [Nov. 28, 1990], the Secretary of Agriculture shall issue 
any regulations necessary to carry out the amendment made by subsection 
(a) [amending this section].''
    Section 706(d) of Pub. L. 101-625 provided that:
    ``(1) Proposed regulations and comment period.--Not later than 120 
days after the date of the enactment of this Act [Nov. 28, 1990], the 
Secretary of Agriculture shall publish in the Federal Register proposed 
regulations to implement the amendments made by this section [amending 
this section and section 1701x of Title 12, Banks and Banking]. The 
Secretary shall receive comments regarding the regulations during the 
30-day period beginning on the date of the publication of the proposed 
regulations.
    ``(2) Implementation.--Not later than 180 days after the date of the 
enactment of this Act, the Secretary of Agriculture shall issue final 
regulations to implement the amendments made by this section. The 
Secretary shall provide for the regulations to take effect not later 
than 30 days after the date on which the regulations are issued.
    ``(3) Applicability.--The amendments made by this section shall not 
apply to guaranteed loans under title V of the Housing Act of 1949 (42 
U.S.C. 1471 et seq.) made before the date on which the final regulations 
issued by the Secretary under paragraph (2) take effect.
    ``(4) Consultation.--In developing and promulgating the regulations 
under paragraphs (1) and (2), the Secretary of Agriculture shall consult 
with the chairperson of the Federal Agricultural Mortgage Corporation 
and shall solicit the views of borrowers, lenders, realtors, and 
homebuilders experienced and knowledgeable regarding housing in rural 
areas to provide that the regulations promulgated ensure that guaranteed 
loans pursuant to the amendments made by this section--
        ``(A) are made in a manner that is cost-effective; and
        ``(B) are made in a manner that reduces, to the extent 
    practicable, the burden of administration and paperwork for 
    borrowers and lenders.''

          Termination of Trust Territory of the Pacific Islands

    For termination of Trust Territory of the Pacific Islands, see note 
set out preceding section 1681 of Title 48, Territories and Insular 
Possessions.


           Rural Housing Loan Guarantees; Findings and Purpose

    Section 706(a) of Pub. L. 101-625 provided that:
    ``(1) Findings.--The Congress finds that--
        ``(A) the Federal Government should encourage support for 
    homeownership through nonsubsidized mortgage loans guaranteed by the 
    Secretary of Agriculture for the purchase of modest homes located in 
    rural areas and small communities of the country that are not 
    adequately served by private conventional, federally insured, or 
    guaranteed mortgage credit providers; and
        ``(B) many rural areas contain disproportionate amounts of 
    substandard housing in need of repair, but lack the necessary 
    funding and support to modernize such housing through preservation.
    ``(2) Purpose.--The purpose of this section [amending this section 
and section 1701x of Title 12, Banks and Banking, and enacting 
provisions set out above] is to expand homeownership opportunities to 
low- and moderate-income residents of rural areas of the country through 
the establishment of guaranteed rural housing loans to be made available 
in rural locations where there is an insufficient availability of 
mortgage financing from other sources.''


               Rural Housing Guaranteed Loan Demonstration

    Section 304 of Pub. L. 100-242, as amended by Pub. L. 100-628, title 
X, Sec. 1041(a), (b), Nov. 7, 1988, 102 Stat. 3272, provided for 
establishment by Secretary of Agriculture of a rural housing guaranteed 
loan demonstration to provide guaranteed loans in accordance with 
section 1487(d) of this title and last sentence of section 1490(a)(1)(A) 
of this title, authorized amount available for such loans, established 
loan criteria, directed Secretary to submit to Congress, as soon as 
practicable after Sept. 30, 1989, an interim report setting forth 
findings and recommendations as a result of the demonstration and a 
final report on such findings and recommendations as soon as practicable 
after Sept. 30, 1991, prohibited Secretary from providing any guaranteed 
loans after Sept. 30, 1991, except pursuant to a commitment entered into 
on or before such date, and excluded applicability of subsec. (d) of 
this section and second sentence of section 1487(e) of this title to 
loan demonstration.


