12 USC 1715z-11a

§ 1715z–11a

TITLE 12—BANKS AND BANKING

of such expenses and costs as the Secretary
deems reasonable and appropriate. Prior to such
disposition of a project, funds may be expended
by the Secretary for necessary repairs and improvements.
(June 27, 1934, ch. 847, title II, § 246, as added
Pub. L. 93–383, title III, § 315, Aug. 22, 1974, 88
Stat. 684; amended Pub. L. 95–557, title III, § 322,
Oct. 31, 1978, 92 Stat. 2102.)
AMENDMENTS
1978—Pub. L. 95–557 inserted ‘‘or to a nonprofit corporation which operates as a consumer cooperative as
defined by the Secretary’’ after ‘‘dwellings to members’’ and ‘‘or upon application of the mortgagee, insure a mortgage under this section upon such terms
and conditions as the Secretary determines are reasonable and appropriate’’ after ‘‘purchase money mortgage’’ and substituted ‘‘the value of the property at the
time of purchase, which value shall be based upon a
mortgage amount on which the debt service can be met
from the income of property when operated on a nonprofit basis after payment of all operating expenses,
taxes, and required reserves; except that the Secretary
may add to the mortgage amount an amount not greater than the amount of prepaid expenses and costs involved in achieving cooperative ownership, or make
such other provision for payment of such expenses and
costs as the Secretary deems reasonable and appropriate’’ for ‘‘the sum of (1) the appraised value of the
property at the time of purchase, which value shall be
based upon a mortgage amount on which the debt service can be met from the income of the property when
operated on a nonprofit basis and after payment of all
operating expenses, taxes and required reserves, and (2)
the amount of prepaid expenses and costs involved in
achieving cooperative ownership’’.

§ 1715z–11a. Disposition of HUD-owned properties
(a) Flexible authority for multifamily projects
During fiscal year 1997 and fiscal years thereafter, the Secretary may manage and dispose of
multifamily properties owned by the Secretary,
including, for fiscal years 1997, 1998, 1999, 2000,
and thereafter, the provision of grants and loans
from the General Insurance Fund (12 U.S.C.
1735c) for the necessary costs of rehabilitation,
demolition, or construction on the properties
(which shall be eligible whether vacant or occupied), and multifamily mortgages held by the
Secretary on such terms and conditions as the
Secretary may determine, notwithstanding any
other provision of law. A grant provided under
this subsection during fiscal years 2006 through
2010 shall be available only to the extent that
appropriations are made in advance for such
purposes and shall not be derived from the General Insurance Fund.
(b) Transfer of unoccupied and substandard
housing to local governments and community development corporations
(1) Transfer authority
Notwithstanding the authority under subsection (a) of this section and the last sentence of section 1710(g) of this title, the Secretary of Housing and Urban Development
shall transfer ownership of any qualified HUD
property, subject to the requirements of this
section, to a unit of general local government
having jurisdiction for the area in which the
property is located or to a community devel-

Page 684

opment corporation which operates within
such a unit of general local government in accordance with this subsection, but only to the
extent that units of general local government
and community development corporations
consent to transfer and the Secretary determines that such transfer is practicable.
(2) Qualified HUD properties
For purposes of this subsection, the term
‘‘qualified HUD property’’ means any property
for which, as of the date that notification of
the property is first made under paragraph
(3)(B), not less than 6 months have elapsed
since the later of the date that the property
was acquired by the Secretary or the date that
the property was determined to be unoccupied
or substandard, that is owned by the Secretary
and is—
(A) an unoccupied multifamily housing
project;
(B) a substandard multifamily housing
project; or
(C) an unoccupied single family property
that—
(i) has been determined by the Secretary
not to be an eligible asset under section
1710(h) of this title; or
(ii) is an eligible asset under such section 1710(h) of this title, but—
(I) is not subject to a specific sale
agreement under such section; and
(II) has been determined by the Secretary to be inappropriate for continued
inclusion in the program under such section 1710(h) of this title pursuant to
paragraph (10) of such section.
(3) Timing
The Secretary shall establish procedures
that provide for—
(A) time deadlines for transfers under this
subsection;
(B) notification to units of general local
government and community development
corporations of qualified HUD properties in
their jurisdictions;
(C) such units and corporations to express
interest in the transfer under this subsection
of such properties;
(D) a right of first refusal for transfer of
qualified HUD properties to units of general
local government and community development corporations, under which—
(i) the Secretary shall establish a period
during which the Secretary may not transfer such properties except to such units
and corporations;
(ii) the Secretary shall offer qualified
HUD properties that are single family
properties for purchase by units of general
local government at a cost of $1 for each
property, but only to the extent that the
costs to the Federal Government of disposal at such price do not exceed the costs
to the Federal Government of disposing of
property subject to the procedures for single family property established by the Secretary pursuant to the authority under the
last sentence of section 1710(g) of this
title;
(iii) the Secretary may accept an offer to
purchase a property made by a community

