the amount the mortgagee may have paid for (A) taxes, special assess- ments, and water rates, which are liens prior to the mortgage; (B) insurance on the property; and (C) reasonable expenses for the com- pletion and preservation of the property and any mortgage insurance premiums paid after default; less the sum of (i) an amount equivalent to 1 per centum of the unpaid amount of such principal obligation on the date of default; (ii) any amount received on account of the mort- gage after such date; and (iii) any net income received by the mort- Foreclosure; insur- gagee from the property after such date: Provided, That the mort- ance benefits. gagee in the event of a default under the mortgage may, at its option and in accordance with regulations of, and in a period to be determined by the Commissioner, proceed to foreclose on and obtain possession of or otherwise acquire such property from the mortgagor after default, and receive the benefits of the insurance as hereinafter pro- vided, upon (1) the prompt conveyance to the Commissioner of title to the property which meets the requirements of the rules and regula- tions of the Commissioner in force at the time the mortgage was insured, and which is evidenced in the manner prescribed by such rules and regulations; and (2) the assignment to him of all claims of the mortgagee against the mortgagor or others, arising out of the mortgage transaction or foreclosure proceedings, except such claims that may have been released with the consent of the Commissioner. Upon such conveyance and assignment, the obligation of the mortgagee to pay the premium charges for insurance shall cease and the mort- gagee shall be entitled to receive the benefits of the insurance as pro- vided in this subsection, except that in such event the 1 per centum Acquisitionofmort- deduction, set out in (i) hereof, shall not apply. If, during the time v.gs. the mortgage is insured and before the mortgagee has received the benefits of the insurance, the United States acquires, or commences eminent domain proceedings to acquire, all or a substantial part (as defined by the Commissioner) of the mortgaged property for the use of the National Military Establishment, the mortgagee may, at its election, within such time and in accordance with such regulations as the Commissioner may prescribe, receive the benefits of the insur- ance as provided in this subsection, notwithstanding the fact that the mortgage may not be in default. Debentures. "(e) Debentures issued under this title shall be in such form and denominations in multiples of $50, shall be subject to such terms and conditions, and shall include such provisions for redemption, if any, as may be prescribed by the Commissioner with the approval of the Secretary of the Treasury, and may be in coupon or registered form. Any difference between the value of the mortgage determined as herein provided and the aggregate face value of the debentures issued, not to exceed $50, shall be adjusted by the payment of cash by the Commissioner to the mortgagee from the Military Housing Insurance Fund. Execution or deben- "(f) Debentures issued under this title shall be executed in the name trs. of the Military Housing Insurance Fund as obligor, shall be signed by the Commissioner, by either his written or engraved signature, and shall be negotiable. All such debentures shall be dated as of the date of default as determined in accordance with subsection (d) of this section, and shall bear interest from such date at a rate deter- mined by the Commissioner with the approval of the Secretary of the Treasury, at the time the mortgage was accepted for insurance, but not to exceed 3 per centum per annum, payable semiannually on the Maturity. 1st day of January and the 1st day of July of each year, and shall Ta exemption. mature ten years after the date thereof. Such debentures shall be exempt, both as to principal and interest, from all taxation (except surtaxes, estate, inheritance, and gift taxes) now or hereafter imposed 574 PUBLIC LAWS-CH. 403 -AUG. 8, 1949 [63 STAT.