First Mortgages or Interests Therein. Secured Interests in Real Property

(a)Entire first mortgages on improved unencumbered real property located in the United States, any state or territory thereof, or the District of Columbia, provided that the amount loaned does not exceed seventy-five percent (75%) of the fair market value of such property, the worth to be substantiated by a qualified real estate appraiser acceptable to the Board.

(b)Bonds, notes or other evidences of indebtedness secured by first mortgages on real property that are:

(1)Guaranteed by the Veterans’ Administration under the Servicemen’s Re-adjustment Act of 1944 (as from time to time amended), or otherwise guaranteed by the United States of America, or by any agency or instrumentality of the United States of America which affords essentially the same protection as that provided by the Serviceman’s Re-adjustment Act of 1944; or CH. 8 RETIREMENT OF PUBLIC EMPLOYEES

(2)Insured under the National Housing Act or under the Farmer’s Home Administration Act of 1946 (as from time to time amended), provided that the amount loaned does not exceed one hundred percent (100%) of the fair market value of the property, the worth to be substantiated by a qualified real estate appraiser acceptable to the Board.

(c)Real property, first mortgages on real property, or any participation or interest therein, which may also include equipment essential to the use of said real property, provided that:

(1)The repayment of principal and interest on such mort gages or the rental income from such real property or interest therein is guaranteed by, or secured by direct or assigned obligations of, any institution or entity whose bonds or other evidences of indebtedness are authorized investments under §§ 8143 through 8160, inclusive; and

(2)Such property is located in the United States, any state or territory thereof, or the District of Columbia; and

(3)The amount loaned or paid does not exceed one hundred percent (100%) of the fair market value of property or participation or interest therein, the worth to be substantiated by a qualified real estate appraiser acceptable to the Board.

(d)Any shares or participating interests in a corporation or trust formed to acquire investments of the types authorized in Subsections (a),

(b)and

(c)of this Section.

(e)“Improved real property,” as used in this Section, shall mean real property on which is situated permanent buildings suitable for residence, industry or commerce. The term “mortgage” shall be construed to include a deed of trust for security. The term “interest in real property” shall be construed to include a leasehold in real property.

(f)Real property for the purposes of this Section shall not be deemed to be encumbered within the meaning of this Section by reason of the existence of instruments reserving rights-of-way, sewer rights and rights in walls nor by reason of building restrictions or other restrictive covenants, nor by reason of the fact that it is subject to lease under which rents or profits are reserved to the owner, if the security for such investment is a full and unrestricted first lien upon such real property and there is no condition nor right of re-entry or forfeiture under which such investments can be cut off, subordinated or otherwise disturbed.

(g)No investment shall be made, either directly or indirectly, in mortgages junior to first mortgages.

(h)No mortgage loan upon a leasehold shall be made or acquired pursuant to this Section unless the terms thereof provide for amortization payments to be made by the borrower on the principal thereof at least once in each year in amounts sufficient to completely amortize the loan within a period of four-fifths (4/5ths) of the term of the leasehold, inclusive of the term which may be provided by enforceable option of renewal, which is unexpired at the time the loan is made, but in no event exceeding thirty

(30)years.

(i)Servicing agreements may be arranged with qualified mortgage servicing institutions for the handling of mortgage service details. The servicer may be reimbursed the customary fee charged by the trade. The servicer shall furnish the Board each month, with respect to each mortgage serviced, postings of all cash transactions affecting each mortgage and, at the end of each calendar year, a completely posted ledger sheet for each separate mortgage serviced, giving all cash transactions affecting such mortgage.

(j)The aggregate of all investments made under this Section shall not exceed forty percent (40%) of the Fund at cost.

(k)In making mortgage investments under this section priority shall be given to mortgages on residential property located in Guam. The aggregate of such mortgage investments shall not exceed ten percent (10%) of the Fund assets. CH. 8 RETIREMENT OF PUBLIC EMPLOYEES