Chapter 13 – National Housing

TITLE 12—BANKS AND BANKING
jurisdiction of each such agency, shall by appropriate rule, regulation, order, or otherwise regulate investment in State housing corporations.
(2) A State housing corporation in which financial institutions invest under the authority
of this section shall make available to the appropriate Federal banking agency referred to in
paragraph (1) such information as may be necessary to insure that investments are properly
made in accordance with this section.
(b) For the purposes of this section and any
Act amended by this section—
(1) The term ‘‘insured institution’’ has the
same meaning as in section 401(a) of the National Housing Act [12 U.S.C. 1724(a)].1
(2) The terms ‘‘State member insured
banks’’ and ‘‘State nonmember insured banks’’
have the same meaning as when used in the
Federal Deposit Insurance Act [12 U.S.C. 1811
et seq.].
(3) The term ‘‘State housing corporation’’
means a corporation established by a State for
the limited purpose of providing housing and
incidental services, particularly for families of
low or moderate income.
(4) The term ‘‘State’’ means any State, the
District of Columbia, Guam, the Commonwealth of Puerto Rico, and the Virgin Islands.
(Pub. L. 93–100, § 5(d), (e), Aug. 16, 1973, 87 Stat.
344; Pub. L. 111–203, title III, § 375, July 21, 2010,
124 Stat. 1566.)
REFERENCES IN TEXT
This section, referred to in subsec. (a)(2), refers to
section 5 of Pub. L. 93–100, which enacted this section
and section 1469 of this title and amended sections 24
and 1464 of this title.
This section and any Act amended by this section, referred to in subsec. (b), are this section and sections 24
par. Seventh, 1464(c), and 1469 of this title.
Section 401(a) of the National Housing Act, referred
to in subsec. (b)(1), which was classified to section 1724
of this title, was repealed by Pub. L. 101–73, title IV,
§ 407, Aug. 9, 1989, 103 Stat. 363.
The Federal Deposit Insurance Act, referred to in
subsec. (b)(2), is act Sept. 21, 1950, ch. 967, § 2, 64 Stat.
873, which is classified generally to chapter 16 (§ 1811 et
seq.) of this title. For complete classification of this
Act to the Code, see Short Title note set out under section 1811 of this title and Tables.
CODIFICATION
Section was not enacted as part of the Home Owners’
Loan Act of 1933, which comprises this chapter.
Subsecs. (d) and (e) of section 5 of Pub. L. 93–100 have
been designated subsecs. (a) and (b) for purposes of
codification.
AMENDMENTS
2010—Subsec. (a)(1). Pub. L. 111–203, § 375(1), substituted ‘‘appropriate Federal banking agency, with respect to the institutions subject to the jurisdiction of
each such agency,’’ for ‘‘Federal Savings and Loan Insurance Corporation with respect to insured institutions, the Board of Governors of the Federal Reserve
System with respect to State member insured banks,
and the Federal Deposit Insurance Corporation with respect to State nonmember insured banks’’.
Subsec. (a)(2). Pub. L. 111–203, § 375(2), substituted
‘‘banking’’ for ‘‘supervisory’’.
EFFECTIVE DATE OF 2010 AMENDMENT
Amendment by Pub. L. 111–203 effective on the transfer date, see section 351 of Pub. L. 111–203, set out as a
note under section 906 of Title 2, The Congress.
1 See

References in Text note below.

Page 406
EFFECTIVE DATE

Section effective Aug. 16, 1973, see section 8 of Pub. L.
93–100, set out as a note under section 1469 of this title.

CHAPTER 13—NATIONAL HOUSING
Sec.

1701.
1701a.
1701b.
1701c.

Short title.
Short title of amendment of 1938.
Short title of amendment of 1942.
Secretary of Housing and Urban Development.
1701c–1 to 1701d–3. Omitted or Repealed.
1701d–4.
Exchange and assembly of housing and
urban planning and development data;
payment of expenses; acceptance of
funds, services, facilities, materials,
and other donations; approval of Secretary of State for international programs and activities.
1701e to 1701g–4. Repealed or Omitted.
1701g–5.
Revolving fund in connection with liquidating programs.
1701g–5a.
Transfer of New Communities Fund assets and liabilities.
1701g–5b.
Liquidation of New Communities Program; cancellation of debt.
1701g–5c.
Transfer of rehabilitation loan fund assets and liabilities.
1701h.
Advisory committees; payment of transportation and other expenses.
1701h–1.
Housing for elderly persons advisory
committee.
1701i, 1701i–1, 1701j. Omitted or Repealed.
1701j–1.
Builder’s certification as to construction.
1701j–2.
National Institute of Building Sciences.
1701j–3.
Preemption of due-on-sale prohibitions.
1701k.
Right to redeem property on which
United States has lien.
1701l.
Limitation on interest rates of insured
mortgages; terms of sales.
1701l–1.
Mortgage proceeds fraudulently misappropriated by mortgagor; recovery
of deficiency after foreclosure.
1701m.
Credit and cancellation of notes transferred from Reconstruction Finance
Corporation; net loss computation.
1701n.
Reduction of vulnerability of congested
urban areas to enemy attack.
1701o.
Annual report of Secretary.
1701p.
Contents of report to President and Congress.
1701p–1.
Periodic report on residential mortgage
delinquencies and foreclosures.
1701p–2.
Default and foreclosure database.
1701q.
Supportive housing for the elderly.
1701q–1.
Civil money penalties against mortgagors under section 1701q of this title.
1701q–2.
Grants for conversion of elderly housing
to assisted living facilities and other
purposes.
1701q–3.
Funds for housing for elderly and persons with disabilities available for cost
of maintenance and disposal of such
properties.
1701r.
Congressional findings respecting housing for senior citizens.
1701r–1.
Pet ownership in assisted rental housing
for the elderly or handicapped.
1701s.
Rent supplement payments for qualified
lower income families.
1701t.
Congressional affirmation of national
goal of decent homes and suitable living environment for American families.
1701u.
Economic opportunities for low- and
very low-income persons.
1701v.
Congressional findings and declaration
for improved architectural design in
Government housing programs.

Page 407

TITLE 12—BANKS AND BANKING

Sec.

Sec.

1701w.

1709–2.

Budget, debt management, and related
counseling services for mortgagors; authorization of appropriations.
1701x.
Assistance with respect to housing for
low- and moderate-income families.
1701x–1.
Home inspection counseling.
1701x–2.
Legal assistance for foreclosure-related
issues.
1701y.
National Homeownership Foundation.
1701z.
New technologies in the development of
housing for lower income families.
1701z–1.
Research and demonstrations; authorization of appropriations; continuing
availability of funds.
1701z–2.
Advanced technologies, methods, and
materials for housing construction, rehabilitation, and maintenance.
1701z–3.
Experimental housing allowance payment program.
1701z–4.
Abandoned properties demonstration
project.
1701z–5.
Demonstrations of heating or cooling
residential housing utilizing solar energy.
1701z–6.
Special housing need research and demonstration authority.
1701z–7.
Studies to determine extent of need for
counseling to mortgagors; report to
Congress.
1701z–8.
Energy conservation and renewable-resource demonstration.
1701z–9.
Expansion of home ownership opportunities in urban areas.
1701z–10.
Model rehabilitation guidelines in inspection and approval of rehabilitated
properties; report to Congress.
1701z–10a.
Biennial survey of economic and housing
market conditions.
1701z–11.
Management and disposition of multifamily housing projects.
1701z–12.
Housing access.
1701z–13.
Solar energy for single-family and multifamily housing units.
1701z–14.
Lower cost technology demonstration
program.
1701z–15.
Approval of individual residential water
purification or treatment units.
1701z–16.
Energy efficient mortgages pilot program.
1701z–17.
Increasing access and understanding of
energy efficient mortgages.
SUBCHAPTER I—HOUSING RENOVATION AND
MODERNIZATION
1702.
1702a.
1703.
1704.
1705.
1706, 1706a.
1706b.

Administrative provisions.
Repealed.
Insurance of financial institutions.
Repealed.
Allocation of funds.
Repealed.
Taxation of real property held by Secretary.
1706c.
Insurance of mortgages.
1706d.
Applicability.
1706e.
Repealed.
1706f.
Prohibition against kickbacks and unearned fees.
SUBCHAPTER II—MORTGAGE INSURANCE

1707.
1708.
1709.
1709–1.
1709–1a.

Definitions.
Federal Housing Administration operations.
Insurance of mortgages.
Repealed.
State constitutional and legal limits
upon interest chargeable on loans,
mortgages, or other interim financing
arrangements; applicability; covered
arrangements.

Equity skimming; penalty; persons liable; one dwelling exemption.
1709a.
Determination of loan-to-value ratios.
1709b.
Repealed.
1710.
Payment of insurance.
1711.
General Surplus and Participating Reserve Accounts.
1712.
Investment of funds.
1712a.
Indexing of FHA multifamily housing
loan limits.
1713.
Rental housing insurance.
1714.
Taxation.
1715.
Statistical and economic surveys.
1715a.
Repealed.
1715b.
Rules and regulations.
1715c.
Labor standards.
1715d.
Insurance of mortgages on property in
Alaska, Guam, Hawaii, and Virgin Islands.
1715e.
Cooperative housing insurance.
1715f.
Process of applications and issuance of
commitments.
1715g.
Insurance of mortgage where mortgagor
is not occupant of property.
1715h to 1715j. Repealed.
1715k.
Rehabilitation and neighborhood conservation housing insurance.
1715l.
Housing for moderate income and displaced families.
1715m.
Repealed.
1715n.
Miscellaneous mortgage insurance.
1715o.
Interest rate on debentures; method of
establishment.
1715p.
Insurance of advances under open-end
mortgages; payment of charges; eligibility and conditions.
1715q.
Delivery of statement of appraisal or estimates to home buyers.
1715r.
Requirement of builder’s cost certification; definitions.
1715s.
Treatment of mortgages covering tax
credit projects.
1715t.
Voluntary termination of insurance.
1715u.
Authority to assist mortgagors in default.
1715v.
Insurance of mortgages for housing for
elderly persons.
1715w.
Mortgage insurance for nursing homes,
intermediate care facilities, and board
and care homes.
1715x.
Experimental housing insurance.
1715y.
Mortgage insurance for condominiums.
1715z.
Homeownership or membership in cooperative association for lower income
families.
1715z–1.
Rental and cooperative housing for lower
income families.
1715z–1a.
Assistance for troubled multifamily
housing projects.
1715z–1b.
Tenant participation in multifamily
housing projects.
1715z–1c.
Regulation of rents in insured projects.
1715z–2.
Repealed.
1715z–3.
Special Risk Insurance Fund.
1715z–4.
Modifications in terms of mortgages covering multifamily projects; requests
for extensions to cure defaults or for
modification of mortgage terms; regulations.
1715z–4a.
Double damages remedy for unauthorized use of multifamily housing project
assets and income.
1715z–5.
Purchase of fee simple title from lessors.
1715z–6.
Supplemental loans for multifamily
projects.
1715z–7.
Mortgage insurance for hospitals.
1715z–8.
Mortgage assistance payments for middle-income families.
1715z–9.
Co-insurance of eligible mortgage, advance, or loan.

TITLE 12—BANKS AND BANKING
Sec.

1715z–10.
1715z–11.

Repealed.
Sale to cooperatives of multifamily
housing projects acquired by Secretary; acceptance of purchase money
mortgage for sale or insurance of
mortgage; principal amount of mortgage; expenditures for repairs, etc.,
prior to sale.
1715z–11a.
Disposition of HUD-owned properties.
1715z–12.
Single-family mortgage insurance on Hawaiian home lands.
1715z–13.
Single family mortgage insurance on Indian reservations.
1715z–13a.
Loan guarantees for Indian housing.
1715z–13b.
Loan guarantees for Native Hawaiian
housing.
1715z–14.
Risk-sharing demonstration.
1715z–15.
Limitation on prepayment of mortgages
on multifamily rental housing.
1715z–16.
Adjustable rate single family mortgages.
1715z–17.
Shared appreciation mortgages for single
family housing.
1715z–18.
Shared appreciation mortgages for
multifamily housing.
1715z–19.
Equity skimming penalty.
1715z–20.
Insurance of home equity conversion
mortgages for elderly homeowners.
1715z–21.
Delegation of insuring authority to direct endorsement mortgagees.
1715z–22.
Multifamily mortgage credit programs.
1715z–22a.
Definitions.
1715z–23.
HOPE for Homeowners Program.
1715z–24.
Pilot program for automated process for
borrowers without sufficient credit
history.
1715z–25.
Mortgage modification data collecting
and reporting.
SUBCHAPTER III—NATIONAL MORTGAGE
ASSOCIATIONS
Declaration of purposes of subchapter.
Repealed.
Partition of Federal National Mortgage
Association into Federal National
Mortgage Association and Government
National Mortgage Association; assets
and liabilities; operations.
1717.
Federal National Mortgage Association
and Government National Mortgage
Association.
1717a.
Prohibition against sale of obligations
by Federal departments and agencies
after June 30, 1966, without compliance
with requirements of section 1717(c) of
this title or without approval by Secretary of the Treasury; exemption.
1718.
Capitalization of Federal National Mortgage Association.
1719.
Secondary market operations.
1720.
Repealed.
1721.
Management and liquidation functions
of Government National Mortgage Association.
1722.
Benefits and burdens incident to administration of functions and operations
under sections 1720 and 1721.
1723.
Management.
1723a.
General powers of Government National
Mortgage Association and Federal National Mortgage Association.
1723b.
Investment of funds.
1723c.
Obligations, participations, or other instruments as lawful investments; acceptance as security; exempt securities.
1723d.
Transfer of certain functions to Association.
1723e to 1723h. Repealed.
1723i.
Civil money penalties against issuers.

Page 408

Sec.

SUBCHAPTER IV—INSURANCE OF SAVINGS AND
LOAN ACCOUNTS
1724 to 1730i. Repealed.
SUBCHAPTER V—MISCELLANEOUS
1731.
1731a.
1731b.
1732.
1733.
1734.
1735.
1735a.
1735b.
1735c.
1735d.
1735e.
1735e–1.
1735f.
1735f–1.
1735f–2.
1735f–3.

1735f–4.
1735f–5.

1716.
1716–1, 1716a.
1716b.

1735f–6.
1735f–7.
1735f–7a.

1735f–8.
1735f–9.
1735f–10.
1735f–11.
1735f–12.
1735f–13.
1735f–14.
1735f–15.
1735f–16.
1735f–17.
1735f–18.
1735f–19.
1735f–20.

Repealed.
Penalties.
Prohibition against transient housing.
Separability.
Application of other laws.
Amendment, extension, or increase of
commitment amounts.
Payment of certain funds to Treasury.
Prepayment of mortgages by nonprofit
educational institutions; refunds.
Expenditures to correct or reimburse for
structural or other major defects in
mortgaged homes.
General Insurance Fund.
Payment of insurance benefits in cash or
debentures; borrowing money from
Treasury to make payments.
Acceptance of materials or products used
in structures.
Use of American materials and products.
Water and sewerage facilities.
Waiver of deduction on assignment of
property to Secretary in lieu of foreclosure.
Uniform rehabilitation standards for
housing within and without urban renewal areas.
Insurance of mortgage proceeds advanced during construction or rehabilitation or prior to final endorsement of
project mortgage.
Minimum property standards.
Prohibition against discrimination on
account of sex in extension of mortgage assistance; consideration of combined income of husband and wife for
purpose of extending mortgage credit;
definitions.
Secondary mortgages held by State or
local governmental agency on insured
properties.
Exemption from State usury laws; applicability.
State constitution or laws limiting
mortgage interest, discount points,
and finance or other charges; exemption for obligations made after March
31, 1980.
Time of payment of premium charges.
Limitation on commitments to insure
loans and mortgages.
Change of mortgagee status.
Review of mortgagee performance and
authority to terminate.
Assurance of adequate processing of applications for loan and mortgage insurance.
Prohibition of requirement of minimum
principal loan amount.
Civil money penalties against mortgagees, lenders, and other participants in
FHA programs.
Civil money penalties against multifamily mortgagors.
Annual audited financial statements.
Examinations and sanctions for certain
violations.
Information regarding early defaults and
foreclosures on insured mortgages.
Partial payment of claims on defaulted
mortgages and in connection with
mortgage restructuring.
Authorization of appropriations for General and Special Risk Insurance Funds.

Page 409

TITLE 12—BANKS AND BANKING

Sec.

Sec.

1735g.

1749aaa–1.
1749aaa–2.
1749aaa–3.
1749aaa–4.
1749aaa–5.

Mortgage relief for homeowners who are
unemployed as result of closing of Federal installation.
1735h.
Repealed.
SUBCHAPTER VI—WAR HOUSING INSURANCE
1736.
1737.
1738.
1739.
1740.
1741.

Definitions.
Repealed.
Insurance of mortgages.
Mortgage insurance benefits.
Repealed.
State taxation of realty held by Secretary.
1742.
Rules and regulations.
1743.
Insurance of mortgages.
1744.
Insurance of loans for manufacture of
houses.
1745.
Insurance of mortgages on sales of Government housing; limits and conditions; Greenbelt towns; State housing.
1746.
Insurance on mortgages on large-scale
housing projects.
1746a.
Termination of commitment authority
under this subchapter.
SUBCHAPTER
VII—INSURANCE
FOR
INVESTMENTS IN RENTAL HOUSING FOR FAMILIES OF
MODERATE INCOME
1747.

Purpose of subchapter; authorization;
terms and conditions; expiration of insurance contract.
1747a.
Eligibility for insurance.
1747b.
Premium charges; fees for examination
and inspection.
1747c.
Rent schedules.
1747d.
Excess earnings used for amortization of
original investment.
1747e.
Financial statements by Secretary.
1747f.
Payment of claims; assignment of benefits by investors.
1747g.
Debentures.
1747h.
Termination of insurance contract by investor.
1747i.
Repealed.
1747j.
Taxation of real property.
1747k.
Rules and regulations.
1747l.
Definitions.
SUBCHAPTER VIII—ARMED SERVICES HOUSING
MORTGAGE INSURANCE
1748.
1748a.
1748b.
1748c.
1748d.
1748e.
1748f.
1748g.
1748g–1, 1748h.
1748h–1.
1748h–2.

Definitions.
Repealed.
Insurance of mortgages.
Repealed.
Lease of property; terms and conditions.
Mortgages on property in Alaska.
Rules and regulations.
Cost certification.
Omitted.
Civilian employees of Armed Forces.
Insurance of mortgages for defense housing for impacted areas.
1748h–3.
Payments in lieu of taxes; limitations;
exemption from taxation.
1748i.
Omitted.
SUBCHAPTER IX—HOUSING FOR EDUCATIONAL
INSTITUTIONS
1749 to 1749c.
1749d.

Repealed.
Cost of inspections and of providing representatives.
SUBCHAPTER IX–A—MORTGAGE INSURANCE FOR
LAND DEVELOPMENT AND NEW COMMUNITIES

1749aa to 1749ll. Repealed.
SUBCHAPTER IX–B—MORTGAGE INSURANCE FOR
GROUP PRACTICE FACILITIES AND MEDICAL
PRACTICE FACILITIES
1749aaa.

Insurance of mortgages.

§ 1701

Premiums and other charges.
Payment of insurance benefits.
Regulations.
Administration.
Definitions.

SUBCHAPTER IX–C—NATIONAL INSURANCE
DEVELOPMENT PROGRAM
1749bbb to 1749bbb–2. Omitted.
PART A—STATEWIDE PLANS TO ASSURE FAIR ACCESS
TO INSURANCE REQUIREMENTS
1749bbb–3 to 1749bbb–6a. Omitted.
PART B—REINSURANCE COVERAGE
1749bbb–7 to 1749bbb–10. Omitted.
PART C—FEDERAL INSURANCE AGAINST BURGLARY AND
THEFT
1749bbb–10a to 1749bbb–10d. Omitted.
PART D—GENERAL PROVISIONS
1749bbb–11 to 1749bbb–21. Omitted.
SUBCHAPTER X—NATIONAL DEFENSE HOUSING
INSURANCE
1750.
Definitions.
1750a, 1750a–1. Repealed or Omitted.
1750b.
Insurance in critical areas.
1750c.
Mortgage insurance benefits.
1750d.
Repealed.
1750e.
Taxation.
1750f.
Rules and regulations.
1750g.
Insurance of additional mortgages.
SUBCHAPTER XI—VOLUNTARY HOME MORTGAGE
CREDIT
1750aa to 1750jj. Omitted.

§ 1701. Short title
This chapter may be cited as the ‘‘National
Housing Act.’’
(June 27, 1934, ch. 847, 48 Stat. 1246.)
REFERENCES IN TEXT
This chapter, referred to in text, was in the original
‘‘this Act’’, meaning act June 27, 1934, ch. 847, 48 Stat.
1246, as amended, which is classified principally to this
chapter (§ 1701 et seq.). For complete classification of
this Act to the Code, see Tables.
SHORT TITLE OF 2013 AMENDMENT
Pub. L. 113–29, § 1, Aug. 9, 2013, 127 Stat. 509, provided
that: ‘‘This Act [amending section 1715z–20 of this title]
may be cited as the ‘Reverse Mortgage Stabilization
Act of 2013’.’’
SHORT TITLE OF 2011 AMENDMENT
Pub. L. 111–372, § 1(a), Jan. 4, 2011, 124 Stat. 4077, provided that: ‘‘This Act [amending sections 1701q and
1701q–2 of this title and section 1437f of Title 42, The
Public Health and Welfare, and amending provisions
set out as notes under section 1701q of this title] may
be cited as the ‘Section 202 Supportive Housing for the
Elderly Act of 2010’.’’
SHORT TITLE OF 2010 AMENDMENT
Pub. L. 111–203, title XIV, § 1441, July 21, 2010, 124
Stat. 2163, provided that: ‘‘This subtitle [subtitle D
(§§ 1441–1452) of title XIV of Pub. L. 111–203, enacting
sections 1701p–2 and 1701x–1 of this title and section 8108
of Title 42, The Public Health and Welfare, and amending sections 1701x and 2604 of this title and section 3533
of Title 42] may be cited as the ‘Expand and Preserve
Home Ownership Through Counseling Act’.’’

§ 1701

TITLE 12—BANKS AND BANKING
SHORT TITLE OF 2008 AMENDMENT

Pub. L. 110–289, div. A, title IV, § 1401, July 30, 2008, 122
Stat. 2800, provided that: ‘‘This title [enacting section
1715z–23 of this title and section 1639a of Title 15, Commerce and Trade, and amending section 1708 of this
title] may be cited as the ‘HOPE for Homeowners Act
of 2008’.’’
Pub. L. 110–289, div. B, § 2001, July 30, 2008, 122 Stat.
2830, provided that: ‘‘This division [see Tables for classification] may be cited as the ‘Foreclosure Prevention
Act of 2008’.’’
Pub. L. 110–289, div. B, title I, § 2101, July 30, 2008, 122
Stat. 2830, provided that: ‘‘This title [enacting sections
1706f and 1715z–24 of this title, amending sections 1701x,
1703, 1707 to 1709, 1711, 1715y, 1715z–12, 1715z–13, 1715z–20,
and 1735c of this title and section 1014 of Title 18,
Crimes and Criminal Procedure, repealing sections
1715m, 1715z–2, and 1715z–10 of this title, enacting provisions set out as notes under this section and sections
1701x, 1703, 1709, and 1710 of this title, and amending
provisions set out as a note under section 12712 of Title
42, The Public Health and Welfare] may be cited as the
‘FHA Modernization Act of 2008’.’’
Pub. L. 110–289, div. B, title I, § 2111, July 30, 2008, 122
Stat. 2830, provided that: ‘‘This subtitle [subtitle A
(§§ 2111–2133) of title I of div. B of Pub. L. 110–289, enacting section 1715z–24 of this title, amending sections
1701x, 1707 to 1709, 1711, 1715y, 1715z–12, 1715z–13, 1715z–20,
and 1735c of this title and section 1014 of Title 18,
Crimes and Criminal Procedure, repealing sections
1715m, 1715z–2, and 1715z–10 of this title, enacting provisions set out as notes under this section and sections
1701x, 1709, and 1710 of this title, and amending provisions set out as a note under section 12712 of Title 42,
The Public Health and Welfare] may be cited as the
‘Building American Homeownership Act of 2008’.’’
Pub. L. 110–289, div. B, title I, § 2141, July 30, 2008, 122
Stat. 2844, provided that: ‘‘This subtitle [subtitle B
(§§ 2141–2150) of title I of div. B of Pub. L. 110–289, enacting section 1706f of this title, amending section 1703 of
this title, and enacting provisions set out as notes
under section 1703 of this title] may be cited as the
‘FHA Manufactured Housing Loan Modernization Act
of 2008’.’’
Pub. L. 110–289, div. B, title VIII, § 2831, July 30, 2008,
122 Stat. 2867, provided that: ‘‘This subtitle [subtitle B
(§§ 2831–2835) of title VIII of div. B of Pub. L. 110–289, enacting section 1715s of this title and sections 1437z–8
and 11403f–1 of Title 42, The Public Health and Welfare,
amending sections 1701q and 1715r of this title and sections 1437f, 1485, 3545, 11403g, 11403h, 11404, 11405, 11405b,
11406, 11407, and 11407b of Title 42, and enacting provisions set out as a note under section 1715s of this title]
may be cited as the ‘Housing Tax Credit Coordination
Act of 2008’.’’
SHORT TITLE OF 2007 AMENDMENT
Pub. L. 110–37, § 1, June 18, 2007, 121 Stat. 229, provided
that: ‘‘This Act [amending section 1715z–13a of this
title] may be cited as the ‘Native American Home Ownership Opportunity Act of 2007’.’’
SHORT TITLE OF 2006 AMENDMENT
Pub. L. 109–240, § 1, July 10, 2006, 120 Stat. 515, provided that: ‘‘This Act [amending section 1715z–7 of this
title] may be cited as the ‘Rural Health Care Capital
Access Act of 2006’.’’
SHORT TITLE OF 2004 AMENDMENT
Pub. L. 108–213, § 1, Apr. 1, 2004, 118 Stat. 571, provided
that: ‘‘This Act [amending section 1715k of this title]
may be cited as the ‘Energy Efficient Housing Technical Correction Act’.’’

Page 410

title] may be cited as the ‘FHA Multifamily Loan
Limit Adjustment Act of 2003’.’’
Pub. L. 108–91, § 1, Oct. 3, 2003, 117 Stat. 1158, provided
that: ‘‘This Act [amending section 1715z–7 of this title
and enacting provisions set out as a note under section
1715z–7 of this title] may be cited as the ‘Hospital Mortgage Insurance Act of 2003’.’’
SHORT TITLE OF 2002 AMENDMENT
Pub. L. 107–326, § 1, Dec. 4, 2002, 116 Stat. 2792, provided
that: ‘‘This Act [enacting section 1712a of this title,
amending sections 1709, 1713, 1715e, 1715k, 1715l, 1715v,
1715y, 1715z–10, and 1721 of this title, and repealing provisions set out as a note under section 1721 of this title]
may be cited as the ‘FHA Downpayment Simplification
Act of 2002’.’’
SHORT TITLE OF 2000 AMENDMENTS
Pub. L. 106–569, § 1(a), Dec. 27, 2000, 114 Stat. 2944, provided that: ‘‘This Act [see Tables for classification]
may be cited as the ‘American Homeownership and
Economic Opportunity Act of 2000’.’’
Pub. L. 106–569, title VIII, § 801, Dec. 27, 2000, 114 Stat.
3018, provided that: ‘‘This title [amending sections
1701q and 1715z–1 of this title and sections 8013, 13631,
and 13632 of Title 42, The Public Health and Welfare,
and enacting provisions set out as notes under this section and sections 1701q and 1715z–1 of this title] may be
cited as the ‘Affordable Housing for Seniors and Families Act’.’’
Pub. L. 106–281, § 1, Oct. 6, 2000, 114 Stat. 865, provided
that: ‘‘This Act [amending section 1709 of this title]
may be cited as the ‘FHA Downpayment Simplification
Extension Act of 2000’.’’
SHORT TITLE OF 1999 AMENDMENT
Pub. L. 106–74, title V, § 501(a), Oct. 20, 1999, 113 Stat.
1100, provided that: ‘‘This title [enacting section 1701q–2
of this title, amending sections 1701q, 1701q–2, 1715z–1,
1715z–1a, 1715z–11a, and 4113 of this title and sections
1437f and 8013 of Title 42, The Public Health and Welfare, enacting provisions set out as notes in sections
1701q and 1715z–1 of this title and section 12701 of Title
42, and amending provisions set out as a note under section 1437f of Title 42] may be cited as the ‘Preserving
Affordable Housing for Senior Citizens and Families
into the 21st Century Act’.’’
SHORT TITLE OF 1997 AMENDMENT
Pub. L. 105–65, title V, § 510, Oct. 27, 1997, 111 Stat.
1385, provided that: ‘‘This title [enacting section 1437z–1
of Title 42, The Public Health and Welfare, amending
sections 1708, 1715z–1, 1715z–4a, 1715z–19, 1735f–14,
1735f–15, 1735f–19, and 4565 of this title, section 1516 of
Title 18, Crimes and Criminal Procedure, section 6103 of
Title 26, Internal Revenue Code, and sections 503, 1437f,
and 1437z of Title 42, enacting provisions set out as
notes under sections 1735f–14 and 1735f–15 of this title
and sections 503, 1437f, and 1437z–1 of Title 42, and
amending provisions set out as notes under section
1437f of Title 42] may be cited as the ‘Multifamily Assisted Housing Reform and Affordability Act of 1997’.’’
SHORT TITLE OF 1996 AMENDMENT
Pub. L. 104–120, § 1, Mar. 28, 1996, 110 Stat. 834, provided that: ‘‘This Act [enacting section 1490p–2 of Title
42, The Public Health and Welfare, amending sections
1715z–20, 1715z–22, and 1721 of this title and sections
1437d, 1437e, 1437n, 1479, 1485, 1490p–2, and 5308 of Title
42, and enacting provisions set out as notes under section 4101 of this title and sections 1437d, 1437f, 5305, and
12805 of Title 42] may be cited as the ‘Housing Opportunity Program Extension Act of 1996’.’’

SHORT TITLE OF 2003 AMENDMENTS

SHORT TITLE OF 1994 AMENDMENT

Pub. L. 108–186, title III, § 302(a), Dec. 16, 2003, 117
Stat. 2692, provided that: ‘‘This section [amending sections 1713, 1715e, 1715k, 1715l, 1715v, and 1715y of this

Pub. L. 103–233, § 1(a), Apr. 11, 1994, 108 Stat. 342, provided that: ‘‘This Act [enacting sections 1735f–19 and
1735f–20 of this title and sections 1437x, 3547, 5321, and

Page 411

TITLE 12—BANKS AND BANKING

12840 of Title 42, The Public Health and Welfare, amending sections 1701z–11, 1713, 1715e, 1715k, 1715y, 1715z–1a,
1715z–3, and 1735c of this title and sections 1437a, 1437d,
1437f, 1437g, 1437l, 3535, 4852, 5301, 5304, 5305, 5308, 5318,
12704, 12744, 12745, 12750, 12833, 12838, and 12893 of Title
42, enacting provisions set out as notes under sections
1701z–11, 1715n, and 1715z–1a of this title and sections
5301 and 5318 of Title 42, amending provisions set out as
notes under sections 1707 and 1715z–1a of this title and
section 3545 of Title 42, and repealing provisions set out
as a note under section 1701z–11 of this title] may be
cited as the ‘Multifamily Housing Property Disposition
Reform Act of 1994’.’’
SHORT TITLE OF 1992 AMENDMENT
Pub. L. 102–550, title V, § 541, Oct. 28, 1992, 106 Stat.
3794, provided that: ‘‘This subtitle [subtitle C (§§ 541–544)
of title V of Pub. L. 102–550, enacting sections 1715z–22
and 1715z–22a of this title] may be cited as the ‘Multifamily Housing Finance Improvement Act’.’’
SHORT TITLE OF 1984 AMENDMENT
Pub. L. 98–440, § 1, Oct. 3, 1984, 98 Stat. 1689, provided:
‘‘That this Act [enacting section 77r–1 of Title 15, Commerce and Trade, and amending sections 24, 1451, 1454,
1455, 1464, 1717, 1723, 1723a, 1723c, and 1757 of this title
and sections 78c, 78g, 78h, and 78k of Title 15] may be
cited as the ‘Secondary Mortgage Market Enhancement
Act of 1984’.’’
SHORT TITLE OF 1983 AMENDMENT
Pub. L. 98–181, title I, § 1(a), Nov. 30, 1983, 97 Stat. 1155,
provided that: ‘‘Titles I through XI of this Act [enacting sections 635i–1, 635i–2, 635o to 635t, 1701g–5b, 1701p–1,
1701r–1, 1701z–10a, 1715z–12 to 1715z–18, and 3901 to 3912 of
this title, section 1671g of Title 19, Customs Duties, sections 276c–3, 283z–3, 285x, 285y, 286b–2, 286e–1i, 286y, 286z,
286aa to 286gg, and 290g–12 of Title 22, Foreign Relations
and Intercourse, and sections 1437o to 1437q, 1490k to
1490o, and 3542 of Title 42, The Public Health and Welfare, amending sections 635, 635a, 635a–2, 635a–3, 635a–4,
635b, 635e, 635f, 635g, 1437, 1701j–2, 1701j–3, 1701q, 1701s,
1701x, 1701z–1, 1703, 1706d, 1706e, 1707, 1709, 1710, 1713,
1715e, 1715h, 1715k, 1715l, 1715n, 1715u, 1715v, 1715w, 1715y,
1715z, 1715z–1, 1715z–1a, 1715z–5, 1715z–6, 1715z–7, 1715z–9,
1715z–10, 1721, 1735, 1735b, 1735c, 1735f–4, 1735f–8, 1735f–9,
1748h–1, 1748h–2, 1749bb, 1749aaa, 1749bbb to 1749bbb–2,
1749bbb–5 to 1749bbb–20, 1812, 2602, 2607, 2614, 2617, 2803,
2807, 2809, 2810, 3202, 3602, 3606, 3609, 3612, 3618, 3620, 3703,
and 3804 of this title, sections 1671a and 1671b of Title
19, sections 262d, 286b, 286c, 286e–2, and 286q of Title 22,
sections 1437a, 1437c, 1437d, 1437f, 1437g, 1437n, 1437l, 1439,
1452, 1452b, 1456, 1471, 1472, 1474, 1476, 1479 to 1481, 1483 to
1487, 1490, 1490a, 1490c, 1490e, 1490f, 1490j, 1500c–2, 2414,
3103, 3936, 4003, 4011 to 4020, 4022 to 4025, 4026, 4027, 4041,
4051 to 4054, 4055, 4056, 4071, 4072, 4081 to 4084, 4101 to
4107, 4121 to 4123, 4127, 4128, 5301, 5302 to 5308, 5312, 5316,
5318, 6872, 8007, 8010, and 8107 of Title 42, and section 2166
of the Appendix to Title 50, War and National Defense,
repealing sections 1709–1, 1720, and 1723e of this title,
section 484b of former Title 40, Public Buildings, Property, and Works, and sections 1482, 1490g, 1490i, 1500c,
3901, 3902 to 3906, 3908, 3909, 3911, 3914, 4511 to 4524, and
4528 to 4532 of Title 42, enacting provisions set out as
notes under sections 635, 635a, 635o, 1701q, 1701z–6, 1709,
1713, 1715z–14, 1720, 2602, 3620, and 3901 of this title, section 484b of former Title 40, and sections 602, 1436a,
1437a, 1437f, 1441, 1472, 1490a, 3901, 4015, 4122, 4518, 5316,
and 5318 of Title 42, amending provisions set out as
notes under section 5301 of Title 42, and repealing provisions set out as notes under sections 1709–1 and 1723 of
this title and sections 1437a and 3901 of Title 42] may be
cited as the ‘Domestic Housing and International Recovery and Financial Stability Act’.’’
Pub. L. 98–181, title I, § 1(b), Nov. 30, 1983, 97 Stat. 1155,
provided that: ‘‘Titles I through V of this Act [enacting
sections 1701g–5b, 1701p–1, 1701r–1, 1701z–10a, and 1715z–12
to 1715z–18 of this title and sections 1437o to 1437q, 1490k
to 1490o, and 3542 of Title 42, The Public Health and

§ 1701

Welfare, amending sections 1701j–2, 1701j–3, 1701q, 1701s,
1701x, 1701z–1, 1703, 1706d, 1706e, 1707, 1709, 1710, 1713,
1715e, 1715h, 1715k, 1715l, 1715n, 1715u, 1715v, 1715w, 1715y,
1715z, 1715z–1, 1715z–1a, 1715z–5, 1715z–6, 1715z–7, 1715z–9,
1715z–10, 1721, 1735, 1735b, 1735c, 1735f–4, 1735f–8, 1735f–9,
1748h–1, 1748h–2, 1749bb, 1749aaa, 1749bbb to 1749bbb–2,
1749bbb–5 to 1749bbb–20, 2602, 2607, 2614, 2617, 3602, 3606,
3609, 3612, 3618, 3620, 3703, and 3804 of this title, and sections 1437a, 1437c, 1437d, 1437f, 1437g, 1437n, 1437l, 1439,
1452, 1452b, 1456, 1471, 1472, 1474, 1476, 1479 to 1481, 1483 to
1487, 1490, 1490a, 1490c, 1490e, 1490f, 1490j, 1500c–2, 2414,
3103, 3936, 4003, 4011 to 4020, 4022 to 4025, 4026, 4027, 4041,
4051 to 4054, 4055, 4056, 4071, 4072, 4081 to 4084, 4101 to
4107, 4121 to 4123, 4127, 4128, 5301, 5302 to 5308, 5312, 5316,
5318, 6872, 8007, 8010, and 8107 of Title 42, repealing sections 1709–1, 1720, and 1723e of this title, section 484b of
former Title 40, Public Buildings, Property, and Works,
and sections 1482, 1490g, 1490i, 1500c, 3901, 3902 to 3906,
3908, 3909, 3911, 3914, 4511 to 4524, and 4528 to 4532 of Title
42, enacting provisions set out as notes under sections
1701q, 1701z–6, 1709, 1713, 1715z–14, 1720, 2602, and 3620 of
this title, section 484b of former Title 40, and sections
602, 1436a, 1437a, 1437f, 1441, 1472, 1490a, 3901, 4015, 4122,
4518, 5316, and 5318 of Title 42, amending provisions set
out as notes under section 5301 of Title 42, and repealing provisions set out as notes under sections 1709–1 and
1723 of this title and sections 1437a and 3901 of Title 42]
may be cited as the ‘Housing and Urban-Rural Recovery Act of 1983’.’’
SHORT TITLE OF 1979 AMENDMENT
Pub. L. 96–153, title III, § 311(a), Dec. 21, 1979, 93 Stat.
1115, provided that: ‘‘This section [amending section
1715z–10 of this title] may be cited as the ‘Homeownership Opportunity Act of 1979’.’’
SHORT TITLE OF 1978 AMENDMENT
Pub. L. 95–630, title VII, § 701, Nov. 10, 1978, 92 Stat.
3687, provided that: ‘‘This title [amending section 1730
of this title] may be cited as the ‘Change in Savings
and Loan Control Act of 1978’.’’
SHORT TITLE OF 1977 AMENDMENT
Pub. L. 95–24, § 1, Apr. 30, 1977, 91 Stat. 55, provided:
‘‘That this Act [amending sections 1706e, 1715k, 1715l,
1735c, 1749bbb, and 1749bbb–8 of this title and sections
1437c, 1437f, 1437g, and 1451 of Title 42, The Public
Health and Welfare, and enacting provisions set out as
a note under section 1441 of Title 42] may be cited as
the ‘Supplemental Housing Authorization Act of 1977’.’’
SHORT TITLE OF 1976 AMENDMENT
Pub. L. 94–375, § 1, Aug. 3, 1976, 90 Stat. 1067, provided
that: ‘‘This Act [enacting section 1701z–7 of this title,
amending sections 1464, 1701j–2, 1701q, 1701z–1 to 1701z–3,
1706e, 1713, 1715e, 1715k, 1715l, 1715v, 1715y, 1715z, 1715z–1,
1715z–6, 1715z–9, 1715z–10, 1723, 1723a, 1723e, 1735b, 1735c,
2708, 2709, and 2710 of this title, section 5315 of Title 5,
Government Organization and Employees, section 461
of former Title 40, Public Buildings, Property, and
Works, sections 1437a, 1437c, 1437f, 1437g, 1452b, 1480,
1490, 1490a, 3535, 4056, 4106, 4127, 4521, 5303, 5305, 5307, and
5316 of Title 42, The Public Health and Welfare, enacting provisions set out as notes under sections 1437c and
1723e of this title, section 461 of former Title 40, and
section 1382 of Title 42, and amending provisions set out
as notes under sections 1715e and 1723e of this title]
may be cited as the ‘Housing Authorization Act of
1976’.’’
SHORT TITLE OF 1975 AMENDMENT
Pub. L. 94–13, prec. § 1, Apr. 8, 1975, 89 Stat. 68, provided: ‘‘That this Act [amending section 1749bbb of this
title and enacting provisions set out as a note under
section 1749bbb of this title] may be cited as the ‘National Insurance Development Act of 1975’.’’
SHORT TITLE OF 1974 AMENDMENT
Pub. L. 93–449, § 1, Oct. 18, 1974, 88 Stat. 1364, provided
that: ‘‘This Act [enacting section 1723e of this title,

§ 1701

TITLE 12—BANKS AND BANKING

amending sections 347b, 1430, 1464, 1703, and 1709 of this
title, enacting provisions set out as notes under section
1723e of this title, and amending provisions set out as
a note under section 1904 of this title] may be cited as
the ‘Emergency Home Purchase Assistance Act of
1974’.’’
SHORT TITLE OF 1970 AMENDMENTS
Pub. L. 91–609, § 1, Dec. 31, 1970, 84 Stat. 1770, provided:
‘‘That this Act [enacting sections 1466a, 1701z–1 to
1701z–4, 1709–2, 1735f–2, 1749bbb–6a, and 1749bbb–10a to
1749bbb–10d of this title; sections 694a and 694b of Title
15, Commerce and Trade; and chapter 59 (§§ 4501 et seq.
and 4511 et seq.) of Title 42, The Public Health and Welfare; amending sections 371, 1431, 1432, 1464, 1701s, 1701x,
1703, 1712, 1715c, 1715e, 1715h, 1715l, 1715z, 1715z–1, 1715z–3,
1715z–6, 1715z–7, 1717, 1718, 1730a, 1735b to 1735d, 1748h–1,
1748h–2, 1749, 1749bb, 1749cc, 1749aaa, 1749bbb, 1749bbb–2,
1749bbb–7, 1749bbb–8, 1749bbb–11 to 1749bbb–15, 1813, and
1817 of this title; sections 692 to 694 and 1705 of title 15;
section 617 of Title 16, Conservation; section 1014 of
Title 18, Crimes and Criminal Procedure; section 803 of
Title 20, Education; sections 461 and 484b of former
Title 40, Public Buildings, Property, and Works; and
sections 1401, 1402, 1410, 1415, 1421b, 1453, 1456, 1458, 1460,
1465, 1471, 1474, 1478, 1484 to 1487, 1490, 1492, 1500 to
1500d–1, 3108, 3311, 3356, 3533, 3535, 3906, 3907, and 3911 of
Title 42; repealing sections 1701d–3 1701e, and 1701f of
this title and sections 1436, 1452a, 3372, and 3373 of Title
42; enacting provisions set out as notes under section
694a of Title 15, and sections 1402, 1415, 1436, 1453, 1500
and 4501 of Title 42; amending provisions set out as
notes under sections 1701c, 1716b, and 1749bbb of this
title; and repealing provisions set out as notes under
sections 1464 and 1701e of this title and section 1456 of
Title 42] may be cited as the ‘Housing and Urban Development Act of 1970’.’’
Pub. L. 91–351, § 1, July 24, 1970, 84 Stat. 450, provided:
‘‘That this Act [enacting sections 1451 to 1459 and
1715z–8 of this title, and section 3941 of Title 42, The
Public Health and Welfare, amending sections 82, 371,
1464, 1709–1, 1715z–3, 1717, 1719, 1720, 1726, 1730a, and 1749
of this title, and section 3906 of Title 42, and enacting
provisions set out as notes under sections 1430, 1451,
1710, and 1715z–8 of this title, and section 1452 of Title
42] may be cited as the ‘Emergency Home Finance Act
of 1970’.’’
SHORT TITLE OF 1969 AMENDMENT
Pub. L. 91–152, § 1, Dec. 24, 1969, 83 Stat. 379, provided:
‘‘That this Act [enacting sections 806 and 807 of Title
20, Education, section 484b of former Title 40, Public
Buildings, Property, and Works, and sections 1490d and
4056 of Title 42, The Public Health and Welfare, amending sections 1425, 1464, 1701q, 1701s, 1701u, 1703, 1706d,
1707, 1709, 1709–1, 1713, 1715d, 1715e, 1715h, 1715k, 1715l,
1715m, 1715n, 1715v, 1715w, 1715y, 1715z, 1715z–1, 1715z–2,
1715z–3, 1717, 1720, 1727, 1748h–1, 1748h–2, 1749, 1749bb,
1749aaa, 1749bbb–8, 1749bbb–9, and 1749bbb–15 of this
title, section 1702 of Title 15, Commerce and Trade, sections 801 to 805, and 811 of Title 20, section 461 of former
Title 40, sections 1402, 1409, 1410, 1414, 1415, 1421b, 1441c,
1451, 1452, 1452b, 1453, 1455, 1460, 1463, 1466, 1467, 1468,
1468a, 1469b, 1483, 1485, 1487, 1489, 1496, 1500a, 3102, 3108,
3311, 3356, 3371, 3372, 3911, 4001, 4012, 4022, 4102, and 4121,
of Title 42, and sections 1603 and 1604 of Title 49, Transportation, repealing section 1488 of Title 42, and enacting provisions set out as notes under section 1727 of this
title, and section 1402 of Title 42] may be cited as the
‘Housing and Urban Development Act of 1969’.’’
SHORT TITLE OF 1968 AMENDMENTS
Pub. L. 90–448, § 1, Aug. 1, 1968, 82 Stat. 476, provided:
‘‘That this Act [enacting sections 1701t to 1701z, 1715z to
1715z–7, 1716b and 1749bbb to 1749bbb–21 of this title, sections 1701 to 1720 of Title 15, Commerce and Trade, and
sections 1417a, 1441a to 1441c, 1468a, 1469 to 1469c, 1490a
to 1490c, 3533a, 3901 to 3914, 3931 to 3940, 4001, 4011 to 4027,
4041, 4051 to 4055, 4071, 4072, 4081 to 4084, 4101 to 4103, and

Page 412

4121 to 4127 of Title 42, The Public Health and Welfare,
amending sections 24, 371, 378, 1431, 1432, 1436, 1464,
1701d–4, 1701q, 1701s, 1703, 1709, 1709–1, 1715c, 1715e, 1715k
to 1715o, 1715q, 1715r, 1715w to 1715y, 1716, 1717 to 1723a,
1723c, 1735c, 1735d, 1748h–2, 1749, 1749b, 1749c, 1749aaa and
1757 of this title, sections 5315 of Title 5, Government
Organization and Employees, sections 633 and 636 of
Title 15, section 709 of Title 18, Crimes and Criminal
Procedure, sections 801, 802 and 805 of Title 20, Education, section 846 of former Title 31, Money and Finance, section 1820 [now 3720] of Title 38, Veterans’ Benefits, sections 461, 462 and 612 of former Title 40, Public
Buildings, Property and Works, section 207 of former
Title 40, Appendix, sections 1401, 1402, 1403, 1410, 1415,
1420, 1421b, 1436, 1451, 1452 to 1453, 1455, 1456, 1457, 1460,
1462, 1465 to 1468, 1483, 1484, 1492, 1500a, 1500d, 2414, 3101,
3102, 3104, 3108, 3311, 3331, 3332, 3335, 3336, 3338, 3356, 3372,
3534 and 3535 of Title 42, and sections 1603 to 1605 and
1608 of Title 49, Transportation, repealing sections 1417,
2401 to 2413 and 2415 to 2421 of Title 42, and note set out
under section 2401 of Title 42, and enacting provisions
set out as notes under this section and sections 1701c,
1709, 1709–1, 1715z, 1715z–1, 1716b, 1717, 1721 and 1749bbb of
this title, section 7313 of Title 5, section 1701 of Title 15,
and sections 1417, 1436, 1452, 1469, 3901 and 4001 of Title
42] may be cited as the ‘Housing and Urban Development Act of 1968’.’’
Pub. L. 90–448, title XI, § 1101, Aug. 1, 1968, 82 Stat. 555,
provided that: ‘‘This title [enacting subchapter IX–C of
chapter 13 of this title and section 3533a of Title 42, The
Public Health and Welfare, amending sections
1701s(c)(2)(E), 1709(h) and 1735d(b) of this title, section
5315 of Title 5, Government Organization and Employees, section 636 of Title 15, and section 1462 of Title 42,
and enacting provisions set out as a note under section
7313 of Title 5] may be cited as the ‘Urban Property
Protection and Reinsurance Act of 1968’.’’
Pub. L. 90–255, § 1, Feb. 14, 1968, 82 Stat. 5, provided:
‘‘That this Act [amending section 1730a of this title]
may be cited as the ‘Savings and Loan Holding Company Amendments of 1967’.’’
SHORT TITLE OF 1966 AMENDMENT
Pub. L. 89–429, § 1, May 24, 1966, 80 Stat. 164, provided:
‘‘That this act [enacting section 745 of Title 20, Education, amending sections 1717, 1720(c), 1749(d), and
1757(7) of this title, section 1988(c) of Title 7, Agriculture, and section 743(c) of Title 20, and enacting provisions set out as a note under section 1717 of this title
and section 262 of former Title 5, Executive Departments and Government Officers and Employees] may be
cited as the ‘Participation Sales Act of 1966’.’’
SHORT TITLE OF 1965 AMENDMENT
Pub. L. 89–117, § 1, Aug. 10, 1965, 79 Stat. 451, provided:
‘‘That this Act [enacting sections 1701s and 1735c to
1735h, and subchapter IX–A of chapter 13 of this title,
subchapter IV–A of chapter 14B of Title 15, Commerce
and Trade, and sections 1421b, 1466 to 1468, 1500c–1,
1500c–2, 1500c–3, and 1487 to 1490, and chapters 36 and 37
of Title 42, The Public Health and Welfare, and provisions set out as notes under sections 1701d–3, 1701q, and
1749 of this title, section 462 of former Title 40, Public
Buildings, Property, and Works, and sections 1451, 1453,
1455, 1460, 1465, 1466, and 3074 of Title 42, amending sections 371, 1464, 1701q, 1701o, 1701h, 1702, 1703, 1706c, 1709,
1710, 1713, 1715, 1715c, 1715e, 1715h, 1715k, 1715l, 1715m,
1715n, 1715t, 1715v, 1715w, 1715x, 1715y, 1717, 1718, 1720,
1721, 1727, 1739, 1743, 1744, 1747f, 1747g, 1748b, 1748h,
1748h–1, 1748h–2, 1749, 1749c, 1750, 1750c, and 1750g of this
title, sections 633 and 671 of Title 15, sections 802 and
803 of Title 20, Education, sections 1804 [now 3704] and
1816 [now 3732] of Title 38, Veterans’ Benefits, sections
461 and 462 of former Title 40, sections 1402, 1410, 1412,
1415, 1421a, 1422, 1451, 1452, 1452b, 1453, 1455, 1456, 1460,
1463, 1465, 1471, 1472, 1476, 1481, 1482, 1483, 1485, 1492, 1500,
1500a, 1500b, 1500c, 1500d, and 1500e of Title 42, and sections 1605 and 1608 of Title 49, Transportation, and repealing sections 1715j, 1737, 1740, 1747i, 1748a, 1748c, 1750a

Page 413

TITLE 12—BANKS AND BANKING

and 1750d of this title] may be cited as the ‘Housing and
Urban Development Act of 1965’.’’
SHORT TITLE OF 1964 AMENDMENT
Pub. L. 88–560, § 1, Sept. 2, 1964, 78 Stat. 769, provided:
‘‘That this act [enacting sections 1730b, 1735a, and 1735b
of this title, sections 801 to 805 and 811 of Title 20, Education, and sections 1452b, 1465, and 1486 of Title 42, The
Public Health and Welfare, amending sections 24, 371,
1430, 1431, 1436, 1464, 1701q, 1703, 1709, 1710, 1713, 1715c,
1715e, 1715k to 1715n, 1715r, 1715u to 1715y, 1717, 1719 to
1721, 1723b, 1723c, 1726, 1739, 1748h–2, 1749c, and 1750c of
this title, sections 636 and 637 of Title 15, Commerce
and Trade, sections 1820 and 1823 of Title 38, Veterans’
Benefits, sections 461 and 462 of former Title 40, Public
Buildings, Property and Works, and sections 1402, 1410,
1415, 1436, 1451, 1452, 1452a, 1453, 1455, 1456, 1457, 1460, 1476,
1481 to 1483, 1485, 1492, 1500a, and 1504a of Title 42, and
enacting provisions set out as notes under section 1713
of this title, section 461 of former Title 40, and sections
1415, 1451, 1455, 1460, and 1465 of Title 42] may be cited
as the ‘Housing Act of 1964’.’’
SHORT TITLE OF 1962 AMENDMENT
Pub. L. 87–723, § 1, Sept. 28, 1962, 76 Stat. 670, provided:
‘‘That this Act [enacting section 1701r of this title and
section 1485 of Title 42, The Public Health and Welfare,
and amending sections 84 and 1701q of this title and sections 1471, 1472, 1474, 1476 and 1481 of Title 42] may be
cited as the ‘Senior Citizens Housing Act of 1962.’ ’’
SHORT TITLE OF 1961 AMENDMENT
Pub. L. 87–70, § 1, June 30, 1961, 75 Stat. 149, provided:
‘‘That this Act [enacting sections 1715x and 1715y of
this title and sections 1436, 1484, 1497 and 1500 to 1500e
of Title 42, The Public Health and Welfare, amending
sections 371, 1464, 1701c, 1701q, 1703, 1709, 1710, 1713, 1715,
1715c, 1715e, 1715h, 1715j, 1715k, 1715l, 1715n, 1715o, 1715q,
1715r, 1715t, 1715v, 1715w, 1717, 1718, 1719, 1720, 1721, 1723a,
1723b, 1748b, 1748h–2, 1749, 1749b, 1749c, and 1750jj of this
title, section 631, 633 and 636 of Title 15, Commerce and
Trade, sections 461 and 462 of former Title 40, Public
Buildings, Property, and Works, and sections 1402, 1410,
1415, 1421, 1421a, 1434, 1451, 1452, 1453, 1454, 1455, 1456, 1457,
1460, 1463, 1471, 1472, 1476, 1477, 1478, 1481, 1482, 1483, 1491,
1492, 1493, and 1594i of Title 42, and amending provisions
set out as a note under section 1592c of Title 42] may be
cited as the ‘Housing Act of 1961’.’’
SHORT TITLE OF 1959 AMENDMENT
Pub. L. 86–372, § 1, Sept. 23, 1959, 73 Stat. 654, provided:
‘‘That this Act [enacting sections 1701q, 1715t to 1715w,
and 1748–2 of this title, and section 1463 of Title 42, The
Public Health and Welfare, amending sections 24, 1464,
1703, 1706c, 1709, 1710, 1713, 1715c to 1715e, 1715h,
1715k–1715m, 1715r, 1717, 1719 to 1721, 1723b, 1731a, 1747,
1748b, 1748g, 1748h–1, 1749, 1749a, 1749c, and 1750jj of this
title, sections 461 and 462 of former Title 40, Public
Buildings, Property and Works, and sections 1401, 1402,
1410, 1415, 1450, 1451, 1452, 1453, 1455, 1456, 1457, 1460, 1586,
1594a and 1594j of Title 42, repealing section 1715i of this
title, and enacting provisions set out as notes under
sections 1720 and 1721 of this title and under sections
1456, 1460, 1476 and 1592c of Title 42] may be cited as the
‘Housing Act of 1959’.’’
SHORT TITLE OF 1956 AMENDMENT
Act Aug. 7, 1956, ch. 1029, § 1, 70 Stat. 1091, provided:
‘‘That this Act [enacting sections 1701d–3 and 1701h–1,
of this title and sections 1462, 1496, 1589d, and 1594f of
Title 42, The Public Health and Welfare; amending sections 1464, 1703, 1709, 1713, 1715e, 1715h, 1715k, 1715l, 1715r,
1717 to 1721, 1748, 1748b and 1749 of this title; section 694l
of former Title 38, Pensions, Bonuses, and Veterans’
Relief; section 461 of former Title 40, Public Buildings,
Property, and Works; and sections 1402, 1410, 1412, 1415,
1421, 1451, 1452, 1454, 1455, 1456, 1460, 1481 to 1483, 1594,
1594a, 1594b, 1594c of Title 42; repealing section 1411b of
Title 42; and enacting provisions set out as notes under

§ 1701

section 1703 of this title and under sections 1481, 1592c
and 1594 of Title 42] may be cited as the ‘Housing Act
of 1956’.’’
SHORT TITLE OF 1955 AMENDMENT
Act Aug. 11, 1955, ch. 783, § 1, 69 Stat. 635, provided:
‘‘That this Act [enacting section 1701d–2 of this title
and sections 1491 to 1495 and 1594 to 1594e of Title 42,
The Public Health and Welfare; amending sections 1426,
1427, 1437, 1464, 1703, 1710, 1713, 1715e, 1715h, 1715k, 1715l,
1715n, 1715r, 1720, 1726, 1729, 1739, 1748 to 1748g, 1749, 1749c
of this title; section 462 of former Title 40, Public Buildings, Property, and Works; sections 1410, 1451, 1453, 1456,
1460, 1481 to 1483, 1585 and 1591c of Title 42; and sections
480, 480a, 721, 721a, 910, 910a, 1408, 1408b, and 1408c of
Title 48, Territories and Insular Possessions; repealing
sections 1748g–1 and 1748h of this title; and enacting
provisions set out as notes under sections 1426, 1715e,
and 1749 of this title; section 1594 of Title 42; and under
sections 480 and 1408 of Title 48] may be cited as the
‘Housing Amendments of 1955’.’’
Act Aug. 11, 1955, ch. 783, title III, § 304, 69 Stat. 646,
provided that the amendments to sections 1749 and
1749c of this title by act Aug. 11, 1955, may be cited as
the ‘‘College Housing Amendments of 1955’’.
SHORT TITLE OF 1954 AMENDMENT
Act Aug. 2, 1954, ch. 649, § 1, 68 Stat. 590, provided:
‘‘That this Act [enacting sections 1701j–1, 1701n to 1701p,
1702a, 1715k to 1715s, 1722 to 1723d, 1731a, 1731b, 1746a and
1750aa to 1750jj of this title; sections 460 to 462 of former
Title 40, Public Buildings, Property, and Works; and
sections 1411d, 1434, 1435, 1446, 1450, 1452a, 1455a, and
1589c of Title 42, The Public Health and Welfare;
amending sections 24, 1430, 1431, 1436, 1464, 1701, 1703,
1706c, 1709, 1710, 1711, 1713, 1715c, 1715e, 1715h, 1715j, 1716,
1717 to 1721, 1725, 1728, 1729, 1730, 1748b, 1749, 1750b, 1750c
and 1750g of this title; section 709 of Title 18, Crimes
and Criminal Procedure; section 272 of Title 20, Education; section 694a of former Title 38, Pensions, Bonuses, and Veterans’ Relief; section 459 of former Title
40; and sections 1407, 1410, 1415, 1416, 1451, 1452, 1453, 1454,
1455, 1456, 1457, 1459, 1460, 1481 to 1483, 1585, 1587, 1591c
and 1592a of Title 42; repealing sections 1701j, 1706,
1716–1 and 1716a of this title; section 456 of former Title
40; sections 1451a, 1461 and 1551 of Title 42; and sections
484e, 724, and 1426 of Title 48, Territories and Insular
Possessions; and enacting provisions set out as notes
under sections 1703, 1710, 1715n, 1715s, and 1716 of this
title; section 846 of former Title 31, Money and Finance;
and under sections 1434, 1446, and 1450 of Title 42] may
be cited as the ‘Housing Act of 1954’.’’
Act June 27, 1934, title III, § 312, as added Aug. 2, 1954,
ch. 649, § 201, 68 Stat. 622, provided that: ‘‘This title III
[enacting sections 1722 to 1723c of this title and amending sections 1716 to 1721 of this title] may be referred to
as the ‘Federal National Mortgage Association Charter
Act’.’’
SHORT TITLE OF 1953 AMENDMENT
Act June 30, 1953, ch. 170, § 1, 67 Stat. 121, provided:
‘‘This Act [enacting sections 1715j and 1735 of this title,
and sections 723 and 1425 of Title 48, Territories and Insular Possessions; amending sections 1701j, 1706c(b),
1709, 1711(c)(i), 1715d, 1715e(d), 1715h, 1716(a), 1716–1, 1717,
1748b(a), (b), 1749(a), 1750b(a), and 1750g(b) of this title,
sections 1402(10), 1456(e), 1460(g), 1591(a), 1591c, 1592d(c),
and 1592n(e) of Title 42, The Public Health and Welfare,
and section 2166(c) of the Appendix to Title 50, War and
National Defense; and enacting provisions set out as a
note under section 1463 of this title, relating to dissolution and abolishment of the Home Owners’ Loan Corporation] may be cited as the ‘Housing Amendments of
1953’.’’
SHORT TITLE OF 1952 AMENDMENT
Act July 14, 1952, ch. 723, § 1, 66 Stat. 601, provided
that: ‘‘This Act [enacting sections 1701m, 1706d, and
1715i of this title and amending sections 1422, 1423, 1464,

§ 1701a

TITLE 12—BANKS AND BANKING

1466, 1701g–2, 1707, 1713, 1715d, 1715h, 1716, 1717, 1726, 1736,
1745, 1747l, 1748, and 1750b of this title; sections 1481 to
1483, 1589a, 1592a, 1592l, and 1593 of Title 42, The Public
Health and Welfare; and sections 484 and 484d of Title
48, Territories and Insular Possessions] may be cited as
the ‘Housing Act of 1952’.’’
SHORT TITLE OF 1950 AMENDMENT
Act Apr. 20, 1950, ch. 94, § 1, 64 Stat. 48, provided that
‘‘This Act [enacting sections 1701j to 1701l, 1715e, 1715f,
and 1749 to 1749c of this title and sections 1581 to 1589
and 1590 of Title 42, The Public Health and Welfare;
amending sections 371, 1430, 1701c, 1703, 1705, 1706, 1706b,
1706c, 1707 to 1709, 1710 to 1715, 1715b, 1715c, 1716, 1717,
1720, 1721, 1736 to 1746, 1747 to 1747c, and 1747e to 1747l of
this title, section 1017 of Title 7, Agriculture, section
604 of Title 15, Commerce and Trade, and sections 1412,
1521 to 1524, 1532, 1533, 1542 to 1548, 1552, 1553, 1561, 1571,
1572, and 1575 of Title 42; and enacting provisions set
out as notes under sections 1701, 1701k, 1703, and 1709 of
this title, section 1017 of Title 7, and section 1412 of
Title 42] may be cited as the ‘Housing Act of 1950’.’’
SHORT TITLE OF 1948 AMENDMENT
Act Aug. 10, 1948, ch. 832, § 1, 62 Stat. 1268, provided
that: ‘‘This Act [enacting sections 1701c, 1701e to
1701g–3, 1702, 1703, 1709, 1710, 1713, 1716, 1738, 1743 to 1746,
and 1747 to 1747l of this title; section 846 of former Title
31, Money and Finance; section 694 of former Title 38,
Pensions, Bonuses, and Veterans’ Relief; and section
1404a of Title 42, The Public Health and Welfare] may
be cited as the ‘Housing Act of 1948’.’’
REGULATIONS
Pub. L. 106–569, title VIII, § 802, Dec. 27, 2000, 114 Stat.
3018, provided that: ‘‘The Secretary of Housing and
Urban Development (referred to in this title as the
‘Secretary’) shall issue any regulations to carry out
this title [see section 801 of Pub. L. 106–569, set out as
a Short Title of 2000 Amendment note above] and the
amendments made by this title that the Secretary determines may or will affect tenants of federally assisted housing only after notice and opportunity for
public comment in accordance with the procedure
under section 553 of title 5, United States Code, applicable to substantive rules (notwithstanding subsections
(a)(2), (b)(B), and (d)(3) of such section). Notice of such
proposed rulemaking shall be provided by publication
in the Federal Register. In issuing such regulations,
the Secretary shall take such actions as may be necessary to ensure that such tenants are notified of, and
provided an opportunity to participate in, the rulemaking, as required by such section 553.’’
SAVINGS PROVISION
Pub. L. 110–289, div. B, title I, § 2131, July 30, 2008, 122
Stat. 2843, provided that: ‘‘Any mortgage insured under
title II of the National Housing Act [12 U.S.C. 1707 et
seq.] before the date of enactment of this subtitle [July
30, 2008] shall continue to be governed by the laws, regulations, orders, and terms and conditions to which it
was subject on the day before the date of the enactment of this subtitle.’’
IMPLEMENTATION
Pub. L. 110–289, div. B, title I, § 2132, July 30, 2008, 122
Stat. 2843, provided that: ‘‘The Secretary of Housing
and Urban Development shall by notice establish any
additional requirements that may be necessary to immediately carry out the provisions of this subtitle [subtitle A (§§ 2111–2133) of title I of div. B of Pub. L. 110–289,
see Short Title of 2008 Amendment note above]. The notice shall take effect upon issuance.’’
PREFERENCES FOR NATIVE HAWAIIANS ON HAWAIIAN
HOME LANDS UNDER HUD PROGRAMS
Secretary of Housing and Urban Development to provide a preference to native Hawaiians for housing as-

Page 414

sistance programs under this chapter for housing located on Hawaiian home lands, see section 958 of Pub.
L. 101–625, set out as a note under section 1437f of Title
42, The Public Health and Welfare.
LIMITATION ON WITHHOLDING OR CONDITIONING OF
ASSISTANCE
Assistance provided for in Housing and Community
Development Act of 1974, National Housing Act, United
States Housing Act of 1937, Housing Act of 1949, Demonstration Cities and Metropolitan Development Act of
1966, and Housing and Urban Development Acts of 1965,
1968, 1969, and 1970 not to be withheld or made subject
to conditions by reason of tax-exempt status of obligations issued or to be issued for financing of assistance,
except as otherwise provided by law, see section 817 of
Pub. L. 93–383, set out as a note under section 5301 of
Title 42, The Public Health and Welfare.

§ 1701a. Short title of amendment of 1938
The Act of February 3, 1938, ch. 13, 52 Stat. 8,
may be cited as the ‘‘National Housing Act
Amendments of 1938.’’
(Feb. 3, 1938, ch. 13, § 1, 52 Stat. 8.)
REFERENCES IN TEXT
The National Housing Act Amendments of 1938, referred to in text, enacted sections 1715a, 1715b, and 1733
of this title and amended sections 24, 1703, 1707 to 1709,
1710 to 1715, 1716, 1717, 1718, and section 1731 [see sections 433, 493, 657, 1006, and 1008 to 1010 of Title 18,
Crimes and Criminal Procedure] of this title.
CODIFICATION
Section was enacted as part of the National Housing
Act Amendments of 1938, and not as part of the National Housing Act which comprises this chapter.

§ 1701b. Short title of amendment of 1942
The Act of May 26, 1942, ch. 319, 56 Stat. 301,
may be cited as the ‘‘National Housing Act
Amendments of 1942’’.
(May 26, 1942, ch. 319, § 15, 56 Stat. 305.)
REFERENCES IN TEXT
The National Housing Act Amendments of 1942, referred to in text, enacted section 1743 of this title,
amended heading of subchapter VI of this chapter [preceding section 1736 of this title], amended sections 1703,
1715c, 1737, 1738, 1739, and 1740 of this title, and enacted
provisions set out as a note under section 1743 of this
title.
CODIFICATION
Section was enacted as part of the National Housing
Act Amendments of 1942, and not as part of the National Housing Act which comprises this chapter.

§ 1701c. Secretary of Housing and Urban Development
In carrying out his functions, powers, and duties—
(a) Employment of personnel; delegation of functions
The Secretary of Housing and Urban Development may appoint such officers and employees
as he may find necessary, which appointments
shall be subject to the civil-service laws and
chapter 51 and subchapter III of chapter 53 of
title 5. The Secretary may make such expenditures as may be necessary to carry out his functions, powers, and duties, and there are author-

Page 415

§ 1701c

TITLE 12—BANKS AND BANKING

ized to be appropriated to the Secretary, out of
any moneys in the Treasury not otherwise appropriated, such sums as may be necessary to
carry out such functions, powers, and duties and
for administrative expenses in connection therewith. The Secretary, without in any way relieving himself from final responsibility, may delegate any of his functions and powers to such officers, agents, or employees as he may designate, may authorize such successive redelegations of such functions and powers, as he may
deem desirable, and may make such rules and
regulations as may be necessary to carry out his
functions, powers, and duties.
(b) Omitted

for expenditure by them, respectively, in accordance with the provisions hereof.
(d) Use of funds for library memberships
The Secretary of Housing and Urban Development may utilize funds made available to him
for salaries and expenses for payment in advance
for dues or fees for library memberships in organizations (or for membership of the individual
librarians in organizations which will not accept
library membership) whose publications are
available to members only, or to members at a
price lower than to the general public, and for
payment in advance for publications available
only upon that basis or available at a reduced
price on prepublication order.

(c) Additional powers and duties of Secretary
and Federal Home Loan Bank Board
The Secretary of Housing and Urban Development, the Comptroller of the Currency, and the
Federal Deposit Insurance Corporation, respectively, may, in addition to and not in derogation
of any powers and authorities conferred elsewhere in this Act—
(1) with the consent of the agency or organization concerned, accept and utilize equipment, facilities, or the services of employees
of any Federal, State, or local public agency
or instrumentality, educational institution, or
nonprofit agency or organization and, in connection with the utilization of such services,
may make payments for transportation while
away from their homes or regular places of
business and per diem in lieu of subsistence en
route and at place of such service, in accordance with the provisions of section 5703 of title
5;
(2) utilize, contract with and act through,
without regard to section 6101 of title 41, any
Federal, State, or local public agency or instrumentality, educational institution, or
non-profit agency or organization with the
consent of the agency or organization concerned, and any funds available to said officers
for carrying out their respective functions,
powers, and duties shall be available to reimburse or pay any such agency or organization;
and, whenever in the judgment of any such officer necessary, he may make advance,
progress, or other payments with respect to
such contracts without regard to the provisions of subsections (a) and (b) of section 3324
of title 31; and
(3) make expenditures for all necessary expenses, including preparation, mounting, shipping, and installation of exhibits; purchase
and exchange of technical apparatus; and such
other expenses as may, from time to time, be
found necessary in carrying out their respective functions, powers, and duties: Provided,
That funds made available for administrative
expenses in carrying out the functions, powers, and duties imposed upon the Secretary of
Housing and Urban Development and the Federal Home Loan Bank Agency,1 respectively,
by or pursuant to law may at their option be
consolidated into a single administrative expense fund accounts of such officer or agency

(Aug. 10, 1948, ch. 832, title V, § 502, 62 Stat. 1283;
Oct. 28, 1949, ch. 782, title XI, § 1106(a), 63 Stat.
972; Apr. 20, 1950, ch. 94, title V, § 503, 64 Stat. 80;
Pub. L. 87–70, title IX, § 909, June 30, 1961, 75
Stat. 192; Pub. L. 90–19, § 5(d)(1)–(3), (8)–(13), May
25, 1967, 81 Stat. 21; Pub. L. 98–479, title II,
§§ 202(b), 203(c), Oct. 17, 1984, 98 Stat. 2228, 2229;
Pub. L. 100–242, title V, § 570(a)(1), (3), Feb. 5,
1988, 101 Stat. 1949, 1950; Pub. L. 101–73, title III,
§ 306, Aug. 9, 1989, 103 Stat. 352; Pub. L. 111–203,
title III, § 370, July 21, 2010, 124 Stat. 1565.)

1 So in original. Probably should refer to the Federal Housing
Finance Agency.

REFERENCES IN TEXT
This Act, referred to in subsec. (c), is act Aug. 10,
1948, ch. 832, 62 Stat. 1268, known as the Housing Act of
1948. For complete classification of this Act to the
Code, see Short Title of 1948 Amendments note set out
under section 1701 of this title and Tables.
CODIFICATION
In subsec. (c)(2), ‘‘section 6101 of title 41’’ substituted
for ‘‘section 3709 of the Revised Statutes’’ on authority
of Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat. 3854,
which Act enacted Title 41, Public Contracts.
Subsec. (b) of section 502 of act Aug. 10, 1948, is set
out as section 1404a of Title 42, The Public Health and
Welfare.
Section was enacted as part of the Housing Act of
1948, and not as part of the National Housing Act which
comprises this chapter.
AMENDMENTS
2010—Subsec. (c). Pub. L. 111–203, § 370(1), substituted
‘‘, the Comptroller of the Currency, and the Federal
Deposit Insurance Corporation’’ for ‘‘and the Director
of the Office of Thrift Supervision’’ in introductory
provisions.
Subsec. (c)(3). Pub. L. 111–203, § 370(2), substituted
‘‘Agency’’ for ‘‘Board’’.
1989—Subsec. (c). Pub. L. 101–73, § 306(a), which directed the substitution of ‘‘Director of the Office of
Thrift Supervision’’ for ‘‘Federal Home Loan Bank
Board (which term as used in this section shall also include and refer to the Federal Savings and Loan Insurance Corporation, the Home Owners Loan Corporation,
and the Chairman of the Federal Home Loan Bank
Board)’’, was executed as directed, except that ‘‘Home
Owners’ ’’ rather than ‘‘Home Owners’’ appeared in the
original in the language struck out.
Subsec. (c)(1). Pub. L. 101–73, § 306(b), substituted ‘‘of
any Federal, State, or local’’ for ‘‘of any State or
local’’.
1988—Subsec. (a). Pub. L. 100–242, § 570(a)(1), struck
out ‘‘The Secretary of Commerce or his designee shall
hereafter be included in the membership of the National Housing Council.’’
Subsec. (c)(2). Pub. L. 100–242, § 570(a)(3), inserted
‘‘and’’ at end.
1984—Subsec. (a). Pub. L. 98–479, § 202(b)(1), substituted ‘‘chapter 51 and subchapter III of chapter 53 of

§ 1701c–1

TITLE 12—BANKS AND BANKING

title 5’’ for ‘‘the Classification Act of 1949, as amended’’.
Subsec. (c)(1). Pub. L. 98–479, § 202(b)(2), substituted
‘‘section 5703 of title 5’’ for ‘‘5 U.S.C. 73b–2’’.
Subsec. (c)(2). Pub. L. 98–479, § 203(c), substituted
‘‘subsections (a) and (b) of section 3324 of title 31’’ for
‘‘section 3648 of the Revised Statutes [31 U.S.C. 529]’’.
1967—Subsec. (a). Pub. L. 90–19, § 5(d)(1)–(3), substituted ‘‘Secretary of Housing and Urban Development’’ for ‘‘Housing and Home Finance Administrator’’
and ‘‘Secretary’’ for ‘‘Administrator’’ wherever appearing, and struck out provision for preparation of official
seal and judicial notice thereof.
Subsec. (c). Pub. L. 90–19, § 5(d)(8), (9), substituted
‘‘Secretary of Housing and Urban Development and the
Federal Home Loan Bank Board’’ for ‘‘Housing and
Home Finance Administrator, the Home Loan Bank
Board’’ where it first appears and ‘‘Federal Home Loan
Bank Board’’ for ‘‘Home Loan Bank Board, the Federal
Housing Commissioner, and the Public Housing Commissioner’’.
Subsec. (c)(3). Pub. L. 90–19, § 5(d)(10), (11), substituted
‘‘Secretary of Housing and Urban Development and the
Federal Home Loan Bank Board’’ and ‘‘such officer or
agency’’ for ‘‘Housing and Home Finance Administrator, the Home Loan Bank Board, the Federal Housing Commissioner, and the Public Housing Commissioner’’ and ‘‘said officers or agencies’’.
Subsec. (d). Pub. L. 90–19, § 5(d)(12), (13), substituted
‘‘Secretary of Housing and Urban Development may
utilize funds made available to him’’ for ‘‘Housing and
Home Finance Administrator, the Federal Housing
Commissioner and the Public Housing Commissioner,
respectively, may utilize funds made available to
them’’ and struck out ‘‘of the respective agencies’’
after ‘‘librarians’’.
1961—Subsec. (c)(3). Pub. L. 87–70, § 909(1), struck out
provisions which made section 5 of title 41 inapplicable
to any purchase or contract by officers (or their agencies) for services or supplies if the amount thereof does
not exceed $300.
Subsec. (d). Pub. L. 87–70, § 909(2), added subsec. (d).
1950—Act Apr. 20, 1950, amended third sentence of subsec. (a) to authorize the Administrator to permit redelegation of functions and powers which he had delegated previously to officers, agents, and employees but
this does not relieve him of any final responsibility,
and inserted ‘‘or pay’’ after ‘‘reimburse’’ in subsec.
(c)(2).
1949—Subsec. (a). Act Oct. 28, 1949, substituted ‘‘Classification Act of 1949’’ for ‘‘Classification Act of 1923’’.
EFFECTIVE DATE OF 2010 AMENDMENT
Amendment by Pub. L. 111–203 effective on the transfer date, see section 351 of Pub. L. 111–203, set out as a
note under section 906 of Title 2, The Congress.
REPEALS
Act Oct. 28, 1949, ch. 782, cited as a credit to this section, was repealed (subject to a savings clause) by Pub.
L. 89–554, Sept. 6, 1966, § 8, 80 Stat. 632, 655.
TRANSFER OF FUNCTIONS
Federal Home Loan Bank Board abolished and functions transferred, see sections 401 to 406 of Pub. L.
101–73, set out as a note under section 1437 of this title.
EMERGENCY PREPAREDNESS FUNCTIONS
For assignment of certain emergency preparedness
functions to Secretary of Housing and Urban Development, see Parts 1, 2, and 9 of Ex. Ord. No. 12656, Nov. 18,
1988, 53 F.R. 47491, set out as a note under section 5195
of Title 42, The Public Health and Welfare.
ANNUAL REPORT ON AREAS OF PROGRAM ADMINISTRATION AND MANAGEMENT WHICH REQUIRE IMPROVEMENT

Pub. L. 90–448, § 5, Aug. 1, 1968, 82 Stat. 477, as amended by Pub. L. 91–609, title IX, § 918, Dec. 31, 1970, 84 Stat.

Page 416

1816, directed Secretary to report annually to Committees on Banking and Currency of House and Senate,
identifying specific areas of program administration
and management which require improvement, describing actions taken and proposed, and recommendations
for legislation, prior to repeal by Pub. L. 93–608, § 1(9),
Jan. 2, 1975, 88 Stat. 1968.
EXECUTIVE ORDER NO. 11196
Ex. Ord. No. 11196, Feb. 2, 1965, 30 F.R. 1171, which delegated functions to Housing and Home Finance Administrator, was revoked by Ex. Ord. No. 12553, Feb. 25,
1986, 51 F.R. 7237.

§ 1701c–1. Omitted
CODIFICATION
Section, act June 24, 1954, ch. 359, title I, § 101, 68 Stat.
283, provided for promotion of economy, efficiency and
fidelity in operations of Housing and Home Finance
Agency by its Administrator, on and after June 24, 1954,
under Reorg. Plan No. 3 of 1947, eff. July 27, 1947, 12 F.R.
4981, 61 Stat. 954, set out in the Appendix to Title 5,
Government Organization and Employees, through assignment and reassignment of functions, reorganizations, and reallocation and transfers of administrative
expense funds and authority. Functions, powers, and
duties of such agency, its head and other officers were
transferred to and vested in the Secretary of Housing
and Urban Development by Pub. L. 89–174, § 5, Sept. 9,
1965, 79 Stat. 669, classified to section 3534 of Title 42,
The Public Health and Welfare.

§ 1701d. Repealed. Pub. L. 89–554, § 8(a), Sept. 6,
1966, 80 Stat. 655
Section, acts Aug. 10, 1948, ch. 832, title V, § 501(a), 62
Stat. 1283; Oct. 15, 1949, ch. 695, § 3, 63 Stat. 880, provided
for compensation of Housing and Home Finance Administrator.

§§ 1701d–1, 1701d–2. Repealed. Pub. L. 90–19,
§§ 6(i), 12(a), May 25, 1967, 81 Stat. 22, 23
Section 1701d–1, act July 15, 1949, ch. 338, title VI,
§ 605, 63 Stat. 440, provided for appointment and duties
of a Deputy Housing and Home Finance Administrator,
including status of acting Administrator during absence, disability, or vacancy in office.
Section 1701d–2, act Aug. 11, 1955, ch. 783, title I, § 113,
69 Stat. 642, prescribed compensation of Community
Facilities Commissioner at same rate established for
heads of constituent agencies of the Housing and Home
Finance Agency. See section 5315 of Title 5, Government Organization and Employees. Section was previously repealed by Pub. L. 89–554, § 8(a), Sept. 6, 1966,
80 Stat. 658.

§ 1701d–3. Repealed. Pub. L. 91–609, title V,
§ 503(3), Dec. 31, 1970, 84 Stat. 1785
Section, acts Aug. 7, 1956, ch. 1029, title VI, § 602, 70
Stat. 1113; May 25, 1967, Pub. L. 90–19, § 13(b), 81 Stat. 24;
Aug. 12, 1970, Pub. L. 91–375, § 6(e), 84 Stat. 776, related
to research and provided for: authorization for specific
programs; contracts and working agreements, amount
of authorization, appropriations, duration of contract,
and unexpended balances of appropriations; dissemination of data; acquisition and use of data; and authority
of Secretary. See sections 1701z–1 to 1701z–4 of this title.

§ 1701d–4. Exchange and assembly of housing
and urban planning and development data;
payment of expenses; acceptance of funds,
services, facilities, materials, and other donations; approval of Secretary of State for
international programs and activities
(a) The Secretary of Housing and Urban Development may exchange data relating to housing

Page 417

§ 1701g–5

TITLE 12—BANKS AND BANKING

and urban planning and development with other
nations and assemble such data from other nations, through participation in international
conferences and other means, where such exchange or assembly is deemed by him to be beneficial in carrying out his responsibilities under
the Department of Housing and Urban Development Act [42 U.S.C. 3531 et seq.] or other legislation. In carrying out his responsibilities under
this subsection the Secretary may—
(1) pay the expenses of participation in activities conducted under authority of this section including, but not limited to, the compensation, travel expenses, and per diem in
lieu of subsistence of persons serving in an advisory capacity while away from their homes
or regular places of business in connection
with attendance at international meetings and
conferences, or other travel for the purpose of
exchange or assembly of data relating to housing and urban planning and development; but
such travel expenses shall not exceed those authorized for regular officers and employees
traveling in connection with said activities;
and
(2) accept from international organizations,
foreign countries, and private nonprofit foundations, funds, services, facilities, materials,
and other donations to be utilized jointly in
carrying out activities under this section.
(b) International programs and activities carried out by the Secretary under the authority
provided in subsection (a) shall be subject to the
approval of the Secretary of State for the purpose of assuring that such authority shall be exercised in a manner consistent with the foreign
policy of the United States.
(Pub. L. 85–104, title VI, § 604, July 12, 1957, 71
Stat. 305; Pub. L. 90–19, § 14(b), May 25, 1967, 81
Stat. 24; Pub. L. 90–448, title XVII, § 1709, Aug. 1,
1968, 82 Stat. 606.)
REFERENCES IN TEXT
The Department of Housing and Urban Development
Act, referred to in subsec. (a), is Pub. L. 89–174, Sept. 9,
1965, 79 Stat. 667, which is classified principally to chapter 44 (§ 3531 et seq.) of Title 42, The Public Health and
Welfare. For complete classification of this Act to the
Code, see Short Title note set out under section 3531 of
Title 42 and Tables.
CODIFICATION
Section was enacted as part of the Housing Act of
1957, and not as part of the National Housing Act which
comprises this chapter.

§§ 1701e, 1701f. Repealed. Pub. L. 91–609, title V,
§ 503(1), Dec. 31, 1970, 84 Stat. 1785
Section 1701e, acts Aug. 10, 1948, ch. 832, title III, § 301,
62 Stat. 1276; July 15, 1949, ch. 338, title IV, § 401, 63 Stat.
431; May 25, 1967, Pub. L. 90–19, § 5(a), 81 Stat. 20; Aug.
12, 1970, Pub. L. 91–375, § 6(f), 84 Stat. 776, related to development and promotion by Secretary of new housing
construction techniques, materials, and methods, and
provided for: improvement and standardization of
building codes, contracts for research and studies, publications, and consolidation of functions and activities;
reports to President and Congress on urban and rural
nonfarm needs; and surveys and plans by local communities and cooperation by Federal agencies. See sections 1701z–1 to 1701z–4 of this title.
Section 1701f, acts Aug. 10, 1948, ch. 832, title III, § 302,
62 Stat. 1276; July 15, 1949, ch. 338, title IV, § 401, 63 Stat.
431; May 25, 1967, Pub. L. 90–19, § 5(b), 81 Stat. 21, provided for utilization of other Federal agencies; cooperative studies with industry, labor, etc.; and exercise of
powers by Secretary. See sections 1701z–1 to 1701z–4 of
this title.

§ 1701f–1. Repealed. Pub. L. 90–19, § 5(c), May 25,
1967, 81 Stat. 21
Section, act Aug. 10, 1948, ch. 832, title III, § 304, as
added July 15, 1949, ch. 338, title IV, § 401, 63 Stat. 431,
provided for appointment, powers, and compensation of
a Director. Section was previously repealed by Pub. L.
89–534, § 8(a), Sept. 6, 1966, 80 Stat. 655.

§§ 1701g to 1701g–3. Omitted
CODIFICATION
Sections 1701g to 1701g–3 were from sections 102 to
102c of the Housing Act of 1948, and provided for loans
to aid production and distribution of prefabricated
housing; provided for loans to assure maintenance of
industrial capacity for production of such homes for
national defense; provided for the powers of the Housing and Home Finance Administrator; and included mobile or portable houses within the term ‘‘prefabricated
houses’’. Authority for issuance of section 1701g obligations under section 1(4) of Reorg. Plan No. 23 of 1950 as
terminating June 30, 1954, see section 1701g–5 of this
title. Authority to make or purchase section 1701g–1
loans or obligations as terminating July 31, 1954, see
section 1591c of Title 42, The Public Health and Welfare.
Section 1701g, act Aug. 10, 1948, ch. 832, title I, § 102,
62 Stat. 1275, amended Sept. 1, 1951, ch. 378, title V, § 501,
65 Stat. 311.
Section 1701g–1, act Aug. 10, 1948, ch. 832, title I,
§ 102a, added Sept. 1, 1951, ch. 378, title V, § 502, 65 Stat.
312.
Section 1701g–2, act Aug. 10, 1948, ch. 832, title I,
§ 102b, added Sept. 1, 1951, ch. 378, title V, § 502, 65 Stat.
312; amended July 14, 1952, ch. 723, § 10(e), 66 Stat. 604.
Section 1701g–3, act Aug. 10, 1948, ch. 832, title I,
§ 102c, added Sept. 1, 1951, ch. 378, title V, § 502, 65 Stat.
312.

§ 1701g–4. Omitted

AMENDMENTS

CODIFICATION

1968—Pub. L. 90–448 designated existing provisions as
subsec. (a), inserted reference to assembly of data from
other nations, and authorized payment of expenses of
participation in activities conducted under authority
of this section, and acceptance from international organizations, foreign countries, and private nonprofit
foundations of funds, services, facilities, materials and
other donations to be utilized jointly, and added subsec. (b).
1967—Pub. L. 90–19 substituted ‘‘Secretary of Housing
and Urban Development’’ and ‘‘Department of Housing
and Urban Development’’ for ‘‘Housing and Home Finance Administrator’’ and ‘‘Housing and Home Finance
Agency’’, respectively.

Section, which placed restrictions on loans, was from
the Independent Offices Appropriation Act, 1953, act
July 5, 1952, ch. 578, title III, § 301, 66 Stat. 415, and was
not repeated in subsequent appropriation acts.
SIMILAR PROVISIONS
Similar provisions were contained in Aug. 31, 1951, ch.
376, title IV, § 401, 65 Stat. 287.

§ 1701g–5. Revolving fund in connection with liquidating programs
There is established as of June 30, 1954, a revolving fund, and the Secretary of Housing and

§ 1701g–5

TITLE 12—BANKS AND BANKING

Urban Development is authorized to credit said
fund with all moneys hereafter obtained or now
held by him or by any constituent agency of the
Department of Housing and Urban Development
or any other official thereof, and to account
under said fund for all assets and liabilities, in
connection with (1) community facilities provided or assisted under title II of the Lanham
Act, as amended [42 U.S.C. 1531 et seq.], or under
title III of the Defense Housing and Community
Facilities and Services Act of 1951, as amended
[42 U.S.C. 1592 et seq.]; (2) loans or advances
made pursuant to title V of the War Mobilization and Reconversion Act of 1944 (58 Stat. 791),
or the Act of October 13, 1949; (3) functions
transferred under Reorganization Plan No. 23 of
1950, or authorized under sections 102, 102a, 102b,
and 102c of the Housing Act of 1948, as amended
[12 U.S.C. 1701g to 1701g–3]; (4) notes or other obligations purchased pursuant to the Alaska
Housing Act, as amended (48 U.S.C. 484(a)); (5)
subsistence homesteads and greentowns (Acts of
June 29, 1936, 49 Stat. 2035, and May 19, 1949, 63
Stat. 68); (6) public war housing under title I of
the Lanham Act, as amended [42 U.S.C. 1521 et
seq.], and defense housing under title III of the
Defense Housing and Community Facilities and
Services Act of 1951, as amended [42 U.S.C. 1592
et seq.]; and (7) veterans’ re-use housing under
title V of the Lanham Act, as amended [42
U.S.C. 1571 et seq.]: Provided, That said fund
shall be available for all necessary expenses (including administrative expenses) in connection
with the liquidation of the programs carried out
pursuant to the foregoing provisions of law, including operation, maintenance, improvement,
or disposition of facilities, and for disbursements pursuant to outstanding commitments
against moneys herein authorized to be credited
to said fund, repayment of obligations to the
Treasury, and refinancing and refunding operations on existing loans: Provided further, That
any amount in said fund which is determined to
be in excess of requirements for the purposes
hereof shall be declared and paid as liquidating
dividends to the Treasury not less often than annually: Provided further, That after June 24, 1954,
no additional notes or obligations shall be purchased from funds appropriated pursuant to the
Alaska Housing Act, as amended (48 U.S.C.
484(d)), except for the furtherance or refinancing
of an existing loan: Provided further, That except
for extensions, or refinancing, of existing obligations the authority to issue obligations to the
Secretary of the Treasury under section 1(4) of
Reorganization Plan No. 23 of 1950, shall terminate on June 30, 1954.
(June 24, 1954, ch. 359, title II, § 201, 68 Stat. 295.)
REFERENCES IN TEXT
The Lanham Act, as amended, referred to in cls. (1),
(6), and (7), is act Oct. 14, 1940, ch. 862, 54 Stat. 1125, as
amended, known as the Lanham Public War Housing
Act. Title I of the Lanham Act is classified generally to
subchapter II (§ 1521 et seq.) of chapter 9 of Title 42, The
Public Health and Welfare. Titles II and V of the
Lanham Act were classified to subchapters III (§ 1531 et
seq.) and VI (§ 1571 et seq.), respectively, of chapter 9 of
Title 42, and were omitted from the Code. For further
details, see References in Text note set out under section 1522 of Title 42. For complete classification of this
Act to the Code, see Short Title note set out under section 1501 of Title 42 and Tables.

