593 



July 26, 1976 - 13 - Pub. Law 94-370 



"(B) no guarantee shall be made unless the Secretary 

 determines that such bonds or other evidences of indebtedness 

 wiU— 



"(i) be issued only to investors who meet the reqrirements 

 prescribed by the Secretary, or, if an offering to the public 

 is contemplated, be underwritten upon terms and conditions 

 approved by the Secretary ; 



"(ii) bear interest at a rate found not to be excessive by 

 the Secretary ; and 



"(iii) contain, or be subject to, repayment, maturit}^ and 



other provisions which are satisfactory to the Secretary; 



"(C) the approval of the Secretary of the Treasury shall be 



required with respect to any such guarantee, vmless the Secretary 



of the Treasury waives such approval; and 



"(D) no guarantee shall be made after September 30, 1986. 

 "(2) The full faith and credit of the United States is pledged to 

 the payment, under paragraph (5), of any default on any indebted- 

 ness guaranteed under subsection (d) (2). Any such guarantee made 

 by the Secretary shall be conclusive evidence of the eligibility of the 

 obligation involved for such guarantee, and the validity of any such 

 guarantee so made shall be incontestable in the hands of a holder of 

 the guaranteed obligation, except for fraud or material misrepre- 

 sentation on the part of the holder, or known to the holder at the time 

 acquired. 



(3) The Secretary shall prescribe and collect fees in connection Fees, 

 with guarantees made under subsection (d) (2). These fees may not 

 exceed the amount which the Secretary estimates to be necessary to 

 cover the administrative costs pertaining to such guarantees. 



"(4) The interest paid on any obligation which is guaranteed under 

 subsection (d) (2) and which is received by the purchaser thereof (or 

 the purchaser's successor in interest) , shall be included in gross income 

 for the purpose of chapter 1 of the Internal Revenue Code of 1954. 26 USC 1 et^ 

 The Secretary may pay out of the Fund to the coastal state or the unit 1££: 

 of general purpose local government issuing such obligations not more 

 than such portion of the interest on such obligations as exceeds the 

 amount of interest that would be due at a comparable rate determined 

 for loans made under subsection (d) (1). 



"(5) (A) Payments required to be made as a result of any guaran- 

 tee made under subsection (d)(2) shall be made by the Secretary from 

 sums appropriated to the Fund or from moneys obtained from the Sec- 

 retary of the Treasury pursuant to paragraph (6) . 



"(B) If there is a default by a coastal state or unit of general pur- 

 pose local government in any payment of principal or interest due 

 under a bond or other evidence of indebtedness guaranteed by the 

 Secretary under subsection (d) (2), any holder of such bond or other 

 evidence of indebtedness may demand payment by the Secretary of 

 the unpaid interest on and the unpaid principal of such obligation as 

 they become due. The Secretary, after investigating the facts presented 

 by the holder, shall pay to the holder the amount which is due such 

 holder, unless the Secretary finds that there was no default by such 

 state or unit or that such default has been remedied. 



"(C) If the Secretary makes a payment to a holder under subpara- 

 graph (B) , the Secretary shall — 



"(i) have all of the rights granted to the Secretary or the 

 United States by law or by agreement with the obligor ; and 



"(ii) be subrogated to all of the rights which were granted such 

 holder, by law, assignment, or security agreement between such 

 holder and the obligor. 



90 STAT. 1025 