Page 685

TITLE 12—BANKS AND BANKING

development corporation only if the offer
provides for purchase on a cost recovery
basis; and
(iv) the Secretary shall accept an offer
to purchase such a property that is made
during such period by such a unit or corporation and that complies with the requirements of this paragraph; and
(E) a written explanation, to any unit of
general local government or community development corporation making an offer to
purchase a qualified HUD property under
this subsection that is not accepted, of the
reason that such offer was not acceptable.
(4) Other disposition
With respect to any qualified HUD property,
if the Secretary does not receive an acceptable
offer to purchase the property pursuant to the
procedure established under paragraph (3), the
Secretary shall dispose of the property to the
unit of general local government in which
property is located or to community development corporations located in such unit of general local government on a negotiated, competitive bid, or other basis, on such terms as
the Secretary deems appropriate.
(5) Satisfaction of indebtedness
Before transferring ownership of any qualified HUD property pursuant to this subsection,
the Secretary shall satisfy any indebtedness
incurred in connection with the property to be
transferred, by canceling the indebtedness.
(6) Determination of status of properties
To ensure compliance with the requirements
of this subsection, the Secretary shall take
the following actions:
(A) Upon enactment
Upon the enactment of this subsection
[December 21, 2000], the Secretary shall
promptly assess each residential property
owned by the Secretary to determine whether such property is a qualified HUD property.
(B) Upon acquisition
Upon acquiring any residential property,
the Secretary shall promptly determine
whether the property is a qualified HUD
property.
(C) Updates
The Secretary shall periodically reassess
the residential properties owned by the Secretary to determine whether any such properties have become qualified HUD properties.
(7) Tenant leases
This subsection shall not affect the terms or
the enforceability of any contract or lease entered into with respect to any residential
property before the date that such property
becomes a qualified HUD property.
(8) Use of property
Property transferred under this subsection
shall be used only for appropriate neighborhood revitalization efforts, including homeownership, rental units, commercial space,

§ 1715z–11a

and parks, consistent with local zoning regulations, local building codes, and subdivision
regulations and restrictions of record.
(9) Inapplicability to properties made available
for homeless
Notwithstanding any other provision of this
subsection, this subsection shall not apply to
any properties that the Secretary determines
are to be made available for use by the homeless pursuant to subpart E of part 291 of title
24, Code of Federal Regulations, during the period that the properties are so available.
(10) Protection of existing contracts
This subsection may not be construed to
alter, affect, or annul any legally binding obligations entered into with respect to a qualified HUD property before the property becomes a qualified HUD property.
(11) Definitions
For purposes of this subsection, the following definitions shall apply:
(A) Community development corporation
The term ‘‘community development corporation’’ means a nonprofit organization
whose primary purpose is to promote community development by providing housing
opportunities for low-income families.
(B) Cost recovery basis
The term ‘‘cost recovery basis’’ means,
with respect to any sale of a residential
property by the Secretary, that the purchase
price paid by the purchaser is equal to or
greater than the sum of: (i) the appraised
value of the property, as determined in accordance with such requirements as the Secretary shall establish; and (ii) the costs incurred by the Secretary in connection with
such property during the period beginning
on the date on which the Secretary acquires
title to the property and ending on the date
on which the sale is consummated.
(C) Multifamily housing project
The term ‘‘multifamily housing project’’
has the meaning given the term in section
1701z–11 of this title.
(D) Residential property
The term ‘‘residential property’’ means a
property that is a multifamily housing
project or a single family property.
(E) Secretary
The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.
(F) Severe physical problems
The term ‘‘severe physical problems’’
means, with respect to a dwelling unit, that
the unit—
(i) lacks hot or cold piped water, a flush
toilet, or both a bathtub and a shower in
the unit, for the exclusive use of that unit;
(ii) on not less than three separate occasions during the preceding winter months,
was uncomfortably cold for a period of
more than 6 consecutive hours due to a
malfunction of the heating system for the
unit;