Page 418

The Defense Housing and Community Facilities and
Services Act, as amended, referred to in cls. (1) and (6),
is act Sept. 1, 1951, ch. 378, 65 Stat. 293, as amended.
Title III of the Act is classified generally to subchapter
IX (§ 1592 et seq.) of chapter 9 of Title 42. For complete
classification of this Act to the Code, see Short Title of
1951 Amendment note set out under section 1501 of Title
42 and Tables.
The War Mobilization and Reconversion Act of 1944,
referred to in cl. (2), is act Oct. 3, 1944, ch. 480, 58 Stat.
785, which was classified to section 1651 et seq. of the
former Appendix to Title 50, War and National Defense,
and which has been omitted from the Code. Title V of
the War Mobilization and Reconversion Act of 1944 was
classified to section 1671 of the former Appendix to
Title 50. For complete classification of this Act to the
Code, see Tables.
Act of October 13, 1949, referred to in cl. (2), is act
Oct. 13, 1949, ch. 685, 63 Stat. 841, as amended, which was
classified generally to subchapter I (§ 451 et seq.) of
chapter 9 of former Title 40, Public Buildings, Property,
and Works. Sections 1–5, 7, and 8 of the Act were repealed by Pub. L. 107–217, § 6(b), Aug. 21, 2002, 116 Stat.
1304. Section 6 of the Act was repealed by act Aug. 2,
1954, ch. 649, title VIII, § 802(b), 68 Stat. 642. See section
1701o of this title.
Reorganization Plan No. 23 of 1950, referred to in cl.
(3) and in the last proviso, is set out in the Appendix to
Title 5, Government Organization and Employees.
The Alaska Housing Act, as amended, referred to in
cl. (3) and in the third proviso, is act Apr. 23, 1949, ch.
89, 63 Stat. 57, as amended, which was classified principally to sections 484 to 484d of Title 48, Territories
and Insular Possessions and was omitted from the
Code, except for section 2(a) of the Act, which added
section 214 to the National Housing Act and which is
classified to section 1715d of this title. For complete
classification of this Act to the Code, see Tables.
Act June 29, 1936, 49 Stat. 2035, referred to in cl. (5),
which related to resettlement or rural rehabilitation
projects, and which was classified to sections 431 to 434
of former Title 40, Public Buildings, Property, and
Works, was repealed by act Aug. 14, 1946, ch. 964,
§ 2(a)(1), 60 Stat. 1062. See chapter 50 (§ 1921 et seq.) of
Title 7, Agriculture.
Act May 19, 1949, 63 Stat. 68, referred to in cl. (5), authorized the sale, without competitive bidding, of certain resettlement projects in Maryland, Wisconsin, and
Ohio, and was not classified to the Code.
CODIFICATION
Section was enacted as a part of title II of the Independent Offices Appropriation Act, 1955, and not as part
of the National Housing Act which comprises this chapter.
The third and last provisos contained in the original
have been omitted from this section. Those provisos
contained limitations on amounts available during fiscal year 1955 for certain administrative and other expenses. Similar or related limitations were contained
in the following prior appropriation acts:
Oct. 17, 1975, Pub. L. 94–116, title I, 89 Stat. 583.
Sept. 6, 1974, Pub. L. 93–414, title I, 88 Stat. 1096.
Oct. 26, 1973, Pub. L. 93–137, title I, 87 Stat. 492.
Aug. 14, 1972, Pub. L. 92–383, title I, 86 Stat. 541.
Aug. 10, 1971, Pub. L. 92–78, title I, 85 Stat. 273.
Dec. 17, 1970, Pub. L. 91–556, title IV, 84 Stat. 1462.
Nov. 16, 1969, Pub. L. 91–126, title III, 83 Stat. 241.
Oct. 4, 1968, Pub. L. 90–550, title III, 82 Stat. 955.
Nov. 3, 1967, Pub. L. 90–121, title II, 81 Stat. 359.
Sept. 6, 1966, Pub. L. 89–555, title II, 80 Stat. 686.
Aug. 16, 1965, Pub. L. 89–128, title II, 79 Stat. 541.
Aug. 30, 1964, Pub. L. 88–507, title II, 78 Stat. 664.
Dec. 19, 1963, Pub. L. 88–215, title II, 77 Stat. 446.
Oct. 3, 1962, Pub. L. 87–741, title II, 76 Stat. 738.
Aug. 17, 1961, Pub. L. 87–141, title II, 75 Stat. 362.
July 12, 1960, Pub. L. 86–626, title II, 74 Stat. 443.
Sept. 14, 1959, Pub. L. 86–255, title II, 73 Stat. 516.
Aug. 28, 1958, Pub. L. 85–844, title II, 72 Stat. 1080.
June 29, 1957, Pub. L. 85–69, title II, 71 Stat. 240.

Page 419

TITLE 12—BANKS AND BANKING

June 27, 1956, ch. 452, title II, 70 Stat. 354.
May 19, 1956, ch. 313, Ch. V, 70 Stat. 166.
June 30, 1955, ch. 244, title II, 69 Stat. 213.
TRANSFER OF FUNCTIONS
Functions of Housing and Home Finance Agency and
Administrator thereof transferred to Secretary of
Housing and Urban Development by section 5(a) of Department of Housing and Urban Development Act (Pub.
L. 89–174, Sept. 9, 1965, 79 Stat. 669) which is classified
to section 3534(a) of Title 42, The Public Health and
Welfare.

§ 1701g–5a. Transfer of New Communities Fund
assets and liabilities
The Secretary shall transfer all assets and liabilities of the fund established pursuant to section 717 of the Housing and Urban Development
Act of 1970, as amended (42 U.S.C. 4518), to the
Revolving fund (liquidating programs) established pursuant to title II of the Independent Offices Appropriation Act, 1955, as amended (12
U.S.C. 1701g–5).
(Pub. L. 98–45, title I, § 101, July 12, 1983, 97 Stat.
223.)
REFERENCES IN TEXT
Section 717 of the Housing and Urban Development
Act of 1970, as amended (42 U.S.C. 4518), referred to in
text, was repealed by Pub. L. 98–181, title I [title IV,
§ 474(e)], Nov. 30, 1983, 97 Stat. 1239, but remaining in effect until completion of the transfer required in title I
of the Department of Housing and Urban DevelopmentIndependent Agencies Appropriation Act, 1984.
The Independent Offices Appropriation Act, 1955, as
amended, referred to in text, is act June 24, 1954, ch.
359, 68 Stat. 272, as amended. Provisions of title II of
this Act relating to the establishment of the revolving
fund (liquidating programs) are classified to section
1701g–5 of this title. For complete classification of this
Act to the Code, see Tables.
CODIFICATION
Section was enacted as part of the Department of
Housing and Urban Development-Independent Agencies
Appropriation Act, 1984, and not as part of the National
Housing Act which comprises this chapter.

§ 1701g–5b. Liquidation of New Communities Program; cancellation of debt
(a) Law applicable
In order to provide for the management and
orderly liquidation of the assets, and discharge
the liabilities, acquired or incurred in connection with the new communities program authorized pursuant to title IV of the Housing and
Urban Development Act of 1968 [42 U.S.C. 3901 et
seq.] and title VII of the Housing and Urban Development Act of 1970 [42 U.S.C. 4501 et seq.]
(hereafter referred to in this section as ‘‘title
IV’’ and ‘‘title VII’’, respectively), the liquidation of the new communities program shall be
carried out pursuant to the provisions of law applicable to the revolving fund (liquidating programs) established pursuant to title II of the
Independent Offices Appropriations Act, 1955 [12
U.S.C. 1701g–5], upon the transfer by the Secretary of Housing and Urban Development (hereafter in this section referred to as the ‘‘Secretary’’) of the assets and liabilities of the fund
authorized under section 717 of title VII [42
U.S.C. 4518] to such revolving fund, as required
in title I of the Department of Housing and

§ 1701g–5b

Urban Development-Independent Agencies Appropriation Act, 1984 [12 U.S.C. 1701g–5a]. The
Secretary shall report to the Congress not less
than sixty days prior to taking any action with
respect to the disposition of real property (other
than a purchase money mortgage) which involves any further potential liability of or assistance from the Department of Housing and
Urban Development with respect to any property so transferred.
(b) Availability of revolving fund moneys for administrative and other expenses
In carrying out the purposes of subsection (a),
all moneys in the revolving fund (liquidating
programs) shall be available for necessary administrative and other expenses of servicing and
liquidating obligations guaranteed pursuant to
section 403 and section 713 of title IV and title
VII, respectively [42 U.S.C. 3902, 4514], including
costs of services (including legal services) performed on a contract or fee basis, and to discharge any other liability acquired or incurred
in connection with the new communities program. Notwithstanding any other provision of
law relating to the acquisition, handling, improvement, or disposal of real and other property by the United States, the Secretary of
Housing and Urban Development shall also have
power, for the protection of the interests of the
revolving fund (liquidating programs), to pay
out of any moneys in such fund all expenses or
charges in connection with the acquisition, handling, improvement, or disposal of any property,
real or personal, acquired by the Secretary either prior or subsequent to November 30, 1983, as
a result of recoveries under security, subrogation, or other rights in connection with the new
communities program.
(c) Issuance of obligations to Secretary of the
Treasury
After making the transfer required in title I of
the Department of Housing and Urban Development-Independent Agencies Appropriation Act,
1984 [12 U.S.C. 1701g–5a], the Secretary of Housing and Urban Development may issue obligations to the Secretary of the Treasury in an
amount sufficient to enable the Secretary of
Housing and Urban Development to satisfy any
guarantee made pursuant to section 403 or 713 of
title IV or title VII, respectively [42 U.S.C. 3902,
4514], and otherwise carry out the functions authorized by this section. The obligations issued
under this subsection shall have such maturities
and bear such rate or rates of interest as shall
be determined by the Secretary of the Treasury.
The Secretary of the Treasury is authorized and
directed to purchase any obligations so issued,
and for that purpose the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of title 31, and the
purposes for which securities may be issued
under such chapter are extended to include purchases of obligations issued under this subsection.
(d) Cancellation of obligations
Upon the transfer required in title I of the Department of Housing and Urban DevelopmentIndependent Agencies Appropriation Act, 1984

§ 1701g–5c

TITLE 12—BANKS AND BANKING

[12 U.S.C. 1701g–5a], each obligation issued by
the Secretary of Housing and Urban Development to the Secretary of the Treasury pursuant
to section 407(a) or 717(b) of title IV or title VII,
respectively [42 U.S.C. 3906(a), 4518(b)], together
with any promise to repay the principal and unpaid interest which has accrued on each obligation, and any other term or condition specified
by each such obligation, is canceled.
(Pub. L. 98–181, title I [title IV, § 474(a)–(d)], Nov.
30, 1983, 97 Stat. 1238, 1239.)
REFERENCES IN TEXT
The Housing and Urban Development Act of 1968, referred to in subsec. (a), is Pub. L. 90–448, Aug. 1, 1968, 82
Stat. 476, as amended. Title IV of the Housing and
Urban Development Act, which was classified to chapter 48 (§ 3901 et seq.) of Title 42, The Public Health and
Welfare, was repealed, with certain exceptions which
were omitted from the Code, by Pub. L. 98–181, title I
[title IV, § 474(e)], Nov. 30, 1983, 97 Stat. 1239. Sections
403 and 407 of the Housing and Urban Development Act
of 1968 were classified to sections 3902 and 3906, respectively, of Title 42, and were repealed by section 474(e)
of Pub. L. 98–181. For complete classification of this
Act to the Code, see Short Title of 1968 Amendment
note set out under section 1701 of this title and Tables.
The Housing and Urban Development Act of 1970, referred to in subsec. (a), is Pub. L. 91–609, Dec. 31, 1970,
84 Stat. 1770, as amended. Title VII of the Housing and
Urban Development Act of 1970, known as the Urban
Growth and New Community Development Act of 1970,
is classified principally to chapter 59 (§ 4501 et seq.) of
Title 42. Sections 713 and 717 of the Housing and Urban
Development Act of 1970 were classified to sections 4514
and 4518, respectively, of Title 42, and were repealed by
Pub. L. 98–181, title I [title IV, § 474(e)], Nov. 30, 1983, 97
Stat. 1239. For complete classification of this Act to
the Code, see Short Title of 1970 Amendment note set
out under section 1701 of this title and Tables.
The Independent Offices Appropriation Act, 1955, as
amended, referred to in subsec. (a), is act June 24, 1954,
ch. 359, 68 Stat. 272, as amended. Provisions of title II
of this Act relating to the establishment of the revolving fund (liquidating programs) are classified to section
1701g–5 of this title. For complete classification of this
Act to the Code, see Tables.
The Department of Housing and Urban DevelopmentIndependent Agencies Appropriation Act, 1984, referred
to in subsecs. (a), (c), and (d), is Pub. L. 98–45, July 12,
1983, 97 Stat. 219. Provisions of title I of this Act requiring the transfer of assets and liabilities to the revolving fund (liquidating programs) are classified to section
1701g–5a of this title. For complete classification of this
Act to the Code, see Tables.
CODIFICATION
Section was enacted as part of the Housing and
Urban-Rural Recovery Act of 1983 and also as part of
the Domestic Housing and International Recovery and
Financial Stability Act, and not as part of the National
Housing Act which comprises this chapter.

§ 1701g–5c. Transfer of rehabilitation loan fund
assets and liabilities
Notwithstanding section 289(c) of the Cranston-Gonzalez National Affordable Housing Act
(Public Law 101–625), the assets and liabilities of
the revolving fund established by section 1452b 1
of title 42, and any collections, including repayments or recaptured amounts, of such fund shall
be transferred to and merged with the Revolving
Fund (liquidating programs), established pursu1 See

References in Text note below.

Page 420

ant to title II of the Independent Offices Appropriation Act, 1955, as amended (12 U.S.C.
1701g–5), effective October 1, 1991.
(Pub. L. 102–139, title II, Oct. 28, 1991, 105 Stat.
752.)
REFERENCES IN TEXT
Section 289(c) of the Cranston-Gonzalez National Affordable Housing Act (Pub. L. 101–625), referred to in
text, is not classified to the Code.
Section 1452b of title 42, referred to in text, was repealed by Pub. L. 101–625, title II, § 289(b), Nov. 28, 1990,
104 Stat. 4128.
The Independent Offices Appropriation Act, 1955, as
amended, referred to in text, is act June 24, 1954, ch.
359, 68 Stat. 272, as amended. Provisions of title II of
this Act relating to the establishment of the revolving
fund (liquidating programs) are classified to section
1701g–5 of this title. For complete classification of this
Act to the Code, see Tables.
CODIFICATION
Section was enacted as part of the Departments of
Veterans Affairs and Housing and Urban Development,
and Independent Agencies Appropriations Act, 1992, and
not as part of the National Housing Act which comprises this chapter.

§ 1701h. Advisory committees; payment of transportation and other expenses
The Secretary of Housing and Urban Development is authorized to establish such advisory
committee or committees as he may deem necessary in carrying out any of his functions, powers, and duties under this or any other Act or
authorization. Persons serving without compensation as members of any such committee
may be paid transportation expenses and not to
exceed $25 per diem in lieu of subsistence, as authorized by section 5703 of title 5.
(July 15, 1949, ch. 338, title VI, § 601, 63 Stat. 439;
Aug. 2, 1954, ch. 649, title VIII, § 807, 68 Stat. 645;
Pub. L. 89–117, title XI, § 1106, Aug. 10, 1965, 79
Stat. 503; Pub. L. 90–19, § 6(h), May 25, 1967, 81
Stat. 22; Pub. L. 98–479, title II, § 202(c), Oct. 17,
1984, 98 Stat. 2228.)
REFERENCES IN TEXT
This Act, referred to in text, is act July 15, 1949, ch.
338, 63 Stat. 413, as amended, known as the Housing Act
of 1949, which is classified principally to chapter 8A
(§ 1441 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the
Code, see Short Title note set out under section 1441 of
Title 42 and Tables.
CODIFICATION
Section was enacted as part of the Housing Act of
1949, and not as part of the National Housing Act which
comprises this chapter.
AMENDMENTS
1984—Pub. L. 98–479 substituted ‘‘section 5703 of title
5’’ for ‘‘section 5 of the Act of August 2, 1946 (5 U.S.C.
73b–2)’’.
1967—Pub. L. 90–19 substituted ‘‘The Secretary of
Housing and Urban Development’’ and ‘‘he’’ for ‘‘The
Housing and Home Finance Administrator and the head
of each constituent agency of the Housing and Home
Finance Agency’’ and ‘‘each’’, respectively.
1965—Pub. L. 89–117 struck out provision that declared inapplicable the conflict-of-interest statutes in
the case of members of advisory committees.
1954—Act Aug. 2, 1954, permitted heads of constituent
agencies of the Housing and Home Finance Agency to

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establish advisory committees, inserted provisions relating to inapplicability of the conflict-of-interest statutes with respect to committee members serving without compensation, and inserted provisions relating to
payment of expenses.
TERMINATION OF ADVISORY COMMITTEES
Advisory committees in existence on Jan. 5, 1973, to
terminate not later than the expiration of the 2-year
period following Jan. 5, 1973, unless, in the case of a
committee established by the President or an officer of
the Federal Government, such committee is renewed by
appropriate action prior to the expiration of such 2year period, or in the case of a committee established
by the Congress, its duration is otherwise provided by
law. See section 14 of Pub. L. 92–463, Oct. 6, 1972, 86
Stat. 776, set out in the Appendix to Title 5, Government Organization and Employees.
EX. ORD. NO. 10486. ADVISORY COMMITTEE ON
GOVERNMENT HOUSING POLICIES AND PROGRAMS
Ex. Ord. No. 10486, Sept. 12, 1953, 18 F.R. 5561, provided:
1. There shall be established the Advisory Committee
on Government Housing Policies and Programs.
2. The Committee shall make, or cause to be made,
studies and surveys of the housing policies and programs of the Government and the organization within
the Executive Branch for the administration of such
policies and programs, and shall advise the Housing and
Home Finance Administrator and the President with
respect thereto.
3. The Housing and Home Finance Administrator
shall serve as the Chairman of the Committee, and the
other members of the Committee shall be appointed
pursuant to the provisions of this Executive Order and
Section 601 of the Housing Act of 1949 (63 Stat. 439) [this
section].
4. To work directly with the Housing and Home Finance Administrator in the task of directing specific
studies and surveys and developing concrete recommendations, there shall be in the Committee an Executive Committee, consisting of members of the Committee designated for such purpose, and the Housing and
Home Finance Administrator shall serve as the Chairman of such Executive Committee.
5. Administrative expenses in connection with the
work of the Committee, including expenses of advisers
and consultants appointed by the Chairman in connection therewith, shall, upon authorization therefor by
the Chairman or his delegate, be paid pursuant to the
authority therefor under the heading, ‘‘Housing and
Home Finance Agency, Office of the Administrator’’ in
the Supplemental Appropriation Act, 1954 (Public Law
207, Eighty-third Congress, approved August 7, 1953).
DWIGHT D. EISENHOWER.

§ 1701h–1. Housing for elderly persons advisory
committee
The Secretary of Housing and Urban Development shall establish, in accordance with the
provisions of section 1701h of this title, an advisory committee on matters relating to housing
for elderly persons.
(Aug. 7, 1956, ch. 1029, title I, § 104(d), 70 Stat.
1093; Pub. L. 90–19, § 13(a), May 25, 1967, 81 Stat.
24.)
CODIFICATION
Section was enacted as part of the Housing Act of
1956, and not as part of the National Housing Act which
comprises this chapter.
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary of Housing
and Urban Development’’ for ‘‘Housing and Home Finance Administrator’’.

§ 1701j–1

TERMINATION OF ADVISORY COMMITTEES
Advisory committees in existence on Jan. 5, 1973, to
terminate not later than the expiration of the 2-year
period following Jan. 5, 1973, unless, in the case of a
committee established by the President or an officer of
the Federal Government, such committee is renewed by
appropriate action prior to the expiration of such 2year period, or in the case of a committee established
by the Congress, its duration is otherwise provided for
by law. See section 14 of Pub. L. 92–463, Oct. 6, 1972, 86
Stat. 776, set out in the Appendix to Title 5, Government Organization and Employees.

§§ 1701i, 1701i–1. Omitted
Section 1701i, act July 15, 1949, ch. 338, title VI, § 603,
63 Stat. 440; 1953 Reorg. Plan No. 1, § 5, eff. Apr. 11, 1953,
18 F.R. 2053, 67 Stat. 631, included the Secretary of
Labor and the Secretary of Health, Education, and Welfare or their designees in the membership of the National Housing Council of the Housing and Home Finance Agency.
Section 1701i–1, act Sept. 1, 1951, ch. 378, title VI, § 615,
65 Stat. 317, included the Secretary of Defense or his
designee and excluded the Chairman of Board of Directors of Reconstruction Finance Corporation or his designee from National Housing Council membership.

§ 1701j. Repealed. Aug. 2, 1954, ch. 649, title VIII,
§ 813, 68 Stat. 647
Section, acts Apr. 20, 1950, ch. 94, title V, § 504, 64
Stat. 81; Sept. 1, 1951, ch. 378, title VI, § 613(a), 65 Stat.
316; June 30, 1953, ch. 170, § 23, 67 Stat. 127, related to
control of charges and fees, imposed by lenders upon
builders and purchasers in connection with home loans,
by the Federal Housing Commissioner and the Administrator of Veterans’ Affairs.

§ 1701j–1. Builder’s certification as to construction
(a) Warranty requirements
The Secretary of Housing and Urban Development is authorized and directed to require that,
in connection with any property upon which
there is located a dwelling designed principally
for not more than a four-family residence and
which is approved for mortgage insurance prior
to the beginning of construction, the seller or
builder, and such other person as may be required by the said Secretary to become warrantor, shall deliver to the purchaser or owner of
such property a warranty that the dwelling is
constructed in substantial conformity with the
plans and specifications (including any amendments thereof, or changes and variations therein, which have been approved in writing by the
Secretary of Housing and Urban Development)
on which the Secretary of Housing and Urban
Development based his valuation of the dwelling: Provided, That the Secretary of Housing and
Urban Development shall deliver to the builder,
seller, or other warrantor his written approval
(which shall be conclusive evidence of such approval) of any amendment of, or change or variation in, such plans and specifications which the
Secretary deems to be a substantial amendment
thereof, or change or variation therein, and
shall file a copy of such written approval with
such plans and specifications: Provided further,
That such warranty shall apply only with respect to such instances of substantial nonconformity to such approved plans and specifications (including any amendments thereof, or

§ 1701j–2

TITLE 12—BANKS AND BANKING

changes or variations therein, which have been
approved in writing, as provided herein, by the
Secretary of Housing and Urban Development)
as to which the purchaser or homeowner has
given written notice to the warrantor within
one year from the date of conveyance of title to,
or initial occupancy of, the dwelling, whichever
first occurs: Provided further, That such warranty shall be in addition to, and not in derogation of, all other rights and privileges which
such purchaser or owner may have under any
other law or instrument: And provided further,
That the provisions of this section shall apply to
any such property covered by a mortgage insured by the Secretary of Housing and Urban
Development on and after October 1, 1954, unless
such mortgage is insured pursuant to a commitment therefor made prior to October 1, 1954.
(b) Availability of plans and specifications
The Secretary of Housing and Urban Development is further directed to permit copies of the
plans and specifications (including written approvals of any amendments thereof, or changes
or variations therein, as provided herein) for
dwellings in connection with which warranties
are required by subsection (a) of this section to
be made available in their appropriate local offices for inspection or for copying by any purchaser, homeowner, or warrantor during such
hours or periods of time as the said Secretary
may determine to be reasonable.
(Aug. 2, 1954, ch. 649, title VIII, § 801, 68 Stat. 642;
Pub. L. 85–857, § 13(s)(2), Sept. 2, 1958, 72 Stat.
1266; Pub. L. 90–19, § 10(e), May 25, 1967, 81 Stat.
22.)
CODIFICATION
Section was enacted as part of the Housing Act of
1954, and not as part of the National Housing Act which
comprises this chapter.
AMENDMENTS
1967—Subsecs. (a), (b). Pub. L. 90–19 substituted ‘‘Secretary of Housing and Urban Development’’ and ‘‘Secretary’’ for ‘‘Federal Housing Commissioner’’ and
‘‘Commissioner’’, respectively.
1958—Subsec. (a). Pub. L. 85–857 struck out provisions
that related to Administrator of Veterans’ Affairs and
to mortgages guaranteed by him.
Subsec. (b). Pub. L. 85–857 struck out provisions that
related to Administrator of Veterans’ Affairs.
EFFECTIVE DATE OF 1958 AMENDMENT
Amendment by Pub. L. 85–857 effective Jan. 1, 1959,
see section 2 of Pub. L. 85–857, set out as an Effective
Date note preceding part 1 of Title 38, Veterans’ Benefits.
STUDY REGARDING HOME WARRANTY PLANS
Pub. L. 102–550, title V, § 514, Oct. 28, 1992, 106 Stat.
3789, directed Secretary of Housing and Urban Development to conduct a study of home and builder’s warranties and protection plans regarding construction of, and
materials used in, 1- to 4-family dwellings subject to
mortgages insured under title II of the National Housing Act (12 U.S.C. 1707 et seq.), and submit a report to
Congress regarding findings of the study and any recommendations of the Secretary resulting from the
study, not later than the expiration of the 12-month period beginning on Oct. 28, 1992.

Page 422

§ 1701j–2. National Institute of Building Sciences
(a) Congressional findings and declaration of
purpose
(1) The Congress finds (A) that the lack of an
authoritative national source to make findings
and to advise both the public and private sectors
of the economy with respect to the use of building science and technology in achieving nationally acceptable standards and other technical
provision for use in Federal, State, and local
housing and building regulations is an obstacle
to efforts by and imposes severe burdens upon
all those who procure, design, construct, use, operate, maintain, and retire physical facilities,
and frequently results in the failure to take full
advantage of new and useful developments in
technology which could improve our living environment; (B) that the establishment of model
buildings codes or of a single national building
code will not completely resolve the problem because of the difficulty at all levels of government in updating their housing and building
regulations to reflect new developments in technology, as well as the irregularities and inconsistencies which arise in applying such requirements to particular localities or special local
conditions; (C) that the lack of uniform housing
and building regulatory provisions increases the
costs of construction and thereby reduces the
amount of housing and other community facilities which can be provided; and (D) that the existence of a single authoritative nationally recognized institution to provide for the evaluation
of new technology could facilitate introduction
of such innovations and their acceptance at the
Federal, State, and local levels.
(2) The Congress further finds, however, that
while an authoritative source of technical findings is needed, various private organizations and
institutions, private industry, labor, and Federal and other governmental agencies and entities are presently engaged in building research,
technology development, testing, and evaluation, standards and model code development and
promulgation, and information dissemination.
These existing activities should be encouraged
and these capabilities effectively utilized wherever possible and appropriate to the purposes of
this section.
(3) The Congress declares that an authoritative nongovernmental instrument needs to be
created to address the problems and issues described in paragraph (1), that the creation of
such an instrument should be initiated by the
Government, with the advice and assistance of
the National Academy of Sciences-National
Academy of Engineering-National Research
Council (hereinafter referred to as the ‘‘Academies-Research Council’’) and of the various sectors of the building community, including labor
and management, technical experts in building
science and technology, and the various levels of
government.
(b) Establishment; advice and assistance of Academies-Research Council and other agencies
and organizations knowledgeable in building
technology
(1) There is authorized to be established, for
the purposes described in subsection (a)(3), an

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appropriate nonprofit, nongovernmental instrument to be known as the National Institute of
Building Sciences (hereinafter referred to as the
‘‘Institute’’), which shall not be an agency or establishment of the United States Government.
The Institute shall be subject to the provisions
of this section and, to the extent consistent with
this section, to a charter of the Congress if such
a charter is requested and issued or to the District of Columbia Nonprofit Corporation Act if
that is deemed preferable.
(2) The Academies-Research Council, along
with other agencies and organizations which are
knowledgeable in the field of building technology, shall advise and assist in (A) the establishment of the Institute; (B) the development of
an organizational framework to encourage and
provide for the maximum feasible participation
of public and private scientific, technical, and
financial organizations, institutions, and agencies now engaged in activities pertinent to the
development, promulgation, and maintenance of
performance criteria, standards, and other technical provisions for building codes and other
regulations; and (C) the promulgation of appropriate organizational rules and procedures including those for the selection and operation of
a technical staff, such rules and procedures to be
based upon the primary object of promoting the
public interest and insuring that the widest possible variety of interests and experience essential to the functions of the Institute are represented in the Institute’s operations. Recommendations of the Academies-Research Council
shall be based upon consultations with and recommendations from various private organizations and institutions, labor, private industry,
and governmental agencies entities operating in
the field, and the Consultative Council as provided for under subsection (c)(8).
(3) Nothing in this section shall be construed
as expressing the intent of the Congress that the
Academies-Research Council itself be required
to assume any function or operation vested in
the Institute by or under this section.
(c) Board of Directors; number; appointment;
membership; terms of office; vacancies; appointment, etc., of Chairman and Vice Chairman; employees of United States; travel and
subsistence expenses; appointment and compensation of president and other executive
officers and employees; establishment, membership, and functions of Consultative Council
(1) The Institute shall have a Board of Directors (hereinafter referred to as the ‘‘Board’’)
consisting of not less than fifteen nor more than
twenty-one members, appointed by the President of the United States by and with the advice
and consent of the Senate. The Board shall be
representative of the various segments of the
building community, of the various regions of
the country, and of the consumers who are or
would be affected by actions taken in the exercise of the functions and responsibilities of the
Institute, and shall include (A) representatives
of the construction industry, including representatives of construction labor organizations,
product manufacturers, and builders, housing
management experts, and experts in building

§ 1701j–2

standards, codes, and fire safety, and (B) members representative of the public interest in such
numbers as may be necessary to assure that a
majority of the members of the Board represent
the public interest and that there is adequate
consideration by the Institute of consumer interests in the exercise of its functions and responsibilities. Those representing the public interest on the Board shall include architects, professional engineers, officials of Federal, State,
and local agencies, and representatives of consumer organizations. Such members of the
Board shall hold no financial interest or membership in, nor be employed by, or receive other
compensation from, any company, association,
or other group associated with the manufacture,
distribution, installation, or maintenance of
specialized building products, equipment, systems, subsystems, or other construction materials and techniques for which there are available substitutes.
(2) The members of the initial Board shall
serve as incorporators and shall take whatever
actions are necessary to establish the Institute
as provided for under subsection (b)(1).
(3) The term of office of each member of the
initial and succeeding Boards shall be three
years; except that (A) any member appointed to
fill a vacancy occurring prior to the expiration
of the term for which his predecessor was appointed shall be appointed for the remainder of
such term; and (B) the terms of office of members first taking office shall begin on the date of
incorporation and shall expire, as designated at
the time of their appointment, one-third at the
end of one year, one-third at the end of two
years, and one-third at the end of three years.
No member shall be eligible to serve in excess of
three consecutive terms of three years each.
Notwithstanding the preceding provisions of
this subsection, a member whose term has expired may serve until his successor has qualified.
(4) Any vacancy in the initial and succeeding
Boards shall not affect its power, but shall be
filled in the manner in which the original appointments were made, or, after the first five
years of operation, as provided for by the organizational rules and procedures of the Institute;
except that, notwithstanding any such rules and
procedures as may be adopted by the Institute,
the President of the United States, by and with
the advice and consent of the Senate, shall appoint, as representative of the public interest,
two of the members of the Board of Directors selected each year for terms commencing in that
year.
(5) The President shall designate one of the
members appointed to the initial Board as
Chairman; thereafter, the members of the initial
and succeeding Boards shall annually elect one
of their number as Chairman. The members of
the Board shall also elect one or more of their
Members as Vice Chairman. Terms of the Chairman and Vice Chairman shall be for one year
and no individual shall serve as Chairman or
Vice Chairman for more than two consecutive
terms.
(6) The members of the initial or succeeding
Boards shall not, by reason of such membership,
be deemed to be employees of the United States

§ 1701j–2

TITLE 12—BANKS AND BANKING

Government. They shall, while attending meetings of the Board or while engaged in duties related to such meetings or in other activities of
the Board pursuant to this section, be entitled
to receive compensation at the rate of $100 per
day including traveltime, and while away from
their homes or regular places of business they
may be allowed travel expenses, including per
diem in lieu of subsistence, equal to that authorized under section 5703 of title 5, for persons
in the Government service employed intermittently.
(7) The Institute shall have a president and
such other executive officers and employees as
may be appointed by the Board at rates of compensation fixed by the Board. No such executive
officer or employee may receive any salary or
other compensation from any source other than
the Institute during the period of his employment by the Institute.
(8) The Institute shall establish, with the advice and assistance of the Academies-Research
Council and other agencies and organizations
which are knowledgeable in the field of building
technology, a Consultative Council, membership
in which shall be available to representatives of
all appropriate private trade, professional, and
labor organizations, private and public standards, code, and testing bodies, public regulatory
agencies, and consumer groups, so as to insure a
direct line of communication between such
groups and the Institute and a vehicle for representative hearings on matters before the Institute.
(d) Financial restrictions and prohibitions
(1) The Institute shall have no power to issue
any shares of stock, or to declare or pay any
dividends.
(2) No part of the income or assets of the Institute shall inure to the benefit of any director,
officer, employee, or other individual except as
salary or reasonable compensation for services.
(3) The Institute shall not contribute to or
otherwise support any political party or candidate for elective public office.
(e) Exercise of functions and responsibilities
(1) The Institute shall exercise its functions
and responsibilities in four general areas, relating to building regulations, as follows:
(A) Development, promulgation, and maintenance of nationally recognized performance
criteria, standards, and other technical provisions for maintenance of life, safety, health,
and public welfare suitable for adoption by
building regulating jurisdictions and agencies,
including test methods and other evaluative
techniques relating to building systems, subsystems, components, products, and materials
with due regard for consumer problems.
(B) Evaluation and prequalification of existing and new building technology in accordance
with subparagraph (A).
(C) Conduct of needed investigations in direct support of subparagraphs (A) and (B).
(D) Assembly, storage, and dissemination of
technical data and other information directly
related to subparagraphs (A), (B), and (C).
(2) The Institute in exercising its functions
and responsibilities described in paragraph (1)

Page 424

shall assign and delegate, to the maximum extent possible, responsibility for conducting each
of the needed activities described in paragraph
(1) to one or more of the private organizations,
institutions, agencies, and Federal and other
governmental entities with a capacity to exercise or contribute to the exercise of such responsibility, monitor the performance achieved
through assignment and delegation, and, when
deemed necessary, reassign and delegate such
responsibility.
(3) The Institute in exercising its functions
and responsibilities under paragraphs (1) and (2)
shall (A) give particular attention to the development of methods for encouraging all sectors
of the economy to cooperate with the Institute
and to accept and use its technical findings, and
to accept and use the nationally recognized performance criteria, standards, and other technical provisions developed for use in Federal,
State, and local building codes and other regulations which result from the program of the Institute; (B) seek to assure that its actions are
coordinated with related requirements which
are imposed in connection with community and
environmental development generally; and (C)
consult with the Department of Justice and
other agencies of government to the extent necessary to insure that the national interest is
protected and promoted in the exercise of its
functions and responsibilities.
(f) Contract and grant authorization; donations;
fees; amounts received in addition to
amounts appropriated
(1) The Institute is authorized to accept contracts and grants from Federal, State, and local
governmental agencies and other entities, and
grants and donations from private organizations, institutions, and individuals.
(2) The Institute may, in accordance with
rates and schedules established with guidance as
provided under subsection (b)(2), establish fees
and other charges for services provided by the
Institute or under its authorization.
(3) Amounts received by the Institute under
this section shall be in addition to any amounts
which may be appropriated to provide its initial
operating capital under subsection (h).
(g) Technical findings and performance criteria
and standards; applicability and use by Federal departments, agencies, and establishments, and State and local governments; supporting grants and contracts
(1) Every department, agency, and establishment of the Federal Government, in carrying
out any building or construction, or any
building- or construction-related programs,
which involves direct expenditures, and in developing technical requirements for any such building or construction, shall be encouraged to accept the technical findings of the Institute, or
any nationally recognized performance criteria,
standards, and other technical provisions for
building regulations brought about by the Institute, which may be applicable.
(2) All projects and programs involving Federal assistance in the form of loans, grants,
guarantees, insurance, or technical aid, or in
any other form, shall be encouraged to accept,
use, and comply with any of the technical find-

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TITLE 12—BANKS AND BANKING

ings of the Institute, or any nationally recognized performance criteria, standards, and other
technical provisions for building codes and other
regulations brought about by the Institute,
which may be applicable to the purposes for
which the assistance is to be used.
(3) Every department, agency, and establishment of the Federal Government having responsibility for building or construction, or for
building- or construction-related programs, is
authorized and encouraged to request authorization and appropriations for grants to the Institute for its general support, and is authorized to
contract with and accept contracts from the Institute for specific services where deemed appropriate by the responsible Federal official involved.
(4) The Institute shall establish and carry on a
specific and continuing program of cooperation
with the States and their political subdivisions
designed to encourage their acceptance of its
technical findings and of nationally recognized
performance criteria, standards, and other technical provisions for building regulations brought
about by the Institute. Such program shall include (A) efforts to encourage any changes in existing State and local law to utilize or embody
such findings and regulatory provisions; and (B)
assistance to States in the development of inservice training programs for building officials,
and in the establishment of fully staffed and
qualified State technical agencies to advise
local officials on questions of technical interpretation.
(h) Advanced Building Technology Program
(1) Establishment of Advanced Building Technology Council
There is established within the Institute, the
Advanced Building Technology Council (hereafter referred to as the ‘‘Council’’).
(2) Purposes
The Council shall carry out an Advanced
Building Technology Program for the purposes
of—
(A) identifying, selecting, and evaluating
existing and new building technologies, including energy cost savings technologies,
that conform to recognized performance criteria and meet applicable test standards for
maintenance of life, safety, health, and public welfare when used in occupied buildings;
(B) to the extent necessary, developing criteria for the use of such technology;
(C) conducting economic analyses of proposed new technologies when produced and
installed in buildings at volumes associated
with comparable conventional technologies;
(D) in cooperation with the appropriate
Federal agencies, advising building designers, installers, subcontractors, contractors
and supervisory officials on the appropriate
design and use of new building technology
incorporated in federally owned or operated
buildings;
(E) in cooperation with the appropriate
Federal agencies, monitoring and evaluating
the performance of new building technologies for at least 1 year after installation
and building occupancy; and

§ 1701j–2

(F) disseminating resulting data to affected parties through automated information management systems.
(3) Council membership
The Council shall be comprised of not less
than 6 and not more than 11 members selected
by the Secretary of Housing and Urban Development from among representatives of the
various segments of the nationwide building
community that have extensive experience in
building industries, including, but not limited
to—
(A) product manufacturers;
(B) experts in the fields of health, fire hazards, and safety; and
(C) independent representatives of the public interest such as architects, professional
engineers, and representatives of consumer
organizations,
except that serving members of the National
Institute of Building Sciences Advisory Council shall not be eligible to serve simultaneously on the Council.
(4) Federal participation
(A) In general
Any agency of the Federal Government involved in any building or construction may
participate in the Advanced Building Technology Program with the Council to develop
and implement programs to incorporate one
or more of the recommended new technologies in a new or existing building within
the agency.
(B) Required assurances
Upon agreement between a participating
Federal agency and the Council, with respect to the selection of the appropriate
technology and the schedule of necessary
work, the Council shall—
(i) provide the Federal agency with a 5year guarantee from the technology manufacturer that—
(I) all necessary corrections to the
technology will be made in the design,
installation, and maintenance of the
technology;
(II) all malfunctions will be repaired
without delay; and
(III) the technology manufacturer will
be responsible for removal of the technology in the event of its failure to perform as required;
(ii) provide the Federal agency and its
officials responsible for constructing or
renovating buildings utilizing the new
technology, as well as the designers, installers, subcontractors, and contractors
responsible for the design, construction, or
renovation of the buildings utilizing such
technology with the technical information
necessary to ensure its most appropriate
use,
(iii) in cooperation with the Federal
agency, monitor and evaluate the performance of the new technology, and
(iv) prepare reports to be made available
to public agencies at all levels of government, the industry, and the public on the
performance of the new technology.

§ 1701j–3

TITLE 12—BANKS AND BANKING

(5) Report to the Institute
The Council shall submit to the Institute annually a description of its activities under the
Advanced Building Technology Program for
inclusion in the Institute’s annual report to
the Congress under subsection (j).
(i) Authorization of appropriations
There is authorized to be appropriated to the
Institute not to exceed $5,000,000 for the fiscal
year 1975, and $5,000,000 for the fiscal year 1976,
and $5,000,000 for each of the fiscal years 1977 and
1978, and any amounts not appropriated in fiscal
years 1977 and 1978 may be appropriated in any
fiscal year through 1984 (with not more than
$500,000 to be appropriated for each of the fiscal
years 1982, 1983, and 1984 and with each appropriation to be available until expended), to provide the Institute with initial capital adequate
for the exercise of its functions and responsibilities during such years; and thereafter the Institute shall be financially self-sustaining through
the means described in subsection (f). In addition to the amounts authorized to be appropriated under the first sentence of this section,
there are authorized to be appropriated to the
Institute to carry out the provisions of this section not to exceed $512,000 for fiscal year 1991
and $534,000 for fiscal year 1992. Any amount appropriated under the preceding sentence shall be
made available for expenditure or obligation by
the Institute only to the extent of an equal
amount received by the Institute after November 30, 1983, from persons or entities other than
the Federal Government.
(j) Annual report to President for transmittal to
Congress; contents
The Institute shall submit an annual report
for the preceding fiscal year to the President for
transmittal to the Congress within sixty days of
its receipt. The report shall include a comprehensive and detailed report of the Institute’s operations, activities, financial condition, and accomplishments under this section and may include such recommendations as the Institute
deems appropriate.

Page 426

1990—Subsec. (h). Pub. L. 101–625 amended second sentence generally. Prior to amendment, second sentence
read as follows: ‘‘In addition to the amounts authorized
to be appropriated under the first sentence of this section, there is authorized to be appropriated to the Institute to carry out the provisions of this section not
to exceed $250,000 for fiscal year 1984.’’
1988—Subsec. (g)(4). Pub. L. 100–242, § 570(f)(1), substituted ‘‘of its’’ for ‘‘and its’’.
Subsec. (h). Pub. L. 100–242, § 570(f)(2), substituted
‘‘preceding’’ for ‘‘preceeding’’.
1983—Subsec. (h). Pub. L. 98–181 inserted provisions
relating to the appropriation of not to exceed $250,000
for fiscal 1984, such amount to be made available for expenditure only to the extent of an equal amount received from persons or entities other than the Federal
Government.
1981—Subsec. (c)(4). Pub. L. 97–35, § 339E(b), inserted
provisions respecting Presidential appointment powers
to the Board.
Subsec. (h). Pub. L. 97–35, § 339E(a), inserted provisions which extended authorization from 1982 to 1984,
and enumerated amount for fiscal years 1982, 1983, and
1984.
1978—Subsec. (h). Pub. L. 95–557 inserted ‘‘, and any
amounts not appropriated in fiscal years 1977 and 1978
may be appropriated in any fiscal year through 1982’’
after ‘‘1978’’.
1976—Subsec. (h). Pub. L. 94–375 inserted ‘‘, and
$5,000,000 for each of the fiscal years 1977 and 1978’’ after
‘‘fiscal year 1976’’.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
NATIONAL INSTITUTE OF BUILDING SCIENCES TRUST
FUND; AUTHORIZATION OF APPROPRIATIONS

(Pub. L. 93–383, title VIII, § 809, Aug. 22, 1974, 88
Stat. 729; Pub. L. 94–375, § 24, Aug. 3, 1976, 90
Stat. 1078; Pub. L. 95–557, title III, § 319, Oct. 31,
1978, 92 Stat. 2101; Pub. L. 97–35, title III, § 339E,
Aug. 13, 1981, 95 Stat. 417; Pub. L. 98–181, title I
[title IV, § 462], Nov. 30, 1983, 97 Stat. 1232; Pub.
L. 100–242, title V, § 570(f), Feb. 5, 1988, 101 Stat.
1950; Pub. L. 101–625, title IX, § 952(a), Nov. 28,
1990, 104 Stat. 4418; Pub. L. 102–550, title IX,
§ 904(a), Oct. 28, 1992, 106 Stat. 3868.)

Pub. L. 98–396, title I, Aug. 22, 1984, 98 Stat. 1384, provided that: ‘‘There is appropriated out of funds not
otherwise appropriated, the sum of $5,000,000 to a ‘National Institute of Building Sciences Trust Fund’ which
is hereby established in the Treasury of the United
States: Provided, That the Secretary shall invest such
funds in U.S. Treasury special issue securities at a
fixed rate of ten per centum per annum, that such interest shall be credited to the Trust Fund on a quarterly basis, and that the Secretary shall make quarterly disbursements from such interest to the National
Institute of Building Sciences: Provided further, That
the total amount of such payment during any fiscal
year may not exceed $500,000 or the amount equivalent
to non-Federal funds received by the Institute during
the preceding fiscal year, whichever is less: Provided
further, That any amount of interest not used for any
such annual payment shall be paid into the general
fund of the Treasury: Provided further, That the appropriation of $5,000,000 made in this paragraph shall revert to the Treasury, on October 1, 1989, and the National Institute of Building Sciences Trust Fund shall
terminate following the final quarterly disbursement of
interest provided for in this paragraph.’’

REFERENCES IN TEXT

§ 1701j–3. Preemption of due-on-sale prohibitions

The District of Columbia Nonprofit Corporation Act,
referred to in subsec. (b)(1), is Pub. L. 87–569, Aug. 6,
1962, 76 Stat. 265, as amended, which is not classified to
the Code.

(a) Definitions
For the purpose of this section—
(1) the term ‘‘due-on-sale clause’’ means a
contract provision which authorizes a lender,
at its option, to declare due and payable sums
secured by the lender’s security instrument if
all or any part of the property, or an interest
therein, securing the real property loan is sold
or transferred without the lender’s prior written consent;
(2) the term ‘‘lender’’ means a person or government agency making a real property loan

CODIFICATION
Section was enacted as part of the Housing and Community Development Act of 1974, and not as part of the
National Housing Act which comprises this chapter.
AMENDMENTS
1992—Subsecs. (h) to (j). Pub. L. 102–550 added subsec.
(h) and redesignated former subsecs. (h) and (i) as (i)
and (j), respectively.

Page 427

TITLE 12—BANKS AND BANKING

or any assignee or transferee, in whole or in
part, of such a person or agency;
(3) the term ‘‘real property loan’’ means a
loan, mortgage, advance, or credit sale secured
by a lien on real property, the stock allocated
to a dwelling unit in a cooperative housing
corporation, or a residential manufactured
home, whether real or personal property; and
(4) the term ‘‘residential manufactured
home’’ means a manufactured home as defined
in section 5402(6) of title 42 which is used as a
residence; and
(5) the term ‘‘State’’ means any State of the
United States, the District of Columbia, the
Commonwealth of Puerto Rico, the Virgin Islands, Guam, the Northern Mariana Islands,
American Samoa, and the Trust Territory of
the Pacific Islands.
(b) Loan contract and terms governing execution
or enforcement of due-on-sale options and
rights and remedies of lenders and borrowers; assumptions of loan rates
(1) Notwithstanding any provision of the constitution or laws (including the judicial decisions) of any State to the contrary, a lender
may, subject to subsection (c), enter into or enforce a contract containing a due-on-sale clause
with respect to a real property loan.
(2) Except as otherwise provided in subsection
(d), the exercise by the lender of its option pursuant to such a clause shall be exclusively governed by the terms of the loan contract, and all
rights and remedies of the lender and the borrower shall be fixed and governed by the contract.
(3) In the exercise of its option under a due-onsale clause, a lender is encouraged to permit an
assumption of a real property loan at the existing contract rate or at a rate which is at or
below the average between the contract and
market rates, and nothing in this section shall
be interpreted to prohibit any such assumption.
(c) State prohibitions applicable for prescribed
period; subsection (b) provisions applicable
upon expiration of such period; loans subject
to State and Federal regulation or subsection
(b) provisions when authorized by State laws
or Federal regulations
(1) In the case of a contract involving a real
property loan which was made or assumed, including a transfer of the liened property subject
to the real property loan, during the period beginning on the date a State adopted a constitutional provision or statute prohibiting the exercise of due-on-sale clauses, or the date on which
the highest court of such State has rendered a
decision (or if the highest court has not so decided, the date on which the next highest appellate court has rendered a decision resulting in a
final judgment if such decision applies Statewide) prohibiting such exercise, and ending on
October 15, 1982, the provisions of subsection (b)
shall apply only in the case of a transfer which
occurs on or after the expiration of 3 years after
October 15, 1982, except that—
(A) a State, by a State law enacted by the
State legislature prior to the close of such 3year period, with respect to real property
loans originated in the State by lenders other
than national banks, Federal savings and loan

§ 1701j–3

associations, Federal savings banks, and Federal credit unions, may otherwise regulate
such contracts, in which case subsection (b)
shall apply only if such State law so provides;
and
(B) the Comptroller of the Currency with respect to real property loans originated by national banks or the National Credit Union Administration Board with respect to real property loans originated by Federal credit unions
may, by regulation prescribed prior to the
close of such period, otherwise regulate such
contracts, in which case subsection (b) shall
apply only if such regulation so provides.
(2)(A) For any contract to which subsection (b)
does not apply pursuant to this subsection, a
lender may require any successor or transferee
of the borrower to meet customary credit standards applied to loans secured by similar property, and the lender may declare the loan due
and payable pursuant to the terms of the contract upon transfer to any successor or transferee of the borrower who fails to meet such customary credit standards.
(B) A lender may not exercise its option pursuant to a due-on-sale clause in the case of a
transfer of a real property loan which is subject
to this subsection where the transfer occurred
prior to October 15, 1982.
(C) This subsection does not apply to a loan
which was originated by a Federal savings and
loan association or Federal savings bank.
(d) Exemption of specified transfers or dispositions
With respect to a real property loan secured
by a lien on residential real property containing
less than five dwelling units, including a lien on
the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential
manufactured home, a lender may not exercise
its option pursuant to a due-on-sale clause
upon—
(1) the creation of a lien or other encumbrance subordinate to the lender’s security instrument which does not relate to a transfer of
rights of occupancy in the property;
(2) the creation of a purchase money security interest for household appliances;
(3) a transfer by devise, descent, or operation
of law on the death of a joint tenant or tenant
by the entirety;
(4) the granting of a leasehold interest of
three years or less not containing an option to
purchase;
(5) a transfer to a relative resulting from the
death of a borrower;
(6) a transfer where the spouse or children of
the borrower become an owner of the property;
(7) a transfer resulting from a decree of a
dissolution of marriage, legal separation
agreement, or from an incidental property settlement agreement, by which the spouse of the
borrower becomes an owner of the property;
(8) a transfer into an inter vivos trust in
which the borrower is and remains a beneficiary and which does not relate to a transfer
of rights of occupancy in the property; or
(9) any other transfer or disposition described in regulations prescribed by the Federal Home Loan Bank Board.

§ 1701k

TITLE 12—BANKS AND BANKING

(e) Rules, regulations, and interpretations; future income bearing loans subject to due-onsale options
(1) The Federal Home Loan Bank Board, in
consultation with the Comptroller of the Currency and the National Credit Union Administration Board, is authorized to issue rules and
regulations and to publish interpretations governing the implementation of this section.
(2) Notwithstanding the provisions of subsection (d), the rules and regulations prescribed
under this section may permit a lender to exercise its option pursuant to a due-on-sale clause
with respect to a real property loan and any related agreement pursuant to which a borrower
obtains the right to receive future income.
(f) Effective date for enforcement of Corporation-owned loans with due-on-sale options
The Federal Home Loan Mortgage Corporation
(hereinafter referred to as the ‘‘Corporation’’)
shall not, prior to July 1, 1983, implement the
change in its policy announced on July 2, 1982,
with respect to enforcement of due-on-sale
clauses in real property loans which are owned
in whole or in part by the Corporation.
(g) Balloon payments
Federal Home Loan Bank Board regulations
restricting the use of a balloon payment shall
not apply to a loan, mortgage, advance, or credit sale to which this section applies.
(Pub. L. 97–320, title III, § 341, Oct. 15, 1982, 96
Stat. 1505; Pub. L. 98–181, title I [title IV, § 473],
Nov. 30, 1983, 97 Stat. 1237.)
CODIFICATION
Section was enacted as part of the Thrift Institutions
Restructuring Act and also as part of the Garn-St Germain Depository Institutions Act of 1982, and not as
part of the National Housing Act which comprises this
chapter.
AMENDMENTS
1983—Subsec. (d). Pub. L. 98–181 substituted ‘‘With respect to a real property loan secured by a lien on residential real property containing less than five dwelling
units, including a lien on the stock allocated to a
dwelling unit in a cooperative housing corporation, or
on a residential manufactured home, a lender’’ for ‘‘A
lender’’.
TERMINATION OF TRUST TERRITORY OF THE PACIFIC
ISLANDS
For termination of Trust Territory of the Pacific Islands, see note set out preceding section 1681 of Title
48, Territories and Insular Possessions.
TRANSFER OF FUNCTIONS

Page 428

REFERENCES IN TEXT
The National Housing Act, as amended, referred to in
text, is act June 27, 1934, ch. 847, 48 Stat. 1246, as
amended, which is classified principally to this chapter
(§ 1701 et seq.). For complete classification of this Act
to the Code, see section 1701 of this title and Tables.
CODIFICATION
Section was enacted as part of the Housing Act of
1950, and not as part of the National Housing Act which
comprises this chapter.
AMENDMENTS
1958—Pub. L. 85–857 struck out provisions which related to the right to redeem in cases in which the subordinate lien or interest derives from the issuance of guaranties of insurance under the Serviceman’s Readjustment Act of 1944, as amended.
EFFECTIVE DATE OF 1958 AMENDMENT
Amendment by Pub. L. 85–857 effective Jan. 1, 1959,
see section 2 of Pub. L. 85–857, set out as an Effective
Date note preceding part 1 of Title 38, Veterans’ Benefits.
ACT APRIL 20, 1950, AS CONTROLLING LAW; HOUSING
AND HOME FINANCE ADMINISTRATOR UNAFFECTED
Act Apr. 20, 1950, ch. 94, title V, § 509, 64 Stat. 81, provided that: ‘‘Insofar as the provisions of any other law
are inconsistent with the provisions of this Act [see
Tables for classification] the provisions of this Act
shall be controlling: Provided, That nothing contained
in this Act shall affect the authority of the Housing
and Home Finance Administrator under title II of Public Law 266, Eighty-first Congress [Act Aug. 24, 1949, ch.
506, title II, 63 Stat. 657].’’
POWERS AND AUTHORITIES OF ACT APRIL 20, 1950, AS
CUMULATIVE; SEPARABILITY
Act Apr. 20, 1950, ch. 94, title V, § 510, 64 Stat. 81, provided that: ‘‘Except as may be otherwise expressly provided in this Act [see Tables for classification] all powers and authorities conferred by this Act shall be cumulative and additional to and not in derogation of any
powers and authorities otherwise existing. Notwithstanding any other evidences of the intention of Congress, it is hereby declared to be the controlling intent
of Congress that if any provisions of this Act, or the application thereof to any persons or circumstances, shall
be adjudged by any court of competent jurisdiction to
be invalid, such judgment shall not affect, impair, or
invalidate the remainder of this Act or its applications
to other persons and circumstances, but shall be confined in its operation to the provisions of this Act, or
the application thereof to the persons and circumstances, directly involved in the controversy in which
such judgment shall have been rendered.’’

§ 1701l. Limitation on interest rates of insured
mortgages; terms of sales

The right to redeem provided for by section
2410(c) of title 28, shall not arise in any case in
which the subordinate lien or interest of the
United States derives from the issuance of insurance under the National Housing Act, as
amended [12 U.S.C. 1701 et seq.].

It is the intent of Congress that no sale of a
dwelling on which a mortgage is insured under
the National Housing Act, as amended [12 U.S.C.
1701 et seq.], shall be financed, while such mortgage is so insured, at an interest rate higher
than that prescribed by the Secretary of Housing and Urban Development. It is the further intent of Congress that no such sale shall be made,
while such mortgage is so insured, on terms less
favorable to the purchaser as to amortization,
retirement, foreclosure, or forfeiture than those
contained in such mortgage.

(Apr. 20, 1950, ch. 94, title V, § 505, 64 Stat. 81;
Pub. L. 85–857, § 13(q), Sept. 2, 1958, 72 Stat. 1266.)

(Apr. 20, 1950, ch. 94, title V, § 508, 64 Stat. 81;
Pub. L. 90–19, § 8(e), May 25, 1967, 81 Stat. 22.)

Federal Home Loan Bank Board abolished and functions transferred, see sections 401 to 406 of Pub. L.
101–73, set out as a note under section 1437 of this title.

§ 1701k. Right to redeem property on which
United States has lien

Page 429

§ 1701o

TITLE 12—BANKS AND BANKING
REFERENCES IN TEXT

The National Housing Act, as amended, referred to in
text, is act June 27, 1934, ch. 847, 48 Stat. 1246, as
amended, which is classified principally to this chapter
(§ 1701 et seq.). For complete classification of this Act
to the Code, see section 1701 of this title and Tables.
CODIFICATION
Section was enacted as part of the Housing Act of
1950, and not as part of the National Housing Act which
comprises this chapter.
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary of Housing
and Urban Development’’ for ‘‘Federal Housing Commissioner’’.

§ 1701l–1. Mortgage proceeds fraudulently misappropriated by mortgagor; recovery of deficiency after foreclosure
The Secretary of Housing and Urban Development shall take action to secure the payment of
any deficiency after foreclosure on a mortgage
insured or assisted under Federal law where the
Secretary has reason to believe that the mortgage proceeds have been fraudulently misappropriated by the mortgagor.
(Pub. L. 93–383, title VIII, § 819, Aug. 22, 1974, 88
Stat. 740.)

and vested in Secretary of Housing and Urban Development by Pub. L. 89–174, § 5, Sept. 9, 1965, 79 Stat. 669,
classified to section 3534 of Title 42, The Public Health
and Welfare.
TERMINATION, LIQUIDATION, AND ABOLITION OF
RECONSTRUCTION FINANCE CORPORATION
Section 6(a) of Reorg. Plan No. 1 of 1957, eff. June 30,
1957, 22 F.R. 4633, 71 Stat. 647, set out in the Appendix
to Title 5, Government Organization and Employees,
abolished Reconstruction Finance Corporation.
Termination on June 30, 1954, of Reconstruction Finance Corporation and liquidation thereof, see sections
608 and 609 of Title 15, Commerce and Trade, and notes
thereunder.

§ 1701n. Reduction of vulnerability of congested
urban areas to enemy attack
The Department of Housing and Urban Development, and any other departments or agencies
of the Federal Government having powers, functions, or duties with respect to housing under
any law shall exercise such powers, functions, or
duties in such manner as, consistent with the requirements thereof, will facilitate progress in
the reduction of the vulnerability of congested
urban areas to enemy attack.
(Aug. 2, 1954, ch. 649, title VIII, § 811, 68 Stat. 646;
Pub. L. 90–19, § 10(g), May 25, 1967, 81 Stat. 23.)

CODIFICATION
Section was enacted as part of the Housing and Community Development Act of 1974, and not as part of the
National Housing Act which comprises this chapter.

§ 1701m. Credit and cancellation of notes transferred from Reconstruction Finance Corporation; net loss computation
The Secretary of the Treasury is authorized
and directed from time to time to credit and
cancel the note or notes of the Housing and
Home Finance Administrator executed and delivered in connection with loans transferred
from the Reconstruction Finance Corporation to
the Housing and Home Finance Agency pursuant
to Reorganization Plan Numbered 23 of 1950 (64
Stat. 1279), to the extent of the net loss, as determined by the Secretary of the Treasury, sustained by said Agency in the liquidation of defaulted loans. The net loss shall be the sum of
the unpaid principal and advances for care and
preservation of collateral, together with accrued
and unpaid interest on said principal and advances, and all expenses and costs (other than
those subject to administrative expense limitations) in connection with the liquidation of defaulted loans, less the amount actually realized
by the Housing and Home Finance Agency on account of such defaulted loans.
(July 14, 1952, ch. 723, § 9, 66 Stat. 603.)
REFERENCES IN TEXT
Reorganization Plan Numbered 23 of 1950, referred to
in text, is set out in the Appendix to Title 5, Government Organization and Employees.
CODIFICATION
Section was enacted as part of the Housing Act of
1952, and not as part of the National Housing Act which
comprises this chapter.
TRANSFER OF FUNCTIONS
Functions, powers, and duties of Housing and Home
Finance Agency and its Administrator transferred to

CODIFICATION
Section was enacted as part of the Housing Act of
1954, and not as part of the National Housing Act which
comprises this chapter.
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Department of Housing and Urban Development’’ for ‘‘Housing and Home
Finance Agency, including its constituent agencies’’.

§ 1701o. Annual report of Secretary
The Secretary of Housing and Urban Development shall, as soon as practicable during each
calendar year, make a report to the President
for submission to the Congress on all operations
and programs (including but not limited to the
insurance, urban renewal, public housing, and
rent supplement programs) under the jurisdiction of the Department of Housing and Urban
Development during the previous calendar year.
Such report shall contain recommendations for
strengthening or improving such programs, or,
when necessary to implement more effectively
Congressional policies and purposes, for establishing new or alternative programs.
(Aug. 2, 1954, ch. 649, title VIII, § 802(a), 68 Stat.
642; Pub. L. 89–117, title XI, § 1101, Aug. 10, 1965,
79 Stat. 502; Pub. L. 90–19, § 10(f), May 25, 1967, 81
Stat. 23; Pub. L. 100–242, title V, § 570(b), Feb. 5,
1988, 101 Stat. 1950.)
CODIFICATION
Section was enacted as part of the Housing Act of
1954, and not as part of the National Housing Act which
comprises this chapter.
AMENDMENTS
1988—Pub. L. 100–242 inserted section catchline ‘‘Annual report of Secretary’’.
1967—Pub. L. 90–19 struck out ‘‘FHA’’ before ‘‘insurance’’ and substituted ‘‘Secretary of Housing and
Urban Development’’ and ‘‘Department of Housing and

§ 1701p

TITLE 12—BANKS AND BANKING

Urban Development’’ for ‘‘Housing and Home Finance
Administrator’’ and ‘‘Housing and Home Finance Agency’’, respectively.
1965—Pub. L. 89–117 specifically included FHA insurance, urban renewal, public housing, and rent supplement programs within the operation and programs of
the Housing and Home Finance Agency which the report shall cover and inserted requirement that the report contain recommendations for improving programs
and for new or alternative programs.

§ 1701p. Contents of report to President and Congress
The annual report made by the Secretary of
Housing and Urban Development to the President for submission to the Congress on all operations provided for by section 1701o of this title
shall contain pertinent information with respect
to all projects for which any loan, contribution,
or grant has been made by the Department of
Housing and Urban Development, including the
amount of loans, contributions and grants contracted for.
(Aug. 2, 1954, ch. 649, title VIII, § 817, 68 Stat. 648;
Pub. L. 90–19, § 10(j), May 25, 1967, 81 Stat. 23;
Pub. L. 97–375, title II, § 207(a), Dec. 21, 1982, 96
Stat. 1824.)
CODIFICATION
Section was enacted as part of the Housing Act of
1954, and not as part of the National Housing Act which
comprises this chapter.
AMENDMENTS
1982—Pub. L. 97–375 struck out requirement for the
inclusion of pertinent information respecting all builders’ cost certifications required by section 1715r of this
title, including amounts paid by mortgagors to mortgagees for application to the reduction of the principal
obligations of the mortgages pursuant to that section.
1967—Pub. L. 90–19 substituted ‘‘Secretary of Housing
and Urban Development’’ and ‘‘Department of Housing
and Urban Development’’ for ‘‘Housing and Home Finance Administrator’’ and ‘‘Housing and Home Finance
Agency’’, respectively.

§ 1701p–1. Periodic report on residential mortgage delinquencies and foreclosures
As soon as practicable following November 30,
1983, the Secretary of Housing and Urban Development, with the cooperation of the Federal
Housing Finance Agency, the Federal Deposit
Insurance Corporation, the Board of Governors
of the Federal Reserve System, and the Comptroller of the Currency, shall develop a method
of accurately reporting to the Congress on a
periodic basis with respect to residential mortgage delinquencies and foreclosures. Each such
report shall include information with respect to
the number of residential mortgage foreclosures,
and the number of sixty- and ninety-day residential mortgage delinquencies, in the Nation
and in each State.
(Pub. L. 98–181, title I [title IV, § 469], Nov. 30,
1983, 97 Stat. 1237; Pub. L. 111–203, title III, § 372,
July 21, 2010, 124 Stat. 1566.)
CODIFICATION
Section was enacted as part of the Housing and
Urban–Rural Recovery Act of 1983 and also as part of
the Domestic Housing and International Recovery and
Financial Stability Act, and not as part of the National
Housing Act which comprises this chapter.

Page 430
AMENDMENTS

2010—Pub. L. 111–203 substituted ‘‘Federal Housing Finance Agency’’ for ‘‘Federal Home Loan Bank Board’’.
EFFECTIVE DATE OF 2010 AMENDMENT
Amendment by Pub. L. 111–203 effective on the transfer date, see section 351 of Pub. L. 111–203, set out as a
note under section 906 of Title 2, The Congress.
TERMINATION OF REPORTING REQUIREMENTS
For termination, effective May 15, 2000, of provisions
of law requiring submittal to Congress of any annual,
semiannual, or other regular periodic report listed in
House Document No. 103–7 (in which a report required
under this section is listed on page 105), see section 3003
of Pub. L. 104–66, set out as a note under section 1113 of
Title 31, Money and Finance.

§ 1701p–2. Default and foreclosure database
(a) Establishment
The Secretary of Housing and Urban Development and the Director of the Bureau, in consultation with the Federal agencies responsible
for regulation of banking and financial institutions involved in residential mortgage lending
and servicing, shall establish and maintain a
database of information on foreclosures and defaults on mortgage loans for one- to four-unit
residential properties and shall make such information publicly available, subject to subsection
(e).
(b) Census tract data
Information in the database may be collected,
aggregated, and made available on a census
tract basis.
(c) Requirements
Information collected and made available
through the database shall include—
(1) the number and percentage of such mortgage loans that are delinquent by more than 30
days;
(2) the number and percentage of such mortgage loans that are delinquent by more than 90
days;
(3) the number and percentage of such properties that are real estate-owned;
(4) number and percentage of such mortgage
loans that are in the foreclosure process;
(5) the number and percentage of such mortgage loans that have an outstanding principal
obligation amount that is greater than the
value of the property for which the loan was
made; and
(6) such other information as the Secretary
of Housing and Urban Development and the
Director of the Bureau consider appropriate.
(d) Rule of construction
Nothing in this section shall be construed to
encourage discriminatory or unsound allocation
of credit or lending policies or practices.
(e) Privacy and confidentiality
In establishing and maintaining the database
described in subsection (a), the Secretary of
Housing and Urban Development and the Director of the Bureau shall—
(1) be subject to the standards applicable to
Federal agencies for the protection of the confidentiality of personally identifiable information and for data security and integrity;

Page 431

TITLE 12—BANKS AND BANKING

(2) implement the necessary measures to
conform to the standards for data integrity
and security described in paragraph (1); and
(3) collect and make available information
under this section, in accordance with paragraphs (5) and (6) of section 5512(c) of this title
and the rules prescribed under such paragraphs, in order to protect privacy and confidentiality.
(Pub. L. 111–203, title XIV, § 1447, July 21, 2010,
124 Stat. 2172.)
CODIFICATION
Section was enacted as part of the Expand and Preserve Home Ownership Through Counseling Act and
also as part of the Mortgage Reform and Anti-Predatory Lending Act and as part of the Dodd-Frank Wall
Street Reform and Consumer Protection Act, and not
as part of the National Housing Act which comprises
this chapter.
EFFECTIVE DATE
Section effective on the date on which final regulations implementing such section take effect, or on the
date that is 18 months after the designated transfer
date if such regulations have not been issued by that
date, see section 1400(c) of Pub. L. 111–203, set out as an
Effective Date of 2010 Amendment note under section
1601 of Title 15, Commerce and Trade.
DEFINITION OF ‘‘BUREAU’’
‘‘Bureau’’ as meaning the Bureau of Consumer Financial Protection established under title X of Pub. L.
111–203, see section 5301 of this title.

§ 1701q. Supportive housing for the elderly
(a) Purpose
The purpose of this section is to enable elderly
persons to live with dignity and independence by
expanding the supply of supportive housing
that—
(1) is designed to accommodate the special
needs of elderly persons; and
(2) provides a range of services that are tailored to the needs of elderly persons occupying
such housing.
(b) General authority
The Secretary is authorized to provide assistance to private nonprofit organizations and consumer cooperatives to expand the supply of supportive housing for the elderly. Such assistance
shall be provided as (1) capital advances in accordance with subsection (c)(1), and (2) contracts
for project rental assistance in accordance with
subsection (c)(2). Such assistance may be used to
finance the construction, reconstruction, or
moderate or substantial rehabilitation of a
structure or a portion of a structure, or the acquisition of a structure, to be used as supportive
housing for the elderly in accordance with this
section. Assistance may also cover the cost of
real property acquisition, site improvement,
conversion, demolition, relocation, and other expenses that the Secretary determines are necessary to expand the supply of supportive housing for the elderly.
(c) Forms of assistance
(1) Capital advances
A capital advance provided under this section shall bear no interest and its repayment

§ 1701q

shall not be required so long as the housing remains available for very low-income elderly
persons in accordance with this section. Such
advance shall be in an amount calculated in
accordance with the development cost limitation established in subsection (h).
(2) Project rental assistance
Contracts for project rental assistance shall
obligate the Secretary to make monthly payments to cover any part of the costs attributed to units occupied (or, as approved by the
Secretary, held for occupancy) by very low-income elderly persons that is not met from
project income. The annual contract amount
for any project shall not exceed the sum of the
initial annual project rentals for all units so
occupied and any initial utility allowances for
such units, as approved by the Secretary. Any
contract amounts not used by a project in any
year shall remain available to the project
until the expiration of the contract. The Secretary may adjust the annual contract amount
if the sum of the project income and the
amount of assistance payments available
under this paragraph are inadequate to provide for reasonable project costs.
(3) Tenant rent contribution
A very low-income person shall pay as rent
for a dwelling unit assisted under this section
the highest of the following amounts, rounded
to the nearest dollar: (A) 30 percent of the person’s adjusted monthly income, (B) 10 percent
of the person’s monthly income, or (C) if the
person is receiving payments for welfare assistance from a public agency and a part of
such payments, adjusted in accordance with
the person’s actual housing costs, is specifically designated by such agency to meet the
person’s housing costs, the portion of such
payments which is so designated.
(d) Term of commitment
(1) Use limitations
All units in housing assisted under this section shall be made available for occupancy by
very low-income elderly persons for not less
than 40 years.
(2) Contract terms
The initial term of a contract entered into
under subsection (c)(2) shall be 240 months.
The Secretary shall, to the extent approved in
appropriation Acts, extend any expiring contract for a term of not less than 60 months. In
order to facilitate the orderly extension of expiring contracts, the Secretary is authorized
to make commitments to extend expiring contracts during the year prior to the date of expiration.
(e) Applications
Funds made available under this section shall
be allocated by the Secretary among approvable
applications submitted by private nonprofit organizations. Applications for assistance under
this section shall be submitted by an applicant
in such form and in accordance with such procedures as the Secretary shall establish. Such applications shall contain—
(1) a description of the proposed housing;

§ 1701q

TITLE 12—BANKS AND BANKING

(2) a description of the assistance the applicant seeks under this section;
(3) a description of the resources that are expected to be made available in compliance
with subsection (h);
(4) a description of (A) the category or categories of elderly persons the housing is intended to serve; (B) the supportive services, if
any, to be provided to the persons occupying
such housing; (C) the manner in which such
services will be provided to such persons, including, in the case of frail elderly persons,
evidence of such residential supervision as the
Secretary determines is necessary to facilitate
the adequate provision of such services; and
(D) the public or private sources of assistance
that can reasonably be expected to fund or
provide such services;
(5) a certification from the public official responsible for submitting a housing strategy
for the jurisdiction to be served in accordance
with section 12705 of title 42 that the proposed
project is consistent with the approved housing strategy; and
(6) such other information or certifications
that the Secretary determines to be necessary
or appropriate to achieve the purposes of this
section.
The Secretary shall not reject an application on
technical grounds without giving notice of that
rejection and the basis therefor to the applicant
and affording the applicant an opportunity to
respond.
(f) Initial selection criteria and processing
(1) Selection criteria
The Secretary shall establish selection criteria for assistance under this section, which
shall include—
(A) the ability of the applicant to develop
and operate the proposed housing;
(B) the need for supportive housing for the
elderly in the area to be served, taking into
consideration the availability of public
housing for the elderly and vacancy rates in
such facilities;
(C) the extent to which the proposed size
and unit mix of the housing will enable the
applicant to manage and operate the housing efficiently and ensure that the provision
of supportive services will be accomplished
in an economical fashion;
(D) the extent to which the proposed design of the housing will meet the special
physical needs of elderly persons;
(E) the extent to which the applicant has
demonstrated that the supportive services
identified in subsection (e)(4) will be provided on a consistent, long-term basis;
(F) the extent to which the applicant has
ensured that a service coordinator will be
employed or otherwise retained for the housing, who has the managerial capacity and responsibility for carrying out the actions described in subparagraphs (A) and (B) of subsection (g)(2);
(G) the extent to which the proposed design of the housing will accommodate the
provision of supportive services that are expected to be needed, either initially or over
the useful life of the housing, by the cat-

Page 432

egory or categories of elderly persons the
housing is intended to serve; and
(H) such other factors as the Secretary determines to be appropriate to ensure that
funds made available under this section are
used effectively.
(2) Delegated processing
(A) The Secretary shall establish procedures
to delegate the award, review and processing
of projects, selected by the Secretary in a national competition, to a State or local housing
agency that—
(i) is in geographic proximity to the property;
(ii) has demonstrated experience in and capacity for underwriting multifamily housing
loans that provide housing and supportive
services;
(iii) may or may not be providing low-income housing tax credits in combination
with the funding under this section; and
(iv) agrees to issue a firm commitment
within 12 months of delegation.
(B) The Secretary shall retain the authority
to process funding under this section in cases
in which no State or local housing agency has
applied to provide delegated processing pursuant to this paragraph or no such agency has
entered into an agreement with the Secretary
to serve as a delegated processing agency.
(C) The Secretary shall develop a schedule
for reasonable fees under this subparagraph to
be paid to delegated processing agencies,
which shall take into consideration any other
fees to be paid to the agency for other funding
provided to the project by the agency, including bonds, tax credits, and other gap funding.
(D) Assistance under subsection (c)(2) may
be provided for projects which identify in the
application for assistance a defined health and
other supportive services program including
sources of financing the services for eligible
residents and memoranda of understanding
with service provision agencies and organizations to provide such services for eligible residents at their request. Such supportive services plan and memoranda of understating
shall—
(i) identify the target populations to be
served by the project;
(ii) set forth methods for outreach and referral;
(iii) identify the health and other supportive services to be provided; and
(iv) identify the terms under which such
services will be made available to residents
of the project.
(E) Under such delegated system, the Secretary shall retain the authority to approve
rents and development costs and to execute
funding under this section within 60 days of receipt of the commitment from the State or
local agency. The Secretary shall provide to
such agency and the project sponsor, in writing, the reasons for any reduction in funding
under this section and such reductions shall be
subject to appeal.
(g) Provisions of services
(1) In general
In carrying out the provisions of this section, the Secretary shall ensure that housing

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assisted under this section provides a range of
services tailored to the needs of the category
or categories of elderly persons (including frail
elderly persons) occupying such housing. Such
services may include (A) meal service adequate to meet nutritional need; (B) housekeeping aid; (C) personal assistance; (D) transportation services; (E) health-related services;
(F) providing education and outreach regarding telemarketing fraud, in accordance with
the standards issued under section 671(f) of the
Housing and Community Development Act of
1992 (42 U.S.C. 13631(f)); and (G) such other
services as the Secretary deems essential for
maintaining independent living. The Secretary may permit the provision of services to
elderly persons who are not residents if the
participation of such persons will not adversely affect the cost-effectiveness or operation of the program or add significantly to
the need for assistance under this Act.
(2) Local coordination of services
The Secretary shall ensure that owners have
the managerial capacity to—
(A) assess on an ongoing basis the service
needs of residents;
(B) coordinate the provision of supportive
services and tailor such services to the individual needs of residents; and
(C) seek on a continuous basis new sources
of assistance to ensure the long-term provision of supportive services.
Any cost associated with this subsection shall
be an eligible cost under subsection (c)(2).
(3) Service coordinators
Any cost associated with employing or
otherwise retaining a service coordinator in
housing assisted under this section shall be
considered an eligible cost under subsection
(c)(2). If a project is receiving congregate
housing services assistance under section 8011
of title 42, the amount of costs provided under
subsection (c)(2) for the project service coordinator may not exceed the additional
amount necessary to cover the costs of providing for the coordination of services for residents of the project who are not eligible residents under such section 8011 of title 42. To the
extent that amounts are available pursuant to
subsection (c)(2) for the costs of carrying out
this paragraph within a project, an owner of
housing assisted under this section shall provide a service coordinator for the housing to
coordinate the provision of services under this
subsection within the housing.
(h) Development cost limitations
(1) In general
The Secretary shall periodically establish
reasonable development cost limitations by
market area for various types and sizes of supportive housing for the elderly by publishing a
notice of the cost limitations in the Federal
Register. The cost limitations shall reflect—
(A) the cost of construction, reconstruction, or rehabilitation of supportive housing
for the elderly that meets applicable State
and local housing and building codes;
(B) the cost of movables necessary to the
basic operation of the housing, as determined by the Secretary;

§ 1701q

(C) the cost of special design features necessary to make the housing accessible to elderly persons;
(D) the cost of special design features necessary to make individual dwelling units
meet the physical needs of elderly project
residents;
(E) the cost of congregate space necessary
to accommodate the provision of supportive
services to elderly project residents;
(F) if the housing is newly constructed, the
cost of meeting the energy efficiency standards promulgated by the Secretary in accordance with section 12709 of title 42; and
(G) the cost of land, including necessary
site improvement.
In establishing development cost limitations
for a given market area under this subsection,
the Secretary shall use data that reflect currently prevailing costs of construction, reconstruction, or rehabilitation, and land acquisition in the area. For purposes of this paragraph, the term ‘‘congregate space’’ shall include space for cafeterias or dining halls, community rooms or buildings, workshops, adult
day health facilities, or other outpatient
health facilities, or other essential service facilities. Neither this section nor any other
provision of law may be construed as prohibiting or preventing the location and operation,
in a project assisted under this section, of
commercial facilities for the benefit of residents of the project and the community in
which the project is located, except that assistance made available under this section
may not be used to subsidize any such commercial facility.
(2) Acquisition
In the case of existing housing and related
facilities to be acquired, the cost limitations
shall include—
(A) the cost of acquiring such housing,
(B) the cost of rehabilitation, alteration,
conversion, or improvement, including the
moderate rehabilitation thereof, and
(C) the cost of the land on which the housing and related facilities are located.
(3) Annual adjustments
The Secretary shall adjust the cost limitation not less than once annually to reflect
changes in the general level of construction,
reconstruction, or rehabilitation costs.
(4) Incentives for savings
(A) Special housing account
The Secretary shall use the development
cost limitations established under paragraph
(1) or (2) to calculate the amount of financing to be made available to individual owners. Owners which incur actual development
costs that are less than the amount of financing shall be entitled to retain 50 percent
of the savings in a special housing account.
Such percentage shall be increased to 75 percent for owners which add energy efficiency
features which—
(i) exceed the energy efficiency standards promulgated by the Secretary in accordance with section 12709 of title 42;

§ 1701q

TITLE 12—BANKS AND BANKING

(ii) substantially reduce the life-cycle
cost of the housing;
(iii) reduce gross rent requirements; and
(iv) enhance tenant comfort and convenience.
(B) Uses
The special housing account established
under subparagraph (A) may be used (i) to
supplement services provided to residents of
the housing or funds set aside for replacement reserves, or (ii) for such other purposes
as determined by the Secretary.
(5) Design flexibility
The Secretary shall, to the extent practicable, give owners the flexibility to design
housing appropriate to their location and proposed resident population within broadly defined parameters.
(6) Use of funds from other sources
An owner shall be permitted voluntarily to
provide funds from sources other than this section for amenities and other features of appropriate design and construction suitable for
supportive housing for the elderly if the cost
of such amenities is (A) not financed with the
advance, and (B) is not taken into account in
determining the amount of Federal assistance
or of the rent contribution of tenants. Notwithstanding any other provision of law, assistance amounts provided under this section
may be treated as amounts not derived from a
Federal grant.
(i) Tenant selection
(1) In general
An owner shall adopt written tenant selection procedures that are satisfactory to the
Secretary as (A) consistent with the purpose
of improving housing opportunities for very
low-income elderly persons; and (B) reasonably related to program eligibility and an applicant’s ability to perform the obligations of
the lease. Such tenant selection procedures
shall comply with subtitle C of title VI of the
Housing and Community Development Act of
1992 [42 U.S.C. 13601 et seq.] and any regulations issued under such subtitle. Owners shall
promptly notify in writing any rejected applicant of the grounds for any rejection.
(2) Information regarding housing under this
section
The Secretary shall provide to an appropriate agency in each area (which may be the
applicable Area Agency on the Aging) information regarding the availability of housing
assisted under this section.
(j) Miscellaneous provisions
(1) Technical assistance
The Secretary shall make available appropriate technical assistance to assure that applicants having limited resources, particularly
minority applicants, are able to participate
more fully in the program carried out under
this section.
(2) Civil rights compliance
Each owner shall certify, to the satisfaction
of the Secretary, that assistance made avail-

Page 434

able under this section will be conducted and
administered in conformity with title VI of
the Civil Rights Act of 1964 [42 U.S.C. 2000d et
seq.], the Fair Housing Act [42 U.S.C. 3601 et
seq.], and other Federal, State, and local laws
prohibiting discrimination and promoting
equal opportunity.
(3) Owner deposit
(A) In general
The Secretary shall require an owner to
deposit an amount not to exceed $25,000 in a
special escrow account to assure the owner’s
commitment to the housing. Such amount
shall be used only to cover operating deficits
during the first 3 years of operations and
shall not be used to cover construction
shortfalls or inadequate initial project rental assistance amounts.
(B) Reduction of requirement
The Secretary may reduce or waive the
owner deposit specified under paragraph (1)
for individual applicants if the Secretary
finds that such waiver or reduction is necessary to achieve the purposes of this section and the applicant demonstrates to the
satisfaction of the Secretary that it has the
capacity to manage and maintain the housing in accordance with this section. The Secretary shall reduce or waive the requirement
of the owner deposit under paragraph (1) in
the case of a nonprofit applicant that is not
affiliated with a national sponsor, as determined by the Secretary.
(4) Notice of appeal
The Secretary shall notify an owner not less
than 30 days prior to canceling any reservation of assistance provided under this section.
During the 30-day period following the receipt
of a notice under the preceding sentence, an
owner may appeal the proposed cancellation of
loan authority. Such appeal, including review
by the Secretary, shall be completed not later
than 45 days after the appeal is filed.
(5) Labor
(A) In general
The Secretary shall take such action as
may be necessary to ensure that all laborers
and mechanics employed by contractors and
subcontractors in the construction of housing with 12 or more units assisted under this
section shall be paid wages at rates not less
than the rates prevailing in the locality involved for the corresponding classes of laborers and mechanics employed on construction
of a similar character, as determined by the
Secretary of Labor in accordance with sections 3141–3144, 3146, and 3147 of title 40.
(B) Exemption
Subparagraph (A) shall not apply to any
individual who—
(i) performs services for which the individual volunteered;
(ii)(I) does not receive compensation for
such services; or
(II) is paid expenses, reasonable benefits,
or a nominal fee for such services; and
(iii) is not otherwise employed at any
time in the construction work.

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(6) Access to residual receipts
The Secretary shall authorize the owner of a
project assisted under this section to use any
residual receipts held for the project in excess
of $500 per unit (or in excess of such other
amount prescribed by the Secretary based on
the needs of the project) for activities to retrofit and renovate the project described under
section 8011(d)(3) of title 42, to provide a service coordinator for the project as described in
section 8011(d)(4) of title 42, or to provide supportive services (as such term is defined in
section 8011(k) of title 42) to residents of the
project. Any owner that uses residual receipts
under this paragraph shall submit to the Secretary a report, not less than annually, describing the uses of the residual receipts. In
determining the amount of project rental assistance to be provided to a project under subsection (c)(2) of this section, the Secretary
may take into consideration the residual receipts held for the project only if, and to the
extent that, excess residual receipts are not
used under this paragraph.
(7) Compliance with Housing and Community
Development Act of 1992
Each owner shall operate housing assisted
under this section in compliance with subtitle
C of title VI of the Housing and Community
Development Act of 1992 [42 U.S.C. 13601 et
seq.] and any regulations issued under such
subtitle.
(8) Use of project reserves
Amounts for project reserves for a project
assisted under this section may be used for
costs, subject to reasonable limitations as the
Secretary determines appropriate, for reducing the number of dwelling units in the
project. Such use shall be subject to the approval of the Secretary to ensure that the use
is designed to retrofit units that are currently
obsolete or unmarketable.
(k) Definitions
(1) The term ‘‘elderly person’’ means a household composed of one or more persons at least
one of whom is 62 years of age or more at the
time of initial occupancy.
(2) The term ‘‘frail elderly’’ means an elderly
person who is unable to perform at least 3 activities of daily living adopted by the Secretary
for purposes of this program. Owners may establish additional eligibility requirements (acceptable to the Secretary) based on the standards in
local supportive services programs.
(3) The term ‘‘owner’’ means a private nonprofit organization that receives assistance
under this section to develop and operate supportive housing for the elderly.
(4) The term ‘‘private nonprofit organization’’
means—
(A) any incorporated private institution or
foundation—
(i) no part of the net earnings of which inures to the benefit of any member, founder,
contributor, or individual;
(ii) which has a governing board—
(I) the membership of which is selected
in a manner to assure that there is significant representation of the views of the

§ 1701q

community in which such housing is located; and
(II) which is responsible for the operation of the housing assisted under this
section, except that, in the case of a nonprofit organization that is the sponsoring
organization of multiple housing projects
assisted under this section, the Secretary
may determine the criteria or conditions
under which financial, compliance and
other administrative responsibilities exercised by a single-entity private nonprofit
organization that is the owner corporation
responsible for the operation of an individual housing project may be shared or
transferred to the governing board of such
sponsoring organization; and
(iii) which is approved by the Secretary as
to financial responsibility; and
(B) a for-profit limited partnership the sole
general partner of which is—
(i) an organization meeting the requirements under subparagraph (A);
(ii) a for-profit corporation wholly owned
and controlled by one or more organizations
meeting the requirements under subparagraph (A); or
(iii) a limited liability company wholly
owned and controlled by one or more organizations meeting the requirements under subparagraph (A).
(5) The term ‘‘State’’ includes the several
States, the District of Columbia, the Commonwealth of Puerto Rico, and the possessions of
the United States.
(6) The term ‘‘Secretary’’ means the Secretary
of Housing and Urban Development.
(7) The term ‘‘supportive housing for the elderly’’ means housing that is designed (A) to meet
the special physical needs of elderly persons and
(B) to accommodate the provision of supportive
services that are expected to be needed, either
initially or over the useful life of the housing,
by the category or categories of elderly persons
that the housing is intended to serve.
(8) The term ‘‘very low-income’’ has the same
meaning as given the term ‘‘very low-income
families’’ under section 1437a(b)(2) of title 42.
(l) Allocation of funds
(1) Capital advances
Of any amounts made available for assistance under this section, such sums as may be
necessary shall be available for funding capital advances in accordance with subsection
(c)(1). Such amounts, the repayments from
such advances, and the proceeds from notes or
obligations issued under this section prior to
November 28, 1990, shall constitute a revolving
fund to be used by the Secretary in carrying
out this section.
(2) Project rental assistance
Of any amounts made available for assistance under this section, such sums as may be
necessary shall be available for funding
project rental assistance in accordance with
subsection (c)(2).
(3) Nonmetropolitan allocation
Not less than 15 percent of the funds made
available for assistance under this section

§ 1701q

TITLE 12—BANKS AND BANKING

shall be allocated by the Secretary on a national basis for nonmetropolitan areas. In
complying with this paragraph, the Secretary
shall either operate a national competition for
the nonmetropolitan funds or make allocations to regional offices of the Department of
Housing and Urban Development.
(m) Authorization of appropriations
There is authorized to be appropriated for providing assistance under this section $710,000,000
for fiscal year 2000.
(m) 2 Authorization of appropriations
There are authorized to be appropriated for
providing assistance under this section such
sums as may be necessary for each of fiscal
years 2001, 2002, and 2003.
(Pub. L. 86–372, title II, § 202, Sept. 23, 1959, 73
Stat. 667; Pub. L. 87–70, title II, § 201, June 30,
1961, 75 Stat. 162; Pub. L. 87–723, § 3, Sept. 28, 1962,
76 Stat. 670; Pub. L. 88–158, Oct. 24, 1963, 77 Stat.
278; Pub. L. 88–560, title II, §§ 201, 203(a)(2), Sept.
2, 1964, 78 Stat. 783; Pub. L. 89–117, title I, § 105(a),
(b)(1), formerly § 105, Aug. 10, 1965, 79 Stat. 457,
renumbered Pub. L. 89–754, title X, § 1001(1), (2),
Nov. 3, 1966, 80 Stat. 1284; Pub. L. 90–19, § 16(a),
May 25, 1967, 81 Stat. 25; Pub. L. 90–448, title
XVII, § 1706, Aug. 1, 1968, 82 Stat. 605; Pub. L.
91–152, title II, § 218, Dec. 24, 1969, 83 Stat. 390;
Pub. L. 93–383, title II, § 210(a)–(f), Aug. 22, 1974,
88 Stat. 669–671; Pub. L. 94–375, § 11, Aug. 3, 1976,
90 Stat. 1074; Pub. L. 95–128, title II, § 202, Oct. 12,
1977, 91 Stat. 1129; Pub. L. 95–557, title II, § 205,
Oct. 31, 1978, 92 Stat. 2090; Pub. L. 96–153, title
III, § 306(a)–(d), Dec. 21, 1979, 93 Stat. 1112, 1113;
Pub. L. 96–399, title III, § 319, Oct. 8, 1980, 94 Stat.
1646; Pub. L. 97–35, title III, § 336, Aug. 13, 1981, 95
Stat. 414; Pub. L. 98–181, title I [title II,
§ 223(a)(1), (b)–(e)], Nov. 30, 1983, 97 Stat. 1189,
1190; Pub. L. 98–479, title I, § 102(c), title II,
§§ 201(e), 203(h), Oct. 17, 1984, 98 Stat. 2222, 2228,
2230; Pub. L. 100–242, title I, §§ 161(a)–(c)(1),
(d)–(f), 162(b), (c), 170(g), Feb. 5, 1988, 101 Stat.
1855–1857, 1859, 1867; Pub. L. 101–625, title VIII,
§§ 801(a), (e), 804(a)–(c), 805, 807, 808, title IX,
§ 955(c), Nov. 28, 1990, 104 Stat. 4297, 4304,
4322–4324, 4421; Pub. L. 102–139, title II, Oct. 28,
1991, 105 Stat. 756; Pub. L. 102–242, title II,
§ 241(c)(2), Dec. 19, 1991, 105 Stat. 2331; Pub. L.
102–550, title VI, §§ 601(c), 602(a)–(c), (e)–(g),
677(a), 682(c), title IX, § 913(a), title XVI,
§ 1604(c)(3), Oct. 28, 1992, 106 Stat. 3802–3805, 3829,
3831, 3876, 4083; Pub. L. 106–74, title V, § 511, Oct.
20, 1999, 113 Stat. 1101; Pub. L. 106–569, title VIII,
§§ 821, 831–835, 851(c)(1), Dec. 27, 2000, 114 Stat.
3020–3022, 3024; Pub. L. 110–289, div. B, title VIII,
§ 2835(b), July 30, 2008, 122 Stat. 2873; Pub. L.
111–372, title I, §§ 101–105, Jan. 4, 2011, 124 Stat.
4077–4079; Pub. L. 113–76, div. L, title II, § 241,
Jan. 17, 2014, 128 Stat. 636.)
REFERENCES IN TEXT
This Act, referred to in subsec. (g)(1), is Pub. L.
86–372, Sept. 23, 1959, 73 Stat. 654, as amended, known as
the Housing Act of 1959. For complete classification of
this Act to the Code, see Short Title of 1959 Amendment note set out under section 1701 of this title and
Tables.
The Housing and Community Development Act of
1992, referred to in subsecs. (i)(1) and (j)(7), is Pub. L.
2 So

in original. Probably should be ‘‘(n)’’.

