106 STAT. 3740 PUBLIC LAW 102-550—OCT. 28, 1992

(D) Any other lender that IB supervised, approved,
regulated, or insured by any agency of the Federal
Government.
(5) TERMS.—The loan shall—

(A) be made for a term not exceeding 30 years;

(B) bear interest (exclusive of the guarantee fee under
section 404 and service charges, if any) at a rate agreed
upon by the borrower and the lender and determined by
the Secretary to be reasonable, which may not exceed the
rate generally charged in the area (as determined by the
Secretary) for home mortgage loans not guaranteed or
insured by any agency or instrumentality of the Federal
Government;

(C) involve a principal obligation not exceeding—

(i) an amount equal to the sum of (I) 97 percent
of $25,000 of the appraised value of the property, as
of the date the loan is accepted for guarantee, and
(II) 95 percent of such value in excess of $25,000;
and

(ii) the amount approved by the Secretary under
this section; and

(D) involve a payment on account of the property (i)
in cash or its equivalent, or (ii) through the value of any
improvements to the property made through the skilled
or unskilled labor of the borrower, as the Secretary shall
provide.

(c) CERTIFICATE OF GUARANTEE.—

(1) APPROVAL PROCESS.—Before the Secretary approves any
loan for guarantee under this section, the lender shall submit
the application for the loan to the Secretary for examination.
If the Secretary approves the loan for guarantee, the Secretary
shall issue a certificate under this paragraph as evidence of
the guarantee.

(2) STANDARD FOR APPROVAL.—The Secretary may approve
a loan for guarantee under this section and issue a certificate
under this paragraph only if the Secretary determines there
is a reasonable prospect of repayment of the loan.

(3) EFFECT.—A certificate of guarantee issued under this
paragraph by the Secretary shall be conclusive evidence of
the eligibility of the loan for guarantee under the provisions
of this section and the amount of such guarantee. Such evidence
shall be incontestable in the hands of the bearer and the
full faith and credit of the United States is pledged to the
payment of all amounts agreed to be paid by the Secretary
as security for such obligations.

(4) FRAUD AND MISREPRESENTATION.—This subsection may
not be construed to preclude the Secretary from establishing
defenses against the original lender based on fraud or material
misrepresentation or to bar the Secretary from establishing
by regulations in effect on the date of issuance or disbursement,
whichever is earlier, partial defenses to the amount payable
on the guarantee.

(d) GUARANTEE FEE.—The Secretary shall fix and collect a
guarantee fee for the guarantee of loans under this section, which
may not exceed the amount equal to 1 percent of the principal
obligation of the loan. The fee shall be paid by the lender at
time of issuance of the guarantee and shall be adequate, in the