§ 1715z–12

TITLE 12—BANKS AND BANKING

(iii) has no functioning electrical service, exposed wiring, any room in which
there is not a functioning electrical outlet,
or has experienced three or more blown
fuses or tripped circuit breakers during
the preceding 90-day period;
(iv) is accessible through a public hallway in which there are no working light
fixtures, loose or missing steps or railings,
and no elevator; or
(v) has severe maintenance problems, including water leaks involving the roof,
windows, doors, basement, or pipes or
plumbing fixtures, holes or open cracks in
walls or ceilings, severe paint peeling or
broken plaster, and signs of rodent infestation.
(G) Single family property
The term ‘‘single family property’’ means
a 1- to 4-family residence.
(H) Substandard
The term ‘‘substandard’’ means, with respect to a multifamily housing project, that
25 percent or more of the dwelling units in
the project have severe physical problems.
(I) Unit of general local government
The term ‘‘unit of general local government’’ has the meaning given such term in
section 5302(a) of title 42.
(J) Unoccupied
The term ‘‘unoccupied’’ means, with respect to a residential property, that the unit
of general local government having jurisdiction over the area in which the project is located has certified in writing that the property is not inhabited.
(12) Regulations
(A) Interim
Not later than 30 days after December 21,
2000, the Secretary shall issue such interim
regulations as are necessary to carry out
this subsection.
(B) Final
Not later than 60 days after December 21,
2000, the Secretary shall issue such final regulations as are necessary to carry out this
subsection.
(Pub. L. 104–204, title II, § 204, Sept. 26, 1996, 110
Stat. 2894; Pub. L. 105–65, title II, § 213, Oct. 27,
1997, 111 Stat. 1366; Pub. L. 105–276, title II, § 206,
Oct. 21, 1998, 112 Stat. 2484; Pub. L. 106–74, title
V, § 537, Oct. 20, 1999, 113 Stat. 1122; Pub. L.
106–377, § 1(a)(1) [title II, § 204], Oct. 27, 2000, 114
Stat. 1441, 1441A–24; Pub. L. 106–554, § 1(a)(7)
[title I, § 141], Dec. 21, 2000, 114 Stat. 2763,
2763A–614; Pub. L. 109–171, title II, § 2003(a), Feb.
8, 2006, 120 Stat. 9.)
CODIFICATION
Section was enacted as part of the Departments of
Veterans Affairs and Housing and Urban Development,
and Independent Agencies Appropriations Act, 1997, and
not as part of the National Housing Act which comprises this chapter.
AMENDMENTS
2006—Subsec. (a). Pub. L. 109–171 inserted at end ‘‘A
grant provided under this subsection during fiscal years

Page 686

2006 through 2010 shall be available only to the extent
that appropriations are made in advance for such purposes and shall not be derived from the General Insurance Fund.’’
2000—Pub. L. 106–554 substituted ‘‘Disposition of
HUD-owned properties’’ for ‘‘Flexible authority’’ in section catchline, designated existing provisions as subsec. (a), inserted heading, and added subsec. (b).
Pub. L. 106–377 substituted ‘‘2000, and thereafter’’ for
‘‘and 2000’’.
1999—Pub. L. 106–74 substituted ‘‘1999, and 2000’’ for
‘‘and 1999’’ and ‘‘, demolition, or construction on the
properties (which shall be eligible whether vacant or
occupied)’’ for ‘‘or demolition’’.
1998—Pub. L. 105–276 substituted ‘‘fiscal years 1997,
1998, and 1999’’ for ‘‘fiscal years 1997 and 1998’’.
1997—Pub. L. 105–65 inserted ‘‘, including, for fiscal
years 1997 and 1998, the provision of grants and loans
from the General Insurance Fund (12 U.S.C. 1735c) for
the necessary costs of rehabilitation or demolition,’’
after ‘‘owned by the Secretary’’.
EFFECTIVE DATE OF 2006 AMENDMENT
Amendment by Pub. L. 109–171 not applicable to any
transaction that formally commences within one year
prior to Feb. 8, 2006, see section 2003(c) of Pub. L.
109–171, set out as a note under section 1701z–11 of this
title.

§ 1715z–12. Single-family mortgage insurance on
Hawaiian home lands
(a) One- to four-family residence; eligibility
The Secretary, subject to such conditions as
the Secretary may prescribe, may insure under
any provision of this subchapter that authorizes
such insurance, a mortgage covering a property
upon which there is located a one- to four-family residence, without regard to any limitation
in this chapter relating to marketability of title
or any other limitation in this chapter that the
Secretary determines is contrary to promoting
the availability of such insurance on Hawaiian
home lands, if—
(1) the mortgage is executed by a native Hawaiian on property located within Hawaiian
home lands covered under a homestead lease
issued under section 207(a) of the Hawaiian
Homes Commission Act, 1920, or under the corresponding provision of the Constitution of
the State of Hawaii adopted under section 4 of
the Act entitled ‘‘An Act to provide for the admission of the State of Hawaii into the
Union’’, approved March 18, 1959 (73 Stat. 5);
(2) the property will be used as the principal
residence of the mortgagor; and
(3) the Department of Hawaiian Home Lands
of the State of Hawaii (A) is a comortgagor;
(B) guarantees to reimburse the Secretary for
any mortgage insurance claim paid in connection with a property on Hawaiian home lands;
or (C) offers other security acceptable to the
Secretary.
(b) Construction advances
Notwithstanding any other provision of this
chapter, the Secretary may, with respect to
mortgages eligible for insurance under subsection (a) of this section, insure and make commitments to insure advances made during construction if the Secretary determines that the
proposed construction is otherwise acceptable
and that no feasible financing alternative is
available.