Page 436

102–550, Oct. 28, 1992, 106 Stat. 3672. Subtitle C of title VI
of the Act is classified generally to subchapter I (§ 13601
et seq.) of chapter 135 of Title 42, The Public Health and
Welfare. For complete classification of this Act to the
Code, see Short Title of 1992 Amendment note set out
under section 5301 of Title 42 and Tables.
The Civil Rights Act of 1964, referred to in subsec.
(j)(2), is Pub. L. 88–352, July 2, 1964, 78 Stat. 241, as
amended. Title VI of the Act is classified generally to
subchapter V (§ 2000d et seq.) of chapter 21 of Title 42.
For complete classification of this Act to the Code, see
Short Title note set out under section 2000a of Title 42
and Tables.
The Fair Housing Act, referred to in subsec. (j)(2), is
title VIII of Pub. L. 90–284, Apr. 11, 1968, 82 Stat. 81, as
amended, which is classified principally to subchapter
I (§ 3601 et seq.) of chapter 45 of Title 42. For complete
classification of this Act to the Code, see Short Title
note set out under section 3601 of Title 42 and Tables.
CODIFICATION
‘‘Sections 3141–3144, 3146, and 3147 of title 40’’ substituted in subsec. (j)(5)(A) for ‘‘the Act of March 3, 1931
(commonly known as the Davis-Bacon Act)’’ on authority of Pub. L. 107–217, § 5(c), Aug. 21, 2002, 116 Stat. 1303,
the first section of which enacted Title 40, Public
Buildings, Property, and Works.
Section was enacted as part of the Housing Act of
1959, and not as part of the National Housing Act which
comprises this chapter.
AMENDMENTS
2014—Subsec. (f)(2)(A). Pub. L. 113–76, § 241(a)(1), in introductory provisions, substituted ‘‘The Secretary
shall establish procedures to delegate the award, review
and processing of projects, selected by the Secretary in
a national competition, to a State or local housing
agency that—’’ for ‘‘In issuing a capital advance under
this subsection for any project for which financing for
the purposes described in the last two sentences of subsection (b) is provided by a combination of a capital advance under subsection (c)(1) and sources other than
this section, within 30 days of award of the capital advance, the Secretary shall delegate review and processing of such projects to a State or local housing agency
that—’’.
Subsec. (f)(2)(A)(iii). Pub. L. 113–76, § 241(a)(2), substituted ‘‘funding’’ for ‘‘capital advance’’ and a semicolon for a comma.
Subsec. (f)(2)(B). Pub. L. 113–76, § 241(b), substituted
‘‘funding under this section’’ for ‘‘capital advances’’.
Subsec. (f)(2)(C). Pub. L. 113–76, § 241(c), struck out
first sentence ‘‘An agency to which review and processing is delegated pursuant to subparagraph (A) may assess a reasonable fee which shall be included in the capital advance amounts and may recommend project
rental assistance amounts in excess of those initially
awarded by the Secretary.’’
Subsec. (f)(2)(D), (E). Pub. L. 113–76, § 241(d), (e), added
subpar. (D), redesignated former subpar. (D) as (E), and
in subpar. (E), substituted ‘‘execute funding under this
section’’ for ‘‘execute a capital advance’’ and ‘‘in funding under this section’’ for ‘‘in capital advance
amounts or project rental assistance’’.
2011—Subsec. (f)(1)(F) to (H). Pub. L. 111–372, § 101,
added subpar. (F) and redesignated former subpars. (F)
and (G) as (G) and (H), respectively.
Subsec. (h)(1). Pub. L. 111–372, § 102, inserted ‘‘reasonable’’ before ‘‘development cost limitations’’ in introductory provisions.
Subsec. (j)(3)(A). Pub. L. 111–372, § 103, inserted after
period at end ‘‘Such amount shall be used only to cover
operating deficits during the first 3 years of operations
and shall not be used to cover construction shortfalls
or inadequate initial project rental assistance
amounts.’’
Subsec. (k)(4). Pub. L. 111–372, § 104, amended par. (4)
generally. Prior to amendment, par. (4) defined ‘‘private nonprofit organization’’.

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Subsec. (l)(3). Pub. L. 111–372, § 105, inserted after period at end ‘‘In complying with this paragraph, the Secretary shall either operate a national competition for
the nonmetropolitan funds or make allocations to regional offices of the Department of Housing and Urban
Development.’’
2008—Subsec. (f). Pub. L. 110–289 substituted ‘‘Initial
selection criteria and processing’’ for ‘‘Selection criteria’’ in heading, designated existing provisions as par.
(1) and inserted heading, redesignated former pars. (1)
to (7) as subpars. (A) to (G), respectively, of par. (1), and
added par. (2).
2000—Subsec. (b). Pub. L. 106–569, § 833(1), struck out
‘‘from the Resolution Trust Corporation’’ after ‘‘or the
acquisition of a structure’’.
Subsec. (g)(1)(F), (G). Pub. L. 106–569, § 851(c)(1), added
cl. (F) and redesignated former cl. (F) as (G).
Subsec. (h)(1). Pub. L. 106–569, § 835, inserted at end of
concluding provisions ‘‘Neither this section nor any
other provision of law may be construed as prohibiting
or preventing the location and operation, in a project
assisted under this section, of commercial facilities for
the benefit of residents of the project and the community in which the project is located, except that assistance made available under this section may not be used
to subsidize any such commercial facility.’’
Subsec. (h)(2). Pub. L. 106–569, § 833(2), substituted
‘‘Acquisition’’ for ‘‘RTC properties’’ in heading and
struck out ‘‘from the Resolution Trust Corporation
under section 1441a(c) of this title or from the Federal
Deposit Insurance Corporation under section 1831q of
this title’’ after ‘‘related facilities to be acquired’’ in
introductory provisions.
Subsec. (h)(6). Pub. L. 106–569, § 832, substituted
‘‘sources other than this section’’ for ‘‘non-Federal
sources’’ and inserted at end ‘‘Notwithstanding any
other provision of law, assistance amounts provided
under this section may be treated as amounts not derived from a Federal grant.’’
Subsec. (j)(8). Pub. L. 106–569, § 834, added par. (8).
Subsec. (k)(4). Pub. L. 106–569, § 831, inserted concluding provisions.
Subsec. (m). Pub. L. 106–569, § 821, added subsec. (m)
relating to authorization of appropriations for fiscal
years 2001 to 2003.
1999—Subsec. (m). Pub. L. 106–74 added subsec. (m) relating to authorization of appropriations for fiscal year
2000.
1992—Subsec. (e)(5) to (7). Pub. L. 102–550, § 602(b), redesignated pars. (6) and (7) as (5) and (6), respectively,
and struck out former par. (5) which read as follows: ‘‘a
certification from the appropriate State or local agency (as determined by the Secretary) that the provision
of services identified in paragraph (4) is well designed
to serve the special needs of the category or categories
of elderly persons the housing is intended to serve;’’.
Subsec. (f)(2). Pub. L. 102–550, § 602(c), which directed
insertion of ‘‘, taking into consideration the availability of public housing for the elderly and vacancy rates
in such facilities’’ at end, was executed by making insertion before semicolon at end.
Subsec. (g)(1). Pub. L. 102–550, § 602(a)(1), struck out
‘‘and persons with disabilities’’ after ‘‘elderly persons’’
in last sentence.
Subsec. (g)(2). Pub. L. 102–550, § 677(a)(A), struck out
at end ‘‘Any cost associated with the employment of a
service coordinator shall also be an eligible cost except
where the project is receiving congregate housing services assistance under section 8011 of title 42.’’
Subsec. (g)(3). Pub. L. 102–550, § 677(a)(B), added par.
(3).
Subsec. (h)(2). Pub. L. 102–550, § 1604(c)(3), made technical amendment to reference to section 1831q of this
title to correct reference to corresponding provision of
original act.
Subsec. (i)(1). Pub. L. 102–550, § 682(c)(1), inserted after
first sentence ‘‘Such tenant selection procedures shall
comply with subtitle C of title VI of the Housing and
Community Development Act of 1992 and any regulations issued under such subtitle.’’

§ 1701q

Subsec. (i)(1)(A). Pub. L. 102–550, § 602(a)(2), substituted ‘‘elderly persons’’ for ‘‘persons with disabilities’’.
Subsec. (j)(3)(B). Pub. L. 102–550, § 602(f), inserted at
end ‘‘The Secretary shall reduce or waive the requirement of the owner deposit under paragraph (1) in the
case of a nonprofit applicant that is not affiliated with
a national sponsor, as determined by the Secretary.’’
Subsec. (j)(5). Pub. L. 102–550, § 913(a), amended par.
(5) generally. Prior to amendment, par. (5) read as follows:
‘‘(A) IN GENERAL.—Any contract for the construction
of affordable housing with 12 or more units assisted
with funds made available under this subtitle shall contain a provision requiring that not less than the wages
prevailing in the locality, as predetermined by the Secretary of Labor pursuant to the Davis-Bacon Act (40
U.S.C. 276a–276a–5), shall be paid to all laborers and mechanics employed in the development of affordable
housing involved, and participating jurisdictions shall
require certification as to compliance with the provisions of this section prior to making any payment
under such contract.
‘‘(B) WAIVER.—Subparagraph (A) shall not apply if
the individual receives no compensation or is paid expenses, reasonable benefits, or a nominal fee to perform
the services for which the individual volunteered and
such persons are not otherwise employed at any time in
the construction work.’’
Subsec. (j)(6). Pub. L. 102–550, § 602(e), added par. (6).
Subsec. (j)(7). Pub. L. 102–550, § 682(c)(2), added par. (7).
Subsec. (l). Pub. L. 102–550, § 601(c)(1), substituted ‘‘Allocation of funds’’ for ‘‘Authorizations’’ in heading.
Subsec. (l)(1). Pub. L. 102–550, § 601(c)(2), inserted sentence at beginning, substituted ‘‘Such amounts’’ for
‘‘Amounts so appropriated’’ in second sentence, and
struck out former first sentence which read as follows:
‘‘There are authorized to be appropriated for the purpose of funding capital advances in accordance with
subsection (c)(1) of this section $659,000,000 for fiscal
year 1992.’’
Subsec. (l)(2). Pub. L. 102–550, § 601(c)(3), added par. (2)
and struck out former par. (2) which read as follows:
‘‘For the purpose of funding contracts for project rental
assistance in accordance with subsection (c)(2) of this
section the Secretary may, to the extent approved in
an appropriations Act, reserve authority to enter into
obligations aggregating $363,000,000 for fiscal year
1992.’’
Subsec. (l)(3). Pub. L. 102–550, § 602(g), which directed
substitution of ‘‘15 percent’’ for ‘‘20 percent’’ in par. (4)
was executed to par. (3) to reflect the probable intent
of Congress.
Pub. L. 102–550, § 601(c)(4), substituted ‘‘for assistance
under this section’’ for ‘‘under this subtitle’’.
1991—Subsec. (g)(2). Pub. L. 102–139, amending Pub. L.
101–625, § 801(a), struck out ‘‘in housing principally serving frail elderly persons’’ after ‘‘coordinator’’.
Pub. L. 102–139 struck out ‘‘or a project where the
tenants are not principally frail elderly’’ before period
at end of subsec. (g)(2) as it existed prior to the general
amendment of this section by section 801(a) of Pub. L.
101–625.
Subsec. (h)(2). Pub. L. 102–242 inserted ‘‘or from the
Federal Deposit Insurance Corporation under section
1831q of this title’’ after ‘‘section 1441a(c) of this title’’.
1990—Pub. L. 101–625, § 801(a), amended section generally, substituting present provisions for provisions authorizing loans for housing and related facilities for elderly or handicapped families.
Subsec. (a)(4)(C). Pub. L. 101–625, § 801(e), struck out
before period at end ‘‘, and not more than $666,400,000
may be approved in appropriation Acts for such loans
with respect to fiscal year 1984. For fiscal years 1988
and 1989, not more than $621,701,000 and $630,000,000, respectively, may be approved in appropriation Acts for
such loans’’ and inserted at end ‘‘For fiscal year 1991,
not more than $714,200,000 may be approved in appropriation Acts for such loans.’’
Subsec. (a)(9). Pub. L. 101–625, § 804(b), added par. (9).

§ 1701q

TITLE 12—BANKS AND BANKING

Subsec. (c)(3). Pub. L. 101–625, § 955(c), designated existing provisions as subpar. (A), struck out before period at end ‘‘; but the Secretary may waive the application of this paragraph in cases or classes of cases where
laborers or mechanics, not otherwise employed at any
time in the construction of such housing, voluntarily
donate their services without full compensation for the
purpose of lowering the costs of construction and the
Secretary determines that any amounts saved thereby
are fully credited to the corporation, cooperative, or
public body or agency undertaking the construction’’,
and added subpar. (B).
Subsec. (d)(3). Pub. L. 101–625, § 804(a), inserted at end
‘‘The term also means the cost of acquiring existing
housing and related facilities from the Resolution
Trust Corporation under section 1441a(c) of this title,
the cost of rehabilitation, alteration, conversion, or
improvement, including the moderate rehabilitation
thereof, and the cost of the land on which the housing
and related facilities are located.’’
Subsec. (g). Pub. L. 101–625, § 808, designated existing
provisions as par. (1) and added par. (2).
Pub. L. 101–625, § 804(c), inserted at end ‘‘In the case
of existing housing and related facilities acquired from
the Resolution Trust Corporation under section 1441a(c)
of this title, the term of the contract pursuant to such
section 8 shall be 240 months.’’
Subsec. (k)(3). Pub. L. 101–625, § 807, added par. (3).
Subsec. (p). Pub. L. 101–625, § 805, added subsec. (p).
1988—Subsec. (a)(3). Pub. L. 100–242, § 161(c)(1), designated existing provisions as subpar. (A), substituted
‘‘taking into consideration the average yield, during
the 3-month period immediately preceding the fiscal
year in which the loan is made, on the most recently
issued 30-year marketable obligations of the United
States’’ for ‘‘of the Treasury taking into consideration
the average interest rate on all interest bearing obligations of the United States then forming a part of the
public debt, computed at the end of the fiscal year next
preceding the date on which the loan is made’’, and
added subpar. (B).
Subsec. (a)(4)(B)(i). Pub. L. 100–242, § 161(a), inserted
provisions relating to such sums as may be approved
for fiscal years 1988 and 1989, and substituted ‘‘October
1, 1983, to such sum’’ for ‘‘October 1, 1983, and to such
sum’’.
Pub. L. 100–242, § 161(d), substituted ‘‘Such notes or
other obligations shall bear interest at a rate determined by the Secretary of the Treasury taking into
consideration the average yield, during the 3-month period immediately preceding the fiscal year in which the
loan is made, on the most recently issued 30-year marketable obligations of the United States.’’ for ‘‘Such
notes or other obligations shall bear interest at a rate
determined by the Secretary of the Treasury, taking
into consideration the average interest rate on all interest bearing obligations of the United States then
forming a part of the public debt, computed at the end
of the fiscal year next preceding the date on which the
loan is made.’’
Subsec. (a)(4)(C). Pub. L. 100–242, § 161(b), inserted provisions relating to loan authority for fiscal years 1988
and 1989.
Subsec. (a)(8). Pub. L. 100–242, § 161(f), added par. (8).
Subsec. (c)(3). Pub. L. 100–242, § 162(b)(3), inserted reference to construction designed for dwelling use by 12
or more elderly or handicapped families.
Subsec. (d)(4). Pub. L. 100–242, § 170(g)(1), substituted
reference to a handicapped person if such person has a
developmental disability as defined in section 6001(7) of
title 42, for reference to a handicapped person if such
person is a developmentally disabled individual as defined in section 102(5) of the Developmental Disabilities
Services and Facilities Construction Amendments of
1950.
Subsec. (d)(9), (10). Pub. L. 100–242, § 162(b)(2), added
pars. (9), (10).
Subsec. (f). Pub. L. 100–242, § 162(c), designated existing provisions as par. (1) and added par. (2).
Pub. L. 100–242, § 170(g)(2), substituted ‘‘section 133’’
for ‘‘section 134’’.

Page 438

Subsec. (h). Pub. L. 100–242, § 162(b)(1), amended subsec. (h) generally, changing structure of subsection
from one consisting of introductory provisions and two
numbered paragraphs to one consisting of four numbered paragraphs.
Subsec. (l). Pub. L. 100–242, § 170(g)(3), substituted
‘‘different’’ for ‘‘difference’’.
Subsec. (n). Pub. L. 100–242, § 161(e), added subsec. (n).
1984—Subsec. (a)(4)(B)(i). Pub. L. 98–479, § 203(h), substituted ‘‘chapter 31 of title 31’’ for ‘‘the Second Liberty Bond Act’’ and ‘‘such chapter’’ for ‘‘that Act’’.
Pub. L. 98–479, § 102(c)(1), substituted ‘‘October 1, 1984’’
for ‘‘October 1, 1985’’.
Subsec. (f). Pub. L. 98–479, § 201(e), substituted
‘‘Health and Human Services’’ for ‘‘Health, Education,
and Welfare’’.
Subsec. (h)(1). Pub. L. 98–479, § 102(c)(2)(A), inserted
‘‘and’’ at end.
Subsec. (h)(2). Pub. L. 98–479, § 102(c)(2)(B), substituted
a period for ‘‘; and’’ at end.
Subsec. (l). Pub. L. 98–479, § 102(c)(3), inserted ‘‘The
Secretary shall not impose difference requirements or
standards with respect to construction change orders,
increases in loan amount to cover change orders, errors
in plans and specifications, and use of contingency
funds, because of the method of contractor selection
used by the sponsor or borrower.’’
1983—Subsec. (a)(3). Pub. L. 98–181, § 223(a)(1), inserted
‘‘, except that such interest rate plus such allowance
shall not exceed 9.25 per centum per annum’’.
Subsec. (a)(4)(B)(i). Pub. L. 98–181, § 223(b), struck out
‘‘and’’ after ‘‘1980’’ and inserted ‘‘, to $6,400,000,000 on
October 1, 1983, and to such sum as may be approved in
an appropriation Act on October 1, 1985,’’.
Subsec. (a)(4)(C). Pub. L. 98–181, § 223(c), substituted
‘‘$666,400,000’’ and ‘‘1984’’ for ‘‘$850,848,000’’ and ‘‘1982’’,
respectively.
Subsec. (h). Pub. L. 98–181, § 223(d)(1), (2), in provisions
preceding par. (1), substituted ‘‘1983’’ for ‘‘1978’’, and inserted ‘‘, and persons described in subparagraphs (B)
and (C) of subsection (d)(4) of this section who have
been released from residential health treatment facilities’’.
Subsec. (h)(1). Pub. L. 98–181, § 223(d)(3), (5), substituted ‘‘persons described in the first sentence of this
subsection’’ for ‘‘handicapped persons’’, and struck out
‘‘and’’ at end.
Subsec. (h)(2). Pub. L. 98–181, § 223(d)(4), (6), substituted ‘‘persons described in the first sentence of this
subsection who are’’ for ‘‘handicapped persons’’, and
substituted ‘‘such community; and’’ for ‘‘such community’’.
Subsecs. (i) to (m). Pub. L. 98–181, § 223(e), added subsecs. (i) to (m).
1981—Subsec. (a)(4)(C). Pub. L. 97–35 inserted provisions relating to fiscal year 1982.
1980—Subsec. (d)(3). Pub. L. 96–399 inserted last sentence relating to housing to meet the needs of handicapped (primarily nonelderly) persons.
1979—Subsec. (a)(4)(B)(i). Pub. L. 96–153, § 306(a), provided for increase of notes or other obligations to
$3,827,500,000 on October 1, 1979, to $4,777,500,000 on October 1, 1980, and to $5,752,500,000 on October 1, 1981.
Subsec. (a)(6), (7). Pub. L. 96–153, § 306(b), added pars.
(6) and (7).
Subsec. (d)(8)(A). Pub. L. 96–153, § 306(c)(1), substituted
‘‘adult day health facilities, or other’’ for ‘‘or infirmaries or other inpatient or’’.
Subsec. (f). Pub. L. 96–153, § 306(c)(2), inserted reference to adult day health services.
Subsec. (g). Pub. L. 96–153, § 306(d), inserted provisions
that at the time of settlement on permanent financing,
the Secretary make appropriate adjustment in the
amount of assistance to be provided under a contract
for annual contributions pursuant to section 8 of the
United States Housing Act of 1937 reflecting the difference between interest rate which will actually be
charged in connection with such permanent financing
and the interest rate which was in effect at the time of
the reservation of assistance in connection with the
project.

Page 439

TITLE 12—BANKS AND BANKING

1978—Subsec. (a)(4)(C). Pub. L. 95–557, § 205(b), struck
out ‘‘in any fiscal year’’ after ‘‘The aggregate loans
made under this section’’, and ‘‘for such year’’ after
‘‘lending authority established’’.
Subsec. (d)(2). Pub. L. 95–557, § 205(d), designated provisions beginning ‘‘no part of’’ as par. (A), substituted
‘‘member, founder, contributor, or individual’’ for ‘‘private shareholder, contributor, or individual, if such institution or foundation is approved by the Secretary as
to financial responsibility’’, and added pars. (B) and (C).
Subsec. (d)(3). Pub. L. 95–557, § 205(c), inserted ‘‘the
cost of movables necessary to the basic operation of the
project as determined by the Secretary,’’ after ‘‘related
facilities’’.
Subsec. (h). Pub. L. 95–557, § 205(a), added subsec. (h).
1977—Subsec. (d)(3). Pub. L. 95–128, § 202(a), provided
for determination of ‘‘development cost’’ without regard to mortgage limits applicable to housing projects
subject to mortgages insured under section 1715v of this
title.
Subsec. (g). Pub. L. 95–128, § 202(b), added subsec. (g).
1976—Subsec. (a)(3). Pub. L. 94–375, § 11(c)(1), substituted ‘‘average interest rate on all interest bearing
obligations of the United States then forming a part of
the public debt, computed at the end of the fiscal year
next preceding the date on which the loan is made’’ for
‘‘current average market yield on outstanding marketable obligations of the United States with remaining
periods to maturity comparable to the average maturities of such loans’’.
Subsec. (a)(4)(B)(i). Pub. L. 94–375, § 11(a), (c)(2), substituted ‘‘$1,475,000,000, which amount shall be increased to $2,387,500,000 on October 1, 1977, and to
$3,300,000,000 on October 1, 1978’’ for ‘‘$800,000,000’’ and
‘‘the average interest rate on all interest bearing obligations of the United States then forming a part of the
public debt, computed at the end of the fiscal year next
preceding the date on which the loan is made’’ for ‘‘the
current average market yield on outstanding marketable obligations of the United States of comparable
maturities during the month preceding the issuance of
the notes or other obligations’’, and inserted provision
restricting the amount of notes or obligations issued to
the Secretary of the Treasury to not more than
$800,000,000.
Subsec. (d)(4). Pub. L. 94–375, § 11(b), included in definition of ‘‘elderly or handicapped families’’ two or
more elderly or handicapped persons living together,
one such person and another providing care for the
first, or a surviving member of the family who was living in the unit at the time another member died.
1974—Subsec. (a)(3). Pub. L. 93–383, § 210(a), substituted provisions authorizing the Secretary of the
Treasury to determine the interest rate, for provisions
authorizing the Secretary of Housing and Urban Development to determine the interest rate.
Subsec. (a)(4). Pub. L. 93–383, § 210(d), redesignated existing provision as subsec. (a)(4)(A), inserted ‘‘, and the
proceeds from notes or other obligations issued under
subparagraph (B),’’ after ‘‘Amounts so appropriated’’,
and added subsec. (a)(4)(B), (C).
Subsec. (a)(5). Pub. L. 93–383, § 210(e), added par. (5).
Subsec. (d)(4). Pub. L. 93–383, § 210(b), substituted ‘‘an
impairment’’ for ‘‘a physical impairment’’ and inserted
provisions relating to developmentally disabled individuals.
Subsec. (d)(8). Pub. L. 93–383, § 210(f), inserted ‘‘residing in the project or in the area’’ after ‘‘families’’.
Subsec. (f). Pub. L. 93–383, § 210(c), added subsec. (f).
1969—Subsec. (a)(4). Pub. L. 91–152 increased by
$150,000,000 on July 1, 1969 the amount authorized to be
appropriated for the purposes of this section.
1968—Subsec. (a)(1). Pub. L. 90–448, § 1706(1), authorized assistance to limited profit sponsors.
Subsec. (a)(2). Pub. L. 90–448, § 1706(2), authorized
loans to any limited profit sponsor approved by the
Secretary.
Subsec. (a)(3). Pub. L. 90–448, § 1706(3), limited the
amount of the loan to not more than 90 per centum of
the development cost in the case of other than a cor-

§ 1701q

poration, consumer cooperative, or public body or
agency.
1967—Pub. L. 90–19, § 16(a)(1), substituted ‘‘Secretary’’
for ‘‘Administrator’’ wherever appearing in subsecs.
(a)(2) to (4), (b), (c)(2), (3), (d)(2), (4), and (e) of this section.
Subsec. (c)(2). Pub. L. 90–19, § 16(a)(2), struck out at
end ‘‘, except that for purposes of this subsection the
Administrator shall perform the functions vested in the
Commissioner by such section 513’’.
Subsec. (d)(6). Pub. L. 90–19, § 16(a)(3), substituted definition of ‘‘Secretary’’ meaning the Secretary of Housing and Urban Development for ‘‘Administrator’’ meaning the Housing and Home Finance Administrator.
1965—Subsec. (a)(3). Pub. L. 89–117, § 105(b)(1), substituted ‘‘the lower of (A) 3 per centum per annum, or’’
for ‘‘the higher of (A) 23⁄4 per centum per annum, or’’.
Subsec. (a)(4). Pub. L. 89–117, § 105(a), increased
amount authorized to be appropriated from $350,000,000
to $500,000,000.
1964—Subsec. (a)(1), (2). Pub. L. 88–560, § 203(a)(2)(A),
substituted ‘‘elderly or handicapped families’’ for ‘‘elderly families and elderly persons’’.
Subsec. (a)(4). Pub. L. 88–560, § 201, increased amount
authorized to be appropriated from $275,000,000 to
$350,000,000.
Subsec. (d)(1). Pub. L. 88–560, § 203(a)(2)(B), included in
definition of ‘‘housing’’ structures suitable for dwelling
use by handicapped families, designated existing provisions as subpar. (A), and added subpar. (B).
Subsec. (d)(4). Pub. L. 88–560, § 203(a)(2)(C), substituted
definitions of ‘‘elderly or handicapped families’’ and
when ‘‘a person shall be considered handicapped’’ for
former provisions defining ‘‘elderly families’’ as ‘‘families the head of which (or his spouse) is sixty-two years
of age or over’’ and ‘‘elderly persons’’ as ‘‘persons who
are sixty-two years of age or over’’.
Subsec. (d)(7). Pub. L. 88–560, § 203(a)(2)(D), redefined
‘‘construction’’ to include rehabilitation, alteration,
conversion, or improvement of existing structures.
Subsec. (d)(8). Pub. L. 88–560, § 203 (a)(2)(E), redefined
‘‘existing facilities’’ by designating existing provisions
as cl. (A), inserting in cl. (A) ‘‘by elderly or handicapped families’’ and ‘‘workshops’’, and adding cl. (B).
Subsec. (e). Pub. L. 88–560, § 203(a)(2)(A), substituted
‘‘elderly or handicapped families’’ for ‘‘elderly families
and elderly persons’’ in two places.
1963—Subsec. (a)(4). Pub. L. 88–158 increased amount
authorized to be appropriated from $225,000,000 to
$275,000,000.
1962—Subsec. (a)(4). Pub. L. 87–723, § 3(a), increased
amount authorized to be appropriated from $125,000,000
to $225,000,000.
Subsec. (d)(1). Pub. L. 87–723, § 3(b)(1), redesignated
subsec. (d)(1)(A) as entire subsec. (d)(1) and struck out
subsec. (d)(1)(B) which included in definition of ‘‘housing’’ dwelling facilities provided by rehabilitation, alteration, conversion, or improvement of existing structures which were otherwise inadequate for proposed
dwellings used by elderly families and persons.
Subsec. (d)(7). Pub. L. 87–723, § 3(b)(2), struck out ‘‘, or
rehabilitation, alteration, conversion, or improvement
of existing structures’’ after ‘‘new structures’’.
Subsec. (d)(8). Pub. L. 87–723, § 3(b)(3), redesignated
subsec. (d)(8)(A) as entire subsec. (d)(8) and struck out
subsec. (d)(8)(B) which included in definition of ‘‘related facilities’’ structures suitable for essential service
facilities provided by rehabilitation, alteration, conversion, or improvement of existing structures which were
otherwise inadequate for essential service facilities.
1961—Subsec. (a)(1). Pub. L. 87–70, § 201(a)(1), authorized assistance for consumer cooperatives and public
bodies and agencies.
Subsec. (a)(2). Pub. L. 87–70, § 201(a)(2), authorized
loans to consumer cooperatives and to public bodies or
agencies, and prohibited loans to public bodies or agencies unless they certify that they are not receiving financial assistance exclusively pursuant to the United
States Housing Act of 1937.
Subsec. (a)(3). Pub. L. 87–70, § 201(a)(3), (b), substituted
‘‘loan under this section’’ for ‘‘loan to a corporation

§ 1701q

TITLE 12—BANKS AND BANKING

Page 440

under this section’’, and ‘‘may be in an amount not exceeding the total development cost’’ for ‘‘may be in an
amount not exceeding 98 per centum of the total development cost’’.
Subsec. (a)(4). Pub. L. 87–70, § 201(c), increased amount
authorized to be appropriated from $50,000,000 to
$125,000,000, and struck out provisions which limited
the amount outstanding at any one time for related facilities to not more than $5,000,000.
Subsec. (c)(3). Pub. L. 87–70, § 201(a)(4), substituted
‘‘credited to the corporation, cooperative, or public
body or agency undertaking’’ for ‘‘credited to the corporation undertaking’’.
Subsec. (e). Pub. L. 87–70, § 201(d), added subsec. (e).

after Nov. 28, 1990, except that such amendment may
not be construed to require repayment of any wages
paid before Nov. 28, 1990, for services provided before
such date, see section 955(d) of Pub. L. 101–625, set out
as a note under section 1437j of Title 42.
Pub. L. 101–507, title II, Nov. 5, 1990, 104 Stat. 1358,
provided that sections 801, 802, and 811 of Pub. L. 101–625
[enacting sections 8011 and 8013 of Title 42, amending
this section and sections 1437g and 1439 of Title 42, and
enacting provisions set out as notes under this section]
are deemed enacted as of the date of enactment of Pub.
L. 101–507, which was approved Nov. 5, 1990.

EFFECTIVE DATE OF 2000 AMENDMENT

Pub. L. 100–242, title I, § 162(f), Feb. 5, 1988, 101 Stat.
1859, provided that:
‘‘(1) Except as otherwise provided in this section, the
provisions of, and amendments made by, this section
[amending this section and enacting and repealing provisions set out as notes below] shall not apply with respect to projects with loans or loan reservations made
under section 202 of the Housing Act of 1959 [this section] before the implementation date under subsection
(e) [section 162(e) of Pub. L. 100–242 set out below].
‘‘(2) Notwithstanding paragraph (1), the Secretary
shall apply the provisions of, and amendments made
by, this section to any project if needed to facilitate
the development of such project in a timely manner.’’

Pub. L. 106–569, title VIII, § 803, Dec. 27, 2000, 114 Stat.
3019, provided that:
‘‘(a) IN GENERAL.—The provisions of this title [see
section 801 of Pub. L. 106–569, set out as a Short Title
of 2000 Amendment note under section 1701 of this title]
and the amendments made by this title are effective as
of the date of the enactment of this Act [Dec. 27, 2000],
unless such provisions or amendments specifically provide for effectiveness or applicability upon another
date certain.
‘‘(b) EFFECT OF REGULATORY AUTHORITY.—Any authority in this title or the amendments made by this
title to issue regulations, and any specific requirement
to issue regulations by a date certain, may not be construed to affect the effectiveness or applicability of the
provisions of this title or the amendments made by this
title under such provisions and amendments and subsection (a) of this section.’’
EFFECTIVE DATE OF 1999 AMENDMENT
Pub. L. 106–74, title V, § 503, Oct. 20, 1999, 113 Stat.
1101, provided that:
‘‘(a) IN GENERAL.—The provisions of this title [see
Short Title of 1999 Amendment note set out under section 1701 of this title] and the amendments made by
this title are effective as of the date of the enactment
of this Act [Oct. 20, 1999], unless such provisions or
amendments specifically provide for effectiveness or
applicability upon another date certain.
‘‘(b) EFFECT OF REGULATORY AUTHORITY.—Any authority in this title or the amendments made by this
title to issue regulations, and any specific requirement
to issue regulations by a date certain, may not be construed to affect the effectiveness or applicability of the
provisions of this title or the amendments made by this
title under such provisions and amendments and subsection (a) of this section.’’
EFFECTIVE DATE OF 1992 AMENDMENT
Amendment by sections 677(a) and 682(c) of Pub. L.
102–550 applicable on expiration of 6-month period beginning Oct. 28, 1992, see section 13642 of Title 42, The
Public Health and Welfare.
Amendment by section 1604(c)(3) of Pub. L. 102–550 effective as if included in the Federal Deposit Insurance
Corporation Improvement Act of 1991, Pub. L. 102–242,
as of Dec. 19, 1991, see section 1609(a) of Pub. L. 102–550,
set out as a note under section 191 of this title.
EFFECTIVE DATE OF 1990 AMENDMENTS
Pub. L. 101–625, title VIII, § 801(c), Nov. 28, 1990, 104
Stat. 4304, provided that: ‘‘The amendments made by
this section [amending this section and section 1439 of
Title 42, The Public Health and Welfare] shall take effect on October 1, 1991, with respect to projects approved on or after such date. The Secretary shall issue
regulations for such purpose after notice and an opportunity for public comment in accordance with section
553 of title 5, United States Code. Regulations shall be
issued for comment not later than 180 days after the
date of enactment of this Act [Nov. 28, 1990].’’
Amendment by section 955(c) of Pub. L. 101–625 applicable to any volunteer services provided before, on, or

EFFECTIVE DATE OF 1988 AMENDMENT

EFFECTIVE AND TERMINATION DATES OF 1983
AMENDMENT
Pub. L. 98–181, title I [title II, § 223(a)(2)], Nov. 30, 1983,
97 Stat. 1190, as amended by Pub. L. 99–120, § 5(b), Oct.
8, 1985, 99 Stat. 504; Pub. L. 99–156, § 5(b), Nov. 15, 1985,
99 Stat. 817; Pub. L. 99–219, § 5(b), Dec. 26, 1985, 99 Stat.
1732; Pub. L. 99–267, § 5(b), Mar. 27, 1986, 100 Stat. 75;
Pub. L. 99–272, title III, § 3011(b), Apr. 7, 1986, 100 Stat.
106; Pub. L. 99–289, § 1(b), May 2, 1986, 100 Stat. 412; Pub.
L. 99–345, § 1, June 24, 1986, 100 Stat. 673; Pub. L. 99–430,
Sept. 30, 1986, 100 Stat. 986; Pub. L. 100–122, § 1, Sept. 30,
1987, 101 Stat. 793; Pub. L. 100–154, Nov. 5, 1987, 101 Stat.
890; Pub. L. 100–170, Nov. 17, 1987, 101 Stat. 914; Pub. L.
100–179, Dec. 3, 1987, 101 Stat. 1018; Pub. L. 100–200, Dec.
21, 1987, 101 Stat. 1327, which provided that the amendment made by paragraph (1), amending this section,
shall apply only with respect to loan agreements entered into after September 30, 1982, and not later than
March 15, 1988, was repealed by Pub. L. 100–242, title I,
§ 161(c)(2), Feb. 5, 1988, 101 Stat. 1856.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
EFFECTIVE DATE OF 1965 AMENDMENT
Pub. L. 89–117, title I, § 105(b)(2), as added by Pub. L.
89–754, title X, § 1001(3), Nov. 3, 1966, 80 Stat. 1284, provided that: ‘‘The interest rate provided by the amendment made in paragraph (1) [amending this section]
shall be applicable (A) with respect to any loan made
on or after August 10, 1965, and (B) with respect to any
loan made prior to such date if construction of the
housing or related facilities to be assisted by such loan
was not commenced prior to such date, and not completed prior to the filing of an application for the benefits of such interest rate.’’
EFFECTIVE DATE OF 1962 AMENDMENT
Pub. L. 87–723, § 3(b), Sept. 28, 1962, 76 Stat. 670, provided that the amendments made by that section are
effective with respect to applications for loans made
under this section after Sept. 28, 1962.
REGULATIONS
Pub. L. 106–74, title V, § 502, Oct. 20, 1999, 113 Stat.
1101, provided that: ‘‘The Secretary of Housing and
Urban Development shall issue any regulations to

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TITLE 12—BANKS AND BANKING

carry out this title [see Short Title of 1999 Amendment
note set out under section 1701 of this title] and the
amendments made by this title that the Secretary determines may or will affect tenants of federally assisted housing only after notice and opportunity for
public comment in accordance with the procedure
under section 553 of title 5, United States Code, applicable to substantive rules (notwithstanding subsections
(a)(2), (b)(B), and (d)(3) of such section). Notice of such
proposed rulemaking shall be provided by publication
in the Federal Register. In issuing such regulations,
the Secretary shall take such actions as may be necessary to ensure that such tenants are notified of, and
provided an opportunity to participate in, the rulemaking, as required by such section 553.’’
RENTAL ASSISTANCE CONTRACT OBLIGATIONS
Pub. L. 111–117, div. A, title II, Dec. 16, 2009, 123 Stat.
3088, as amended by Pub. L. 112–10, div. B, title XII,
§ 2256, Apr. 15, 2011, 125 Stat. 197, provided in part: ‘‘That
amounts obligated for initial project rental assistance
contracts from amounts appropriated in fiscal year 2003
and thereafter shall remain available for the purpose of
paying such obligations incurred prior to the expiration of such amounts for a 10 year period following such
expiration’’.
INTERGENERATIONAL HOUSING ASSISTANCE
Pub. L. 108–186, title II, Dec. 16, 2003, 117 Stat. 2688,
provided that:
‘‘SEC. 201. SHORT TITLE.
‘‘This title may be cited as the ‘Living Equitably:
Grandparents Aiding Children and Youth Act of 2003’ or
the ‘LEGACY Act of 2003’.
‘‘SEC. 202. DEFINITIONS.
‘‘In this title:
‘‘(1) CHILD.—The term ‘child’ means an individual
who—
‘‘(A) is not attending school and is not more than
18 years of age; or
‘‘(B) is attending school and is not more than 19
years of age.
‘‘(2) COVERED FAMILY.—The term ‘covered family’
means a family that—
‘‘(A) includes a child; and
‘‘(B) has a head of household who is—
‘‘(i) a grandparent of the child who is raising
the child; or
‘‘(ii) a relative of the child who is raising the
child.
‘‘(3) ELDERLY PERSON.—The term ‘elderly person’
has the same meaning as in section 202(k) of the
Housing Act of 1959 (12 U.S.C. 1701q(k)).
‘‘(4) GRANDPARENT.—
‘‘(A) IN GENERAL.—The term ‘grandparent’ means,
with respect to a child, an individual who is a
grandparent or stepgrandparent of the child by
blood or marriage, regardless of the age of such individual.
‘‘(B) CASE OF ADOPTION.—In the case of a child
who was adopted, the term includes an individual
who, by blood or marriage, is a grandparent or
stepgrandparent of the child as adopted.
‘‘(5) INTERGENERATIONAL DWELLING UNIT.—The term
‘intergenerational dwelling unit’ means a qualified
dwelling unit that is reserved for occupancy only by
an intergenerational family.
‘‘(6) INTERGENERATIONAL FAMILY.—The term ‘intergenerational family’ means a covered family that has
a head of household who is an elderly person.
‘‘(7) PRIVATE NONPROFIT ORGANIZATION.—The term
‘private nonprofit organization’ has the same meaning as in section 202(k) of the Housing Act of 1959 (12
U.S.C. 1701q(k)).
‘‘(8) QUALIFIED DWELLING UNIT.—The term ‘qualified
dwelling unit’ means a dwelling unit that—
‘‘(A) has not fewer than 2 separate bedrooms;
‘‘(B) is equipped with design features appropriate
to meet the special physical needs of elderly persons, as needed; and

§ 1701q

‘‘(C) is equipped with design features appropriate
to meet the special physical needs of young children, as needed.
‘‘(9) RAISING A CHILD.—The term ‘raising a child’
means, with respect to an individual, that the individual—
‘‘(A) resides with the child; and
‘‘(B) is the primary caregiver for the child—
‘‘(i) because the biological or adoptive parents
of the child do not reside with the child or are unable or unwilling to serve as the primary caregiver for the child; and
‘‘(ii) regardless of whether the individual has a
legal relationship to the child (such as guardianship or legal custody) or is caring for the child informally and has no such legal relationship with
the child.
‘‘(10) RELATIVE.—
‘‘(A) IN GENERAL.—The term ‘relative’ means,
with respect to a child, an individual who—
‘‘(i) is not a parent of the child by blood or marriage; and
‘‘(ii) is a relative of the child by blood or marriage, regardless of the age of the individual.
‘‘(B) CASE OF ADOPTION.—In the case of a child
who was adopted, the term ‘relative’ includes an individual who, by blood or marriage, is a relative of
the family who adopted the child.
‘‘(11) SECRETARY.—The term ‘Secretary’ means the
Secretary of Housing and Urban Development.
‘‘SEC. 203. DEMONSTRATION PROGRAM FOR ELDERLY HOUSING FOR INTERGENERATIONAL
FAMILIES.
‘‘(a) DEMONSTRATION PROGRAM.—The Secretary shall
carry out a demonstration program (referred to in this
section as the ‘demonstration program’) to provide assistance for intergenerational dwelling units for intergenerational families in connection with the supportive
housing program under section 202 of the Housing Act
of 1959 (12 U.S.C. 1701q).
‘‘(b) INTERGENERATIONAL DWELLING UNITS.—The Secretary shall provide assistance under this section only
to private nonprofit organizations selected under subsection (d) for use only for expanding the supply of intergenerational dwelling units, which units shall be
provided—
‘‘(1) by designating and retrofitting, for use as intergenerational dwelling units, existing dwelling
units that are located within a project assisted under
section 202 of the Housing Act of 1959 (12 U.S.C. 1701q);
‘‘(2) through development of buildings or projects
comprised solely of intergenerational dwelling units;
or
‘‘(3) through the development of an annex or addition to an existing project assisted under section 202
of the Housing Act of 1959 (12 U.S.C. 1701q), that contains intergenerational dwelling units, including
through the development of elder cottage housing opportunity units that are small, freestanding, barrier
free, energy efficient, removable dwelling units located adjacent to a larger project or dwelling.
‘‘(c) PROGRAM TERMS.—Assistance provided pursuant
to this section shall be subject to the provisions of section 202 of the Housing Act of 1959 (12 U.S.C. 1701q), except that—
‘‘(1) notwithstanding subsection (d)(1) of that section 202 or any provision of that section restricting
occupancy to elderly persons, any intergenerational
dwelling unit assisted under the demonstration program may be occupied by an intergenerational family;
‘‘(2) subsections (e) and (f) of that section 202 shall
not apply;
‘‘(3) in addition to the requirements under subsection (g) of that section 202, the Secretary shall—
‘‘(A) ensure that occupants of intergenerational
dwelling units assisted under the demonstration
program are provided a range of services that are
tailored to meet the needs of elderly persons, children, and intergenerational families; and

§ 1701q

TITLE 12—BANKS AND BANKING

‘‘(B) coordinate with the heads of other Federal
agencies as may be appropriate to ensure the provision of such services; and
‘‘(4) the Secretary may waive or alter any other
provision of that section 202 necessary to provide for
assistance under the demonstration program.
‘‘(d) SELECTION.—The Secretary shall—
‘‘(1) establish application procedures for private
nonprofit organizations to apply for assistance under
this section; and
‘‘(2) to the extent that amounts are made available
pursuant to subsection (f), select not less than 2 and
not more than 4 projects that are assisted under section 202 of the Housing Act of 1959 (12 U.S.C. 1701q) for
assistance under this section, based on the ability of
the applicant to develop and operate intergenerational dwelling units and national geographical diversity among those projects funded.
‘‘(e) REPORT.—Not later than 36 months after the date
of enactment of this Act [Dec. 16, 2003], the Secretary
shall submit a report to Congress that—
‘‘(1) describes the demonstration program; and
‘‘(2) analyzes the effectiveness of the demonstration
program.
‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There are
authorized to be appropriated $10,000,000 to carry out
this section.
‘‘(g) SUNSET.—The demonstration program carried
out under this section shall terminate 5 years after the
date of enactment of this Act.
‘‘SEC. 204. TRAINING FOR HUD PERSONNEL REGARDING GRANDPARENT-HEADED AND RELATIVE-HEADED FAMILIES ISSUES.
[Amended section 3535 of Title 42, The Public Health
and Welfare.]
‘‘SEC. 205. STUDY OF HOUSING NEEDS OF GRANDPARENT-HEADED
AND
RELATIVE-HEADED
FAMILIES.
‘‘(a) IN GENERAL.—The Secretary and the Director of
the Bureau of the Census jointly shall—
‘‘(1) conduct a study to determine an estimate of
the number of covered families in the United States
and their affordable housing needs; and
‘‘(2) submit a report to Congress regarding the results of the study conducted under paragraph (1).
‘‘(b) REPORT AND RECOMMENDATIONS.—The report required under subsection (a) shall—
‘‘(1) be submitted to Congress not later than 12
months after the date of enactment of this Act [Dec.
16, 2003]; and
‘‘(2) include recommendations by the Secretary and
the Director of the Bureau of the Census regarding
how the major assisted housing programs of the Department of Housing and Urban Development, including the supportive housing for the elderly program
under section 202 of the Housing Act of 1959 (12 U.S.C.
1701q) can be used and, if appropriate, amended or altered, to meet the affordable housing needs of covered families.’’
PREPAYMENT AND REFINANCING
Pub. L. 106–569, title VIII, § 811, Dec. 27, 2000, 114 Stat.
3019, as amended by Pub. L. 107–116, title VI, § 633(a),
Jan. 10, 2002, 115 Stat. 2228; Pub. L. 111–372, title II,
§§ 201–204, Jan. 4, 2011, 124 Stat. 4079–4081, provided that:
‘‘(a) APPROVAL OF PREPAYMENT OF DEBT.—Upon request of the project sponsor of a project assisted with
a loan under section 202 of the Housing Act of 1959 [12
U.S.C. 1701q](as in effect before the enactment of the
Cranston-Gonzalez National Affordable Housing Act
[Pub. L. 101–625, which was approved Nov. 28, 1990]), for
which the Secretary’s consent to prepayment is required,, [sic] the Secretary shall approve the prepayment of any indebtedness to the Secretary relating to
any remaining principal and interest under the loan as
part of a prepayment plan under which—
‘‘(1) the project sponsor agrees to operate the
project until at least 20 years following the maturity

Page 442

date of the original loan under terms at least as advantageous to existing and future tenants as the
terms required by the original loan agreement or any
project-based rental assistance payments contract
under section 8 of the United States Housing Act of
1937 [42 U.S.C. 1437f] (or any other project-based rental housing assistance programs of the Department of
Housing and Urban Development, including the rent
supplement program under section 101 of the Housing
and Urban Development Act of 1965 (12 U.S.C. 1701s)),
or any successor project-based rental assistance program, relating to the project; and
‘‘(2) the prepayment may involve refinancing of the
loan if such refinancing results in—
‘‘(A) a lower interest rate on the principal of the
loan for the project and in reductions in debt service related to such loan; or
‘‘(B) a transaction in which the project owner will
address the physical needs of the project, but only
if, as a result of the refinancing—
‘‘(i) the rent charges for unassisted families residing in the project do not increase or such families are provided rental assistance under a senior
preservation rental assistance contract for the
project pursuant to subsection (e); and
‘‘(ii) the overall cost for providing rental assistance under section 8 for the project (if any) is not
increased, except, upon approval by the Secretary
to—
‘‘(I) mark-up-to-market contracts pursuant to
section 524(a)(3) of the Multifamily Assisted
Housing Reform and Affordability Act [of 1997]
[Pub. L. 105–65] (42 U.S.C. 1437f note), as such
section is carried out by the Secretary for properties owned by nonprofit organizations; or
‘‘(II) mark-up-to-budget contracts pursuant to
section 524(a)(4) of the Multifamily Assisted
Housing Reform and Affordability Act (42
U.S.C. 1437f note), as such section is carried out
by the Secretary for properties owned by eligible owners (as such term is defined in section
202(k) of the Housing Act of 1959 (12 U.S.C.
1701q(k)); and
‘‘(3) notwithstanding paragraph (2)(A), the prepayment and refinancing authorized pursuant to paragraph (2)(B) involves an increase in debt service only
in the case of a refinancing of a project assisted with
a loan under such section 202 carrying an interest
rate of 6 percent or lower.
‘‘(b) SOURCES OF REFINANCING.—In the case of prepayment under this section involving refinancing, the
project sponsor may refinance the project through any
third party source, including financing by State and
local housing finance agencies, use of tax-exempt
bonds, multi-family mortgage insurance under the National Housing Act [12 U.S.C. 1701 et seq.], reinsurance,
or other credit enhancements, including risk sharing as
provided under section 542 of the Housing and Community
Development
Act
of
1992
[12
U.S.C.
1715z–22]([former] 12 U.S.C. 1707 note). For purposes of
underwriting a loan insured under the National Housing Act, the Secretary may assume that any section 8
rental assistance contract relating to a project will be
renewed for the term of such loan.
‘‘(c) USE OF PROCEEDS.—Upon execution of the refinancing for a project pursuant to this section, the Secretary shall ensure that proceeds are used in a manner
advantageous to tenants of the project, or are used in
the provision of affordable rental housing and related
social services for elderly persons that are tenants of
the project or are tenants of other HUD-assisted senior
housing by the private nonprofit organization project
owner, private nonprofit organization project sponsor,
or private nonprofit organization project developer, including—
‘‘(1) not more than 15 percent of the cost of increasing the availability or provision of supportive services, which may include the financing of service
coordinators and congregate services, except that
upon the request of the non-profit owner, sponsor, or

Page 443

TITLE 12—BANKS AND BANKING

organization and determination of the Secretary,
such 15 percent limitation may be waived to ensure
that the use of unexpended amounts better enables
seniors to age in place;
‘‘(2) rehabilitation, modernization, or retrofitting
of structures, common areas, or individual dwelling
units, including reducing the number of units by reconfiguring units that are functionally obsolete, unmarketable, or not economically viable;
‘‘(3) construction of an addition or other facility in
the project, including assisted living facilities (or,
upon the approval of the Secretary, facilities located
in the community where the project sponsor refinances a project under this section, or pools shared
resources from more than one such project);
‘‘(4) rent reduction of unassisted tenants residing in
the project;
‘‘(5) rehabilitation of the project to ensure longterm viability; and
‘‘(6) the payment to the project owner, sponsor, or
third party developer of a developer’s fee in an
amount not to exceed or duplicate—
‘‘(A) in the case of a project refinanced through a
State low income housing tax credit program, the
fee permitted by the low income housing tax credit
program as calculated by the State program as a
percentage of acceptable development cost as defined by that State program; or
‘‘(B) in the case of a project refinanced through
any other source of refinancing, 15 percent of the
acceptable development cost.
‘‘For purposes of paragraph (6)(B), the term ‘acceptable development cost’ shall include, as applicable,
the cost of acquisition, rehabilitation, loan prepayment, initial reserve deposits, and transaction costs.
‘‘(d) USE OF CERTAIN PROJECT FUNDS.—The Secretary
shall allow a project sponsor that is prepaying and refinancing a project under this section—
‘‘(1) to use any residual receipts held for that
project in excess of $500 per individual dwelling unit
for the cost of activities designed to increase the
availability or provision of supportive services or
other purposes approved by the Secretary; and
‘‘(2) to use any reserves for replacement in excess of
$1,000 per individual dwelling unit for activities described in paragraphs (2) and (3) of subsection (c).
‘‘(e) SENIOR PRESERVATION RENTAL ASSISTANCE CONTRACTS.—Notwithstanding any other provision of law,
in connection with a prepayment plan for a project approved under subsection (a) by the Secretary or as
otherwise approved by the Secretary to prevent displacement of elderly residents of the project in the case
of refinancing or recapitalization and to further preservation and affordability of such project, the Secretary
shall provide project-based rental assistance for the
project under a senior preservation rental assistance
contract, as follows:
‘‘(1) Assistance under the contract shall be made
available to the private nonprofit organization
owner—
‘‘(A) for a term of at least 20 years, subject to annual appropriations; and
‘‘(B) under the same rules governing project-based
rental assistance made available under section 8 of
the Housing Act of 1937 [42 U.S.C. 1437f] or under the
rules of such assistance as may be made available
for the project.
‘‘(2) Any projects for which a senior preservation
rental assistance contract is provided shall be subject
to a use agreement to ensure continued project affordability having a term of the longer of (A) the
term of the senior preservation rental assistance contract, or (B) such term as is required by the new financing.
‘‘(f) SUBORDINATION OR ASSUMPTION OF EXISTING
DEBT.—In lieu of prepayment under this section of the
indebtedness with respect to a project, the Secretary
may approve—
‘‘(1) in connection with new financing for the
project, the subordination of the loan for the project

§ 1701q

under section 202 of the Housing Act of 1959 [12 U.S.C.
1701q] (as in effect before the enactment of the Cranston-Gonzalez National Affordable Housing Act [Pub.
L. 101–625, which was approved Nov. 28, 1990]) and the
continued subordination of any other existing subordinate debt previously approved by the Secretary to
facilitate preservation of the project as affordable
housing; or
‘‘(2) the assumption (which may include the subordination described in paragraph (1)) of the loan for
the project under such section 202 in connection with
the transfer of the project with such a loan to a private nonprofit organization.
‘‘(g) FLEXIBLE SUBSIDY DEBT.—The Secretary shall
waive the requirement that debt for a project pursuant
to the flexible subsidy program under section 201 of the
Housing and Community Development Amendments of
1978 (12 U.S.C. 1715z–1a) be prepaid in connection with a
prepayment, refinancing, or transfer under this section
of a project if the financial transaction or refinancing
cannot be completed without the waiver.
‘‘(h) TENANT INVOLVEMENT IN PREPAYMENT AND REFINANCING.—The Secretary shall not accept an offer to
prepay the loan for any project under section 202 of the
Housing Act of 1959 unless the Secretary—
‘‘(1) has determined that the owner of the project
has notified the tenants of the owner’s request for approval of a prepayment; and
‘‘(2) has determined that the owner of the project
has provided the tenants with an opportunity to comment on the owner’s request for approval of a prepayment, including on the description of any anticipated
rehabilitation or other use of the proceeds from the
transaction, and its impacts on project rents, tenant
contributions, or the affordability restrictions for the
project, and that the owner has responded to such
comments in writing.
‘‘(i) DEFINITION OF PRIVATE NONPROFIT ORGANIZATION.—For purposes of this section, the term ‘private
nonprofit organization’ has the meaning given such
term in section 202(k) of the Housing Act of 1959 (12
U.S.C. 1701q(k)).’’
[Pub. L. 111–372, title II, § 203(2), Jan. 4, 2011, 124 Stat.
4081, which directed amendment of section 811(d)(1) of
Pub. L. 106–569, set out above, by inserting before the
period at the end ‘‘or other purposes approved by the
Secretary’’, was executed by making the insertion before ‘‘; and’’ to reflect the probable intent of Congress.]
[Pub. L. 107–116, title VI, § 633(b), Jan. 10, 2002, 115
Stat. 2228, provided that: ‘‘The amendment made by
subsection (a) of this section [amending section 811 of
Pub. L. 106–569, set out above] shall take effect upon
the date of the enactment of this Act [Jan. 10, 2002] and
the provisions of section 811 of the American Homeownership and Economic Opportunity Act of 2000 (12
U.S.C. 1701q note), as amended by subsection (a) of this
section, shall apply as so amended upon such date of
enactment, notwithstanding—
[‘‘(1) any authority of the Secretary of Housing and
Urban Development to issue regulations to implement or carry out the amendments made by subsection (a) of this section or the provisions of section
811 of the American Homeownership and Economic
Opportunity Act of 2000 (12 U.S.C. 1701q note); or
[‘‘(2) any failure of the Secretary of Housing and
Urban Development to issue any such regulations authorized.’’]
CONSIDERATION OF COSTS OF PROVIDING SERVICE
COORDINATORS IN DETERMINING AMOUNT OF HOUSING
ASSISTANCE
Pub. L. 102–550, title VI, § 677(b), Oct. 28, 1992, 106 Stat.
3829, provided that:
‘‘(1) AVAILABILITY OF SECTION 8 ASSISTANCE.—Subject
to the availability of appropriations for contract
amendments for the purpose of this paragraph, in determining the amount of assistance under section 8 of
the United States Housing Act of 1937 [42 U.S.C. 1437f]
to be provided for a project assisted under section 202
of the Housing Act of 1959 [12 U.S.C. 1701q], as in effect

§ 1701q

TITLE 12—BANKS AND BANKING

before the effectiveness of the amendments made by
section 801 of the Cranston-Gonzalez National Affordable Housing Act [Pub. L. 101–625, see Effective Date of
1990 Amendment note above], the Secretary shall consider (and annually adjust for) the costs of—
‘‘(A) employing or otherwise retaining the services
of one or more service coordinators under section 661
[671] of this Act [42 U.S.C. 13631] to coordinate the
provision of any services within the project for residents of the project who are elderly families and disabled families; and
‘‘(B) expenses for the provision of such services.
Not more than 15 percent of the cost of the provision of
services under subparagraph (B) may be considered
under this paragraph for purposes of determining the
amount of assistance provided.
‘‘(2) INAPPLICABILITY OF HUD REFORM ACT PROVISIONS.—Notwithstanding section 102 of the Department
of Housing and Urban Development Reform Act of 1989
[42 U.S.C. 3545], the provisions of paragraphs (1), (2), and
(3) of subsection (a) of such section shall not apply to
amendments to contracts under section 8 of the United
States Housing Act of 1937 made to carry out the purposes of paragraph (1) of this subsection.
‘‘(3) LIMITATION.—If a project is receiving congregate
housing services assistance under the Congregate Housing Services Act of 1978 [42 U.S.C. 8001 et seq.] or section 802 of the Cranston-Gonzalez National Affordable
Housing Act [42 U.S.C. 8011], the amount of costs provided pursuant to paragraph (1) for the project may not
exceed the additional amount necessary to cover the
costs of providing for the coordination of services for
residents of the project who are not eligible residents
under such section 802 or eligible project residents
under the Congregate Housing Services Act of 1978, as
applicable.’’
EXPEDITED FINANCING AND CONSTRUCTION
Pub. L. 101–625, title VIII, § 801(d), Nov. 28, 1990, 104
Stat. 4304, provided that:
‘‘(1) IN GENERAL.—The Secretary may, subject to the
availability of appropriations for contract amendments
for the purposes of this subsection—
‘‘(A) provide such adjustments and waivers to the
cost limitations specified under 24 CFR 885.410(a)(1);
and
‘‘(B) make such adjustments to the relevant fair
market rent limitations established under section
8(c)(1) of the United States Housing Act of 1937 [42
U.S.C. 1437f(c)(1)] in providing assistance under such
Act,
as are necessary to ensure the expedited financing and
construction of qualified supportive housing for the elderly provided that the Secretary finds that any applicable cost containment rules and regulations have been
satisfied.
‘‘(2) DEFINITION.—For purposes of this subsection, the
term ‘supportive housing for the elderly’ means housing—
‘‘(A) located in a high-cost jurisdiction; and
‘‘(B) for which a loan reservation was made under
section 202 of the Housing Act of 1959 [12 U.S.C. 1701q],
3 years before the date of enactment of this Act [Nov.
28, 1990] but for which no loan has been executed and
recorded.’’
FEASIBILITY OF INCLUDING ELDER COTTAGE HOUSING
OPPORTUNITY UNITS AS ELIGIBLE DEVELOPMENT COSTS
Pub. L. 101–625, title VIII, § 806(b), Nov. 28, 1990, 104
Stat. 4323, as amended by Pub. L. 102–550, title VI,
§ 602(d), Oct. 28, 1992, 106 Stat. 3804, provided that:
‘‘(1) IN GENERAL.—The Secretary of Housing and
Urban Development shall carry out a program to determine the feasibility of including, as an eligible development cost under section 202 of the Housing Act of 1959
[12 U.S.C. 1701q], the cost of purchasing and installing
elder cottage housing opportunity units that are small,
freestanding, barrier-free, energy efficient, removable,
and designed to be installed adjacent to existing 1- to

Page 444

4-family dwellings. In conducting the demonstration,
the Secretary shall determine whether the durability of
such units is appropriate for making such units generally eligible for assistance under the programs under
such sections.
‘‘(2) ALLOCATION.—Notwithstanding any other law,
the Secretary shall reserve from any amounts available
for capital advances and project rental assistance
under section 202 of the Housing Act of 1959, amounts
sufficient in each of fiscal years 1993 and 1994 to provide
not less than 100 units under the demonstration under
this subsection in connection with each such section.
Any amounts reserved under this paragraph shall be
available only for carrying out the demonstration
under this subsection and, for purposes of the demonstration, the cost of purchasing and installing an
elder cottage housing opportunity unit shall be considered an eligible development cost under sections [sic]
202 of the Housing Act of 1959.
‘‘(3) REPORT.—Not later than January 1, 1994, the Secretary shall submit a report to the Congress on the results of the demonstration under this subsection, which
shall be based on actual experience in implementing
this subsection.
‘‘(4) IMPLEMENTATION.—The Secretary shall issue regulations to carry out the demonstration under this subsection not later than the expiration of the 6-month period beginning on the date of the enactment of the
Housing and Community Development Act of 1992 [Oct.
28, 1992].’’
PREFERENCES FOR NATIVE HAWAIIANS ON HAWAIIAN
HOME LANDS UNDER HUD PROGRAMS
Secretary of Housing and Urban Development to provide a preference to native Hawaiians for housing assistance programs under this section for housing located on Hawaiian home lands, see section 958 of Pub.
L. 101–625, set out as a note under section 1437f of Title
42, The Public Health and Welfare.
FINDINGS AND PURPOSE OF 1988 AMENDMENT
Pub. L. 100–242, title I, § 162(a), Feb. 5, 1988, 101 Stat.
1856, provided that:
‘‘(1) The Congress finds that—
‘‘(A) housing for nonelderly handicapped families is
assisted under section 202 of the Housing Act of 1959
[12 U.S.C. 1701q] and section 8 of the United States
Housing Act of 1937 [42 U.S.C. 1437f];
‘‘(B) the housing programs under such sections are
designed and implemented primarily to assist rental
housing for elderly and nonelderly families and are
often inappropriate for dealing with the specialized
needs of the physically impaired, the developmentally disabled, and the chronically mentally ill;
‘‘(C) the development of housing for nonelderly
handicapped families under such programs is often
more expensive than necessary, thereby reducing the
number of such families that can be assisted with
available funds;
‘‘(D) the program under section 202 of the Housing
Act of 1959 can continue to provide direct loans to finance group residences and independent apartments
for nonelderly handicapped families, but can be made
more efficient and less costly by the adoption of
standards and procedures applicable only to housing
for such families;
‘‘(E) the cost containment policies currently being
implemented in the development of small group
homes (i) do not adequately reflect the necessity for
building designs to meet the needs of the designated
residents; and (ii) do not recognize necessary State
and local standards for the operation of such homes;
‘‘(F) the use of the program under section 8 of the
United States Housing Act of 1937 to assist rentals for
housing for nonelderly handicapped families is time
consuming and unnecessarily costly and, in some
areas of the Nation, prevents the development of such
housing;
‘‘(G) the use of the program under section 8 of the
United States Housing Act of 1937 to assist rentals for

Page 445

TITLE 12—BANKS AND BANKING

housing for nonelderly handicapped families should
be replaced by a more appropriate subsidy mechanism;
‘‘(H) both elderly and handicapped housing projects
assisted under section 202 of the Housing Act of 1959
will benefit from an increased emphasis on supportive
services and a greater use of State and local funds;
and
‘‘(I) an improved program for nonelderly handicapped families will assist in providing shelter and
supportive services for mentally ill persons who
might otherwise be homeless.
‘‘(2) The purpose of this section is to improve the direct loan program under section 202 of the Housing Act
of 1959 to ensure that such program meets the special
housing and related needs of nonelderly handicapped
families.’’
TERMINATION OF SECTION 8 ASSISTANCE
Pub. L. 100–242, title I, § 162(d), Feb. 5, 1988, 101 Stat.
1859, provided that: ‘‘On and after the first date that
amounts approved in an appropriation Act for any fiscal year become available for contracts under section
202(h)(4)(A) of the Housing Act of 1959 [12 U.S.C.
1701q(h)(4)(A)], as amended by subsection (b) of this section, no project for handicapped (primarily nonelderly)
families approved for such fiscal year pursuant to section 202 of such Act shall be provided assistance payments under section 8 of the United States Housing Act
of 1937 [42 U.S.C. 1437f], except pursuant to a reservation for a contract to make such assistance payments
that was made before the first date that amounts for
contracts under such section 202(h)(4)(A) became available.’’
IMPLEMENTATION OF 1988 AMENDMENT
Pub. L. 100–242, title I, § 162(e), Feb. 5, 1988, 101 Stat.
1859, provided that: ‘‘Not later than the expiration of
the 120-day period following the date of the enactment
of this Act [Feb. 5, 1988], the Secretary of Housing and
Urban Development shall, to the extent amounts are
approved in an appropriation Act for use under section
202(h)(4)(A) of the Housing Act of 1959 [12 U.S.C.
1701q(h)(4)(A)] for fiscal year 1988, publish in the Federal Register a notice of fund availability to implement
the provisions of, and amendments made by, this section [amending this section and enacting and repealing
provisions set out above]. The Secretary shall issue
such rules as may be necessary to carry out such provisions and amendments for fiscal year 1989 and thereafter.’’
HOUSING FOR THE ELDERLY OR HANDICAPPED FUND
Pub. L. 101–507, title II, Nov. 5, 1990, 104 Stat. 1361,
provided: ‘‘That, notwithstanding section 202(a)(3) of
the Housing Act of 1959 [12 U.S.C. 1701q(a)(3)], any such
obligations [direct loan obligations made in fiscal year
1991] shall bear an interest rate which does not exceed
9.25 per centum, including the allowance adequate in
the judgment of the Secretary to cover administrative
costs and probable losses under the program.’’
Similar provisions were contained in the following
prior appropriation acts:
Pub. L. 101–144, title II, Nov. 9, 1989, 103 Stat. 847.
Pub. L. 100–404, title I, Aug. 19, 1988, 102 Stat. 1016.
Pub. L. 100–202, § 101(f) [title I], Dec. 22, 1987, 101 Stat.
1329–187, 1329–190.
Pub. L. 99–500, § 101(g) [H.R. 5313, title I], Oct. 18, 1986,
100 Stat. 1783–242, and Pub. L. 99–591, § 101(g), Oct. 30,
1986, 100 Stat. 3341–242.
Pub. L. 99–160, title I, Nov. 25, 1985, 99 Stat. 911.
Pub. L. 98–371, title I, July 18, 1984, 98 Stat. 1216.
Pub. L. 98–45, title I, as added Pub. L. 98–181, title I,
Nov. 30, 1983, 97 Stat. 1153.
REPORTS RESPECTING ELDERLY AND HANDICAPPED
HOUSING PROGRAMS IN RURAL AREAS, ETC.
Pub. L. 96–153, title III, § 306(e), (f), Dec. 21, 1979, 93
Stat. 1113, required Secretary of Housing and Urban De-

§ 1701q–1

velopment, not later than six months after Dec. 21,
1979, to report to Congress on housing needs of elderly
and handicapped in rural areas and recommend to Congress on means to reduce costs of program carried out
under this section.
FEASIBILITY AND MARKETABILITY OF PROJECTS; ASSISTANCE FOR PROJECTS SERVICING LOW- AND MODERATEINCOME FAMILIES
Pub. L. 93–383, title II, § 210(g), Aug. 22, 1974, 88 Stat.
671, provided that:
‘‘(1) In determining the feasibility and marketability
of a project under section 202 of the Housing Act of 1959
[this section], the Secretary shall consider the availability of monthly assistance payments pursuant to
section 8 of the United States Housing Act of 1937 [42
U.S.C. 1437f] with respect to such a project.
‘‘(2) The Secretary shall insure that with the original
approval of a project authorized pursuant to section 202
of the Housing Act of 1959, and thereafter at each annual revision of the assistance contract under section 8
of the United States Housing Act of 1937 with respect to
units in such project, the project will serve both lowand moderate-income families in a mix which he determines to be appropriate for the area and for viable operation of the project; except that the Secretary shall
not permit maintenance of vacancies to await tenants
of one income level where tenants of another income
level are available.’’

§ 1701q–1. Civil money penalties against mortgagors under section 1701q of this title
(a) In general
The penalties set forth in this section shall be
in addition to any other available civil remedy
or criminal penalty, and may be imposed whether or not the Secretary imposes other administrative sanctions. The Secretary may not impose penalties under this section for violations a
material cause of which are the failure of the
Department, an agent of the Department, or a
public housing agency to comply with existing
agreements.
(b) Penalty for violation of agreement as condition of transfer of physical assets, flexible
subsidy loan, capital improvement loan,
modification of mortgage terms, or workout
agreement
(1) In general
Whenever a mortgagor of property that includes 5 or more living units and that has a
mortgage held pursuant to section 1701q of
this title, who has agreed in writing, as a condition of a transfer of physical assets, a flexible subsidy loan, a capital improvement loan,
a modification of the mortgage terms, or a
workout agreement, to use nonproject income
to make cash contributions for payments due
under the note and mortgage, for payments to
the reserve for replacements, to restore the
project to good physical condition, or to pay
other project liabilities, knowingly and materially fails to comply with any of these commitments, the Secretary may impose a civil
money penalty on the mortgagor in accordance with the provisions of this section.
(2) Amount
The amount of the penalty, as determined by
the Secretary, for a violation of this subsection may not exceed the amount of the loss
the Secretary would incur at a foreclosure
sale, or sale after foreclosure, with respect to
the property involved.

§ 1701q–1

TITLE 12—BANKS AND BANKING

(c) Violations of regulatory agreement
(1) In general
The Secretary may also impose a civil
money penalty on a mortgagor or property
that includes 5 or more living units and that
has a mortgage held pursuant to section 1701q
of this title for any knowing and material violation of the regulatory agreement executed
by the mortgagor, as follows:
(A) Conveyance, transfer, or encumbrance
of any of the mortgaged property, or permitting the conveyance, transfer, or encumbrance of such property, without the prior
written approval of the Secretary.
(B) Assignment, transfer, disposition, or
encumbrance of any personal property of the
project, including rents, or paying out any
funds, except for reasonable operating expenses and necessary repairs, without the
prior written approval of the Secretary.
(C) Conveyance, assignment, or transfer of
any beneficial interest in any trust holding
title to the property, or the interest of any
general partner in a partnership owning the
property, or any right to manage or receive
the rents and profits from the mortgaged
property, without the prior written approval
of the Secretary.
(D) Remodeling, adding to, reconstructing,
or demolishing any part of the mortgaged
property or subtracting from any real or personal property of the project, without the
prior written approval of the Secretary.
(E) Requiring, as a condition of the occupancy or leasing of any unit in the project,
any consideration or deposit other than the
prepayment of the first month’s rent, plus a
security deposit in an amount not in excess
of 1 month’s rent, to guarantee the performance of the covenants of the lease.
(F) Not holding any funds collected as security deposits separate and apart from all
other funds of the project in a trust account,
the amount of which at all times equals or
exceeds the aggregate of all outstanding obligations under the account.
(G) Payment for services, supplies, or materials which exceeds $500 and substantially
exceeds the amount ordinarily paid for such
services, supplies, or materials in the area
where the services are rendered or the supplies or materials furnished.
(H) Failure to maintain at any time the
mortgaged property, equipment, buildings,
plans, offices, apparatus, devices, books,
contracts, records, documents, and other related papers (including failure to keep copies
of all written contracts or other instruments
which affect the mortgaged property) in reasonable condition for proper audit and for
examination and inspection at any reasonable time by the Secretary or any duly authorized agents of the Secretary.
(I) Failure to maintain the books and accounts of the operations of the mortgaged
property and of the project in accordance
with requirements prescribed by the Secretary.
(J) Failure to furnish the Secretary, by the
expiration of the 60-day period beginning on

Page 446

the 1st day after the completion of each fiscal year, with a complete annual financial
report based upon an examination of the
books and records of the mortgagor prepared
in accordance with requirements prescribed
by the Secretary, and prepared and certified
to by an independent public accountant or a
certified public accountant and certified to
by an officer of the mortgagor, unless the
Secretary has approved an extension of the
60-day period in writing. The Secretary shall
approve an extension where the mortgagor
demonstrates that failure to comply with
this subparagraph is due to events beyond
the control of the mortgagor.
(K) At the request of the Secretary, the
agents of the Secretary, the employees of
the Secretary, or the attorneys of the Secretary, failure to furnish monthly occupancy
reports or failure to provide specific answers
to questions upon which information is
sought relative to income, assets, liabilities,
contracts, the operation and condition of the
property, or the status of the mortgage.
(L) Failure to make promptly all payments due under the note and mortgage, including tax and insurance escrow payments,
and payments to the reserve for replacements when there is adequate project income available to make such payments.
(M) Amending the articles of incorporation
or bylaws, other than as permitted under the
terms of the articles of incorporation as approved by the Secretary, without the prior
written approval of the Secretary.
(2) Amount of penalty
A penalty imposed for a violation under this
subsection, as determined by the Secretary,
may not exceed $25,000 for a violation of any of
the subparagraphs of paragraph (1).
(d) Agency procedures
(1) Establishment
The Secretary shall establish standards and
procedures governing the imposition of civil
money penalties under subsections (b) and (c).
These standards and procedures—
(A) shall provide for the Secretary or other
department official (such as the Assistant
Secretary for Housing) to make the determination to impose a penalty;
(B) shall provide for the imposition of a
penalty only after the mortgagor has been
given an opportunity for a hearing on the
record; and
(C) may provide for review by the Secretary of any determination or order, or interlocutory ruling, arising from a hearing.
(2) Final orders
If no hearing is requested within 15 days of
receipt of the notice of opportunity for hearing, the imposition of the penalty shall constitute a final and unappealable determination. If the Secretary reviews the determination or order, the Secretary may affirm, modify, or reverse that determination or order. If
the Secretary does not review the determination or order within 90 days of the issuance of
the determination or order, the determination
or order shall be final.

Page 447

§ 1701q–2

TITLE 12—BANKS AND BANKING

(3) Factors in determining amount of penalty
In determining the amount of a penalty
under subsection (b) or (c), consideration shall
be given to such factors as the gravity of the
offense, any history of prior offenses (including offenses occurring before December 15,
1989), ability to pay the penalty, injury to the
tenants, injury to the public, benefits received, deterrence of future violations, and
such other factors as the Secretary may determine in regulations to be appropriate.
(4) Reviewability of imposition of penalty
The Secretary’s determination or order imposing a penalty under subsection (b) or (c)
shall not be subject to review, except as provided in subsection (e).
(e) Judicial review of agency determination
(1) In general
After exhausting all administrative remedies established by the Secretary under subsection (d)(1), a mortgagor against whom the
Secretary has imposed a civil money penalty
under subsection (b) or (c) may obtain a review of the penalty and such ancillary issues
as may be addressed in the notice of determination to impose a penalty under subsection (d)(1)(A) in the appropriate court of appeals of the United States, by filing in such
court, within 20 days after the entry of such
order or determination, a written petition
praying that the Secretary’s order or determination be modified or be set aside in whole
or in part.
(2) Objections not raised in hearing
The court shall not consider any objection
that was not raised in the hearing conducted
pursuant to subsection (d)(1) unless a demonstration is made of extraordinary circumstances causing the failure to raise the objection. If any party demonstrates to the satisfaction of the court that additional evidence
not presented at such hearing is material and
that there were reasonable grounds for the
failure to present such evidence at the hearing, the court shall remand the matter to the
Secretary for consideration of such additional
evidence.
(3) Scope of review
The decisions, findings, and determinations
of the Secretary shall be reviewed pursuant to
section 706 of title 5.
(4) Order to pay penalty
Notwithstanding any other provision of law,
in any such review, the court shall have the
power to order payment of the penalty imposed by the Secretary.
(f) Action to collect penalty
If a mortgagor fails to comply with the Secretary’s determination or order imposing a civil
money penalty under subsection (b) or (c), after
the determination or order is no longer subject
to review as provided by subsections (d)(1) and
(e), the Secretary may request the Attorney
General of the United States to bring an action
in an appropriate United States district court to
obtain a monetary judgment against the mort-

gagor and such other relief as may be available.
The monetary judgment may, in the court’s discretion, include the attorneys fees and other expenses incurred by the United States in connection with the action. In an action under this
subsection, the validity and appropriateness of
the Secretary’s determination or order imposing
the penalty shall not be subject to review.
(g) Settlement by Secretary
The Secretary may compromise, modify, or
remit any civil money penalty which may be, or
has been, imposed under this section.
(h) ‘‘Knowingly’’ defined
The term ‘‘knowingly’’ means having actual
knowledge of or acting with deliberate ignorance of or reckless disregard for the prohibitions under this section.
(i) Regulations
The Secretary shall issue such regulations as
the Secretary deems appropriate to implement
this section.
(j) Deposit of penalties in insurance funds
Notwithstanding any other provision of law,
all civil money penalties collected under this
section shall be deposited in the fund established under section 1715z–1a(j) of this title.
(Pub. L. 86–372, title II, § 202a, as added Pub. L.
101–235, title I, § 109(a), Dec. 15, 1989, 103 Stat.
2007.)
CODIFICATION
Section was enacted as part of the Housing Act of
1959, and not as part of the National Housing Act which
comprises this chapter.
EFFECTIVE DATE
Pub. L. 101–235, title I, § 109(b), Dec. 15, 1989, 103 Stat.
2011, provided that: ‘‘The amendment made by subsection (a) [enacting this section] shall apply only with
respect to violations referred to in the amendment that
occur on or after the effective date of this section [Dec.
15, 1989].’’

§ 1701q–2. Grants for conversion of elderly housing to assisted living facilities and other purposes
(a) Grant authority
The Secretary of Housing and Urban Development may make grants in accordance with this
section to owners of eligible projects described
in subsection (b) for one or both of the following
activities:
(1) Repairs
Substantial capital repairs to projects that
are needed to rehabilitate, modernize, or retrofit aging structures, common areas, or individual dwelling units.
(2) Conversion
(A) Assisted living facilities
Activities designed to convert dwelling
units in the eligible project to assisted living facilities for elderly persons.
(B) Service-enriched housing
Activities designed to convert dwelling
units in the eligible project to service-enriched housing for elderly persons.

§ 1701q–2

TITLE 12—BANKS AND BANKING

(b) Eligible projects
An eligible project described in this subsection
is a multifamily housing project that is—
(1)(A) described in subparagraph (B), (C), (D),
(E), (F), or (G) of section 13641(2) of title 42, or
(B) only to the extent amounts of the Department of Agriculture are made available to the
Secretary of Housing and Urban Development
for such grants under this section for such
projects, subject to a loan made or insured
under section 1485 of title 42;
(2) owned by a private nonprofit organization (as such term is defined in section 1701q of
this title); and
(3) designated primarily for occupancy by elderly persons.
Notwithstanding any other provision of this subsection or this section, an unused or underutilized commercial property may be considered an
eligible project under this subsection, except
that the Secretary may not provide grants
under this section for more than three such
properties. For any such projects, any reference
under this section to dwelling units shall be considered to refer to the premises of such properties.
(c) Applications
Applications for grants under this section
shall be submitted to the Secretary in accordance with such procedures as the Secretary shall
establish. Such applications shall contain—
(1) a description of the substantial capital
repairs or the proposed conversion activities
for either an assisted living facility or serviceenriched housing for which a grant under this
section is requested;
(2) the amount of the grant requested to
complete the substantial capital repairs or
conversion activities;
(3) a description of the resources that are expected to be made available, if any, in conjunction with the grant under this section;
and
(4) such other information or certifications
that the Secretary determines to be necessary
or appropriate.
(d) Requirements for services
(1) Sufficient evidence of firm funding commitments
The Secretary may not make a grant under
this section for conversion activities unless an
application for a grant submitted pursuant to
subsection (c) contains sufficient evidence, in
the determination of the Secretary, of firm
commitments for the funding of services to be
provided in the assisted living facility or service-enriched housing, which may be provided
by third parties.
(2) Required evidence
The Secretary shall require evidence that
each recipient of a grant for service-enriched
housing under this section provides relevant
and timely disclosure of information to residents or potential residents of such housing
relating to—
(A) the services that will be available at
the property to each resident, including—
(i) the right to accept, decline, or choose
such services and to have the choice of
provider;

Page 448

(ii) the services made available by or
contracted through the grantee;
(iii) the identity of, and relevant information for, all agencies or organizations
providing any services to residents, which
agencies or organizations shall provide information regarding all procedures and requirements to obtain services, any charges
or rates for the services, and the rights
and responsibilities of the residents related to those services;
(B) the availability, identity, contact information, and role of the service coordinator; and
(C) such other information as the Secretary determines to be appropriate to ensure that residents are adequately informed
of the services options available to promote
resident independence and quality of life.
(e) Selection criteria
The Secretary shall select applications for
grants under this section based upon selection
criteria, which shall be established by the Secretary and shall include—
(1) in the case of a grant for substantial capital repairs, the extent to which the project to
be repaired is in need of such repair, including
such factors as the age of improvements to be
repaired, and the impact on the health and
safety of residents of failure to make such repairs;
(2) in the case of a grant for conversion activities, the extent to which the conversion is
likely to provide assisted living facilities or
service-enriched housing that are needed or
are expected to be needed by the categories of
elderly persons that the assisted living facility 1 service-enriched housing is intended to
serve, with a special emphasis on very low-income elderly persons who need assistance with
activities of daily living;
(3) the inability of the applicant to fund the
repairs or conversion activities from existing
financial resources, as evidenced by the applicant’s financial records, including assets in
the applicant’s residual receipts account and
reserves for replacement account;
(4) the extent to which the applicant has evidenced community support for the repairs or
conversion, by such indicators as letters of
support from the local community for the repairs or conversion and financial contributions from public and private sources;
(5) in the case of a grant for conversion activities, the extent to which the applicant
demonstrates a strong commitment to promoting the autonomy and independence of the
elderly persons that the assisted living facility
or service-enriched housing is intended to
serve;
(6) in the case of a grant for conversion activities, the quality, completeness, and managerial capability of providing the services
which the assisted living facility or service-enriched housing intends to provide to elderly
residents, especially in such areas as meals,
24-hour staffing, and on-site health care; and
(7) such other criteria as the Secretary determines to be appropriate to ensure that
1 So

in original. Probably should be followed by ‘‘or’’.

Page 449

funds made available under this section are
used effectively.
(f) Section 8 project-based assistance
(1) Eligibility
Notwithstanding any other provision of law,
a multifamily project which includes one or
more dwelling units that have been converted
to assisted living facilities or service-enriched
housing using grants made under this section
shall be eligible for project-based assistance
under section 8 of the United States Housing
Act of 1937 [42 U.S.C. 1437f], in the same manner in which the project would be eligible for
such assistance but for the assisted living facilities or service-enriched housing in the
project.
(2) Calculation of rent
For assistance pursuant to this subsection,
the maximum monthly rent of a dwelling unit
that is an assisted living facility or service-enriched housing with respect to which assistance payments are made shall not include
charges attributable to services relating to assisted living.
(g) Definitions
For purposes of this section—
(1) the term ‘‘assisted living facility’’ has
the meaning given such term in section
1715w(b) of this title;
(2) the term ‘‘service-enriched housing’’
means housing that—
(A) makes available through licensed or
certified third party service providers supportive services to assist the residents in
carrying out activities of daily living, such
as bathing, dressing, eating, getting in and
out of bed or chairs, walking, going outdoors, using the toilet, laundry, home management, preparing meals, shopping for personal items, obtaining and taking medication, managing money, using the telephone,
or performing light or heavy housework, and
which may make available to residents
home health care services, such as nursing
and therapy;
(B) includes the position of service coordinator, which may be funded as an operating expense of the property;
(C) provides separate dwelling units for
residents, each of which contains a full
kitchen and bathroom and which includes
common rooms and other facilities appropriate for the provision of supportive services to the residents of the housing; and
(D) provides residents with control over
health care and supportive services decisions, including the right to accept, decline,
or choose such services, and to have the
choice of provider; and
(3) the definitions in section 1701(q)(k) 2 of
this title shall apply.
(h) Authorization of appropriations
There is authorized to be appropriated for providing grants under this section such sums as
may be necessary for fiscal year 2000.
2 See

References in Text note below.

§ 1701q–3

TITLE 12—BANKS AND BANKING

(Pub. L. 86–372, title II, § 202b, as added and
amended Pub. L. 106–74, title V, §§ 522, 523(b),
Oct. 20, 1999, 113 Stat. 1103, 1105; Pub. L. 111–372,
title III, § 301, Jan. 4, 2011, 124 Stat. 4082.)
REFERENCES IN TEXT
Section 1701(q)(k) of this title, referred to in subsec.
(g)(3), probably should be a reference to section 202(k)
of this Act, which is classified to section 1701q(k) of
this title.
CODIFICATION
Section was enacted as part of the Housing Act of
1959, and not as part of the National Housing Act which
comprises this chapter.
AMENDMENTS
2011—Pub. L. 111–372, § 301(a), inserted ‘‘and other purposes’’ after ‘‘assisted living facilities’’ in section
catchline.
Subsec. (a)(2). Pub. L. 111–372, § 301(b), designated existing provisions as subpar. (A), inserted heading, and
added subpar. (B).
Subsec. (c)(1). Pub. L. 111–372, § 301(c), inserted ‘‘for either an assisted living facility or service-enriched
housing’’ after ‘‘activities’’.
Subsec. (d). Pub. L. 111–372, § 301(d), amended subsec.
(d) generally. Prior to amendment, text read as follows:
‘‘The Secretary may not make a grant under this section for conversion activities unless the application
contains sufficient evidence, in the determination of
the Secretary, of firm commitments for the funding of
services to be provided in the assisted living facility,
which may be provided by third parties.’’
Subsec. (e)(2). Pub. L. 111–372, § 301(e)(1), inserted ‘‘or
service-enriched housing’’ after ‘‘facilities’’ and ‘‘service-enriched housing’’ after ‘‘facility’’.
Subsec. (e)(5). Pub. L. 111–372, § 301(e)(2), inserted ‘‘or
service-enriched housing’’ after ‘‘facility’’.
Subsec. (e)(6). Pub. L. 111–372, § 301(e)(3), inserted ‘‘or
service-enriched housing’’ after ‘‘facility’’.
Subsec. (f)(1). Pub. L. 111–372, § 301(f)(1), inserted ‘‘or
service-enriched housing’’ after ‘‘facilities’’ in two
places.
Subsec. (f)(2). Pub. L. 111–372, § 301(f)(2), inserted ‘‘or
service-enriched housing’’ after ‘‘facility’’.
Subsec. (g). Pub. L. 111–372, § 301(g), amended subsec.
(g) generally. Prior to amendment, subsec. (g) related
to definitions for purposes of this section.
1999—Subsecs. (f) to (h). Pub. L. 106–74 added subsec.
(f) and redesignated former subsecs. (f) and (g) as (g)
and (h), respectively.

§ 1701q–3. Funds for housing for elderly and persons with disabilities available for cost of
maintenance and disposal of such properties
Notwithstanding any other provision of law,
for this fiscal year and every fiscal year thereafter, funds appropriated for housing for the elderly, as authorized by section 1701q of this
title, as amended, and for supportive housing for
persons with disabilities, as authorized by section 8013 of title 42, shall be available for the
cost of maintaining and disposing of such properties that are acquired or otherwise become the
responsibility of the Department.
(Pub. L. 109–115, div. A, title III, § 313, Nov. 30,
2005, 119 Stat. 2463.)
CODIFICATION
Section was enacted as part of the Transportation,
Treasury, Housing and Urban Development, the Judiciary, the District of Columbia, and Independent Agencies Appropriations Act, 2006, and also as part of the
Transportation, Treasury, Housing and Urban Develop-

§ 1701r

TITLE 12—BANKS AND BANKING

ment, the Judiciary, and Independent Agencies Appropriations Act, 2006, and the Department of Housing and
Urban Development Appropriations Act, 2006, and not
as part of the National Housing Act which comprises
this chapter.
PRIOR PROVISIONS
Provisions similar to this section were contained in
the following prior appropriations acts:
Pub. L. 108–447, div. I, title II, § 213, Dec. 8, 2004, 118
Stat. 3318.
Pub. L. 108–199, div. G, title II, § 221, Jan. 23, 2004, 118
Stat. 398.

§ 1701r. Congressional findings respecting housing for senior citizens
The Congress finds that there is a large and
growing need for suitable housing for older people both in urban and rural areas. Our older citizens face special problems in meeting their
housing needs because of the prevalence of modest and limited incomes among the elderly, their
difficulty in obtaining liberal long-term home
mortgage credit, and their need for housing
planned and designed to include features necessary to the safety and convenience of the occupants in a suitable neighborhood environment. The Congress further finds that the
present programs for housing the elderly under
the Department of Housing and Urban Development have proven the value of Federal credit assistance in this field and at the same time demonstrated the urgent need for an expanded and
more comprehensive effort to meet our responsibilities to our senior citizens.
(Pub. L. 87–723, § 2, Sept. 28, 1962, 76 Stat. 670;
Pub. L. 90–19, § 19, May 25, 1967, 81 Stat. 25.)
CODIFICATION
Section was enacted as part of the Senior Citizens
Housing Act of 1962, and not as part of the National
Housing Act which comprises this chapter.
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Department of Housing and Urban Development’’ for ‘‘Housing and Home
Finance Agency’’ in second sentence.

§ 1701r–1. Pet ownership in assisted rental housing for the elderly or handicapped
(a) Restrictions on ownership
No owner or manager of any federally assisted
rental housing for the elderly or handicapped
may—
(1) as a condition of tenancy or otherwise,
prohibit or prevent any tenant in such housing
from owning common household pets or having common household pets living in the
dwelling accommodations of such tenant in
such housing; or
(2) restrict or discriminate against any person in connection with admission to, or continued occupancy of, such housing by reason of
the ownership of such pets by, or the presence
of such pets in the dwelling accommodations
of, such person.
(b) Rules and regulations
(1) Not later than the expiration of the twelvemonth period following November 30, 1983, the
Secretary of Housing and Urban Development
and the Secretary of Agriculture shall each

Page 450

issue such regulations as may be necessary to
ensure (A) compliance with the provisions of
subsection (a) with respect to any program of
assistance referred to in subsection (d) that is
administered by such Secretary; and (B) attaining the goal of providing decent, safe, and sanitary housing for the elderly or handicapped.
(2) Such regulations shall establish guidelines
under which the owner or manager of any federally assisted rental housing for the elderly or
handicapped (A) may prescribe reasonable rules
for the keeping of pets by tenants in such housing; and (B) shall consult with the tenants of
such housing in prescribing such rules. Such
rules may consider factors such as density of
tenants, pet size, types of pets, potential financial obligations of tenants, and standards of pet
care.
(c) Removal of pets constituting a nuisance
Nothing in this section may be construed to
prohibit any owner or manager of federally assisted rental housing for the elderly or handicapped, or any local housing authority or other
appropriate authority of the community where
such housing is located, from requiring the removal from any such housing of any pet whose
conduct or condition is duly determined to constitute a nuisance or a threat to the health or
safety of the other occupants of such housing or
of other persons in the community where such
housing is located.
(d) ‘‘Federally assisted rental housing for the elderly or handicapped’’ defined
For purposes of this section, the term ‘‘federally assisted rental housing for the elderly or
handicapped’’ means any rental housing project
that—
(1) is assisted under section 1701q of this
title; or
(2) is assisted under the United States Housing Act of 1937 [42 U.S.C. 1437 et seq.], the National Housing Act [12 U.S.C. 1701 et seq.], or
title V of the Housing Act of 1949 [42 U.S.C.
1471 et seq.], and is designated for occupancy
by elderly or handicapped families, as such
term is defined in section 1701q(d)(4) 1 of this
title.
(Pub. L. 98–181, title I [title II, § 227], Nov. 30,
1983, 97 Stat. 1195.)
REFERENCES IN TEXT
The United States Housing Act of 1937, referred to in
subsec. (d)(2), is act Sept. 1, 1937, ch. 896, as revised generally by Pub. L. 93–383, title II, Aug. 22, 1974, 88 Stat.
653, which is classified generally to chapter 8 (§ 1437 et
seq.) of Title 42, The Public Health and Welfare. For
complete classification of this Act to the Code, see
Short Title note set out under section 1437 of Title 42
and Tables.
The National Housing Act, referred to in subsec.
(d)(2), is act June 27, 1934, ch. 847, 48 Stat. 1246, as
amended, which is classified principally to this chapter
(§ 1701 et seq.). For complete classification of this Act
to the Code, see section 1701 of this title and Tables.
The Housing Act of 1949, referred to in subsec. (d)(2),
is act July 15, 1949, ch. 338, 63 Stat. 413, as amended.
Title V of the Housing Act of 1949 is classified generally
to subchapter III (§ 1471 et seq.) of chapter 8A of Title
42, The Public Health and Welfare. For complete classi1 See

References in Text note below.

Page 451

TITLE 12—BANKS AND BANKING

fication of this Act to the Code, see Short Title note
set out under section 1441 of Title 42 and Tables.
Section 1701q of this title, referred to in subsec. (d)(2),
was amended generally by Pub. L. 101–625, title VIII,
§ 801(a), Nov. 28, 1990, 104 Stat. 4297, and, as so amended,
no longer contains a subsec. (d)(4) or a definition of the
term ‘‘elderly or handicapped families’’.
CODIFICATION
Section was enacted as part of the Housing and
Urban–Rural Recovery Act of 1983 and also as part of
the Domestic Housing and International Recovery and
Financial Stability Act, and not as part of the National
Housing Act which comprises this chapter.

