INVESTMENT OF STATE FUNDS IN MORTGAGES INSURED BY THE FEDERAL HOUSING ADMINISTRATION

INVESTMENT OF STATE FUNDS IN MORTGAGES INSURED BY THE FEDERAL HOUSING ADMINISTRATION.

The State Finance Committee may invest state funds in mortgages insured by the Federal Housing Administration, pursuant to Title VIII of the Federal Housing Act.

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                                                                February 28, 1952

State Finance Committee
Legislative Building
Olympia, Washington                                                                                                 Cite as:  AGO 51-53 No. 244

Attention:  Mr. Ernest Minor, Secretary

Gentlemen:

            Receipt is acknowledged of your letter of February 1, 1952, in which you request our opinion as to whether you may invest state funds in mortgages issued under the provisions of Title VIII of the National Housing Act (U.S. Code [[U.S.C.]], Title XII, § 1748, et seq.).

            It is our conclusion that you may invest state funds in mortgages issued under the provisions of Title VIII of the National Housing Act.

                                                                     ANALYSIS

            Title VIII of the National Housing Act relates to military housing insurance.  Under it mortgages issued for military housing are insured by the government.  Section 1, chapter 37, Laws of Ex. Sess. 1933, as last amended by section 1, chapter 32, Laws of 1939 (Rem. Rev. Stat. Supp. 5545-1) provides:

            "Notwithstanding the provisions of any other statute of the State of Washington to the contrary, it shall be lawful for the State of Washington  [[Orig. Op. Page 2]] and any of its departments, institutions and agencies, municipalities, districts, and any other political subdivision of the state, or any political or public corporation of the state, or for any insurance company, savings and loan association, or for any bank, trust company or other financial institution, operating under the laws of the State of Washington, or for any executor, administrator, guardian or conservator, trustee or other fiduciary to invest its funds or the moneys in its custody or possession, eligible for investment, in notes or bonds secured by mortgage which the Federal Housing Administrator has insured or has made a commitment to insure in obligations of national mortgage associations, in debentures issued by the Federal Housing Administrator, and in the bonds of the Home Owners Loan Corporation, a corporation organized under and by virtue of the authority granted in H. R. 5240, designated as the Home Owner's Loan Act of 1933, passed by the Congress of the United States and approved June 13, 1933, and in bonds of any other corporation which is or hereafter may be created by the United States, as a governmental agency or instrumentality."  (Emphasis supplied)

            The language above underlined is confusing.  If there were a comma after the words "made a commitment to insure" and before the words "in obligations of national mortgage associations," the language would be clear.  Without the comma it might appear that the requirement is that the administrator insure the mortgages in obligations of national mortgage associations.  However, such a requirement could not be met.  National mortgage associations are set up under subchapter III of the National Housing Act (12 U.S. Code [[U.S.C.]]§ 1716).  Such associations have no power to insure mortgages but their function is to purchase, service and sell mortgages which are insured under the other subchapters of the National Housing Act.

            Reference to obligations of national mortgage associations was inserted in the original act when it was amended by chapter 32, Laws of 1939.  It seems apparent that the legislature inadvertently omitted the comma.  The National Mortgage Association is authorized by subsection (a) (2) of section 1716,  [[Orig. Op. Page 3]] Title 12 U.S.C. to issue notes and other obligations.  Thus, if the pertinent language of section 5545-1, Remington's Revised Statutes, is read as though a comma appeared before the words "in obligations of national mortgage associations," that item will be one of a series of types of investments authorized for state funds, and a sensible construction can be given to the sentence.  All statutes should be construed in such manner as to make them purposeful and effective rather than futile and meaningless.  Denning v. Quist, 172 Wash. 83, 19 P. (2d) 656.  In the case ofState ex rel. Puget Sound and W. H. Railway Company v. Northern Pacific Railway Company, 94 Wash. 10, this court said:

            "* * * 'The real meaning of a statute is to be ascertained and declared, even though it seems to conflict with the words of the statute.'  * * *"

            In the present case it seems obvious what the legislature intended.  It is, therefore, our opinion that the legislature authorized the investment of state funds "in notes or bonds secured by a mortgage which the Federal Housing Authority has insured or has made a commitment to insure" and the legislature did not attach knowingly any impossible qualification that such mortgages be insured in obligations of a national mortgage association.

            Consequently, it is our opinion that mortgages insured under Title VIII of the Federal Housing Act are eligible for investment of state funds.

Very truly yours,

SMITH TROY
Attorney General

LYLE L. IVERSEN
Assistant Attorney General