Sunday, June 14, 2009

Department of housing and Urban Development (HUD)obligations

Department of housing and Urban Development (HUD), also issues securities which, unlike securities issued by other federal instrumentalities, are originally obligations of local governmental authorities, but are indirectly guaranteed by the credit of federal Government. prior to 1965, such housing offering were handled by the public Housing Administration (PHA). such obligation take the from either of short-term notes with original maturities 1 year or less, or of longer-term bonds with maturities running as high as 40 year. These HUD obligations are essentially the debt of various local public housing authorities created by statutes in the various states. Nevertheless, HUD, under a contractual financial arrangement, agrees to provide sufficient money for the local authorities to pay interest and principle when due, if this proves to be necessary.
Department of housing and Development, in turn,can secure funds, if needed,from the treasure of the united states. these HUD obligations could also be mentioned under municipal securities, because interest income from them is exempt from federal income tax.On march 21,1973,HUD sold $319.5 million of such tax-exempt bonds, which was the largest amount sold in 22 years.(such bonds were first sold in 1951). The 1973 bond sale involved 39 separate bonds by local housing authorities in 21 states and the virgin Island of other federal instrumentalities , are approved for bank investment. the comptroller of the Currency has rules that national banks may invest in such obligations of federal instrumentalities and government-sponsored credit agencies without regard to statutory limitations applicable to investment securities.

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