§ 1701s. Rent supplement payments for qualified
lower income families
(a) Authorization; maximum term; maximum aggregate amount
The Secretary of Housing and Urban Development (hereinafter referred to as the ‘‘Secretary’’) is authorized to make, and contract to
make, annual payments to a ‘‘housing owner’’
on behalf of ‘‘qualified tenants’’, as those terms
are defined herein, in such amounts and under
such circumstances as are prescribed in or pursuant to this section. In no case shall a contract
provide for such payments with respect to any
housing for a period exceeding forty years. The
aggregate amount of the contracts to make such
payments shall not exceed amounts approved in
appropriation Acts, and payments pursuant to
such contracts shall not exceed $150,000,000 per
annum prior to July 1, 1969, which maximum
dollar amount shall be increased by $40,000,000,
on July 1, 1969, by $100,000,000 on July 1, 1970, and
by $40,000,000 on July 1, 1971.
(b) ‘‘Housing owner’’ defined; limitation on payments to housing owner
As used in this section, the term ‘‘housing
owner’’ means a private nonprofit corporation
or other private nonprofit legal entity, a limited
dividend corporation or other limited dividend
legal entity, or a cooperative housing corporation, which is a mortgagor under section
221(d)(3) of the National Housing Act [12 U.S.C.
1715l(d)(3)] and which, after August 10, 1965, has
been approved for mortgage insurance thereunder and has been approved for receiving the
benefits of this section: Provided, That, except as
provided in subsection (j), no payments under
this section may be made with respect to any
property financed with a mortgage receiving the
benefits of the interest rate provided for in the
proviso in section 221(d)(5) of that Act [12 U.S.C.
1715l(d)(5)]. Such term also includes a private
nonprofit corporation or other private nonprofit
legal entity, a limited dividend corporation or
other limited dividend legal entity, or a cooperative housing corporation, which is the owner of
a rental or cooperative housing project financed
under a State or local program providing assistance through loans, loan insurance, or tax
abatement and which may involve either new or
existing construction and which is approved for
receiving the benefits of this section. Subject to
the limitations provided in subsection (j), the
term ‘‘housing owner’’ also has the meaning prescribed in such subsection. Nothing in this section shall be construed as preventing payments
to a housing owner with respect to projects in

§ 1701s

which all or part of the dwelling units do not
contain kitchen facilities; but of the total
amount of contracts to make annual payments
approved in appropriation Acts pursuant to subsection (a) after December 31, 1970, not more
than 10 per centum in the aggregate shall be
made with respect to such projects.
(c) Definitions
As used in this section, the term—
(1) ‘‘qualified tenant’’ means any individual
or family having an income which would qualify such individual or family for assistance
under section 1437f of title 42, except that such
term shall also include any individual or family who was receiving assistance under this
section on the day preceding December 21,
1979, so long as such individual or family continues to meet the conditions for such assistance which were in effect on such day; and
(2) ‘‘income’’ means income from all sources
of each member of the household, as determined in accordance with criteria prescribed
by the Secretary. In determining amounts to
be excluded from income, the Secretary may,
in the Secretary’s discretion, take into account the number of minor children in the
household and such other factors as the Secretary may determine are appropriate.
The terms ‘‘qualified tenant’’ and ‘‘tenant’’ include a member of a cooperative who satisfies
the foregoing requirements and who, upon resale
of his membership to the cooperative, will not
be reimbursed for any equity increment accumulated through payments under this section. With
respect to members of a cooperative, the terms
‘‘rental’’ and ‘‘rental charges’’ mean the charges
under the occupancy agreements between such
members and the cooperative.
(d) Annual payment amount
The amount of the annual payment with respect to any dwelling unit shall be the lesser of
(1) 70 per centum of the fair market rent, or (2)
the amount by which the fair market rental for
such unit exceeds 30 per centum of the tenant’s
adjusted income.
(e) Criteria and procedure for determining eligibility and rental charges; recertification of
income; agreements for services required in
selection of tenants; delegation of authority
to issue certificates
(1) For purposes of carrying out the provisions
of this section, the Secretary shall establish criteria and procedures for determining the eligibility of occupants and rental charges, including
criteria and procedures with respect to periodic
review of tenant incomes and periodic adjustment of rental charges.
(2) Procedures adopted by the Secretary hereunder shall provide for recertifications of the incomes of occupants no less frequently than annually for the purpose of adjusting rental
charges and annual payments on the basis of occupants’ incomes, but in no event shall rental
charges adjusted under this section for any
dwelling exceed the fair market rental of the
dwelling.
(3) The Secretary may enter into agreements,
or authorize housing owners to enter into agreements, with public or private agencies for serv-

§ 1701s

TITLE 12—BANKS AND BANKING

ices required in the selection of qualified tenants, including those who may be approved, on
the basis of the probability of future increases
in their incomes, as lessees under an option to
purchase (which will give such approved qualified tenants an exclusive right to purchase at a
price established or determined as provided in
the option) dwellings, and in the establishment
of rentals. The Secretary is authorized (without
limiting his authority under any other provision
of law) to delegate to any such public or private
agency his authority to issue certificates pursuant to this subsection.
(4) No payments under this section may be
made with respect to any property for which the
costs of operation (including wages and salaries)
are determined by the Secretary to be greater
than similar costs of operation of similar housing in the community where the property is situated.

Page 452

(i) Omitted
(j) Additional definition of housing owner; restrictions on payments

The Secretary is authorized to make such
rules and regulations, to enter into such agreements, and to adopt such procedures as he may
deem necessary or desirable to carry out the
provisions of this section. Nothing contained in
this section shall affect the authority of the
Secretary of Housing and Urban Development
with respect to any housing assisted under this
section, section 221(d)(3), section 231(c)(3), or section 236 of the National Housing Act [12 U.S.C.
1715l(d)(3), 1715v(c)(3), 1715z–1], or section 1701q of
this title, including the authority to prescribe
occupancy requirements under other provisions
of law or to determine the portion of such housing which may be occupied by qualified tenants.
To ensure that qualified tenants occupying that
number of units with respect to which assistance was being provided under this section immediately prior to November 30, 1983, receive the
benefit of assistance contracted for under this
section, the Secretary shall offer annually to
amend contracts entered into with owners of
projects assisted under this section but not subject to mortgages insured under title II of the
National Housing Act [12 U.S.C. 1707 et seq.] to
provide sufficient payments to cover 100 percent
of the necessary rent increases and changes in
the incomes of qualified tenants, subject to the
availability of authority for such purpose under
section 1437c(c) of title 42. The Secretary shall
take such actions as may be necessary to ensure
that payments, including payments that reflect
necessary rent increases and changes in the incomes of tenants, are made on a timely basis for
all units covered by contracts entered into
under this section.

(1) For the purpose of assisting housing under
this section on an experimental basis, subject to
the limitations of this subsection, the term
‘‘housing owner’’ (in addition to the meaning
prescribed in subsection (b)) includes—
(A) a private nonprofit corporation or other
private nonprofit legal entity, a limited dividend corporation or other limited dividend
legal entity, or a cooperative housing corporation, which is a mortgagor under a mortgage
which receives the benefits of the interest rate
provided for in the proviso in section 221(d)(5)
of the National Housing Act [12 U.S.C.
1715l(d)(5)] and which, after August 10, 1965,
has been approved for mortgage insurance
under section 221(d)(3) of the National Housing
Act and has been approved for receiving the
benefits of this section;
(B) a private nonprofit corporation or other
private nonprofit legal entity which is a mortgagor under a mortgage insured under section
231(c)(3) of the National Housing Act [12 U.S.C.
1715v(c)(3)] and which, after August 10, 1965,
has obtained final endorsement of such mortgage for mortgage insurance and has been approved for receiving the benefits of this section;
(C) a private nonprofit corporation, a public
body or agency, or a cooperative housing corporation, which is a borrower under section
1701q of this title and has been approved for receiving the benefits of this section: Provided,
That, with respect to properties financed with
loans under such section made on or before
August 10, 1965, payments shall not be made
with respect to more than 20 per centum of the
dwelling units in any property so financed;
and
(D) a private nonprofit corporation or other
private nonprofit legal entity, a limited dividend corporation or other limited dividend
legal entity, or a cooperative housing corporation, which is assisted under section 236 of the
National Housing Act [12 U.S.C. 1715z–1] and
which has been approved for receiving the benefits of this section: Provided, That payments
shall not be made with respect to more than 20
per centum of the dwelling units in any property so financed, except that the foregoing
limitation may be increased to 40 per centum
of the dwelling units in any such property if
the Secretary determines that such increase is
necessary and desirable in order to provide additional housing for individuals and families
meeting the requirements of subsection (c).

(h) Authorization of appropriations
There are authorized to be appropriated such
sums as may be necessary to carry out the provisions of this section, including, but not limited to, such sums as may be necessary to make
annual payments as prescribed in this section,
pay for services provided under (or pursuant to
agreements entered into under) subsection (e),
and provide administrative expenses.

(2) Of the amounts approved in appropriation
Acts pursuant to subsection (a) for payments
under this section in any year, not more than 5
per centum in the aggregate shall be paid with
respect to properties of housing owners as defined in paragraph (1)(A) of this subsection, and
not more than 5 per centum in the aggregate
shall be paid with respect to properties of housing owners as defined in paragraphs (1)(B) and
(1)(C) of this subsection.

(f) Omitted
(g) Authority of Secretary

Page 453

§ 1701s

TITLE 12—BANKS AND BANKING

(k) Repealed. Pub. L. 105–276, title V, § 514(d),
Oct. 21, 1998, 112 Stat. 2548
(l) Additional available assistance authority
Notwithstanding the provisions of subsection
(a) and any other provision of law, the Secretary
may utilize additional authority under section
1437c(c) of title 42 made available by appropriation Acts on or after October 1, 1979, to supplement assistance authority available under this
section. The Secretary shall utilize, to the extent necessary after September 30, 1984, any authority under this section that is recaptured either as the result of the conversion of housing
projects covered by assistance under this section
to contracts for assistance under section 1437f of
title 42 or otherwise (1) for the purpose of making assistance payments, including amendments
as provided in subsection (g), with respect to
housing projects assisted under this section, but
not subject to mortgages insured under the National Housing Act [12 U.S.C. 1701 et seq.], that
remain covered by assistance under this section;
and (2) if not required to provide assistance
under this section, and notwithstanding any
other provision of law, for the purpose of contracting for assistance payments under section
236(f)(2) of the National Housing Act [12 U.S.C.
1715z–1(f)(2)].
(m) Payments for benefit of certain projects having mortgages made by State or local housing finance or government agencies
The Secretary shall, not later than 45 days
after receipt of an application by the mortgagee,
provide interest reduction and rental assistance
payments for the benefit of projects assisted
under this section whose mortgages were made
by State or local housing finance agencies or
State or local government agencies for a term
equal to the remaining mortgage term to maturity on projects assisted under this section to
the extent of—
(1) unexpended balances of amounts of authority as set forth in certain letter agreements between the Department of Housing and
Urban Development and such State or local
housing finance agencies or State or local government agencies, and
(2) existing allocation under section 236 contracts on projects whose mortgages were made
by State or local housing finance agencies or
State or local government agencies which are
not being funded, to the extent of such excess
allocation, for any purposes permitted under
the provisions of this section.
An application shall be eligible for assistance
under the previous sentence only if the mortgagee submits the application within 548 days
after February 5, 1988, along with a certification
of the mortgagee that amounts are to be utilized
hereunder for the purpose of either (A) reducing
rents or rent increases to tenants, or (B) making
repairs or otherwise increasing the economic viability of a related project. Unexpended balances
referred to in the first sentence of this subsection which remain after disposition of all
such applications is favorably concluded shall be
rescinded. The authority conferred by this subsection to provide interest reduction and rental
assistance payments shall be available only to
the extent approved in appropriation Acts.

(Pub. L. 89–117, title I, § 101, Aug. 10, 1965, 79
Stat. 451; Pub. L. 90–19, § 22(a), (c), May 25, 1967,
81 Stat. 26; Pub. L. 90–448, title II, §§ 201(e), 202,
title XI, § 1106(b), Aug. 1, 1968, 82 Stat. 502, 503,
567; Pub. L. 91–152, title I, § 112, Dec. 24, 1969, 83
Stat. 383; Pub. L. 91–609, title I, §§ 103, 114[115](c),
118(b), 120(a), (b), Dec. 31, 1970, 84 Stat. 1771, 1774,
1775; Pub. L. 96–153, title II, § 203(a), Dec. 21, 1979,
93 Stat. 1106; Pub. L. 96–399, Oct. 8, 1980, title II,
§ 205, 94 Stat. 1630; Pub. L. 97–35, title III,
§§ 322(g), 327, Aug. 13, 1981, 95 Stat. 403, 407; Pub.
L. 98–181, title I [title II, §§ 203(b)(3), 219], Nov. 30,
1983, 97 Stat. 1178, 1187; Pub. L. 98–479, title I,
§ 102(d), title II, § 204(e), Oct. 17, 1984, 98 Stat.
2222, 2233; Pub. L. 100–242, title I, §§ 167(a)(2), 168,
170(h), title IV, § 430(b), Feb. 5, 1988, 101 Stat.
1864, 1867, 1920; Pub. L. 104–99, title IV, § 402(d)(5),
Jan. 26, 1996, 110 Stat. 42; Pub. L. 105–276, title V,
§ 514(d), Oct. 21, 1998, 112 Stat. 2548.)
REFERENCES IN TEXT
The National Housing Act, referred to in subsecs. (g)
and (l), is act June 27, 1934, ch. 847, 48 Stat. 1246, as
amended which is classified principally to this chapter
(§ 1701 et seq.). Title II of the National Housing Act is
classified generally to subchapter II (§ 1707 et seq.) of
this chapter. For complete classification of this Act to
the Code, see section 1701 of this title and Tables.
Section 236 contracts, referred to in subsec. (m)(2),
refer to contracts under section 1715z–1 of this title.
CODIFICATION
Subsecs. (f) and (i) of this section amended sections
1451(c) and 1465(c)(2) of Title 42, The Public Health and
Welfare.
Section was enacted as part of the Housing and Urban
Development Act of 1965, and not as part of the National Housing Act which comprises this chapter.
AMENDMENTS
1998—Subsec. (k). Pub. L. 105–276, which directed the
repeal of subsec. (k) of section 1010 of Pub. L. 89–117,
was executed by striking out subsec. (k) of this section,
to reflect the probable intent of Congress. For text, see
1996 Amendment note below.
1996—Subsec. (k). Pub. L. 104–99 temporarily substituted ‘‘[Reserved.]’’ for the text of subsec. (k), which
read as follows: ‘‘In selecting individuals or families to
be assisted under this section in accordance with the
eligibility criteria and procedures established under
subsection (e)(1) of this section, the project owner shall
give preference to individuals or families who are occupying substandard housing, are paying more than 50
percent of family income for rent, or are involuntarily
displaced at the time they are seeking housing assistance under this section.’’ See Effective and Termination Dates of 1996 Amendment note below.
1988—Subsec. (e)(1). Pub. L. 100–242, § 168(1), struck out
provisions authorizing the Secretary to issue, upon the
request of a housing owner, certificates of facts concerning individuals and families applying for admission
to, or residing in, dwellings of such owner.
Subsec. (g). Pub. L. 100–242, § 167(a)(2), substituted
‘‘100 percent’’ for ‘‘90 per centum’’.
Subsec. (j)(1)(D). Pub. L. 100–242, § 170(h), made
amendment identical to Pub. L. 98–479, § 204(e). See 1984
Amendment note below.
Subsec. (k). Pub. L. 100–242, § 168(2), amended subsec.
(k) generally. Prior to amendment, subsec. (k) read as
follows: ‘‘In making assistance available under this section, the Secretary shall give priority to individuals or
families who are occupying substandard housing or are
involuntarily displaced at the time they are seeking
housing assistance under this section.’’
Subsec. (m). Pub. L. 100–242, § 430(b), added subsec.
(m).
1984—Subsec. (g). Pub. L. 98–479, § 102(d), struck out
‘‘up to’’ before ‘‘90 per centum’’ in next to last sentence.

§ 1701s

TITLE 12—BANKS AND BANKING

Subsec. (j)(1)(D). Pub. L. 98–479, § 204(e), substituted
‘‘dividend’’ for ‘‘divided’’ before ‘‘legal entity’’.
1983—Subsec. (e)(1)(B). Pub. L. 98–181, § 203(b)(3), inserted ‘‘, was paying more than 50 per centum of family
income for rent,’’.
Subsec. (g). Pub. L. 98–181, § 219(a), inserted provision
relating to the offer annually to amend contracts to ensure that qualified tenants receive the benefit of assistance contracted for under this section.
Subsec. (l). Pub. L. 98–181, § 219(b), inserted provision
relating to the utilization by the Secretary of any authority under this section that is recaptured.
1981—Subsec. (c)(2). Pub. L. 97–35, § 322(g)(1), substituted provisions defining ‘‘income’’ as income from
all sources of each member and criteria for exclusions,
for provisions defining ‘‘income’’ as determined under
section 1437f of title 42.
Subsec. (d). Pub. L. 97–35, §§ 322(g)(2), 327(b), substituted provisions relating to determination of annual
payment amount, for provisions relating to determination of maximum amount of annual payment.
Subsec. (e)(2). Pub. L. 97–35, § 322(g)(3), substituted
provisions relating to annual recertifications, for provisions relating to the elderly and recertifications at
intervals of two years or shorter.
Subsec. (l). Pub. L. 97–35, § 327(a), substituted provisions relating to additional available assistance authority, for provisions relating to amendment of contracts.
1980—Subsec. (l). Pub. L. 96–399 substituted ‘‘shall,
not later than 4 years after October 8, 1980,’’ for ‘‘may’’
in first sentence; inserted second sentence relating to
amending of contracts; and substituted ‘‘the first sentence of this paragraph’’ for ‘‘preceding’’ in last sentence.
1979—Subsec. (c). Pub. L. 96–153, § 203(a)(l), revised definition of ‘‘qualified tenant’’ and inserted definition of
‘‘income’’.
Subsec. (d). Pub. L. 96–153, § 203(a)(2), struck out provisions that in determining the income of tenants, an
amount equal to $300 for each minor person shall be deducted and that the earnings of minor persons shall not
be included in the income of the tenant, and inserted
provisions relating to the determination of amount of
payments under contracts amended pursuant to subsec.
(j) of this section by reference to section 1437f of title
42.
Subsec. (e)(1)(B). Pub. L. 96–153, § 203(a)(3), substituted
‘‘occupying substandard housing or was involuntarily
displaced at the time it was seeking assistance under
this section’’ for ‘‘displaced by governmental action, is
elderly, is physically handicapped, or is (or was) occupying substandard housing or housing extensively damaged or destroyed as the result of a natural disaster’’.
Subsecs. (k), (l). Pub. L. 96–153, § 203(a)(4), added subsecs. (k) and (l).
1970—Subsec. (a). Pub. L. 91–609, § 103, increased maximum amount of payments by $40,000,000 on July 1, 1971.
Subsec. (b). Pub. L. 91–609, §§ 114[115](c), 118(b), authorized payments to housing owners with respect to
projects with dwelling units without kitchen facilities
and provided for percentage limitation on payments to
housing owner, and substituted ‘‘which may involve either new or existing construction and which’’ for
‘‘which prior to completion of construction or rehabilitation’’ before ‘‘is approved’’, respectively.
Subsec. (c)(2)(F). Pub. L. 91–609, § 120(a), added par.
(F).
Subsec. (e)(1)(B). Pub. L. 91–609, § 120(b), provided for
issuance of certificates with respect to whether the individual or family is a member of the Armed Forces of
the United States serving on active duty.
1969—Subsec. (j)(1)(D). Pub. L. 91–152 inserted exception which authorized the Secretary to increase payments to 40 per centum of the dwelling units under the
specified conditions.
1968—Subsec. (a). Pub. L. 90–448, § 202(a), increased
maximum amount of payments by $40,000,000 on July 1,
1969, and by $100,000,000 on July 1, 1970.
Subsec. (b). Pub. L. 90–448, § 202(b), included within
definition of ‘‘housing owner’’ a private nonprofit cor-

Page 454

poration or other private nonprofit legal entity, a limited dividend corporation or other limited dividended
legal entity, or a cooperative housing corporation,
which is the owner of a rental or cooperative housing
project financed under a State or local program.
Subsec. (c)(2)(E). Pub. L. 90–448, § 1106(b), substituted
‘‘affected by a disaster’’ for ‘‘affected by a natural disaster’’.
Subsec. (d). Pub. L. 90–448, § 201(e)(1), inserted provisions authorizing, in determining the income of any
tenant, a deduction of an amount equal to $300 for each
minor person who is a member of the immediate family
of the tenant and living with the tenant, and directing
that the earnings of any such minor shall not be included in the income of such tenant.
Subsec. (g). Pub. L. 90–448, § 201(e)(2), inserted reference to section 1715z–1 of this title.
Subsec. (j)(1)(D). Pub. L. 90–448, § 201(e)(3), inserted
subpar. (D).
1967—Pub. L. 90–19, § 22(a), substituted ‘‘Secretary’’
for ‘‘Administrator’’ wherever appearing in subsecs. (c),
(d), (e), and (g).
Subsec. (a). Pub. L. 90–19, § 22(c)(1), substituted ‘‘Secretary of Housing and Urban Development (hereinafter
referred to as the ‘Secretary’)’’ for ‘‘Housing and Home
Finance Administrator (hereinafter referred to as the
‘Administrator’)’’.
Subsec. (g). Pub. L. 90–19, § 22(c)(2), consolidated in
the Secretary of Housing and Urban Development the
authorities of the Federal Housing Commissioner and
the Housing and Home Finance Administrator with respect to housing assisted under sections 1715l(d)(3) and
1715v(c)(3), and section 1701q of this title, respectively.
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105–276, title V, § 514(g), Oct. 21, 1998, 112 Stat.
2549, provided that: ‘‘This section [amending this section, sections 1701z–11 and 4116 of this title, and sections 1437d, 1437f, 12899d, and 13615 of Title 42, The Public Health and Welfare, enacting provisions set out as
notes under sections 1437a and 1437f of Title 42, and repealing provisions set out as notes under sections 1437d
and 1437f of Title 42] shall take effect on, and the
amendments made by this section are made on, and
shall apply beginning upon, the date of the enactment
of this Act [Oct. 21, 1998].’’
EFFECTIVE AND TERMINATION DATES OF 1996
AMENDMENT
Amendment by Pub. L. 104–99 effective Jan. 26, 1996,
and only for fiscal years 1996, 1997, and 1998, and to
cease to be effective Oct. 21, 1998, see section 402(f) of
Pub. L. 104–99, as amended, and section 514(f) of Pub. L.
105–276, set out as notes under section 1437a of Title 42,
The Public Health and Welfare.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
EFFECTIVE DATE OF 1979 AMENDMENT
Pub. L. 96–153, title II, § 203(c), Dec. 21, 1979, 93 Stat.
1107, providing for the effective date of amendment of
this section and section 1715z–1 of this title as Dec. 21,
1979, and setting forth maximum applicable tenant contribution, was repealed by Pub. L. 97–35, title III,
§§ 322(h)(2), 371, Aug. 13, 1981, 95 Stat. 404, 431, eff. Oct.
1, 1981.
AMENDMENTS TO CONTRACTS
Pub. L. 109–115, div. A, title III, Nov. 30, 2005, 119 Stat.
2453, provided in part: ‘‘That amendments to such contracts [under this section and section 1715z–1(f)(2) of
this title in State-aided, non-insured rental housing
projects] hereafter may be for a period less than the
term of the respective contracts.’’

Page 455

TITLE 12—BANKS AND BANKING

§ 1701u

LIMITATION ON WITHHOLDING OR CONDITIONING OF
ASSISTANCE

NATIONAL ADVISORY COMMISSION ON LOW INCOME
HOUSING

Assistance provided for in Housing and Community
Development Act of 1974, National Housing Act, United
States Housing Act of 1937, Housing Act of 1949, Demonstration Cities and Metropolitan Development Act of
1966, and Housing and Urban Development Acts of 1965,
1968, 1969, and 1970 [see Short Title note set out under
section 1701 of this title], not to be withheld or made
subject to conditions by reason of tax-exempt status of
obligations issued or to be issued for financing of assistance, except as otherwise provided by law, see section 817 of Pub. L. 93–383, set out as a note under section 5301 of Title 42, The Public Health and Welfare.

Pub. L. 90–448, title I, § 110, Aug. 1, 1968, 82 Stat. 497,
established the National Advisory Commission on Low
Income Housing; provided for the appointment of members and the filling of vacancies; fixed the quorum
number and the number necessary to conduct hearings;
provided that the Commission study ways of bringing
safe and sanitary housing to low income families, utilize services of private research organizations, and
coordinate its investigation with the Banking and Currency Committees of the Senate and House; required
that an interim report be submitted by July 1, 1969 and
a final report by July 1, 1970; authorized the Commission or a subcommittee to hold hearings and to administer oaths and affirmations; directed executive branch
departments, agencies, and instrumentalities to furnish
information requested by the Commission; empowered
the chairman, without regard to the provisions of Title
5, Government Organization and Employees, governing
appointments in the competitive service and relating
to classification and General Schedule pay rates, to appoint and pay personnel as he deemed necessary and to
procure temporary services, as is authorized by section
3109 of title 5, at rates up to $50 a day for individuals;
provided that members appointed from the executive or
legislative branch serve without compensation in addition to that received in their regular employment but
be reimbursed for travel, subsistence, and necessary expenses incurred while performing duties for the Commission and that members other than those appointed
from the executive or legislative branches be paid $75 a
day plus travel, subsistence, and other necessary expenses while acting as members of the Commission; and
directed that the Commission cease to exist 30 days
after its final report.

§ 1701t. Congressional affirmation of national
goal of decent homes and suitable living environment for American families
The Congress affirms the national goal, as set
forth in section 1441 of title 42, of ‘‘a decent
home and a suitable living environment for
every American family’’.
The Congress finds that this goal has not been
fully realized for many of the Nation’s lower income families; that this is a matter of grave national concern; and that there exist in the public and private sectors of the economy the resources and capabilities necessary to the full realization of this goal.
The Congress declares that in the administration of those housing programs authorized by
this Act which are designed to assist families
with incomes so low that they could not otherwise decently house themselves, and of other
Government programs designed to assist in the
provision of housing for such families, the highest priority and emphasis should be given to
meeting the housing needs of those families for
which the national goal has not become a reality; and in the carrying out of such programs
there should be the fullest practicable utilization of the resources and capabilities of private
enterprise and of individual self-help techniques.
(Pub. L. 90–448, § 2, Aug. 1, 1968, 82 Stat. 476.)
REFERENCES IN TEXT
This Act, referred to in text, is Pub. L. 90–448, Aug.
1, 1968, 82 Stat. 476, as amended, known as the Housing
and Urban Development Act of 1968. For complete classification of this Act to the Code, see Short Title of
1968 Amendments note set out under section 1701 of this
title and Tables.
CODIFICATION
Section was enacted as part of the Housing and Urban
Development Act of 1968, and not as part of the National Housing Act which comprises this chapter.
LIMITATION ON WITHHOLDING OR CONDITIONING OF
ASSISTANCE
Assistance provided for in Housing and Community
Development Act of 1974, National Housing Act, United
States Housing Act of 1937, Housing Act of 1949, Demonstration Cities and Metropolitan Development Act of
1966, and Housing and Urban Development Acts of 1965,
1968, [see Short Title notes set out under section 1701 of
this title], 1969, and 1970 not to be withheld or made
subject to conditions by reason of tax-exempt status of
obligations issued or to be issued for financing of assistance, except as otherwise provided by law, see section 817 of Pub. L. 93–383, set out as a note under section 5301 of Title 42, The Public Health and Welfare.

§ 1701u. Economic opportunities for low- and
very low-income persons
(a) Findings
The Congress finds that—
(1) Federal housing and community development programs provide State and local governments and other recipients of Federal financial assistance with substantial funds for
projects and activities that produce significant employment and other economic opportunities;
(2) low- and very low-income persons, especially recipients of government assistance for
housing, often have restricted access to employment and other economic opportunities;
(3) the employment and other economic opportunities generated by projects and activities that receive Federal housing and community development assistance offer an effective
means of empowering low- and very low-income persons, particularly persons who are recipients of government assistance for housing;
and
(4) prior Federal efforts to direct employment and other economic opportunities generated by Federal housing and community development programs to low- and very low-income persons have not been fully effective and
should be intensified.
(b) Policy
It is the policy of the Congress and the purpose of this section to ensure that the employment and other economic opportunities generated by Federal financial assistance for housing and community development programs
shall, to the greatest extent feasible, be directed

§ 1701u

TITLE 12—BANKS AND BANKING

toward low- and very low-income persons, particularly those who are recipients of government assistance for housing.
(c) Employment
(1) Public and Indian housing program
(A) In general
The Secretary shall require that public
and Indian housing agencies, and their contractors and subcontractors, make their best
efforts, consistent with existing Federal,
State, and local laws and regulations, to
give to low- and very low-income persons the
training and employment opportunities generated by development assistance provided
pursuant to section 1437c of title 42, operating assistance provided pursuant to section
1437g of title 42, and modernization grants
provided pursuant to section 1437l of title
42.1
(B) Priority
The efforts required under subparagraph
(A) shall be directed in the following order of
priority:
(i) To residents of the housing developments for which the assistance is expended.
(ii) To residents of other developments
managed by the public or Indian housing
agency that is expending the assistance.
(iii) To participants in YouthBuild programs receiving assistance under section
3226 of title 29.
(iv) To other low- and very low-income
persons residing within the metropolitan
area (or nonmetropolitan county) in which
the assistance is expended.
(2) Other programs
(A) In general
In other programs that provide housing
and community development assistance, the
Secretary shall ensure that, to the greatest
extent feasible, and consistent with existing
Federal, State, and local laws and regulations, opportunities for training and employment arising in connection with a housing
rehabilitation (including reduction and
abatement of lead-based paint hazards),
housing construction, or other public construction project are given to low- and very
low-income persons residing within the metropolitan area (or nonmetropolitan county)
in which the project is located.
(B) Priority
Where feasible, priority should be given to
low- and very low-income persons residing
within the service area of the project or the
neighborhood in which the project is located
and to participants in YouthBuild programs
receiving assistance under section 3226 of
title 29.
(d) Contracting
(1) Public and Indian housing program
(A) In general
The Secretary shall require that public
and Indian housing agencies, and their con1 See

References in Text note below.

Page 456

tractors and subcontractors, make their best
efforts, consistent with existing Federal,
State, and local laws and regulations, to
award contracts for work to be performed in
connection with development assistance provided pursuant to section 1437c of title 42,
operating assistance provided pursuant to
section 1437g of title 42, and modernization
grants provided pursuant to section 1437l of
title 42,1 to business concerns that provide
economic opportunities for low- and very
low-income persons.
(B) Priority
The efforts required under subparagraph
(A) shall be directed in the following order of
priority:
(i) To business concerns that provide
economic opportunities for residents of the
housing development for which the assistance is provided.
(ii) To business concerns that provide
economic opportunities for residents of
other housing developments operated by
the public and Indian housing agency that
is providing the assistance.
(iii) To YouthBuild programs receiving
assistance under section 3226 of title 29.
(iv) To business concerns that provide
economic opportunities for low- and very
low-income persons residing within the
metropolitan area (or nonmetropolitan
county) in which the assistance is provided.
(2) Other programs
(A) In general
In providing housing and community development assistance pursuant to other programs, the Secretary shall ensure that, to
the greatest extent feasible, and consistent
with existing Federal, State, and local laws
and regulations, contracts awarded for work
to be performed in connection with a housing rehabilitation (including reduction and
abatement of lead-based paint hazards),
housing construction, or other public construction project are given to business concerns that provide economic opportunities
for low- and very low-income persons residing within the metropolitan area (or nonmetropolitan county) in which the assistance is expended.
(B) Priority
Where feasible, priority should be given to
business concerns which provide economic
opportunities for low- and very low-income
persons residing within the service area of
the project or the neighborhood in which the
project is located and to YouthBuild programs receiving assistance under section
3226 of title 29.
(e) Definitions
For the purposes of this section the following
definitions shall apply:
(1) Low- and very low-income persons
The terms ‘‘low-income persons’’ and ‘‘very
low-income persons’’ have the same meanings
given the terms ‘‘low-income families’’ and

Page 457

TITLE 12—BANKS AND BANKING

‘‘very low-income families’’, respectively, in
section 1437a(b)(2) of title 42.
(2) Business concern that provides economic
opportunities
The term ‘‘a business concern that provides
economic opportunities’’ means a business
concern that—
(A) provides economic opportunities for a
class of persons that has a majority controlling interest in the business;
(B) employs a substantial number of such
persons; or
(C) meets such other criteria as the Secretary may establish.
(f) Coordination with other Federal agencies
The Secretary shall consult with the Secretary of Labor, the Secretary of Health and
Human Services, the Secretary of Commerce,
the Administrator of the Small Business Administration, and such other Federal agencies as the
Secretary determines are necessary to carry out
this section.
(g) Regulations
Not later than 180 days after October 28, 1992,
the Secretary shall promulgate regulations to
implement this section.
(Pub. L. 90–448, § 3, Aug. 1, 1968, 82 Stat. 476; Pub.
L. 91–152, title IV, § 404, Dec. 24, 1969, 83 Stat. 395;
Pub. L. 93–383, title I, § 118, Aug. 22, 1974, 88 Stat.
653; Pub. L. 96–399, title III, § 329, Oct. 8, 1980, 94
Stat. 1651; Pub. L. 102–550, title IX, § 915, Oct. 28,
1992, 106 Stat. 3878; Pub. L. 109–281, § 2(d)(1), Sept.
22, 2006, 120 Stat. 1181; Pub. L. 113–128, title V,
§ 512(p), July 22, 2014, 128 Stat. 1711.)
REFERENCES IN TEXT
Section 1437l of title 42, referred to in subsecs.
(c)(1)(A) and (d)(1)(A), was repealed by Pub. L. 105–276,
title V, § 522(a), Oct. 21, 1998, 112 Stat. 2564.
CODIFICATION
Section was enacted as part of the Housing and Urban
Development Act of 1968, and not as part of the National Housing Act which comprises this chapter.
October 28, 1992, referred to in subsec. (g), was in the
original ‘‘the date of enactment of the National Affordable Housing Act Amendments of 1992’’, and was translated as meaning the date of enactment of the Housing
and Community Development Act of 1992, Pub. L.
102–550, which amended this section generally, to reflect the probable intent of Congress.
AMENDMENTS
2014—Subsec.
(c)(1)(B)(iii).
Pub.
L.
113–128,
§ 512(p)(1)(A), substituted ‘‘participants in YouthBuild
programs receiving assistance under section 3226 of
title 29’’ for ‘‘participants in YouthBuild programs receiving assistance under section 2918a of title 29’’.
Subsec. (c)(2)(B). Pub. L. 113–128, § 512(p)(1)(B), substituted ‘‘participants in YouthBuild programs receiving assistance under section 3226 of title 29’’ for ‘‘participants in YouthBuild programs receiving assistance
under section 2918a of title 29’’.
Subsec. (d)(1)(B)(iii). Pub. L. 113–128, § 512(p)(2)(A),
substituted ‘‘To YouthBuild programs receiving assistance under section 3226 of title 29’’ for ‘‘To YouthBuild
programs receiving assistance under section 2918a of
title 29’’.
Subsec. (d)(2)(B). Pub. L. 113–128, § 512(p)(2)(B), substituted ‘‘to YouthBuild programs receiving assistance
under section 3226 of title 29’’ for ‘‘to YouthBuild programs receiving assistance under section 2918a of title
29’’.

§ 1701u

2006—Subsecs. (c)(1)(B)(iii), (2)(B), (d)(1)(B)(iii), (2)(B).
Pub. L. 109–281 substituted ‘‘YouthBuild programs receiving assistance under section 2918a of title 29’’ for
‘‘Youthbuild programs receiving assistance under subtitle D of title IV of the Cranston-Gonzalez National
Affordable Housing Act’’.
1992—Pub. L. 102–550 amended section generally. Prior
to amendment, section read as follows: ‘‘In the administration by the Secretary of Housing and Urban Development of programs providing direct financial assistance, including community development block grants
under title I of the Housing and Community Development Act of 1974, in aid of housing, urban planning, development, redevelopment, or renewal, public or community facilities, and new community development,
the Secretary shall—
‘‘(1) require, in consultation with the Secretary of
Labor, that to the greatest extent feasible opportunities for training and employment arising in connection with the planning and carrying out of any
project assisted under any such program be given to
lower income persons residing within the unit of local
government or the metropolitan area (or nonmetropolitan county), as determined by the Secretary, in which the project is located; and
‘‘(2) require, in consultation with the Administrator of the Small Business Administration, that to
the greatest extent feasible contracts for work to be
performed in connection with any such project be
awarded to business concerns, including but not limited to individuals or firms doing business in the field
of planning, consulting, design, architecture, building
construction, rehabilitation, maintenance or repair,
which are located in or owned in substantial part by
persons residing in the same metropolitan area (or
nonmetropolitan county) as the project.’’
1980—Par. (1). Pub. L. 96–399, § 329(1), substituted ‘‘residing within the unit of local government or the metropolitan area (or nonmetropolitan county), as determined by the Secretary, in which the project is located’’ for ‘‘residing in the area of such project’’.
Par. (2). Pub. L. 96–399, § 329(2), substituted ‘‘residing
in the same metropolitan area (or nonmetropolitan
county) as the project’’ for ‘‘residing in the area of such
project’’.
1974—Pub. L. 93–383 inserted reference to community
development block grants under title I of the Housing
and Community Development Act of 1974.
1969—Pub. L. 91–152 substituted provisions making applicable programs providing direct financial assistance
in aid of housing, urban planning, development, redevelopment, or renewal, public or community facilities,
and new community development, for provisions making applicable programs authorized by sections
1715l(d)(3), 1715z, and 1715z–1 of this title, the low-rent
public housing program under the United States Housing Act of 1937, and the rent supplement program under
section 101 of the Housing and Urban Development Act
of 1965.
EFFECTIVE DATE OF 2014 AMENDMENT
Amendment by Pub. L. 113–128 effective on the first
day of the first full program year after July 22, 2014
(July 1, 2015), see section 506 of Pub. L. 113–128, set out
as an Effective Date note under section 3101 of Title 29,
Labor.
EFFECTIVE DATE OF 2006 AMENDMENT
Pub. L. 109–281, § 2(f), Sept. 22, 2006, 120 Stat. 1182, provided that: ‘‘This section [enacting former section 2918a
of Title 29, Labor, amending this section, section 4183 of
Title 25, Indians, former section 2939 of Title 29, and
section 12870 of Title 42, The Public Health and Welfare,
and repealing sections 12899 to 12899i of Title 42] and
the amendments made by this section take effect on
the earlier of—
‘‘(1) the date of enactment of this Act [Sept. 22,
2006]; and
‘‘(2) September 30, 2006.’’

§ 1701v

TITLE 12—BANKS AND BANKING
EFFECTIVENESS STUDY

Pub. L. 102–550, title IX, § 916, Oct. 28, 1992, 106 Stat.
3881, provided that:
‘‘(a) IN GENERAL.—The Secretary of Housing and
Urban Development shall submit to the Congress, not
later than 1 year after the date of the enactment of this
Act [Oct. 28, 1992], a report describing—
‘‘(1) the Secretary’s efforts to enforce section 3 of
the Housing and Urban Development Act of 1968 [12
U.S.C. 1701u];
‘‘(2) the barriers to full implementation of section
3 of the Housing and Urban Development Act of 1968;
‘‘(3) the anticipated costs and benefits of full implementation of section 3 of the Housing and Urban Development Act of 1968; and
‘‘(4) recommendations for legislative changes to enhance the effectiveness of section 3 of the Housing
and Urban Development Act of 1968.
‘‘(b) CONTENTS.—
‘‘(1) ENFORCEMENT.—The description under subsection (a)(1) of the Secretary’s enforcement efforts
shall include, at a minimum—
‘‘(A) a discussion of how responsibility for implementing section 3 of the Housing and Urban Development Act of 1968 [12 U.S.C. 1701u] is allocated
within the Department of Housing and Urban Development;
‘‘(B) a discussion of the status of existing regulations implementing such section 3;
‘‘(C) a discussion of ongoing efforts to enforce
current regulations;
‘‘(D) a list of the programs under the responsibility of the Secretary with respect to which the Secretary is enforcing section 3; and
‘‘(E) a separate description of the activities carried out under section 3 with respect to each of
these programs.
‘‘(2) IMPEDIMENTS.—The discussion under subsection
(a)(2) of the external impediments to effective enforcement of section 3 of the Housing and Urban Development Act of 1968 shall include, at a minimum, a
discussion of—
‘‘(A) any lack of necessary training for targeted
employees and technical assistance to targeted
businesses;
‘‘(B) any barriers created by Federal, State, or
local procurement regulations or other laws;
‘‘(C) any difficulties in coordination with labor
unions;
‘‘(D) any difficulties in coordination with other
implicated Federal agencies; and
‘‘(E) any lack of resources on the part of recipients of assistance who are responsible for carrying
out section 3 of the Housing and Urban Development Act of 1968.
‘‘(c) CONSULTATION.—In preparing the report under
this subsection, the Secretary shall consult with the
Secretary of Labor, the Secretary of Commerce, the
Secretary of Health and Human Services, the Administrator of the Small Business Administration, other appropriate Federal officials, and recipients of Federal
housing and community development assistance who
are responsible for executing section 3 of the Housing
and Urban Development Act of 1968 [12 U.S.C. 1701u].’’

§ 1701v. Congressional findings and declaration
for improved architectural design in Government housing programs
The Congress finds that Federal aids to housing have not contributed fully to improvement
in architectural standards. This objective has
been contemplated in Federal housing legislation since the establishment of mortgage insurance through the Federal Housing Administration.
The Congress commends the Department of
Housing and Urban Development for its recent

Page 458

efforts to improve architectural standards
through competitive design awards and in other
ways but at the same time recognizes that this
important objective requires high priority if
Federal aid is to make its full communitywide
contribution toward improving our urban environment.
The Congress further finds that even within
the necessary budget limitations on housing for
low and moderate income families architectural
design could be improved not only to make the
housing more attractive, but to make it better
suited to the needs of occupants.
The Congress declares that in the administration of housing programs which assist in the
provision of housing for low and moderate income families, emphasis should be given to encouraging good design as an essential component of such housing and to developing housing
which will be of such quality as to reflect its important relationship to the architectural standards of the neighborhood and community in
which it is situated, consistent with prudent
budgeting.
(Pub. L. 90–448, § 4, Aug. 1, 1968, 82 Stat. 477.)
CODIFICATION
Section was enacted as part of the Housing and Urban
Development Act of 1968, and not as part of the National Housing Act which comprises this chapter.

§ 1701w. Budget, debt management, and related
counseling services for mortgagors; authorization of appropriations
The Secretary of Housing and Urban Development is authorized to provide, or contract with
public or private organizations to provide, such
budget, debt management, and related counseling services to mortgagors whose mortgages are
insured under section 1715z(i) or (j)(4) of this
title as he determines to be necessary to assist
such mortgagors in meeting the responsibilities
of homeownership. There are authorized to be
appropriated such sums as may be necessary to
carry out the provisions of this section.
(Pub. L. 90–448, title I, § 101(e), Aug. 1, 1968, 82
Stat. 484.)
CODIFICATION
Section was enacted as part of the Housing and Urban
Development Act of 1968, and not as part of the National Housing Act which comprises this chapter.

§ 1701x. Assistance with respect to housing for
low- and moderate-income families
(a) Authorization to provide information, advice,
and technical assistance; scope of assistance;
authorization of appropriations
(1) The Secretary is authorized to provide, or
contract with public or private organizations to
provide, information, advice, and technical assistance, including but not limited to—
(i) the assembly, correlation, publication,
and dissemination of information with respect
to the construction, rehabilitation, and operation of low- and moderate-income housing;
(ii) the provision of advice and technical assistance to public bodies or to nonprofit or cooperative organizations with respect to the
construction, rehabilitation, and operation of

Page 459

TITLE 12—BANKS AND BANKING

low- and moderate-income housing, including
assistance with respect to self-help and mutual self-help programs;
(iii) counseling and advice to tenants and
homeowners with respect to property maintenance, financial management, and such other
matters as may be appropriate to assist them
in improving their housing conditions and in
meeting the responsibilities of tenancy or
homeownership; and
(iv) the provision of technical assistance to
communities, particularly smaller communities, to assist such communities in planning,
developing, and administering Community Development Programs pursuant to title I of the
Housing and Community Development Act of
1974 [42 U.S.C. 5301 et seq.].
(2) The Secretary (A) shall provide the services
described in clause (iii) of paragraph (1) for
homeowners assisted under section 235 of the
National Housing Act [12 U.S.C. 1715z]; (B) shall,
in consultation with the Secretary of Agriculture, provide such services for borrowers who
are first-time homebuyers with guaranteed
loans under section 502(h) of the Housing Act of
1949 [42 U.S.C. 1472(h)]; and (C) may provide such
services for other owners of single family dwelling units insured under title II of the National
Housing Act [12 U.S.C. 1707 et seq.] or guaranteed or insured under chapter 37 of title 38. For
purposes of this paragraph and clause (iii) of
paragraph (1), the Secretary may provide the
services described in such clause directly or may
enter into contracts with, make grants to, and
provide other types of assistance to private or
public organizations with special competence
and knowledge in counseling low- and moderateincome families to provide such services.
(3) There is authorized to be appropriated for
the purposes of this subsection, without fiscal
year limitation, such sums as may be necessary;
except that for such purposes there are authorized to be appropriated $6,025,000 for fiscal year
1993 and $6,278,050 for fiscal year 1994. Of the
amounts appropriated for each of fiscal years
1993 and 1994, up to $500,000 shall be available for
use for counseling and other activities in connection with the demonstration program under
section 152 of the Housing and Community Development Act of 1992. Any amounts so appropriated shall remain available until expended.
(4) HOMEOWNERSHIP AND RENTAL COUNSELING
ASSISTANCE.—
(A) IN GENERAL.—The Secretary shall make
financial assistance available under this paragraph to HUD-approved housing counseling
agencies and State housing finance agencies.
(B) QUALIFIED ENTITIES.—The Secretary shall
establish standards and guidelines for eligibility of organizations (including governmental and nonprofit organizations) to receive
assistance under this paragraph, in accordance
with subparagraph (D).
(C) DISTRIBUTION.—Assistance made available under this paragraph shall be distributed
in a manner that encourages efficient and successful counseling programs and that ensures
adequate distribution of amounts for rural
areas having traditionally low levels of access
to such counseling services, including areas
with insufficient access to the Internet. In dis-

§ 1701x

tributing such assistance, the Secretary may
give priority consideration to entities serving
areas with the highest home foreclosure rates.
(D) LIMITATION ON DISTRIBUTION OF ASSISTANCE.—
(i) IN GENERAL.—None of the amounts
made available under this paragraph shall be
distributed to—
(I) any organization which has been convicted for a violation under Federal law relating to an election for Federal office; or
(II) any organization which employs applicable individuals.
(ii) DEFINITION OF APPLICABLE INDIVIDUALS.—In this subparagraph, the term ‘‘applicable individual’’ means an individual
who—
(I) is—
(aa) employed by the organization in a
permanent or temporary capacity;
(bb) contracted or retained by the organization; or
(cc) acting on behalf of, or with the express or apparent authority of, the organization; and
(II) has been convicted for a violation
under Federal law relating to an election
for Federal office.
(E) GRANTMAKING PROCESS.—In making assistance available under this paragraph, the
Secretary shall consider appropriate ways of
streamlining and improving the processes for
grant application, review, approval, and
award.
(F) AUTHORIZATION OF APPROPRIATIONS.—
There are authorized to be appropriated
$45,000,000 for each of fiscal years 2009 through
2012 for—
(i) the operations of the Office of Housing
Counseling of the Department of Housing
and Urban Development;
(ii) the responsibilities of the Director of
Housing Counseling under paragraphs (2)
through (5) of subsection (g); and
(iii) assistance pursuant to this paragraph
for entities providing homeownership and
rental counseling.
(b) Loans to nonprofit organizations or public
housing agencies; purpose and terms; repayment; authorization of appropriations; deposit of appropriations in Low and Moderate
Income Sponsor Fund
(1) The Secretary is authorized to make loans
to nonprofit organizations or public housing
agencies for the necessary expenses, prior to
construction, in planning, and obtaining financing for, the rehabilitation or construction of
housing for low or moderate income families
under section 235 of the National Housing Act
[12 U.S.C. 1715z] or any other federally assisted
program. Such loans shall be made without interest and shall not exceed 80 per centum of the
reasonable costs expected to be incurred in planning, and in obtaining financing for, such housing prior to the availability of financing, including, but not limited to, preliminary surveys and
analyses of market needs, preliminary site engineering and architectural fees, site acquisition,
application and mortgage commitment fees, and

§ 1701x

TITLE 12—BANKS AND BANKING

construction loan fees and discounts. The Secretary shall require repayment of loans made
under this subsection, under such terms and
conditions as he may require, upon completion
of the project or sooner, and may cancel any
part or all of a loan if he determines that it cannot be recovered from the proceeds of any permanent loan made to finance the rehabilitation
or construction of the housing.
(2) The Secretary shall determine prior to the
making of any loan that the nonprofit organization or public housing agency meets such requirements with respect to financial responsibility and stability as he may prescribe.
(3) There are authorized to be appropriated for
the purposes of this subsection not to exceed
$7,500,000 for the fiscal year ending June 30, 1969,
and not to exceed $10,000,000 for the fiscal year
ending June 30, 1970. Any amounts so appropriated shall remain available until expended,
and any amounts authorized for any fiscal year
under this paragraph but not appropriated may
be appropriated for any succeeding fiscal year.
(4) All funds appropriated for the purposes of
this subsection shall be deposited in a fund
which shall be known as the Low and Moderate
Income Sponsor Fund, and which shall be available without fiscal year limitation and be administered by the Secretary as a revolving fund
for carrying out the purposes of this subsection.
Sums received in repayment of loans made
under this subsection shall be deposited in such
fund.
(c) Grants for homeownership counseling organizations
(1) In general
The Secretary of Housing and Urban Development may make grants—
(A) to nonprofit organizations experienced
in the provision of homeownership counseling to enable the organizations to provide
homeownership counseling to eligible homeowners; and
(B) to assist in the establishment of nonprofit homeownership counseling organizations.
(2) Program requirements
(A) Applications for grants under this subsection shall be submitted in the form, and in
accordance with the procedures, that the Secretary requires.
(B) The homeownership counseling organizations receiving assistance under this subsection shall use the assistance only to provide homeownership counseling to eligible
homeowners.
(C) The homeownership counseling provided
by homeownership counseling organizations
receiving assistance under this subsection
shall include counseling with respect to—
(i) financial management;
(ii) available community resources, including public assistance programs, mortgage assistance programs, home repair assistance
programs, utility assistance programs, food
programs, and social services; and
(iii) employment training and placement.
(3) Availability of homeownership counseling
The Secretary shall take any action that is
necessary—

Page 460

(A) to ensure the availability throughout
the United States of homeownership counseling from homeownership counseling organizations receiving assistance under this
subsection, with priority to areas that—
(i) are experiencing high rates of home
foreclosure and any other indicators of
homeowner distress determined by the
Secretary to be appropriate;
(ii) are not already adequately served by
homeownership counseling organizations;
and
(iii) have a high incidence of mortgages
involving principal obligations (including
such initial service charges, appraisal, inspection, and other fees as the Secretary
shall approve) in excess of 97 percent of the
appraised value of the properties that are
insured pursuant to section 203 of the National Housing Act [12 U.S.C. 1709]; and
(B) to inform the public of the availability
of the homeownership counseling.
(4) Eligibility for counseling
A homeowner shall be eligible for homeownership counseling under this subsection
if—
(A) the home loan is secured by property
that is the principal residence (as defined by
the Secretary) of the homeowner;
(B) the home loan is not assisted under
title V of the Housing Act of 1949 [42 U.S.C.
1471 et seq.]; and
(C) the homeowner is, or is expected to be,
unable to make payments, correct a home
loan delinquency within a reasonable time,
or resume full home loan payments due to a
reduction in the income of the homeowner
because of—
(i) an involuntary loss of, or reduction
in, the employment of the homeowner, the
self-employment of the homeowner, or income from the pursuit of the occupation of
the homeowner;
(ii) any similar loss or reduction experienced by any person who contributes to
the income of the homeowner;
(iii) a significant reduction in the income of the household due to divorce or
death; or
(iv) a significant increase in basic expenses of the homeowner or an immediate
family member of the homeowner (including the spouse, child, or parent for whom
the homeowner provides substantial care
or financial assistance) due to—
(I) an unexpected or significant increase in medical expenses;
(II) a divorce;
(III) unexpected and significant damage to the property, the repair of which
will not be covered by private or public
insurance; or
(IV) a large property-tax increase; or
(D) the Secretary of Housing and Urban
Development determines that the annual income of the homeowner is no greater than
the annual income established by the Secretary as being of low- or moderate-income.

Page 461

TITLE 12—BANKS AND BANKING

(5) Notification of availability of homeownership counseling
(A) Notification of availability of homeownership counseling
(i) Requirement
Except as provided in subparagraph (C),
the creditor of a loan (or proposed creditor) shall provide notice under clause (ii)
to (I) any eligible homeowner who fails to
pay any amount by the date the amount is
due under a home loan, and (II) any applicant for a mortgage described in paragraph
(4).
(ii) Content
Notification under this subparagraph
shall—
(I) notify the homeowner or mortgage
applicant of the availability of any
homeownership counseling offered by the
creditor (or proposed creditor);
(II) if provided to an eligible mortgage
applicant, state that completion of a
counseling program is required for insurance pursuant to section 203 of the National Housing Act [12 U.S.C. 1709];
(III) notify the homeowner or mortgage applicant of the availability of
homeownership counseling provided by
nonprofit organizations approved by the
Secretary and experienced in the provision of homeownership counseling, or
provide the toll-free telephone number
described in subparagraph (D)(i);
(IV) notify the homeowner by a statement or notice, written in plain English
by the Secretary of Housing and Urban
Development, in consultation with the
Secretary of Defense and the Secretary
of the Treasury, explaining the mortgage
and foreclosure rights of servicemembers, and the dependents of such
servicemembers, under the Servicemembers Civil Relief Act (50 U.S.C. App.
501 et seq.) [now 50 U.S.C. 3901 et seq.],
including the toll-free military one
source number to call if servicemembers,
or the dependents of such servicemembers, require further assistance; and
(V) notify the housing or mortgage applicant of the availability of mortgage
software systems provided pursuant to
subsection (g)(3).
(B) Deadline for notification
The notification required in subparagraph
(A) shall be made—
(i) in a manner approved by the Secretary; and
(ii) before the expiration of the 45-day
period beginning on the date on which the
failure referred to in such subparagraph
occurs.
(C) Notification
Notification under subparagraph (A) shall
not be required with respect to any loan for
which the eligible homeowner pays the
amount overdue before the expiration of the
45-day period under subparagraph (B)(ii).
(D) Administration and compliance
The Secretary shall, to the extent of
amounts approved in appropriation Acts,

§ 1701x

enter into an agreement with an appropriate
private entity under which the entity will—
(i) operate a toll-free telephone number
through which any eligible homeowner can
obtain a list of nonprofit organizations,
which shall be updated annually, that—
(I) are approved by the Secretary and
experienced in the provision of homeownership counseling; and
(II) serve the area in which the residential property of the homeowner is located;
(ii) monitor the compliance of creditors
with the requirements of subparagraphs
(A) and (B); and
(iii) report to the Secretary not less than
annually regarding the extent of compliance of creditors with the requirements of
subparagraphs (A) and (B).
(E) Report
The Secretary shall submit a report to the
Congress not less than annually regarding
the extent of compliance of creditors with
the requirements of subparagraphs (A) and
(B) and the effectiveness of the entity monitoring such compliance. The Secretary shall
also include in the report any recommendations for legislative action to increase the
authority of the Secretary to penalize creditors who do not comply with such requirements.
(6) Definitions
For purposes of this subsection:
(A) The term ‘‘creditor’’ means a person or
entity that is servicing a home loan on behalf of itself or another person or entity.
(B) The term ‘‘eligible homeowner’’ means
a homeowner eligible for counseling under
paragraph (4).
(C) The term ‘‘home loan’’ means a loan
secured by a mortgage or lien on residential
property.
(D) The term ‘‘homeowner’’ means a person who is obligated under a home loan.
(E) The term ‘‘residential property’’ means
a 1-family residence, including a 1-family
unit in a condominium project, a membership interest and occupancy agreement in a
cooperative housing project, and a manufactured home and the lot on which the home is
situated.
(7) Regulations
The Secretary shall issue any regulations
that are necessary to carry out this subsection.
(8) Authorization of appropriations
There are authorized to be appropriated to
carry out this section $7,000,000 for fiscal year
1993 and $7,294,000 for fiscal year 1994, of which
amounts $1,000,000 shall be available in each
such fiscal year to carry out paragraph (5)(D).
Any amount appropriated under this subsection shall remain available until expended.
(d) Prepurchase and foreclosure-prevention
counseling demonstration
(1) Purposes
The purpose of this subsection is—

§ 1701x

TITLE 12—BANKS AND BANKING

(A) to reduce defaults and foreclosures on
mortgage loans insured under the Federal
Housing Administration single family mortgage insurance program;
(B) to encourage responsible and prudent
use of such federally insured home mortgages;
(C) to assist homeowners with such federally insured mortgages to retain the homes
they have purchased pursuant to such mortgages; and
(D) to encourage the availability and expansion of housing opportunities in connection with such federally insured home mortgages.
(2) Authority
The Secretary of Housing and Urban Development shall carry out a program to demonstrate the effectiveness of providing coordinated prepurchase counseling and foreclosureprevention counseling to first-time homebuyers and homeowners in avoiding defaults
and foreclosures on mortgages insured under
the Federal Housing Administration single
family home mortgage insurance program.
(3) Grants
Under the demonstration program under this
subsection, the Secretary shall make grants to
qualified nonprofit organizations under paragraph (4) to enable the organizations to provide prepurchase counseling services to eligible homebuyers and foreclosure-prevention
counseling services to eligible homeowners, in
counseling target areas.
(4) Qualified nonprofit organizations
The Secretary shall select nonprofit organizations to receive assistance under the demonstration program under this subsection
based on the experience and ability of the organizations in providing homeownership counseling and their ability to provide communitybased prepurchase and foreclosure-prevention
counseling under paragraphs (5) and (6) in a
counseling target area. To be eligible for selection under this paragraph, a nonprofit organization shall submit an application containing a proposal for providing counseling services in the form and manner required by the
Secretary.
(5) Prepurchase counseling
(A) Mandatory participation
Under the demonstration program, the
Secretary shall require any eligible homebuyer who intends to purchase a home located in a counseling target area and who
has applied for (as determined by the Secretary) a qualified mortgage (as such term is
defined in paragraph (9)) on such home that
involves a downpayment of less than 10 percent of the principal obligation of the mortgage, to receive counseling prior to signing
of a contract to purchase the home. The
counseling shall include counseling with respect to—
(i) financial management and the responsibilities involved in homeownership;
(ii) fair housing laws and requirements;
(iii) the maximum mortgage amount
that the homebuyer can afford; and

Page 462

(iv) options, programs, and actions available to the homebuyer in the event of actual or potential delinquency or default.
(B) Eligibility for counseling
A homebuyer shall be eligible for prepurchase counseling under this paragraph
if—
(i) the homebuyer has applied for a
qualified mortgage;
(ii) the homebuyer is a first-time homebuyer; and
(iii) the home to be purchased under the
qualified mortgage is located in a counseling target area.
(6) Foreclosure-prevention counseling
(A) Availability
Under the demonstration program, the
Secretary shall make counseling available
for eligible homeowners who are 60 or more
days delinquent with respect to a payment
under a qualified mortgage on a home located within a counseling target area. The
counseling shall include counseling with respect to options, programs, and actions
available to the homeowner for resolving the
delinquency or default.
(B) Notification of delinquency
Under the demonstration program, the
Secretary shall require the creditor of any
eligible homeowner who is delinquent (as described in subparagraph (A)) to send written
notice by registered or certified mail within
5 days (excluding Saturdays, Sundays, and
legal public holidays) after the occurrence of
such delinquency—
(i) notifying the homeowner of the delinquency and the name, address, and phone
number of the counseling organization for
the counseling target area; and
(ii) notifying any counseling organization for the counseling target area of the
delinquency and the name, address, and
phone number of the delinquent homeowner.
(C) Coordination with emergency homeownership counseling program
The Secretary may coordinate the provision of assistance under subsection (c) with
the demonstration program under this subsection.
(D) Eligibility for counseling
A homeowner shall be eligible for foreclosure-prevention counseling under this
paragraph if—
(i) the home owned by the homeowner is
subject to a qualified mortgage; and
(ii) such home is located in a counseling
target area.
(7) Scope of demonstration program
(A) Designation of counseling target areas
The Secretary shall designate 3 counseling
target areas (as provided in subparagraph
(B)), which shall be located in not less than
2 separate metropolitan areas. The Secretary shall provide for counseling under the
demonstration program under this sub-

Page 463

TITLE 12—BANKS AND BANKING

section with respect to only such counseling
target areas.
(B) Counseling target areas
Each counseling target area shall consist
of a group of contiguous census tracts—
(i) the population of which is greater
than 50,000;
(ii) which together constitute an identifiable neighborhood, area, borough, district, or region within a metropolitan area
(except that this clause may not be construed to exclude a group of census tracts
containing areas not wholly contained
within a single town, city, or other political subdivision of a State);
(iii) in which the average age of existing
housing is greater than 20 years; and
(iv) for which (I) the percentage of qualified mortgages on homes within the area
that are foreclosed exceeds 5 percent for
the calendar year preceding the year in
which the area is selected as a counseling
target area, or (II) the number of qualified
mortgages originated on homes in such
area in the calendar year preceding the
calendar year in which the area is selected
as a counseling target area exceeds 20 percent of the total number of mortgages
originated on residences in the area during
such year.
(C) Mortgage characteristics
In designating counseling target areas
under subparagraph (A), the Secretary shall
designate at least 1 such area that meets the
requirements of subparagraph (B)(iv)(I) and
at least 1 such area that meets the requirements of subparagraph (B)(iv)(II).
(D) Expansion of target areas
The Secretary may expand any counseling
target area during the term of the demonstration program, if the Secretary determines that counseling can be adequately
provided within such expanded area and the
purposes of this subsection will be furthered
by such expansion. Any such expansion shall
include only groups of census tracts that are
contiguous to the counseling target area expanded and such census tract groups shall
not be subject to the provisions of subparagraph (B).
(E) Designation of control areas
For purposes of determining the effectiveness of counseling under the demonstration
program, the Secretary shall designate 3
control areas, each of which shall correspond
to 1 of the counseling target areas designated under subparagraph (A). Each control area shall be located in the metropolitan area in which the corresponding counseling target area is located, shall meet the requirements of subparagraph (B), and shall be
similar to such area with respect to size, age
of housing stock, median income, and racial
makeup of the population. Each control area
shall also comply with the requirements of
subclause (I) or (II) of subparagraph (B)(iv),
according to the subclause with which the
corresponding counseling target area complies.

§ 1701x

(8) Evaluation
Each organization providing counseling
under the demonstration program under this
subsection shall maintain records with respect
to each eligible homebuyer and eligible homeowner counseled and shall provide information
with respect to such counseling as the Secretary or the Comptroller General may require.
(9) Definitions
For purposes of this subsection:
(A) The term ‘‘control area’’ means an
area designated by the Secretary under
paragraph (7)(E).
(B) The term ‘‘counseling target area’’
means an area designated by the Secretary
under paragraph (7)(A).
(C) The term ‘‘creditor’’ means a person or
entity that is servicing a loan secured by a
qualified mortgage on behalf of itself or another person or entity.
(D) The term ‘‘displaced homemaker’’
means an individual who—
(i) is an adult;
(ii) has not worked full-time, full-year in
the labor force for a number of years, but
has during such years, worked primarily
without remuneration to care for the home
and family; and
(iii) is unemployed or underemployed
and is experiencing difficulty in obtaining
or upgrading employment.
(E) The term ‘‘downpayment’’ means the
amount of purchase price of home required
to be paid at or before the time of purchase.
(F) The term ‘‘eligible homebuyer’’ means
a homebuyer that meets the requirements
under paragraph (5)(B).
(G) The term ‘‘eligible homeowner’’ means
a homeowner that meets the requirements
under paragraph (6)(D).
(H) The term ‘‘first-time homebuyer’’
means an individual who—
(i) (and whose spouse) has had no ownership in a principal residence during the 3year period ending on the date of purchase
of the home pursuant to which counseling
is provided under this subsection;
(ii) is a displaced homemaker who, except for owning a residence with his or her
spouse or residing in a residence owned by
the spouse, meets the requirements of
clause (i); or
(iii) is a single parent who, except for
owning a residence with his or her spouse
or residing in a residence owned by the
spouse while married, meets the requirements of clause (i).
(I) The term ‘‘home’’ includes any dwelling
or dwelling unit eligible for a qualified
mortgage, and includes a unit in a condominium project, a membership interest
and occupancy agreement in a cooperative
housing project, and a manufactured home
and the lot on which the home is situated.
(J) The term ‘‘metropolitan area’’ means a
standard metropolitan statistical area as
designated by the Director of the Office of
Management and Budget.

§ 1701x

TITLE 12—BANKS AND BANKING

(K) The term ‘‘qualified mortgage’’ means
a mortgage on a 1- to 4-family home that is
insured under title II of the National Housing Act [12 U.S.C. 1707 et seq.].
(L) The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.
(M) The term ‘‘single parent’’ means an individual who—
(i) is unmarried or legally separated
from a spouse; and
(ii)(I) has 1 or more minor children for
whom the individual has custody or joint
custody; or
(II) is pregnant.
(10) Regulations
The Secretary may issue any regulations
necessary to carry out this subsection.
(11) Authorization of appropriations
There are authorized to be appropriated to
carry out this subsection $365,000 for fiscal
year 1993 and $380,330 for fiscal year 1994.
(12) Termination
The demonstration program under this subsection shall terminate at the end of fiscal
year 1994.
(e) Certification
(1) Requirement for assistance
An organization may not receive assistance
for counseling activities under subsection
(a)(1)(iii), (a)(2), (a)(4), (c), or (d) of this section, or under section 1701w of this title, unless the organization, or the individuals
through which the organization provides such
counseling, has been certified by the Secretary
under this subsection as competent to provide
such counseling.
(2) Standards and examination
The Secretary shall, by regulation, establish
standards and procedures for testing and certifying counselors and for certifying organizations. Such standards and procedures shall require, for certification of an organization, that
each individual through which the organization provides counseling shall demonstrate,
and, for certification of an individual, that the
individual shall demonstrate, by written examination (as provided under subsection
(f)(4)), competence to provide counseling in
each of the following areas:
(A) Financial management.
(B) Property maintenance.
(C) Responsibilities of homeownership and
tenancy.
(D) Fair housing laws and requirements.
(E) Housing affordability.
(F) Avoidance of, and responses to, rental
and mortgage delinquency and avoidance of
eviction and mortgage default.
(3) Requirement under HUD programs
Any homeownership counseling or rental
housing counseling (as such terms are defined
in subsection (g)(1)) required under, or provided in connection with, any program administered by the Department of Housing and
Urban Development shall be provided only by
organizations or counselors certified by the
Secretary under this subsection as competent
to provide such counseling.

Page 464

(4) Outreach
The Secretary shall take such actions as the
Secretary considers appropriate to ensure that
individuals and organizations providing homeownership or rental housing counseling are
aware of the certification requirements and
standards of this subsection and of the training and certification programs under subsection (f).
(5) Encouragement
The Secretary shall encourage organizations
engaged in providing homeownership and rental counseling that do not receive assistance
under this section to employ organizations
and individuals to provide such counseling
who are certified under this subsection or
meet the certification standards established
under this subsection.
(f) Homeownership and rental counselor training
and certification programs
(1) Establishment
To the extent amounts are provided in appropriations Acts under paragraph (7), the
Secretary shall contract with an appropriate
entity (which may be a nonprofit organization) to carry out a program under this subsection to train individuals to provide homeownership and rental counseling and to administer the examination under subsection (e)(2)
and certify individuals under such subsection.
(2) Eligibility and selection
(A) Eligibility
To be eligible to provide the training and
certification program under this subsection,
an entity shall have demonstrated experience in training homeownership and rental
counselors.
(B) Selection
The Secretary shall provide for entities
meeting the requirements of subparagraph
(A) to submit applications to provide the
training and certification program under
this subsection. The Secretary shall select
an application based on the ability of the entity to—
(i) establish the program as soon as possible on a national basis, but not later
than the date under paragraph (6);
(ii) minimize the costs involved in establishing the program; and
(iii) effectively and efficiently carry out
the program.
(3) Training
The Secretary shall require that training of
counselors under the program under this subsection be designed and coordinated to prepare
individuals for successful completion of the
examination for certification under subsection
(e)(2). The Secretary, in consultation with the
entity selected under paragraph (2)(B), shall
establish the curriculum and standards for
training counselors under the program.
(4) Certification
The entity selected under paragraph (2)(B)
shall administer the examination under subsection (e)(2) and, on behalf of the Secretary,

Page 465

§ 1701x

TITLE 12—BANKS AND BANKING

certify individuals successfully completing the
examination. The Secretary, in consultation
with such entity, shall establish the content
and format of the examination.
(5) Fees
Subject to the approval of the Secretary, the
entity selected under paragraph (2)(B) may establish and impose reasonable fees for participation in the training provided under the program and for examination and certification
under subsection (e)(2), in an amount sufficient to cover any costs of such activities not
covered with amounts provided under paragraph (7).
(6) Timing
The entity selected under paragraph (2)(B)
to carry out the training and certification program shall establish the program as soon as
possible after such selection, and shall make
training and certification available under the
program on a national basis not later than the
expiration of the 1-year period beginning upon
such selection.
(7) Authorization of appropriations
There are authorized to be appropriated to
carry out this subsection $2,000,000 for fiscal
year 1993 and $2,084,000 for 1994.
(g) Procedures and activities
(1) Counseling procedures
(A) In general
The Secretary shall establish, coordinate,
and monitor the administration by the Department of Housing and Urban Development of the counseling procedures for homeownership counseling and rental housing
counseling provided in connection with any
program of the Department, including all requirements, standards, and performance
measures that relate to homeownership and
rental housing counseling.
(B) Homeownership counseling
For purposes of this subsection and as used
in the provisions referred to in this subparagraph, the term ‘‘homeownership counseling’’ means counseling related to homeownership and residential mortgage loans.
Such term includes counseling related to
homeownership and residential mortgage
loans that is provided pursuant to—
(i) section 105(a)(20) of the Housing and
Community Development Act of 1974 (42
U.S.C. 5305(a)(20));
(ii) in the United States Housing Act of
1937 [42 U.S.C. 1437 et seq.]—
(I) section 9(e) (42 U.S.C. 1437g(e));
(II) section 8(y)(1)(D) (42 U.S.C.
1437f(y)(1)(D));
(III) section 18(a)(4)(D) (42 U.S.C.
1437p(a)(4)(D));
(IV)
section
23(c)(4)
(42
U.S.C.
1437u(c)(4));
(V)
section
32(e)(4)
(42
U.S.C.
1437z–4(e)(4));
(VI) section 33(d)(2)(B) (42 U.S.C.
1437z–5(d)(2)(B));
(VII) sections 302(b)(6) and 303(b)(7) (42
U.S.C. 1437aaa–1(b)(6), 1437aaa–2(b)(7));
and

(VIII) section
1437aaa–3(c)(4));

304(c)(4)

(42

U.S.C.

(iii) section 302(a)(4) of the American
Homeownership and Economic Opportunity Act of 2000 (42 U.S.C. 1437f note);
(iv) sections 12773(b)(2) and 12808(b) of
title 42;
(v) this section and section 1701w of this
title;
(vi) section 4110(d)(2)(G) of this title;
(vii) sections 12872(b)(6), 12873(b)(7),
12874(c)(4), 12892(b)(6), and 12893(b)(6) of
title 42;
(viii) section 11408(b)(1)(F)(iii) 1 of title
42;
(ix) sections 202(3) 1 and 810(b)(2)(A) 1 of
the Native American Housing and Self-Determination Act of 1996 (25 U.S.C. 4132(3),
4229(b)(2)(A));
(x) in the National Housing Act [12
U.S.C. 1701 et seq.]—
(I) in section 203 (12 U.S.C. 1709), the
penultimate undesignated paragraph of
paragraph (2) of subsection (b), subsection (c)(2)(A), and subsection (r)(4);
(II) subsections (a) and (c)(3) of section
237; 1 and
(III) subsections (d)(2)(B) and (m)(1) of
section 255 (12 U.S.C. 1715z–20);
(xi) section 502(h)(4)(B) of the Housing
Act of 1949 (42 U.S.C. 1472(h)(4)(B));
(xii) section 1701z–7 of this title; and
(xiii) section 1701z–16 of this title.
(C) Rental housing counseling
For purposes of this subsection, the term
‘‘rental housing counseling’’ means counseling related to rental of residential property,
which may include counseling regarding future homeownership opportunities and providing referrals for renters and prospective
renters to entities providing counseling and
shall include counseling related to such topics that is provided pursuant to—
(i) section 105(a)(20) of the Housing and
Community Development Act of 1974 (42
U.S.C. 5305(a)(20));
(ii) in the United States Housing Act of
1937—
(I) section 9(e) (42 U.S.C. 1437g(e));
(II) section 18(a)(4)(D) (42 U.S.C.
1437p(a)(4)(D));
(III)
section
23(c)(4)
(42
U.S.C.
1437u(c)(4));
(IV)
section
32(e)(4)
(42
U.S.C.
1437z–4(e)(4));
(V) section 33(d)(2)(B) (42 U.S.C.
1437z–5(d)(2)(B)); and
(VI)
section
302(b)(6)
(42
U.S.C.
1437aaa–1(b)(6));
(iii) section 12773(b)(2) of title 42;
(iv) this section;
(v) section 12872(b)(6) of title 42;
(vi) section 11408(b)(1)(F)(iii) 1 of title 42;
(vii) sections 202(3) 1 and 810(b)(2)(A) 1 of
the Native American Housing and Self-Determination Act of 1996 (25 U.S.C. 4132(3),
4229(b)(2)(A)); and
1 See

References in Text note below.

§ 1701x

TITLE 12—BANKS AND BANKING

(viii) the rental assistance program
under section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f).
(2) Standards for materials
The Secretary, in consultation with the advisory committee established under subsection
(g)(4) 1 of the Department of Housing and
Urban Development Act, shall establish standards for materials and forms to be used, as appropriate, by organizations providing homeownership counseling services, including any
recipients of assistance pursuant to subsection
(a)(4).
(3) Mortgage software systems
(A) Certification
The Secretary shall provide for the certification of various computer software programs for consumers to use in evaluating
different residential mortgage loan proposals. The Secretary shall require, for such
certification, that the mortgage software
systems take into account—
(i) the consumer’s financial situation
and the cost of maintaining a home, including insurance, taxes, and utilities;
(ii) the amount of time the consumer expects to remain in the home or expected
time to maturity of the loan; and
(iii) such other factors as the Secretary
considers appropriate to assist the consumer in evaluating whether to pay points,
to lock in an interest rate, to select an adjustable or fixed rate loan, to select a conventional or government-insured or guaranteed loan and to make other choices
during the loan application process.
If the Secretary determines that available
existing software is inadequate to assist consumers during the residential mortgage loan
application process, the Secretary shall arrange for the development by private sector
software companies of new mortgage software systems that meet the Secretary’s
specifications.
(B) Use and initial availability
Such certified computer software programs shall be used to supplement, not replace, housing counseling. The Secretary
shall provide that such programs are initially used only in connection with the assistance of housing counselors certified pursuant to subsection (e).
(C) Availability
After a period of initial availability under
subparagraph (B) as the Secretary considers
appropriate, the Secretary shall take reasonable steps to make mortgage software
systems certified pursuant to this paragraph
widely available through the Internet and at
public locations, including public libraries,
senior-citizen centers, public housing sites,
offices of public housing agencies that administer rental housing assistance vouchers,
and housing counseling centers.
(D) Budget compliance
This paragraph shall be effective only to
the extent that amounts to carry out this

Page 466

paragraph are made available in advance in
appropriations Acts.
(4) National public service multimedia campaigns to promote housing counseling
(A) In general
The Director of Housing Counseling shall
develop, implement, and conduct national
public service multimedia campaigns designed to make persons facing mortgage
foreclosure, persons considering a subprime
mortgage loan to purchase a home, elderly
persons, persons who face language barriers,
low-income persons, minorities, and other
potentially vulnerable consumers aware that
it is advisable, before seeking or maintaining a residential mortgage loan, to obtain
homeownership counseling from an unbiased
and reliable sources 2 and that such homeownership counseling is available, including
through programs sponsored by the Secretary of Housing and Urban Development.
(B) Contact information
Each segment of the multimedia campaign
under subparagraph (A) shall publicize the
toll-free telephone number and website of
the Department of Housing and Urban Development through which persons seeking housing counseling can locate a housing counseling agency in their State that is certified by
the Secretary of Housing and Urban Development and can provide advice on buying a
home, renting, defaults, foreclosures, credit
issues, and reverse mortgages.
(C) Authorization of appropriations
There are authorized to be appropriated to
the Secretary, not to exceed $3,000,000 for fiscal years 2009, 2010, and 2011, for the development, implementation, and conduct of national public service multimedia campaigns
under this paragraph.
(D) Foreclosure rescue education programs
(i) In general
Ten percent of any funds appropriated
pursuant to the authorization under subparagraph (C) shall be used by the Director
of Housing Counseling to conduct an education program in areas that have a high
density of foreclosure. Such program shall
involve direct mailings to persons living in
such areas describing—
(I) tips on avoiding foreclosure rescue
scams;
(II) tips on avoiding predatory lending
mortgage agreements;
(III) tips on avoiding for-profit foreclosure counseling services; and
(IV) local counseling resources that
are approved by the Department of Housing and Urban Development.
(ii) Program emphasis
In conducting the education program described under clause (i), the Director of
Housing Counseling shall also place an emphasis on serving communities that have a
high percentage of retirement commu2 So

in original.

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TITLE 12—BANKS AND BANKING

nities or a high percentage of low-income
minority communities.
(iii) Terms defined
For purposes of this subparagraph:
(I) High density of foreclosures
An area has a ‘‘high density of foreclosures’’ if such area is one of the metropolitan statistical areas (as that term
is defined by the Director of the Office of
Management and Budget) with the highest home foreclosure rates.
(II) High percentage of retirement communities
An area has a ‘‘high percentage of retirement communities’’ if such area is
one of the metropolitan statistical areas
(as that term is defined by the Director
of the Office of Management and Budget)
with the highest percentage of residents
aged 65 or older.
(III) High percentage of low-income minority communities
An area has a ‘‘high percentage of lowincome minority communities’’ if such
area contains a higher-than-normal percentage of residents who are both minorities and low-income, as defined by
the Director of Housing Counseling.
(5) Education programs
The Secretary shall provide advice and technical assistance to States, units of general
local government, and nonprofit organizations
regarding the establishment and operation of,
including assistance with the development of
content and materials for, educational programs to inform and educate consumers, particularly those most vulnerable with respect
to residential mortgage loans (such as elderly
persons, persons facing language barriers, lowincome persons, minorities, and other potentially vulnerable consumers), regarding home
mortgages, mortgage refinancing, home equity
loans, home repair loans, and where appropriate by region, any requirements and costs
associated with obtaining flood or other disaster-specific insurance coverage.
(h) Definitions
For purposes of this section:
(1) Nonprofit organization
The term ‘‘nonprofit organization’’ has the
meaning given such term in section 12704(5) of
title 42, except that subparagraph (D) of such
section shall not apply for purposes of this
section.
(2) State
The term ‘‘State’’ means each of the several
States, the Commonwealth of Puerto Rico, the
District of Columbia, the Commonwealth of
the Northern Mariana Islands, Guam, the Virgin Islands, American Samoa, the Trust Territories of the Pacific, or any other possession
of the United States.
(3) Unit of general local government
The term ‘‘unit of general local government’’ means any city, county, parish, town,

§ 1701x

township, borough, village, or other general
purpose political subdivision of a State.
(4) HUD-approved counseling agency
The term ‘‘HUD-approved counseling agency’’ means a private or public nonprofit organization that is—
(A) exempt from taxation under section
501(c) of title 26; and
(B) certified by the Secretary to provide
housing counseling services.
(5) State housing finance agency
The term ‘‘State housing finance agency’’
means any public body, agency, or instrumentality specifically created under State statute
that is authorised to finance activities designed to provide housing and related facilities
throughout an entire State through land acquisition, construction, or rehabilitation.
(i) Accountability for recipients of covered assistance
(1) Tracking of funds
The Secretary shall—
(A) develop and maintain a system to ensure that any organization or entity that receives any covered assistance uses all
amounts of covered assistance in accordance
with this section, the regulations issued
under this section, and any requirements or
conditions under which such amounts were
provided; and
(B) require any organization or entity, as a
condition of receipt of any covered assistance, to agree to comply with such requirements regarding covered assistance as the
Secretary shall establish, which shall include—
(i) appropriate periodic financial and
grant activity reporting, record retention,
and audit requirements for the duration of
the covered assistance to the organization
or entity to ensure compliance with the
limitations and requirements of this section, the regulations under this section,
and any requirements or conditions under
which such amounts were provided; and
(ii) any other requirements that the Secretary determines are necessary to ensure
appropriate administration and compliance.
(2) Misuse of funds
If any organization or entity that receives
any covered assistance is determined by the
Secretary to have used any covered assistance
in a manner that is materially in violation of
this section, the regulations issued under this
section, or any requirements or conditions
under which such assistance was provided—
(A) the Secretary shall require that, within 12 months after the determination of such
misuse, the organization or entity shall reimburse the Secretary for such misused
amounts and return to the Secretary any
such amounts that remain unused or uncommitted for use; and
(B) such organization or entity shall be ineligible, at any time after such determination, to apply for or receive any further covered assistance.

§ 1701x

TITLE 12—BANKS AND BANKING

The remedies under this paragraph are in addition to any other remedies that may be available under law.
(3) Covered assistance
For purposes of this subsection, the term
‘‘covered assistance’’ means any grant or
other financial assistance provided under this
section.
(Pub. L. 90–448, title I, § 106, Aug. 1, 1968, 82 Stat.
490; Pub. L. 91–609, title IX, § 903(a), (b), Dec. 31,
1970, 84 Stat. 1808; Pub. L. 93–383, title VIII, § 811,
Aug. 22, 1974, 88 Stat. 735; Pub. L. 95–128, title IX,
§ 903, Oct. 12, 1977, 91 Stat. 1149; Pub. L. 97–35,
title III, § 339A, Aug. 13, 1981, 95 Stat. 417; Pub. L.
98–181, title I [title IV, § 465], Nov. 30, 1983, 97
Stat. 1236; Pub. L. 98–479, title II, § 204(f), Oct. 17,
1984, 98 Stat. 2233; Pub. L. 100–242, title I, § 169,
Feb. 5, 1988, 101 Stat. 1865; Pub. L. 100–628, title
X, § 1009, Nov. 7, 1988, 102 Stat. 3266; Pub. L.
101–137, § 8, Nov. 3, 1989, 103 Stat. 826; Pub. L.
101–625, title V, § 577, title VII, § 706(c), Nov. 28,
1990, 104 Stat. 4238, 4286; Pub. L. 102–550, title I,
§ 162(a)–(d), Oct. 28, 1992, 106 Stat. 3719–3721; Pub.
L. 104–316, title I, § 106(a), Oct. 19, 1996, 110 Stat.
3830; Pub. L. 105–276, title V, § 594(a), (b), Oct. 21,
1998, 112 Stat. 2655; Pub. L. 107–73, title II, § 205,
Nov. 26, 2001, 115 Stat. 674; Pub. L. 109–163, div. A,
title VI, § 688(a), Jan. 6, 2006, 119 Stat. 3336; Pub.
L. 110–289, div. B, title I, § 2127, July 30, 2008, 122
Stat. 2841; Pub. L. 111–203, title XIV, §§ 1443–1445,
1448, 1449, July 21, 2010, 124 Stat. 2165–2171, 2173,
2174.)
REFERENCES IN TEXT
The Housing and Community Development Act of
1974, referred to in subsec. (a)(1)(iv), is Pub. L. 93–383,
Aug. 22, 1974, 88 Stat. 633, as amended. Title I of the
Housing and Community Development Act of 1974 is
classified principally to chapter 69 (§ 5301 et seq.) of
Title 42, The Public Health and Welfare. For complete
classification of this Act to the Code, see Short Title
note set out under section 5301 of Title 42 and Tables.
The National Housing Act, referred to in subsecs.
(a)(2), (d)(9)(K), and (g)(1)(B)(x), is act June 27, 1934, ch.
847, 48 Stat. 1246, as amended. Title II of the Act is classified generally to subchapter II (§ 1707 et seq.) of this
chapter. Section 237 of the Act, which was formerly
classified to section 1715z–2 of this title, was repealed
by Pub. L. 110–289, div. B, title I, § 2120(a)(6), July 30,
2008, 122 Stat. 2835. For complete classification of this
Act to the Code, see section 1701 of this title and
Tables.
Section 152 of the Housing and Community Development Act of 1992, referred to in subsec. (a)(3), is section
152 of Pub. L. 102–550, which was set out as a note under
section 1437f of Title 42, The Public Health and Welfare,
prior to repeal by Pub. L. 105–276, title V, § 550(f), Oct.
21, 1998, 112 Stat. 2610.
The Housing Act of 1949, referred to in subsec.
(c)(4)(B), is act July 15, 1949, ch. 338, 63 Stat. 413, as
amended. Title V of the Housing Act of 1949 is classified
generally to subchapter III (§ 1471 et seq.) of chapter 8A
of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short
Title note set out under section 1441 of Title 42, The
Public Health and Welfare, and Tables.
The Servicemembers Civil Relief Act, referred to in
subsec. (c)(5)(A)(ii)(IV), is act Oct. 17, 1940, ch. 888, 54
Stat. 1178, which was classified to section 501 et seq. of
the former Appendix to Title 50, War and National Defense, prior to editorial reclassification and renumbering as chapter 50 (§ 3901 et seq.) of Title 50. For complete classification of this Act to the Code, see Tables.
The United States Housing Act of 1937, referred to in
subsec. (g)(1)(B)(ii), (C)(ii), is act Sept. 1, 1937, ch. 896,

Page 468

as revised generally by Pub. L. 93–383, title II, § 201(a),
Aug. 22, 1974, 88 Stat. 653, which is classified generally
to chapter 8 (§ 1437 et seq.) of Title 42, The Public
Health and Welfare. For complete classification of this
Act to the Code, see Short Title note set out under section 1437 of Title 42 and Tables.
Section 302(a)(4) of the American Homeownership and
Economic Opportunity Act of 2000, referred to in subsec. (g)(1)(B)(iii), is section 302(a)(4) of Pub. L. 106–569,
title III, Dec. 27, 2000, 114 Stat. 2953, which was formerly
set out as a note under section 1437f of Title 42, The
Public Health and Welfare.
Section 11408(b)(1)(F)(iii) of this title, referred to in
subsec. (g)(1)(B)(viii), (C)(vi), was redesignated section
11408(b)(1)(J)(iii) of this title by Pub. L. 111–22, div. B.,
title IV, § 1401(2)(C)(i), May 20, 2009, 123 Stat. 1697.
Sections 202(3) and 810(b)(2)(A) of the Native American Housing and Self-Determination Act of 1996, referred to in subsec. (g)(1)(B)(ix), (C)(vii), probably
means sections 202(3) and 810(b)(2)(A) of Pub. L. 104–330,
known as the Native American Housing Assistance and
Self-Determination Act of 1996, which are classified to
sections 4132(3) and 4229(b)(2)(A), respectively, of Title
25, Indians.
Subsection (g)(4) of the Department of Housing and
Urban Development Act, referred to in subsec. (g)(2),
probably means section 4(g)(4) of Pub. L. 89–174, known
as the Department of Housing and Urban Development
Act, which is classified to section 3533(g)(4) of Title 42,
The Public Health and Welfare.
CODIFICATION
Section was enacted as part of the Housing and Urban
Development Act of 1968, and not as part of the National Housing Act which comprises this chapter.
AMENDMENTS
2010—Subsec. (a)(4). Pub. L. 111–203, § 1444, added par.
(4).
Subsec. (c)(5)(A)(ii)(V). Pub. L. 111–203, § 1443(b), added
subcl. (V).
Subsec. (e)(1). Pub. L. 111–203, § 1445(1), added par. (1)
and struck out former subpar. (1). Prior to amendment,
text read as follows: ‘‘An organization may not receive
assistance for counseling activities under subsection
(a)(1)(iii), (a)(2), (c), or (d) of this section, unless the organization provides such counseling, to the extent
practicable, by individuals who have been certified by
the Secretary under this subsection as competent to
provide such counseling.’’
Subsec. (e)(2). Pub. L. 111–203, § 1445(2), in introductory provisions, inserted ‘‘and for certifying organizations’’ before period at end of first sentence and substituted ‘‘, for certification of an organization, that
each individual through which the organization provides counseling shall demonstrate, and, for certification of an individual,’’ for ‘‘for certification’’.
Subsec. (e)(3). Pub. L. 111–203, § 1445(5), added par. (3).
Former par. (3) redesignated (5).
Pub. L. 111–203, § 1445(3), inserted ‘‘organizations and’’
before ‘‘individuals’’.
Subsec. (e)(4), (5). Pub. L. 111–203, § 1445(4), (5), added
par. (4) and redesignated former par. (3) as (5).
Subsec. (g). Pub. L. 111–203, § 1443(a), added subsec. (g).
Subsec. (h). Pub. L. 111–203, § 1448, added subsec. (h).
Subsec. (i). Pub. L. 111–203, § 1449, added subsec. (i).
2008—Subsec. (c)(4). Pub. L. 110–289, § 2127(2), struck
out concluding provisions which read as follows: ‘‘An
applicant for a mortgage shall be eligible for homeownership counseling under this subsection if the applicant is a first-time homebuyer who meets the requirements of section 12852(b)(1) of title 42 and the mortgage
involves a principal obligation (including such initial
service charges, appraisal, inspection, and other fees as
the Secretary shall approve) in excess of 97 percent of
the appraised value of the property and is to be insured
pursuant to section 203 of the National Housing Act.’’
Subsec. (c)(4)(C)(iii), (iv). Pub. L. 110–289, § 2127(1),
added cls. (iii) and (iv).

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Subsec. (c)(4)(D). Pub. L. 110–289, § 2127(3), added subpar. (D).
2006—Subsec. (c)(5)(A)(ii)(IV). Pub. L. 109–163 added
subcl. (IV).
2001—Subsec. (c)(9). Pub. L. 107–73 struck out heading
and text of par. (9). Text read as follows: ‘‘The provisions of this subsection shall not be effective after September 30, 2000.’’
1998—Subsec. (c)(5)(C). Pub. L. 105–276, § 594(b), amended heading and text of subpar. (C) generally. Prior to
amendment, text read as follows: ‘‘Notification under
subparagraph (A) shall not be required with respect to
any loan—
‘‘(i) insured or guaranteed under chapter 37 of title
38; or
‘‘(ii) for which the eligible homeowner pays the
amount overdue before the expiration of the 45-day
period under subparagraph (B)(ii).’’
Subsec. (c)(9). Pub. L. 105–276, § 594(a), substituted
‘‘2000’’ for ‘‘1994’’.
1996—Subsec. (d)(5)(A). Pub. L. 104–316, § 106(a)(2), substituted ‘‘(9)’’ for ‘‘(10)(K)’’ in introductory provisions.
Subsec. (d)(8). Pub. L. 104–316, § 106(a)(3), struck out
‘‘(for purposes of the study and report under paragraph
(9))’’ before ‘‘may require’’.
Subsec. (d)(9) to (13). Pub. L. 104–316, § 106(a)(1), (4), redesignated pars. (10) to (13) as (9) to (12), respectively,
and struck out former par. (9) which related to GAO
study and report on demonstration program.
1992—Subsec. (a)(3). Pub. L. 102–550, § 162(a), substituted ‘‘except that for such purposes there are authorized to be appropriated $6,025,000 for fiscal year 1993
and $6,278,050 for fiscal year 1994. Of the amounts appropriated for each of fiscal years 1993 and 1994, up to
$500,000 shall be available for use for counseling and
other activities in connection with the demonstration
program under section 152 of the Housing and Community Development Act of 1992.’’ for ‘‘except that for
such purposes there are authorized to be appropriated
$3,600,000 for fiscal year 1991 and $3,700,000 for fiscal
year 1992.’’
Subsec. (c)(3)(A)(iii). Pub. L. 102–550, § 162(b)(3), added
cl. (iii).
Subsec. (c)(4). Pub. L. 102–550, § 162(b)(4), inserted
flush sentence at end.
Subsec. (c)(5)(A). Pub. L. 102–550, § 162(b)(5), added subpar. (A) and struck out former subpar. (A) which read
as follows: ‘‘(A) IN GENERAL.—Except as provided in
subparagraph (C), if any eligible homeowner fails to
pay any amount by the date the amount is due under
a home loan, the creditor of the loan shall notify the
homeowner of the availability of any homeownership
counseling offered by the creditor and, as a supplement
to counseling provided by the creditor, shall notify the
homeowner of 1 of the following:
‘‘(i) The availability of homeownership counseling
provided by nonprofit organizations approved by the
Secretary and experienced in the provision of homeownership counseling.
‘‘(ii) The toll-free telephone number described in
subparagraph (D)(i).’’
Subsec. (c)(5)(D)(i). Pub. L. 102–550, § 162(b)(6), inserted
‘‘, which shall be updated annually,’’ after ‘‘organizations’’.
Subsec. (c)(8). Pub. L. 102–550, § 162(b)(1), amended
first sentence generally. Prior to amendment, first sentence read as follows: ‘‘There is authorized to be appropriated to carry out this section $6,700,000 for fiscal
year 1991 and $7,000,000 for fiscal year 1992, of which
amounts $2,000,000 shall be available in each such fiscal
year to carry out paragraph (5)(D).’’
Subsec. (c)(9). Pub. L. 102–550, § 162(b)(2), substituted
‘‘1994’’ for ‘‘1992’’.
Subsec. (d)(12). Pub. L. 102–550, § 162(c), amended par.
(12) generally. Prior to amendment, par. (12) read as
follows: ‘‘There are authorized to be appropriated to
carry out this subsection $350,000 for fiscal year 1991
and $365,000 for fiscal year 1992.’’
Subsecs. (e), (f). Pub. L. 102–550, § 162(d), added subsecs. (e) and (f).

