574 



tary of Commerce may notify the obligee or his 

 agent of such default and the obligee or his agent 

 shall have the right to demand at or before the 

 expiration of such period as may be specified in the 

 guarantee or related agreements, but not later than 

 sixty days from the date of such notice, payment by 

 the Secretary of Commerce of the unpaid principal 

 amount of said obligation and of the unpaid interest 

 thereon. Within such period as may be specified in 

 the guarantee or related agreements, but not later 

 than thirty days from the date of such demand, the 

 Secretary of Commerce shall promptly pay to the 

 obligee or his agent the unpaid principal amount of 

 said obligation and unpaid interest thereon to the 

 date of payment. 



(c) Secretary to complete, sell or operate property. 



In the event of any payment by the Secretary of 

 Commerce under subsection (a) or (b) of this sec- 

 tion, the Secretary of Commerce shall have all rights 

 in any security held by him relating to his guarantee 

 of such obligations as are conferred upon him under 

 any security agreement with the obligor. Notwith- 

 standing any other provision of law relating to the 

 acquisition, handling, or disposal of property by the 

 United States, the Secretary of Commerce shall have 

 the right, in his discretion, to complete, recondition, 

 reconstruct, renovate, repair, maintain, operate, 

 charter, or sell any property acquired by him pur- 

 suant to a security agreement with the obligor or 

 may place a vessel in the national defense reserve. 

 The terms of the sale shall be as approved by the 

 Secretary of Commerce. 



(d) Cash payments; issuance of notes or obligations. 

 Any amount required to be paid by the Secretary 



of Commerce pursuant to subsection (a) or (b) of 

 this section, shall be paid in cash, n at any time the 

 moneys in the Fund authorized by section 1272 of 

 this title are not sufRcient to pay any amount the 

 Secretary of Commerce is required to pay by sub- 

 section (a) or (b) of this section, the Secretary of 

 Commerce is authorized to issue to the Secretary 

 of the Treasury notes or other obligations in such 

 forms and denominations, bearing such maturities, 

 and subject to such terms and conditions as may be 

 prescribed by the Secretary of Commerce, with the 

 approval of the Secretary of the Treasury. Such 

 notes or other obligations shall bear interest at a 

 rate determined by the Secretary of the Treasury, 

 taking into consideration the current average mar- 

 ket yield on outstanding marketable obligations of 

 the United States of comparable maturities during 

 the month preceding the issuance of such notes or 

 other obligations. The Secretary of the Treasury is 

 authorized and directed to purchase any notes and 

 other obligations to be issued hereunder and for such 

 purpose he is authorized to use as a pwblic debt 

 transaction the proceeds from the sale of any securi- 

 ties Issued under the Second Liberty Bond Act, as 

 amended, and the purposes for which securities may 

 be Issued under such Act, as amended, are extended 

 to Include any purchases of such notes and obliga- 

 tions. The Secretary of the Treasury may at any 

 time sell any of the notes or other obligations ac- 

 quired by hUa under this section. All redemptions, 

 purchases, and sales by the Secretary of the Trea- 



sury of such notes or other obligations shall be 

 treated as public debt transactions of the United 

 States. Funds borrowed under this section shall be 

 deposited in the Fund and redemptions of such notes 

 and obligations shall be made by the Secretary of 

 Commerce from such Fund. 



(e) Actions against obligor. 



In the event of a default imder any guaranteed 

 obligation or any related agreement, the Secretary 

 of Commerce shall take such action against the obli- 

 gor or any other parties liable thereunder that, in 

 his discretion, may be required to protect the inter- 

 ests of the United States. Any suit may be brought 

 in the name of the United States or in the name of 

 the obligee and the obligee shall make available to 

 the United States all records and evidence necessary 

 to prosecute any such suit. The Secretary of Com- 

 merce shall have the right, in his discretion, to ac- 

 cept a conveyance of title to and possession of prop- 

 erty from the obligor or other parties liable to the 

 Secretary of Commerce, and may purchase the prop- 

 erty for an amount not greater than the unpaid 

 principal amount of such obligation and interest 

 thereon. In the event the Secretary of Commerce 

 shall receive through the sale of property an amount 

 of cash in excess of any payment made to an obligee 

 under subsection (a) or (b) of this section and the 

 expenses of collection of such amounts, he shall pay 

 such excess to the obligor. (As amended Oct. 19, 

 1972, Pub. L. 92-507, i 3, 86 Stat. 914.) 

 Amendments 



1972 — Subsec. (a) . Pub. L. 92-507 substituted provisions 

 relating to the rights of obligee to demand and receive 

 payment from the Secretary under certain circumstances, 

 for provisions relattog to the rights of mortgagee and 

 lender to demand and receive payment under certain cir- 

 cumstances and the authority of the Secretary to termi- 

 nate the Insurance contract by notification to the mort- 

 gagee or the lender as the case may be. 



Subsec. (b). Pub. L. 92-507 added provisions relating 

 to notification of default to the obligee, and payment of 

 unpaid principal and interest amount, by the Secretary 

 within certain time. Former subsec. (b) redesignated (d). 



Subsec. (c). Pub. L. 92-507 Incorporated substantially 

 the provisions of subsec. (d) Into subsec. (c). Former 

 subsec. (c) Is now covered by subsec. (e). 



Subsec. (d). Pub. L. 92-607 Incorporated provisions of 

 former subsec. (b) Into subsec. (d). Former subsec. (d) 

 Is now covered by subsec. (c) . 



Subsec. (e) . Pub. L. 92-507 Incorporated provisions of 

 former subsec. (c) relating to actions by the Secretary In 

 the event of defaults by mortgagors and borrowers, Into 

 subsec. (e), and substituted therefor provisions relating 

 to actions by the Secretary In the event of defaults by 

 obligors of guaranteed obligations and related agreements. 

 Provisions of former subsec. (e) relating to termination 

 and cancellation of Insurance contracts and the Incon- 

 testability of such contracts except for fraud, duress or 

 mutual mistake of fact are omitted. 



1970 — Subsec. (d). Pub. L. 91-469 substituted provision 

 for Inclusion of Interest In the installments on the pur- 

 chase price remaining unpaid at a rate not less than a 

 rate determined by the Secretary of the Treasury, taking 

 Into consideration the current average market yield on 

 outstanding maketable obligations of the United States 

 with remaining periods to maturity comparable to the 

 average maturities of such Installments, adjusted to the 

 nearest one-eighth of 1 per centum plus an administra- 

 tive cost allowance, for prior rate of 3'/2 per centum per 

 annum on Installments of purchase price remaining 

 unpaid. 



1958 — Subsec. (b) . Pub. L. 85-520 authorized the Sec- 

 retary of Commerce to Issue notes or obligations when- 