        Prohibition on Acceptance of Prepayment of Certain Loans

    Pub. L. 100-71, title I, July 11, 1987, 101 Stat. 428, as amended by 
Pub. L. 100-122, Sec. 2(d), Sept. 30, 1987, 101 Stat. 793; Pub. L. 100-
154, Nov. 5, 1987, 101 Stat. 890; Pub. L. 100-170, Nov. 17, 1987, 101 
Stat. 914; Pub. L. 100-179, Dec. 3, 1987, 101 Stat. 1018; Pub. L. 100-
200, Dec. 21, 1987, 101 Stat. 1327, provided that: ``The limitations on 
loan prepayments contained in section 634 of the Agriculture, Rural 
Development, and Related Agencies Appropriations Act, 1987 [section 
101(a) [title VI, Sec. 634] of Pub. L. 99-500 and 99-591, set out below] 
shall remain in effect through March 15, 1988.''
    Pub. L. 99-500, Sec. 101(a) [title VI, Sec. 634], Oct. 18, 1986, 100 
Stat. 1783, 1783-34, and Pub. L. 99-591, Sec. 101(a) [title VI, 
Sec. 634], Oct. 30, 1986, 100 Stat. 3341, 3341-34, provided that: 
``Notwithstanding any other provision of law, including section 
502(c)(2) of the Housing Act of 1949 (42 U.S.C. 1471 et seq.) [subsec. 
(c)(2) of this section], none of the funds appropriated under this or 
any other Act shall be used prior to June 30, 1987 to accept prepayment 
of any loan made under section 515 of the Housing Act of 1949 [section 
1485 of this title], unless such loan was made at least twenty years 
prior to the date of prepayment or, for loans made before December 21, 
1979, the Secretary makes a determination that a supply of adequate, 
comparable housing is available in the community, or that prepayment of 
such loans will not result in a substantial increase in rents to tenants 
in residence upon date of prepayment or displacement of such tenants.''


Study and Report of Comparison of Construction Costs and Energy Savings 
  Between Manufactured Homes Built Under National Manufactured Housing 
                    Safety Standards and Other Homes

    Section 503(b) of Pub. L. 98-181 provided that: ``Within 18 months 
from the issuance by the Secretary of Agriculture of regulations under 
section 502(e)(2) of the Housing Act of 1949 [subsec. (e)(2) of this 
section], the Secretary of Energy, in consultation with the Secretary of 
Housing and Urban Development and the Secretary of Agriculture, shall 
conduct a study and transmit to the Congress a report that compares the 
increased construction costs, actual annual energy use, and the 
projected value of energy saved over the expected life of the home or 
the mortgage term, whichever is shorter, of manufactured homes which are 
financed under titles I and II of the National Housing Act [12 U.S.C. 
1702 et seq., 1707 et seq.], or under title V of the Housing Act of 1949 
[this subchapter] and which are built according to national manufactured 
housing safety standards with other homes insured under either such 
Act.''


Study and Report to Congress of Adverse Effects on Housing of Prepayment 
                                of Loans

    Section 514(b) of Pub. L. 96-399 required Secretary of Agriculture 
to conduct a study of, and report to Congress not later than 6 months 
after Oct. 8, 1980, on any adverse effects the amendments made by 
subsection (a) [amending this section] may have on housing, particularly 
for the elderly and persons of low income.

                  Section Referred to in Other Sections

    This section is referred to in sections 1436a, 1473, 1477, 1479, 
1480, 1483, 1484, 1485, 1487, 1490a, 1490c, 1490f, 1490m, 1490p-1, 
4851b, 8011 of this title; title 7 sections 1933, 1991, 2204f; title 12 
section 1701x; title 26 section 42.