§ 1701x

1990—Subsec. (a)(2)(A) to (C). Pub. L. 101–625, § 706(c),
designated portions of existing text as cls. (A) and (C),
and added cl. (B).
Subsec. (a)(3). Pub. L. 101–625, § 577(a), substituted
provisions authorizing appropriations of $3,600,000 for
fiscal year 1991 and $3,700,000 for fiscal year 1992, for
provisions authorizing appropriations of $3,500,000 for
each of the fiscal years 1988 and 1989.
Subsec. (c)(5). Pub. L. 101–625, § 577(b)(3), amended par.
(5) generally. Prior to amendment, par. (5) read as follows: ‘‘The creditor of a delinquent home loan shall notify an eligible homeowner of the availability of any
homeownership counseling offered by the creditor. As a
supplement to the counseling provided by the creditor,
the creditor shall notify the homeowner of the availability of 1 of the following:
‘‘(A) Homeownership counseling provided by nonprofit organizations approved by the Secretary and
experienced in the provision of homeownership counseling.
‘‘(B) A list of the nonprofit organizations, approved
by the Secretary and experienced in the provision of
homeownership counseling, that can be obtained by
calling a toll-free telephone number at the Department of Housing and Urban Development.
‘‘(C) Homeownership counseling provided by the Administrator of Veterans’ Affairs for loans insured or
guaranteed under chapter 37 of title 38.’’
Subsec. (c)(8). Pub. L. 101–625, § 577(b)(1), amended
first sentence generally. Prior to amendment, first sentence read as follows: ‘‘There are authorized to be appropriated to carry out this subsection $3,500,000 for
each of the fiscal years 1988 and 1989.’’
Subsec. (c)(9). Pub. L. 101–625, § 577(b)(2), substituted
‘‘September 30, 1992’’ for ‘‘September 30, 1990’’.
Subsec. (d). Pub. L. 101–625, § 577(c), added subsec. (d).
1989—Subsec. (c)(9). Pub. L. 101–137 substituted ‘‘September 30, 1990’’ for ‘‘September 30, 1989’’.
1988—Subsec. (a)(2). Pub. L. 100–628 inserted before period at end of first sentence ‘‘or guaranteed or insured
under chapter 37 of title 38’’.
Subsec. (a)(3). Pub. L. 100–242, § 169(a), substituted
‘‘except that for each of the fiscal years 1988 and 1989
there are authorized to be appropriated $3,500,000 for
such purposes’’ for ‘‘except that for the fiscal year 1984,
there are authorized to be appropriated not to exceed
$3,500,000 for such purposes’’.
Subsec. (c). Pub. L. 100–242, § 169(b), added subsec. (c).
1984—Subsec. (b)(1). Pub. L. 98–479 substituted ‘‘architectural’’ for ‘‘architechtual’’.
1983—Subsec. (a)(3). Pub. L. 98–181 substituted ‘‘1984’’
for ‘‘1982’’, and ‘‘$3,500,000’’ for ‘‘$4,000,000’’.
1981—Subsec. (a)(3). Pub. L. 97–35 inserted provisions
authorizing appropriations for fiscal year 1982.
1977—Subsec. (a)(2). Pub. L. 95–128 authorized the Secretary to provide the services for other owners of single
family dwelling units insured under subchapter II of
this chapter.
1974—Subsec. (a)(1). Pub. L. 93–383, § 811(b)(1), (c), in
cl. (iii) substituted provisions authorizing counseling
and advice to tenants and homeowners with respect to
property maintenance, etc., for provisions authorizing
counseling on household management, self-help, etc.,
for families receiving assistance under this chapter or
the United States Housing Act of 1937, and added cl.
(iv).
Subsec. (a)(2). Pub. L. 93–383, § 811(b)(2), added par. (2).
Former par. (2) redesignated (3).
Subsec. (a)(3). Pub. L. 93–383, § 811(b)(2), (d), redesignated former par. (2) as (3) and substituted ‘‘such sums
as may be necessary’’ for ‘‘not to exceed $5,000,000’’.
Subsec. (b)(1), (2). Pub. L. 93–383, § 811(e), (f), inserted
reference to public housing agencies.
1970—Subsec. (a). Pub. L. 91–609, § 903(a), designated
existing provisions as par. (1), inserted provision respecting specific authorities without limitation to such
authorities, redesignated former par. (1) as cl. (i),
struck out introductory text relating to assistance
with respect to construction, rehabilitation, and operation by nonprofit organizations of housing for low or

§ 1701x

TITLE 12—BANKS AND BANKING

moderate income families now incorporated in cl. (i),
redesignated former par. (2) as cl. (ii), inserting therein
provision for assistance to public bodies or to nonprofit
or cooperative organizations, including assistance with
respect to self-help and mutual self-help programs, and
added cl. (iii) and par. (2).
Subsec. (b)(1). Pub. L. 91–609, § 903(b), substituted
‘‘section 1715z of this title or any other federally assisted program’’ for ‘‘any federally assisted program’’
in first sentence.
EFFECTIVE DATE OF 2010 AMENDMENT
Amendment by Pub. L. 111–203 effective on the date
on which final regulations implementing that amendment take effect, or on the date that is 18 months after
the designated transfer date if such regulations have
not been issued by that date, see section 1400(c) of Pub.
L. 111–203, set out as a note under section 1601 of Title
15, Commerce and Trade.
EFFECTIVE DATE OF 2006 AMENDMENT
Pub. L. 109–163, div. A, title VI, § 688(d), Jan. 6, 2006,
119 Stat. 3337, provided that: ‘‘The amendments made
under subsection (a) [amending this section] shall take
effect 150 days after the date of the enactment of this
Act [Jan. 6, 2006].’’
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105–276, title V, § 594(c), Oct. 21, 1998, 112 Stat.
2656, provided that: ‘‘The amendments made by this
section [amending this section] are made on, and shall
apply beginning upon, the date of the enactment of this
Act [Oct. 21, 1998].’’
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
REGULATIONS
Pub. L. 102–550, title I, § 162(e), Oct. 28, 1992, 106 Stat.
3722, provided that: ‘‘The Secretary of Housing and
Urban Development shall issue any regulations necessary to carry out the amendments made by subsection (d) [amending this section], not later than the
expiration of the 6-month period beginning on the date
of the enactment of this Act [Oct. 28, 1992].’’
CONSTRUCTION OF AMENDMENTS BY PUB. L. 109–163
Pub. L. 109–163, div. A, title VI, § 688(b), Jan. 6, 2006,
119 Stat. 3337, provided that: ‘‘Nothing in this section
[amending this section and enacting provisions set out
as notes under this section] shall relieve any person of
any obligation imposed by any other Federal, State, or
local law.’’
FINANCIAL EDUCATION AND COUNSELING
Pub. L. 110–289, div. A, title I, § 1132, July 30, 2008, 122
Stat. 2727, as amended by Pub. L. 111–203, title X,
§ 1072(a), July 21, 2010, 124 Stat. 2059, provided that:
‘‘(a) GOALS.—Financial education and counseling
under this section shall have the goal of—
‘‘(1) increasing the financial knowledge and decision making capabilities of prospective homebuyers
or economically vulnerable individuals and families;
‘‘(2) assisting prospective homebuyers or economically vulnerable individuals and families to develop
monthly budgets, build personal savings, finance or
plan for major purchases, reduce their debt, improve
their financial stability, and set and reach their financial goals;
‘‘(3) helping prospective homebuyers or economically vulnerable individuals and families to improve
their credit scores by understanding the relationship
between their credit histories and their credit scores;
and
‘‘(4) educating prospective homebuyers or economically vulnerable individuals and families about the

Page 470

options available to build savings for short- and longterm goals.
‘‘(b) GRANTS.—
‘‘(1) IN GENERAL.—The Secretary of the Treasury (in
this section referred to as the ‘Secretary’) shall make
grants to eligible organizations to enable such organizations to provide a range of financial education
and counseling services to prospective homebuyers or
economically vulnerable individuals and families.
‘‘(2) SELECTION.—The Secretary shall select eligible
organizations to receive assistance under this section
based on their experience and ability to provide financial education and counseling services that result
in documented positive behavioral changes.
‘‘(c) ELIGIBLE ORGANIZATIONS.—
‘‘(1) IN GENERAL.—For purposes of this section, the
term ‘eligible organization’ means an organization
that is—
‘‘(A) certified in accordance with section 106(e)(1)
of the Housing and Urban Development Act of 1968
(12 U.S.C. 1701x(e)[1]);
‘‘(B) certified by the Office of Financial Education of the Department of the Treasury for purposes of this section, in accordance with paragraph
(2); or
‘‘(C) a nonprofit corporation that—
‘‘(i) is exempt from taxation under section
501(c)(3) of the Internal Revenue Code of 1986 [26
U.S.C. 501(c)(3)]; and
‘‘(ii) specializes or has expertise in working
with economically vulnerable individuals and
families, but whose primary purpose is not provision of credit counseling services.
‘‘(2) OFE CERTIFICATION.—To be certified by the Office of Financial Education for purposes of this section, an eligible organization shall be—
‘‘(A) a housing counseling agency certified by the
Secretary of Housing and Urban Development under
section 106(e) of the Housing and Urban Development Act of 1968 [12 U.S.C. 1701x(e)];
‘‘(B) a State, local, or tribal government agency;
‘‘(C) a community development financial institution (as defined in section 103(5) of the Community
Development Banking and Financial Institutions
Act of 1994 (12 U.S.C. 4702(5)) or a credit union; or
‘‘(D) any collaborative effort of entities described
in any of subparagraphs (A) through (C).
‘‘(d) AUTHORITY FOR PILOT PROJECTS.—
‘‘(1) IN GENERAL.—The Secretary of the Treasury
shall authorize pilot project grants to eligible organizations under subsection (c) in order to—
‘‘(A) carry out the services under this section; and
‘‘(B) provide such other services that will improve
the financial stability and economic condition of
low- and moderate-income and low-wealth individuals.
‘‘(2) GOAL.—The goal of the pilot project grants
under this subsection is to—
‘‘(A) identify successful methods resulting in
positive behavioral change for financial empowerment; and
‘‘(B) establish program models for organizations
to carry out effective counseling services.
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There are
authorized to be appropriated to the Secretary such
sums as are necessary to carry out this section and for
the provision of additional financial educational services.
‘‘(f) STUDY AND REPORT ON EFFECTIVENESS AND IMPACT.—
‘‘(1) IN GENERAL.—The Comptroller General of the
United States shall conduct a study on the effectiveness and impact of the grant program established
under this section. Not later than 3 years after the
date of enactment of this Act [July 30, 2008], the
Comptroller General shall submit a report on the results of such study to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives.

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‘‘(2) CONTENT OF STUDY.—The study required under
paragraph (1) shall include an evaluation of the following:
‘‘(A) The effectiveness of the grant program established under this section in improving the financial situation of homeowners and prospective homebuyers served by the grant program.
‘‘(B) The extent to which financial education and
counseling services have resulted in positive behavioral changes.
‘‘(C) The effectiveness and quality of the eligible
organizations providing financial education and
counseling services under the grant program.
‘‘(g) REGULATIONS.—The Secretary is authorized to
promulgate such regulations as may be necessary to
implement and administer the grant program authorized by this section.’’
[Pub. L. 111–203, title X, § 1072(b), July 21, 2010, 124
Stat. 2060, provided that: ‘‘Amendments made by subsection (a) [amending section 1132 of Pub. L. 110–289, set
out above] shall not apply to programs authorized by
section 1132 of the Housing and Economic Recovery Act
of 2008 [Pub. L. 110–289] (12 U.S.C. 1701x note) that are
funded with appropriations prior to fiscal year 2011.’’]
PRE-PURCHASE HOMEOWNERSHIP COUNSELING
DEMONSTRATION
Pub. L. 110–289, div. B, title I, § 2128, July 30, 2008, 122
Stat. 2841, provided that:
‘‘(a) ESTABLISHMENT OF PROGRAM.—For the period beginning on the date of enactment of this title [July 30,
2008] and ending on the date that is 3 years after such
date of enactment, the Secretary of Housing and Urban
Development shall establish and conduct a demonstration program to test the effectiveness of alternative
forms of pre-purchase homeownership counseling for eligible homebuyers.
‘‘(b) FORMS OF COUNSELING.—The Secretary of Housing and Urban Development shall provide to eligible
homebuyers pre-purchase homeownership counseling
under this section in the form of—
‘‘(1) telephone counseling;
‘‘(2) individualized in-person counseling;
‘‘(3) web-based counseling;
‘‘(4) counseling classes; or
‘‘(5) any other form or type of counseling that the
Secretary may, in his discretion, determine appropriate.
‘‘(c) SIZE OF PROGRAM.—The Secretary shall make
available the pre-purchase homeownership counseling
described in subsection (b) to not more than 3,000 eligible homebuyers in any given year.
‘‘(d) INCENTIVE TO PARTICIPATE.—The Secretary of
Housing and Urban Development may provide incentives to eligible homebuyers to participate in the demonstration program established under subsection (a).
Such incentives may include the reduction of any insurance premium charges owed by the eligible homebuyer to the Secretary.
‘‘(e) ELIGIBLE HOMEBUYER DEFINED.—For purposes of
this section an ‘eligible homebuyer’ means a first-time
homebuyer who has been approved for a home loan with
a loan-to-value ratio between 97 percent and 98.5 percent.
‘‘(f) REPORT TO CONGRESS.—The Secretary of Housing
and Urban Development shall report to the Committee
on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House
of Representative—[sic]
‘‘(1) on an annual basis, on the progress and results
of the demonstration program established under subsection (a); and
‘‘(2) for the period beginning on the date of enactment of this title [July 30, 2008] and ending on the
date that is 5 years after such date of enactment, on
the payment history and delinquency rates of eligible
homebuyers who participated in the demonstration
program.’’
DISCLOSURE FORM
Pub. L. 109–163, div. A, title VI, § 688(c), Jan. 6, 2006,
119 Stat. 3337, provided that: ‘‘Not later than 150 days

§ 1701x–1

after the date of the enactment of this Act [Jan. 6,
2006], the Secretary of Housing and Urban Development
shall issue a final disclosure form to fulfill the requirement of subclause (IV) of section 106(c)(5)(A)(ii) of the
Housing and Urban Development Act of 1968 [12 U.S.C.
1701x(c)(5)(A)(ii)(IV)], as added by subsection (a).’’

§ 1701x–1. Home inspection counseling
(a) Public outreach
(1) In general
The Secretary of Housing and Urban Development (in this section referred to as the
‘‘Secretary’’) shall take such actions as may
be necessary to inform potential homebuyers
of the availability and importance of obtaining an independent home inspection. Such actions shall include—
(A) publication of the HUD/FHA form HUD
92564–CN entitled ‘‘For Your Protection: Get
a Home Inspection’’, in both English and
Spanish languages;
(B) publication of the HUD/FHA booklet
entitled ‘‘For Your Protection: Get a Home
Inspection’’, in both English and Spanish
languages;
(C) development and publication of a HUD
booklet entitled ‘‘For Your Protection—Get
a Home Inspection’’ that does not reference
FHA-insured homes, in both English and
Spanish languages; and
(D) publication of the HUD document entitled ‘‘Ten Important Questions To Ask Your
Home Inspector’’, in both English and Spanish languages.
(2) Availability
The Secretary shall make the materials
specified in paragraph (1) available for electronic access and, where appropriate, inform
potential homebuyers of such availability
through home purchase counseling public
service announcements and toll-free telephone
hotlines of the Department of Housing and
Urban Development. The Secretary shall give
special emphasis to reaching first-time and
low-income homebuyers with these materials
and efforts.
(3) Updating
The Secretary may periodically update and
revise such materials, as the Secretary determines to be appropriate.
(b) Requirement for FHA-approved lenders
Each mortgagee approved for participation in
the mortgage insurance programs under title II
of the National Housing Act [12 U.S.C. 1707 et
seq.] shall provide prospective homebuyers, at
first contact, whether upon pre-qualification,
pre-approval, or initial application, the materials specified in subparagraphs (A), (B), and (D)
of subsection (a)(1).
(c) Requirements for HUD-approved counseling
agencies
Each counseling agency certified pursuant by 1
the Secretary to provide housing counseling
services shall provide each of their clients, as
part of the home purchase counseling process,
1 So

in original.

§ 1701x–2

TITLE 12—BANKS AND BANKING

the materials specified in subparagraphs (C) and
(D) of subsection (a)(1).
(d) Training
Training provided the Department of Housing
and Urban Development for housing counseling
agencies, whether such training is provided directly by the Department or otherwise, shall include—
(1) providing information on counseling potential homebuyers of the availability and importance of getting an independent home inspection;
(2) providing information about the home inspection process, including the reasons for specific inspections such as radon and lead-based
paint testing;
(3) providing information about advising potential homebuyers on how to locate and select a qualified home inspector; and
(4) review of home inspection public outreach materials of the Department.
(Pub. L. 111–203, title XIV, § 1451, July 21, 2010,
124 Stat. 2176.)
REFERENCES IN TEXT
The National Housing Act, referred to in subsec. (b),
is act June 27, 1934, ch. 847, 48 Stat. 1246. Title II of the
Act is classified generally to subchapter II (§ 1707 et
seq.) of this chapter. For complete classification of this
Act to the Code, see section 1701 of this title and
Tables.
CODIFICATION
Section was enacted as part of the Expand and Preserve Home Ownership Through Counseling Act and
also as part of the Mortgage Reform and Anti-Predatory Lending Act and as part of the Dodd-Frank Wall
Street Reform and Consumer Protection Act, and not
as part of the National Housing Act which comprises
this chapter.
EFFECTIVE DATE
Section effective on the date on which final regulations implementing such section take effect, or on the
date that is 18 months after the designated transfer
date if such regulations have not been issued by that
date, see section 1400(c) of Pub. L. 111–203, set out as an
Effective Date of 2010 Amendment note under section
1601 of Title 15, Commerce and Trade.

§ 1701x–2. Legal assistance for foreclosure-related issues
(a) Establishment
The Secretary of Housing and Urban Development (hereafter in this section referred to as the
‘‘Secretary’’) shall establish a program for making grants for providing a full range of foreclosure legal assistance to low- and moderate-income homeowners and tenants related to home
ownership preservation, home foreclosure prevention, and tenancy associated with home foreclosure.
(b) Competitive allocation
The Secretary shall allocate amounts made
available for grants under this section to State
and local legal organizations on the basis of a
competitive process. For purposes of this subsection ‘‘State and local legal organizations’’
are those State and local organizations whose
primary business or mission is to provide legal
assistance.

Page 472

(c) Priority to certain areas
In allocating amounts in accordance with subsection (b), the Secretary shall give priority
consideration to State and local legal organizations that are operating in the 125 metropolitan
statistical areas (as that term is defined by the
Director of the Office of Management and Budget) with the highest home foreclosure rates.
(d) Legal assistance
(1) In general
Any State or local legal organization that
receives financial assistance pursuant to this
section may use such amounts only to assist—
(A) homeowners of owner-occupied homes
with mortgages in default, in danger of default, or subject to or at risk of foreclosure;
and
(B) tenants at risk of or subject to eviction
as a result of foreclosure of the property in
which such tenant resides.
(2) Commence use within 90 days
Any State or local legal organization that
receives financial assistance pursuant to this
section shall begin using any financial assistance received under this section within 90 days
after receipt of the assistance.
(3) Prohibition on class actions
No funds provided to a State or local legal
organization under this section may be used to
support any class action litigation.
(4) Limitation on legal assistance
Legal assistance funded with amounts provided under this section shall be limited to
mortgage-related default, eviction, or foreclosure proceedings, without regard to whether such foreclosure is judicial or nonjudicial.
(5) Effective date
Notwithstanding any other provision of this
Act, this subsection shall take effect on July
21, 2010.
(e) Limitation on distribution of assistance
(1) In general
None of the amounts made available under
this section shall be distributed to—
(A) any organization which has been convicted for a violation under Federal law relating to an election for Federal office; or
(B) any organization which employs applicable individuals.
(2) Definition of applicable individuals
In this subsection, the term ‘‘applicable individual’’ means an individual who—
(A) is—
(i) employed by the organization in a
permanent or temporary capacity;
(ii) contracted or retained by the organization; or
(iii) acting on behalf of, or with the express or apparent authority of, the organization; and
(B) has been convicted for a violation
under Federal law relating to an election for
Federal office.
(f) Authorization of appropriations
There are authorized to be appropriated to the
Secretary $35,000,000 for each of fiscal years 2011
through 2012 for grants under this section.

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TITLE 12—BANKS AND BANKING

(Pub. L. 111–203, title XIV, § 1498, July 21, 2010,
124 Stat. 2211.)
REFERENCES IN TEXT
This Act, referred to in subsec. (d)(5), is Pub. L.
111–203, July 21, 2010, 124 Stat. 1376, known as the DoddFrank Wall Street Reform and Consumer Protection
Act, which enacted chapter 53 (§ 5301 et seq.) of this
title and chapters 108 (§ 8201 et seq.) and 109 (§ 8301 et
seq.) of Title 15, Commerce and Trade, and enacted,
amended, and repealed numerous other sections and
notes in the Code. For complete classification of this
Act to the Code, see Short Title note set out under section 5301 of this title and Tables.
CODIFICATION
Section was enacted as part of the Mortgage Reform
and Anti-Predatory Lending Act and also as part of the
Dodd-Frank Wall Street Reform and Consumer Protection Act, and not as part of the National Housing Act
which comprises this chapter.
EFFECTIVE DATE
Section effective on the date on which final regulations implementing such section take effect, or on the
date that is 18 months after the designated transfer
date if such regulations have not been issued by that
date, see section 1400(c) of Pub. L. 111–203, set out as an
Effective Date of 2010 Amendment note under section
1601 of Title 15, Commerce and Trade.
DEFINITION OF ‘‘STATE’’
For definition of ‘‘State’’, see section 5301 of this
title.

§ 1701y. National Homeownership Foundation
(a) Creation; purpose; articles of incorporation
and charter; reservation of right to alter or
amend charter; term; principal office; administration as charitable and educational foundation; compensation of officers and employees; contract authority; donations and
grants; payment of principal and interest on
borrowings
(1) There is hereby created a body corporate to
be known as the ‘‘National Homeownership
Foundation’’ (hereinafter referred to as the
‘‘Foundation’’) to carry out a continuing program of encouraging private and public organizations at the national, community, and neighborhood levels to provide increased homeownership and housing opportunities in urban and
rural areas for lower income families through
such means as—
(A) encouraging the investment in, and
sponsoring of, housing for lower income families;
(B) encouraging the establishment of programs of assistance and counseling to lower
income families to enable them better to
achieve and afford adequate housing;
(C) providing a broad range of technical assistance through publications and advisory
services to public and private organizations
which are carrying out, or are desirous of carrying out, programs to expand homeownership
and housing opportunities for lower income
families; and
(D) providing grants and loans to public and
private organizations carrying out homeownership and housing opportunity programs
for lower income families to help cover some
of the expenses of such programs.

§ 1701y

(2) The Foundation shall be deemed to be a
corporation without members organized and established under the provisions of the District of
Columbia Nonprofit Corporation Act, with all
the rights, powers, and responsibilities thereof
except as limited by this section and any
amendments thereto. This section shall constitute the articles of incorporation and charter
of the Foundation, which shall not be an agency
or instrumentality of the United States Government. The Congress expressly reserves the exclusive right to alter or amend this charter. The
Foundation shall have succession until dissolved
by Act of Congress. The Foundation shall maintain its principal office in the District of Columbia.
(3) No part of the net earnings of the Foundation shall inure to the benefit of any private
person, and no substantial part of its activities
shall be devoted to attempting to influence legislation. The Foundation shall not participate
or intervene in any political campaign on behalf
of any candidate for public office. The Foundation shall be operated and administered at all
times as a charitable and educational foundation.
(4) No employee or officer of the Foundation
shall receive compensation in excess of that received by or hereafter prescribed by law for
heads of executive departments.
(5) The Foundation shall make maximum use
of existing public and private agencies and programs, and in carrying out its functions the
Foundation is authorized to contract with individuals, private corporations, organizations, and
associations, and with agencies of the Federal,
State, and local governments.
(6) The Foundation is authorized to receive donations and grants from individuals and from
public and private organizations, foundations,
and agencies.
(7) The Foundation may use only donated
funds, or funds derived from payment of interest
on loans made by it, for the principal and interest payments on any borrowings.
(b) Board of Directors; appointment of members;
Chairman; terms of office; reappointment;
compensation and travel expenses; Executive
Director and other officers; vacancies; bylaws
(1) The Foundation shall have a Board of Directors consisting of eighteen members, fifteen
of whom shall be appointed by the President of
the United States, with the advice and consent
of the Senate. The other three members shall be,
ex officio, the Secretary of Housing and Urban
Development, the Secretary of Agriculture, and
the Director of the Office of Economic Opportunity. The President shall appoint one of the
fifteen appointed members to serve as Chairman
of the Board during his term of office as a member.
(2) Within thirty days after August 1, 1968, the
President shall appoint the fifteen appointed
members of the Board. Not more than five of
such members shall, at the time of their appointment, be serving full time as officers or
employees of the Federal Government, or as officers or employees of any State or local government. Each appointed member of the Board

§ 1701y

TITLE 12—BANKS AND BANKING

shall hold office for a term of three years, except
that (A) any member appointed to fill a vacancy
prior to the expiration of the term for which his
predecessor was appointed shall be appointed for
the remainder of such term, and (B) the terms of
the members first taking office shall expire, as
designated by the President at the time of appointment, five at the end of the first year, five
at the end of the second year, and five at the end
of the third year after the date of appointment.
Members of the Board, however appointed, shall
be eligible for reappointment, but at no time
shall there be more than five members of the
Board who at the time of their appointment or
reappointment were full-time officers or employees of the Federal Government or of any
State or local government.
(3) Appointed members of the Board who are
not employees of the Federal Government, while
attending meetings or conferences of the Board
or otherwise serving on business of the Board,
shall be entitled to receive compensation at
rates fixed by the President, but not exceeding
$100 per day, including travel time, and while so
serving away from their homes or regular places
of business they may be allowed travel expenses,
including per diem in lieu of subsistence, as authorized by section 5703 of title 5 for persons in
the Government service employed intermittently.
(4) The Board shall appoint an Executive Director of the Foundation. The Executive Director shall be the chief executive officer of the
Foundation and shall serve at the pleasure of
the Board, and all other executive officers and
employees of the Board shall be responsible to
him. The Board shall also cause to be appointed
a secretary, a treasurer, and such other officers
as may be necessary to conduct properly the
business of the Foundation, and shall provide for
filling vacancies in such offices.
(5) The Board shall adopt bylaws for the Foundation which shall be made available for public
inspection upon request.
(c) Functions; programs to expand homeownership and housing opportunities for lower income families; fees for assistance or services
(1) The Foundation shall assist public and private organizations, at their request, in initiating, developing, and conducting programs to expand homeownership and housing opportunities
for lower income families. To provide such assistance and to carry out the purposes of this
section, the Foundation is authorized to—
(A) carry out a continuing program of encouraging private and public organizations at
the national, community, and neighborhood
levels in the establishment of such programs;
(B) assist in the formation of organizations
the purpose of which is the development and
carrying out of such programs, including the
establishment of local development funds for
financing housing for lower income families
through the pooling of moneys from private
sources;
(C) identify and arrange for the technical
and managerial assistance and personnel needed for the successful operation of such programs by public and private organizations;
(D) assist public and private organizations in
obtaining the mortgage financing, insurance,

Page 474

and other requirements or aids necessary for
conducting programs of housing construction,
rehabilitation, or improvement for lower income families;
(E) arrange for, or provide on a limited
basis, training for persons in the skills needed
in administering programs of homeownership
and housing opportunity for lower income
families;
(F) encourage research and innovation, and
collect and make available such information
as may be desirable to further the purposes of
this section, including but not limited to such
activities as the sponsoring of seminars, conferences, and meetings and the establishment
of a continuing information program to acquaint lower income families with the means
they can use to improve the quality of their
housing and the homeownership and housing
opportunities available to them;
(G) assist private and public organizations in
establishing, in connection with their homeownership and housing opportunity programs
for lower income families, counseling and
similar activities designed to advise lower income families of the means available to better
themselves economically through job training
and manpower development programs; and
(H) perform other similar services in order
to further the purposes of this section.
(2) The Foundation may, if it deems it appropriate, charge a reasonable fee for any assistance or service provided under this subsection.
(d) Grants and loans to public or private organizations; eligibility; encouragement of cooperation between organizations and neighborhoods and communities
(1) In order to assist public and private organizations which are carrying out homeownership
and housing opportunity programs for lower income families to fill unmet needs, initiate exceptional programs, and experiment with new
approaches and programs, the Foundation is authorized, subject to such terms and conditions
as it may prescribe, to make grants and loans to
such organizations to help defray the following
expenses:
(A) organizational and administrative expenses incurred in commencing the operation
of a program, or in expanding an existing program, to the extent that the activities are related to providing homeownership and housing
opportunities for lower income families;
(B) necessary preconstruction costs incurred
for architectural assistance, land options, application fees, and similar items; and
(C) the cost of carrying out programs providing counseling or similar services to lower income families for whom housing is being provided, in order to enable those families better
to achieve and afford adequate housing, in
such matters as home management, budget
management, and home maintenance.
(2) In order to be eligible for a grant or loan
under this subsection, the organization seeking
such assistance shall demonstrate to the satisfaction of the Foundation that the funds requested are not otherwise available from Federal sources: Provided, That a grant or loan

Page 475

§ 1701y

TITLE 12—BANKS AND BANKING

under this subsection may be provided to help
cover that portion of the cost of an eligible activity not covered by Federal funds.
(3) The Foundation shall encourage cooperation between public and private organizations
carrying out programs of homeownership and
housing opportunity for lower income families
and the neighborhoods and communities affected by such programs. To help assure such cooperation and in order to coordinate, to the
maximum extent feasible, any construction or
rehabilitation activities with the development
goals of the neighborhood or community affected, no application for a loan or grant under
this subsection shall be considered unless such
application has been submitted to the governing
body of the community affected, or to such
other entity of local government as may be designated by the governing body, for such recommendations as the local governing body or its
designee may desire to make. Any recommendations so made shall be given careful consideration by the Foundation before taking final action on any such application. If, upon the expiration of thirty days after any such application
has been submitted to such governing body or
its designee, such body or designee fails to provide such recommendations, the application
may be considered without the benefit of such
recommendations.
(e) Coordination of activities and consultation
with Department of Housing and Urban Development and other Federal departments
and agencies
The Foundation shall coordinate its activities
and consult with the Department of Housing and
Urban Development and other Federal departments and agencies engaged in providing homeownership and housing opportunities for lower
income families.
(f) Annual report to the President and the Congress; contents
(1) Not later than one hundred and twenty
days after the close of each fiscal year, the
Foundation shall prepare and submit to the
President and to the Congress a full report of its
activities during such year. Such report shall include an account of the Foundation’s experiences with the efforts of private and public organizations to expand homeownership and housing
opportunities for lower income families, together with such recommendations as it deems
appropriate.
(2) Whenever in its judgement the general unavailability of mortgage funds is sufficiently serious to deter the Foundation from carrying out
its objective of expanding homeownership and
housing opportunities for lower income families,
the Foundation shall, in its annual report or in
a separate report to the President and the Congress, state its findings and make such recommendations for alternate means of financing
housing for such families as it deems appropriate.
(g) Audit of financial transaction; access to
records; report of audit; contents of report
(1) The financial transactions of the Foundation shall be audited by the Government Accountability Office in accordance with the prin-

ciples and procedures applicable to commercial
corporate transactions and under such rules and
regulations as may be prescribed by the Comptroller General of the United States. The representatives of the Government Accountability
Office shall have access to all books, accounts,
financial records, reports, files, and all other papers, things, or property belonging to or in use
by the Foundation and necessary to facilitate
the audit, and they shall be afforded full facilities for verifying transactions with the balances
or securities held by depositories, fiscal agents,
and custodians. The audit shall cover the fiscal
year corresponding to that of the United States
Government.
(2) A report of each such audit shall be made
by the Comptroller General to the Congress not
later than six and one-half months following the
close of the last year covered by such audit. The
report shall set forth the scope of the audit and
shall include a statement of assets and liabilities, capital, and surplus or deficit; a statement
of sources and application of funds; and such
comments and information as may be deemed
necessary to keep the Congress informed of the
operations and financial condition of the Foundation, together with such recommendations
with respect thereto as the Comptroller General
may deem advisable. The report shall also show
specifically any program, expenditure, or other
financial transaction or undertaking, observed
in the course of the audit, which, in the opinion
of the Comptroller General, has been carried on
or made without authority of law. A copy of
each report shall be furnished to the President
and to the Foundation at the time submitted to
the Congress.
(h) Deposit of funds of Foundation
Funds of the Foundation shall be deposited, to
the extent practicable, in accounts with financial institutions which are actively engaged in
making loans or are otherwise carrying on activities in furtherance of homeownership and
housing opportunities for lower income families.
(i) Authorization of appropriations
There is authorized to be appropriated to the
Foundation not to exceed $10,000,000 to carry out
the purposes of this section. Appropriations
made hereunder shall remain available until expended.
(Pub. L. 90–448, title I, § 107, Aug. 1, 1968, 82 Stat.
491; Pub. L. 93–604, title VI, § 604, Jan. 2, 1975, 88
Stat. 1963; Pub. L. 104–66, title I, § 1072(b), Dec.
21, 1995, 109 Stat. 721; Pub. L. 108–271, § 8(b), July
7, 2004, 118 Stat. 814.)
REFERENCES IN TEXT
The District of Columbia Nonprofit Corporation Act,
referred to in subsec. (a)(2), is Pub. L. 87–569, Aug. 6,
1962, 76 Stat. 265, as amended, which is not classified to
the Code.
CODIFICATION
Section was enacted as part of the Housing and Urban
Development Act of 1968, and not as part of the National Housing Act which comprises this chapter.
AMENDMENTS
2004—Subsec. (g)(1). Pub. L. 108–271 substituted ‘‘Government Accountability Office’’ for ‘‘General Accounting Office’’ in two places.

§ 1701z

TITLE 12—BANKS AND BANKING

1995—Subsec. (g)(1). Pub. L. 104–66 struck out at end
‘‘Such audit shall be made at least once in every three
years.’’
1975—Subsec. (g)(1). Pub. L. 93–604, § 604(1), inserted
provision that the audit under this subsection shall be
made at least once in every three years.
Subsec. (g)(2). Pub. L. 93–604, § 604(2), substituted ‘‘six
and one-half months following the close of the last year
covered by such audit’’ for ‘‘January 15 following the
close of the fiscal year for which the audit was made’’.
TERMINATION OF REPORTING REQUIREMENTS
For termination, effective May 15, 2000, of provisions
in subsec. (f)(1) of this section relating to submittal of
an annual report to Congress, see section 3003 of Pub.
L. 104–66, as amended, set out as a note under section
1113 of Title 31, Money and Finance, and page 203 of
House Document No. 103–7.
OFFICE OF ECONOMIC OPPORTUNITY
Pub. L. 93–644, § 9(a), Jan. 4, 1975, 88 Stat. 2310 [42
U.S.C. 2941], amended the Economic Opportunity Act of
1964 [42 U.S.C. 2701 et seq.] to create the Community
Services Administration, an independent agency in the
executive branch, as the successor authority to the Office of Economic Opportunity, and provided that references to the Office of Economic Opportunity or to its
Director were deemed to refer to the Community Services Administration or its Director. The Community
Services Administration was terminated when the Economic Opportunity Act of 1964, except for titles VIII
and X, was repealed, effective Oct. 1, 1981, by section
683(a) of Pub. L. 97–35, title VI, Aug. 13, 1981, 95 Stat.
519, which is classified to 42 U.S.C. 9912(a). An Office of
Community Services, headed by a Director, was established in the Department of Health and Human Services by section 676 of Pub. L. 97–35, which is classified
to 42 U.S.C. 9905.

§ 1701z. New technologies in the development of
housing for lower income families
(a) Institution of program; assistance to mobile
home buyers
In order to encourage the use of new housing
technologies in providing decent, safe, and sanitary housing for lower income families; to encourage large-scale experimentation in the use
of such technologies; to provide a basis for comparison of such technologies with existing housing technologies in providing such housing; and
to evaluate the effect of local housing codes and
zoning regulations on the large-scale use of new
housing technologies in the provision of such
housing, the Secretary of Housing and Urban
Development (hereinafter referred to as the
‘‘Secretary’’) shall institute a program under
which qualified organizations, public and private, will submit plans for the development of
housing for lower income families, using new
and advanced technologies, on Federal land
which has been made available by the Secretary
for the purposes of this section, or on other land
where (1) local building regulations permit the
construction of experimental housing, or (2)
State or local law permits variances from building regulations in the construction of experimental housing for the purpose of testing and
developing new building technologies.
(b) Approval of plans utilizing new housing technologies; considerations
The Secretary shall approve not more than
five plans utilizing new housing technologies
which are submitted to him pursuant to the pro-

Page 476

gram referred to in subsection (a) and which he
determines are most promising in furtherance of
the purposes of this section. In making such determination the Secretary shall consider—
(1) the potential of the technology employed
for producing housing for lower income families on a large scale at a moderate cost;
(2) the extent to which the plan envisages
environmental quality;
(3) the possibility of mass production of the
technology; and
(4) the financial soundness of the organization submitting the plan, and the ability of
such organization, alone or in combination
with other organizations, to produce at least
one thousand dwelling units a year utilizing
the technology proposed.
(c) Number of dwelling units to be constructed
for each type of technology; evaluation of
projects
In approving projects for mortgage insurance
under section 1715x(a)(2) of this title, the Secretary shall seek to achieve the construction of
at least one thousand dwelling units a year over
a five-year period for each of the various types
of technologies proposed in approved plans
under subsection (b). The Secretary shall evaluate each project with respect to which assistance is extended pursuant to this section with a
view to determining (1) the detailed cost breakdown per dwelling unit, (2) the environmental
quality achieved in each unit, and (3) the effect
which local housing codes and zoning regulations have, or would have if applicable, on the
cost per dwelling unit.
(d) Transfer of surplus property
Notwithstanding the provisions of chapters 1
to 11 of title 40 and division C (except sections
3302, 3307(e), 3501(b), 3509, 3906, 4710, and 4711) of
subtitle I of title 41, any land which is excess
property within the meaning of chapters 1 to 11
of title 40 and division C (except sections 3302,
3307(e), 3501(b), 3509, 3906, 4710, and 4711) of subtitle I of title 41 and which is determined by the
Secretary to be suitable in furtherance of the
purposes of this section may be transferred to
the Secretary upon his request.
(e) Report of findings; legislative recommendations
The Secretary shall, at the earliest practicable date, report his findings with respect to
projects assisted pursuant to this section (including evaluations of each such project in accordance with subsection (c)), together with
such recommendations for additional legislation
as he determines to be necessary or desirable to
expand the available supply of decent, safe, and
sanitary housing for lower income families
through the use of technologies the efficacy of
which has been demonstrated under this section.
(Pub. L. 90–448, title I, § 108(a)–(e), Aug. 1, 1968, 82
Stat. 495, 496.)
CODIFICATION
In subsec. (d), ‘‘chapters 1 to 11 of title 40 and division
C (except sections 3302, 3307(e), 3501(b), 3509, 3906, 4710,
and 4711) of subtitle I of title 41, any land which is excess property within the meaning of chapters 1 to 11 of
title 40 and division C (except sections 3302, 3307(e),

Page 477

TITLE 12—BANKS AND BANKING

3501(b), 3509, 3906, 4710, and 4711) of subtitle I of title 41’’
substituted for ‘‘the Federal Property and Administrative Services Act of 1949, any land which is excess property within the meaning of such Act’’ on authority of
Pub. L. 107–217, § 5(c), Aug. 21, 2002, 116 Stat. 1303, which
Act enacted Title 40, Public Buildings, Property, and
Works, and Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat.
3854, which Act enacted Title 41, Public Contracts.
Section was enacted as part of the Housing and Urban
Development Act of 1968, and not as part of the National Housing Act which comprises this chapter.

§ 1701z–1. Research and demonstrations; authorization of appropriations; continuing availability of funds
The Secretary of Housing and Urban Development is authorized and directed to undertake
such programs of research, studies, testing, and
demonstration relating to the mission and programs of the Department as he determines to be
necessary and appropriate. There is 1 authorized
to be appropriated to carry out this title [12
U.S.C. 1701z–1 et seq.] $35,000,000 for fiscal year
1993 and $36,470,000 for fiscal year 1994.
(Pub. L. 91–609, title V, § 501, Dec. 31, 1970, 84
Stat. 1784; Pub. L. 94–375, § 23(a), Aug. 3, 1976, 90
Stat. 1078; Pub. L. 95–128, title II, § 204, Oct. 12,
1977, 91 Stat. 1129; Pub. L. 95–557, title III,
§ 305(a), Oct. 31, 1978, 92 Stat. 2097; Pub. L. 96–153,
title III, § 304, Dec. 21, 1979, 93 Stat. 1112; Pub. L.
96–399, title III, § 303, Oct. 8, 1980, 94 Stat. 1639;
Pub. L. 97–35, title III, § 337, Aug. 13, 1981, 95
Stat. 414; Pub. L. 98–181, title I [title IV, § 466(a)],
Nov. 30, 1983, 97 Stat. 1236; Pub. L. 100–242, title
V, § 564, Feb. 5, 1988, 101 Stat. 1945; Pub. L.
101–625, title IX, § 951(a), Nov. 28, 1990, 104 Stat.
4417; Pub. L. 102–550, title IX, § 901, Oct. 28, 1992,
106 Stat. 3866.)
REFERENCES IN TEXT
This title, referred to in text, is title V of the Housing and Urban Development Act of 1970, Pub. L. 91–609,
Dec. 31, 1970, 84 Stat. 1784, as amended, which is classified generally to section 1701z–1 et seq. of this title. For
complete classification of this Act to the Code, see
Short Title of 1970 Amendments note set out under section 1701 of this title and Tables.
CODIFICATION
Section was enacted as part of the Housing and Urban
Development Act of 1970, and not as part of the National Housing Act which comprises this chapter.
AMENDMENTS
1992—Pub. L. 102–550 substituted ‘‘There is authorized
to be appropriated to carry out this title $35,000,000 for
fiscal year 1993 and $36,470,000 for fiscal year 1994.’’ for
‘‘There are authorized to be appropriated to carry out
this title $21,200,000 for fiscal year 1991 and $22,100,000
for fiscal year 1992. From any amounts appropriated
under this section for fiscal year 1991, the Secretary
shall use not more than $500,000 to carry out a demonstration project to test affordable housing technologies, and shall include in the annual report under
section 3536 of title 42 (for the appropriate year) a
statement of the activities under the demonstration
program and findings resulting from the program. The
statement shall set forth the amount and use of funds
expended by the Secretary under the program for the
year relating to the report and the Secretary shall include such a statement in each such annual report for
each year that amounts appropriated under this section
1 So

in original. Probably should be ‘‘are’’.

§ 1701z–1

are used under the demonstration. All funds so appropriated shall remain available until expended unless
specifically limited.’’
1990—Pub. L. 101–625 substituted provisions authorizing appropriations of $21,200,000 for 1991 and $22,100,000
for 1992, for provisions authorizing $17,000,000 for 1988
and $18,000,000 for 1989, and added provisions limiting
amount to be used for demonstration project in 1991
and requiring that annual report include statement relating to such project.
1988—Pub. L. 100–242 substituted ‘‘There are authorized to be appropriated to carry out this title $17,000,000
for fiscal year 1988, and $18,000,000 for fiscal year 1989.’’
for ‘‘There are authorized to be appropriated for activities under this title not to exceed $19,000,000 for fiscal
year 1984, and such sums as may be necessary for fiscal
year 1985. Of the amount appropriated under the preceding sentence for fiscal year 1984, not less than
$2,000,000 shall be provided for implementation of a research program to be developed in consultation with
public housing agencies, which program shall identify
current problems of public housing management, specific solutions to such problems, and incentives to encourage implementation of such solutions.’’
1983—Pub. L. 98–181 substituted provisions relating to
appropriations for fiscal years 1984 and 1985 and the expenditure of not less than $2,000,000 for a public housing
management research program for provisions authorizing appropriations of $65,000,000 for fiscal 1977,
$60,000,000 for fiscal 1978, $62,000,000 for fiscal 1979,
$50,300,000 for fiscal 1980, $51,000,000 for fiscal 1981 and
$35,000,000 for fiscal 1982.
1981—Pub. L. 97–35 inserted provisions authorizing appropriations for fiscal year 1982.
1980—Pub. L. 96–399 authorized appropriation of
$51,000,000 for fiscal year 1981.
1979—Pub. L. 96–153 authorized appropriation of
$50,300,000 for fiscal year 1980.
1978—Pub. L. 95–557 substituted ‘‘not to exceed
$60,000,000 for the fiscal year 1978, and not to exceed
$62,000,000 for the fiscal year 1979’’ for ‘‘and not to exceed $60,000,000 for the fiscal year 1978’’.
1977—Pub. L. 95–128 authorized appropriation of
$60,000,000 for fiscal year 1978.
1976—Pub. L. 94–375 substituted provision authorizing
appropriations for fiscal year 1977 in an amount not exceeding $65,000,000 for provision which authorized sums
to be appropriated as may have been necessary.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
REHABILITATION DEMONSTRATION GRANT PROGRAM
Pub. L. 105–276, title V, § 599G, Oct. 21, 1998, 112 Stat.
2666, provided that:
‘‘(a) IN GENERAL.—The Secretary of Housing and
Urban Development shall, to the extent amounts are
provided in appropriation Acts to carry out this section, carry out a program to demonstrate the effectiveness of making grants for rehabilitation of single family housing located within 10 demonstration areas designated by the Secretary. Of the areas designated by
the Secretary under this section—
‘‘(1) 6 shall be areas that have primarily urban
characteristics;
‘‘(2) 3 shall be areas that are outside of a metropolitan statistical area; and
‘‘(3) 1 shall be an area that has primarily rural
characteristics.
In selecting areas, the Secretary shall provide for national geographic and demographic diversity.
‘‘(b) GRANTEES.—Grants under the program under this
section may be made only to agencies of State and
local governments and non-profit organizations operating within the demonstration areas.
‘‘(c) SELECTION CRITERIA.—In selecting among applications for designation of demonstration areas and

§ 1701z–2

TITLE 12—BANKS AND BANKING

grants under this section, the Secretary shall consider—
‘‘(1) the extent of single family residences located
in the proposed area that have rehabilitation needs;
‘‘(2) the ability and expertise of the applicant in
carrying out the purposes of the demonstration program, including the availability of qualified housing
counselors and contractors in the proposed area willing and able to participate in rehabilitation activities funded with grant amounts;
‘‘(3) the extent to which the designation of such
area and the grant award would promote affordable
housing opportunities;
‘‘(4) the extent to which selection of the proposed
area would have a beneficial effect on the neighborhood or community in the area and on surrounding
areas;
‘‘(5) the extent to which the applicant has demonstrated that grant amounts will be used to leverage
additional public or private funds to carry out the
purposes of the demonstration program;
‘‘(6) the extent to which lenders (including local
lenders and lenders outside the proposed area) are
willing and able to make loans for rehabilitation activities assisted with grant funds; and
‘‘(7) the extent to which the application provides
for the involvement of local residents in the planning
of rehabilitation activities in the demonstration
area.
‘‘(d) USE OF GRANT FUNDS.—Funds from grants made
under this section may be used by grantees—
‘‘(1) to subsidize interest on loans, over a period of
not more than 5 years from the origination date of
the loan, made after the date of the enactment of this
Act [Oct. 21, 1998] for rehabilitation of any owner-occupied 1- to 4-family residence, including the payment of interest during any period in which a residence is uninhabitable because of rehabilitation activities;
‘‘(2) to facilitate loans for rehabilitation of 1- to 4family properties previously subject to a mortgage
insured under the National Housing Act [12 U.S.C.
1701 et seq.] that has been foreclosed or for which insurance benefits have been paid, including to establish revolving loan funds, loan loss reserves, and
other financial structures; and
‘‘(3) to provide technical assistance in conjunction
with the rehabilitation of owner-occupied 1- to 4-family residences, including counseling, selection contractors, monitoring of work, approval of contractor
payments, and final inspection of work.
‘‘(e) DEFINITION OF REHABILITATION.—For purposes of
this section, the term ‘rehabilitation’ has the meaning
given such term in section 203(k)(2)(B) of the National
Housing Act (12 U.S.C. 1709(k)(2)(B)).
‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to be appropriated to the Secretary to carry
out this section such sums as may be necessary for
each of fiscal years 1999 through 2003.
‘‘(g) EFFECTIVE DATE.—This section shall take effect
on the date of the enactment of this Act [Oct. 21, 1998].’’
REPORT REGARDING RESEARCH ACTIVITIES
Pub. L. 101–625, title IX, § 951(b), Nov. 28, 1990, 104
Stat. 4417, directed Secretary of Housing and Urban Development, not later than the expiration of the 1-year
period beginning on Nov. 28, 1990, to submit to Congress
a report listing and describing various research activities, studies, testing, and demonstration programs relating to mission and programs of Department of Housing and Urban Development that are being conducted,
have concluded, or will conclude during such period,
pursuant to section 501 of the Housing and Urban Development Act of 1970 (12 U.S.C. 1701z–1), title V of such
Act (12 U.S.C. 1701z–1 et seq.), or any other authority,
such report to include a statement identifying the individual or entity that is conducting each such activity,
study, test, and demonstration program.

Page 478

§ 1701z–2. Advanced technologies, methods, and
materials for housing construction, rehabilitation, and maintenance
(a) General acceptance; costs, reduction; health
and safety restrictions on expanded housing
production
The Secretary shall require, to the greatest
extent feasible, the employment of new and improved technologies, methods, and materials in
housing construction, rehabilitation, and maintenance under programs administered by him
with a view to reducing costs, and shall encourage and promote the acceptance and application
of such advanced technology, methods, and materials by all segments of the housing industry,
communities, industries engaged in urban development activities, and the general public. To
the extent feasible, in connection with the construction, major rehabilitation, or maintenance
of any housing assisted under section 1701z–1 of
this title, the Secretary shall assure that there
is no restraint by contract, building code, zoning
ordinance, or practice against the employment
of new or improved technologies, techniques,
materials, and methods or of preassembled products which may reduce the cost or improve the
quality of such construction, rehabilitation, and
maintenance, and therefore stimulate expanded
production of housing, except where such restraint is necessary to insure safe and healthful
working and living conditions.
(b) Experimental construction under approved
housing plans on Federal or other lands with
view toward ultimate mass housing production; use of section 1701z–1 funds and authority
To encourage large-scale experimentation in
the use of new technologies, methods, and materials, with a view toward the ultimate mass production of housing and related facilities, the
Secretary shall wherever feasible conduct programs under section 1701z–1 of this title in which
qualified organizations, public and private, will
submit plans for development and production of
housing and related facilities using such new advances on Federal land which has been made
available or acquired by the Secretary for the
purpose of this subsection or on other land
where (1) local building regulations permit such
experimental construction, or (2) necessary variances from building regulations can be granted.
The Secretary may utilize the funds and authority available to him under the provisions of section 1701z–1 of this title to assist in the implementation of plans which he approves.
(c) Acquisition, use, and disposal of property;
transfer of excess property
Notwithstanding any other provision of law,
the Secretary is authorized, in connection with
projects under this title [12 U.S.C. 1701z–1 et
seq.], to acquire, use and dispose of any land and
other property required for the project as he
deems necessary. Notwithstanding the provisions of chapters 1 to 11 of title 40 and division
C (except sections 3302, 3307(e), 3501(b), 3509, 3906,
4710, and 4711) of subtitle I of title 41, any land
which is excess property within the meaning of
chapters 1 to 11 of title 40 and division C (except
sections 3302, 3307(e), 3501(b), 3509, 3906, 4710, and

Page 479

§ 1701z–3

TITLE 12—BANKS AND BANKING

4711) of subtitle I of title 41 and which is determined by the Secretary to be suitable in furtherance of the purposes of subsection (b) may
be transferred to the Secretary upon his request.
(d) Technical assistance; reports; general dissemination and form of reports, data, and information
In order to effectively carry out his activities
under section 1701z–1 of this title, the Secretary
is authorized to provide such advice and technical assistance as may be required and to pay
for the cost of writing and publishing reports on
activities and undertakings financed under section 1701z–1 of this title, as well as reports on
similar activities and undertakings, not so financed, which are of significant value in furthering the purposes of that section. He may disseminate (without regard to the provisions of
section 3204 of title 39 or section 4154 of such
title with respect to any period before the effective date of such section 3204 as provided in section 15(a) of the Postal Reorganization Act) any
reports, data, or information acquired or held
under this title [12 U.S.C. 1701z–1 et seq.], including related data and information otherwise
available to the Secretary through the operation of the programs and activities of the Department of Housing and Urban Development, in
such form as he determines to be most useful to
departments, establishments, and agencies of
Federal, State, and local governments, to industry, and to the general public.
(e) Contracts or grants; authority; advance and
progress payments; work limitation
The Secretary is authorized to carry out the
functions authorized in section 1701z–1 of this
title either directly or, without regard to section 6101 of title 41, by contract or by grant. Advance and progress payments may be made
under such contracts or grants without regard
to the provisions of subsections (a) and (b) of
section 3324 of title 31 and such contracts or
grants may be made for work to continue for not
more than four years from the date thereof.
(f) Utilization of facilities of other agencies;
working agreements, cooperative agreements, contract authority, receipt of funds,
and exercise of section 1701c(c) powers
In carrying out activities under section 1701z–1
of this title, the Secretary shall utilize to the
fullest extent feasible the available facilities of
other Federal departments and agencies, and
shall consult with, and make recommendations
to, such departments and agencies. The Secretary may enter into working agreements with
such departments and agencies and contract or
make grants on their behalf or have such departments and agencies contract or make grants
on his behalf and such departments and agencies
are hereby authorized to execute such contracts
and grants. The Secretary is authorized to make
or accept reimbursement for the cost of such activities. The Secretary is further authorized to
undertake activities under this title [12 U.S.C.
1701z–1 et seq.] under cooperative agreements
with industry and labor, agencies of State or
local governments, educational institutions, and
other organizations. He may enter into contracts with and receive funds from such agen-

cies, institutions, and organizations, and may
exercise any of the other powers vested in him
by section 1701c(c) of this title.
(g) Information and data; restriction on use or
identification
The Secretary is authorized to request and receive such information or data as he deems appropriate from private individuals and organizations, and from public agencies. Any such information or data shall be used only for the purposes for which it is supplied, and no publication
shall be made by the Secretary whereby the information or data furnished by any particular
person or establishment can be identified, except with the consent of such person or establishment.
(Pub. L. 91–609, title V, § 502, Dec. 31, 1970, 84
Stat. 1784; Pub. L. 94–375, § 23(c), Aug. 3, 1976, 90
Stat. 1078; Pub. L. 98–479, title II, § 203(k), Oct.
17, 1984, 98 Stat. 2231.)
REFERENCES IN TEXT
This title, referred to in subsecs. (c), (d), and (f) following ‘‘under’’, is title V of the Housing and Urban Development Act of 1970, Pub. L. 91–609, Dec. 31, 1970, 84
Stat. 1784, as amended, which is classified generally to
section 1701z–1 et seq., of this title. For complete classification of this Act to the Code, see Short Title of 1970
Amendments note set out under section 1701 of this
title and Tables.
For effective date of section 3204 of title 39 as provided in section 15(a) of the Postal Reorganization Act,
referred to in subsec. (d), see notes preceding section
101 and under section 3204 of Title 39, Postal Service.
CODIFICATION
In subsec. (c), ‘‘chapters 1 to 11 of title 40 and division
C (except sections 3302, 3307(e), 3501(b), 3509, 3906, 4710,
and 4711) of subtitle I of title 41, any land which is excess property within the meaning of chapters 1 to 11 of
title 40 and division C (except sections 3302, 3307(e),
3501(b), 3509, 3906, 4710, and 4711) of subtitle I of title 41’’
substituted for ‘‘the Federal Property and Administrative Services Act of 1949, any land which is excess property within the meaning of such Act’’ on authority of
Pub. L. 107–217, § 5(c), Aug. 21, 2002, 116 Stat. 1303, which
Act enacted Title 40, Public Buildings, Property, and
Works, and Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat.
3854, which Act enacted Title 41, Public Contracts.
In subsec. (e), ‘‘section 6101 of title 41’’ substituted for
‘‘section 3709 of the Revised Statutes’’ on authority of
Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat. 3854, which
Act enacted Title 41, Public Contracts.
Section was enacted as part of the Housing and Urban
Development Act of 1970, and not as part of the National Housing Act which comprises this chapter.
AMENDMENTS
1984—Subsec. (e). Pub. L. 98–479 substituted ‘‘subsections (a) and (b) of section 3324 of title 31’’ for ‘‘section 3648 of the Revised Statutes [31 U.S.C. 529]’’.
1976—Subsec. (f). Pub. L. 94–375 inserted ‘‘and such departments and agencies are hereby authorized to execute such contracts and grants.’’ after ‘‘make grants on
his behalf’’.

§ 1701z–3. Experimental housing allowance payment program
(a) Purpose of payments
The Secretary is authorized to undertake on
an experimental basis programs to demonstrate
the feasibility of providing housing allowance
payments to assist families in meeting rental or
homeownership expenses.

§ 1701z–4

TITLE 12—BANKS AND BANKING

(b) Termination date of payments; termination
date for contracts; contracts for performance
of administrative functions
(1) No housing allowance payments shall be
made after July 1, 1985. After January 1, 1975,
the Secretary shall not enter into contracts
under the United States Housing Act of 1937 [42
U.S.C. 1437 et seq.] to carry out the purposes of
this section. The Secretary may contract with
public or private agencies for the performance of
administrative functions in connection with the
programs authorized by this section.
(2) Notwithstanding the provisions of paragraph (1), the Secretary shall, to the extent approved in appropriation Acts, extend the annual
contributions contracts for the experimental
housing allowance supply program through September 30, 1989, on the same terms and conditions as the original contracts, for the sole purpose of providing assistance for homeowners
participating in such program on June 1, 1983. In
extending such contracts, the Secretary may, to
the extent approved in appropriation Acts, use
authority available under section 5(c) of the
United States Housing Act of 1937 [42 U.S.C.
1437c(c)].
(c) Report to Congress
The Secretary shall report to the Congress on
his findings pursuant to this section not later
than eighteen months after August 22, 1974.
(Pub. L. 91–609, title V, § 504, Dec. 31, 1970, 84
Stat. 1786; Pub. L. 93–383, title VIII, § 804, Aug.
22, 1974, 88 Stat. 725; Pub. L. 94–375, § 23(b), Aug.
3, 1976, 90 Stat. 1078; Pub. L. 98–35, § 6(a), May 26,
1983, 97 Stat. 198.)
REFERENCES IN TEXT
The United States Housing Act of 1937, referred to in
subsec. (b)(1), is act Sept. 1, 1937, ch. 896, as revised generally by Pub. L. 93–383, title II, Aug. 22, 1974, 88 Stat.
653, which is classified to chapter 8 (§ 1437 et seq.) of
Title 42, The Public Health and Welfare. For complete
classification of this Act to the Code, see Short Title
note set out under section 1437 of Title 42 and Tables.
CODIFICATION
Section was enacted as part of the Housing and Urban
Development Act of 1970, and not as part of the National Housing Act which comprises this chapter.
AMENDMENTS
1983—Subsec. (b). Pub. L. 98–35 designated existing
provisions as par. (1) and added par. (2).
1976—Subsec. (b). Pub. L. 94–375 struck out provisions
which authorized the Secretary to make or contract to
make housing allowance payments, authorized sums to
be appropriated as necessary, including sums for contract payments and administrative costs, and limited
the aggregate amount of contracts for making housing
allowance payments.
1974—Subsec. (a). Pub. L. 93–383 substituted provisions authorizing the Secretary to undertake programs
on an experimental basis of housing allowance payments to assist families in meeting rental or homeownership expenses, for provisions authorizing the Secretary in carrying out activities under section 1701z–1
of this title to undertake programs on an experimental
basis of housing allowances to assist families of low income to obtain rental housing of their choice in existing units.
Subsec. (b). Pub. L. 93–383 substituted provisions relating to the authority of the Secretary to make or
contract to make payments to or on behalf of partici-

Page 480

pating families, authorizing appropriations, and setting
forth limits on the contracting power of the Secretary,
for provisions setting forth limitations on the amount
of family allowances and conditioning payment of such
allowances.
Subsec. (c). Pub. L. 93–383 substituted provisions requiring the Secretary to report to Congress not later
than 18 months after Aug. 22, 1974, for provisions setting forth the contracting authority of the Secretary
for services.
Subsec. (d). Pub. L. 93–383 struck out subsec. (d)
which set forth limits on aggregate family allowances
and authorizing appropriations to make payments.
Subsec. (e). Pub. L. 93–383 struck out subsec. (e)
which required a report to Congress by the Secretary as
soon as practicable in calendar years 1972 and 1973.
Subsec. (f). Pub. L. 93–383 struck out subsec. (f) which
defined ‘‘families of low income’’ and ‘‘existing standard housing’’.
Subsec. (g). Pub. L. 93–383 struck out subsec. (g)
which prohibited payments after June 30, 1973.
EFFECTIVE DATE OF 1983 AMENDMENT
Pub. L. 98–35, § 6(b), May 26, 1983, 97 Stat. 199, provided
that: ‘‘The amendments made by this section [amending this section] shall become effective on October 1,
1983.’’

§ 1701z–4. Abandoned properties demonstration
project
(a) Grants for arrest of incipient abandonment
and revitalization of blighted areas
In carrying out activities under section 1701z–1
of this title, the Secretary may undertake programs to demonstrate the most feasible means
of providing assistance to localities in which a
substantial number of structures are abandoned
or are threatened with abandonment for the purpose of arresting the process of housing abandonment in its incipiency or in restoring viability to blighted areas in which abandonment is
pervasive. For this purpose, the Secretary is authorized to make grants, subject to the limitations of this section, to assist local public bodies
in planning and implementing demonstration
projects for prompt and effective action in alleviating and preventing such abandonment in
designated demonstration areas.
(b) Preferred projects; scope of projects
In administering this section, the Secretary
shall give preference to those demonstration
projects which in his judgment can reasonably
be expected to arrest the process of abandonment in the demonstration area within a period
of two years and which provide for innovative
approaches to combating the problem of housing
abandonment. Such projects may include, but
shall not be limited to (1) acquisition by negotiated purchase, lease, receivership, tax lien proceedings, or other means authorized by law and
satisfactory to the Secretary, of real property
within the demonstration area or areas which is
abandoned, deteriorated, or in violation of applicable code standards; (2) the repair of streets,
sidewalks, parks, playgrounds, publicly owned
utilities, public buildings to meet needs consistent with the revitalization and continued use of
the area; (3) the demolition of structures determined to be structurally unsound or unfit for
human habitation or which contribute adversely
to the physical or social environment of the locality involved; (4) the establishment of rec-

Page 481

§ 1701z–5

TITLE 12—BANKS AND BANKING

reational or community facilities including public playgrounds; (5) the improvement of garbage
and trash collection, street cleaning and other
essential services necessary to the revitalization
and maintenance of the area; (6) the rehabilitation of privately and publicly owned real property by the locality; and (7) the establishment
and operation of locally controlled, nonprofit
housing management corporations and municipal repair programs.
(c) Purchase or lease of project real estate at fair
market value for new or rehabilitated housing use; conditions
Subject to such conditions as the Secretary
may prescribe, real property held as part of a
project assisted under this section may be made
available to (1) a limited dividend corporation,
nonprofit corporation, or association, cooperative or public body or agency, or other approved
purchaser or lessee, or (2) a purchaser who would
be eligible for a mortgage insured under section
1715l(d)(3) or (d)(4), section 1715l(h)(1), section
1715z(i) or (j)(1), or section 1715z–1 of this title,
for purchase or lease at fair market value for
use by such purchaser or lessee, as, or in the
provision of, new or rehabilitated housing for
occupancy by families or individuals of low or
moderate income.
(d) Amount of grants; authorization of appropriations; continuing availability of funds; locality limitation
Grants under this section shall be in amounts
which do not exceed 90 per centum of the net
project cost as determined by the Secretary.
There are authorized to be appropriated for demonstration grants under this section not to exceed $20,000,000 for the fiscal year ending June
30, 1971. Any amounts appropriated shall remain
available until expended and any amount authorized but not appropriated may be appropriated for any succeeding fiscal year commencing prior to July 1, 1972. Not more than onethird of the aggregate amount of grants made in
any fiscal year under this section shall be made
with respect to projects undertaken by one locality.
(e) Projects as part of urban renewal projects for
purpose of application of urban renewal provisions
The provisions of sections 1456, 1465, and 1466 1
of title 42, and section 1452b 1 of title 42, may
apply to projects assisted under this Act as if
such projects were being carried out in urban renewal areas as part of urban renewal projects
within the meaning of section 1460 1 of title 42.
(Pub. L. 91–609, title V, § 505, Dec. 31, 1970, 84
Stat. 1787; Pub. L. 99–386, title I, § 105(a), Aug. 22,
1986, 100 Stat. 822.)

Section 1452b of title 42, referred to in subsec. (e), was
repealed by Pub. L. 101–625, title II, § 289(b)(1), Nov. 28,
1990, 104 Stat. 4128.
CODIFICATION
Section was enacted as part of the Housing and Urban
Development Act of 1970, and not as part of the National Housing Act which comprises this chapter.
AMENDMENTS
1986—Subsec. (f). Pub. L. 99–386 struck out subsec. (f)
which related to annual reports to Congress by Secretary with respect to status of demonstration
projects.

§ 1701z–5. Demonstrations of heating or cooling
residential housing utilizing solar energy
(a) Consultation by Secretary with National
Science Foundation; scope of demonstrations; powers of Secretary
In carrying out activities under section 1701z–1
of this title, the Secretary may, after consultation with the National Science Foundation, undertake demonstrations to determine the economic and technical feasibility of utilizing solar
energy for heating or cooling residential housing (including demonstrations of new housing
design or structure involving the use of solar energy). Demonstrations carried out under this
section should involve both single family and
multifamily housing located in areas having distinguishable climatic characteristics in urban as
well as rural environments. To carry out the
purpose of this section the Secretary is authorized—
(1) to enter into contracts with, to make
grants to, and to provide other types of assistance to individuals and entities with special
competence and knowledge to contribute to
the planning, design, development, and operation of such housing;
(2) to utilize the contract, loan, or mortgage
insurance authority of any federally assisted
housing program in the actual planning, development, and occupancy of such housing; and
(3) to set aside any development, construction, design, or occupancy requirements for
the purpose of any demonstration under this
section if he determines that such requirements inhibit such demonstration.
(b) Evaluation by Secretary
The Secretary shall include in any demonstration under this section an evaluation of the
demonstration to cover the full experience involved in all stages of the demonstration.
(Pub. L. 91–609, title V, § 506, as added Pub. L.
93–383, title VIII, § 814, Aug. 22, 1974, 88 Stat. 738;
amended Pub. L. 99–386, title I, § 105(b), Aug. 22,
1986, 100 Stat. 822.)

REFERENCES IN TEXT

CODIFICATION

Sections 1456, 1460, and 1466 of title 42, referred to in
subsec. (e), were omitted from the Code pursuant to
section 5316 of Title 42, The Public Health and Welfare,
which terminated authority to make grants or loans
under those sections after Jan. 1, 1975.
Section 1465 of title 42, referred to in subsec. (e), was
repealed by Pub. L. 91–646, title II, § 220(a)(5), Jan. 2,
1971, 84 Stat. 1903. See section 4601 et seq. of Title 42.

Section was enacted as part of the Housing and Urban
Development Act of 1970, and not as part of the National Housing Act which comprises this chapter.

1 See

References in Text note below.

AMENDMENTS
1986—Subsec. (c). Pub. L. 99–386 struck out subsec. (c)
which related to reports to Congress by Secretary not
later than 6 months following close of year in which
the Secretary carried out demonstration under this
section.

§ 1701z–6

TITLE 12—BANKS AND BANKING

§ 1701z–6. Special housing need research and
demonstration authority
(a) Special demonstrations of housing design,
structure, facilities, and amenities to meet
needs of elderly, handicapped, etc.; contracts, grants, and assistance by Secretary
In carrying out activities under section 1701z–1
of this title, the Secretary may undertake special demonstrations to determine the housing
design, the housing structure, and the housingrelated facilities, and amenities most effective
or appropriate to meet the needs of groups with
special housing needs including the elderly, the
handicapped, the displaced, single individuals,
broken families, and large households. For this
purpose, the Secretary is authorized to enter
into contracts with, to make grants to, and to
provide other types of assistance to individuals
and entities with special competence and knowledge to contribute to the planning, development, design, and management of such housing.
(b) Areas of preferential attention
In carrying out his functions under this section, the Secretary shall give preferential attention to demonstrations which in his judgment
involve areas of housing user needs most neglected in past and current research and demonstration efforts.
(c) Utilization of contract and loan authority of
federally assisted housing programs; setting
aside of development, etc., requirements during testing
The Secretary is authorized to undertake demonstrations involving the actual planning, development, and occupancy of housing utilizing
the contract and loan authority of any federally
assisted housing program. He is also authorized
to set aside any development, construction, design, and occupancy requirements, for the purposes of these demonstrations, if in his judgment they inhibit the testing of housing designed to meet the special housing needs.
(d) Evaluation of demonstration
In carrying out this section, the Secretary
shall include, as part of any demonstration, an
evaluation of the demonstration to cover the
full experience involved in planning, development, and occupancy.
(e) Limitation on amounts available for research
In addition to any other contract or loan authority which the Secretary may utilize under
subsection (c), not more than $10,000,000 from
amounts approved in appropriation Acts shall be
available for research under this section.
(Pub. L. 91–609, title V, § 507, as added Pub. L.
93–383, title VIII, § 815, Aug. 22, 1974, 88 Stat. 738.)
CODIFICATION
Section was enacted as part of the Housing and Urban
Development Act of 1970, and not as part of the National Housing Act which comprises this chapter.
INDIAN PUBLIC HOUSING EARLY CHILDHOOD
DEVELOPMENT DEMONSTRATION PROGRAM
Pub. L. 101–625, title V, § 518, Nov. 28, 1990, 104 Stat.
4201, as amended by Pub. L. 102–550, title I, § 124, Oct. 28,
1992, 106 Stat. 3709; Pub. L. 104–330, title V, § 501(d)(1),
Oct. 26, 1996, 110 Stat. 4042, authorized Secretary of

Page 482

Housing and Urban Development to carry out demonstration program in low-income housing developed or
operated pursuant to a contract between the Secretary
and an Indian housing authority in the same manner as
the demonstration program under section 222 of Pub. L.
98–181 was carried out, and further provided for funding
for demonstration program, limitations, and report to
Congress, prior to repeal by Pub. L. 105–276, title V,
§ 582(a)(7), Oct. 21, 1998, 112 Stat. 2643.
DEMONSTRATION PROJECT FOR ASSISTANCE TO UNITS OF
GENERAL LOCAL GOVERNMENT TO ENCOURAGE UPGRADING OF LOWER INCOME FAMILY HOUSING
Pub. L. 98–181, title I [title II, § 225], Nov. 30, 1983, 97
Stat. 1191, provided that:
‘‘(a) The Congress finds that—
‘‘(1) the Department of Health and Human Services
spends in excess of $5,000,000,000 annually for housing
in the form of allowances for shelter for public assistance recipients;
‘‘(2) States administering the Department of Health
and Human Services public assistance program often
specify shelter allowances that have little relationship to the cost or the quality of the housing in which
public assistance recipients live;
‘‘(3) at least 30 per centum of public assistance recipients live in substandard housing;
‘‘(4) the older rental buildings in which many public
assistance recipients live are in those neighborhoods
that need the assistance of the programs of the Department of Housing and Urban Development for
preservation and rehabilitation; and
‘‘(5) there is the potential for improving housing for
many lower income families by coordinating State
and local government efforts in order to assure that
families receiving public assistance payments from
the Department of Health and Human Services are
able to live in decent, safe, and sanitary housing.
‘‘(b) The purpose of this section, therefore, is to provide assistance to units of general local government
and their designated agencies in order to develop a program that will—
‘‘(1) encourage the upgrading of housing occupied
primarily by lower income families, including families receiving assistance under the aid for families
with dependent children program established under
title IV of the Social Security Act [42 U.S.C. 601 et
seq.]; and
‘‘(2) provide for better coordination at the local
level of the efforts to assist families receiving public
assistance from the Department of Health and
Human Services so that these families will be able to
occupy affordable housing that is decent, safe, and
sanitary and that, if necessary, is rehabilitated with
funds provided by the Department of Housing and
Urban Development.
‘‘(c) The Secretary of Housing and Urban Development (hereafter referred to in this section as the ‘Secretary’) shall, to the extent approved in appropriation
Acts, establish and maintain a demonstration project
to carry out the purpose described in subsection (b).
‘‘(d) In carrying out such project, the Secretary shall
make grants to units of general local government, or
designated agencies thereof, to carry out administrative plans approved by the Secretary in accordance
with subsection (e), and the Secretary may make
grants to States to provide technical assistance for the
purpose of assisting such units of general local government to develop and carry out such plans.
‘‘(e)(1) Grants may be made to States and units of
general local government and agencies thereof that
apply for them in a manner and at a time determined
by the Secretary and that, in the case of units of general local government and their agencies, are selected
on the basis of an administrative plan described in such
application.
‘‘(2) No such administrative plan shall be selected by
the Secretary unless it sets forth a plan for local government activities that are designed to—
‘‘(A) require or encourage owners of rental housing
occupied by lower income families to bring such
housing into compliance with local housing codes;

Page 483

TITLE 12—BANKS AND BANKING

‘‘(B) provide technical assistance, loans, or grants
to assist owners described in subparagraph (A) to undertake cost-effective improvements of such housing;
‘‘(C) work with the State to establish and implement a schedule of local shelter allowances for recipients of assistance under title IV of the Social Security Act [42 U.S.C. 601 et seq.] based on building quality that will be applicable to buildings involved in
this program; and
‘‘(D) coordinate local housing inspection, housing
rehabilitation loan or grant assistance, rental assistance, and social service programs for the purpose of
improving the quality and affordability of housing for
lower income families.
‘‘(3) Funds received from any grant made by the Secretary to a unit of general local government shall be
made available for use according to the administrative
plans and may be used for—
‘‘(A) technical assistance or financial assistance to
property owners to upgrade housing projects described in paragraph (2)(A) of this subsection;
‘‘(B) temporary rental assistance to families who
live in buildings assisted under this program and who
are eligible for, but are not receiving, assistance
under section 8 of the United States Housing Act of
1937 [42 U.S.C. 1437f], except that such families shall
not include families receiving assistance under title
IV of the Social Security Act [42 U.S.C. 601 et seq.],
and the amount of such rental assistance may not exceed 20 per centum of each grant received under this
section;
‘‘(C) housing counseling and referral and other
housing related services;
‘‘(D) expenses incurred in administering the program carried out with funds received under this section, except that such expenses may not exceed 10 per
centum of the grant received under this section; and
‘‘(E) other appropriate activities that are consistent with the purposes of this section and that are approved by the Secretary.
‘‘(f) Any recipient of a grant from the Secretary
under this section shall agree to—
‘‘(1) contribute to the program an amount equal to
15 per centum of the funds received from the Secretary under this section, and the Secretary shall
permit the recipient to meet this requirement by the
contribution of the value of services carried out specifically in connection with the program assisted
under this section;
‘‘(2) permit the Secretary and the General Accounting Office [now Government Accountability Office] to
audit its books in order to assure that the funds received under this section are used in accordance with
the section; and
‘‘(3) other terms and conditions prescribed by the
Secretary for the purpose of carrying out this section
in an effective and efficient manner.
‘‘(g) In making grants available under this section,
the Secretary shall select as recipients at least 20 units
of general local government (or their designated agencies). The selection of proposals for funding shall be
based on criteria that result in a selection of projects
that will enable the Secretary to carry out the purpose
of this section in an effective and efficient manner and
provide a sufficient amount of data necessary to make
an evaluation of the demonstration project carried out
under this section.
‘‘(h)(1) Not later than June 1, 1984, the Secretary shall
transmit to the Congress an interim report on the implementation of the demonstration under this section.
‘‘(2) The Secretary shall transmit, not later than October 1, 1985, to both Houses of the Congress a detailed
report concerning the findings and conclusions that
have been reached by the Secretary as a result of carrying out this section, along with any legislative recommendations that the Secretary determines are necessary.
‘‘(i) To carry out this section, there are authorized to
be appropriated not to exceed $10,000,000 during fiscal
year 1984, and not to exceed $15,000,000 during fiscal
year 1985, to remain available until expended.’’

§ 1701z–6

PUBLIC HOUSING EARLY CHILDHOOD DEVELOPMENT
PROGRAM
Pub. L. 98–181, title I [title II, § 222], Nov. 30, 1983, 97
Stat. 1188, as amended by Pub. L. 100–242, title I, § 117,
Feb. 5, 1988, 101 Stat. 1826; Pub. L. 100–628, title X, § 1002,
Nov. 7, 1988, 102 Stat. 3263; Pub. L. 101–625, title V, § 517,
Nov. 28, 1990, 104 Stat. 4200; Pub. L. 102–550, title I, § 123,
Oct. 28, 1992, 106 Stat. 3709, which authorized Secretary
of Housing and Urban Development to carry out demonstration program of making grants to nonprofit organizations to assist in providing early childhood development services in or near lower income housing
projects, and required report to Congress setting forth
findings and conclusions not later than three years
after Feb. 5, 1988, was repealed by Pub. L. 105–276, title
V, § 582(a)(6), Oct. 21, 1998, 112 Stat. 2643.
PUBLIC HOUSING SECURITY
Pub. L. 96–399, title II, § 209, Oct. 8, 1980, 94 Stat. 1635,
provided that:
‘‘(a) This section may be cited as the ‘Public Housing
Anti-Crime Amendments of 1980’.
‘‘(b) The Congress finds that—
‘‘(1) public housing and surrounding neighborhoods
continue to suffer substantially from rising crime
and the fear of crime;
‘‘(2) funding to provide more security for public
housing can be used to leverage funding from other
sources and thereby produce more successful anticrime efforts;
‘‘(3) the effects of inflation and the need for reductions in the budget of the Federal Government result
in a need for more co-targeting of Federal and local
anti-crime resources;
‘‘(4) as authorized by the Public Housing Security
Demonstration Act of 1978 [set out below], the Urban
Initiatives Anti-Crime Program has performed in a
promising manner; and
‘‘(5) the First Annual Report to Congress of the
Urban Initiatives Anti-Crime Program and the two
General Accounting Office [now Government Accountability Office] reports to Congress on such Program have provided useful suggestions which can now
be implemented.
‘‘(c) It is, therefore, the purpose of this section to
continue the efforts of the Urban Initiatives AntiCrime Program so that more progress can be made in
providing secure, decent, safe, and sanitary dwelling
units for low-income and elderly tenants in public
housing projects.
‘‘(d) [This subsection amended section 207 of Pub. L.
95–557, set out below.].’’
Pub. L. 95–557, title II, § 207, Oct. 31, 1978, 92 Stat. 2093,
as amended by Pub. L. 96–399, title II, § 209(d), Oct. 8,
1980, 94 Stat. 1635; Pub. L. 98–479, title II, § 201(i), Oct. 17,
1984, 98 Stat. 2228; Pub. L. 103–82, title IV, § 405(c), Sept.
21, 1993, 107 Stat. 921, provided that:
‘‘(a) This section may be cited as the ‘Public Housing
Security Demonstration Act of 1978’.
‘‘(b)(1) The Congress finds that—
‘‘(A) low-income and elderly public housing residents of the Nation have suffered substantially from
rising crime and violence, and are being threatened
as a result of inadequate security arrangements for
the prevention of physical violence, theft, burglary,
and other crimes;
‘‘(B) older persons generally regard the fear of
crime as the most serious problem in their lives, to
the extent that one-fourth of all Americans over 65
voluntarily restrict their mobility because of it;
‘‘(C) crime and the fear of crime have led some residents to move from public housing projects;
‘‘(D) an integral part of successfully providing decent, safe, and sanitary dwellings for low-income persons is to insure that the housing is secure;
‘‘(E) local public housing authorities may have inadequate security arrangements for the prevention of
crime and vandalism; and
‘‘(F) action is needed to provide for the security of
public housing residents and to preserve the Nation’s
investment in its public housing stock.

§ 1701z–7

TITLE 12—BANKS AND BANKING

‘‘(2) It is, therefore, declared to be the policy of the
United States to provide for a demonstration and evaluation of effective means of mitigating crime and vandalism in public housing projects, in order to provide a
safe living environment for the residents, particularly
the elderly residents, of such projects.
‘‘(c)(1) The Secretary of Housing and Urban Development shall promptly initiate and carry out during the
fiscal year beginning on October 1, 1978, to the extent
approved in appropriation Acts, a program for the development, demonstration, and evaluation of improved,
innovative community anticrime and security methods, concepts and techniques which will mitigate the
level of crime in public housing projects and their surrounding neighborhoods.
‘‘(2) In selecting public housing projects to receive assistance under this section, the Secretary shall assure
that a broad spectrum of project types, locations and
tenant populations are represented and shall consider
at least the following: the extent of crime and vandalism currently existing in the projects; the extent, nature and quality of community anticrime efforts in the
projects and surrounding areas; the extent, nature and
quality of police and other protective services available
to the projects and their tenants; the demand for public
housing units in the locality, the vacancy rate, and extent of abandonment of such units; and the characteristics and needs of the public housing tenants.
‘‘(3) In selecting the anticrime and security methods,
concepts and techniques to be demonstrated under this
section, the Secretary shall consider the improvement
of physical security equipment or dwelling units in
those projects, social and environmental design improvements, tenant awareness and volunteer programs,
tenant participation and employment in providing security services, and such other measures as deemed
necessary or appropriate by the Secretary. Particular
attention shall be given to comprehensive community
anticrime and security plans submitted by public housing authorities which (i) provide for coordination between public housing management and local law enforcement officials, or (ii) coordinate resources available to the community through programs funded by the
Law Enforcement Assistance Administration, the Department of Health and Human Services, the Department of Labor, the Community Services Administration, and the Corporation for National and Community
Service, or other Federal or State agencies.
‘‘(4) In carrying out the provisions of this section, the
Secretary shall coordinate and jointly target resources
with other agencies, particularly the Law Enforcement
Assistance Administration, the Department of Health
and Human Services, the Department of Labor, the Department of Justice, the Department of the Interior,
the Department of Commerce, the Department of Education, the Corporation for National and Community
Service, the Community Services Administration, and
State and local agencies.
‘‘(5) In order to assess the impact of crime and vandalism in public housing projects, the Secretary may,
as part of the Annual Housing Survey conducted by the
Department of Housing and Urban Development or by
other means, collect data on crime and vandalism and
integrate the data collection with the victimization
surveys undertaken by the Department of Justice and
the Department of Commerce.
‘‘(6) The Secretary shall, to the maximum extent
practicable, utilize information derived from the program authorized by this section for assisting in establishing (A) guidelines to be used by public housing authorities in determining strategies to meet the security
needs of tenants of public housing projects assisted
under the United States Housing Act of 1937 [42 U.S.C.
1437 et seq.] other than under section 8 of such Act [42
U.S.C. 1437f], and (B) guidelines for improvements relating to the security of projects (and the tenants living in such projects) assisted under section 14 of such
Act [42 U.S.C. 1437l].
‘‘(d) The Secretary shall initiate and carry out a survey of crime and vandalism existing in the Nation’s

Page 484

public housing projects. The survey shall include the
nature, extent and impact of crime and vandalism and
the nature and extent of resources currently available
and employed to alleviate crime and vandalism in public housing.
‘‘(e) The Secretary shall report to the Congress not
later than eighteen months after the date of enactment
of the Housing and Community Development Act of
1980 [Oct. 8, 1980]. Such report shall include the results
of the survey on crime and vandalism in public housing; findings from the demonstration and evaluation of
various methods of reducing the level of crime; and legislative recommendations, if appropriate for (A) a comprehensive program to increase security in public housing projects and (B) increasing the coordination between anticrime programs of other State and Federal
agencies that may be used by public housing authorities. Any recommendations shall include estimated
costs of such programs.
‘‘(f) Of the additional authority approved in appropriation Acts with respect to entering into annual contributions contracts under section 5(c) of the United
States Housing Act of 1937 [42 U.S.C. 1437c(c)] for the
fiscal year beginning on October 1, 1978, the Secretary
may utilize up to $12,000,000 of such authority in the fiscal year beginning on October 1, 1978, for the establishment of the public housing security demonstration program authorized by this section. Of the authority approved in appropriation Acts for the purpose of entering into annual contributions contracts under section
5(c) of the United States Housing Act of 1937 with respect to the fiscal year beginning on October 1, 1980,
the Secretary may enter into contracts to carry out
this section, except that the aggregate amount obligated over the duration of such contracts may not exceed $10,000,000.’’

§ 1701z–7. Studies to determine extent of need for
counseling to mortgagors; report to Congress
(a) In carrying out activities under section
1701z–1 of this title, the Secretary is directed to
undertake programs of studies and demonstrations within at least three standard metropolitan statistical areas to determine the extent of
need for and cost effectiveness of providing prepurchase, default and delinquency counseling
and related services to owners and purchasers of
single-family dwellings insured or to be insured
under the unsubsidized mortgage insurance programs of the National Housing Act [12 U.S.C.
1701 et seq.].
(b) Within one year from August 3, 1976, the
Secretary shall submit an interim report to the
Congress with respect to the progress made
under such studies and demonstrations, including an estimate as to the date when a final report on the results of such demonstrations will
be made available to the Congress.
(Pub. L. 91–609, title V, § 508, as added Pub. L.
94–375, § 26, Aug. 3, 1976, 90 Stat. 1078.)
REFERENCES IN TEXT
The National Housing Act, referred to in subsec. (a),
is act June 27, 1934, ch. 847, 48 Stat. 1246, as amended,
which is classified principally to this chapter (§ 1701 et
seq.). For complete classification of this Act to the
Code, see section 1701 of this title and Tables.
CODIFICATION
Section was enacted as part of the Housing and Urban
Development Act of 1970, and not as part of the National Housing Act which comprises this chapter.

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§ 1701z–8. Energy conservation and renewable-resource demonstration
(a) National demonstration program; purpose
The Secretary shall undertake a national demonstration program designed to test the feasibility and effectiveness of various forms of financial assistance for encouraging the installation
or implementation of approved energy conservation measures and approved renewable-resource
energy measures in existing dwelling units. The
Secretary shall carry out such demonstration
program with a view toward recommending a
national program or programs designed to reduce significantly the consumption of energy in
existing dwelling units.
(b) Financial assistance to owners and tenants of
dwelling units; authorization of Secretary
The Secretary is authorized to make financial
assistance available pursuant to this section in
the form of grants, low-interest-rate loans, interest subsidies, loan guarantees, and such other
forms of assistance as the Secretary deems appropriate to carry out the purposes of this section. Assistance may be made available to both
owners of dwelling units and tenants occupying
such units.
(c) Duties of Secretary
In carrying out the demonstration program required by this section, the Secretary shall—
(1) provide assistance in a wide variety of geographic areas to reflect differences in climate, types of dwelling units, and income levels of recipients in order to provide a national
profile for use in designing a program which is
to be operational and effective nationwide;
(2) evaluate the appropriateness of various
financial incentives for different income levels
of owners and occupants of existing dwelling
units;
(3) take into account and evaluate any other
financial assistance which may be available
for the installation or implementation of energy conservation and renewable-resource energy measures;
(4) make use of such State and local instrumentalities or other public or private entities
as may be appropriate in carrying out the purposes of this section in coordination with the
provisions of part C of title III of the Energy
Policy and Conservation Act [42 U.S.C. 6321 et
seq.];
(5) consider, with respect to various forms of
assistance and procedures for their application, (A) the extent to which energy conservation measures and renewable-resource energy
measures are encouraged which would otherwise not have been undertaken, (B) the minimum amount of Federal subsidy necessary to
achieve the objectives of a national program,
(C) the costs of administering the assistance,
(D) the extent to which the assistance may be
encumbered by delays, redtape, and uncertainty as to its availability with respect to
any particular applicant, (E) the factors which
may prevent the assistance from being available in certain areas or for certain classes of
persons, and (F) the extent to which fraudulent practices can be prevented; and
(6) consult with the Administrator, the Secretary of Housing and Urban Development,

§ 1701z–8

and the heads of such other Federal agencies
as may be appropriate.
(d) Limitations on grants; modification and exceptions to limitation; eligibility
(1) The amount of any grant made pursuant to
this section shall not exceed the lesser of—
(A) with respect to an approved energy conservation measure, (i) $400, or (ii) 20 per centum of the cost of installing or otherwise implementing such measure; and
(B) with respect to an approved renewableresource energy measure, (i) $2,000, or (ii) 25
per centum of the cost of installing or otherwise implementing such measure.
The Secretary may, by rule, increase such percentages and amounts in the case of an applicant whose annual gross family income for the
preceding taxable year is less than the median
family income for the housing market area in
which the dwelling unit which is to be modified
by such measure is located, as determined by
the Secretary. The Secretary may also modify
the limitations specified in this paragraph if
necessary in order to achieve the purposes of
this section.
(2) No person shall be eligible for both financial assistance under this section and a credit
against income tax for the same energy conservation measure or renewable-resource energy
measure.
(e) Conditions upon availability of financial assistance
The Secretary may condition the availability
of financial assistance with respect to the installation and implementation of any renewable-resource energy measure on such measure’s
meeting performance standards for reliability
and efficiency and such certification procedures
as the Secretary may, in consultation with the
Administrator, the Secretary of Housing and
Urban Development, and other appropriate Federal agencies, prescribe for the purpose of protecting consumers.
(f) Implementation of program
In carrying out the demonstration program required by this section, the Secretary is authorized to delegate responsibilities to, or to contract with, other Federal agencies or with such
State or local instrumentalities or other public
or private bodies as the Secretary may deem desirable. Such demonstration program shall be
coordinated, to the extent practicable, with the
State energy conservation plans as described in,
and implemented pursuant to, part C of title III
of the Energy Policy and Conservation Act [42
U.S.C. 6321 et seq.].
(g) Interim and final reports on program
progress, findings, and legislative recommendations; criteria for evaluation of
projects
The Secretary shall submit an interim report
to the Congress not later than 6 months after
August 14, 1976, (and every 6 months thereafter
until the final report is made under this subsection) indicating the progress made in carrying out the demonstration program required by
this section and shall submit a final report to
the Congress, containing findings and legislative

§ 1701z–9

TITLE 12—BANKS AND BANKING

recommendations, not later than 2 years after
August 14, 1976. As part of each report made
under this subsection, the Secretary shall include an evaluation, based on the criteria described in subsection (h), of each demonstration
project conducted under this section.
(h) Report on evaluation criteria to be used and
results sought prior to funding of projects
Prior to undertaking any demonstration project under this section, the Secretary shall specify and report to the Congress the criteria by
which the Secretary will evaluate the effectiveness of the project and the results to be sought.
(i) Definitions
As used in this section:
(1) The term ‘‘Administrator’’ means the Administrator of the Federal Energy Administration; except that after such Administration
ceases to exist, such term means any officer of
the United States designated by the President
for purposes of this section.
(2) The term ‘‘approved’’, with respect to an
energy conservation measure or a renewableresource energy measure, means any such
measure which is included on a list of such
measures which is published by the Administrator of the Federal Energy Administration
pursuant to section 365(e)(1) of the Energy Policy and Conservation Act [42 U.S.C. 6325(e)(1)].
The Administrator may, by rule, require that
an energy audit be conducted as a condition of
obtaining assistance under this section for a
renewable-resource energy measure.
(3) The terms ‘‘energy audit’’, ‘‘energy conservation measure’’, and ‘‘renewable-resource
energy measure’’ have the meanings prescribed for such terms in section 366 of the Energy Policy and Conservation Act [42 U.S.C.
6326].
(j) Authorization of appropriations
There is authorized to be appropriated, for
purposes of this section, not to exceed
$200,000,000. Any amount appropriated pursuant
to this subsection shall remain available until
expended.

