of the Interior. 



I have mentioned both loans and mort- 

 gages and I might explain here that a loan 

 is used during the period of construction 

 of the vessel, and a mortgage after the 

 launching of the vessel. The word loan as 

 used in this discussion of mortgage insur- 

 ance has no connection with the Fisheries 

 Loan Fund program. Loans under this Mort- 

 gage Insurance Program are simply used to 

 cover the period of construction. A com- 

 mitment to insure means that the Secretary 

 agrees to insure the loan or mortgage on 

 the performance of certain conditions. A 

 commitment to insure must be approved by 

 the Secretary prior to the launching of 

 the vessel. It will include a copy of the 

 proposed mortgage and other pertinent 

 papers. Applications for mortgage insur- 

 ance will be filed on a form to be completed 

 jointly by the borrower and the lender. 



To initiate a loan, the borrower must 

 have plans and specifications of the vessel 

 to be constructed and he must secure com- 

 petitive bids for its construction. The 

 applicant and lending agency then will have 

 to work out an agreement, subject to ob- 

 taining the insurance. The applications 

 will be filed with the Director, Bureau of 

 Commercial Fisheries, United States Depart- 

 ment of the Interior, Washington, D. C. 

 rather than through the local field offices. 



We anticipate that this fishing vessel 

 mortgage insurance program will be imple- 

 mented as soon as certain legal difficulties 

 in connection with the funding of the re- 

 volving fund are straightened out. Although 

 authority to provide mortgage insurance was 

 transferred to the Department of the 

 Interior, it is not possible to begin oper- 

 ating until we have either a fund to take 

 care of any losses or we have the authority 

 to borrow funds from the Treasury Depart- 

 ment in case a claim caused by a default 

 exceeds the amount in the revolving fund. 

 The Maritime Administration was given this 

 authority in 1958, but there is some 

 question in the minds of the Government 

 solicitors whether this authority also 

 extends to the Department of the Interior. 

 Legislation giving this authority to the 

 Secretary of the Interior has passed the 

 Senate and has been introduced into the 

 House of Representatives. The program can 

 be started as soon as these bills become law. 



In conclusion, we feel that these two 

 programs that I have discussed will be of 

 benefit to the tuna industry in the follow- 

 ing manner: 



The Fisheries Loan Fund provides: 



1. A source of financial assistance 

 not otherwise available. 



2. Assistance at a fairly low rate 

 of interest with repayment over 

 a period longer than banks would 

 allow. This reduces regular 

 payments. 



The Mortgage Insurance Fund provides: 



1. A means of financing the construc- 

 tion of new fishing vessels and 

 major reconstruction of older 

 vessels. 



2. Repayment terms to a maximum of 

 15 years in contrast to a much 

 shorter period required by 

 commercial banks. 



This mortgage insurance program, unlike 

 the Fisheries Loan Fund, provides a means 

 of rebuilding or expanding the domestic 

 tuna fleet. 



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