42 USC 5308 - Guarantee and commitment to guarantee loans for acquisition of property

U.S Code last checked for updates: Jan 18, 2025

§ 5308.

Guarantee and commitment to guarantee loans for acquisition of property

(a)

Authority of Secretary; issuance of obligations by eligible public entities or designated public agencies; form, denomination, maturity, and conditions of notes or other obligations; percentage allocation requirements

(b)

Prerequisites

(c)

Payment of principal, interest and costs

(d)

Repayment contract; security; pledge by State

(1)

To assure the repayment of notes or other obligations and charges incurred under this section and as a condition for receiving such guarantees, the Secretary shall require the issuer to—

(A)

enter into a contract, in a form acceptable to the Secretary, for repayment of notes or other obligations guaranteed hereunder;

(B)

pledge any grant for which the issuer may become eligible under this chapter; and

(C)

furnish, at the discretion of the Secretary, such other security as may be deemed appropriate by the Secretary in making such guarantees, including increments in local tax receipts generated by the activities assisted under this chapter or dispositions proceeds from the sale of land or rehabilitated property.

(2)

To assist in assuring the repayment of notes or other obligations and charges incurred under this section, a State shall pledge any grant for which the State may become eligible under this chapter as security for notes or other obligations and charges issued under this section by any unit of general local government in a nonentitlement area in the State.

(e)

Pledged grants for repayments

(f)

Full faith and credit of United States pledged for payment; conclusiveness and validity of guarantee

(g)

Issuance of obligations by Secretary to Secretary of the Treasury to satisfy authorized guarantee obligations; establishment of maturities and rates of interest and purchase of obligations by Secretary of the Treasury

(h)

Federal taxation of guaranteed obligations; grants to borrowing entity or agency of taxable obligations for net interest costs, etc.; limitation on amount of grant; assistance to issuer in hardship cases

(i)

Omitted

(j)

Inclusion within gross income for purpose of chapter 1 of title 26 of interest paid on taxable obligations

(k)

Outstanding obligations; limitation; monitoring use of guarantees under this section

(1)

The total amount of outstanding obligations guaranteed on a cumulative basis by the Secretary pursuant to subsection (a) shall not at any time exceed $4,500,000,000 or such higher amount as may be authorized to be appropriated for sections 5306 and 5307 of this title for any fiscal year.

(2)

The Secretary shall monitor the use of guarantees under this section by eligible public entities. If the Secretary finds that 50 percent of the aggregate guarantee authority has been committed, the Secretary may—

(A)

impose limitations on the amount of guarantees any one entity may receive in any fiscal year of $35,000,000 for units of general local government receiving grants under section 5306(b) of this title and $7,000,000 for units of general local government receiving grants under section 5306(d) of this title; or

(B)

request the enactment of legislation increasing the aggregate limitation on guarantees under this section.

(l)

Purchase of guaranteed obligations by Federal Financing Bank

(m)

Limitation on imposition of fee or charge

(n)

State assistance in submission of applications

(o)

“Eligible public entity” defined

(p)

Training and information activities relating to home guarantee program

(1)

The Secretary, in cooperation with eligible public entities, shall carry out training and information activities with respect to the guarantee program under this section. Such activities shall commence not later than 1 year after November 28, 1990.3

 See Codification note below.

(2)

The Secretary may use amounts set aside under section 5307 of this title to carry out this subsection.

(q)

Economic development grants

(1)

Authorization

(2)

Eligible activities

(3)

Applications

(4)

Selection criteria

The Secretary shall establish criteria for awarding assistance under this subsection. Such criteria shall include—

(A)

the extent of need for such assistance;

(B)

the level of distress in the community to be served and in the jurisdiction applying for assistance;

(C)

the quality of the plan proposed and the capacity or potential capacity of the applicant to successfully carry out the plan; and

(D)

such other factors as the Secretary determines to be appropriate.

(r)

Guarantee of obligations backed by loans

(1)

Authority

The Secretary may, upon such terms and conditions as the Secretary considers appropriate, guarantee the timely payment of the principal of and interest on such trust certificates or other obligations as may—

(A)

be offered by the Secretary or by any other offeror approved for purposes of this subsection by the Secretary; and

(B)

be based on and backed by a trust or pool composed of notes or other obligations guaranteed or eligible for guarantee by the Secretary under this section.

(2)

Full faith and credit

(3)

Subrogation

(4)

Effect of laws

No State or local law, and no Federal law, shall preclude or limit the exercise by the Secretary of—

(A)

the power to contract with respect to public offerings and other sales of notes, trust certificates, and other obligations guaranteed under this section upon such terms and conditions as the Secretary deems appropriate;

(B)

the right to enforce any such contract by any means deemed appropriate by the Secretary; and

(C)

any ownership rights of the Secretary, as applicable, in notes, certificates, or other obligations guaranteed under this section, or constituting the trust or pool against which trust certificates, or other obligations guaranteed under this section, are offered.

(Pub. L. 93–383, title I, § 108, Aug. 22, 1974, 88 Stat. 647; Pub. L. 95–128, title I, § 108, Oct. 12, 1977, 91 Stat. 1123; Pub. L. 96–399, title I, § 108, Oct. 8, 1980, 94 Stat. 1619; Pub. L. 97–35, title III, § 309(i), Aug. 13, 1981, 95 Stat. 397; Pub. L. 98–181, title I [title I, § 108], Nov. 30, 1983, 97 Stat. 1168; Pub. L. 98–479, title II, §§ 203(l)(2), 204(k)(1), Oct. 17, 1984, 98 Stat. 2231, 2233; Pub. L. 99–272, title III, § 3002(a), Apr. 7, 1986, 100 Stat. 102; Pub. L. 100–242, title V, § 514, Feb. 5, 1988, 101 Stat. 1930; Pub. L. 101–625, title IX, §§ 901(b), 910(b)–(g), Nov. 28, 1990, 104 Stat. 4385, 4389–4391; Pub. L. 102–550, title VIII, § 801(b), Oct. 28, 1992, 106 Stat. 3843; Pub. L. 103–233, title II, §§ 231, 232(a)(1), 233, Apr. 11, 1994, 108 Stat. 366, 368; Pub. L. 104–120, § 3(b), Mar. 28, 1996, 110 Stat. 835.)

cite as: 42 USC 5308