Page 486

retary of Energy by section 7154(b) of Title 42, The Public Health and Welfare.
Federal Energy Administration terminated and functions vested by law in Administrator thereof transferred to Secretary of Energy (unless otherwise specifically provided) by sections 7151(a) and 7293 of Title 42.

§ 1701z–9. Expansion of home ownership opportunities in urban areas
In carrying out activities under section 1701z–1
of this title, the Secretary is authorized to conduct demonstrations to determine the feasibility of expanding homeownership opportunities
in urban areas and encouraging the creation and
maintenance of decent, safe, and sanitary housing in such areas by utilizing techniques including, but not limited to, the conversion of multifamily housing properties to condominium or
cooperative ownership by individuals and families.
(Pub. L. 91–609, title V, § 510, as added Pub. L.
95–557, title III, § 305(b), Oct. 31, 1978, 92 Stat.
2097.)
CODIFICATION
Section was enacted as part of the Housing and Urban
Development Act of 1970, and not as part of the National Housing Act which comprises this chapter.
STUDY TO DETERMINE FEASIBILITY OF UNDERGROUND
CONSTRUCTION OF RESIDENTIAL HOUSING
Pub. L. 95–557, title III, § 305(c), Oct. 31, 1978, 92 Stat.
2097, required the Secretary to study the feasibility of
underground construction of residential housing and
necessary changes in housing codes and financing, and
report to Congress no later than one year after Oct. 31,
1978 as to the findings and recommendations of legislative enactments as a result of the study.

§ 1701z–10. Model rehabilitation guidelines in inspection and approval of rehabilitated properties; report to Congress

TRANSFER OF FUNCTIONS

(a)(1) The Secretary shall develop model rehabilitation guidelines for the voluntary adoption
by States and communities to be used in conjunction with existing building codes by State
and local officials in the inspection and approval
of rehabilitated properties.
(2) Such guidelines shall be developed in consultation with the National Institute of Building Sciences, appropriate national organizations
of agencies and officials of State and local governments, representatives of the building industry, and consumer groups, and other interested
parties.
(3) The Secretary shall publish such guidelines
for public comment not later than one year
after October 31, 1978, and promulgate them no
later than eighteen months after such date.
(4) The Secretary may furnish technical assistance to State and local governments to facilitate the use and implementation of such
guidelines.
(b) The Secretary shall report to Congress not
later than thirty-six months after October 31,
1978, regarding (1) actions taken by State and
local governments to adopt guidelines or their
equivalents, and (2) recommendations for further action.

Functions vested in Secretary of Housing and Urban
Development under this section transferred to Sec-

(Pub. L. 91–609, title V, § 511, as added Pub. L.
95–557, title IX, § 903, Oct. 31, 1978, 92 Stat. 2125.)

(Pub. L. 91–609, title V, § 509, as added Pub. L.
94–385, title IV, § 441, Aug. 14, 1976, 90 Stat. 1162;
amended Pub. L. 95–91, title VII, § 709(d), Aug. 4,
1977, 91 Stat. 608.)
REFERENCES IN TEXT
The Energy Policy and Conservation Act, referred to
in subsecs. (c)(4) and (f), is Pub. L. 94–163, Dec. 22, 1975,
89 Stat. 871, as amended. Part C of title III of such act
is classified generally to part B (§ 6321 et seq.) of subchapter III of chapter 77 of Title 42, The Public Health
and Welfare. For complete classification of this Act to
the Code, see Short Title note set out under section
6201 of Title 42 and Tables.
CODIFICATION
Section was enacted as part of the Housing and Urban
Development Act of 1970, and not as part of the National Housing Act which comprises this chapter.
AMENDMENTS
1977—Subsecs. (c)(6), (e). Pub. L. 95–91 inserted ‘‘, the
Secretary of Housing and Urban Development,’’ after
‘‘the Administrator’’.

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CODIFICATION

Section was enacted as part of the Housing and Urban
Development Act of 1970, and not as part of the National Housing Act which comprises this chapter.

§ 1701z–10a. Biennial survey of economic and
housing market conditions
The Secretary shall, not less than biennially,
survey national, regional, and local economic
and housing market conditions in a manner that
provides data comparable to the data collected
in such survey conducted in 1981.
(Pub. L. 91–609, title V, § 512, as added Pub. L.
98–181, title I [title IV, § 466(b)], Nov. 30, 1983, 97
Stat. 1236.)
CODIFICATION
Section was enacted as part of the Housing and Urban
Development Act of 1970, and not as part of the National Housing Act which comprises this chapter.

§ 1701z–11. Management and disposition of multifamily housing projects
(a) Goals
The Secretary of Housing and Urban Development shall manage or dispose of multifamily
housing projects that are owned by the Secretary or that are subject to a mortgage held by
the Secretary in a manner that—
(1) is consistent with the National Housing
Act [12 U.S.C. 1701 et seq.] and this section;
(2) will protect the financial interests of the
Federal Government; and
(3) will, in the least costly fashion among
reasonable available alternatives, address the
goals of—
(A) preserving certain housing so that it
can remain available to and affordable by
low-income persons;
(B) preserving and revitalizing residential
neighborhoods;
(C) maintaining existing housing stock in
a decent, safe, and sanitary condition;
(D) minimizing the involuntary displacement of tenants;
(E) maintaining housing for the purpose of
providing rental housing, cooperative housing, and homeownership opportunities for
low-income persons;
(F) minimizing the need to demolish
multifamily housing projects;
(G) supporting fair housing strategies; and
(H) disposing of such projects in a manner
consistent with local housing market conditions.
In determining the manner in which a project is
to be managed or disposed of, the Secretary may
balance competing goals relating to individual
projects in a manner that will further the purposes of this section.
(b) Definitions
For purposes of this section:
(1) Multifamily housing project
The term ‘‘multifamily housing project’’
means any multifamily rental housing project
which is, or prior to acquisition by the Secretary was, assisted or insured under the National Housing Act [12 U.S.C. 1701 et seq.], or

§ 1701z–11

was subject to a loan under section 1701q of
this title.
(2) Subsidized project
The term ‘‘subsidized project’’ means a
multifamily housing project that, immediately prior to the assignment of the mortgage on such project to, or the acquisition of
such mortgage by, the Secretary, was receiving any of the following types of assistance:
(A) Below market interest rate mortgage
insurance under the proviso of section
221(d)(5) of the National Housing Act [12
U.S.C. 1715l(d)(5)].
(B) Interest reduction payments made in
connection with mortgages insured under
section 236 of the National Housing Act [12
U.S.C. 1715z–1].
(C) Direct loans made under section 1701q
of this title.
(D) Assistance in the form of—
(i) rent supplement payments under section 101 of the Housing and Urban Development Act of 1965 [12 U.S.C. 1701s],
(ii) additional assistance payments
under section 236(f)(2) of the National
Housing Act [12 U.S.C. 1715z–1(f)(2)],
(iii) housing assistance payments made
under section 23 of the United States Housing Act of 1937 [42 U.S.C. 1421b] (as in effect
before January 1, 1975), or
(iv) housing assistance payments made
under section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f] (excluding
payments made for tenant-based assistance under section 8),
if (except for purposes of section 183(c) of the
Housing and Community Development Act
of 1987) such assistance payments are made
to more than 50 percent of the units in the
project.
(3) Formerly subsidized project
The term ‘‘formerly subsidized project’’
means a multifamily housing project owned by
the Secretary that was a subsidized project
immediately prior to its acquisition by the
Secretary.
(4) Unsubsidized project
The term ‘‘unsubsidized project’’ means a
multifamily housing project owned by the Secretary that is not a subsidized project or a formerly subsidized project.
(5) Affordable
A unit shall be considered affordable if—
(A) for units occupied—
(i) by very low-income families, the rent
does not exceed 30 percent of 50 percent of
the area median income, as determined by
the Secretary, with adjustments for smaller and larger families; and
(ii) by low-income families other than
very low-income families, the rent does
not exceed 30 percent of 80 percent of the
area median income, as determined by the
Secretary, with adjustments for smaller
and larger families; or
(B) the unit, or the family residing in the
unit, is receiving assistance under section 8

§ 1701z–11

TITLE 12—BANKS AND BANKING

of the United States Housing Act of 1937 [42
U.S.C. 1437f].
(6) Low-income families and very low-income
families
The terms ‘‘low-income families’’ and ‘‘very
low-income families’’ shall have the meanings
given the terms in section 3(b) of the United
States Housing Act of 1937 [42 U.S.C. 1437a(b)].
(7) Preexisting tenant
The term ‘‘preexisting tenant’’ means, with
respect to a multifamily housing project acquired pursuant to this section by a purchaser
other than the Secretary at foreclosure or
after sale by the Secretary, a family that resides in a unit in the project immediately before the acquisition of the project by the purchaser.
(8) Market area
The term ‘‘market area’’ means a market
area determined by the Secretary.
(9) Secretary
The term ‘‘Secretary’’ means the Secretary
of Housing and Urban Development.
(c) Disposition of property
(1) Disposition to purchasers
In carrying out this section, the Secretary
may dispose of a multifamily housing project
owned by the Secretary on a negotiated, competitive bid, or other basis, on such terms as
the Secretary deems appropriate considering
the low-income character of the project and
consistent with the goals in subsection (a),
only to a purchaser determined by the Secretary to be capable of—
(A) satisfying the conditions of the disposition plan developed under paragraph (2)
for the project;
(B) implementing a sound financial and
physical management program that is designed to enable the project to meet anticipated operating and repair expenses to ensure that the project will remain in decent,
safe, and sanitary condition and in compliance with any standards under applicable
State or local laws, rules, ordinances, or regulations relating to the physical condition
of the housing and any such standards established by the Secretary;
(C) responding to the needs of the tenants
and working cooperatively with tenant organizations;
(D) providing adequate organizational,
staff, and financial resources to the project;
and
(E) meeting such other requirements as
the Secretary may determine.
(2) Disposition plan
(A) In general
Prior to the sale of a multifamily housing
project that is owned by the Secretary, the
Secretary shall develop an initial disposition
plan for the project that specifies the minimum terms and conditions of the Secretary
for disposition of the project, the initial
sales price that is acceptable to the Secretary, and the assistance that the Sec-

Page 488

retary plans to make available to a prospective purchaser in accordance with this section.
(B) Market-wide plans
In developing the initial disposition plan
under this subsection for a multifamily
housing project located in a market area in
which at least 1 other multifamily housing
project owned by the Secretary is located,
the Secretary may coordinate the disposition of all such multifamily housing projects
located within the same market area to the
extent and in such manner as the Secretary
determines appropriate to carry out the
goals under subsection (a).
(C) Sales price
The initial sales price shall be reasonably
related to the intended use of the project
after sale, any rehabilitation requirements
for the project, the rents for units in the
project that can be supported by the market,
the amount of rental assistance available for
the project under section 8 of the United
States Housing Act of 1937 [42 U.S.C. 1437f],
the occupancy profile of the project (including family size and income levels for tenant
families), and any other factors that the
Secretary considers appropriate.
(D) Community and tenant input
In carrying out this section, the Secretary
shall develop procedures—
(i) to obtain appropriate and timely
input into disposition plans from officials
of the unit of general local government affected, the community in which the
project is situated, and the tenants of the
project; and
(ii) to facilitate, where feasible and appropriate, the sale of multifamily housing
projects to existing tenant organizations
with demonstrated capacity, to public or
nonprofit entities that represent or are affiliated with existing tenant organizations, or to other public or nonprofit entities.
(E) Technical assistance
To carry out the procedures developed
under subparagraph (D), the Secretary may
provide technical assistance, directly or indirectly, and may use amounts available for
technical assistance under the Emergency
Low Income Housing Preservation Act of
1987, subtitle C of the Low-Income Housing
Preservation and Resident Homeownership
Act of 1990 [12 U.S.C. 4141 et seq.], subtitle B
of title IV of the Cranston-Gonzalez National
Affordable Housing Act [42 U.S.C. 12871 et
seq.], or this section, for the provision of
technical assistance under this paragraph.
Recipients of technical assistance funding
under the provisions referred to in this subparagraph shall be permitted to provide
technical assistance to the extent of such
funding under any of such provisions or
under this subparagraph, notwithstanding
the source of the funding.
(3) Foreclosure sale
In carrying out this section, the Secretary
shall—

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TITLE 12—BANKS AND BANKING

(A) prior to foreclosing on any mortgage
held by the Secretary on any multifamily
housing project, notify both the unit of general local government in which the property
is located and the tenants of the property of
the proposed foreclosure sale; and
(B) dispose of a multifamily housing
project through a foreclosure sale only to a
purchaser that the Secretary determines is
capable of implementing a sound financial
and physical management program that is
designed to enable the project to meet anticipated operating and repair expenses to
ensure that the project will remain in decent, safe, and sanitary condition and in
compliance with any standards under applicable State or local laws, rules, ordinances,
or regulations relating to the physical condition of the housing and any such standards
established by the Secretary.
(d) Management and maintenance of properties
(1) Contracting for management services
In carrying out this section, the Secretary
may—
(A) contract for management services for a
multifamily housing project that is owned
by the Secretary (or for which the Secretary
is mortgagee in possession) with for-profit
and nonprofit entities and public agencies
(including public housing authorities) on a
negotiated, competitive bid, or other basis
at a price determined by the Secretary to be
reasonable, with a manager the Secretary
has determined is capable of—
(i) implementing a sound financial and
physical management program that is designed to enable the project to meet anticipated operating and maintenance expenses to ensure that the project will remain in decent, safe, and sanitary condition and in compliance with any standards
under applicable State or local laws, rules,
ordinances, or regulations relating to the
physical condition of the project and any
such standards established by the Secretary;
(ii) responding to the needs of the tenants and working cooperatively with tenant organizations;
(iii) providing adequate organizational,
staff, and financial resources to the
project; and
(iv) meeting such other requirements as
the Secretary may determine; and
(B) require the owner of a multifamily
housing project that is subject to a mortgage held by the Secretary to contract for
management services for the project in the
manner described in subparagraph (A).
(2) Maintenance of projects owned by Secretary
In the case of multifamily housing projects
that are owned by the Secretary (or for which
the Secretary is mortgagee in possession), the
Secretary shall—
(A) to the greatest extent possible, maintain all such occupied projects in a decent,
safe, and sanitary condition and in compliance with any standards under applicable

§ 1701z–11

State or local laws, rules, ordinances, or regulations relating to the physical condition
of the housing and any such standards established by the Secretary;
(B) to the greatest extent possible, maintain full occupancy in all such projects; and
(C) maintain all such projects for purposes
of providing rental or cooperative housing.
(3) Projects subject to a mortgage held by Secretary
In the case of any multifamily housing
project that is subject to a mortgage held by
the Secretary, the Secretary shall require the
owner of the project to carry out the requirements of paragraph (2).
(e) Required assistance
In disposing of multifamily housing property
under this section, consistent with the goal of
subsection (a)(3)(A), the Secretary shall take,
separately or in combination with other actions
under this subsection or subsection (f), one or
more of the following actions:
(1) Contract with owner for project-based assistance
In the case of multifamily housing projects
that are acquired by a purchaser other than
the Secretary at foreclosure or after sale by
the Secretary, the Secretary may enter into
contracts under section 8 of the United States
Housing Act of 1937 [42 U.S.C. 1437f] (to the extent budget authority is available) with owners of the projects, subject to the following requirements:
(A) Subsidized or formerly subsidized
projects receiving mortgage-related assistance
In the case of a subsidized or formerly subsidized project referred to in subparagraphs
(A) through (C) of subsection (b)(2)—
(i) the contract shall be sufficient to assist at least all units covered by an assistance contract under any of the authorities
referred to in subsection (b)(2)(D) before
acquisition or foreclosure, unless the Secretary acts pursuant to the provisions of
subparagraph (C);
(ii) the contract shall provide that, when
a vacancy occurs in any unit in the project
requiring project-based rental assistance
pursuant to this subparagraph that is occupied by a family who is not eligible for
assistance under such section 8 [42 U.S.C.
1437f], the owner shall lease the available
unit to a family eligible for assistance
under such section 8; and
(iii) the Secretary shall take actions to
ensure that any unit in any such project
that does not otherwise receive projectbased assistance under this subparagraph
remains available and affordable for the
remaining useful life of the project, as defined by the Secretary; to carry out this
clause, the Secretary may require purchasers to establish use or rent restrictions maintaining the affordability of such
units.
(B) Subsidized or formerly subsidized
projects receiving rental assistance
In the case of a subsidized or formerly subsidized project referred to in subsection

§ 1701z–11

TITLE 12—BANKS AND BANKING

(b)(2)(D) that is not subject to subparagraph
(A)—
(i) the contract shall be sufficient to assist at least all units in the project that
are covered, or were covered immediately
before foreclosure on or acquisition of the
project by the Secretary, by an assistance
contract under any of the provisions referred to in such subsection, unless the
Secretary acts pursuant to provisions of
subparagraph (C); and
(ii) the contract shall provide that, when
a vacancy occurs in any unit in the project
requiring project-based rental assistance
pursuant to this subparagraph that is occupied by a family who is not eligible for
assistance under such section 8 [42 U.S.C.
1437f], the owner shall lease the available
unit to a family eligible for assistance
under such section 8.
(C) Exceptions
(i) Authority
In lieu of providing project-based assistance under section 8 of the United States
Housing Act of 1937 [42 U.S.C. 1437f] in accordance with subparagraph (A)(i) or (B)(i)
for a project, the Secretary may, for certain units in unsubsidized projects located
within the same market area as the
project otherwise required to be assisted
with such project-based assistance—
(I) require use and rent restrictions
providing that such units shall be available to and affordable by very low-income families for the remaining useful
life of the project (as defined by the Secretary), or
(II) provide project-based assistance
under section 8 for such units to be occupied by only very low-income persons,
but only if the requirements under clause
(ii) are met.
(ii) Requirements
The requirements under this clause are
that—
(I) upon the disposition of the project
otherwise required to be assisted with
project-based assistance under subparagraph (A)(i) or (B)(i), the Secretary shall
make available tenant-based assistance
under section 8 [42 U.S.C. 1437f] to lowincome families residing in units otherwise required to be assisted with such
project-based assistance; and
(II) the number of units subject to use
restrictions or provided assistance under
clause (i) shall be at least equivalent to
the number of units otherwise required
to be assisted with project-based assistance under section 8 in accordance with
subparagraph (A)(i) or (B)(i).
(D) Unsubsidized projects
Notwithstanding actions taken pursuant
to subparagraph (C), in the case of unsubsidized projects, the contract shall be sufficient to provide—
(i) project-based rental assistance for all
units that are covered, or were covered im-

Page 490

mediately before foreclosure or acquisition, by an assistance contract under—
(I) the new construction and substantial rehabilitation program under section 8(b)(2) of the United States Housing
Act of 1937 [42 U.S.C. 1437f(b)(2)] (as in effect before October 1, 1983);
(II) the property disposition program
under section 8(b) of such Act;
(III) the project-based certificate program under section 8 of such Act;
(IV) the moderate rehabilitation program under section 8(e)(2) of such Act;
(V) section 23 of such Act [42 U.S.C.
1421b] (as in effect before January 1,
1975);
(VI) the rent supplement program
under section 101 of the Housing and
Urban Development Act of 1965 [12 U.S.C.
1701s]; or
(VII) section 8 of the United States
Housing Act of 1937, following conversion
from assistance under section 101 of the
Housing and Urban Development Act of
1965; and
(ii) tenant-based assistance under section 8 of the United States Housing Act of
1937 for families that are preexisting tenants of the project in units that, immediately before foreclosure or acquisition of
the project by the Secretary, were covered
by an assistance contract under the loan
management set-aside program under section 8(b) of the United States Housing Act
of 1937.
(2) Annual contribution contracts for tenantbased assistance
In the case of multifamily housing projects
that are acquired by a purchaser other than
the Secretary at foreclosure or after sale by
the Secretary, the Secretary may enter into
annual contribution contracts with public
housing agencies to provide tenant-based assistance under section 8 of the United States
Housing Act of 1937 [42 U.S.C. 1437f] on behalf
of all low-income families who are otherwise
eligible for assistance in accordance with subparagraph (A), (B), or (D) of paragraph (1) on
the date that the project is acquired by the
purchaser, subject to the following requirements:
(A)

Requirement of sufficient affordable
housing in area
The Secretary may not take action under
this paragraph unless the Secretary determines that there is available in the area an
adequate supply of habitable, affordable
housing for very low-income families and
other low-income families using tenantbased assistance.
(B) Limitation for subsidized and formerly
subsidized projects
The Secretary may not take actions under
this paragraph in connection with units in
subsidized or formerly subsidized projects
for more than 10 percent of the aggregate
number of units in such projects disposed of
by the Secretary in any fiscal year.

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(3) Other assistance
(A) In general
In accordance with the authority provided
under the National Housing Act [12 U.S.C.
1701 et seq.], the Secretary may provide
other assistance pursuant to subsection (f)
to the owners of multifamily housing
projects that are acquired by a purchaser
other than the Secretary at foreclosure, or
after sale by the Secretary, on terms that
ensure that—
(i) at least the units in the project otherwise required to receive project-based assistance pursuant to subparagraphs (A),
(B), or (D) of paragraph (1) are available to
and affordable by low-income persons; and
(ii) for the remaining useful life of the
project, as defined by the Secretary, there
shall be in force such use or rent restrictions as the Secretary may prescribe.
(B) Very low-income tenants
If, as a result of actions taken pursuant to
this paragraph, the rents charged to any
very low-income families residing in the
project who are otherwise required (pursuant
to subparagraph (A), (B), or (D) of paragraph
(1)) to receive project-based assistance under
section 8 of the United States Housing Act of
1937 [42 U.S.C. 1437f] exceed the amount payable as rent under section 3(a) of the United
States Housing Act of 1937 [42 U.S.C.
1437a(a)], the Secretary shall provide tenantbased assistance under section 8 of such Act
to such families.
(f) Discretionary assistance
In addition to the actions required under subsection (e) for a subsidized, formerly subsidized,
or unsubsidized multifamily housing project, the
Secretary may, pursuant to the disposition plan
and the goals in subsection (a), take one or more
of the following actions:
(1) Discounted sales price
In accordance with the authority provided
under the National Housing Act [12 U.S.C. 1701
et seq.], the Secretary may reduce the selling
price of the project. Such reduced sales price
shall be reasonably related to the intended use
of the property after sale, any rehabilitation
requirements for the project, the rents for
units in the project that can be supported by
the market, the amount of rental assistance
available for the project under section 8 of the
United States Housing Act of 1937 [42 U.S.C.
1437f], the occupancy profile of the project (including family size and income levels for tenant families), and any other factors that the
Secretary considers appropriate.
(2) Use and rent restrictions
The Secretary may require certain units in a
project to be subject to use or rent restrictions
providing that such units will be available to
and affordable by low- and very low-income
persons for the remaining useful life of the
property, as defined by the Secretary.
(3) Short-term loans
The Secretary may provide short-term loans
to facilitate the sale of a multifamily housing
project if—

§ 1701z–11

(A) authority for such loans is provided in
advance in an appropriation Act;
(B) such loan has a term of not more than
5 years;
(C) the Secretary determines, based upon
documentation provided to the Secretary,
that the borrower has obtained a commitment of permanent financing to replace the
short-term loan from a lender who meets
standards established by the Secretary; and
(D) the terms of such loan are consistent
with prevailing practices in the marketplace
or the provision of such loan results in no
cost to the Government, as defined in section 661a of title 2.
(4) Up-front grants
If the Secretary determines that action
under this paragraph is more cost-effective
than establishing rents pursuant to subsection
(h)(2), the Secretary may utilize the budget
authority provided for contracts issued under
this section for project-based assistance under
section 8 of the United States Housing Act of
1937 [42 U.S.C. 1437f] to (in addition to providing project-based section 8 rental assistance)
provide up-front grants for the necessary cost
of rehabilitation and other related development costs. This paragraph shall be effective
during fiscal years 2006 through 2010 only to
the extent that such budget authority is made
available for use under this paragraph in advance in appropriation Acts.
(5) Tenant-based assistance
The Secretary may make available tenantbased assistance under section 8 of the United
States Housing Act of 1937 to families residing
in a multifamily housing project that do not
otherwise qualify for project-based assistance.
(6) Alternative uses
(A) In general
Notwithstanding any other provision of
law, after providing notice to and an opportunity for comment by preexisting tenants,
the Secretary may allow not more than—
(i) 10 percent of the total number of
units in multifamily housing projects that
are disposed of by the Secretary during
any fiscal year to be made available for
uses other than rental or cooperative uses,
including low-income homeownership opportunities, or in any particular project,
community space, office space for tenant
or housing-related service providers or security programs, or small business uses, if
such uses benefit the tenants of the
project; and
(ii) 5 percent of the total number of units
in multifamily housing projects that are
disposed of by the Secretary during any
fiscal year to be used in any manner, if the
Secretary and the unit of general local
government or area-wide governing body
determine that such use will further fair
housing, community development, or
neighborhood revitalization goals.
(B) Displacement protection
The Secretary may take actions under
subparagraph (A) only if—

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(i) tenant-based rental assistance under
section 8 of the United States Housing Act
of 1937 [42 U.S.C. 1437f] is made available to
each eligible family residing in the project
that is displaced as a result of such actions; and
(ii) the Secretary determines that sufficient habitable, affordable rental housing
is available in the market area in which
the project is located to ensure use of such
assistance.
(7) Transfer for use under other programs of
Secretary
(A) In general
Notwithstanding the provisions of subsection (e), the Secretary may, pursuant to
an agreement under subparagraph (B), transfer a multifamily housing project—
(i) to a public housing agency for use of
the project as public housing; or
(ii) to an entity eligible to own or operate housing assisted under section 1701q of
this title or under section 811 of the Cranston-Gonzalez National Affordable Housing
Act [42 U.S.C. 8013] for use as supportive
housing under either of such sections.
(B) Requirements for agreement
An agreement providing for the transfer of
a project described in subparagraph (A)
shall—
(i) contain such terms, conditions, and
limitations as the Secretary determines
appropriate, including requirements to ensure use of the project as public housing,
supportive housing under section 1701q of
this title, or supportive housing under section 811 of the Cranston-Gonzalez National
Affordable Housing Act [42 U.S.C. 8013], as
applicable; and
(ii) ensure that no tenant of the project
will be displaced as a result of actions
taken under this paragraph.
(8) Rebuilding
Notwithstanding any provision of section 8
of the United States Housing Act of 1937 [42
U.S.C. 1437f], the Secretary may provide
project-based assistance in accordance with
subsection (e) of this section to support the rebuilding of a multifamily housing project rebuilt or to be rebuilt (in whole or in part and
on-site, off-site, or in a combination of both)
in connection with disposition under this section, if the Secretary determines that—
(A) the project is not being maintained in
a decent, safe, and sanitary condition;
(B) rebuilding the project would be less expensive than substantial rehabilitation;
(C) the unit of general local government in
which the project is located approves the rebuilding and makes a financial contribution
or other commitment to the project; and
(D) the rebuilding is a part of a local
neighborhood revitalization plan approved
by the unit of general local government.
The provisions of subsection (j)(2) shall apply
to any tenants of the project who are displaced.
(9) Emergency assistance funds
The Secretary may make arrangements with
State agencies and units of general local gov-

Page 492

ernment of States receiving emergency assistance under part A of title IV of the Social Security Act [42 U.S.C. 601 et seq.] for the provision of assistance under such Act [42 U.S.C. 301
et seq.] on behalf of eligible families who
would reside in any multifamily housing
projects.
(g) Protection for unassisted very low-income
tenants
For each multifamily housing project disposed
of under this section, the Secretary shall require
that, for any very low-income family who is a
preexisting tenant of the project who (upon disposition) would be required to pay rent in an
amount in excess of 30 percent of the adjusted
income (as such term is defined in section 3(b) of
the United States Housing Act of 1937 [42 U.S.C.
1437a(b)]) of the family—
(1) for a period of 2 years beginning upon the
date of the acquisition of the project by the
purchaser under such disposition, the rent for
the unit occupied by the family may not be increased above the rent charged immediately
before acquisition;
(2) such family shall be considered displaced
for purposes of any system of preferences established pursuant to section 6(c)(4)(A),
8(d)(1)(A), or 8(o)(6)(A) of the United States
Housing Act of 1937 [42 U.S.C. 1437d(c)(4)(A),
1437f(d)(1)(A), and 1437f(o)(6)(A)]; and
(3) notice shall be provided to such family,
not later than the date of the acquisition of
the project by the purchaser—
(A) of the requirements under paragraphs
(1) and (2); and
(B) that, after the expiration of the period
under paragraph (1), the rent for the unit occupied by the family may be increased.
(h) Contract requirements
Contracts for project-based rental assistance
under section 8 of the United States Housing Act
of 1937 [42 U.S.C. 1437f] provided pursuant to this
section shall be subject to the following requirements:
(1) Contract term
The contract shall have a term of 15 years,
except that the term may be less than 15
years—
(A) to the extent that the Secretary finds
that, based on the rental charges and financing for the multifamily housing project to
which the contract relates, the financial viability of the project can be maintained under
a contract having such a term; except that
the Secretary shall require that the amount
of rent payable by tenants of the project for
units assisted under such contract shall not
exceed the amount payable for rent under
section 3(a) of the United States Housing
Act of 1937 [42 U.S.C. 1437a(a)] for a period of
at least 15 years; or
(B) if such assistance is provided—
(i) under a contract authorized under
section 6 of the HUD Demonstration Act of
1993; and
(ii) pursuant to a disposition plan under
this section for a project that is determined by the Secretary to be otherwise in
compliance with this section.

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(2) Contract rent
The Secretary shall establish the contract
rents under such contracts at levels that, together with other resources available to the
purchasers, provide sufficient amounts for the
necessary costs of rehabilitating and operating the multifamily housing project and do
not exceed the percentage of the existing
housing fair market rentals for the market
area in which the project assisted under the
contract is located as determined by the Secretary under section 8(c) of the United States
Housing Act of 1937 [42 U.S.C. 1437f(c)].
(i) Right of first refusal for local and State government agencies
(1) Notification
Not later than 30 days after the Secretary
acquires title to a multifamily housing
project, the Secretary shall notify the appropriate unit of general local government (including public housing agencies) and State
agency or agencies designated by the chief executive officer of the State in which the
project is located of such acquisition of title
and that, for a period beginning upon such notification that does not exceed 90 days, such
unit of general local government and agency
or agencies shall have the exclusive right
under this subsection to make bona fide offers
to purchase the project.
(2) Right of first refusal
During the 90-day period, the Secretary may
not sell or offer to sell the multifamily housing project other than to a party notified
under paragraph (1), unless the unit of general
local government and the designated State
agency or agencies notify the Secretary that
they will not make an offer to purchase the
project. The Secretary shall accept a bona fide
offer to purchase the project made during such
period if it complies with the terms and conditions of the disposition plan for the project or
is otherwise acceptable to the Secretary.
(3) Procedure
The Secretary shall establish any procedures
necessary to carry out this subsection.
(j) Displacement of tenants and relocation assistance
(1) In general
Whenever tenants will be displaced as a result of the demolition of, repairs to, or conversion in the use of, a multifamily housing
project that is owned by the Secretary (or for
which the Secretary is mortgagee in possession), the Secretary shall identify tenants who
will be displaced, and shall notify all such tenants of their pending displacement and of any
relocation assistance that may be available. In
the case of a multifamily housing project that
is subject to a mortgage held by the Secretary, the Secretary shall require the owner
of the project to carry out the requirements of
this paragraph, if the Secretary has authorized
the demolition of, repairs to, or conversion in
the use of such multifamily housing project.
(2) Rights of displaced tenants
The Secretary shall ensure for any such tenant (who continues to meet applicable qualification standards) the right—

§ 1701z–11

(A) to return, whenever possible, to a repaired or rebuilt unit;
(B) to occupy a unit in another multifamily housing project owned by the Secretary;
(C) to obtain housing assistance under the
United States Housing Act of 1937 [42 U.S.C.
1437 et seq.]; or
(D) to receive any other available similar
relocation assistance as the Secretary determines to be appropriate.
(k) Mortgage and project sales
(1) In general
The Secretary may not approve the sale of
any loan or mortgage held by the Secretary
(including any loan or mortgage owned by the
Government National Mortgage Association)
on any subsidized project or formerly subsidized project, unless such sale is made as
part of a transaction that will ensure that
such project will continue to operate at least
until the maturity date of such loan or mortgage, in a manner that will provide rental
housing on terms at least as advantageous to
existing and future tenants as the terms required by the program under which the loan or
mortgage was made or insured prior to the assignment of the loan or mortgage on such
project to the Secretary.
(2) Sale of certain projects
The Secretary may not approve the sale of
any subsidized project—
(A) that is subject to a mortgage held by
the Secretary, or
(B) if the sale transaction involves the provision of any additional subsidy funds by the
Secretary or a recasting of the mortgage,
unless such sale is made as part of a transaction that will ensure that the project will
continue to operate, at least until the maturity date of the loan or mortgage, in a manner
that will provide rental housing on terms at
least as advantageous to existing and future
tenants as the terms required by the program
under which the loan or mortgage was made or
insured prior to the proposed sale of the
project.
(3) Mortgage sales to State and local governments
Notwithstanding any provision of law that
requires competitive sales or bidding, the Secretary may carry out negotiated sales of mortgages held by the Secretary, without the competitive selection of purchasers or intermediaries, to units of general local government or State agencies, or groups of investors
that include at least one such unit of general
local government or State agency, if the negotiations are conducted with such agencies, except that—
(A) the terms of any such sale shall include the agreement of the purchasing agency or unit of local government or State
agency to act as mortgagee or owner of a
beneficial interest in such mortgages, in a
manner consistent with maintaining the
projects that are subject to such mortgages
for occupancy by the general tenant group
intended to be served by the applicable

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TITLE 12—BANKS AND BANKING

mortgage insurance program, including, to
the extent the Secretary determines appropriate, authorizing such unit of local government or State agency to enforce the provisions of any regulatory agreement or other
program requirements applicable to the related projects; and
(B) the sales prices for such mortgages
shall be, in the determination of the Secretary, the best prices that may be obtained
for such mortgages from a unit of general
local government or State agency, consistent with the expectation and intention that
the projects financed will be retained for use
under the applicable mortgage insurance
program for the life of the initial mortgage
insurance contract.
(4) Sale of mortgages covering unsubsidized
projects
Notwithstanding any other provision of law,
the Secretary may sell mortgages held on
projects that are not subsidized or formerly
subsidized projects on such terms and conditions as the Secretary may prescribe.
(5) Mortgage sale demonstration
The Secretary may carry out a demonstration to test the feasibility of restructuring
and disposing of troubled multifamily mortgages held by the Secretary through the establishment of partnerships with public, private,
and nonprofit entities.
(6) Project sale demonstration
The Secretary may carry out a demonstration to test the feasibility of disposing of troubled multifamily housing projects that are
owned by the Secretary through the establishment of partnerships with public, private, and
nonprofit entities.
(l) Report to Congress
Not later than June 1 of each year, the Secretary shall submit to the Congress a report describing the status of multifamily housing
projects owned by or subject to mortgages held
by the Secretary, on an aggregate basis, which
highlights the differences, if any, between the
subsidized and the unsubsidized inventory. The
report shall include—
(1) the average and median size of the
projects;
(2) the geographic locations of the projects,
by State and region;
(3) the years during which projects were assigned to the Department, and the average and
median length of time that projects remain in
the HUD-held inventory;
(4) the status of HUD-held mortgages;
(5) the physical condition of the HUD-held
and HUD-owned inventory;
(6) the occupancy profile of the projects, including the income, family size, race, and ethnic origin of current tenants, and the rents
paid by such tenants;
(7) the proportion of units that are vacant;
(8) the number of projects for which the Secretary is mortgagee in possession;
(9) the number of projects sold in foreclosure
sales;
(10) the number of HUD-owned projects sold;

Page 494

(11) a description of actions undertaken pursuant to this section, including a description
of the effectiveness of such actions and any
impediments to the disposition or management of multifamily housing projects;
(12) a description of the extent to which the
provisions of this section and actions taken
under this section have displaced tenants of
multifamily housing projects;
(13) a description of any of the functions performed in connection with this section that
are contracted out to public or private entities
or to States; and
(14) a description of the activities carried
out under subsection (i) during the preceding
year.
(Pub. L. 95–557, title II, § 203, Oct. 31, 1978, 92
Stat. 2088; Pub. L. 96–153, title II, § 208, Dec. 21,
1979, 93 Stat. 1109; Pub. L. 96–399, title II, § 213,
Oct. 8, 1980, 94 Stat. 1636; Pub. L. 100–242, title I,
§ 181, Feb. 5, 1988, 101 Stat. 1868; Pub. L. 100–628,
title X, § 1010, Nov. 7, 1988, 102 Stat. 3266; Pub. L.
101–235, title II, § 204(a), Dec. 15, 1989, 103 Stat.
2039; Pub. L. 101–625, title V, § 579, Nov. 28, 1990,
104 Stat. 4245; Pub. L. 103–120, § 6(c)(2), Oct. 27,
1993, 107 Stat. 1149; Pub. L. 103–233, title I,
§ 101(b), Apr. 11, 1994, 108 Stat. 343; Pub. L.
105–276, title V, § 514(b)(2)(C), Oct. 21, 1998, 112
Stat. 2548; Pub. L. 109–171, title II, § 2003(b), Feb.
8, 2006, 120 Stat. 9.)
REFERENCES IN TEXT
The National Housing Act, referred to in subsecs.
(a)(1), (b)(1), (e)(3)(A), and (f)(1), is act June 27, 1934, ch.
847, 48 Stat. 1246, as amended, which is classified principally to this chapter (§ 1701 et seq.). For complete
classification of this Act to the Code, see section 1701
of this title and Tables.
Section 183(c) of the Housing and Community Development Act of 1987, referred to in subsec. (b)(2)(D), is
section 183(c) of Pub. L. 100–242, which was set out as a
note under section 1437f of Title 42, The Public Health
and Welfare, prior to repeal by Pub. L. 105–276, title V,
§ 582(a)(2), Oct. 21, 1998, 112 Stat. 2643.
Section 101 of the Housing and Urban Development
Act of 1965, referred to in subsecs. (b)(2)(D)(i) and
(e)(1)(D)(i)(VI), (VII), is section 101 of Pub. L. 89–117,
title I, Aug. 10, 1965, 79 Stat. 451, as amended, which enacted section 1701s of this title and amended sections
1451 and 1465 of Title 42.
Section 23 of the United States Housing Act of 1937,
referred to in subsecs. (b)(2)(D)(iii) and (e)(1)(D)(i)(V),
was classified to section 1421b of Title 42 and was omitted from the Code following the general revision of the
United States Housing Act of 1937 by Pub. L. 93–383,
title II, § 201(a), Aug. 22, 1974, 88 Stat. 653.
The Emergency Low Income Housing Preservation
Act of 1987, referred to in subsec. (c)(2)(E), is title II of
Pub. L. 100–242, Feb. 5, 1988, 101 Stat. 1877, which, as
amended by Pub. L. 101–625, is known as the Low-Income Housing Preservation and Resident Homeownership Act of 1990, and is classified principally to subchapter I (§ 4101 et seq.) of chapter 42 of this title. Subtitle C of the Low-Income Housing Preservation and
Resident Homeownership Act of 1990, probably means
subtitle C of title II of Pub. L. 100–242, as added by Pub.
L. 102–550, which is classified generally to subchapter II
(§ 4141 et seq.) of chapter 42 of this title. Another subtitle C of title II of Pub. L. 100–242 amended sections
1472, 1485, and 1487 of Title 42. For complete classification of this Act to the Code, see Short Title note set
out under section 4101 of this title and Tables.
The Cranston-Gonzalez National Affordable Housing
Act, referred to in subsec. (c)(2)(E), is Pub. L. 101–625,
Nov. 28, 1990, 104 Stat. 4079. Subtitle B of title IV of the

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Act is classified principally to part A (§ 12871 et seq.) of
subchapter IV of chapter 130 of Title 42. For complete
classification of this Act to the Code, see Short Title
note set out under section 12701 of Title 42 and Tables.
The Social Security Act, referred to in subsec. (f)(9),
is act Aug. 14, 1935, ch. 531, 49 Stat. 620, as amended,
which is classified generally to chapter 7 (§ 301 et seq.)
of Title 42. Part A of title IV of the Act is classified
generally to part A (§ 601 et seq.) of subchapter IV of
chapter 7 of Title 42. For complete classification of this
Act to the Code, see section 1305 of Title 42 and Tables.
Section 6 of the HUD Demonstration Act of 1993, referred to in subsec. (h)(1)(B)(i), is section 6 of Pub. L.
103–120, which is set out as a note under section 1437f of
Title 42.
The United States Housing Act of 1937, as amended,
referred to in subsec. (j)(2)(C), is act Sept. 1, 1937, ch.
896, as revised generally by Pub. L. 93–383, title II,
§ 201(a), Aug. 22, 1974, 88 Stat. 653, which is classified
generally to chapter 8 (§ 1437 et seq.) of Title 42. For
complete classification of this Act to the Code, see
Short Title note set out under section 1437 of Title 42
and Tables.
CODIFICATION
Section was enacted as part of the Housing and Community Development Amendments of 1978, and not as
part of the National Housing Act which comprises this
chapter.
AMENDMENTS
2006—Subsec. (f)(4). Pub. L. 109–171 inserted at end
‘‘This paragraph shall be effective during fiscal years
2006 through 2010 only to the extent that such budget
authority is made available for use under this paragraph in advance in appropriation Acts.’’
1998—Subsec. (g)(2). Pub. L. 105–276 substituted ‘‘any
system of preferences established pursuant to section
6(c)(4)(A), 8(d)(1)(A), or 8(o)(6)(A)’’ for ‘‘the preferences
for assistance under sections 6(c)(4)(A)(i), 8(d)(1)(A)(i),
and 8(o)(3)(B)’’.
1994—Pub. L. 103–233 amended section generally, substituting present provisions for former provisions
which related, in subsec. (a) to goals, in subsec. (b) to
management or disposal of property by negotiated
competitive bids, in subsec. (c) to maintenance of housing projects, in subsec. (d) to financial assistance to
owner, in subsec. (e) to right of first refusal, in subsec.
(f) to displacement of tenants and relocation assistance, in subsec. (g) to assignment or partial payment of
mortgages, in subsec. (h) to limitations on certain
project, loan, and mortgage sales, in subsec. (i) to definition of multifamily housing project, in subsec. (j) to
rules and regulations, in subsec. (k) to annual report
describing status of projects, and in subsec. (l) to
project-based assistance.
1993—Subsec. (l). Pub. L. 103–120 added subsec. (l).
1990—Subsec. (a)(1)(B). Pub. L. 101–625, § 579(a), struck
out ‘‘or vacant’’ after ‘‘moderate-income persons’’.
Subsec. (d)(1). Pub. L. 101–625, § 579(b)(1), struck out
‘‘or are vacant (which units shall be made available for
such families as soon as possible)’’ before semicolon at
end of cl. (B).
Subsec. (d)(2), (3). Pub. L. 101–625, § 579(b)(2), (3), added
par. (2) and redesignated former par. (2) as (3).
1989—Subsec. (k). Pub. L. 101–235 amended subsec. (k)
generally. Prior to amendment, subsec. (k) read as follows: ‘‘The Secretary shall annually submit to the Congress a report describing the activities carried out
under subsection (e) of this section during the preceding year.’’
1988—Subsec. (a). Pub. L. 100–628, § 1010(a), substituted
‘‘occupied by low- and moderate-income persons on the
date of assignment or foreclosure (whichever is greater)’’ for ‘‘, on the date of assignment, occupied by lowand moderate-income persons’’ in par. (1)(C).
Pub. L. 100–242, § 181(a), substituted introductory provisions and par. (1) for former introductory provisions
and par. (1) which read as follows: ‘‘It is the policy of

§ 1701z–11

the United States that the Secretary of Housing and
Urban Development (hereinafter referred to as the ‘Secretary’) shall manage and dispose of multifamily housing projects which are owned by the Secretary in a
manner consistent with the National Housing Act and
this section. The purpose of the property management
and disposition program of the Department of Housing
and Urban Development shall be to manage and dispose
of projects in a manner which will protect the financial
interests of the Federal Government and be less costly
to the Federal Government than other reasonable alternatives by which the Secretary can further the goals
of—
‘‘(1) preserving the housing units so that at least
those units which are occupied by low- and moderateincome persons or which are vacant, at the time of
acquisition, are available to and affordable by such
persons;’’.
Subsec. (b)(2). Pub. L. 100–242, § 181(b), designated existing provisions as subpar. (A) and redesignated former
cls. (A) to (D) as cls. (i) to (iv), substituted ‘‘subject to
subsection (a) of this section that is owned by the Secretary (or for which the Secretary is mortgagee in possession)’’ for ‘‘, owned by the Secretary’’, substituted
‘‘may determine; and’’ for ‘‘may determine.’’, and
added subpar. (B).
Subsec. (c). Pub. L. 100–242, § 181(c), amended subsec.
(c) generally. Prior to amendment, subsec. (c) read as
follows: ‘‘Except where the Secretary has determined
on a case-by-case basis that it would be clearly inappropriate, given the manner by which an individual
project is to be managed or disposed of pursuant to subsection (a) of this section, the Secretary shall seek to—
‘‘(1) maintain all occupied multifamily housing
projects owned by the Secretary in a decent, safe, and
sanitary condition;
‘‘(2) to the greatest extent possible, maintain full
occupancy in all multifamily housing projects owned
by the Secretary; and
‘‘(3) maintain the project for purposes of providing
rental or cooperative housing for the longest feasible
period.’’
Subsec. (d). Pub. L. 100–628, § 1010(b), amended third
sentence of par. (1) generally. Prior to amendment,
third sentence read as follows: ‘‘Such contracts shall be
sufficient to assist all units in subsidized or formerly
subsidized projects, and all units in other projects that
are occupied by lower income families eligible for assistance under such section 8 at the time of foreclosure
or sale, as the case may be, and all units that are vacant at such time (which units shall be made available
for such families as soon as possible).’’
Pub. L. 100–242, § 181(d), added subsec. (d). Former subsec. (d) redesignated (f).
Subsec. (e). Pub. L. 100–628, § 1010(c), amended subsec.
(e) generally. Prior to amendment, subsec. (e) read as
follows: ‘‘Upon receipt of a bona fide offer to purchase
a project subject to subsection (a) of this section, the
Secretary shall notify the local government and the
State housing finance agency (or other agency or agencies designated by the Governor) of the proposed terms
and conditions of the offer, including the assistance
that the Secretary plans to make available to the prospective purchaser. The local government and the designated State agency shall have 90 days to match the
offer and purchase the project. In administering the
right of first refusal provided in this subsection, the
Secretary shall offer assistance to the local government or designated State agency on terms and conditions at least as favorable as made available to the prospective purchaser. Notwithstanding any other provision of law to the contrary, a local government (including a public housing agency) or designated State agency may purchase a subsidized project or formerly subsidized project in accordance with this subsection.’’
Pub. L. 100–242, § 181(d)(1), (e), added subsec. (e).
Former subsec. (e) redesignated (g).
Subsec. (f). Pub. L. 100–242, § 181(d)(1), (e)(1), (g)(1), redesignated former subsec. (d) as (f). Former subsec. (f)
redesignated (i).

§ 1701z–11

TITLE 12—BANKS AND BANKING

Subsec. (f)(1). Pub. L. 100–242, § 181(f), substituted
‘‘subject to subsection (a) of this section that is owned
by the Secretary (or for which the Secretary is mortgagee in possession)’’ for ‘‘owned by the Secretary’’, and
inserted at end ‘‘In the case of a multifamily housing
project subject to subsection (a) of this section that is
not owned by the Secretary (and for which the Secretary is not mortgagee in possession), the Secretary
shall require the owner of the project to carry out the
requirements of this paragraph.’’
Subsec. (g). Pub. L. 100–242, § 181(d)(1), (e)(1), redesignated former subsec. (e) as (g). Former subsec. (g) redesignated (j).
Subsec. (h). Pub. L. 100–242, § 181(d)(1), (e)(1), (g),
added subsec. (h).
Subsec. (i). Pub. L. 100–628, § 1010(d), (e), substituted
‘‘(excluding payments made for certificates under subsection (b)(1) or vouchers under subsection (o) of this
section), if (except for purposes of paragraphs (1) and (2)
of subsection (h) of this section), and section 183(c) of
the Housing and Community Development Act of 1987)
such housing assistance payments are made to more
than 50 percent of the units in the project’’ for ‘‘(other
than subsection (b)(1) of such section), without regard
to whether such payments are made to all or a portion
of the units in the project’’ in par. (2) (E) and added
par. (4).
Pub. L. 100–242, § 181(e)(1), (g)(1), (h), redesignated
former subsec. (f) as (i), designated existing provisions
as par. (1), and added pars. (2) and (3).
Subsec. (j). Pub. L. 100–242, § 181(g)(1), redesignated
former subsec. (g) as (j).
Subsec. (k). Pub. L. 100–628, § 1010(f), added subsec. (k).
1980—Subsec. (a). Pub. L. 96–399, § 213(a), in par. (1) inserted provisions respecting occupation of units by lowand moderate-income persons or units vacant at the
time of acquisition, and added par. (6).
Subsec. (b)(1). Pub. L. 96–399, § 213(b), inserted provisions relating to the number of project units occupied
by low- and moderate-income persons.
Subsec. (c)(3). Pub. L. 96–399, § 213(c), added par. (3).
Subsec. (d)(2)(B), (C). Pub. L. 96–399, § 213(d), inserted
exception for tenants of above-moderate income.
Subsec. (f). Pub. L. 96–399, § 213(e), substituted provisions respecting applicability to projects assisted or insured under this chapter, or subject to loans under section 1701q of this title or section 1452b of title 42, or
projects acquired by the Secretary pursuant to any
other provision of law, for provisions respecting applicability to assistance under section 1715z-1 of this title,
the proviso of section 1715l(d)(5) of this title, or section
101 of the Housing and Urban Development Act of 1965,
and projects insured under this chapter.
1979—Subsec. (d)(2). Pub. L. 96–153 substituted ‘‘assure
for any such tenant (who continues to meet applicable
qualification standards) the right’’ for ‘‘seek to assure
the maximum opportunity for any such tenant’’.
EFFECTIVE DATE OF 2006 AMENDMENT
Pub. L. 109–171, title II, § 2003(c), Feb. 8, 2006, 120 Stat.
9, provided that: ‘‘The amendments made by this section [amending this section and section 1715z–11a of
this title] shall not apply to any transaction that formally commences within one year prior to the enactment of this section [Feb. 8, 2006].’’
REGULATIONS
Pub. L. 103–233, title I, § 101(f), Apr. 11, 1994, 108 Stat.
358, provided that: ‘‘The Secretary shall issue interim
regulations necessary to implement the amendments
made by subsections (b) through (d) [amending this section and sections 1437d and 1437f of Title 42, The Public
Health and Welfare] not later than 90 days after the
date of the enactment of this Act [Apr. 11, 1994]. Such
interim regulations shall take effect upon issuance and
invite public comment on the interim regulations. The
Secretary shall issue final regulations to implement
such amendments after opportunity for such public
comment, but not later than 12 months after the date
of issuance of such interim regulations.’’

Page 496

APPROPRIATED FUNDS REQUIREMENT FOR BELOWMARKET SALES
Pub. L. 109–171, title II, §§ 2001, 2002, Feb. 8, 2006, 120
Stat. 7, 8, provided that:
‘‘SEC. 2001. DEFINITIONS.
‘‘For purposes of this subtitle [subtitle A (§§ 2001–2003)
of title II of Pub. L. 109–171, amending this section and
section 1715z–11a of this title and enacting provisions
set out as notes under this section], the following definitions shall apply:
‘‘(1) The term ‘affordability requirements’ means
any requirements or restrictions imposed by the Secretary, at the time of sale, on a multifamily real
property or a multifamily loan, such as use restrictions, rent restrictions, and rehabilitation requirements.
‘‘(2) The term ‘discount sale’ means the sale of a
multifamily real property in a transaction, such as a
negotiated sale, in which the sale price is lower than
the property market value and is set outside of a
competitive bidding process that has no affordability
requirements.
‘‘(3) The term ‘discount loan sale’ means the sale of
a multifamily loan in a transaction, such as a negotiated sale, in which the sale price is lower than the
loan market value and is set outside of a competitive
bidding process that has no affordability requirements.
‘‘(4) The term ‘loan market value’ means the value
of a multifamily loan, without taking into account
any affordability requirements.
‘‘(5) The term ‘multifamily real property’ means
any rental or cooperative housing project of 5 or
more units owned by the Secretary that prior to acquisition by the Secretary was security for a loan or
loans insured under title II of the National Housing
Act [12 U.S.C. 1707 et seq.].
‘‘(6) The term ‘multifamily loan’ means a loan held
by the Secretary and secured by a multifamily rental
or cooperative housing project of 5 or more units that
was formerly insured under title II of the National
Housing Act.
‘‘(7) The term ‘property market value’ means the
value of a multifamily real property for its current
use, without taking into account any affordability requirements.
‘‘(8) The term ‘Secretary’ means the Secretary of
Housing and Urban Development.
‘‘SEC. 2002. APPROPRIATED FUNDS REQUIREMENT
FOR BELOW-MARKET SALES.
‘‘(a) DISCOUNT SALES.—Notwithstanding any other
provision of law, except for affordability requirements
for the elderly and disabled required by statute, disposition by the Secretary of a multifamily real property during fiscal years 2006 through 2010 through a discount sale under sections 207(l) or 246 of the National
Housing Act (12 U.S.C. 1713(l), 1715z–11), section 203 of
the Housing and Community Development Amendments of 1978 (12 U.S.C. 1701z–11), or section 204 of the
Departments of Veterans Affairs and Housing and
Urban Development, and Independent Agencies Appropriations Act, 1997 (12 U.S.C. 1715z–11a), shall be subject
to the availability of appropriations to the extent that
the property market value exceeds the sale proceeds. If
the multifamily real property is sold, during such fiscal
years, for an amount equal to or greater than the property market value then the transaction is not subject
to the availability of appropriations.
‘‘(b) DISCOUNT LOAN SALES.—Notwithstanding any
other provision of law and in accordance with the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.), a
discount loan sale during fiscal years 2006 through 2010
under section 207(k) of the National Housing Act (12
U.S.C. 1713(k)), section 203(k) of the Housing and Community Development Amendments of 1978 (12 U.S.C.
1701z–11(k)), or section 204(a) of the Departments of
Veterans Affairs and Housing and Urban Development,
and Independent Agencies Appropriations Act, 1997 (12

Page 497

TITLE 12—BANKS AND BANKING

U.S.C. 1715z–11a(a)), shall be subject to the availability
of appropriations to the extent that the loan market
value exceeds the sale proceeds. If the multifamily loan
is sold, during such fiscal years, for an amount equal to
or greater than the loan market value then the transaction is not subject to the availability of appropriations.
‘‘(c) APPLICABILITY.—This section shall not apply to
any transaction that formally commences within one
year prior to the enactment of this section [Feb. 8,
2006].’’
MULTIFAMILY HOUSING DISPOSITION
Pub. L. 103–233, title I, § 101(a), Apr. 11, 1994, 108 Stat.
343, provided that: ‘‘The Congress finds that—
‘‘(1) the portfolio of multifamily housing project
mortgages insured by the FHA is severely troubled
and at risk of default, requiring the Secretary to increase loss reserves from $5,500,000,000 in 1991 to
$11,900,000,000 in 1992 to cover estimated future losses;
‘‘(2) the inventory of multifamily housing projects
owned by the Secretary has more than quadrupled
since 1989, and, by the end of 1994, may exceed 69,000
units;
‘‘(3) the cost to the Federal Government of owning
and maintaining multifamily housing projects escalated to $288,000,000 in fiscal year 1993;
‘‘(4) the inventory of multifamily housing projects
subject to mortgages held by the Secretary has increased dramatically, to more than 2,400 mortgages,
and approximately half of these mortgages, with approximately 219,000 units, are delinquent;
‘‘(5) the inventory of insured and formerly insured
multifamily housing projects is deteriorating, potentially endangering tenants and neighborhoods; and
‘‘(6) the current statutory framework governing the
disposition of multifamily housing projects effectively impedes the Government’s ability to dispose of
properties, protect tenants, and ensure that projects
are maintained over time.’’
Pub. L. 100–242, title I, § 184, Feb. 5, 1988, 101 Stat. 1872,
as amended by Pub. L. 101–625, title V, § 580, Nov. 28,
1990, 104 Stat. 4245, provided for establishment of demonstration program for multifamily housing disposition partnerships, together with requirements relating
to participation by State housing finance agencies in
sale of such housing and cooperation between Secretary
of Housing and Urban Development and such agencies,
as well as termination of such program at end of Sept.
30, 1991, with certain exceptions, with report to Congress required to be submitted by Secretary not later
than 6 months after Sept. 30, 1991, prior to repeal by
Pub. L. 103–233, title I, § 102, Apr. 11, 1994, 108 Stat. 358.

§ 1701z–12. Housing access
The Secretary shall require any purchaser of a
multifamily housing project owned by the Secretary which is sold on or after October 1, 1978,
to agree not to refuse unreasonably to lease a
vacant dwelling unit in the project which rents
for an amount not greater than the fair market
rent for a comparable unit in the area as determined by the Secretary under section 1437f of
title 42 to a holder of a certificate of eligibility
under that section solely because of such prospective tenant’s status as a certificate holder.
(Pub. L. 95–557, title II, § 204, Oct. 31, 1978, 92
Stat. 2090.)

§ 1701z–13

§ 1701z–13. Solar energy for single-family and
multifamily housing units
(a) Purpose
It is the purpose of this section to promote
and extend the application of viable solar energy
systems as a desirable source of energy for residential single-family and multifamily housing
units.
(b) Cost-effective and economically feasible solar
energy systems; ‘‘solar energy system’’ defined
(1) The Secretary, in carrying out programs
and activities under section 1452b 1 of title 42,
section 1701q of this title, and section 1437f of
title 42, shall permit the installation of solar energy systems which are cost-effective and economically feasible.
(2) For the purpose of this Act, the term ‘‘solar
energy system’’ means any addition, alteration,
or improvement to an existing or new structure
which is designed to utilize wind energy or solar
energy either of the active type based on mechanically forced energy transfer or of the passive type based on convective, conductive, or radiant energy transfer or some combination of
these types to reduce the energy requirements
of that structure from other energy sources, and
which is in conformity with such criteria and
standards as shall be prescribed by the Secretary in consultation with the Secretary of Energy.
(c) Matters considered
In carrying out subsection (b), the Secretary
shall take such steps as may be necessary to encourage the installation of cost-effective and
economically feasible solar energy systems in
housing assisted under the programs and activities referred to in such subsection taking into
account the interests of low-income homeowners
and renters, including the implementation of a
plan of action to publicize the availability and
feasibility of solar energy systems to current or
potential recipients of assistance under such
programs and activities.
(d) Report to Congress
The Secretary shall, in conjunction with the
Secretary of Energy, transmit to the Congress,
within eighteen months after October 31, 1978, a
report setting forth—
(1) the number of solar units which were contracted for or installed or which are on order
under the provisions of subsection (b)(1) of this
section during the first twelve full calendar
months after October 31, 1978; and
(2) an analysis of any problems and benefits
related to encouraging the use of solar energy
systems in the programs and activities referred to in subsection (b).
(Pub. L. 95–557, title II, § 209, Oct. 31, 1978, 92
Stat. 2095; Pub. L. 98–479, title II, § 204(n)(3), Oct.
17, 1984, 98 Stat. 2234.)
REFERENCES IN TEXT

CODIFICATION
Section was enacted as part of the Housing and Community Development Amendments of 1978, and not as
part of the National Housing Act which comprises this
chapter.

Section 1452b of title 42, referred to in subsec. (b)(1),
was repealed by Pub. L. 101–625, title II, § 289(b)(1), Nov.
28, 1990, 104 Stat. 4128.
1 See

References in Text note below.

§ 1701z–14

TITLE 12—BANKS AND BANKING

This Act, referred to in subsec. (b)(2), is Pub. L.
95–557, Oct. 31, 1978, 92 Stat. 2080, known as the Housing
and Community Development Amendments of 1978. For
complete classification of this Act to the Code, see
Short Title of 1978 Amendments note set out under section 5301 of Title 42, The Public Health and Welfare,
and Tables.

Page 498

§ 1701z–16. Energy efficient mortgages pilot program

CODIFICATION

(a) Establishment of pilot program
(1) In general
Not later than 6 months after October 24,
1992, the Secretary of Housing and Urban Development (hereafter referred to as the ‘‘Secretary’’) shall establish an energy efficient
mortgage pilot program in 5 States, to promote the purchase of existing energy efficient
residential buildings and the installation of
cost-effective improvements in existing residential buildings.
(2) Pilot program
The pilot program established under this
subsection shall include the following criteria,
where applicable:
(A) Origination
The lender shall originate a housing loan
that is insured under title II of the National
Housing Act [12 U.S.C. 1707 et seq.] in accordance with the applicable requirements.
(B) Approval
The mortgagor’s base loan application
shall be approved if the mortgagor’s income
and credit record is found to be satisfactory.
(C) Costs of improvements
The cost of cost-effective energy efficiency
improvements shall not exceed the greater
of—
(i) 5 percent of the property value (not to
exceed 5 percent of the limit established
under section 203(b)(2)(A)) of the National
Housing Act (12 U.S.C. 1709(b)(2)(A); 1 or
(ii) 2 percent of the limit established
under section 203(b)(2)(B) of such Act [12
U.S.C. 1709(b)(2)(B)].
(D) Limitation
In any fiscal year, the aggregate number of
mortgages insured pursuant to this section
may not exceed 5 percent of the aggregate
number of mortgages for 1- to 4-family residences insured by the Secretary of Housing
and Urban Development under title II of the
National Housing Act (12 U.S.C. 1707 et seq.)
during the preceding fiscal year.
(3) Authority for mortgagees
In granting mortgages under the pilot program established pursuant to this subsection,
the Secretary shall grant mortgagees the authority—
(A) to permit the final loan amount to exceed the loan limits established under title
II of the National Housing Act [12 U.S.C. 1707
et seq.] by an amount not to exceed 100 percent of the cost of the cost-effective energy
efficiency improvements, if the mortgagor’s
request to add the cost of such improvements is received by the mortgagee prior to
funding of the base loan;
(B) to hold in escrow all funds provided to
the mortgagor to undertake the energy efficiency improvements until the efficiency
improvements are actually installed; and

Section was enacted as part of the Housing and Community Development Act of 1987, and not as part of the
National Housing Act which comprises this chapter.

1 So in original. There probably should be an additional closing
parenthesis.

CODIFICATION
Section was enacted as part of the Housing and Community Development Amendments of 1978, and not as
part of the National Housing Act which comprises this
chapter.
AMENDMENTS
1984—Subsec. (d). Pub. L. 98–479 substituted ‘‘conjunction’’ for ‘‘conjuction’’ in provisions preceding par. (1).

§ 1701z–14. Lower cost technology demonstration
program
The Secretary of Housing and Urban Development is authorized to develop and implement a
demonstration program utilizing lower cost
building technology for projects located on
inner-city vacant land.
(Pub. L. 97–35, title III, § 339C, Aug. 13, 1981, 95
Stat. 417.)
CODIFICATION
Section was enacted as part of the Housing and Community Development Amendments of 1981 and also as
part of the Omnibus Budget Reconciliation Act of 1981,
and not as part of the National Housing Act which comprises this chapter.
EFFECTIVE DATE
Section effective Oct. 1, 1981, see section 371 of Pub.
L. 97–35, set out as a note under section 3701 of this
title.

§ 1701z–15. Approval of individual residential
water purification or treatment units
(a) In general
When the existing water supply does not meet
the minimum property standards established by
the Department of Housing and Urban Development and a permanent alternative acceptable
water supply is not available, a continuous supply of water may be provided through the use of
approved residential water treatment equipment
or a water purification unit that provides bacterially and chemically safe drinking water.
(b) Approval process
A performance-based approval of the equipment or unit and the maintenance, monitoring,
and replacement plan for such equipment or
unit shall be certified by field offices of the Department of Housing and Urban Development
based upon general standards recognized by the
Department as modified for local or regional
conditions. As a part of such approved plan, a
separate monthly escrow account may be required to be established through the lender to
cover the cost of the approved yearly maintenance and monitoring schedule and projected replacement of the equipment or unit.
(Pub. L. 100–242, title IV, § 424, Feb. 5, 1988, 101
Stat. 1915.)

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§ 1701z–16

TITLE 12—BANKS AND BANKING

(C) to transfer or sell the energy efficient
mortgage to the appropriate secondary market agency, after the mortgage is issued, but
before the energy efficiency improvements
are actually installed.
(4) Promotion of pilot program
The Secretary shall encourage participation
in the energy efficient mortgage pilot program
by—
(A) making available information to lending agencies and other appropriate authorities regarding the availability and benefits
of energy efficient mortgages;
(B) requiring mortgagees and designated
lending authorities to provide written notice
of the availability and benefits of the pilot
program to mortgagors applying for financing in those States designated by the Secretary as participating under the pilot program; and
(C) requiring each applicant for a mortgage insured under title II of the National
Housing Act [12 U.S.C. 1707 et seq.] in those
States participating under the pilot program
to sign a statement that such applicant has
been informed of the program requirements
and understands the benefits of energy efficient mortgages.
(5) Training program
Not later than 9 months after October 24,
1992, the Secretary, in consultation with the
Secretary of Energy, shall establish and implement a program for training personnel at
relevant lending agencies, real estate companies, and other appropriate organizations regarding the benefits of energy efficient mortgages and the operation of the pilot program
under this subsection.
(6) Report
Not later than 18 months after October 24,
1992, the Secretary shall prepare and submit a
report to the Congress describing the effectiveness and implementation of the energy efficient mortgage pilot program as described
under this subsection, and assessing the potential for expanding the pilot program nationwide.
(b) Expansion of program
Not later than the expiration of the 2-year period beginning on the date of the implementation of the energy efficient mortgage pilot program under this section, the Secretary of Housing and Urban Development shall expand the
pilot program on a nationwide basis and shall
expand the program to include new residential
housing, unless the Secretary determines that
either such expansion would not be practicable
in which case the Secretary shall submit to the
Congress, before the expiration of such period, a
report explaining why either expansion would
not be practicable.
(c) Definitions
For purposes of this section:
(1) The term ‘‘base loan’’ means any mortgage loan for a residential building eligible for
insurance under title II of the National Housing Act [12 U.S.C. 1707 et seq.] or title 38 that
does not include the cost of cost-effective energy improvements.

(2) The term ‘‘cost-effective’’ means, with respect to energy efficiency improvements to a
residential building, improvements that result
in the total present value cost of the improvements (including any maintenance and repair
expenses) being less than the total present
value of the energy saved over the useful life
of the improvement, when 100 percent of the
cost of improvements is added to the base
loan. For purposes of this paragraph, savings
and cost-effectiveness shall be determined pursuant to a home energy rating report sufficient for purposes of the Federal National
Mortgage Association and the Federal Home
Loan Mortgage Corporation, or by other technically accurate methods.
(3) The term ‘‘energy efficient mortgage’’
means a mortgage on a residential building
that recognizes the energy savings of a home
that has cost-effective energy saving construction or improvements (including solar water
heaters, solar-assisted air conditioners and
ventilators, super-insulation, and insulating
glass and film) and that has the effect of not
disqualifying a borrower who, but for the expenditures on energy saving construction or
improvements, would otherwise have qualified
for a base loan.
(4) The term ‘‘residential building’’ means
any attached or unattached single family residence.
(d) Rule of construction
This section may not be construed to affect
any other programs of the Secretary of Housing
and Urban Development for energy-efficient
mortgages. The pilot program carried out under
this section shall not replace or result in the
termination of such other programs.
(e) Regulations
The Secretary shall issue any regulations necessary to carry out this section not later than
the expiration of the 180-day period beginning on
October 24, 1992. The regulations shall be issued
after notice and opportunity for public comment
pursuant to the provisions of section 553 of title
5 (notwithstanding subsections (a)(2), (b)(B), and
(d)(3) of such section).
(f) Authorization of appropriations
There are authorized to be appropriated such
sums as may be necessary to carry out this section.
(Pub. L. 102–486, title I, § 106, Oct. 24, 1992, 106
Stat. 2792; Pub. L. 110–289, div. B, title I, § 2123,
July 30, 2008, 122 Stat. 2839.)
REFERENCES IN TEXT
The National Housing Act, referred to in subsecs.
(a)(2)(A), (D), (3)(A), (4)(C), and (c)(1), is act June 27,
1934, ch. 847, 48 Stat. 1246. Title II of the Act is classified generally to subchapter II (§ 1707 et seq.) of this
chapter. For complete classification of this Act to the
Code, see section 1701 of this title and Tables.
CODIFICATION
Section was enacted as part of the Energy Policy Act
of 1992, and not as part of the National Housing Act
which comprises this chapter.
Section was formerly classified as a note under section 12712 of Title 42, The Public Health and Welfare.

§ 1701z–17

TITLE 12—BANKS AND BANKING
AMENDMENTS

2008—Subsec. (a)(2)(C). Pub. L. 110–289, § 2123(1),
amended subpar. (C) generally. Prior to amendment,
text read as follows: ‘‘The cost of cost-effective energy
efficiency improvements shall not exceed the greater
of—
‘‘(i) 5 percent of the property value (not to exceed
$8,000); or
‘‘(ii) $4,000.’’
Subsec. (a)(2)(D). Pub. L. 110–289, § 2123(2), added subpar. (D).
SIMILAR PROVISIONS
Similar provisions were contained in Pub. L. 102–550,
title V, § 513, Oct. 28, 1992, 106 Stat. 3786.

§ 1701z–17. Increasing access and understanding
of energy efficient mortgages
(a) Definition
As used in this section, the term ‘‘energy efficient mortgage’’ has the same meaning as given
that term in paragraph (24) of section 12704 of
title 42.
(b) Recommendations to eliminate barriers to
use of energy efficient mortgages
(1) In general
Not later than 180 days after July 30, 2008,
the Secretary of Housing and Urban Development, in conjunction with the Secretary of
Energy and the Administrator of the Environmental Protection Agency, shall consult with
the residential mortgage industry and States
to develop recommendations to eliminate the
barriers that exist to increasing the availability, use, and purchase of energy efficient
mortgages, including such barriers as—
(A) the lack of reliable and accessible information on such mortgages, including estimated energy savings and other benefits of
energy efficient housing;
(B) the confusion regarding underwriting
requirements and differences among various
energy efficient mortgage programs;
(C) the complex and time consuming process of securing such mortgages;
(D) the lack of publicly available research
on the default risk of such mortgages; and
(E) the availability of certified or accredited home energy rating services.
(2) Report to Congress
The Secretary of Housing and Urban Development shall submit a report to Congress
that—
(A) summarizes the recommendations developed under paragraph (1); and
(B) includes any recommendations for
statutory, regulatory, or administrative
changes that the Secretary deems necessary
to institute such recommendations.
(c) Energy efficient mortgages outreach campaign
(1) In general
The Secretary of Housing and Urban Development, in consultation and coordination with
the Secretary of Energy, the Administrator of
the Environmental Protection Agency, and
State Energy and Housing Finance Directors,
shall carry out an education and outreach
campaign to inform and educate consumers,

Page 500

home builders, residential lenders, and other
real estate professionals on the availability,
benefits, and advantages of—
(A) improved energy efficiency in housing;
and
(B) energy efficient mortgages.
(2) Authorization of appropriations
There are authorized to be appropriated such
sums as are necessary to carry out the education and outreach campaign described under
paragraph (1).
(Pub. L. 110–289, div. B, title IX, § 2902, July 30,
2008, 122 Stat. 2876.)
CODIFICATION
Section was enacted as part of the Foreclosure Prevention Act of 2008, and also as part of the Housing and
Economic Recovery Act of 2008, and not as part of the
National Housing Act which comprises this chapter.

SUBCHAPTER I—HOUSING RENOVATION
AND MODERNIZATION
§ 1702. Administrative provisions
The powers conferred by this chapter shall be
exercised by the Secretary of Housing and Urban
Development (hereinafter referred to as the
‘‘Secretary’’). In order to carry out the provisions of this subchapter and subchapters II, III,
V, VI, VII, VIII, IX–B, and X, the Secretary may
establish such agencies, accept and utilize such
voluntary and uncompensated services, utilize
such Federal officers and employees, and, with
the consent of the State, such State and local
officers and employees, and appoint such other
officers and employees as he may find necessary,
and may prescribe their authorities, duties, responsibilities, and tenure and fix their compensation. The Secretary may delegate any of
the functions and powers conferred upon him
under this subchapter and subchapters II, III, V,
VI, VII, VIII, IX–B, and X to such officers,
agents, and employees as he may designate or
appoint, and may make such expenditures (including expenditures for personal services and
rent at the seat of government and elsewhere,
for law books and books of reference, and for
paper, printing, and binding) as are necessary to
carry out the provisions of this subchapter and
subchapters II, III, V, VI, VII, VIII, IX–B, and X,
without regard to any other provisions of law
governing the expenditure of public funds. All
such compensation, expenses, and allowances
shall be paid out of funds made available by this
chapter: Provided, That notwithstanding any
other provisions of law except provisions of law
hereafter enacted expressly in limitation hereof,
all expenses of the Department of Housing and
Urban Development in connection with the examination and insurance of loans or investments under any subchapter of this chapter all
properly capitalized expenditures, and other
necessary expenses not attributable to general
overhead in accordance with generally accepted
accounting principles shall be considered nonadministrative and payable from funds made
available by this chapter, except that, unless
made pursuant to specific authorization by the
Congress therefor, expenditures made in any fiscal year pursuant to this proviso, other than the

Page 501

§ 1702

TITLE 12—BANKS AND BANKING

payment of insurance claims and other than expenditures (including services on a contract or
fee basis, but not including other personal services) in connection with the acquisition, protection, completion, operation, maintenance, improvement, or disposition of real or personal
property of the Department acquired under authority of this chapter, shall not exceed 35 per
centum of the income received by the Department of Housing and Urban Development from
premiums and fees during the preceding fiscal
year. Except with respect to subchapter III, for
the purposes of this section, the term ‘‘nonadministrative’’ shall not include contract expenses that are not capitalized or routinely deducted from the proceeds of sales, and such expenses shall not be payable from funds made
available by this chapter. The Secretary shall,
in carrying out the provisions of this subchapter
and subchapters II, III, V, VI, VII, VIII, IX–B,
and X, be authorized, in his official capacity, to
sue and be sued in any court of competent jurisdiction, State or Federal.
(June 27, 1934, ch. 847, title I, § 1, 48 Stat. 1246;
Aug. 23, 1935, ch. 614, title III, § 344(a), 49 Stat.
722; Mar. 28, 1941, ch. 31, § 2, 55 Stat. 61; June 28,
1941, ch. 261, § 6, 55 Stat. 365; Aug. 10, 1948, ch. 832,
title IV, § 402, 62 Stat. 1283; Aug. 8, 1949, ch. 403,
§ 2, 63 Stat. 576; Oct. 25, 1949, ch. 729, § 2, 63 Stat.
905; Apr. 20, 1950, ch. 94, title I, § 122, 64 Stat. 59;
Sept. 1, 1951, ch. 378, title II, § 202, 65 Stat. 303;
Pub. L. 89–117, title XI, § 1108(bb), Aug. 10, 1965, 79
Stat. 507; Pub. L. 89–754, title X, § 1020(g), Nov. 3,
1966, 80 Stat. 1296; Pub. L. 90–19, § 1(a)(1), (3), (c),
May 25, 1967, 81 Stat. 17, 18; Pub. L. 98–479, title
II, § 202(a)(1), Oct. 17, 1984, 98 Stat. 2228; Pub. L.
100–242, title IV, § 429(a), Feb. 5, 1988, 101 Stat.
1918; Pub. L. 101–235, title I, § 133(d)(1), Dec. 15,
1989, 103 Stat. 2027; Pub. L. 106–74, title II, § 212,
Oct. 20, 1999, 113 Stat. 1073.)
REFERENCES IN TEXT
This chapter, referred to in text, was in the original
‘‘this Act’’, meaning act June 27, 1934, ch. 847, 48 Stat.
1246, which is classified principally to this chapter
(§ 1701 et seq.). For complete classification of this Act
to the Code, see Tables.
AMENDMENTS
1999—Pub. L. 106–74 inserted before last sentence ‘‘Except with respect to subchapter III, for the purposes of
this section, the term ‘‘nonadministrative’’ shall not
include contract expenses that are not capitalized or
routinely deducted from the proceeds of sales, and such
expenses shall not be payable from funds made available by this chapter.’’
1989—Pub. L. 101–235 struck out ‘‘IX–A,’’ after ‘‘VIII,’’
wherever appearing.
1988—Pub. L. 100–242 struck out comma before period
at end of second sentence.
1984—Pub. L. 98–479 struck out ‘‘without regard to the
provisions of other laws applicable to the employment
or compensation of other officers or employees of the
United States’’ at end of second sentence.
1967—Pub. L. 90–19 substituted ‘‘Department of Housing and Urban Development’’ and ‘‘Secretary’’ for
‘‘Federal Housing Administration’’ and ‘‘Commissioner’’, respectively, wherever appearing, substituted
provision for exercise of national housing powers by the
Secretary of Housing and Urban Development for
former authorization for creation of a Federal Housing
Administration under a Federal Housing Commissioner
appointed by the President with the consent of the Senate, and substituted ‘‘Department’’ for ‘‘Administration’’ in penultimate sentence.

1966—Pub. L. 89–754 inserted references to subchapter
IX–B.
1965—Pub. L. 89–117 inserted references to subchapters
V and IX–A.
1951—Act Sept. 1, 1951, inserted references to subchapter X.
1950—Act Apr. 20, 1950, made technical amendments
to section to reflect change in title of Administrator to
Commissioner and to omit provisions relating to tenure
and compensation of Commissioner.
1949—Joint Res. Oct. 25, 1949, inserted proviso at end
of fourth sentence.
Act Aug. 8, 1949, made provisions applicable to subchapter VIII.
1948—Act Aug. 10, 1948, substituted ‘‘subchapters II,
III, VI, and VII’’ for ‘‘subchapters II, III, and VI’’.
1941—Act June 28, 1941, substituted ‘‘$12,000’’ for
‘‘$10,000’’.
Act Mar. 28, 1941, substituted ‘‘subchapters II, III, and
VI’’ for ‘‘subchapters II and III’’.
1935—Act Aug. 23, 1935, inserted sentence at end.
EFFECTIVE DATE OF 1941 AMENDMENT
Amendment by act June 28, 1941, effective July 1,
1941, see section 6 of act June 28, 1941.
REPEALS
Act Aug. 10, 1948, ch. 832, title V, § 501(a), 62 Stat. 1283,
formerly cited as a credit to this section, was repealed
by Pub. L. 89–554, § 8(a), Sept. 6, 1966, 80 Stat. 655.
TRANSFER OF FUNCTIONS
Functions, powers, and duties of Federal Housing Administration and Housing and Home Finance Agency
transferred to Secretary of Housing and Urban Development who was authorized to delegate such functions,
powers, and duties to such officers and employees of
Department of Housing and Urban Development as Secretary may designate, see sections 3534 and 3535 of Title
42, The Public Health and Welfare.
Reorg. Plan No. 3 of 1947, eff. July 27, 1947, 12 F.R.
4981, 61 Stat. 954, set out in the Appendix to Title 5,
Government Organization and Employees, abolished office of Federal Housing Administrator and transferred
functions to Federal Housing Commissioner. It also
consolidated Federal Housing Administration with
other agencies into Housing and Home Finance Agency
and transferred functions of Federal Loan Administrator with respect to Federal Housing Administration
and its functions to Housing and Home Finance Administrator. Federal Housing Administration continued as
a constituent agency within Housing and Home Finance Agency. For provisions concerning appointment
and compensation of Federal Housing Commissioner,
see section 3 of Reorganization Plan.
Functions, powers, and duties of National Housing
Agency with respect to property, funds, and other assets which were formerly under administration of Farm
Security Administration and were transferred to National Housing Agency by Ex. Ord. No. 9070, Feb. 24,
1942, 7 F.R. 1529, as amended, were abolished by section
2(a)(3) of act Aug. 14, 1946, ch. 964, 60 Stat. 1063, as
amended, set out as a note under sections 1001 to 1005d
of Title 7, Agriculture, except with respect of housing
projects and such other properties and assets in process
of liquidation.
Federal Housing Administration consolidated with
other agencies into National Housing Agency during
World War II, see Ex. Ord. No. 9070.
Functions of National Housing Agency with respect
to non-farm-housing projects and other properties remaining under its jurisdiction pursuant to section
2(a)(3) of act Aug. 14, 1946, transferred to Public Housing Commissioner by Reorg. Plan No. 3 of 1947, § 4(b),
eff. July 27, 1947, 12 F.R. 4983, 61 Stat. 955, set out in the
Appendix to Title 5.
Federal Housing Administration to be administered
by Federal Loan Administrator within Federal Loan
Agency, see Reorg. Plan No. I of 1939, § 402, eff. July 1,

§ 1702a

TITLE 12—BANKS AND BANKING

1939, 4 F.R. 2730, 53 Stat. 1429 set out in the Appendix
to Title 5.
EXECUTIVE ORDER NO. 7058
Ex. Ord. No. 7058, May 29, 1935, authorized Federal
Housing Administrator to adopt a seal for Federal
Housing Administration, provided that copies of any
books, records, papers, documents, agreements, orders,
rules, or regulations of Administration were admissible
in evidence equally with originals thereof, and empowered Administrator or his designee to certify or exemplify copies of any books, records, papers, or documents
of Administration.
EXECUTIVE ORDER NO. 7280
Ex. Ord. No. 7280, Jan. 28, 1936, was issued as evidence
of creation of Federal Housing Administration and
validated and confirmed creation thereof.

§ 1702a. Repealed. June
§ 12(c)(14), 69 Stat. 182

28,

1955,

ch.

189,

Section, act June 27, 1934, ch. 847, title II, § 228, as
added Aug. 2, 1954, ch. 649, title I, § 126, 68 Stat. 809, authorized Commissioner to establish one position in
GS–18, four in GS–17, and eight in GS–16 in Federal
Housing Administration.

§ 1703. Insurance of financial institutions
(a) Authority to insure financial institutions
The Secretary is authorized and empowered
upon such terms and conditions as he may prescribe, to insure banks, trust companies, personal finance companies, mortgage companies,
building and loan associations, installment lending companies and other such financial institutions, which the Secretary finds to be qualified
by experience or facilities and approves as eligible for credit insurance, against losses which
they may sustain as a result of loans and advances of credit, and purchases of obligations
representing loans and advances of credit, made
by them for the purpose of (i) financing alterations, repairs, and improvements upon or in
connection with existing structures or manufactured homes, and the building of new structures,
upon urban, suburban, or rural real property (including the restoration, rehabilitation, rebuilding, and replacement of such improvements
which have been damaged or destroyed by earthquake, conflagration, tornado, hurricane, cyclone, flood, or other catastrophe), by the owners thereof or by lessees of such real property
under a lease expiring not less than six months
after the maturity of the loan or advance of
credit; and for the purpose of (ii) financing the
purchase of a manufactured home to be used by
the owner as his principal residence or financing
the purchase of a lot on which to place such
home and paying expenses reasonably necessary
for the appropriate preparation of such lot, including the installation of utility connections,
sanitary facilities, and paving, and the construction of a suitable pad, or financing only the acquisition of such a lot either with or without
such preparation by an owner of a manufactured
home; and for the purpose of financing the preservation of historic structures, and, as used in
this section, the term ‘‘historic structures’’
means residential structures which are registered in the National Register of Historic
Places or which are certified by the Secretary of
the Interior to conform to National Register cri-

Page 502

teria; and the term ‘‘preservation’’ means restoration or rehabilitation undertaken for such
purposes as are approved by the Secretary in
regulations issued by him, after consulting with
the Secretary of the Interior. Other than in connection with a manufactured home or a lot on
which to place such a home (or both), in no case
shall the insurance granted by the Secretary
under this section to any such financial institution on loans, advances of credit, and purchases
made by such financial institution for such purposes exceed 10 per centum of the total amount
of such loans, advances of credit, and purchases.
With respect to any loan, advance of credit, or
purchase, the amount of any claim for loss on
any such individual loan, advance of credit or
purchase paid by the Secretary under the provisions of this section to a lending institution
shall not exceed 90 per centum of such loss.
After August 2, 1954, (i) the Secretary shall not
enter into contracts for insurance pursuant to
this section except with lending institutions
which are subject to the inspection and supervision of a governmental agency required by law
to make periodic examinations of their books
and accounts, and which the Secretary finds to
be qualified by experience or facilities to make
and service such loans, advances or purchases,
and with such other lending institutions which
the Secretary approves as eligible for insurance
pursuant to this section on the basis of their
credit and their experience or facilities to make
and service such loans, advances or purchases;
(ii) only such items as substantially protect or
improve the basic livability or utility of properties shall be eligible for financing under this
section, and therefore the Secretary shall from
time to time declare ineligible for financing
under this section any item, product, alteration,
repair, improvement, or class thereof which he
determines would not substantially protect or
improve the basic livability or utility of such
properties, and he may also declare ineligible
for financing under this section any item which
he determines is especially subject to selling
abuses; and (iii) the Secretary is authorized and
directed, by such regulations or procedures as he
shall deem advisable, to prevent the use of any
financial assistance under this section (1) with
respect to new residential structures (other than
manufactured homes) that have not been completed and occupied for at least six months, or
(2) which would, through multiple loans, result
in an outstanding aggregate loan balance with
respect to the same structure exceeding the dollar amount limitation prescribed in this subsection for the type of loan involved: Provided,
That this clause (iii) may in the discretion of
the Secretary be waived with respect to the period of occupancy or completion of any such new
residential structures. The Secretary is hereby
authorized and directed, with respect to manufactured homes to be financed under this section, to (i) prescribe minimum property standards to assure the livability and durability of
the manufactured home and the suitability of
the site on which the manufactured home is to
be located; and (ii) obtain assurances from the
borrower that the manufactured home will be
placed on a site which complies with the standards prescribed by the Secretary and with local
zoning and other applicable local requirements.

Page 503

TITLE 12—BANKS AND BANKING

The insurance authority provided under this
section may be made available with respect to
any existing manufactured home that has not
been insured under this section if such home was
constructed in accordance with the standards issued under the National Manufactured Housing
Construction and Safety Standards Act of 1974
[42 U.S.C. 5401 et seq.] and it meets standards
similar to the minimum property standards applicable to existing homes insured under subchapter II.
Alterations, repairs, and improvements upon
or in connection with existing structures may
include the provision of fire safety equipment,
energy conserving improvements, or the installation of solar energy systems. Alterations, repairs, and improvements upon or in connection
with existing structures may also include the
evaluation and reduction of lead-based paint
hazards. As used in this section—
(1) the term ‘‘fire safety equipment’’ means
any device or facility which is designed to reduce the risk of personal injury or property
damage resulting from fire and is in conformity with such criteria and standards as shall
be prescribed by the Secretary;
(2) the term ‘‘energy conserving improvements’’ means the purchase and installation of
weatherization materials as defined in section
6862(9) of title 42; and 1
(3) the term ‘‘solar energy system’’ means
any addition, alteration, or improvement to
an existing or new structure which is designed
to utilize wind energy or solar energy either of
the active type based on mechanically forced
energy transfer or of the passive type based on
convective, conductive, or radiant energy
transfer or some combination of these types to
reduce the energy requirements of that structure from other energy sources, and which is
in conformity with such criteria and standards
as shall be prescribed by the Secretary in consultation with the Secretary of Energy.2
(4) the terms ‘‘evaluation’’, ‘‘reduction’’, and
‘‘lead-based paint hazard’’ have the same
meanings given those terms in section 4851b of
title 42.
(b) Conditions for denial of insurance
(1) Except as provided in the last sentence of
this paragraph, no insurance shall be granted
under this section to any such financial institution with respect to any obligation representing
any such loan, advance of credit, or purchase by
it if the amount of such loan, advance of credit,
or purchase exceeds—
(A)(i) $25,000 if made for the purpose of financing alterations, repairs and improvements
upon or in connection with existing singlefamily structures; and
(ii) $25,090 if made for the purpose of financing alterations, repairs and improvements
upon or in connection with existing manufactured homes;
(B) $60,000 or an average amount of $12,000
per family unit if made for the purpose of financing the alteration, repair, improvement,
or conversion of an existing structure used or
1 So
2 So

in original. The word ‘‘and’’ probably should not appear.
in original. The period probably should be ‘‘; and’’.

§ 1703

to be used as an apartment house or a dwelling
for two or more families;
(C) $69,678 if made for the purpose of financing the purchase of a manufactured home;
(D) $92,904 if made for the purpose of financing the purchase of a manufactured home and
a suitably developed lot on which to place the
home; and 1
(E) $23,226 if made for the purpose of financing the purchase, by an owner of a manufactured home which is the principal residence of
that owner, of a suitably developed lot on
which to place that manufactured home, and if
the owner certifies that he or she will place
the manufactured home on the lot acquired
with such loan within 6 months after the date
of such loan.3
(F) $15,000 per family unit if made for the
purpose of financing the preservation of an
historic structure; and
(G) such principal amount as the Secretary
may prescribe if made for the purpose of financing fire safety equipment for a nursing
home, extended health care facility, intermediate health care facility, or other comparable health care facility.
The Secretary shall, by regulation, annually increase the dollar amount limitations in subparagraphs (A)(ii), (C), (D), and (E) (as such limitations may have been previously adjusted under
this sentence) in accordance with the index established pursuant to paragraph (9).
(2) Because of prevailing higher costs, the Secretary may, by regulation, in Alaska, Guam, or
Hawaii, increase any dollar amount limitation
on manufactured homes or manufactured home
lot loans contained in this subsection by not to
exceed 40 per centum. In other areas, the maximum dollar amounts specified in subsections
(b)(1)(D) and (b)(1)(E) may be increased on an
area-by-area basis to the extent the Secretary
deems necessary, but in no case may such limits, as so increased, exceed the lesser of (A) 185
percent of the dollar amount specified, or (B)
the dollar amount specified as increased by the
same percentage by which 95 percent of the median one-family house price in the area (as determined by the Secretary) exceeds $67,500.
(3) No insurance shall be granted under this
section to any such financial institution with
respect to any obligation representing any such
loan, advance of credit, or purchase by it if the
term to maturity of such loan, advance of credit
or purchase exceeds—
(A)(i) twenty years and thirty-two days if
made for the purpose of financing alterations,
repairs, and improvements upon or in connection with an existing single-family structure;
and
(ii) fifteen years and thirty-two days if made
for the purpose of financing alterations, repairs, and improvements upon or in connection with an existing manufactured home;
(B) twenty years and thirty-two days if
made for the purpose of financing the alteration, repair, improvement or conversion of an
existing structure used or to be used as an
apartment house or a dwelling for two or more
families;
3 So

in original. The period probably should be a semicolon.

§ 1703

TITLE 12—BANKS AND BANKING

(C) twenty years and thirty-two days (twenty-three years and thirty-two days in the case
of a manufactured home composed of two or
more modules) if made for the purpose of financing the purchase of a manufactured home;
(D) twenty years and thirty-two days (twenty-five years and thirty-two days in the case
of a manufactured home composed of two or
more modules) if made for the purpose of financing the purchase of a manufactured home
and a suitably developed lot on which to place
the home;
(E) twenty years and thirty-two days if
made for the purpose of financing the purchase, by the owner of a manufactured home
which is the principal residence of that owner,
of a suitably developed lot on which to place
that manufactured home;
(F) fifteen years and thirty-two days if made
for the purpose of financing the preservation
of an historic structure;
(G) such term to maturity as the Secretary
may prescribe if made for the purpose of financing the construction of a new structure
for use in whole or in part for agricultural purposes; and
(H) such term to maturity as the Secretary
may prescribe if made for the purpose of financing fire safety equipment for a nursing
home, extended health care facility, intermediate health care facility, or other comparable health care facility.
(4) For the purpose of this subsection—
(A) the term ‘‘developed lot’’ includes an interest in a condominium project (including
any interest in the common areas) or a share
in a cooperative association;
(B) a loan to finance the purchase of a manufactured home or a manufactured home and
lot may also finance the purchase of a garage,
patio, carport, or other comparable appurtenance; and
(C) a loan to finance the purchase of a manufactured home or a manufactured home and
lot shall be secured by a first lien upon such
home or home and lot, its furnishings, equipment, accessories, and appurtenances.
(5) No insurance shall be granted under this
section to any such financial institution with
respect to any obligation representing any such
loan, advance of credit, or purchase by it unless
the obligation has such maturity, bears such insurance premium charges, and contains such
other terms, conditions, and restrictions as the
Secretary shall prescribe, in order to make credit available for the purpose of this subchapter.
Any such obligation with respect to which insurance is granted under this section shall bear interest at such rate as may be agreed upon by the
borrower and the financial institution.
(6)(A) Any obligation with respect to which insurance is granted under this section may be refinanced and extended in accordance with such
terms and conditions as the Secretary may prescribe, but in no event for an additional amount
or term in excess of any applicable maximum
provided for in this subsection.
(B) The owner of a manufactured home lot
purchased without assistance under this section
but otherwise meeting the requirements of this

Page 504

section may refinance such lot under this section in connection with the purchase of a manufactured home if the borrower certifies that the
home and lot is or will be his or her principal
residence within six months after the date of the
loan.
(C) The owner-occupant of a manufactured
home or a home and lot which was purchased
without assistance under this section but which
otherwise meets the requirements of this section may refinance such home or home and lot
under this section if the home was constructed
in accordance with standards established under
section 604 of the National Manufactured Housing Construction and Safety Standards Act of
1974 [42 U.S.C. 5403].
(7) With respect to the financing of alterations, repairs, and improvements to existing
structures or the building of new structures as
authorized under clause (i) of the first sentence
of subsection (a), any loan broker (as defined by
the Secretary) or any other party having a financial interest in the making of such a loan or
advance of credit or in providing assistance to
the borrower in preparing the loan application
or otherwise assisting the borrower in obtaining
the loan or advance of credit who knowingly (as
defined in section 1735f–14(g) of this title) submits to any such financial institution or to the
Secretary false information shall be subject to a
civil money penalty in the amount and manner
provided under section 1735f–14 of this title with
respect to mortgagees and lenders under this
chapter.
(8) INSURANCE BENEFITS FOR MANUFACTURED
HOUSING LOANS.—Any contract of insurance with
respect to loans, advances of credit, or purchases in connection with a manufactured home
or a lot on which to place a manufactured home
(or both) for a financial institution that is executed under this subchapter after July 30, 2008,
by the Secretary shall be conclusive evidence of
the eligibility of such financial institution for
insurance, and the validity of any contract of
insurance so executed shall be incontestable in
the hands of the bearer from the date of the execution of such contract, except for fraud or misrepresentation on the part of such institution.
(9) ANNUAL INDEXING OF MANUFACTURED HOUSING LOANS.—The Secretary shall develop a method of indexing in order to annually adjust the
loan limits established in subparagraphs (A)(ii),
(C), (D), and (E) of this subsection. Such index
shall be based on the manufactured housing
price data collected by the United States Census
Bureau. The Secretary shall establish such
index no later than 1 year after July 30, 2008.
(10) FINANCIAL SOUNDNESS OF MANUFACTURED
HOUSING PROGRAM.—The Secretary shall establish such underwriting criteria for loans and advances of credit in connection with a manufactured home or a lot on which to place a manufactured home (or both), including such loans
and advances represented by obligations purchased by financial institutions, as may be necessary to ensure that the program under this
subchapter for insurance for financial institutions against losses from such loans, advances of
credit, and purchases is financially sound.
(11) LEASEHOLD REQUIREMENTS.—No insurance
shall be granted under this section to any such

Page 505

TITLE 12—BANKS AND BANKING

financial institution with respect to any obligation representing any such loan, advance of
credit, or purchase by it, made for the purposes
of financing a manufactured home which is intended to be situated in a manufactured home
community pursuant to a lease, unless such
lease—
(A) expires not less than 3 years after the
origination date of the obligation;
(B) is renewable upon the expiration of the
original 3 year term by successive 1 year
terms; and
(C) requires the lessor to provide the lessee
written notice of termination of the lease not
less than 180 days prior to the expiration of
the current lease term in the event the lessee
is required to move due to the closing of the
manufactured home community, and further
provides that failure to provide such notice to
the mortgagor in a timely manner will cause
the lease term, at its expiration, to automatically renew for an additional 1 year term.
(c) Handling and disposal of property
(1) Authority of Secretary
Notwithstanding any other provision of law,
the Secretary may—
(A) deal with, complete, rent, renovate,
modernize, insure, or assign or sell at public
or private sale, or otherwise dispose of, for
cash or credit in the Secretary’s discretion,
and upon such terms and conditions and for
such consideration as the Secretary shall determine to be reasonable, any real or personal property conveyed to or otherwise acquired by the Secretary, in connection with
the payment of insurance heretofore or hereafter granted under this subchapter, including any evidence of debt, contract, claim,
personal property, or security assigned to or
held by him in connection with the payment
of insurance heretofore or hereafter granted
under this section; and
(B) pursue to final collection, by way of
compromise or otherwise, all claims assigned to or held by the Secretary and all
legal or equitable rights accruing to the Secretary in connection with the payment of
such insurance, including unpaid insurance
premiums owed in connection with insurance made available by this subchapter.
(2) Advertisements for proposals
Section 6101 of title 41 shall not be construed
to apply to any contract of hazard insurance
or to any purchase or contract for services or
supplies on account of such property if the
amount thereof does not exceed $25,000.
(3) Delegation of authority
The power to convey and to execute in the
name of the Secretary, deeds of conveyance,
deeds of release, assignments and satisfactions
of mortgages, and any other written instrument relating to real or personal property or
any interest therein heretofore or hereafter
acquired by the Secretary pursuant to the provisions of this subchapter may be exercised by
an officer appointed by the Secretary without
the execution of any express delegation of
power or power of attorney. Nothing in this
subsection shall be construed to prevent the

§ 1703

Secretary from delegating such power by order
or by power of attorney, in the Secretary’s discretion, to any officer or agent the Secretary
may appoint.
(d) Authority to transfer insurance
The Secretary is authorized and empowered,
under such regulations as he may prescribe, to
transfer to any such approved financial institution any insurance in connection with any loans
and advances of credit which may be sold to it
by another approved financial institution.
(e) Authority to waive compliance with regulations
The Secretary is authorized to waive compliance with regulations heretofore or hereafter
prescribed by him with respect to the interest
and maturity of and the terms, conditions, and
restrictions under which loans, advances of credit, and purchases may be insured under this section and section 1706a 4 of this title, if in his
judgment the enforcement of such regulations
would impose an injustice upon an insured institution which has substantially complied with
such regulations in good faith and refunded or
credited any excess charge made, and where
such waiver does not involve an increase of the
obligation of the Secretary beyond the obligation which would have been involved if the regulations had been fully complied with.
(f) Premium charges; manufactured home loans
(1) Premium charges
The Secretary shall fix a premium charge
for the insurance hereafter granted under this
section, but in the case of any obligation representing any loan, advance of credit, or purchase, such premium charge shall not exceed
an amount equivalent to 1 per centum per
annum of the net proceeds of such loan, advance of credit, or purchase, for the term of
such obligation, and such premium charge
shall be payable in advance by the financial
institution and shall be paid at such time and
in such manner as may be prescribed by the
Secretary.
(2) Manufactured home loans
Notwithstanding paragraph (1), in the case
of a loan, advance of credit, or purchase in
connection with a manufactured home or a lot
on which to place such a home (or both), the
premium charge for the insurance granted
under this section shall be paid by the borrower under the loan or advance of credit, as
follows:
(A) At the time of the making of the loan,
advance of credit, or purchase, a single premium payment in an amount not to exceed
2.25 percent of the amount of the original insured principal obligation.
(B) In addition to the premium under subparagraph (A), annual premium payments
during the term of the loan, advance, or obligation purchased in an amount not exceeding 1.0 percent of the remaining insured
principal balance (excluding the portion of
the remaining balance attributable to the
premium collected under subparagraph (A)
4 See

References in Text note below.

§ 1703

TITLE 12—BANKS AND BANKING

and without taking into account delinquent
payments or prepayments).
(C) Premium charges under this paragraph
shall be established in amounts that are sufficient, but do not exceed the minimum
amounts necessary, to maintain a negative
credit subsidy for the program under this
section for insurance of loans, advances of
credit, or purchases in connection with a
manufactured home or a lot on which to
place such a home (or both), as determined
based upon risk to the Federal Government
under existing underwriting requirements.
(D) The Secretary may increase the limitations on premium payments to percentages above those set forth in subparagraphs
(A) and (B), but only if necessary, and not in
excess of the minimum increase necessary,
to maintain a negative credit subsidy as described in subparagraph (C).
(g) Finality of payment for loss
Any payment for loss made to an approved financial institution under this section shall be
final and incontestable after two years from the
date the claim was certified for payment by the
Secretary, in the absence of fraud or misrepresentation on the part of such institution, unless
a demand for repurchase of the obligation shall
have been made on behalf of the United States
prior to the expiration of such two-year period.
(h) Authority to regulate
The Secretary is authorized and directed to
make such rules and regulations as may be necessary to carry out the provisions of this subchapter.
(i) ‘‘Manufactured home’’ defined
For purposes of this section, the term ‘‘manufactured home’’ includes any elder cottage housing opportunity unit that is small, freestanding,
barrier-free, energy efficient, removable, and designed to be installed adjacent to an existing 1to 4-family dwelling.
(June 27, 1934, ch. 847, title I, § 2, 48 Stat. 1246;
May 28, 1935, ch. 150, § 28, 49 Stat. 299; Aug. 23,
1935, ch. 614, title III, § 344(b), 49 Stat. 722; Apr. 3,
1936, ch. 165, § 1, 49 Stat. 1187; Apr. 17, 1936, ch.
234, § 4, 49 Stat. 1234; Apr. 22, 1937, ch. 121, § 2, 50
Stat. 71; Feb. 3, 1938, ch. 13, § 2, 52 Stat. 9; June
3, 1939, ch. 175, §§ 1, 2, 53 Stat. 804, 805; June 28,
1941, ch. 261, §§ 1–5, 55 Stat. 364, 365; May 26, 1942,
ch. 319, § 13, 56 Stat. 305; Mar. 23, 1943, ch. 21, § 2,
57 Stat. 43; Oct. 15, 1943, ch. 259, §§ 3, 4, 57 Stat.
571; June 26, 1947, ch. 152, 61 Stat. 182; Aug. 10,
1948, ch. 832, title I, § 101(s), 62 Stat. 1275; July 15,
1949, ch. 338, title II, § 201(1), 63 Stat. 421; Aug. 30,
1949, ch. 524, 63 Stat. 681; Oct. 25, 1949, ch. 729,
§ 1(1), 63 Stat. 905; Apr. 20, 1950, ch. 94, title I,
§§ 101(a), 122, 64 Stat. 48, 59; Mar. 10, 1953, ch. 5,
§ 1, 67 Stat. 4; Aug. 2, 1954, ch. 649, title I,
§§ 101(a), 102, 68 Stat. 590; June 30, 1955, ch. 251,
§ 1(1), 69 Stat. 225; Aug. 11, 1955, ch. 783, title I,
§ 101, 69 Stat. 635; Feb. 10, 1956, ch. 33, 70 Stat. 11;
Aug. 7, 1956, ch. 1029, title I, § 101, 70 Stat. 1091;
Pub. L. 85–104, title I, § 105, July 12, 1957, 71 Stat.
297; Pub. L. 86–372, title I, § 101, Sept. 23, 1959, 73
Stat. 654; Pub. L. 86–788, § 2(a), Sept. 14, 1960, 74
Stat. 1028; Pub. L. 87–70, title VI, § 604(a), June
30, 1961, 75 Stat. 177; Pub. L. 88–560, title I, § 101,
Sept. 2, 1964, 78 Stat. 769; Pub. L. 89–117, title II,

Page 506

§ 202(a), title XI, § 1108(a), Aug. 10, 1965, 79 Stat.
465, 504; Pub. L. 90–19, § 1(a)(3), (d), May 25, 1967,
81 Stat. 17, 18; Pub. L. 90–448, title III, § 308, Aug.
1, 1968, 82 Stat. 509; Pub. L. 91–78, § 2(a), Sept. 30,
1969, 83 Stat. 125; Pub. L. 91–152, title I, §§ 101(a),
103(c), Dec. 24, 1969, 83 Stat. 379, 380; Pub. L.
91–432, § 1(a), Oct. 2, 1970, 84 Stat. 886; Pub. L.
91–473, § 1(a), Oct. 21, 1970, 84 Stat. 1064; Pub. L.
91–525, § 1(a), Dec. 1, 1970, 84 Stat. 1384; Pub. L.
91–609, title I, §§ 101(a), 113, Dec. 31, 1970, 84 Stat.
1770, 1773; Pub. L. 92–503, § 1(a), Oct. 18, 1972, 86
Stat. 906; Pub. L. 93–85, § 1(a), Aug. 10, 1973, 87
Stat. 220; Pub. L. 93–117, § 1(a), Oct. 2, 1973, 87
Stat. 421; Pub. L. 93–383, title III, §§ 309(a)–(d),
316(a), Aug. 22, 1974, 88 Stat. 680, 681, 685; Pub. L.
93–449, § 4(a), Oct. 18, 1974, 88 Stat. 1366; Pub. L.
94–173, § 1, Dec. 23, 1975, 89 Stat. 1027; Pub. L.
95–60, § 1(a), June 30, 1977, 91 Stat. 257; Pub. L.
95–80, § 1(a), July 31, 1977, 91 Stat. 339; Pub. L.
95–128, title II, §§ 301(a), 306, Oct. 12, 1977, 91 Stat.
1131, 1134; Pub. L. 95–406, § 1(a), Sept. 30, 1978, 92
Stat. 879; Pub. L. 95–557, title III, §§ 301(a), 320,
Oct. 31, 1978, 92 Stat. 2095, 2101; Pub. L. 95–619,
title II, § 241, Nov. 9, 1978, 92 Stat. 3228; Pub. L.
96–71, § 1(a), Sept. 28, 1979, 93 Stat. 501; Pub. L.
96–105, § 1(a), Nov. 8, 1979, 93 Stat. 794; Pub. L.
96–153, title III, §§ 301(a), 313(a), Dec. 21, 1979, 93
Stat. 1111, 1116; Pub. L. 96–372, § 1(a), Oct. 3, 1980,
94 Stat. 1363; Pub. L. 96–399, title III, §§ 301(a),
308(a)–(c)(1), Oct. 8, 1980, 94 Stat. 1638, 1640; Pub.
L. 97–35, title III, §§ 331(a), 338(a), 339B(c), Aug.
13, 1981, 95 Stat. 412, 414, 417; Pub. L. 97–289, § 1(a),
Oct. 6, 1982, 96 Stat. 1230; Pub. L. 98–35, § 1(a),
May 26, 1983, 97 Stat. 197; Pub. L. 98–109, § 1(a),
Oct. 1, 1983, 97 Stat. 745; Pub. L. 98–181, title I
[title IV, §§ 401(a), 404(b)(1), 415–417], Nov. 30, 1983,
97 Stat. 1207, 1208, 1212; Pub. L. 99–120, § 1(a), Oct.
8, 1985, 99 Stat. 502; Pub. L. 99–156, § 1(a), Nov. 15,
1985, 99 Stat. 815; Pub. L. 99–219, § 1(a), Dec. 26,
1985, 99 Stat. 1730; Pub. L. 99–267, § 1(a), Mar. 27,
1986, 100 Stat. 73; Pub. L. 99–272, title III,
§ 3007(a), Apr. 7, 1986, 100 Stat. 104; Pub. L. 99–289,
§ 1(b), May 2, 1986, 100 Stat. 412; Pub. L. 99–345,
§ 1, June 24, 1986, 100 Stat. 673; Pub. L. 99–430,
Sept. 30, 1986, 100 Stat. 986; Pub. L. 100–122, § 1,
Sept. 30, 1987, 101 Stat. 793; Pub. L. 100–154, Nov.
5, 1987, 101 Stat. 890; Pub. L. 100–170, Nov. 17, 1987,
101 Stat. 914; Pub. L. 100–179, Dec. 3, 1987, 101
Stat. 1018; Pub. L. 100–200, Dec. 21, 1987, 101 Stat.
1327; Pub. L. 100–242, title IV, § 401(b), Feb. 5,
1988, 101 Stat. 1898; Pub. L. 101–235, title I,
§ 134(a), Dec. 15, 1989, 103 Stat. 2027; Pub. L.
101–625, title III, § 340(b)(1), (c), title VIII, § 806(a),
Nov. 28, 1990, 104 Stat. 4147, 4323; Pub. L. 102–389,
title II, Oct. 6, 1992, 106 Stat. 1592, 1593; Pub. L.
102–550, title V, § 503(c)(1), title X, § 1012(k)(1),
Oct. 28, 1992, 106 Stat. 3779, 3906; Pub. L. 106–569,
title IX, § 901, Dec. 27, 2000, 114 Stat. 3026; Pub. L.
110–289, div. B, title I, §§ 2143, 2144(a), 2145–2148(a),
2150, July 30, 2008, 122 Stat. 2844–2848.)
REFERENCES IN TEXT
The National Manufactured Housing Construction
and Safety Standards Act of 1974, referred to in subsec.
(a), is title VI of Pub. L. 93–383, Aug. 22, 1974, 88 Stat.
700, as amended, which is classified generally to chapter 70 (§ 5401 et seq.) of Title 42, The Public Health and
Welfare. For complete classification of this Act to the
Code, see Short Title note set out under section 5401 of
Title 42 and Tables.
This chapter, referred to in subsec. (b)(7), was in the
original ‘‘this Act’’, meaning act June 27, 1934, ch. 847,

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48 Stat. 1246, as amended, which is classified principally
to this chapter (§ 1701 et seq.). For complete classification of this Act to the Code, see Tables.
Section 1706a of this title, referred to in subsec. (e),
was repealed by act June 3, 1939, ch. 175, § 3, 53 Stat. 805,
eff. July 1, 1939.
CODIFICATION
In subsec. (c)(2), ‘‘Section 6101 of title 41’’ substituted
for ‘‘Section 3709 of the Revised Statutes’’ on authority
of Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat. 3854,
which Act enacted Title 41, Public Contracts.
AMENDMENTS
2008—Subsec. (a). Pub. L. 110–289, § 2147(a), in first undesignated par., struck out ‘‘on and after July 1, 1939,’’
after ‘‘made by them’’ and after ‘‘institution for such
purposes’’ and struck out ‘‘made after August 2, 1954’’
after ‘‘credit, or purchase’’.
Pub. L. 110–289, § 2143, in first undesignated par., substituted ‘‘Other than in connection with a manufactured home or a lot on which to place such a home (or
both), in no case’’ for ‘‘In no case’’ and ‘‘. With’’ for
‘‘: Provided, That with’’.
Subsec. (b)(1). Pub. L. 110–289, § 2145(c), substituted
‘‘Except as provided in the last sentence of this paragraph, no’’ for ‘‘No’’ in introductory provisions and inserted concluding provisions.
Subsec. (b)(1)(A)(ii). Pub. L. 110–289, § 2145(a)(1), substituted ‘‘$25,090’’ for ‘‘$17,500’’.
Subsec. (b)(1)(C) to (E). Pub. L. 110–289, § 2145(a)(2)–(5),
realigned margins and substituted ‘‘$69,678’’ for
‘‘$48,600’’ in subpar. (C), ‘‘$92,904’’ for ‘‘$64,800’’ in subpar. (D), and ‘‘$23,226’’ for ‘‘$16,200’’ in subpar. (E).
Subsec. (b)(8). Pub. L. 110–289, § 2144(a), added par. (8).
Subsec. (b)(9). Pub. L. 110–289, § 2145(b), added par. (9).
Subsec. (b)(10). Pub. L. 110–289, § 2148(a), added par.
(10).
Subsec. (b)(11). Pub. L. 110–289, § 2150, added par. (11).
Subsec. (c). Pub. L. 110–289, § 2147(b), amended subsec.
(c) generally. Prior to amendment, subsec. (c) related
to the Secretary’s powers with respect to any debt,
contract, claim, personal property, or security assigned
or held in connection with the payment of insurance.
Subsec. (f). Pub. L. 110–289, § 2146, designated existing
provisions as par. (1), inserted heading, and added par.
(2).
2000—Subsec. (b)(3)(E). Pub. L. 106–569 substituted
‘‘twenty years’’ for ‘‘fifteen years’’.
1992—Subsec. (a). Pub. L. 102–550, § 1012(k)(1), which
directed amendment of fifth undesignated par. by inserting ‘‘Alterations, repairs, and improvements upon
or in connection with existing structures may also include the evaluation and reduction of lead-based paint
hazards.’’, and by adding par. (4), was executed to
fourth undesignated par. to reflect the probable intent
of Congress.
Subsec. (b)(1)(C) to (E). Pub. L. 102–550, § 503(c)(1),
added subpars. (C) to (E) and struck out former subpars. (C) to (E) which read as follows:
‘‘(C) 70 percent of the median 1-family house price in
the area, as determined by the Secretary under section
1709(b)(2) of this title, if made for the purpose of financing the purchase of a manufactured home;
‘‘(D) 80 percent of the median 1-family house price in
the area, as determined by the Secretary under section
1709(b)(2) of this title, if made for the purpose of financing the purchase of a manufactured home and a suitably developed lot on which to place the home;
‘‘(E) the greater of (i) 20 percent of the median 1-family house price in the area, as determined by the Secretary under section 1709(b)(2) of this title, or (ii)
$13,500, if made for the purpose of financing the purchase, by an owner of a manufactured home which is
the principal residence of the owner, of a suitably developed lot on which to place that manufactured home,
and if the owner certifies that the owner will place the
manufactured home on the lot acquired with such loan
within 6 months after the date of such loan;’’.

§ 1703

Pub. L. 102–389 added subpars. (C) to (E) and struck
out former subpars. (C) to (E) which read as follows:
‘‘(C) $40,500 if made for the purpose of financing the
purchase of a manufactured home;
‘‘(D) $54,000 if made for the purpose of financing the
purchase of a manufactured home and a suitably developed lot on which to place the home;
‘‘(E) $13,500, if made for the purpose of financing the
purchase, by an owner of a manufactured home which
is the principal residence of that owner, of a suitably
developed lot on which to place that manufactured
home, and if the owner certifies that he or she will
place the manufactured home on the lot acquired with
such loan within six months after the date of such
loan;’’.
Subsec. (b)(2). Pub. L. 102–389 substituted ‘‘but in no
case may such limits, as so increased, exceed the lesser
of (A) 185 percent of the dollar amount specified, or (B)
the dollar amount specified as increased by the same
percentage by which 95 percent of the median one-family house price in the area (as determined by the Secretary) exceeds $67,500’’ for ‘‘but not to exceed the percentage by which the maximum mortgage amount of a
one-family residence in the area is increased by the
Secretary under section 1709(b)(2) of this title’’.
1990—Subsec. (b)(1)(A). Pub. L. 101–625, § 340(b)(1)(A),
added subpar. (A) and struck out former subpar. (A)
which read as follows: ‘‘$17,500 ($20,000 where financing
the installation of a solar energy system is involved) if
made for the purpose of financing alterations, repairs
and improvements upon or in connection with existing
single-family structures or manufactured homes;’’.
Subsec. (b)(1)(B). Pub. L. 101–625, § 340(b)(1)(B), substituted ‘‘$60,000 or an average amount of $12,000 per
family unit’’ for ‘‘$43,750 or an average amount of $8,750
per family unit ($50,000 and $10,000, respectively, where
financing the installation of a solar energy system is
involved)’’.
Subsec. (b)(3)(A). Pub. L. 101–625, § 340(c)(1), added subpar. (A) and struck out former subpar. (A) which read
as follows: ‘‘fifteen years and thirty-two days if made
for the purpose of financing alterations, repairs, and
improvements upon or in connection with an existing
single-family structure or manufactured home;’’.
Subsec. (b)(3)(B). Pub. L. 101–625, § 340(c)(2), substituted ‘‘twenty years’’ for ‘‘fifteen years’’.
Subsec. (i). Pub. L. 101–625, § 806(a), added subsec. (i).
1989—Subsec. (b)(7). Pub. L. 101–235 added par. (7).
1988—Subsec. (a). Pub. L. 100–242 struck out ‘‘and not
later than March 15, 1988,’’ after ‘‘made by them on or
after July 1, 1939,’’.
1987—Subsec. (a). Pub. L. 100–200 substituted ‘‘March
15, 1988’’ for ‘‘December 16, 1987’’.
Pub. L. 100–179 substituted ‘‘December 16, 1987’’ for
‘‘December 2, 1987’’.
Pub. L. 100–170 substituted ‘‘December 2, 1987’’ for
‘‘November 15, 1987’’.
Pub. L. 100–154 substituted ‘‘November 15, 1987’’ for
‘‘October 31, 1987’’.
Pub. L. 100–122 substituted ‘‘October 31, 1987’’ for
‘‘September 30, 1987’’.
1986—Subsec. (a). Pub. L. 99–430 substituted ‘‘September 30, 1987’’ for ‘‘September 30, 1986’’.
Pub. L. 99–345 substituted ‘‘September 30, 1986’’ for
‘‘June 6, 1986’’.
Pub. L. 99–289 substituted ‘‘June 6, 1986’’ for ‘‘April 30,
1986’’.
Pub. L. 99–272 made amendment identical to Pub. L.
99–219. See 1985 Amendment note below.
Pub. L. 99–267 substituted ‘‘April 30, 1986’’ for ‘‘March
17, 1986’’.
1985—Subsec. (a). Pub. L. 99–219 substituted ‘‘not later
than March 17, 1986’’ for ‘‘prior to December 16, 1985’’.
Pub. L. 99–156 substituted ‘‘December 16, 1985’’ for
‘‘November 15, 1985’’.
Pub. L. 99–120 substituted ‘‘November 15, 1985’’ for
‘‘October 1, 1985’’.
1983—Subsec. (a). Pub. L. 98–181, § 415, inserted new
undesignated par. authorizing insurance be made available to existing manufactured homes not insured under

§ 1703

TITLE 12—BANKS AND BANKING

this section if such homes were constructed in accordance with the standards issued under the National
Manufactured Housing Construction and Safety Standards Act of 1974 and meet standards similar to the minimum property standards applicable to existing homes
issued under subchapter II of this chapter.
Pub. L. 98–181, § 401(a), substituted ‘‘October 1, 1985’’
for ‘‘December 1, 1983’’.
Pub. L. 98–109 substituted ‘‘December 1, 1983’’ for ‘‘October 1, 1983’’.
Pub. L. 98–35 substituted ‘‘October 1, 1983’’ for ‘‘May
21, 1983’’.
Subsec. (b)(1)(C). Pub. L. 98–181, § 416(a)(1), substituted
‘‘$40,500’’ for ‘‘$22,500 ($35,000 in the case of a manufactured home composed of two or more modules)’’.
Subsec. (b)(1)(D). Pub. L. 98–181, § 416(a)(2), substituted ‘‘$54,000’’ for ‘‘$35,000 ($47,500 in the case of a
manufactured home composed of two or more modules)’’.
Subsec. (b)(1)(E). Pub. L. 98–181, § 416(a)(3), substituted
‘‘$13,500’’ for ‘‘such an amount as may be necessary, but
not exceeding $12,500,’’.
Subsec. (b)(2). Pub. L. 98–181, § 416(b), substituted provision authorizing the Secretary, in other areas, to increase the maximum dollar amounts specified in subsec. (b)(1)(D) and (E) on an area-by-area basis as
deemed necessary, but not to exceed the percentage by
which the maximum mortgage amount of a one-family
residence in the area is increased by the Secretary
under section 1709(b)(2) of this title for provision which
authorized the Secretary, by regulation, in other areas
where needed to meet the higher costs of land acquisition, etc., in connection with the purchase of a manufactured home or lot, to increase any dollar amount
limitation otherwise applicable by an additional $7,500.
Subsec. (b)(5). Pub. L. 98–181, § 404(b)(1), amended par.
(5) generally, substituting provision that any obligation with respect to which insurance is granted under
this section bear interest at such rate as agreed upon
by the borrower and the financial institution for provision that any such obligation bear interest and insurance premium charges as do not exceed an amount determined by a specified formula.
Subsec. (b)(6)(C). Pub. L. 98–181, § 417, added subpar.
(C).
1982—Subsec. (a). Pub. L. 97–289 substituted ‘‘May 21,
1983’’ for ‘‘October 1, 1982’’.
1981—Pub. L. 97–35, § 339B(c), provided that for purposes of section 308(c)(1) of Pub. L. 96–399, the terms
‘‘mobile home’’ and ‘‘manufactured home’’ shall be
deemed to include the terms ‘‘mobile homes’’ and
‘‘manufactured homes’’, respectively. See 1980 Amendment notes below.
Subsec. (a). Pub. L. 97–35, § 331(a), substituted ‘‘1982’’
for ‘‘1981’’.
Subsec. (b). Pub. L. 97–35, § 338(a), completely revised
and reorganized provisions respecting computations,
adjustments, applicability, etc., for granting of insurance to financial institutions for obligations representing loans, advances of credit, or purchases.
1980—Subsec. (a). Pub. L. 96–399, § 308(c)(1), which directed substitution of ‘‘manufactured home’’ for ‘‘mobile home’’ wherever appearing, was executed by substituting ‘‘manufactured home’’ for ‘‘mobile home’’ and
‘‘manufactured homes’’ for ‘‘mobile homes’’ wherever
appearing pursuant to Pub. L. 97–35, § 339B(c). See 1981
Amendment note above.
Pub. L. 96–399, § 301(a), substituted ‘‘October 1, 1981’’
for ‘‘October 16, 1980’’.
Pub. L. 96–372 substituted ‘‘October 16, 1980’’ for ‘‘October 1, 1980’’.
Subsec. (b). Pub. L. 96–399, § 308(c)(1), which directed
substitution of ‘‘manufactured home’’ for ‘‘mobile
home’’ wherever appearing, was executed by substituting ‘‘manufactured home’’ for ‘‘mobile home’’ and
‘‘manufactured homes’’ for ‘‘mobile homes’’ wherever
appearing pursuant to Pub. L. 97–35, § 339B(c). See 1981
Amendment note above.
Pub. L. 96–399, § 308(a), (b), inserted provisions respecting areas of high land costs or high set-up costs

Page 508

and increased amounts with respect to financing purchases of such homes from $18,000 to $20,000 (from
$27,000 to $30,000 where there are two or more modules),
where an undeveloped lot is concerned from $24,000 to
$26,675 (from $33,000 to $36,675 where there are two or
more modules), where a suitably developed lot is concerned from $27,500 to $30,550 (from $36,500 to $40,550
where there are two or more modules), and where a
principal place of residence of the owner is concerned
from $6,250 to $6,950 and $9,375 to $10,425, respectively,
for undeveloped and developed lots.
1979—Subsec. (a). Pub. L. 96–153, § 301(a), substituted
‘‘October 1, 1980’’ for ‘‘December 1, 1979’’.
Pub. L. 96–105 substituted ‘‘December 1, 1979’’ for ‘‘November 1, 1979’’.
Pub. L. 96–71 substituted ‘‘November 1, 1979’’ for ‘‘October 1, 1979’’.
Subsec. (b). Pub. L. 96–153, § 313(a), substituted: in cl.
(1) of first sentence of first unlettered paragraph
‘‘$18,000 ($27,000 in the case of a mobile home containing’’ for ‘‘$16,000 ($24,000 in the case of a mobile home
composing’’, in subpar. (A) of second unlettered paragraph ‘‘such an amount not exceeding $24,000 ($33,000 in
the case of a mobile home composed of two or more
modules)’’ for ‘‘an amount not exceeding (i) the maximum amount under clause (1) of the first paragraph of
this subsection, and (ii) such amount not to exceed
$5,000 as may be necessary to cover the cost of purchasing the lot’’, in subpar. (B) of second unlettered paragraph ‘‘twenty years and thirty-two days (twenty-five’’
for ‘‘fifteen years and thirty-two days (twenty-three’’,
in subpar. (A) of third unlettered paragraph ‘‘such an
amount not exceeding $27,500 ($36,500 in the case of a
mobile home composed of two or more modules)’’ for
‘‘an amount not exceeding (i) the maximum amount
under clause (1) of the first paragraph of this subsection, and (ii) such amount not to exceed $7,500 as
may be necessary to cover the cost of purchasing the
lot’’, in subpar. (B) of such unlettered paragraph ‘‘twenty years and thirty-two days (twenty-five’’ for ‘‘fifteen
years and thirty-two days (twenty-three’’, in subpar.
(A) of the fourth unlettered paragraph ‘‘$6,250 in the
case of an undeveloped lot, or (ii) $9,375’’ for ‘‘$5,000 in
the case of an undeveloped lot, or (ii) $7,500’’, and in
subpar. (B) of such paragraph ‘‘fifteen years and thirtytwo days’’ for ‘‘ten years and thirty-two days’’.
1978—Subsec. (a). Pub. L. 95–557, § 301(a), substituted
‘‘October 1, 1979’’ for ‘‘November 1, 1978’’.
Pub. L. 95–406 substituted ‘‘November 1, 1978’’ for ‘‘October 1, 1978’’.
Subsec. (a)(2). Pub. L. 95–619 defined ‘‘energy conserving improvements’’ in terms of purchase and installation of weatherization materials as defined in section
6862(9) of title 42 rather than additions, alterations, or
improvements of an existing or new structure, designed
to reduce the total energy requirements of a structure
in conformity with standards prescribed by the Secretary.
Subsec. (a)(3). Pub. L. 95–619 expanded definition of
‘‘solar energy system’’ to include the utilization of
wind energy and added the distinction between active
and passive types of energy systems.
Subsec. (b). Pub. L. 95–557, § 320, substituted ‘‘not in
excess of $37,500 nor an average amount of $7,500 per
family unit and having a maturity not in excess of fifteen years’’ for ‘‘not in excess of $25,000 nor an average
amount of $5,000 per family unit and having a maturity
not in excess of twelve years’’.
1977—Subsec. (a). Pub. L. 95–128, § 301(a), substituted
‘‘October 1, 1978’’ for ‘‘October 1, 1977’’.
Pub. L. 95–80 substituted ‘‘October 1, 1977’’ for ‘‘August 1, 1977’’.
Pub. L. 95–60 substituted ‘‘August 1, 1977’’ for ‘‘June
30, 1977’’.
Subsec. (b). Pub. L. 95–128, § 306, substituted: in cl. (1)
of first sentence ‘‘$15,000’’ for ‘‘$10,000’’ and ‘‘$16,000
($24,000’’ for ‘‘$12,500 ($20,000’’, and in cl. (2) ‘‘fifteen
years’’ for ‘‘twelve years’’; inserted at end of proviso in
cl. (2) ‘‘(twenty-three years and thirty-two days in the
case of a mobile home composed of two or more mod-

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TITLE 12—BANKS AND BANKING

ules)’’; substituted in subpar. (B) of the second and
third paragraphs ‘‘twenty-three years’’ for ‘‘twenty
years’’; and inserted paragraph at end of subsec. (b)
which authorized the Secretary to increase by regulation any dollar amount limitation on mobile homes or
mobile home lot loans contained in this subsection by
not to exceed 40 per centum.
1975—Subsec. (b). Pub. L. 94–173 substituted ‘‘$12,500
($20,000’’ for ‘‘$10,000 ($15,000’’ in cl. 1.
1974—Subsec. (a). Pub. L. 93–449, § 4(a)(1), inserted provisions relating to financing preservation of historic
structures and defining ‘‘historic structures’’ and
‘‘preservation’’.
Pub. L. 93–383, §§ 309(b)(1), (2), (c), 316(a), substituted
‘‘June 30, 1977’’ for ‘‘October 1, 1974’’ in provisions preceding initially designated cl. (i), inserted ‘‘or mobile
homes’’ after ‘‘in connection with existing structures’’
in initial cl. (i), provisions relating to the financing of
the purchase of a lot on which a mobile home is to be
placed and payment of reasonable expenses for the appropriate preparation of such lot, and paragraph relating to alteration, repair, and improvement upon or in
connection with existing structures with respect to inclusion of fire safety equipment, etc.
Subsec. (b). Pub. L. 93–449, § 4(a)(2), added par. relating to loans financing preservation of historic structures.
Pub. L. 93–383, § 309(a), (b)(3), (d), in cl. (1) substituted
‘‘exceeds $10,000’’ for ‘‘exceeds $5,000’’, in cl. (2) substituted provisions relating to maturity of obligation
in excess of twelve years and thirty-two days for provisions relating to maturity of obligation in excess of
three years and thirty-two days and authorization of
increase to seven years and thirty-two days under conditions determined by the Secretary and substituted
‘‘fifteen years and thirty-two days’’ for ‘‘twelve years
and thirty-two days (fifteen years and thirty-two days
in the case of a mobile home composed of two or more
modules)’’, in cl. (3) substituted ‘‘$25,000’’ for ‘‘$15,000’’,
‘‘$5,000’’ for ‘‘$2,500’’, and ‘‘twelve years’’ for ‘‘seven
years’’, inserted provision relating to loans to finance
fire safety equipment for a nursing home, etc., and inserted paragraphs relating to financing the purchase of
a mobile home and an undeveloped lot on which the
mobile home is to be placed, financing the purchase of
a mobile home and a suitably developed lot on which
the mobile home is to be placed, and financing the purchase by the owner of a mobile home of a lot on which
the mobile home is to be placed.
1973—Subsec. (a). Pub. L. 93–117 substituted ‘‘October
1, 1974’’ for ‘‘October 1, 1973’’.
Pub. L. 93–85 substituted ‘‘October 1, 1973’’ for ‘‘June
30, 1973’’.
1972—Subsec. (a). Pub. L. 92–503 substituted ‘‘June 30,
1973’’ for ‘‘October 1, 1972’’.
1970—Subsec. (a). Pub. L. 91–609, § 101(a), substituted
‘‘October 1, 1972’’ for ‘‘January 1, 1971’’.
Pub. L. 91–525 substituted ‘‘January 1, 1971’’ for ‘‘December 1, 1970’’.
Pub. L. 91–473 substituted ‘‘December 1, 1970’’ for ‘‘November 1, 1970’’.
Pub. L. 91–432 substituted ‘‘November 1, 1970’’ for ‘‘October 1, 1970’’.
Subsec. (b). Pub. L. 91–609, § 113(1), (2), in cl. (1) prohibited insurance with respect to obligations representing a loan where loan exceeds ‘‘($15,000 in the case of a
mobile home composed of two or more modules)’’, and
in cl. (2) prescribed maturity date for obligation financing purchase of a mobile home of ‘‘(fifteen years and
thirty-two days in the case of a mobile home composed
of two or more modules)’’.
1969—Subsec. (a). Pub. L. 91–152, §§ 101(a), 103(c)(1)(4),
substituted ‘‘October 1, 1970’’ for ‘‘January 1, 1970’’, designated as ‘‘(i)’’ provisions authorizing and empowering
the Secretary to insure institutions financing alterations, repairs, and improvements, etc., inserted provisions designated as ‘‘(ii)’’ dealing with institutions
which finance the purchase of mobile homes used by
the owner as his principal residence, inserted ‘‘(other
than mobile homes)’’ after ‘‘(1) with respect to new res-

§ 1703

idential structures’’, and inserted provisions authorizing and directing the Secretary to prescribe minimum
property standards and conformance to local zoning requirements with respect to mobile homes financed by
insured institutions.
Pub. L. 91–78 substituted ‘‘January 1, 1970’’ for ‘‘October 1, 1969’’.
Subsec. (b). Pub. L. 91–152, § 103(c)(5), (6), in cl. (1) inserted provision excepting obligations financing the
purchase of mobile homes in an amount not exceeding
$10,000, and in cl. (2) inserted proviso limiting obligations financing the purchase of mobile homes to a maturity date not in excess of twelve years and thirty-two
days.
Subsec. (c)(2). Pub. L. 91–152, § 103(c)(7), substituted
‘‘real or personal property’’ for ‘‘real property’’ wherever appearing.
1968—Subsec. (b). Pub. L. 90–448 substituted ‘‘$5,000’’
for ‘‘$3,500’’, ‘‘seven years’’ for ‘‘five years’’, ‘‘$5.50 discount’’ for ‘‘$5 discount’’, and ‘‘$4.50 discount’’ for ‘‘$4
discount’’.
1967—Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’
for ‘‘Commissioner’’ wherever appearing in subsecs. (a),
(b), (c)(1), (2), and (d) to (h).
Subsec. (c)(2). Pub. L. 90–19, § 1(d), substituted ‘‘an officer’’ for ‘‘the Commissioner or by any Assistant Commissioner’’.
1965—Subsec. (a). Pub. L. 89–117, § 202(a), substituted
‘‘October 1, 1969’’ for ‘‘October 1, 1965’’.
Subsec. (f). Pub. L. 89–117, § 1108(a), struck out provisions directing the deposit of premium charges and fees
and property held with respect to insurance into a
United States Treasury account to be used to defray
Federal Housing Administration expenses and to pay
insurance claims and making allowance for transfer
and merger of funds and disposition of surplus funds.
1964—Subsec. (g). Pub. L. 88–560 struck out ‘‘after December 31, 1957,’’ after ‘‘Any payment for loss made’’.
1961—Subsec. (a). Pub. L. 87–70 substituted ‘‘October
1, 1965’’ for ‘‘October 1, 1961’’.
1960—Subsec. (a). Pub. L. 86–788 substituted ‘‘October
1, 1961’’ for ‘‘October 1, 1960’’, and struck out provisions
limiting the aggregate amount of all loans, advances of
credit, and obligations purchased, with respect to
which insurance could be granted under the section, at
$1,750,000,000.
1959—Subsec. (a). Pub. L. 86–372 substituted ‘‘October
1, 1960’’ for ‘‘September 30, 1959’’.
1957—Subsecs. (g), (h). Pub. L. 85–104 added subsec. (g)
and redesignated former subsec. (g) as (h).
1956—Subsec. (a). Act Aug. 7, 1956, § 101(a), substituted
‘‘September 30, 1959’’ for ‘‘September 30, 1956’’ and proviso of second par. authorizing waiver of clause (iii) in
discretion of Commissioner with respect to occupancy
of completion of new residential structures, for former
proviso providing that the clause (iii) occupancy requirement should not be mandatory with respect to
new residences damaged by a major disaster.
Act Feb. 10, 1956, removed the six months’ occupancy
requirement with respect to new residences damaged by
a major disaster.
Subsec. (b). Act Aug. 7, 1956, § 101(b), (c), increased
amount of loans which can be insured to $3,500 in lieu
of former provisions providing $2,500 for improvement
of existing structures and $3,000 for construction of new
structures, increased maximum term of loans which
can be insured from 3 years and thirty-two days to 5
years and thirty-two days, inserted proviso limiting interest and premium charges equivalent to $5 discount
per $100 for proceeds of loan up to $2,500 and $4 discount
per $100 for proceeds in excess of $2,500, and substituted
‘‘$15,000 nor an average amount of $2,500 per family
unit’’ for ‘‘$10,000’’.
1955—Subsec. (a). Act Aug. 11, 1955, substituted ‘‘September 30, 1956’’ for ‘‘August 1, 1955’’.
Act June 30, 1955, substituted ‘‘August 1, 1955’’ for
‘‘July 1, 1955’’.
1954—Subsec. (a). Act Aug. 2, 1954, § 101(a), in second
sentence, inserted proviso restricting claims for losses
on individual loans, advances of credit, and purchases

§ 1703

TITLE 12—BANKS AND BANKING

to 90 per centum of loss in each such case, and added
second par.
Subsec. (f). Act Aug. 2, 1954, § 102, inserted last two
sentences with respect to termination of the Title I
Claims Account as of August 1, 1954.
1953—Subsec. (a). Act Mar. 10, 1953, increased the Subchapter
I
loan
insurance
authorization
from
$1,250,000,000 to $1,750,000,000.
1950—Act Apr. 20, 1950, § 122, substituted ‘‘Commissioner’’ for ‘‘Administrator’’ wherever appearing.
Subsec. (a). Act Apr. 20, 1950, § 101(a)(1), (2), substituted ‘‘July 1, 1955’’ for ‘‘Mar. 1, 1950’’, and limited
the total amount of outstanding loans with respect to
which insurance is granted under this section to
$1,250,000,000 outstanding at any one time.
Subsec. (b)(1). Act Apr. 20, 1950, § 101(a)(3), substituted
‘‘$3,000’’ for ‘‘$4,500’’.
Subsec. (b)(2). Act Apr. 20, 1950, § 101(a)(4), struck out
‘‘residential or’’ before ‘‘agricultural purposes’’.
Subsec. (f). Act Apr. 20, 1950, § 101(a)(5), substituted
‘‘section’’ for ‘‘subchapter’’ wherever appearing.
1949—Subsec. (a). Joint Res. Oct. 25, 1949, substituted
‘‘March 1, 1950’’ for ‘‘November 1, 1949’’ in first sentence
and ‘‘$225,000,000’’ for ‘‘$200,000,000’’ in last sentence.
Act Aug. 30, 1949, substituted ‘‘November 1, 1949’’ for
‘‘September 1, 1949’’.
Act July 15, 1949, substituted ‘‘September 1, 1949’’ for
‘‘July 1, 1949’’.
1948—Subsec. (a). Act Aug. 10, 1948, § 101(s)(1), substituted ‘‘$200,000,000’’ for ‘‘$165,000,000’’.
Subsec. (b). Act Aug. 10, 1948, § 101(s)(2)–(4), substituted ‘‘$4,500’’ for ‘‘$3,000’’, struck out first proviso
and inserted in lieu a new proviso, and struck out last
sentence.
1947—Subsec. (a). Act June 26, 1947, extended provisions of section for two years from 1947 to 1949.
1943—Subsec. (a). Act Oct. 15, 1943, substituted ‘‘1947’’
for ‘‘1944’’ in first sentence.
Act Mar. 23, 1943, substituted ‘‘1944’’ for ‘‘1943’’ in first
sentence.
Subsec. (f). Act Oct. 15, 1943, § 4, struck out ‘‘threefourths of’’ before ‘‘1 per centum’’ in first sentence.
1942—Subsec. (b). Act May 26, 1942, amended provisions generally.
1941—Subsec. (a). Act June 28, 1941, §§ 1, 2, substituted
‘‘July 1, 1943’’ for ‘‘July 1, 1941’’ in first sentence; inserted ‘‘and other sources’’ after ‘‘premiums’’; and substituted ‘‘$165,000,000’’ for ‘‘$100,000,000’’.
Subsec. (b). Act June 28, 1941, § 3, substituted ‘‘made
for the purpose of financing the alteration, repair, or
improvement of existing structures exceeds $2,500 (or in
the case of the alteration, repair, or improvement of an
existing dwelling designed or to be designed for more
than one family, exceeds $5,000), or for the purpose of financing the construction of new structures exceeds
$3,000’’ for ‘‘exceeds $2,500’’; substituted in cl. (2) ‘‘where
the loan, advance of credit, or purchase does not exceed
$2,500, or has a maturity in excess of five years and
thirty-two days, where the loan, advance of credit, or
purchase exceeds $2,500 but does not exceed $5,000; except that such maturity limitations shall not apply if’’
for ‘‘unless’’; and inserted proviso at end.
Subsec. (c). Act June 28, 1941, § 4, designated existing
provisions as par. (1), inserted ‘‘personal’’ before ‘‘property’’, and added par. (2).
Subsec. (f). Act June 28, 1941, § 5, inserted ‘‘and all
moneys collected by the Administrator as fees of any
kind in connection with the granting of insurance as
provided in this section, and all moneys derived from
the sale, collection, disposition, or compromise of any
evidence of debt, contract, claim, property, or security
assigned to or held by the Administrator as provided in
subsection (c) of this section with respect to insurance
collected on and after July 1, 1939’’ in last sentence.
1939—Subsecs. (a), (b). Act June 3, 1939, § 1, amended
provisions generally.
Subsecs. (f), (g). Act June 3, 1939, § 2, added subsecs. (f)
and (g).
1938—Subsecs. (a), (b). Act Feb. 3, 1938, amended provisions generally.

Page 510

1937—Subsec. (a). Act Apr. 22, 1937, in third sentence,
limited the total liability for all insurance under this
section and former section 1026a of this title, not to exceed in the aggregate $100,000,000.
1936—Subsecs. (a) to (d). Act Apr. 3, 1936, amended
provisions generally.
Subsec. (e). Act Apr. 17, 1936, added subsec. (e).
1935—Subsec. (a). Act Aug. 23, 1935, substituted ‘‘and
the purchase and installation of equipment and machinery on real property’’ for ‘‘including the installation of equipment and machinery’’ in first sentence.
Act May 28, 1935, substituted ‘‘April’’ for ‘‘January’’
in first sentence and inserted ‘‘including the installation of equipment and machinery’’, and amended generally the last sentence.
EFFECTIVE DATE OF 2008 AMENDMENT
Pub. L. 110–289, div. B, title I, § 2144(b), July 30, 2008,
122 Stat. 2844, provided that: ‘‘The amendment made by
subsection (a) [amending this section] shall only apply
to loans that are registered or endorsed for insurance
after the date of the enactment of this title [July 30,
2008].’’
EFFECTIVE DATE OF 1990 AMENDMENT
Pub. L. 101–625, title III, § 340(b)(2), Nov. 28, 1990, 104
Stat. 4147, provided that: ‘‘The amendments made by
this subsection [amending this section] shall apply to
loans executed on or after June 1, 1991.’’
EFFECTIVE DATE OF 1989 AMENDMENT
Pub. L. 101–235, title I, § 134(b), Dec. 15, 1989, 103 Stat.
2028, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply only
with respect to—
‘‘(1) violations referred to in the amendment that
occur on or after the date of the enactment of this
Act [Dec. 15, 1989]; and
‘‘(2) in the case of a continuing violation (as determined by the Secretary of Housing and Urban Development), any portion of a violation referred to in the
amendment that occurs on or after such date.’’
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
EFFECTIVE DATE OF 1954 AMENDMENT
Act Aug. 2, 1954, ch. 649, title I, § 101(b), 68 Stat. 590,
provided that, as used in the amendments made by such
act (see 1954 Amendments note above), the words ‘‘effective date of the Housing Act of 1954 [Act Aug. 2,
1954]’’ mean the first day after the first full calendar
month following the date of approval of such act (Aug.
2, 1954).
EFFECTIVE DATE OF 1950 AMENDMENT
Act Apr. 20, 1950, ch. 94, title I, § 101(b), 64 Stat. 48,
provided that ‘‘This section [amending this section]
shall take effect as of March 1, 1950.’’
EFFECTIVE DATE OF 1949 AMENDMENT
Act July 15, 1949, ch. 338, title II, § 202, 63 Stat. 421,
provided that: ‘‘This title [amending this section and
sections 1709 and 1738 of this title] shall take effect as
of June 30, 1949.’’
EFFECTIVE DATE OF 1939 AMENDMENT
Act June 3, 1939, ch. 175, § 4, 53 Stat. 805, provided
that: ‘‘The provisions of sections 1, 2, and 3 of this Act
[amending this section and repealing section 1706a of
this title] shall take effect on July 1, 1939.’’
EFFECTIVE DATE OF 1936 AMENDMENT
Act Apr. 3, 1936, ch. 165, § 1, 49 Stat. 1187, provided
that the amendment made by that section is effective
Apr. 1, 1936.

Page 511

§ 1706a

TITLE 12—BANKS AND BANKING
INCONSISTENT LAWS

Act Aug. 2, 1954, ch. 649, title VIII, § 818, 68 Stat. 648,
provided that: ‘‘Insofar as the provisions of any other
law are inconsistent with the provisions of this Act [see
1954 Short Title note set out under section 1701 of this
title], the provisions of this Act shall be controlling.’’
POWERS AND AUTHORITIES OF ACT AUGUST 2, 1954 AS
CUMULATIVE; SEPARABILITY
Act Aug. 2, 1954, ch. 649, title VIII, § 819, 68 Stat. 648,
provided that: ‘‘Except as may be otherwise expressly
provided in this Act [see Short Title of 1954 Amendments note set out under section 1701 of this title], all
powers and authorities conferred by this Act shall be
cumulative and additional to and not in derogation of
any powers and authorities otherwise existing. Notwithstanding any other evidences of the intention of
Congress, it is hereby declared to be the controlling intent of Congress that if any provisions of this Act, or
the application thereof to any persons or circumstances, shall be adjudged by any court of competent
jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder of this Act or
its application to other persons and circumstances.’’
PURPOSES
Pub. L. 110–289, div. B, title I, § 2142, July 30, 2008, 122
Stat. 2844, provided that: ‘‘The purposes of this subtitle
[subtitle B (§§ 2141–2150) of title I of div. B of Pub. L.
110–289, see Short Title of 2008 Amendment note set out
under section 1701 of this title] are—
‘‘(1) to provide adequate funding for FHA-insured
manufactured housing loans for low- and moderateincome homebuyers during all economic cycles in the
manufactured housing industry;
‘‘(2) to modernize the FHA title I insurance program for manufactured housing loans to enhance participation by Ginnie Mae and the private lending
markets; and
‘‘(3) to adjust the low loan limits for title I manufactured home loan insurance to reflect the increase
in costs since such limits were last increased in 1992
and to index the limits to inflation.’’
TIMING
Pub. L. 110–289, div. B, title I, § 2148(b), July 30, 2008,
122 Stat. 2847, provided that: ‘‘Not later than the expiration of the 6-month period beginning on the date of
the enactment of this title [July 30, 2008], the Secretary
of Housing and Urban Development shall revise the existing underwriting criteria for the program referred to
in paragraph (10) of section 2(b) of the National Housing
Act [12 U.S.C. 1703(b)(10)] (as added by subsection (a) of
this section) in accordance with the requirements of
such paragraph.’’
‘‘MOBILE HOME’’ AND ‘‘MANUFACTURED HOME’’ TO INCLUDE
‘‘MOBILE HOMES’’ AND ‘‘MANUFACTURED
HOMES’’
Pub. L. 97–35, title III, § 339B(c), Aug. 13, 1981, 95 Stat.
417, provided that: ‘‘For purposes of paragraphs (1) and
(4) of section 308(c) of the Housing and Community Development Act of 1980 [amending sections 1703 and 1713
of this title, and section 5401 et seq. of Title 42, The
Public Health and Welfare], the term ‘mobile home’
and the term ‘manufactured home’ shall be deemed to
include the term ‘mobile homes’ and the term ‘manufactured homes’, respectively.’’
DATA COLLECTION AND REPORTING PROCEDURES RESPECTING MEAN AND MEDIAN SALES PRICES ON MANUFACTURED HOMES AND LOTS; DEVELOPMENT, CONTENTS, ETC.
Pub. L. 96–399, title III, § 308(e), Oct. 8, 1980, 94 Stat.
1641, provided that: ‘‘Not later than January 1, 1982, the
Secretary of Housing and Urban Development shall develop a procedure for collecting and regularly reporting
data on the mean and median sales price for new manu-

factured homes, and, where available, data on the mean
and median sales price for manufactured home lots and
combination new manufactured home and lot packages.
Such reports shall contain, to the maximum extent feasible, sales price information for the Nation, each census region, each State on an annual basis, and selected
standard metropolitan statistical areas having sufficient activity on an annual basis.’’
REPORT RESPECTING OWNERSHIP OF MOBILE HOME
SITES
Pub. L. 96–153, title III, § 321, Dec. 21, 1979, 93 Stat.
1119, required the Secretary of Housing and Urban Development to submit a report to Congress by Mar. 31,
1980, containing recommendations for programs and
policies which encourage individual ownership of mobile home lots through several methods.
REPAYMENT TO TREASURY ON CAPITAL ACCOUNT OF
SUBCHAPTER I INSURANCE FUND
Act Mar. 10, 1953, ch. 5, § 2, 67 Stat. 5, directed the
Federal Housing Commissioner to pay out of the capital account of the Title I Insurance Fund to the Secretary of the Treasury, prior to June 30, 1954, the sum
of $8,333,313.65 either in one lump sum or in installments, except that the first payment was to be made on
July 1, 1953.

§ 1704. Repealed. Apr. 3, 1936, ch. 165, § 2, 49 Stat.
1188
Section, act June 27, 1934, ch. 847, title I, § 3, 48 Stat.
1247, related to loans to financial institutions.

§ 1705. Allocation of funds
For the purposes of carrying out the provisions of this subchapter and subchapters II and
III, the President, in his discretion, is authorized to provide such funds or any portion thereof
by allotment to the Secretary from any funds
that are available, or may hereafter be made
available, to the President for emergency purposes.
(June 27, 1934, ch. 847, title I, § 4, 48 Stat. 1247;
June 30, 1947, ch. 166, title II, § 206(l), 61 Stat. 208;
Apr. 20, 1950, ch. 94, title I, § 122, 64 Stat. 59; Pub.
L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17; Pub.
L. 98–479, title II, § 204(a)(1), Oct. 17, 1984, 98 Stat.
2231.)
AMENDMENTS
1984—Pub. L. 98–479 substituted ‘‘such’’ for ‘‘suuch’’.
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’.
1950—Act Apr. 20, 1950, § 122, substituted ‘‘Commissioner’’ for ‘‘Administrator’’.
1947—Act June 30, 1947, struck out references to Reconstruction Finance Corporation.

§ 1706. Repealed. Aug. 2, 1954, ch. 649, title VIII,
§ 802(b), 68 Stat. 642
Section, acts June 27, 1934, ch. 847, title I, § 5, 48 Stat.
1247; Mar. 28, 1941, ch. 31, § 3, 55 Stat. 61; Aug. 10, 1948,
ch. 832, title IV, § 402 (part), 62 Stat. 1283; Aug. 8, 1949,
ch. 403, § 2 (part), 63 Stat. 576; Apr. 20, 1950, ch. 94, title
I, § 122, 64 Stat. 59; Sept. 1, 1951, ch. 378, title II, § 202
(part), 65 Stat. 303, related to reports to Congress. See
section 1701o of this title.

§ 1706a. Repealed. June 3, 1939, ch. 175, § 3, 53
Stat. 805
Section, act June 27, 1934, ch. 847, title I, § 6, as added
act Apr. 17, 1936, ch. 234, § 3, 49 Stat. 1233; amended act
Apr. 22, 1937, ch. 121, § 1, 50 Stat. 70, related to insurance
of financial institutions financing rehabilitation of
property damaged by fires, floods, storms, etc.

§ 1706b

TITLE 12—BANKS AND BANKING
EFFECTIVE DATE OF REPEAL

Repeal effective July 1, 1939, see section 4 of act June
3, 1939, set out as an Effective Date of 1939 Amendment
note under section 1703 of this title.

§ 1706b. Taxation of real property held by Secretary
Nothing in this subchapter shall be construed
to exempt any real property acquired and held
by the Secretary in connection with the payment of insurance heretofore or hereafter granted under this subchapter from taxation by any
State or political subdivision thereof, to the
same extent, according to its value, as other
real property is taxed.
(June 27, 1934, ch. 847, title I, § 7, as added June
28, 1941, ch. 261, § 7, 55 Stat. 365; amended Apr. 20,
1950, ch. 94 title I, § 122, 64 Stat. 59; Pub. L. 90–19,
§ 1(a)(3), May 25, 1967, 81 Stat. 17.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’.

§ 1706c. Insurance of mortgages
(a) Supplemental system; limitation on amount;
termination of authority
To assist in providing adequate housing for
families of low and moderate income, particularly in suburban and outlying areas, this section is designed to supplement systems of mortgage insurance under other provisions of this
chapter by making feasible the insurance of
mortgages covering properties in areas where it
is not practicable to obtain conformity with
many of the requirements essential to the insurance of mortgages on housing in built-up urban
areas. The Secretary is authorized, upon application by the mortgagee, to insure, as hereinafter provided, any mortgage (as defined in section 1707 of this title) offered to him which is eligible for insurance as hereinafter provided, and,
upon such terms as the Secretary may prescribe,
to make commitments for the insuring of such
mortgages prior to the date of their execution or
disbursement thereon: Provided, That the aggregate amount of principal obligations of all mortgages insured under this section and outstanding at any one time shall not exceed $100,000,000,
except that with the approval of the President
such aggregate amount may be increased at any
time or times by additional amounts aggregating not more than $150,000,000 upon a determination by the President, taking into account the
general effect of any such increase upon conditions in the building industry and upon the national economy, that such increase is in the
public interest: And provided further, That no
mortgage shall be insured under this section
after August 2, 1954, except pursuant to a commitment to insure issued on or before such date.
(b) Eligibility conditions
To be eligible for insurance under this section,
a mortgage shall—
(1) have been made to, and be held by, a
mortgagee approved by the Secretary as responsible and able to service the mortgage
properly;

Page 512

(2) involve a principal obligation (including
such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve) in an amount not to exceed $5,700, and
not to exceed 95 per centum of the appraised
value, as of the date the mortgage is accepted
for insurance, of a property upon which there
is located a dwelling designed principally for a
single-family residence, and which is approved
for mortgage insurance prior to the beginning
of construction: Provided, That the mortgagor
shall be the owner and occupant of the property at the time of insurance and shall have
paid on account of the property at least 5 per
centum of the Secretary’s estimate of the cost
of acquisition in cash or its equivalent, or
shall be the builder constructing the dwelling,
in which case the principal obligation shall
not exceed 85 per centum of the appraised
value of the property or $5,100: Provided further, That the Secretary finds that the project
with respect to which the mortgage is executed is an acceptable risk, giving consideration to the need for providing adequate housing for families of low and moderate income
particularly in suburban and outlying areas:
And provided further, That, where the mortgagor is the owner and occupant of the property
and establishes (to the satisfaction of the Secretary) that his home, which he occupied as an
owner or as a tenant, was destroyed or damaged to such an extent that reconstruction is
required as a result of a flood, fire, hurricane,
earthquake, storm or other catastrophe, which
the President, pursuant to sections 5122(2) and
5170 of title 42, has determined to be a major
disaster, such maximum dollar limitation may
be increased by the Secretary from $5,700 to
$7,000, and the percentage limitation may be
increased by the Secretary from 95 per centum
to 100 per centum of the appraised value;
(3) have a maturity satisfactory to the Secretary but not to exceed thirty years from the
date of insurance of the mortgage;
(4) contain complete amortization provisions
satisfactory to the Secretary requiring periodic payments by the mortgagor not in excess
of his reasonable ability to pay as determined
by the Secretary;
(5) bear interest (exclusive of premium
charges for insurance and service charges, if
any) at not to exceed 5 per centum per annum
on the amount of the principal obligation outstanding at any time;
(6) provide, in a manner satisfactory to the
Secretary, for the application of the mortgagor’s periodic payments (exclusive of the
amount allocated to interest and to the premium charge which is required for mortgage
insurance as hereinafter provided and to the
service charge, if any) to amortization of the
principal of the mortgage; and
(7) contain such terms and provisions with
respect to insurance, repairs, alterations, payment of taxes, service charges, default reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, and other
matters as the Secretary may in his discretion
prescribe.
(c) Premium charge
The Secretary is authorized to fix a premium
charge for the insurance of mortgages under this

Page 513

§ 1706c

TITLE 12—BANKS AND BANKING

section, but in the case of any mortgage, such
charge shall not be less than an amount equivalent to one-half of 1 per centum per annum nor
more than an amount equivalent to 1 per centum per annum of the amount of the principal
obligation of the mortgage outstanding at any
time, without taking into account delinquent
payments or prepayments. Such premium
charges shall be payable by the mortgagee, either in cash or in debentures issued by the Secretary under this section at par plus accrued interest, in such manner as may be prescribed by
the Secretary: Provided, That the Secretary may
require the payment of one or more such premium charges at the time the mortgage is insured, at such discount rate as he may prescribe
not in excess of the interest rate specified in the
mortgage. If the Secretary finds, upon the presentation of a mortgage for insurance and the
tender of the initial premium charge or charges
so required, that the mortgage complies with
the provisions of this section, such mortgage
may be accepted for insurance by endorsement
or otherwise as the Secretary may prescribe. In
the event that the principal obligation of any
mortgage accepted for insurance under this section is paid in full prior to the maturity date,
the Secretary is further authorized, in his discretion, to require the payment by the mortgagee of an adjusted premium charge in such
amount as the Secretary determines to be equitable, but not in excess of the aggregate amount
of the premium charges that the mortgagee
would otherwise have been required to pay if the
mortgage had continued to be insured until such
maturity date; and in the event that the principal obligation is paid in full as herein set
forth, the Secretary is authorized to refund to
the mortgagee for the account of the mortgagor
all, or such portion as he shall determine to be
equitable, of the current unearned premium
charges theretofore paid.
(d) Release of mortgagor
The Secretary may, at any time under such
terms and conditions as he may prescribe, consent to the release of the mortgagor from his liability under the mortgage or the credit instrument secured thereby, or consent to the release
of parts of the mortgaged property from the lien
of the mortgage.
(e) Conclusiveness of insurance contract as to
eligibility
Any contract of insurance executed by the
Secretary under this section shall be conclusive
evidence of the eligibility of the mortgage for
insurance, and the validity of any contract of
insurance so executed shall be incontestable in
the hands of an approved mortgagee from the
date of the execution of such contract, except
for fraud or misrepresentation on the part of
such approved mortgagee.
(f) Rights of mortgagee upon foreclosure
In any case in which the mortgagee under a
mortgage insured under this section shall have
foreclosed and taken possession of the mortgaged property in accordance with the regulations of, and within a period to be determined
by, the Secretary or shall, with the consent of
the Secretary, have otherwise acquired such

property from the mortgagor after default, the
mortgagee shall be entitled to receive the benefits of the insurance as provided in section
1710(a) of this title with respect to mortgages insured under section 203(b)(2)(D) of this Act.
(g) Applicability of other sections
Subsections (c), (d), (e), (f), (g), (h),1 (j), and
(k) 1 of section 1710 of this title shall be applicable to mortgages insured under this section except that all references therein to the Mutual
Mortgage Insurance Funds or the Fund shall be
construed to refer to the General Insurance
Fund, and all references therein to section 1709
of this title shall be construed to refer to this
section: Provided, That debentures issued in connection with mortgages insured under this section shall have the same tax exemption as debentures issued in connection with mortgages
insured under section 1709 of this title.
(June 27, 1934, ch. 847, title I, § 8, as added Apr.
20, 1950, ch. 94, title I, § 102, 64 Stat. 48; amended
Aug. 3, 1951, ch. 293, § 1, 65 Stat. 173; June 30, 1953,
ch. 170, § 2, 67 Stat. 121; Aug. 2, 1954, ch. 649, title
I, § 103, 68 Stat. 591; Pub. L. 86–372, title I, § 116(a),
Sept. 23, 1959, 73 Stat. 664; Pub. L. 89–117, title
XI, § 1108(b), Aug. 10, 1965, 79 Stat. 504; Pub. L.
90–19, § 1(a)(3), (4), May 25, 1967, 81 Stat. 17; Pub.
L. 91–606, title III, § 301(b), Dec. 31, 1970, 84 Stat.
1758; Pub. L. 93–288, title VII, § 702(b), formerly
title VI, § 602(b), May 22, 1974, 88 Stat. 163, renumbered title VII, § 702(b), Pub. L. 103–337, div.
C, title XXXIV, § 3411(a)(1), (2), Oct. 5, 1994, 108
Stat. 3100; Pub. L. 100–707, title I, § 109(e)(1), Nov.
23, 1988, 102 Stat. 4708.)
REFERENCES IN TEXT
This chapter, referred to in subsec. (a), was in the
original ‘‘this Act’’, meaning act June 27, 1934, ch. 847,
48 Stat. 1246, which is classified principally to this
chapter (§ 1701 et seq.). For complete classification of
this Act to the Code, see Tables.
Section 203(b)(2)(D) of this Act, referred to in subsec.
(f), which was formerly classified to section
1709(b)(2)(D) of this title, was repealed by act Aug. 2,
1954, ch. 649, title I, § 104, 68 Stat. 591.
Subsection (h) of section 1710 of this title, referred to
in subsec. (g), was redesignated subsec. (i) by Pub. L.
105–276, title VI, § 602(1), Oct. 21, 1998, 112 Stat. 2674.
Subsection (k) of section 1710 of this title, referred to
in subsec. (g), was repealed by Pub. L. 105–276, title VI,
§ 601(c), Oct. 21, 1998, 112 Stat. 2673.
The General Insurance Fund, referred to in subsec.
(g), was established by section 1735c of this title.
AMENDMENTS
1988—Subsec. (b)(2). Pub. L. 100–707 substituted ‘‘5170
of title 42’’ for ‘‘5141 of title 42’’.
1974—Subsec. (b)(2). Pub. L. 93–288 substituted ‘‘sections 5122(2) and 5141 of title 42’’ for ‘‘section 4402(1) of
title 42’’.
1970—Subsec. (b)(2). Pub. L. 91–606 substituted reference to section ‘‘4402(1)’’ for ‘‘1855a(a)’’ of title 42.
1967—Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’
for ‘‘Commissioner’’ wherever appearing in subsecs. (a),
(b)(1) to (4), (6), (7), and (c) to (f).
Subsec. (b)(2). Pub. L. 90–19, § 1(a)(4), substituted
‘‘Secretary’s’’ for ‘‘Commissioner’s’’.
1965—Subsec. (g). Pub. L. 89–117, § 1108(b)(1), substituted ‘‘General Insurance Fund’’ for ‘‘Title I Housing
Insurance Fund’’.
Subsec. (h). Pub. L. 89–117, § 1108(b)(2), repealed subsec. (h) which created the Title I Housing Insurance
Fund.
1 See

References in Text note below.

§ 1706d

TITLE 12—BANKS AND BANKING

Subsec. (i). Pub. L. 89–117, § 1108(b)(2), repealed subsec.
(i) which dealt with the disposition of surplus funds of
the Title I Housing Insurance Fund, purchase of debentures, and credits and charges to fund.
1959—Subsec. (g). Pub. L. 86–372 inserted reference to
subsecs. (j) and (k) of section 1710 of this title.
1954—Subsec. (a). Act Aug. 2, 1954, inserted proviso
prohibiting the insurance of mortgages under this section after Aug. 2, 1954, except pursuant to commitments to insure issued on or before such date.
1953—Subsec. (b)(2). Act June 30, 1953, raised the maximum mortgage, where the mortgagor is the owner-occupant, from $4,750, not exceeding 95 per centum of
value, to $5,700, not exceeding 95 per centum of value;
and raised the maximum mortgage, where the builder
is the mortgagor, from $4,250, not exceeding 85 per centum of value, to $5,100, not exceeding 85 per centum of
value.
1951—Subsec. (b)(2). Act Aug. 3, 1951, permitted more
liberal mortgage insurance for those building low-cost
homes to replace their homes lost in a flood or other
major disaster.
EFFECTIVE DATE OF 1974 AMENDMENT
Amendment by Pub. L. 93–288 effective Apr. 1, 1974,
see section 605 of Pub. L. 93–288, formerly set out as an
Effective Date note under section 5121 of Title 42, The
Public Health and Welfare.
EFFECTIVE DATE OF 1970 AMENDMENT
Amendment by Pub. L. 91–606 effective Dec. 31, 1970,
see section 304 of Pub. L. 91–606, set out as a note under
section 165 of Title 26, Internal Revenue Code.
REPAYMENT TO TREASURY ON CAPITAL ACCOUNT OF
TITLE I INSURANCE FUND
Act Mar. 10, 1953, ch. 5, § 2, 67 Stat. 5, directed the
Federal Housing Commissioner to pay out of the capital account of the Title I Insurance Fund to the Secretary of the Treasury, prior to June 30, 1954, the sum
of $8,333,313.65 either in one lump sum or in installments, except that the first payment was to be made on
July 1, 1953.

§ 1706d. Applicability
The provisions of sections 1703 and 1706c of
this title shall be applicable in the several
States and Puerto Rico, the District of Columbia, Guam, the Trust Territory of the Pacific Islands, American Samoa, and the Virgin Islands.
(June 27, 1934, ch. 847, title I, § 9, as added July
14, 1952, ch. 723, § 10(a)(1), 66 Stat. 603; amended
Pub. L. 86–70, § 10(a), June 25, 1959, 73 Stat. 142;
Pub. L. 86–624, § 6, July 12, 1960, 74 Stat. 411; Pub.
L. 91–152, title IV, § 403(c)(3), Dec. 24, 1969, 83
Stat. 395; Pub. L. 98–181, title I [title IV, § 407(a)],
Nov. 30, 1983, 97 Stat. 1211; Pub. L. 100–242, title
IV, § 429(b), Feb. 5, 1988, 101 Stat. 1918.)
AMENDMENTS
1988—Pub. L. 100–242 inserted ‘‘Applicability’’ as section catchline.
1983—Pub. L. 98–181 inserted ‘‘American Samoa,’’
after ‘‘Pacific Islands,’’.
1969—Pub. L. 91–152 inserted ‘‘the Trust Territory of
the Pacific Islands,’’ after ‘‘Guam,’’.
1960—Pub. L. 86–624 struck out ‘‘Hawaii,’’ before
‘‘Puerto Rico’’.
1959—Pub. L. 86–70 struck out ‘‘Alaska,’’ before ‘‘Hawaii’’.
TERMINATION OF TRUST TERRITORY OF THE PACIFIC
ISLANDS
For termination of Trust Territory of the Pacific Islands, see note set out preceding section 1681 of Title
48, Territories and Insular Possessions.

Page 514

§ 1706e. Repealed. Pub. L. 101–625, title
§ 289(b), Nov. 28, 1990, 104 Stat. 4128

II,

Section, Pub. L. 93–383, title VIII, § 810, Aug. 22, 1974,
88 Stat. 734; Pub. L. 94–375, § 20, Aug. 3, 1976, 90 Stat.
1077; Pub. L. 95–24, title I, § 103, Apr. 30, 1977, 91 Stat. 55;
Pub. L. 95–128, title II, § 203, Oct. 12, 1977, 91 Stat. 1129;
Pub. L. 95–557, title I, § 102, Oct. 31, 1978, 92 Stat. 2083;
Pub. L. 96–153, title I, § 106, Dec. 21, 1979, 93 Stat. 1104;
Pub. L. 96–399, title I, § 116, Oct. 8, 1980, 94 Stat. 1623;
Pub. L. 97–35, title III, § 312, Aug. 13, 1981, 95 Stat. 397;
Pub. L. 98–181, title I [title I, § 122], Nov. 30, 1983, 97
Stat. 1170; Pub. L. 98–479, title I, § 101(a)(14), Oct. 17,
1984, 98 Stat. 2220; Pub. L. 100–242, title V, § 517(a),
(c)–(e), Feb. 5, 1988, 101 Stat. 1936, 1937; Pub. L. 101–73,
title V, § 501(e)(1), Aug. 9, 1989, 103 Stat. 394; Pub. L.
101–235, title I, § 126(a), (b), Dec. 15, 1989, 103 Stat. 2025;
Pub. L. 101–625, title IX, § 914(a), (b), Nov. 28, 1990, 104
Stat. 4394, 4395, related to urban homestead program of
unit of general local government, State, or designated
public agency.
EFFECTIVE DATE OF REPEAL
Repeal effective Oct. 1, 1991, and except with respect
to projects and programs for which binding commitments have been entered into prior to Oct. 1, 1991, no
new grants or loans to be made after Oct. 1, 1991, under
this section, see section 12839(a)(5), (b)(1) of Title 42,
The Public Health and Welfare.

§ 1706f. Prohibition against kickbacks and unearned fees
(a) In general
Except as provided in subsection (b), the provisions of sections 2602, 2607, 2614, 2615, 2616, and
2617 of this title shall apply to each sale of a
manufactured home financed with an FHA-insured loan or extension of credit, as well as to
services rendered in connection with such transactions.
(b) Authority of the Secretary
The Secretary is authorized to determine the
manner and extent to which the provisions of
sections 2602, 2607, 2614, 2615, 2616, and 2617 of
this title may reasonably be applied to the
transactions described in subsection (a), and to
grant such exemptions as may be necessary to
achieve the purposes of this section.
(c) Definitions
For purposes of this section—
(1) the term ‘‘federally related mortgage
loan’’ as used in sections 2602, 2607, 2614, 2615,
2616, and 2617 of this title shall include an
FHA-insured loan or extension of credit made
to a borrower for the purpose of purchasing a
manufactured home that the borrower intends
to occupy as a personal residence; and
(2) the term ‘‘real estate settlement service’’
as used in sections 2602, 2607, 2614, 2615, 2616,
and 2617 of this title shall include any service
rendered in connection with a loan or extension of credit insured by the Federal Housing
Administration for the purchase of a manufactured home.
(d) Unfair and deceptive practices
In connection with the purchase of a manufactured home financed with a loan or extension of
credit insured by the Federal Housing Administration under this subchapter, the Secretary
shall prohibit acts or practices in connection
with loans or extensions of credit that the Sec-

Page 515

§ 1707

TITLE 12—BANKS AND BANKING

retary finds to be unfair, deceptive, or otherwise
not in the interests of the borrower.
(June 27, 1934, ch. 847, title I, § 10, as added Pub.
L. 110–289, div. B, title I, § 2149, July 30, 2008, 122
Stat. 2847.)
SUBCHAPTER II—MORTGAGE INSURANCE
§ 1707. Definitions
As used in section 1709 of this title—
(a) The term ‘‘mortgage’’ means (A) a first
mortgage on real estate, in fee simple, (B) a first
mortgage on a leasehold on real estate (i) under
a lease for not less than ninety-nine years which
is renewable, or (ii) under a lease having a period of not less than ten years to run beyond the
maturity date of the mortgage, or (C) a first
mortgage given to secure the unpaid purchase
price of a fee interest in, or long-term leasehold
interest in, real estate consisting of a one-family unit in a multifamily project, including a
project in which the dwelling units are attached,
or are manufactured housing units, semi-detached, or detached, and an undivided interest
in the common areas and facilities which serve
the project; and the term ‘‘first mortgage’’
means such classes of first liens as are commonly given to secure advances on, or the unpaid purchase price of, real estate, under the
laws of the State, in which the real estate is located, together with the credit instruments, if
any, secured thereby.
(b) The term ‘‘mortgagee’’ includes the original lender under a mortgage, and his successors
and assigns approved by the Secretary; and the
term ‘‘mortgagor’’ includes the original borrower under a mortgage and his successors and
assigns.
(c) The term ‘‘maturity date’’ means the date
on which the mortgage indebtedness would be
extinguished if paid in accordance with periodic
payments provided for in the mortgage.
(d) The term ‘‘State’’ includes the several
States, and Puerto Rico, the District of Columbia, Guam, the Commonwealth of the Northern
Mariana Islands, American Samoa, and the Virgin Islands.
(e) The term ‘‘family member’’ means, with respect to a mortgagor under such section, a child,
parent, or grandparent of the mortgagor (or the
mortgagor’s spouse). In determining whether
any of the relationships referred to in the preceding sentence exist, a legally adopted son or
daughter of an individual (and a child who is a
member of an individual’s household, if placed
with such individual by an authorized placement
agency for legal adoption by such individual),
and a foster child of an individual, shall be
treated as a child of such individual by blood.
(f) The term ‘‘child’’ means, with respect to a
mortgagor under such section, a son, stepson,
daughter, or stepdaughter of such mortgagor.
(g) The term ‘‘real estate’’ means land and all
natural resources and structures permanently
affixed to the land, including residential buildings and stationary manufactured housing. The
Secretary may not require, for treatment of any
land or other property as real estate for purposes of this subchapter, that such land or property be treated as real estate for purposes of
State taxation.

(June 27, 1934, ch. 847, title II, § 201, 48 Stat. 1247;
Feb. 3, 1938, ch. 13, § 3, 52 Stat. 9; Mar. 28, 1941,
ch. 31, § 4(a), 55 Stat. 61; Apr. 20, 1950, ch. 94, title
I, § 122, 64 Stat. 59; July 14, 1952, ch. 723, § 10(a)(2),
66 Stat. 603; Pub. L. 86–70, § 10(a), June 25, 1959,
73 Stat. 142; Pub. L. 86–624, § 6, July 12, 1960, 74
Stat. 411; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81
Stat. 17; Pub. L. 91–152, title IV, § 403(c)(1), Dec.
24, 1969, 83 Stat. 395; Pub. L. 96–399, title III, § 306,
Oct. 8, 1980, 94 Stat. 1640; Pub. L. 98–181, title I
[title IV, § 407(b)], Nov. 30, 1983, 97 Stat. 1211;
Pub. L. 104–204, title IV, § 425(b), Sept. 26, 1996,
110 Stat. 2928; Pub. L. 110–289, div. B, title I,
§§ 2117(b), (c), 2120(c), July 30, 2008, 122 Stat. 2833,
2835.)
AMENDMENTS
2008—Subsec. (a). Pub. L. 110–289, § 2117(b), inserted
‘‘(A)’’ before ‘‘a first mortgage’’, substituted ‘‘(B) a
first mortgage on a leasehold on real estate (i)’’ for ‘‘or
on a leasehold (1)’’ and ‘‘, or (ii)’’ for ‘‘or (2)’’, and inserted ‘‘, or (C) a first mortgage given to secure the unpaid purchase price of a fee interest in, or long-term
leasehold interest in, real estate consisting of a onefamily unit in a multifamily project, including a
project in which the dwelling units are attached, or are
manufactured housing units, semi-detached, or detached, and an undivided interest in the common areas
and facilities which serve the project’’ before semicolon.
Subsec. (d). Pub. L. 110–289, § 2120(c), substituted ‘‘the
Commonwealth of the Northern Mariana Islands’’ for
‘‘the Trust Territory of the Pacific Islands’’.
Subsec. (g). Pub. L. 110–289, § 2117(c), added subsec. (g).
1996—Subsecs. (e), (f). Pub. L. 104–204 added subsecs.
(e) and (f).
1983—Subsec. (d). Pub. L. 98–181 inserted ‘‘American
Samoa,’’ after ‘‘Pacific Islands,’’.
1980—Subsec. (a). Pub. L. 96–399 substituted ‘‘ten
years to run beyond the maturity date of the mortgage’’ for ‘‘fifty years to run from the date the mortgage was executed’’.
1969—Subsec. (d). Pub. L. 91–152 inserted ‘‘the Trust
Territory of the Pacific Islands’’ after ‘‘Guam’’.
1967—Subsec. (b). Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’.
1960—Subsec. (d). Pub. L. 86–624 struck out ‘‘Hawaii,’’
before ‘‘Puerto Rico’’.
1959—Subsec. (d). Pub. L. 86–70 struck out ‘‘Alaska,’’
before ‘‘Hawaii’’.
1952—Subsec. (d). Act July 14, 1952, inserted ‘‘Guam,’’
after ‘‘District of Columbia’’.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’.
1941—Subsec. (a). Act Mar. 28, 1941, § 4(a)(1), struck
out ‘‘district, or Territory’’.
Subsec. (d). Act Mar. 28, 1941, § 4(a)(2), added subsec.
(d).
1938—Subsec. (a)(2). Act Feb. 3, 1938, struck out ‘‘upon
which there is located a dwelling for not more than
four families which is used in whole or in part for residential purposes, irrespective of whether such dwelling
has a party wall or is otherwise physically connected
with another dwelling’’ after ‘‘executed’’.
Subsec. (c). Act Feb. 3, 1938, added subsec. (c).
IMPROVEMENT OF FINANCING FOR MULTIFAMILY
HOUSING
Pub. L. 102–550, title V, subtitle C, Oct. 28, 1992, 106
Stat. 3794, which related to improvement of financing
for multifamily housing and was formerly set out as a
note under this section, was transferred or omitted as
follows:
Section 541 of Pub. L. 102–550 was transferred and is
set out as a note under section 1701 of this title;
Section 542 of Pub. L. 102–550 was transferred to section 1715z–22 of this title;

§ 1708

TITLE 12—BANKS AND BANKING

Section 543 of Pub. L. 102–550, as amended by Pub. L.
111–203, title III, § 371, July 21, 2010, 124 Stat. 1565, was
omitted from the Code;
Section 544 of Pub. L. 102–550 was transferred to section 1715z–22a of this title.

§ 1708. Federal Housing Administration operations
(a) Mutual Mortgage Insurance Fund
(1) Establishment
Subject to the provisions of the Federal
Credit Reform Act of 1990 [2 U.S.C. 661 et seq.],
there is hereby created a Mutual Mortgage Insurance Fund (in this subchapter referred to as
the ‘‘Fund’’), which shall be used by the Secretary to carry out the provisions of this subchapter with respect to mortgages insured
under section 1709 of this title. The Secretary
may enter into commitments to guarantee,
and may guarantee, such insured mortgages.
(2) Limit on loan guarantees
The authority of the Secretary to enter into
commitments to guarantee such insured mortgages shall be effective for any fiscal year only
to the extent that the aggregate original principal loan amount under such mortgages, any
part of which is guaranteed, does not exceed
the amount specified in appropriations Acts
for such fiscal year.
(3) Fiduciary responsibility
The Secretary has a responsibility to ensure
that the Mutual Mortgage Insurance Fund remains financially sound.
(4) Annual independent actuarial study
The Secretary shall provide for an independent actuarial study of the Fund to be conducted annually, which shall analyze the financial position of the Fund. The Secretary
shall submit a report annually to the Congress
describing the results of such study and assessing the financial status of the Fund. The
report shall recommend adjustments to underwriting standards, program participation, or
premiums, if necessary, to ensure that the
Fund remains financially sound. The report
shall also include an evaluation of the quality
control procedures and accuracy of information utilized in the process of underwriting
loans guaranteed by the Fund. Such evaluation shall include a review of the risk characteristics of loans based not only on borrower
information and performance, but on risks associated with loans originated or funded by
various entities or financial institutions.
(5) Quarterly reports
During each fiscal year, the Secretary shall
submit a report to the Congress for each calendar quarter, which shall specify for mortgages that are obligations of the Fund—
(A) the cumulative volume of loan guarantee commitments that have been made during such fiscal year through the end of the
quarter for which the report is submitted;
(B) the types of loans insured, categorized
by risk;
(C) any significant changes between actual
and projected claim and prepayment activity;

Page 516

(D) projected versus actual loss rates; and
(E) updated projections of the annual subsidy rates to ensure that increases in risk to
the Fund are identified and mitigated by adjustments to underwriting standards, program participation, or premiums, and the financial soundness of the Fund is maintained.
The first quarterly report under this paragraph shall be submitted on the last day of the
first quarter of fiscal year 2008, or on the last
day of the first full calendar quarter following
July 30, 2008, whichever is later.
(6) Adjustment of premiums
If, pursuant to the independent actuarial
study of the Fund required under paragraph
(4), the Secretary determines that the Fund is
not meeting the operational goals established
under paragraph (7) or there is a substantial
probability that the Fund will not maintain
its established target subsidy rate, the Secretary may either make programmatic adjustments under this subchapter as necessary to
reduce the risk to the Fund, or make appropriate premium adjustments.
(7) Operational goals
The operational goals for the Fund are—
(A) to minimize the default risk to the
Fund and to homeowners by among other actions instituting fraud prevention quality
control screening not later than 18 months
after July 30, 2008; and
(B) to meet the housing needs of the borrowers that the single family mortgage insurance program under this subchapter is designed to serve.
(b) Advisory Board
There is created a Federal Housing Administration Advisory Board (‘‘Board’’) that shall review operation of the Federal Housing Administration, including the activities of the Mortgagee Review Board, and shall provide advice to
the Federal Housing Commissioner with respect
to the formulation of general policies of the
Federal Housing Administration and such other
matters as the Federal Housing Commissioner
may deem appropriate. The Advisory Board
shall, in all other respects, be subject to the provisions of the Federal Advisory Committee Act.
(1) The Advisory Board shall be composed of
15 members to be appointed from among individuals who have substantial expertise and
broad experience in housing and mortgage
lending of whom—
(A) 9 shall be appointed by the Secretary;
(B) 3 shall be appointed by the Chairman
and Ranking Minority Member of the Subcommittee on Housing and Urban Affairs of
the Committee on Banking, Housing, and
Urban Affairs of the Senate; and
(C) 3 shall be appointed by the Chairman
and Ranking Minority Member of the Subcommittee on Housing and Community Development of the Committee on Banking, Finance and Urban Affairs of the House of Representatives.
(2) Membership on the Advisory Board shall
include—

Page 517

TITLE 12—BANKS AND BANKING

(A) not less than 4 persons with distinguished private sector careers in housing finance, lending, management, development
or insurance;
(B) not less than 4 persons with outstanding reputations as licensed actuaries, experts in actuarial science, or economics related to housing;
(C) not less than 4 persons with backgrounds of leadership in representing the interests of housing consumers;
(D) not less than 1 person with significant
experience and a distinguished reputation
for work in the enforcement, advocacy, or
development of fair housing or civil rights
legislation; and
(E) not less than 1 person with a background of leadership representing rural
housing interests.
(3) Members of the Advisory Board shall be
selected to ensure, to the greatest extent practicable, geographical representation or every
region of the country.
(4) Not more than 8 members of the Advisory
Board may be from any one political party.
(5) Membership of the Advisory Board shall
not include any person who, during the previous 24-month period, was required to register
with the Secretary under section 3537b(c) 1 of
title 42 or employed a person for purposes that
required such person to so register.
(6) Of the members of the Advisory Board
first appointed, 5 shall have terms of l year,
and 5 shall have terms of 2 years. Their successors and all other appointees shall have terms
of 3 years.
(7) The Advisory Board is empowered to confer with, request information of, and make
recommendations to the Federal Housing
Commissioner.
The
Commissioner
shall
promptly provide the Advisory Board with
such information as the Board determines to
be necessary to carry out its review of the activities and policies of the Federal Housing
Administration.
(8) The Board shall, not later than December
31 of each year, submit to the Secretary and
the Congress a report of its assessment of the
activities of the Federal Housing Administration, including the soundness of underwriting
procedures, the adequacy of information systems, the appropriateness of staffing patterns,
the effectiveness of the Mortgagee Review
Board, and other matters related to the Federal Housing Administration’s ability to serve
the nation’s homebuyers and renters. Such report shall contain the Board’s recommendations for improvement and include any minority views.
(9) The Board shall meet in Washington,
D.C., not less than twice annually, or more
frequently if requested by the Federal Housing
Commissioner or a majority of the members.
The Board shall elect a chair, vice-chair and
secretary and adopt methods of procedure. The
Board may establish committees and subcommittees as needed.
(10) Subject to the provisions of Section 7 of
the Federal Advisory Committee Act, all
1 See

References in Text note below.

§ 1708

members of the Board may be compensated
and shall be entitled to reimbursement from
the Department for traveling expenses incurred in attendance at meetings of the Board.
(11) The Board shall terminate on January 1,
1995.
(c) Mortgagee Review Board
(1) Establishment
There is established within the Federal
Housing Administration the Mortgagee Review Board (‘‘Board’’). The Board is empowered to initiate the issuance of a letter of reprimand, the probation, suspension or withdrawal of any mortgagee found to be engaging
in activities in violation of Federal Housing
Administration requirements or the nondiscrimination requirements of the Equal
Credit Opportunity Act [15 U.S.C. 1691 et seq.],
the Fair Housing Act [42 U.S.C. 3601 et seq.], or
Executive Order 11063.
(2) Composition
The Board shall consist of—
(A) the Assistant Secretary of Housing/
Federal Housing Commissioner;
(B) the General Counsel of the Department;
(C) the President of the Government National Mortgage Association;
(D) the Assistant Secretary for Administration;
(E) the Assistant Secretary for Fair Housing Enforcement (in cases involving violations of nondiscrimination requirements);
and
(F) the Chief Financial Officer of the Department or their designees.
(3) Actions authorized
When any report, audit, investigation, or
other information before the Board discloses
that a basis for an administrative action
against a mortgagee exists, the Board shall
take one of the following administrative actions:
(A) Letter of reprimand
The Board may issue a letter of reprimand
only once to a mortgagee without taking action under subparagraphs 2 (B), (C), or (D) of
this section. A letter of reprimand shall explain the violation and describe actions the
mortgagee should take to correct the violation.
(B) Probation
The Board may place a mortgagee on probation for a specified period of time not to
exceed 6 months for the purpose of evaluating the mortgagee’s compliance with Federal Housing Administration requirements,
the Equal Credit Opportunity Act [15 U.S.C.
1691 et seq.], the Fair Housing Act [42 U.S.C.
3601 et seq.], Executive Order 11063, or orders
of the Board. During the probation period,
the Board may impose reasonable additional
requirements on a mortgagee including supervision of the mortgagee’s activities by
the Federal Housing Administration, peri2 So

in original. Probably should be ‘‘subparagraph’’.

§ 1708

TITLE 12—BANKS AND BANKING

odic reporting to the Federal Housing Commissioner, or submission to Federal Housing
Administration audits of internal financial
statements, audits by an independent certified public accountant or other audits.
(C) Suspension
The Board may issue an order temporarily
suspending a mortgagee’s approval for doing
business with the Federal Housing Administration if (i) there exists adequate evidence
of a violation or violations and (ii) continuation of the mortgagee’s approval, pending
or at the completion of any audit, investigation, or other review, or such administrative
or other legal proceedings as may ensue,
would not be in the public interest or in the
best interests of the Department. Notwithstanding paragraph (4)(A), a suspension shall
be effective upon issuance by the Board if
the Board determines that there exists adequate evidence that immediate action is required to protect the financial interests of
the Department or the public. A suspension
shall last for not less than 6 months, and for
not longer than 1 year. The Board may extend the suspension for an additional 6
months if it determines the extension is in
the public interest. If the Board and the
mortgagee agree, these time limits may be
extended. During the period of suspension,
the Federal Housing Administration shall
not commit to insure any mortgage originated by the suspended mortgagee.
(D) Withdrawal
The Board may issue an order withdrawing
a mortgagee if the Board has made a determination of a serious violation or repeated
violations by the mortgagee. The Board
shall determine the terms of such withdrawal, but the term shall be not less than
1 year. Where the Board has determined that
the violation is egregious or willful, the
withdrawal shall be permanent.
(E) Settlements
The Board may at any time enter into a
settlement agreement with a mortgagee to
resolve any outstanding grounds for an action. Agreements may include provisions
such as—
(i) cessation of any violation;
(ii) correction or mitigation of the effects of any violation;
(iii) repayment of any sums of money
wrongfully or incorrectly paid to the
mortgagee by a mortgagor, by a seller or
by the Federal Housing Administration;
(iv) actions to collect sums of money
wrongfully or incorrectly paid by the
mortgagee to a third party;
(v) indemnification of the Federal Housing Administration for mortgage insurance claims on mortgages originated in
violation of Federal Housing Administration requirements;
(vi) modification of the length of the
penalty imposed; or
(vii) implementation of other corrective
measures acceptable to the Secretary.

Page 518

Material failure to comply with the provisions of a settlement agreement shall be sufficient cause for suspension or withdrawal.
(4) Notice and hearing
(A) The Board shall issue a written notice to
the mortgagee at least 30 days prior to taking
any action against the mortgagee under subparagraph (B), (C), or (D) of paragraph (3). The
notice shall state the specific violations which
have been alleged, and shall direct the mortgagee to reply in writing to the Board within 30
days. If the mortgagee fails to reply during
such period, the Board may make a determination without considering any comments of the
mortgagee.
(B) If the Board takes action against a mortgagee under subparagraph (B), (C), or (D) of
paragraph (3), the Board shall promptly notify
the mortgagee in writing of the nature, duration, and specific reasons for the action. If,
within 30 days of receiving the notice, the
mortgagee requests a hearing, the Board shall
hold a hearing on the record regarding the violations within 30 days of receiving the request.
If a mortgagee fails to request a hearing within such 30-day period, the right of the mortgagee to a hearing shall be considered waived.
(C) In any case in which the notification of
the Board does not result in a hearing (including any settlement by the Board and a mortgagee), any information regarding the nature
of the violation and the resolution of the action shall be available to the public.
(5) Publication
The Secretary shall establish and publish in
the Federal Register a description of and the
cause for administrative action against a
mortgagee.
(6) Cease-and-desist orders
(A) Whenever the Secretary, upon request of
the Mortgagee Review Board, determines that
there is reasonable cause to believe that a
mortgagee is violating, has violated, or is
about to violate, a law, rule or regulation or
any condition imposed in writing by the Secretary or the Board, and that such violation
could result in significant cost to the Federal
Government or the public, the Secretary may
issue a temporary order requiring the mortgagee to cease and desist from any such violation and to take affirmative action to prevent
such violation or a continuation of such violation pending completion of proceedings of the
Board with respect to such violation. Such
order shall include a notice of charges in respect thereof and shall become effective upon
service to the mortgagee. Such order shall remain effective and enforceable for a period not
to exceed 30 days pending the completion of
proceedings of the Board with respect to such
violation, unless such order is set aside, limited, or suspended by a court in proceedings
authorized by subparagraph (B) of this paragraph. The Board shall provide the mortgagee
an opportunity for a hearing on the record, as
soon as practicable but not later than 20 days
after the temporary cease-and-desist order has
been served.
(B) Within 10 days after the mortgagee has
been served with a temporary cease-and-desist

Page 519

TITLE 12—BANKS AND BANKING

order, the mortgagee may apply to the United
States district court for the judicial district in
which the home office of the mortgagee is located, or the United States District Court for
the District of Columbia, for an injunction
setting aside, limiting of suspending the enforcement, operation, or effectiveness of such
order pending the completion of the administrative proceedings pursuant to the notice of
charges served upon the mortgagee, and such
court shall have jurisdiction to issue such injunction.
(C) In the case of violation or threatened
violation of, or failure to obey, a temporary
cease-and-desist order issued pursuant to this
paragraph, the Secretary may apply to the
United States district court, or the United
States court of any territory, within the jurisdiction of which the home office of the mortgagee is located, for an injunction to enforce
such order, and, if the court shall determine
that there has been such violation or threatened violation or failure to obey, it shall be
the duty of the court to issue such injunction.
(7) ‘‘Mortgagee’’ defined
For purposes of this subsection, the term
‘‘mortgagee’’ means—
(A) a mortgagee approved under this chapter;
(B) a lender or a loan correspondent approved under subchapter I of this chapter;
(C) a branch office or subsidiary of the
mortgagee, lender, or loan correspondent; or
(D) a director, officer, employee, agent, or
other person participating in the conduct of
the affairs of the mortgagee, lender, or loan
correspondent.
(8) Report required
The Board, in consultation with the Federal
Housing Administration Advisory Board, shall
annually recommend to the Secretary such
amendments to statute or regulation as the
Board determines to be appropriate to ensure
the long term financial strength of the Federal Housing Administration fund and the adequate support for home mortgage credit.
(9) Prohibition against limitations on Mortgagee Review Board’s power to take action
against mortgagees
No State or local law, and no Federal law
(except a Federal law enacted expressly in
limitation of this subsection after the effective date of this sentence), shall preclude or
limit the exercise by the Board of its power to
take any action authorized under paragraphs
(3) and (6) of this subsection against any mortgagee.
(d) Limitations on participation in origination
and mortgagee approval
(1) Requirement
Any person or entity that is not approved by
the Secretary to serve as a mortgagee, as such
term is defined in subsection (c)(7), shall not
participate in the origination of an FHA-insured loan except as authorized by the Secretary.
(2) Eligibility for approval
In order to be eligible for approval by the
Secretary, an applicant mortgagee shall not

§ 1708

be, and shall not have any officer, partner, director, principal, manager, supervisor, loan
processor, loan underwriter, or loan originator
of the applicant mortgagee who is—
(A) currently suspended, debarred, under a
limited denial of participation (LDP), or
otherwise restricted under part 25 of title 24
of the Code of Federal Regulations, 2 Code of
Federal Regulations, part 180 as implemented by part 2424, or any successor regulations to such parts, or under similar provisions of any other Federal agency;
(B) under indictment for, or has been convicted of, an offense that reflects adversely
upon the applicant’s integrity, competence
or fitness to meet the responsibilities of an
approved mortgagee;
(C) subject to unresolved findings contained in a Department of Housing and
Urban Development or other governmental
audit, investigation, or review;
(D) engaged in business practices that do
not conform to generally accepted practices
of prudent mortgagees or that demonstrate
irresponsibility;
(E) convicted of, or who has pled guilty or
nolo contendre 3 to, a felony related to participation in the real estate or mortgage
loan industry—
(i) during the 7-year period preceding the
date of the application for licensing and
registration; or
(ii) at any time preceding such date of
application, if such felony involved an act
of fraud, dishonesty, or a breach of trust,
or money laundering;
(F) in violation of provisions of the
S.A.F.E. Mortgage Licensing Act of 2008 (12
U.S.C. 5101 et seq.) or any applicable provision of State law; or
(G) in violation of any other requirement
as established by the Secretary.
(3) Rulemaking and implementation
The Secretary shall conduct a rulemaking to
carry out this subsection. The Secretary shall
implement this subsection not later than the
expiration of the 60-day period beginning upon
May 20, 2009, by notice, mortgagee letter, or
interim final regulations, which shall take effect upon issuance.
(e) Coordination of GNMA and FHA withdrawal
action
(1) Whenever the Federal Housing Administration or Government National Mortgage Association initiates proceedings that could lead to
withdrawing the mortgagee from participating
in the program, the initiating agency shall—
(A) within 24 hours notify the other agency
in writing of the action taken;
(B) provide to the other agency the factual
basis for the action taken; and
(C) if a mortgagee is withdrawn, publish its
decision in the Federal Register.
(2) Within 60 days of receipt of a notification
of action that could lead to withdrawal under
subsection 4 (1), the Federal Housing Adminis3 So
4 So

in original. Probably should be ‘‘contendere’’.
in original. Probably should be ‘‘paragraph’’.

§ 1708

TITLE 12—BANKS AND BANKING

tration or the Government National Mortgage
Association shall—
(A) conduct and complete its own investigation;
(B) provide written notification to the other
agency of its decision, including the factual
basis for its decision; and
(C) if a mortgagee is withdrawn, publish its
decision in the Federal Register.
(f) Suspension or revocation of approval of mortgagee; notice and statement of reasons
Whenever the Secretary has taken any discretionary action to suspend or revoke the approval of any mortgagee to participate in any
mortgage insurance program under this subchapter, the Secretary shall provide prompt notice of the action and a statement of the reasons
for the action to—
(1) the Secretary of Veterans Affairs;
(2) the chief executive officer of the Federal
National Mortgage Association;
(3) the chief executive officer of the Federal
Home Loan Mortgage Corporation;
(4) the Secretary of Agriculture;
(5) if the mortgagee is a national bank, a
subsidiary or affiliate of such bank, a Federal
savings association or a subsidiary or affiliate
of a savings association, the Comptroller of
the Currency;
(6) if the mortgagee is a State bank that is
a member of the Federal Reserve System or a
subsidiary or affiliate of such a bank, or a
bank holding company or a subsidiary or affiliate of such a company, the Board of Governors of the Federal Reserve System; and
(7) if the mortgagee is a State bank or State
savings association that is not a member of
the Federal Reserve System or is a subsidiary
or affiliate of such a bank, the Board of Directors of the Federal Deposit Insurance Corporation.
(g) Appraisal standards
(1) The Secretary shall prescribe standards for
the appraisal of all property to be insured by the
Federal Housing Administration. Such appraisals shall be performed in accordance with uniform standards, by individuals who have demonstrated competence and whose professional
conduct is subject to effective supervision.
These standards shall require at a minimum—
(A) that the appraisals of properties to be insured by the Federal Housing Administration
shall be performed in accordance with generally accepted appraisal standards, such as the
appraisal standards promulgated by the Appraisal Foundation a not-for-profit corporation established on November 30, 1987 under
the laws of Illinois; and
(B) that each appraisal be a written statement used in connection with a real estate
transaction that is independently an 5 impartially prepared by a licensed or certified appraiser setting forth an opinion of defined
value of an adequately described property as
of a specific date, supported by presentation
and analysis of relevant market information.
(2) The Appraisal Subcommittee of the Federal
Financial Institutions Examination Council
shall include the Secretary or his designee.
5 So

in original. Probably should be ‘‘and’’.

Page 520

(3) DIRECT ENDORSEMENT PROGRAM.—
(A) Any mortgagee that is authorized by the
Secretary to process mortgages as a direct endorsement mortgagee (pursuant to the singlefamily home mortgage direct endorsement
program established by the Secretary) may
contract with an appraiser chosen at the discretion of the mortgagee for the performance
of appraisals in connection with such mortgages. Such appraisers may include appraisal
companies organized as corporations, partnerships, or sole proprietorships.
(B) Any appraisal conducted pursuant to
subparagraph (A) shall be conducted by an individual who complies with the qualifications
or standards for appraisers established by the
Secretary pursuant to this subsection.
(C) In conducting an appraisal, such individual may utilize the assistance of others, who
shall be under the direct supervision of the individual responsible for the appraisal. The individual responsible for the appraisal shall
personally approve and sign any appraisal report.
(4) FEE PANEL APPRAISERS.—
(A) Any individual who is an employee of an
appraisal company (including any company organized as a corporation, partnership, or sole
proprietorship) and who meets the qualifications or standards for appraisers and inclusion
on appraiser fee panels established by the Secretary, shall be eligible for assignment to conduct appraisals for mortgages under this subchapter in the same manner and on the same
basis as other approved appraisers.
(B) With respect to any employee of an appraisal company described in subparagraph (A)
who is offered an appraisal assignment in connection with a mortgage under this subchapter, the person utilizing the appraiser
may contract directly with the appraisal company employing the appraiser for the furnishing of the appraisal services.
(5) ADDITIONAL APPRAISER STANDARDS.—Beginning on July 30, 2008, any appraiser chosen or approved to conduct appraisals for mortgages
under this subchapter shall—
(A) be certified—
(i) by the State in which the property to be
appraised is located; or
(ii) by a nationally recognized professional
appraisal organization; and
(B) have demonstrated verifiable education
in the appraisal requirements established by
the Federal Housing Administration under
this subsection.
(h) Use of name
The Secretary shall, by regulation, require
each mortgagee approved by the Secretary for
participation in the FHA mortgage insurance
programs of the Secretary—
(1) to use the business name of the mortgagee that is registered with the Secretary in
connection with such approval in all advertisements and promotional materials, as such
terms are defined by the Secretary, relating to
the business of such mortgagee in such mortgage insurance programs; and
(2) to maintain copies of all such advertisements and promotional materials, in such

Page 521

§ 1708

TITLE 12—BANKS AND BANKING

form and for such period as the Secretary requires.
(June 27, 1934, ch. 847, title II, § 202, 48 Stat. 1248;
Feb. 3, 1938, ch. 13, § 3, 52 Stat. 10; June 3, 1939,
ch. 175, § 5, 53 Stat. 805; Apr. 20, 1950, ch. 94, title
I, § 122, 64 Stat. 59; Pub. L. 90–19, § 1(a)(3), May 25,
1967, 81 Stat. 17; Pub. L. 101–235, title I, § 142, Dec.
15, 1989, 103 Stat. 2030; Pub. L. 101–625, title III,
§ 322, Nov. 28, 1990, 104 Stat. 4134; Pub. L. 102–550,
title V, §§ 502, 518, 519, Oct. 28, 1992, 106 Stat. 3778,
3792; Pub. L. 105–65, title V, § 551, Oct. 27, 1997, 111
Stat. 1412; Pub. L. 106–377, § 1(a)(1) [title II,
§ 209(c)], Oct. 27, 2000, 114 Stat. 1441, 1441A–25;
Pub. L. 110–289, div. A, title IV, § 1404, div. B,
title I, §§ 2116(1), (3), 2118(a), July 30, 2008, 122
Stat. 2810, 2832, 2833; Pub. L. 111–22, div. A, title
II, § 203(a), (b), May 20, 2009, 123 Stat. 1643; Pub.
L. 111–203, title III, § 373, July 21, 2010, 124 Stat.
1566.)
REFERENCES IN TEXT
The Federal Credit Reform Act of 1990, referred to in
subsec. (a)(1), is title V of Pub. L. 93–344, as added by
Pub. L. 101–508, title XIII, § 13201(a), Nov. 5, 1990, 104
Stat. 1388–609, which is classified generally to subchapter III (§ 661 et seq.) of chapter 17A of Title 2, The
Congress. For complete classification of this Act to the
Code, see Short Title note set out under section 621 of
Title 2 and Tables.
The Federal Advisory Committee Act, referred to in
subsec. (b), is Pub. L. 92–463, Oct. 6, 1972, 86 Stat. 770,
which is set out in the Appendix to Title 5, Government
Organization and Employees.
Section 3537b(c) of title 42, referred to in subsec.
(b)(5), was in the original ‘‘section 112(c) of the Department of Housing and Urban Development Reform Act of
1989’’, meaning section 112 of Pub. L. 101–235, which does
not contain a subsec. (c), but enacted section 13 of the
Department of Housing and Urban Development Act,
which was classified to section 3537b of title 42 prior to
repeal by Pub. L. 104–65, § 11(b)(1), Dec. 19, 1995, 109 Stat.
701, and which contained a subsec. (c) relating to registration with the Secretary.
The Equal Credit Opportunity Act, referred to in subsec. (c)(1), (3)(B), is title VII of Pub. L. 90–321, as added
by Pub. L. 93–495, title V, § 503, Oct. 28, 1974, 88 Stat.
1521, which is classified generally to subchapter IV
(§ 1691 et seq.) of chapter 41 of Title 15, Commerce and
Trade. For complete classification of this Act to the
Code, see Short Title note set out under section 1601 of
Title 15 and Tables.
The Fair Housing Act, referred to in subsec. (c)(1),
(3)(B), is title VIII of Pub. L. 90–284, Apr. 11, 1968, 82
Stat. 81, which is classified principally to subchapter I
(§ 3601 et seq.) of chapter 45 of Title 42, The Public
Health and Welfare. For complete classification of this
Act to the Code, see Short Title note set out under section 3601 of Title 42 and Tables.
Executive Order 11063, referred to in subsec. (c)(1),
(3)(B), is set out as a note under section 1982 of Title 42.
This chapter, referred to in subsec. (c)(7)(A), was in
the original ‘‘this Act’’, meaning act June 27, 1934, ch.
847, 48 Stat. 1246, which is classified principally to this
chapter (§ 1701 et seq.). For complete classification of
this Act to the Code, see Tables.
The effective date of this sentence, referred to in subsec. (c)(9), is the date of enactment of Pub. L. 111–22,
which enacted par. (9) and was approved May 20, 2009.
The S.A.F.E. Mortgage Licensing Act of 2008, referred
to in subsec. (d)(2)(F), is title V of div. A of Pub. L.
110–289, July 30, 2008, 122 Stat. 2810, also known as the
Secure and Fair Enforcement for Mortgage Licensing
Act of 2008, which is classified generally to chapter 51
(§ 5101 et seq.) of this title. For complete classification
of this Act to the Code, see Short Title note set out
under section 5101 of this title and Tables.

CODIFICATION
Section 1709(s) of this title, which was transferred
and redesignated as subsec. (e) of this section by Pub.
L. 110–289, div. B, title I, § 2116(3), July 30, 2008, 122 Stat.
2832, was based on act June 27, 1934, ch. 847, title II,
§ 203(s), as added Pub. L. 101–235, title I, § 135, Dec. 15,
1989, 103 Stat. 2028; amended Pub. L. 108–386, § 8(b), Oct.
30, 2004, 118 Stat. 2231; Pub. L. 110–289, div. B, title I,
§ 2116(2), July 30, 2008, 122 Stat. 2832.
AMENDMENTS
2010—Subsec. (f)(5). Pub. L. 111–203, § 373(1), added par.
(5) and struck out former par. (5) which read as follows:
‘‘if the mortgagee is a national bank, or a subsidiary or
affiliate of such a bank, the Comptroller of the Currency;’’.
Subsec. (f)(6). Pub. L. 111–203, § 373(2), inserted ‘‘and’’
at end.
Subsec. (f)(7). Pub. L. 111–203, § 373(3), inserted ‘‘or
State savings association’’ after ‘‘State bank’’ and substituted period for ‘‘; and’’ at end.
Subsec. (f)(8). Pub. L. 111–203, § 373(4), struck out par.
(8) which read as follows: ‘‘if the mortgagee is a Federal
or State savings association or a subsidiary or affiliate
of a savings association, the Director of the Office of
Thrift Supervision.’’
2009—Subsec. (c)(2)(E). Pub. L. 111–22, § 203(a)(1)(A), inserted ‘‘and’’ after semicolon at end.
Subsec. (c)(2)(F). Pub. L. 111–22, § 203(a)(1)(B), substituted ‘‘or their designees.’’ for ‘‘; and’’.
Subsec. (c)(2)(G). Pub. L. 111–22, § 203(a)(1)(C), struck
out subpar. (G), which read as follows: ‘‘the Director of
the Enforcement Center; or their designees.’’
Subsec. (c)(9). Pub. L. 111–22, § 203(a)(2), added par. (9).
Subsecs. (d) to (g). Pub. L. 111–22, § 203(b)(1), (2), added
subsec. (d) and redesignated former subsecs. (d) to (f) as
(e) to (g), respectively.
Subsec. (h). Pub. L. 111–22, § 203(b)(3), added subsec.
(h).
2008—Subsec. (a). Pub. L. 110–289, § 2118(a), amended
subsec. (a) generally. Prior to amendment, text read as
follows: ‘‘There is created a Mutual Mortgage Insurance Fund (hereinafter referred to as the ‘Fund’), which
shall be used by the Secretary as a revolving fund for
carrying out the provisions of this subchapter with respect to mortgages insured under section 1709 of this
title as hereinafter provided, and there shall be allocated immediately to such Fund the sum of $10,000,000
out of funds made available to the Secretary for the
purposes of this subchapter.’’
Subsec. (e). Pub. L. 110–289, § 2116(3), transferred subsec. (s) of section 1709 of this title and redesignated it
as subsec. (e) of this section. See Codification note
above. Former subsec. (e) redesignated (f).
Subsec. (e)(3)(B). Pub. L. 110–289, § 2116(1)(A), made
technical amendment to reference in original act which
appears in text as reference to ‘‘this subsection’’.
Subsec. (e)(5). Pub. L. 110–289, § 1404, added par. (5).
Subsec. (f). Pub. L. 110–289, § 2116(1)(B), redesignated
subsec. (e) as (f).
2000—Subsec. (c)(2)(E). Pub. L. 106–377, § 1(a)(1) [title
II, § 209(c)(1)], struck out ‘‘and’’ at end.
Subsec. (c)(2)(F). Pub. L. 106–377, § 1(a)(1) [title II,
§ 209(c)(2)], which directed substitution of ‘‘and’’ for ‘‘or
their designees.’’, was executed by inserting ‘‘and’’
after semicolon to reflect the probable intent of Congress, because the phrase ‘‘or their designees.’’ appeared at end of par. (2) and did not appear in subpar.
(F).
Subsec. (c)(2)(G). Pub. L. 106–377, § 1(a)(1) [title II,
§ 209(c)(3)], added subpar. (G).
1997—Subsec. (c)(3)(C). Pub. L. 105–65 inserted after
first sentence ‘‘Notwithstanding paragraph (4)(A), a
suspension shall be effective upon issuance by the
Board if the Board determines that there exists adequate evidence that immediate action is required to
protect the financial interests of the Department or the
public.’’
1992—Subsec. (b)(11). Pub. L. 102–550, § 502, added par.
(11).

§ 1709

TITLE 12—BANKS AND BANKING

Subsec. (c)(3)(C). Pub. L. 102–550, § 518, inserted ‘‘temporarily’’ after ‘‘order’’, ‘‘(i)’’ after ‘‘Administration
if’’, ‘‘(ii)’’ after ‘‘violations and’’, and ‘‘, and for not
longer than 1 year. The Board may extend the suspension for an additional 6 months if it determines the extension is in the public interest. If the Board and the
mortgagee agree, these time limits may be extended’’
after ‘‘6 months’’.
Subsec. (c)(6)(D). Pub. L. 102–550, § 519(1), struck out
subpar. (D) which read as follows: ‘‘For purposes of this
paragraph, the term ‘mortgagee’ means a mortgagee, a
branch office or subsidiary of a mortgagee, or a director, officer, employee, agent, or other person participating in the conduct of the affairs of such mortgagee.’’
Subsec. (c)(7), (8). Pub. L. 102–550, § 519(2), added par.
(7) and redesignated former par. (7) as (8).
1990—Subsec. (e)(3), (4). Pub. L. 101–625 added pars. (3)
and (4).
1989—Pub. L. 101–235 substituted ‘‘Federal Housing
Administration operations’’ for ‘‘Mutual Mortgage Insurance Fund’’ in section catchline, designated existing
provisions as subsec. (a) and inserted heading, and
added subsecs. (b) to (e).
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.
1939—Act June 3, 1939, substituted ‘‘created’’ for ‘‘create’’.
1938—Act Feb. 3, 1938, inserted ‘‘with respect to mortgages insured under section 1709 of this title’’.
CHANGE OF NAME
Committee on Banking, Finance and Urban Affairs of
House of Representatives treated as referring to Committee on Banking and Financial Services of House of
Representatives by section 1(a) of Pub. L. 104–14, set
out as a note preceding section 21 of Title 2, The Congress. Committee on Banking and Financial Services of
House of Representatives abolished and replaced by
Committee on Financial Services of House of Representatives, and jurisdiction over matters relating to
securities and exchanges and insurance generally transferred from Committee on Energy and Commerce of
House of Representatives by House Resolution No. 5,
One Hundred Seventh Congress, Jan. 3, 2001.
EFFECTIVE DATE OF 2010 AMENDMENT
Amendment by Pub. L. 111–203 effective on the transfer date, see section 351 of Pub. L. 111–203, set out as a
note under section 906 of Title 2, The Congress.
EXPANDED REVIEW OF FHA MORTGAGEE APPLICANTS
AND NEWLY APPROVED MORTGAGEES
Pub. L. 111–22, div. A, title II, § 203(g), May 20, 2009, 123
Stat. 1648, provided that: ‘‘Not later than the expiration of the 3-month period beginning upon the date of
the enactment of this Act [May 20, 2009], the Secretary
of Housing and Urban Development shall—
‘‘(1) expand the existing process for reviewing new
applicants for approval for participation in the mortgage insurance programs of the Secretary for mortgages on 1- to 4-family residences for the purpose of
identifying applicants who represent a high risk to
the Mutual Mortgage Insurance Fund; and
‘‘(2) implement procedures that, for mortgagees approved during the 12-month period ending upon such
date of enactment—
‘‘(A) expand the number of mortgages originated
by such mortgagees that are reviewed for compliance with applicable laws, regulations, and policies;
and
‘‘(B) include a process for random reviews of such
mortgagees and a process for reviews that is based
on volume of mortgages originated by such mortgagees.’’

§ 1709. Insurance of mortgages
(a) Authorization
The Secretary is authorized, upon application
by the mortgagee, to insure as hereinafter pro-

Page 522

vided any mortgage offered to him which is eligible for insurance as hereinafter provided, and,
upon such terms as the Secretary may prescribe,
to make commitments for the insuring of such
mortgages prior to the date of their execution or
disbursement thereon.
(b) Eligibility for insurance; mortgage limits
To be eligible for insurance under this section
a mortgage shall comply with the following:
(1) Have been made to, and be held by, a
mortgagee approved by the Secretary as responsible and able to service the mortgage
properly.
(2) Involve a principal obligation (including
such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve) in an amount—
(A) not to exceed the lesser of—
(i) in the case of a 1-family residence, 115
percent of the median 1-family house price
in the area, as determined by the Secretary; and in the case of a 2-, 3-, or 4-family residence, the percentage of such median price that bears the same ratio to
such median price as the dollar amount
limitation determined under the sixth sentence of section 1454(a)(2) of this title for a
2-, 3-, or 4-family residence, respectively,
bears to the dollar amount limitation determined under such section for a 1-family
residence; or
(ii) 150 percent of the dollar amount limitation determined under the sixth sentence of such section 1454(a)(2) for a residence of applicable size;
except that the dollar amount limitation in
effect under this subparagraph for any size
residence for any area may not be less than
the greater of: (I) the dollar amount limitation in effect under this section for the area
on October 21, 1998; or (II) 65 percent of the
dollar amount limitation determined under
the sixth sentence of such section 1454(a)(2)
for a residence of the applicable size; and
(B) not to exceed 100 percent of the appraised value of the property.
For purposes of the preceding sentence, the
term ‘‘area’’ means a metropolitan statistical
area as established by the Office of Management and Budget; and the median 1-family
house price for an area shall be equal to the
median 1-family house price of the county
within the area that has the highest such median price. Notwithstanding any other provision of this paragraph, the amount which may
be insured under this section may be increased
by up to 20 percent if such increase is necessary to account for the increased cost of the
residence due to the installation of a solar energy system (as defined in subparagraph (3) of
the last paragraph of section 1703(a) of this
title) therein.
Notwithstanding any other provision of this
paragraph, the Secretary may not insure, or
enter into a commitment to insure, a mortgage under this section that is executed by a
first-time homebuyer and that involves a principal obligation (including such initial service
charges, appraisal, inspection, and other fees

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TITLE 12—BANKS AND BANKING

as the Secretary shall approve) in excess of 97
percent of the appraised value of the property
unless the mortgagor has completed a program of counseling with respect to the responsibilities and financial management involved
in homeownership that is approved by the Secretary; except that the Secretary may, in the
discretion of the Secretary, waive the applicability of this requirement.
(3) Have a maturity satisfactory to the Secretary, but not to exceed, in any event, thirtyfive years (or thirty years if such mortgage is
not approved for insurance prior to construction) from the date of the beginning of amortization of the mortgage.
(4) Contain complete amortization provisions satisfactory to the Secretary requiring
periodic payments by the mortgagor not in excess of his reasonable ability to pay as determined by the Secretary.
(5) Bear interest at such rate as may be
agreed upon by the mortgagor and the mortgagee.
(6) Provide, in a manner satisfactory to the
Secretary, for the application of the mortgagor’s periodic payments (exclusive of the
amount allocated to interest and to the premium charge which is required for mortgage
insurance as hereinafter provided) to amortization of the principal of the mortgage.
(7) Contain such terms and provisions with
respect to insurance, repairs, alterations, payment of taxes, default, reserves, delinquency
charges, foreclosure proceedings, anticipation
of maturity, additional and secondary liens,
and other matters as the Secretary may in his
discretion prescribe.
(8) Repealed. Pub. L. 100–242, title IV,
§ 406(b)(2), Feb. 5, 1988, 101 Stat. 1900.
(9) CASH INVESTMENT REQUIREMENT.—
(A) IN GENERAL.—A mortgage insured
under this section shall be executed by a
mortgagor who shall have paid, in cash or its
equivalent, on account of the property an
amount equal to not less than 3.5 percent of
the appraised value of the property or such
larger amount as the Secretary may determine.
(B) FAMILY MEMBERS.—For purposes of this
paragraph, the Secretary shall consider as
cash or its equivalent any amounts borrowed
from a family member (as such term is defined in section 1707 of this title), subject
only to the requirements that, in any case in
which the repayment of such borrowed
amounts is secured by a lien against the
property, that—
(i) such lien shall be subordinate to the
mortgage; and
(ii) the sum of the principal obligation of
the mortgage and the obligation secured
by such lien may not exceed 100 percent of
the appraised value of the property plus
any initial service charges, appraisal, inspection, and other fees in connection with
the mortgage.
(C) PROHIBITED SOURCES.—In no case shall
the funds required by subparagraph (A) consist, in whole or in part, of funds provided by
any of the following parties before, during,
or after closing of the property sale:

§ 1709

(i) The seller or any other person or entity that financially benefits from the
transaction.
(ii) Any third party or entity that is reimbursed, directly or indirectly, by any of
the parties described in clause (i).
This subparagraph shall apply only to mortgages for which the mortgagee has issued
credit approval for the borrower on or after
October 1, 2008.
(c) Premium charges
(1) The Secretary is authorized to fix premium
charges for the insurance of mortgages under
the separate sections of this subchapter but in
the case of any mortgage such charge shall be
not less than an amount equivalent to onefourth of 1 per centum per annum nor more than
an amount equivalent to 1 per centum per
annum of the amount of the principal obligation
of the mortgage outstanding at any time, without taking into account delinquent payments or
prepayments: Provided, That premium charges
fixed for insurance (1) under section 1715z–10,1
1715z–12, 1715z–16, 1715z–17, or 1715z–18 of this
title, or any other financing mechanism providing alternative methods for repayment of a
mortgage that is determined by the Secretary to
involve additional risk, or (2) under subsection
(n) are not required to be the same as the premium charges for mortgages insured under the
other provisions of this section, but in no case
shall premium charges under subsection (n) exceed 1 per centum per annum: Provided, That
any reduced premium charge so fixed and computed may, in the discretion of the Secretary,
also be made applicable in such manner as the
Secretary shall prescribe to each insured mortgage outstanding under the section or sections
involved at the time the reduced premium
charge is fixed. Such premium charges shall be
payable by the mortgagee, either in cash, or in
debentures issued by the Secretary under this
subchapter at par plus accrued interest, in such
manner as may be prescribed by the Secretary:
Provided, That debentures presented in payment
of premium charges shall represent obligations
of the particular insurance fund or account to
which such premium charges are to be credited:
Provided further, That the Secretary may require
the payment of one or more such premium
charges at the time the mortgage is insured, at
such discount rate as he may prescribe not in
excess of the interest rate specified in the mortgage. If the Secretary finds upon the presentation of a mortgage for insurance and the tender of the initial premium charge or charges so
required that the mortgage complies with the
provisions of this section, such mortgage may be
accepted for insurance by endorsement or otherwise as the Secretary may prescribe; but no
mortgage shall be accepted for insurance under
this section unless the Secretary finds that the
project with respect to which the mortgage is
executed is economically sound. In the event
that the principal obligation of any mortgage
accepted for insurance is paid in full prior to the
maturity date, the Secretary is further authorized in his discretion to require the payment by
1 See

References in Text note below.

§ 1709

TITLE 12—BANKS AND BANKING

the mortgagee of an adjusted premium charge in
such amount as the Secretary determines to be
equitable, but not in excess of the aggregate
amount of the premium charges that the mortgagee would otherwise have been required to pay
if the mortgage had continued to be insured
under this section until such maturity date; and
in the event that the principal obligation is paid
in full as herein set forth the Secretary is authorized to refund to the mortgagee for the account of the mortgagor all, or such portion as he
shall determine to be equitable, of the current
unearned premium charges theretofore paid:
Provided, That with respect to mortgages (1) for
which the Secretary requires, at the time the
mortgage is insured, the payment of a single
premium charge to cover the total premium obligation for the insurance of the mortgage, and
(2) on which the principal obligation is paid before the number of years on which the premium
with respect to a particular mortgage was based,
or the property is sold subject to the mortgage
or is sold and the mortgage is assumed prior to
such time, the Secretary shall provide for refunds, where appropriate, of a portion of the premium paid and shall provide for appropriate allocation of the premium cost among the mortgagors over the term of the mortgage, in accordance with procedures established by the Secretary which take into account sound financial
and actuarial considerations.
(2) Notwithstanding any other provision of
this section, each mortgage secured by a 1- to 4family dwelling that is an obligation of the Mutual Mortgage Insurance Fund shall be subject
to the following requirements:
(A) The Secretary shall establish and collect, at the time of insurance, a single premium payment in an amount not exceeding 3
percent of the amount of the original insured
principal obligation of the mortgage. In the
case of a mortgage for which the mortgagor is
a first-time homebuyer who completes a program of counseling with respect to the responsibilities and financial management involved
in homeownership that is approved by the Secretary, the premium payment under this subparagraph shall not exceed 2.75 percent of the
amount of the original insured principal obligation of the mortgage. Upon payment in full
of the principal obligation of a mortgage prior
to the maturity date of the mortgage, the Secretary shall refund all of the unearned premium charges paid on the mortgage pursuant
to this subparagraph, provided that the mortgagor refinances the unpaid principal obligation under this subchapter.
(B) In addition to the premium under subparagraph (A), the Secretary may establish
and collect annual premium payments in an
amount not exceeding 1.5 percent of the remaining insured principal balance (excluding
the portion of the remaining balance attributable to the premium collected under subparagraph (A) and without taking into account delinquent payments or prepayments)
for the following periods:
(i) For any mortgage involving an original
principal obligation (excluding any premium
collected under subparagraph (A)) that is
less than 90 percent of the appraised value of

Page 524

the property (as of the date the mortgage is
accepted for insurance), for the first 11 years
of the mortgage term.
(ii) For any mortgage involving an original principal obligation (excluding any premium collected under subparagraph (A))
that is greater than or equal to 90 percent of
such value, for the first 30 years of the mortgage term; except that notwithstanding the
matter preceding clause (i), for any mortgage involving an original principal obligation (excluding any premium collected under
subparagraph (A)) that is greater than 95
percent of such value, the annual premium
collected during the 30-year period under
this clause may be in an amount not exceeding 1.55 percent of the remaining insured
principal balance (excluding the portion of
the remaining balance attributable to the
premium collected under subparagraph (A)
and without taking into account delinquent
payments or prepayments).
(C)(i) In addition to the premiums under subparagraphs (A) and (B), the Secretary shall establish and collect annual premium payments
for any mortgage for which the Secretary collects an annual premium payment under subparagraph (B), in an amount described in
clause (ii).
(ii)(I) Subject to subclause (II), with respect
to a mortgage, the amount described in this
clause is 10 basis points of the remaining insured principal balance (excluding the portion
of the remaining balance attributable to the
premium collected under subparagraph (A) and
without taking into account delinquent payments or prepayments).
(II) During the 2-year period beginning on
December 23, 2011, the Secretary shall increase
the number of basis points of the annual premium payment collected under this subparagraph incrementally, as determined appropriate by the Secretary, until the number of
basis points of the annual premium payment
collected under this subparagraph is equal to
the number described in subclause (I).
(d) Increase in maximum amount of mortgage
(1) Except as provided in paragraph (2) of this
subsection, notwithstanding 2 provision of this
subchapter governing maximum mortgage
amounts for insuring a mortgage secured by a
one- to four-family dwelling, the maximum
amount of the mortgage determined under any
such provision may be increased by the amount
of the mortgage insurance premium paid at the
time the mortgage is insured.
(2) The maximum amount of a mortgage determined under subsection (b)(2)(B) of this section
may not be increased as provided in paragraph
(1).
(e) Contract of insurance as evidence of eligibility
Any contract of insurance heretofore or hereafter executed by the Secretary under this subchapter shall be conclusive evidence of the eligibility of the loan or mortgage for insurance, and
the validity of any contract of insurance so exe2 So

in original.

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TITLE 12—BANKS AND BANKING

cuted shall be incontestable in the hands of an
approved financial institution or approved mortgagee from the date of the execution of such
contract, except for fraud or misrepresentation
on the part of such approved financial institution or approved mortgagee.
(f) Disclosure of other mortgage products
(1) In general
In conjunction with any loan insured under
this section, an original lender shall provide
to each prospective borrower a disclosure notice that provides a 1-page analysis of mortgage products offered by that lender and for
which the borrower would qualify.
(2) Notice
The notice required under paragraph (1)
shall include—
(A) a generic analysis comparing the note
rate (and associated interest payments), insurance premiums, and other costs and fees
that would be due over the life of the loan
for a loan insured by the Secretary under
subsection (b) with the note rates, insurance
premiums (if applicable), and other costs and
fees that would be expected to be due if the
mortgagor obtained instead other mortgage
products offered by the lender and for which
the borrower would qualify with a similar
loan-to-value ratio in connection with a conventional mortgage (as that term is used in
section 1454(a)(2) of this title or section
1717(b)(2) of this title, as applicable), assuming prevailing interest rates; and
(B) a statement regarding when the requirement of the mortgagor to pay the mortgage insurance premiums for a mortgage insured under this section would terminate, or
a statement that the requirement shall terminate only if the mortgage is refinanced,
paid off, or otherwise terminated.
(g) Limitation on use of single family mortgage
insurance by investors
(1) The Secretary may insure a mortgage
under this subchapter that is secured by a 1- to
4-family dwelling, or approve a substitute mortgagor with respect to any such mortgage, only if
the mortgagor is to occupy the dwelling as his
or her principal residence or as a secondary residence, as determined by the Secretary. In making this determination with respect to the occupancy of secondary residences, the Secretary
may not insure mortgages with respect to such
residences unless the Secretary determines that
it is necessary to avoid undue hardship to the
mortgagor. In no event may a secondary residence under this subsection include a vacation
home, as determined by the Secretary.
(2) The occupancy requirement established in
paragraph (1) shall not apply to any mortgagor
(or co-mortgagor, as appropriate) that is—
(A) a public entity, as provided in section
1715d or 1715z–12 of this title, or any other
State or local government or an agency thereof;
(B) a private nonprofit or public entity, as
provided in section 1715l(h) or 1715z(j) of this
title, or other private nonprofit organization
that is exempt from taxation under section
501(c)(3) of title 26 and intends to sell or lease

§ 1709

the mortgaged property to low or moderate-income persons, as determined by the Secretary;
(C) an Indian tribe, as provided in section
1715z–13 of this title;
(D) a serviceperson who is unable to meet
such requirement because of his or her duty
assignment, as provided in section 1715g of this
title or subsection (b)(4) or (f) of section
1715m 1 of this title;
(E) a mortgagor or co-mortgagor under subsection (k); or
(F) a mortgagor that, pursuant to section
1715n(a)(7) of this title, is refinancing an existing mortgage insured under this chapter for
not more than the outstanding balance of the
existing mortgage, if the amount of the
monthly payment due under the refinancing
mortgage is less than the amount due under
the existing mortgage for the month in which
the refinancing mortgage is executed.
(3) For purposes of this subsection, the term
‘‘substitute mortgagor’’ means a person who,
upon the release by a mortgagee of a previous
mortgagor from personal liability on the mortgage note, assumes such liability and agrees to
pay the mortgage debt.
(h) Disaster housing
Notwithstanding any other provision of this
section, the Secretary is authorized to insure
any mortgage which involves a principal obligation not in excess of the applicable maximum
dollar limit under subsection (b) and not in excess of 100 per centum of the appraised value of
a property upon which there is located a dwelling designed principally for a single-family residence, where the mortgagor establishes (to the
satisfaction of the Secretary) that his home
which he occupied as an owner or as a tenant
was destroyed or damaged to such an extent
that reconstruction is required as a result of a
flood, fire, hurricane, earthquake, storm, or
other catastrophe which the President, pursuant
to sections 5122(2) and 5170 of title 42, has determined to be a major disaster.
(i) Repealed. Pub. L. 110–289, div. B, title I,
§ 2120(a)(1), July 30, 2008, 122 Stat. 2835
(j) Real estate loans by national banks
Loans secured by mortgages insured under
this section shall not be taken into account in
determining the amount of real estate loans
which a national bank may make in relation to
its capital and surplus or its time and savings
deposits.
(k) Rehabilitation of one- to four-family structures; definitions; eligibility; refinancing and
extension; General Insurance Fund
(1) The Secretary may, in order to assist in the
rehabilitation of one- to four-family structures
used primarily for residential purposes, insure
and make commitments to insure rehabilitation
loans (including advances made during rehabilitation) made by financial institutions. Such
commitments to insure and such insurance shall
be made upon such terms and conditions which
the Secretary may prescribe and which are consistent with the provisions of subsections (b),
(c), (e), (i),1 and (j) of this section, except as
modified by the provisions of this subsection.

§ 1709

TITLE 12—BANKS AND BANKING

(2) For the purpose of this subsection—
(A) the term ‘‘rehabilitation loan’’ means a
loan, advance of credit, or purchase of an obligation representing a loan or advance of credit, made for the purpose of financing—
(i) the rehabilitation of an existing one- to
four-unit structure which will be used primarily for residential purposes;
(ii) the rehabilitation of such a structure
and the refinancing of the outstanding indebtedness on such structure and the real
property on which the structure is located;
or
(iii) the rehabilitation of such a structure
and the purchase of the structure and the
real property on which it is located; and
(B) the term ‘‘rehabilitation’’ means the improvement (including improvements designed
to meet cost-effective energy conservation
standards prescribed by the Secretary) or repair of a structure, or facilities in connection
with a structure, and may include the provision of such sanitary or other facilities as are
required by applicable codes, a community development plan, or a statewide property insurance plan to be provided by the owner or tenant of the project. The term ‘‘rehabilitation’’
may also include measures to evaluate and reduce lead-based paint hazards, as such terms
are defined in section 4851b of title 42.
(3) To be eligible for insurance under this subsection, a rehabilitation loan shall—
(A) involve a principal obligation (including
such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve) in an amount which does not exceed,
when added to any outstanding indebtedness
of the borrower which is secured by the structure and the property on which it is located,
the amount specified in subsection (b)(2); except that, in determining the amount of the
principal obligation for purposes of this subsection, the Secretary shall establish as the
appraised value of the property an amount not
to exceed the sum of the estimated cost of rehabilitation and the Secretary’s estimate of
the value of the property before rehabilitation;
(B) bear interest at such rate as may be
agreed upon by the borrower and the financial
institution;
(C) be an acceptable risk, as determined by
the Secretary; and
(D) comply with such other terms, conditions, and restrictions as the Secretary may
prescribe.
(4) Any rehabilitation loan insured under this
subsection may be refinanced and extended in
accordance with such terms and conditions as
the Secretary may prescribe, but in no event for
an additional amount or term which exceeds the
maximum provided for in this subsection.
(5) All funds received and all disbursements
made pursuant to the authority established by
this subsection shall be credited or charged, as
appropriate, to the Mutual Mortgage Insurance
Fund, and insurance benefits shall be paid in
cash out of such Fund or in debentures executed
in the name of such Fund. Insurance benefits
paid with respect to loans secured by a first

Page 526

mortgage and insured under this subsection
shall be paid in accordance with section 1710 of
this title. Insurance benefits paid with respect
to loans secured by a mortgage other than a
first mortgage and insured under this subsection
shall be paid in accordance with paragraphs (6)
and (7) of section 1715k(h) of this title, except
that reference to ‘‘this subsection’’ in such paragraphs shall be construed as referring to this
subsection.
(l) Repealed. Pub. L. 90–448, title I, § 103(b), Aug.
1, 1968, 82 Stat. 486
(m) Repealed. Pub. L. 100–242, title IV, § 406(c),
Feb. 5, 1988, 101 Stat. 1902
(n) Cooperative housing projects; definitions
(1) The Secretary is authorized to insure under
this section any mortgage meeting the requirements of subsection (b) of this section, except as
modified by this subsection. To be eligible, the
mortgage shall involve a dwelling unit in a cooperative housing project which is covered by a
blanket mortgage insured under this chapter or
the construction of which was completed more
than a year prior to the application for the
mortgage insurance. The mortgage amount as
determined under the other provisions of subsection (b) of this section shall be reduced by an
amount equal to the portion of the unpaid balance of the blanket mortgage covering the
project which is attributable (as of the date the
mortgage is accepted for insurance) to such
unit.
(2) For the purposes of this subsection—
(A) The terms ‘‘home mortgage’’ and ‘‘mortgage’’ include a first or subordinate mortgage
or lien given (in accordance with the laws of
the State where the property is located and
accompanied by such security and other undertakings as may be required under regulations of the Secretary) to secure a loan made
to finance the purchase of stock or membership in a cooperative ownership housing corporation the permanent occupancy of the
dwelling units of which is restricted to members of such corporation, where the purchase
of such stock or membership will entitle the
purchaser to the permanent occupancy of one
of such units.
(B) The terms ‘‘appraised value of the property’’, ‘‘value of the property’’, and ‘‘value’’
include the appraised value of a dwelling unit
in a cooperative housing project of the type
described in subparagraph (A) where the purchase of the stock or membership involved
will entitle the purchaser to the permanent
occupancy of that unit; and the term ‘‘property’’ includes a dwelling unit in such a cooperative project.
(C) The term ‘‘mortgagor’’ includes a person
or persons giving a first or subordinate mortgage or lien (of the type described in subparagraph (A)) to secure a loan to finance the purchase of stock or membership in a cooperative
housing corporation.

Page 527

TITLE 12—BANKS AND BANKING

(o) Repealed. Pub. L. 110–289, div. B, title I,
§ 2120(a)(2), July 30, 2008, 122 Stat. 2835
(p) Repealed. Pub. L. 110–289, div. B, title I,
§ 2120(a)(3), July 30, 2008, 122 Stat. 2835
(q) Repealed. Pub. L. 110–289, div. B, title I,
§ 2120(a)(4), July 30, 2008, 122 Stat. 2835
(r) Actions to reduce losses under single family
mortgage insurance program
The Secretary shall take appropriate actions
to reduce losses under the single-family mortgage insurance programs carried out under this
subchapter. Such actions shall include—
(1) an annual review by the Secretary of the
rate of early serious defaults and claims, in
accordance with section 1735f–11 of this title;
(2) requiring that at least one person acquiring ownership of a one- to four-family residential property encumbered by a mortgage insured under this subchapter be determined to
be creditworthy under standards prescribed by
the Secretary, whether or not such person assumes personal liability under the mortgage
(except that acquisitions by devise or descent
shall not be subject to this requirement);
(3) in any case where personal liability under
a mortgage is assumed, requiring that the
original mortgagor be advised of the procedures by which he or she may be released from
liability; and
(4) providing counseling, either directly or
through third parties, to delinquent mortgagors whose mortgages are insured under this
section, using the Fund to pay for such counseling.
In any case where the homeowner does not request a release from liability, the purchaser and
the homeowner shall have joint and several liability for any default for a period of 5 years following the date of the assumption. After the
close of such 5-year period, only the purchaser
shall be liable for any default on the mortgage
unless the mortgage is in default at the time of
the expiration of the 5-year period.
(s) Transferred
(t) Disclosure regarding interest due upon mortgage prepayment
(1) Each mortgagee (or servicer) with respect
to a mortgage under this section shall provide
each mortgagor of such mortgagee (or servicer)
written notice, not less than annually, containing a statement of the amount outstanding for
prepayment of the principal amount of the
mortgage and describing any requirements the
mortgagor must fulfill to prevent the accrual of
any interest on such principal amount after the
date of any prepayment. This paragraph shall
apply to any insured mortgage outstanding on
or after the expiration of the 90-day period beginning on the date of effectiveness of final regulations implementing this paragraph.
(2) Each mortgagee (or servicer) with respect
to a mortgage under this section shall, at or before closing with respect to any such mortgage,
provide the mortgagor with written notice (in
such form as the Secretary shall prescribe, by
regulation, before the expiration of the 90-day

§ 1709

period beginning upon November 28, 1990) describing any requirements the mortgagor must
fulfill upon prepayment of the principal amount
of the mortgage to prevent the accrual of any
interest on the principal amount after the date
of such prepayment. This paragraph shall apply
to any mortgage executed after the expiration of
the period under paragraph (1).
(u) Accountability of mortgage lenders
(1) No mortgagee may make or hold mortgages
insured under this section if the customary
lending practices of the mortgagee, as determined by the Secretary pursuant to section
1735f–17 of this title, provide for a variation in
mortgage charge rates that exceeds 2 percent for
insured mortgages made by the mortgagee on
dwellings located within an area. The Secretary
shall ensure that any permissible variations in
the mortgage charge rates of any mortgagee are
based only on actual variations in fees or costs
to the mortgagee to make the loan.
(2) For purposes of this subsection—
(A) the term ‘‘area’’ means a metropolitan
statistical area as established by the Office of
Management and Budget;
(B) the term ‘‘mortgage charges’’ includes
the interest rate, discount points, loan origination fee, and any other amount charged to a
mortgagor with respect to an insured mortgage; and
(C) the term ‘‘mortgage charge rate’’ means
the amount of mortgage charges for an insured
mortgage expressed as a percentage of the initial principal amount of the mortgage.
(v) Use of FHA insurance with assistance under
42 U.S.C. 1437f
The insurance of a mortgage under this section in connection with the assistance provided
under section 1437f(y) of title 42 shall be the obligation of the Mutual Mortgage Insurance
Fund.
(w) Annual report
The Secretary of Housing and Urban Development shall submit to the Congress an annual report on the single family mortgage insurance
program under this section. Each report shall
set forth—
(1) an analysis of the income groups served
by the single family insurance program, including—
(A) the percentage of borrowers whose incomes do not exceed 100 percent of the median income for the area;
(B) the percentage of borrowers whose incomes do not exceed 80 percent of the median income for the area; and
(C) the percentage of borrowers whose incomes do not exceed 60 percent of the median income for the area;
(2) an analysis of the percentage of minority
borrowers annually assisted by the program;
the percentage of central city borrowers assisted and the percentage of rural borrowers
assisted by the program;
(3) the extent to which the Secretary in carrying out the program has employed methods
to ensure that needs of low and moderate income families, underserved areas, and historically disadvantaged groups are served by the
program; and

§ 1709

TITLE 12—BANKS AND BANKING

(4) the current impediments to having the
program serve low and moderate income borrowers; borrowers from central city areas; borrowers from rural areas; and minority borrowers.
The report required under this subsection shall
include the report required under section
1735f–18(c) of this title and the report required
under section 1711(g) 1 of this title.
(x) Management deficiencies report
(1) In general
Not later than 60 days after October 21, 1998,
and annually thereafter, the Secretary shall
submit to Congress a report on the plan of the
Secretary to address each material weakness,
reportable condition, and noncompliance with
an applicable law or regulation (as defined by
the Director of the Office of Management and
Budget) identified in the most recent audited
financial statement of the Federal Housing
Administration submitted under section 3515
of title 31.
(2) Contents of annual report
Each report submitted under paragraph (1)
shall include—
(A) an estimate of the resources, including
staff, information systems, and contract assistance, required to address each material
weakness, reportable condition, and noncompliance with an applicable law or regulation described in paragraph (1), and the costs
associated with those resources;
(B) an estimated timetable for addressing
each material weakness, reportable condition, and noncompliance with an applicable
law or regulation described in paragraph (1);
and
(C) the progress of the Secretary in implementing the plan of the Secretary included
in the report submitted under paragraph (1)
for the preceding year, except that this subparagraph does not apply to the initial report submitted under paragraph (1).
(y) Requirements for mortgages for condominiums
(1) Project recertification requirements
Notwithstanding any other law, regulation,
or guideline of the Secretary, including chapter 2.4 of the Condominium Project Approval
and Processing Guide of the FHA, the Secretary shall streamline the project certification requirements that are applicable to the
insurance under this section for mortgages for
condominium projects so that recertifications
are substantially less burdensome than certifications. The Secretary shall consider lengthening the time between certifications for approved properties, and allowing updating of information rather than resubmission.
(2) Commercial space requirements
Notwithstanding any other law, regulation,
or guideline of the Secretary, including chapter 2.1.3 of the Condominium Project Approval
and Processing Guide of the FHA, in providing
for exceptions to the requirement for the insurance of a mortgage on a condominium
property under this section regarding the per-

Page 528

centage of the floor space of a condominium
property that may be used for nonresidential
or commercial purposes, the Secretary shall
provide that—
(A) any request for such an exception and
the determination of the disposition of such
request may be made, at the option of the
requester, under the direct endorsement
lender review and approval process or under
the HUD review and approval process
through the applicable field office of the Department; and
(B) in determining whether to allow such
an exception for a condominium property,
factors relating to the economy for the locality in which such project is located or
specific to project,2 including the total number of family units in the project, shall be
considered.
Not later than the expiration of the 90-day period beginning on July 29, 2016, the Secretary
shall issue regulations to implement this paragraph, which shall include any standards,
training requirements, and remedies and penalties that the Secretary considers appropriate.
(3) Transfer fees
Notwithstanding any other law, regulation,
or guideline of the Secretary, including chapter 1.8.8 of the Condominium Project Approval
and Processing Guide of the FHA and section
203.41 of the Secretary’s regulations (24 CFR
203.41), existing standards of the Federal Housing Finance Agency relating to encumbrances
under private transfer fee covenants shall
apply to the insurance of mortgages by the
Secretary under this section to the same extent and in the same manner that such standards apply to the purchasing, investing in, and
otherwise dealing in mortgages by the Federal
National Mortgage Association and the Federal Home Loan Mortgage Corporation. If the
provisions of part 1228 of the Director of the
Federal Housing Finance Agency’s regulations
(12 CFR part 1228) are amended or otherwise
changed after July 29, 2016, the Secretary of
Housing and Urban Development shall adopt
any such amendments or changes for purposes
of this paragraph, unless the Secretary causes
to be published in the Federal Register a notice explaining why the Secretary will disregard such amendments or changes within 90
days after the effective date of such amendments or changes.
(4) Owner-occupancy requirement
(A) Establishment of percentage requirement
Not later than the expiration of the 90-day
period beginning on July 29, 2016, the Secretary shall, by rule, notice, or mortgagee
letter, issue guidance regarding the percentage of units that must be occupied by the
owners as a principal residence or a secondary residence (as such terms are defined by
the Secretary), or must have been sold to
owners who intend to meet such occupancy
requirements, including justifications for
the percentage requirements, in order for a
condominium project to be acceptable to the
Secretary for insurance under this section of

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TITLE 12—BANKS AND BANKING

a mortgage within such condominium property.
(B) Failure to act
If the Secretary fails to issue the guidance
required under subparagraph (A) before the
expiration of the 90-day period specified in
such clause, the following provisions shall
apply:
(i) 35 percent requirement
In order for a condominium project to be
acceptable to the Secretary for insurance
under this section, at least 35 percent of
all family units (including units not covered by FHA-insured mortgages) must be
occupied by the owners as a principal residence or a secondary residence (as such
terms are defined by the Secretary), or
must have been sold to owners who intend
to meet such occupancy requirement.
(ii) Other considerations
The Secretary may increase the percentage applicable pursuant to clause (i) to a
condominium project on a project-byproject or regional basis, and in determining such percentage for a project shall consider factors relating to the economy for
the locality in which such project is located or specific to project,2 including the
total number of family units in the
project.
(June 27, 1934, ch. 847, title II, § 203, 48 Stat. 1248;
May 28, 1935, ch. 150, § 29(a), 49 Stat. 299; Aug. 23,
1935, ch. 614, title III, § 344(c), 49 Stat. 722; Feb. 3,
1938, ch. 13, § 3, 52 Stat. 10; June 3, 1939, ch. 175,
§§ 6–8, 53 Stat. 805, 806; June 28, 1941, ch. 261, § 8,
55 Stat. 365; Oct. 15, 1943, ch. 259, § 2, 57 Stat. 571;
July 1, 1946, ch. 531, 60 Stat. 408; Aug. 10, 1948, ch.
832, title I, § 101(g)–(k), 62 Stat. 1272; July 15,
1949, ch. 338, title II, § 201(2), 63 Stat. 421; Aug. 30,
1949, ch. 524, 63 Stat. 681; Oct. 25, 1949, ch. 729,
§ 1(2), 63 Stat. 905; Apr. 20, 1950, ch. 94, title I,
§§ 103, 104(a), 122, 64 Stat. 51, 59; June 30, 1953, ch.
170, § 3, 67 Stat. 121; Aug. 2, 1954, ch. 649, title I,
§§ 104–110, 68 Stat. 591, 592; Aug. 7, 1956, ch. 1029,
title I, §§ 102, 104(a), 70 Stat. 1091, 1092; Pub. L.
85–104, title I, §§ 101, 106, July 12, 1957, 71 Stat.
294, 297; Pub. L. 85–364, § 1(a), Apr. 1, 1958, 72 Stat.
73; Pub. L. 86–372, title I, §§ 102, 103, title VIII,
§ 809, Sept. 23, 1959, 73 Stat. 654, 688; Pub. L. 87–70,
title I, § 102(b), title VI, §§ 604(b), 605, 606, 612(a),
June 30, 1961, 75 Stat. 157, 177, 178, 180; Pub. L.
88–560, title I, §§ 102, 103, 105(c)(1), Sept. 2, 1964, 78
Stat. 769, 772; Pub. L. 89–117, title II, §§ 203–206,
title XI, § 1108(c), Aug. 10, 1965, 79 Stat. 466, 504;
Pub. L. 89–754, title III, §§ 301, 302, Nov. 3, 1966, 80
Stat. 1266; Pub. L. 90–19, § 1(a)(3), (4), May 25,
1967, 81 Stat. 17; Pub. L. 90–448, title I, § 103(b),
title III, §§ 317, 318, title XI, § 1106(d), Aug. 1, 1968,
82 Stat. 486, 512, 567; Pub. L. 91–152, title I,
§§ 102(a), 113(a), Dec. 24, 1969, 83 Stat. 379, 383;
Pub. L. 91–606, title III, § 301(c), Dec. 31, 1970, 84
Stat. 1758; Pub. L. 93–288, title VII, § 702(c), formerly title VI, § 602(c), May 22, 1974, 88 Stat. 163,
renumbered title VII, § 702(c), Pub. L. 103–337,
div. C, title XXXIV, § 3411(a)(1), (2), Oct. 5, 1994,
108 Stat. 3100; Pub. L. 93–383, title III, §§ 302(a),
310(a), Aug. 22, 1974, 88 Stat. 676, 682; Pub. L.
93–449, § 4(b), Oct. 18, 1974, 88 Stat. 1367; Pub. L.
95–128, title III, §§ 303(a), (g), 304(a), 305, 307, Oct.

§ 1709

12, 1977, 91 Stat. 1132, 1133, 1134; Pub. L. 95–557,
title I, § 101(c)(1), (2), Oct. 31, 1978, 92 Stat. 2082,
2083; Pub. L. 95–619, title II, § 248(a), Nov. 9, 1978,
92 Stat. 3235; Pub. L. 96–153, title III, §§ 310,
312(a), 318, Dec. 21, 1979, 93 Stat. 1114, 1116, 1119;
Pub. L. 96–399, title III, §§ 321, 328, 333(a), 336(a),
Oct. 8, 1980, 94 Stat. 1646, 1651, 1653, 1654; Pub. L.
97–253, title II, § 201(a), (b), Sept. 8, 1982, 96 Stat.
789; Pub. L. 98–63, title I, July 30, 1983, 97 Stat.
321; Pub. L. 98–181, title I [title IV, §§ 404(b)(2),
(3), 419, 423(a), (b)(1), 424(a), 425, 447], Nov. 30,
1983, 97 Stat. 1209, 1212, 1216–1218, 1228; Pub. L.
98–479, title II, § 204(a)(2), Oct. 17, 1984, 98 Stat.
2232; Pub. L. 99–601, Nov. 5, 1986, 100 Stat. 3357;
Pub.
L.
100–242,
title
IV,
§§ 403–405(1),
406(a)–(b)(6), (c), 407(a)(1), 422(b), 423, 429(c), Feb.
5, 1988, 101 Stat. 1899–1902, 1914, 1918; Pub. L.
100–628, title X, §§ 1061–1063(a), Nov. 7, 1988, 102
Stat. 3274; Pub. L. 100–707, title I, § 109(e)(2), Nov.
23, 1988, 102 Stat. 4708; Pub. L. 101–144, title II,
Nov. 9, 1989, 103 Stat. 852; Pub. L. 101–235, title I,
§§ 132(a), 135, 143(a), (b), Dec. 15, 1989, 103 Stat.
2026, 2028, 2036; Pub. L. 101–402, § 3, Oct. 1, 1990,
104 Stat. 866; Pub. L. 101–507, title II, Nov. 5, 1990,
104 Stat. 1369; Pub. L. 101–508, title II,
§§ 2101–2103(a), Nov. 5, 1990, 104 Stat. 1388–17; Pub.
L. 101–625, title III, §§ 326(a), 327, 329, 330(a), title
IV, § 429, Nov. 28, 1990, 104 Stat. 4137, 4138, 4171;
Pub. L. 102–40, title IV, § 402(d)(2), May 7, 1991,
105 Stat. 239; Pub. L. 102–389, title II, Oct. 6, 1992,
106 Stat. 1591, 1593; Pub. L. 102–550, title I,
§ 185(c)(1), title V, §§ 503(a), 504–506(a), 507(a), title
X, § 1012(k)(2), Oct. 28, 1992, 106 Stat. 3747,
3779–3782, 3907; Pub. L. 103–211, title I, Feb. 12,
1994, 108 Stat. 12; Pub. L. 103–327, title II, Sept.
28, 1994, 108 Stat. 2314; Pub. L. 104–204, title IV,
§§ 424, 425(a), 426, Sept. 26, 1996, 110 Stat. 2927,
2928; Pub. L. 105–65, title II, § 211, Oct. 27, 1997, 111
Stat. 1366; Pub. L. 105–276, title II, §§ 212, 224,
225(a), 228, Oct. 21, 1998, 112 Stat. 2486, 2489–2491;
Pub. L. 106–74, title II, § 207, Oct. 20, 1999, 113
Stat. 1072; Pub. L. 106–281, § 2, Oct. 6, 2000, 114
Stat. 865; Pub. L. 106–377, § 1(a)(1) [title II,
§§ 209(a), 225], Oct. 27, 2000, 114 Stat. 1441,
1441A–25, 1441A–30; Pub. L. 106–569, title XI,
§ 1103(f), Dec. 27, 2000, 114 Stat. 3031; Pub. L.
107–73, title II, § 207(a), Nov. 26, 2001, 115 Stat. 674;
Pub. L. 107–326, § 2, Dec. 4, 2002, 116 Stat. 2792;
Pub. L. 108–386, § 8(b), Oct. 30, 2004, 118 Stat. 2231;
Pub. L. 108–447, div. I, title II, §§ 222, 223, Dec. 8,
2004, 118 Stat. 3321; Pub. L. 109–13, div. A, title
VI, § 6073, May 11, 2005, 119 Stat. 300; Pub. L.
110–289, div. B, title I, §§ 2112(a), (b), 2113–2115,
2116(2), (3), 2118(b)(1), 2120(a)(1)–(4), (b), 2121, July
30, 2008, 122 Stat. 2830–2832, 2834, 2835; Pub. L.
111–229, § 1(a), Aug. 11, 2010, 124 Stat. 2483; Pub. L.
112–78, title IV, § 402(a), (b), Dec. 23, 2011, 125
Stat. 1289; Pub. L. 114–201, title III, § 301, July 29,
2016, 130 Stat. 806.)
AMENDMENT OF SUBSECTION (c)(2)
Pub. L. 112–78, § 402(b), Dec. 23, 2011, 125 Stat.
1289, provided that, effective Oct. 1, 2021, subsection (c)(2) of this section is amended by striking subparagraph (C). See 2011 Amendment note
below.
REFERENCES IN TEXT
Section 1715z–10 of this title, referred to in subsec.
(c)(1), was repealed by Pub. L. 110–289, div. B, title I,
§ 2120(a)(7), July 30, 2008, 122 Stat. 2835.

§ 1709

TITLE 12—BANKS AND BANKING

Section 1715m of this title, referred to in subsec.
(g)(2)(D), was repealed by Pub. L. 110–289, div. B, title I,
§ 2120(a)(5), July 30, 2008, 122 Stat. 2835.
This chapter, referred to in subsecs. (g)(2)(F) and
(n)(1), was in the original ‘‘this Act’’, meaning act June
27, 1934, ch. 847, 48 Stat. 1246, which is classified principally to this chapter (§ 1701 et seq.). For complete
classification of this Act to the Code, see Tables.
Subsection (i) of this section, referred to in subsec.
(k)(1), was repealed by Pub. L. 110–289, div. B, title I,
§ 2120(a)(1), July 30, 2008, 122 Stat. 2835.
Section 1711(g) of this title, referred to in subsec. (w),
was repealed by Pub. L. 110–289, div. B, title I,
§ 2118(c)(1), July 30, 2008, 122 Stat. 2835.
AMENDMENTS
2016—Subsec. (y). Pub. L. 114–201 added subsec. (y).
2011—Subsec. (c)(2)(C). Pub. L. 112–78, § 402(b), struck
out subpar. (C) which related to requirement that the
Secretary, in addition to the premiums under subpars.
(A) and (B), establish and collect annual premium payments of up to 10 basis points of the remaining insured
principal balance for any mortgage for which the Secretary collects an annual premium under subpar.(B).
See Effective Date of 2011 Amendment note below.
Pub. L. 112–78, § 402(a), added subpar. (C).
2010—Subsec. (c)(2)(B). Pub. L. 111–229, § 1(a)(1), in introductory provisions, substituted ‘‘may’’ for ‘‘shall’’
and ‘‘1.5 percent’’ for ‘‘0.50 percent’’.
Subsec. (c)(2)(B)(ii). Pub. L. 111–229, § 1(a)(2), substituted ‘‘may be in an amount not exceeding 1.55 percent’’ for ‘‘shall be in an amount not exceeding 0.55 percent’’.
2008—Subsec. (b)(2). Pub. L. 110–289, § 2112(a)(2), which
directed striking out second sentence in matter following subpar. (B) and all that followed through ‘‘section
3103A(d) of title 38’’, was executed in first undesignated
par. after subpar. (B) by striking out ‘‘For purposes of
this paragraph, the term ‘average closing cost’ means,
with respect to a State, the average, for mortgages executed for properties that are located within the State,
of the total amounts (as determined by the Secretary)
of initial service charges, appraisal, inspection, and
other fees (as the Secretary shall approve) that are paid
in connection with such mortgages. Notwithstanding
any other provision of this section, in any case where
the dwelling is not approved for mortgage insurance
prior to the beginning of construction, such mortgage
shall not exceed 90 per centum of the entire appraised
value of the property as of the date the mortgage is accepted for insurance, unless (i) the dwelling was completed more than one year prior to the application for
mortgage insurance, or (ii) the dwelling was approved
for guaranty, insurance, or a direct loan under chapter
37 of title 38 prior to the beginning of construction, or
(iii) the dwelling is covered by a consumer protection
or warranty plan acceptable to the Secretary and satisfies all requirements which would have been applicable
if such dwelling had been approved for mortgage insurance prior to the beginning of construction. As used
herein, the term ‘veteran’ means any person who served
on active duty in the armed forces of the United States
for a period of not less than ninety days (or is certified
by the Secretary of Defense as having performed extrahazardous service), and who was discharged or released
therefrom under conditions other than dishonorable,
except that persons enlisting in the armed forces after
September 7, 1980, or entering active duty after October
16, 1981, shall have their eligibility determined in accordance with section 5303A(d) of title 38.’’, to reflect
the probable intent of Congress and amendment by
Pub. L. 102–40. See 1991 Amendment note below.
Subsec. (b)(2)(A), (B). Pub. L. 110–289, § 2112(a)(1),
added subpars. (A) and (B) and struck out former subpars. (A) and (B) which related to maximum limits for
principal loan obligation.
Subsec. (b)(9). Pub. L. 110–289, § 2113, amended par. (9)
generally. Prior to amendment, par. (9) related to requirement that mortgagors other than veterans pay on
account of the property at least 3 per centum, or such

Page 530

larger amount as the Secretary may determine, of the
Secretary’s estimate of the cost of acquisition, excluding the mortgage insurance premium paid at the time
the mortgage is insured, in cash or its equivalent.
Subsec. (c)(2). Pub. L. 110–289, § 2114(1), in introductory provisions, struck out ‘‘or of the General Insurance Fund pursuant to subsection (v) of this section
and each mortgage that is insured under subsection (k)
of this section or section 1715y(c) of this title,,’’ after
‘‘Mutual Mortgage Insurance Fund’’.
Subsec. (c)(2)(A). Pub. L. 110–289, § 2114(2), substituted
‘‘3 percent’’ for ‘‘2.25 percent’’ and ‘‘2.75 percent’’ for
‘‘2.0 percent’’.
Subsec. (d). Pub. L. 110–289, § 2112(b), substituted ‘‘Except as provided in paragraph (2) of this subsection,
notwithstanding’’ for ‘‘Notwithstanding any’’, designated existing provisions as par. (1), and added par.
(2).
Subsec. (i). Pub. L. 110–289, § 2120(a)(1), struck out subsec. (i) which related to Secretary’s authority to insure
mortgages for single-family residences in suburban and
outlying areas or small communities and certain farm
homes.
Subsec. (k)(1). Pub. L. 110–289, § 2115(1), struck out ‘‘on
and after 180 days following October 31, 1978’’ after ‘‘financial institutions’’.
Subsec. (k)(5). Pub. L. 110–289, § 2115(2), substituted
‘‘Mutual Mortgage Insurance Fund’’ for ‘‘General Insurance Fund’’ and struck out ‘‘, except that all references in section 1710 of this title to the Mutual Mortgage Insurance Fund shall be construed as referring to
the General Insurance Fund’’ after ‘‘section 1710 of this
title’’.
Subsec. (n)(2)(A), (C). Pub. L. 110–289, § 2121, inserted
‘‘or subordinate mortgage or’’ before ‘‘lien’’.
Subsec. (o). Pub. L. 110–289, § 2120(a)(2), struck out
subsec. (o) which related to insurance of mortgages on
owner occupied homes in communities subject to adverse economic conditions resulting from Indian claims
to ownership of land and obligation of Special Risk Insurance Fund.
Subsec. (p). Pub. L. 110–289, § 2120(a)(3), struck out
subsec. (p) which related to insurance of mortgages in
communities subject to temporary adverse economic
conditions as a result of claims to ownership of land in
the community by an American Indian Tribe, band, or
nation.
Subsec. (q). Pub. L. 110–289, § 2120(a)(4), struck out
subsec. (q) which related to insurance of mortgages secured by property on certain lands leased by Seneca
Nation of New York Indians.
Subsec. (s). Pub. L. 110–289, § 2116(3), redesignated and
transferred subsec. (s) of this section to subsec. (e) of
section 1708 of this title.
Subsec. (s)(4). Pub. L. 110–289, § 2116(2), added par. (4)
and struck out former par. (4) which read as follows:
‘‘the Administrator of the Farmers Home Administration;’’.
Subsec. (u)(2)(A). Pub. L. 110–289, § 2120(b), substituted
‘‘means a metropolitan statistical area as established
by the Office of Management and Budget;’’ for ‘‘shall
have the meaning given the term under subsection
(b)(2) of this section;’’.
Subsec. (v). Pub. L. 110–289, § 2118(b)(1), substituted
‘‘The’’ for ‘‘Notwithstanding section 1708 of this title,
the’’ and ‘‘Mutual Mortgage Insurance Fund.’’ for
‘‘General Insurance Fund created pursuant to section
1735c of this title. The provisions of subsections (a)
through (h), (j), and (k) of section 1710 of this title shall
apply to such mortgages, except that (1) all references
in section 1710 of this title to the Mutual Mortgage Insurance Fund or the Fund shall be construed to refer to
the General Insurance Fund, and (2) any excess
amounts described in section 1710(f)(1) of this title shall
be retained by the Secretary and credited to the General Insurance Fund.’’
2005—Subsec. (c)(1). Pub. L. 109–13, § 6073(b)(2), struck
out ‘‘or (k)’’ after ‘‘(2) under subsection (n)’’ and
‘‘charges under subsection (n)’’.
Pub. L. 109–13, § 6073(b)(1), substituted ‘‘(2) under subsection (n)’’ for ‘‘(2) under subsections (n)’’.

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Pub. L. 109–13, § 6073(a), repealed Pub. L. 108–447, § 222.
See note below.
2004–Subsec. (c)(1). Pub. L. 108–447, § 222, which directed the substitution of ‘‘subsection (n)’’ for ‘‘subsections (n) and (k)’’ and the striking out of ‘‘or (k)’’,
was repealed by Pub. L. 109–13, § 6073(a).
Subsec. (c)(2)(A). Pub. L. 108–447, § 223, inserted
‘‘, provided that the mortgagor refinances the unpaid
principal obligation under this subchapter’’ before period at end.
Subsec. (s)(5). Pub. L. 108–386 struck out ‘‘or District
bank’’ after ‘‘national bank’’.
2002—Subsec. (b). Pub. L. 107–326, § 2(1)(A), substituted
‘‘shall comply with the following:’’ for ‘‘shall—’’ in introductory provisions.
Subsec. (b)(2). Pub. L. 107–326, § 2(1)(C), transferred
text of subsec. (b)(10)(B) so as to appear as second sentence of concluding provisions in par. (2).
Pub. L. 107–326, § 2(1)(B)(ii)(III), in concluding provisions, struck out the eleventh sentence through the end
which read as follows: ‘‘In conjunction with any loan
insured under this section, an original lender shall provide to each prospective borrower a disclosure notice
that provides a one page analysis of mortgage products
offered by that lender and for which the borrower
would qualify. This notice shall include: (i) a generic
analysis comparing the note rate (and associated interest payments), insurance premiums, and other costs
and fees that would be due over the life of the loan for
a loan insured by the Secretary under this subsection
with the note rates, insurance premiums (if applicable),
and other costs and fees that would be expected to be
due if the mortgagor obtained instead other mortgage
products offered by the lender and for which the borrower would qualify with a similar loan-to-value ratio
in connection with a conventional mortgage (as that
term is used in section 1454(a)(2) of this title or section
1717(b)(2) of this title, as applicable), assuming prevailing interest rates; and (ii) a statement regarding when
the mortgagor’s requirement to pay the mortgage insurance premiums for a mortgage insured under this
section would terminate or a statement that the requirement will terminate only if the mortgage is refinanced, paid off, or otherwise terminated.’’
Pub. L. 107–326, § 2(1)(B)(ii)(II), in concluding provisions, struck out seventh through ninth sentences
which read as follows: ‘‘Except with respect to mortgages executed by mortgagors who are veterans, a
mortgage may not involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve) in
excess of 98.75 percent of the appraised value of the
property (97.75 percent, in the case of a mortgage with
an appraised value in excess of $50,000), plus the amount
of the mortgage insurance premium paid at the time
the mortgage is insured. For purposes of the preceding
sentence, the term ‘appraised value’ means the amount
set forth in the written statement required under section 1715q of this title, or a similar amount determined
by the Secretary if section 1715q of this title does not
apply. Notwithstanding the authority of the Secretary
to establish the terms of insurance under this section
and approve the initial service charges, appraisal, inspection, and other fees (and subject to any other limitations under this section on the amount of a principal
obligation), the Secretary may not (by regulation or
otherwise) limit the percentage or amount of any such
approved charges and fees that may be included in the
principal obligation of a mortgage.’’
Pub. L. 107–326, § 2(1)(B)(ii)(I), in concluding provisions, struck out second and third sentences which read
as follows: ‘‘If the mortgage to be insured under this
section covers property on which there is located a oneto four-family residence, and the appraised value of the
property, as of the date the mortgage is accepted for insurance, does not exceed $50,000, the principal obligation may be in an amount not to exceed 97 percent of
such appraised value. If the mortgagor is a veteran, and
the mortgage to be insured under this section covers
property upon which there is located a dwelling de-

§ 1709

signed principally for a one-family residence, the principal obligation may be in an amount equal to the sum
of (i) 100 per centum of $25,000 of the appraised value of
the property as of the date the mortgage is accepted for
insurance, and (ii) 95 per centum of such value in excess
of $25,000.’’
Subsec. (b)(2)(A). Pub. L. 107–326, § 2(1)(B)(i), realigned
margins of matter that precedes cl. (ii).
Subsec. (b)(2)(B). Pub. L. 107–326, § 2(1)(B)(iii), added
subpar. (B) and struck out former subpar. (B) which
read as follows: ‘‘except as otherwise provided in this
paragraph (2), not to exceed an amount equal to the
sum of—
‘‘(i) 97 percent of $25,000 of the appraised value of
the property, as of the date the mortgage is accepted
for insurance;
‘‘(ii) 95 percent of such value in excess of $25,000 but
not in excess of $125,000; and
‘‘(iii) 90 percent of such value in excess of $125,000.’’
Subsec. (b)(10). Pub. L. 107–326, § 2(1)(C), (D), transferred text of subpar. (B) so as to appear as second sentence of concluding provisions in subsec. (b)(2) and
struck out headings and text of remainder of par. (10)
which related to calculation of downpayment.
Subsec. (f). Pub. L. 107–326, § 2(2), added subsec. (f).
2001—Subsec. (c)(1). Pub. L. 107–73, § 207(a)(1), substituted ‘‘subsections (n) or (k)’’ for ‘‘subsections (n)
and (k)’’ in cl. (2) of first proviso.
Subsec. (c)(2). Pub. L. 107–73, § 207(a)(2), in introductory provisions, struck out ‘‘and executed on or after
October 1, 1994,’’ after ‘‘1- to 4-family dwelling’’ and inserted ‘‘and each mortgage that is insured under subsection (k) of this section or section 1715y(c) of this
title,’’ after ‘‘subsection (v) of this section’’.
2000—Subsec. (b)(10)(A). Pub. L. 106–377, § 1(a)(1) [title
II, § 225], substituted ‘‘mortgage closed on or before December 31, 2002, involving’’ for ‘‘mortgage closed on or
before October 30, 2000 involving’’ in introductory provisions.
Pub. L. 106–281 substituted ‘‘closed on or before October 30, 2000’’ for ‘‘executed for insurance in fiscal years
1998, 1999, and 2000’’ in introductory provisions.
Subsec. (s). Pub. L. 106–377, § 1(a)(1) [title II,
§ 209(a)(2)], redesignated subsec. (s), relating to disclosure regarding interest due upon mortgage prepayment,
as (t).
Subsec. (t). Pub. L. 106–377, § 1(a)(1) [title II,
§ 209(a)(2)], redesignated subsec. (s), relating to disclosure regarding interest due upon mortgage prepayment,
as (t).
Pub. L. 106–377, § 1(a)(1) [title II, § 209(a)(1)], redesignated subsec. (t) as (u).
Subsec. (u). Pub. L. 106–377, § 1(a)(1) [title II,
§ 209(a)(1)], redesignated subsec. (t) as (u).
Subsec. (v). Pub. L. 106–377, § 1(a)(1) [title II,
§ 209(a)(3)], redesignated subsec. (v), relating to annual
report, as (w).
Subsec. (w). Pub. L. 106–569, which directed the
amendment of subsec. (v) relating to annual report by
inserting concluding provisions, was executed by making the insertion in subsec. (w) to reflect the probable
intent of Congress and the intervening redesignation of
that subsec. (v) as (w) by Pub. L. 106–377, § 1(a)(1) [title
II, § 209(a)(3)]. See below.
Pub. L. 106–377, § 1(a)(1) [title II, § 209(a)(3)], redesignated subsec. (v), relating to annual report, as (w).
1999—Subsec. (b)(2)(A)(ii). Pub. L. 106–74 inserted ‘‘the
greater of the dollar amount limitation in effect under
this section for the area on October 21, 1998, or’’ before
‘‘48 percent’’.
1998—Subsec. (b)(2). Pub. L. 105–276, § 225(a), inserted
at end undesignated par. relating to disclosure notice
furnished by original lender.
Subsec. (b)(2)(A). Pub. L. 105–276, § 228(a), added cl. (ii)
and struck out former cl. (ii) and concluding provisions
which read as follows:
‘‘(ii) 75 percent of the dollar amount limitation determined under section 1454(a)(2) of this title for a
residence of the applicable size;
except that the applicable dollar amount limitation in
effect for any area under this subparagraph may not be

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TITLE 12—BANKS AND BANKING

less than the greater of the dollar amount limitation in
effect under this section for the area on September 28,
1994, or 38 percent of the dollar amount limitation determined under section 1454(a)(2) of this title for a residence of the applicable size; and’’.
Subsec. (b)(2)(B). Pub. L. 105–276, § 228(b), amended
first sentence of concluding provisions generally. Prior
to amendment, sentence read as follows: ‘‘For purposes
of the preceding sentence, the term ‘area’ means a
county, or a metropolitan statistical area as established by the Office of Management and Budget, whichever results in the higher dollar amount.’’
Subsec. (b)(10). Pub. L. 105–276, § 212(1), substituted
‘‘CALCULATION OF DOWNPAYMENT’’ for ‘‘ALASKA AND HAWAII’’ in heading.
Subsec. (b)(10)(A). Pub. L. 105–276, § 212(2), substituted
‘‘executed for insurance in fiscal years 1998, 1999, and
2000’’ for ‘‘originated in the State of Alaska or the
State of Hawaii and endorsed for insurance in fiscal
years 1997 and 1998,’’.
Subsec. (x). Pub. L. 105–276, § 224, added subsec. (x).
1997—Subsec. (b)(10)(A). Pub. L. 105–65 substituted
‘‘fiscal years 1997 and 1998’’ for ‘‘fiscal year 1997’’.
1996—Subsec. (b)(9). Pub. L. 104–204, § 425(a), inserted
before period at end ‘‘: Provided further, That for purposes of this paragraph, the Secretary shall consider as
cash or its equivalent any amounts borrowed from a
family member (as such term is defined in section 1707
of this title), subject only to the requirements that, in
any case in which the repayment of such borrowed
amounts is secured by a lien against the property, such
lien shall be subordinate to the mortgage and the sum
of the principal obligation of the mortgage and the obligation secured by such lien may not exceed 100 percent of the appraised value of the property plus any initial service charges, appraisal, inspection, and other
fees in connection with the mortgage’’.
Subsec. (b)(10). Pub. L. 104–204, § 426, added par. (10).
Subsec. (c)(2)(A). Pub. L. 104–204, § 424, inserted after
first sentence ‘‘In the case of a mortgage for which the
mortgagor is a first-time homebuyer who completes a
program of counseling with respect to the responsibilities and financial management involved in homeownership that is approved by the Secretary, the premium payment under this subparagraph shall not exceed 2.0 percent of the amount of the original insured
principal obligation of the mortgage.’’
1994—Subsec. (b)(2)(A). Pub. L. 103–327 substituted cl.
(ii) and concluding provisions for former cl. (ii) and
concluding provisions which read as follows:
‘‘(ii) 75 percent of the dollar amount limitation determined under section 1454(a)(2) of this title (as in
effect on September 30, 1992) for a residence of the applicable size;
except that the applicable dollar amount limitation in
effect for any area under this subparagraph (A) may
not be less than the dollar amount limitation in effect
under this section for the area on May 12, 1992;’’.
Subsec. (h). Pub. L. 103–211, effective for 18-month period following Feb. 12, 1994, for eligible persons, substituted ‘‘Robert T. Stafford Disaster Relief and Emergency Assistance Act’’ for ‘‘section 5122(2) and 5170 of
title 42’’ and inserted at end ‘‘In any case in which the
single family residence to be insured under this subsection is within a jurisdiction in which the President
has declared a major disaster to have occurred, the
Secretary is authorized, for a temporary period not to
exceed 18 months from the date of such Presidential
declaration, to enter into agreements to insure a mortgage which involves a principal obligation of up to 100
percent of the dollar limitation determined under section 1454(a)(2) of this title for single family residence,
and not in excess of 100 percent of the appraised value.’’
See Applicability of 1994 Amendment note below.
Subsec. (k)(6). Pub. L. 103–211, effective for 18-month
period following Feb. 12, 1994, for eligible persons,
added par. (6) which read as follows: ‘‘The Secretary is
authorized, for a temporary period not to exceed 18
months from the date on which the President has declared a major disaster to have occurred, to enter into

Page 532

agreements to insure a rehabilitation loan under this
subsection which involves a principal obligation of up
to 100 percent of the dollar limitation determined
under section 1454(a)(2) of this title for a residence of
the applicable size, if such loan is secured by a structure and property that are within a jurisdiction in
which the President has declared such disaster, pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act [42 U.S.C. 5121 et seq.], and if such
loan otherwise conforms to the loan-to-value ratio and
other requirements of this subsection.’’ See Applicability of 1994 Amendment note below.
1992—Subsec. (b)(2). Pub. L. 102–550, § 506(a), added undesignated par. prohibiting Secretary from insuring
mortgage executed by first-time homebuyer involving
principal obligation in excess of 97 percent of value of
property, unless mortgagor completes approved counseling program or Secretary waives requirement.
Pub. L. 102–550, § 505(a), substituted ‘‘Except with respect to mortgages executed by mortgagors who are
veterans’’ for ‘‘Notwithstanding any other provision of
this paragraph’’ in second undesignated par.
Pub. L. 102–550, § 503(a), amended first sentence generally. Prior to amendment, first sentence read as follows: ‘‘Involve a principal obligation (including such
initial service charges, appraisal, inspection, and other
fees as the Secretary shall approve) in an amount—
‘‘(A) not to exceed the lesser of—
‘‘(i) in the case of the 1-family residence, 95 percent of the median 1-family house price in the area
(as determined by the Secretary); in the case of a 2family residence, 107 percent of such median price;
in the case of a 3-family residence, 130 percent of
such median price; or in the case of a 4-family residence, 150 percent of such median price; or
‘‘(ii) 75 percent of the dollar amount limitation
determined under section 1454(a)(2) of this title (as
adjusted annually under such section) for a residence of the applicable size;
except that the applicable dollar amount limitation
in effect for any area under this subparagraph (A)
may not be less than the dollar amount limitation in
effect under this section for the area on May 12, 1992;
and
‘‘(B) except as otherwise provided in this paragraph
(2), not to exceed an amount equal to the sum of—
‘‘(i) 97 percent of $25,000 of the appraised value of
the property, as of the date the mortgage is accepted for insurance;
‘‘(ii) 95 percent of such value in excess of $25,000
but not in excess of $125,000; and
‘‘(iii) 90 percent of such value in excess of
$125,000.’’
Pub. L. 102–389 amended first sentence generally.
Prior to amendment, first sentence read as follows:
‘‘Involve a principal obligation (including such initial
service charges, appraisal, inspection, and other fees as
the Secretary shall approve) in an amount not to exceed $67,500 in the case of property upon which there is
located a dwelling designed principally for a one-family
residence; or $76,000 in the case of a two-family residence; or $92,000 in the case of a three-family residence,
or $107,000 in the case of a four-family residence; except
that the Secretary may increase the preceding maximum dollar amounts on an area-by-area basis to the
extent the Secretary deems necessary, after taking
into consideration the extent to which moderate and
middle income persons have limited housing opportunities in the area due to high prevailing housing sales
prices, but in no case may such limits, as so increased,
exceed the lesser of (A) 185 percent of the dollar amount
specified, or (B) in the case of a one-family residence,
95 per centum of the median one-family house price in
the area, as determined by the Secretary; in the case of
a two-family residence, 107 per centum of such median
price; in the case of a three-family residence, 130 per
centum of such median price; or in the case of a fourfamily residence, 150 per centum of such median price;
and (except as otherwise provided in this paragraph)
not to exceed an amount equal to the sum of (i) 97 per

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centum of $25,000 of the appraised value of the property,
as of the date the mortgage is accepted for insurance,
and (ii) 95 per centum of such value in excess of
$25,000.’’
Pub. L. 102–389 inserted at end of second undesignated
par. ‘‘Notwithstanding the authority of the Secretary
to establish the terms of insurance under this section
and approve the initial service charges, appraisal, inspection, and other fees (and subject to any other limitations under this section on the amount of a principal
obligation), the Secretary may not (by regulation or
otherwise) limit the percentage or amount of any such
approved charges and fees that may be included in the
principal obligation of a mortgage.’’
Subsec. (b)(9). Pub. L. 102–550, § 505(b), substituted
‘‘(except with respect to a mortgage executed by a
mortgagor who is a veteran)’’ for ‘‘(except in a case to
which the next to the last sentence of paragraph (2) applies)’’.
Subsec. (c)(2). Pub. L. 102–550, § 185(c)(1)(A), inserted
‘‘or of the General Insurance Fund pursuant to subsection (v) of this section’’ after ‘‘Fund’’ in introductory provisions.
Subsec. (c)(2)(A), (B). Pub. L. 102–550, § 507(a)(1), (2)(A),
substituted ‘‘not exceeding’’ for ‘‘equal to’’.
Subsec. (c)(2)(B)(ii). Pub. L. 102–550, § 507(a)(2)(B), substituted ‘‘not exceeding 0.55 percent’’ for ‘‘equal to 0.55
percent’’.
Subsec. (k)(2)(B). Pub. L. 102–550, § 1012(k)(2), inserted
at end ‘‘The term ‘rehabilitation’ may also include
measures to evaluate and reduce lead-based paint hazards, as such terms are defined in section 4851b of title
42.’’
Subsec. (v). Pub. L. 102–550, § 504, added subsec. (v) relating to annual reports.
Pub. L. 102–550, § 185(c)(1)(B), added subsec. (v) relating to use of FHA insurance with assistance under 42
U.S.C. 1437f.
1991—Subsec. (b)(2). Pub. L. 102–40 substituted ‘‘section 5303A(d) of title 38’’ for ‘‘section 3103A(d) of title
38’’.
1990—Subsec. (b)(2). Pub. L. 101–508, § 2102, inserted at
end ‘‘Notwithstanding any other provision of this paragraph, a mortgage may not involve a principal obligation (including such initial service charges, appraisal,
inspection, and other fees as the Secretary shall approve) in excess of 98.75 percent of the appraised value
of the property (97.75 percent, in the case of a mortgage
with an appraised value in excess of $50,000), plus the
amount of the mortgage insurance premium paid at the
time the mortgage is insured. For purposes of the preceding sentence, the term ‘appraised value’ means the
amount set forth in the written statement required
under section 1715q of this title, or a similar amount
determined by the Secretary if section 1715q of this
title does not apply.’’
Pub. L. 101–508, § 2101, substituted ‘‘185 percent of the
dollar amount specified’’ for ‘‘150 percent (185 percent
until October 31, 1990) of the dollar amount specified’’
after ‘‘exceed the lesser of (A)’’.
Pub. L. 101–507 which directed the substitution of
‘‘(185 percent during fiscal year 1991)’’ for ‘‘(185 percent
during fiscal year 1990)’’ could not be executed because
‘‘during fiscal year 1990’’ did not appear in text after
amendment by Pub. L. 101–402. See below.
Pub. L. 101–402 substituted ‘‘until October 31, 1990’’
for ‘‘during fiscal year 1990’’.
Subsec. (b)(9). Pub. L. 101–625, § 429, inserted ‘‘or with
respect to a mortgage covering a housing unit in connection with a homeownership program under the
Homeownership and Opportunity Through HOPE Act,’’
before ‘‘the mortgagor’s payment’’.
Subsec. (c). Pub. L. 101–508, § 2103(a), designated existing provisions as par. (1), added par. (2), and struck out
at end of par. (1) ‘‘In the case of any mortgage secured
by a 1- to 4-family dwelling, the total premium charge
shall not exceed an amount equal to 3.8 percent of the
original principal obligation of the mortgage if the Secretary requires (1) a single premium charge to cover
the total premium obligation of the insurance of the

§ 1709

mortgage; or (2) a periodic premium charge over less
than the term of the mortgage.’’
Subsec. (g)(1). Pub. L. 101–625, § 326(a), inserted at end
‘‘In making this determination with respect to the occupancy of secondary residences, the Secretary may
not insure mortgages with respect to such residences
unless the Secretary determines that it is necessary to
avoid undue hardship to the mortgagor. In no event
may a secondary residence under this subsection include a vacation home, as determined by the Secretary.’’
Subsec. (r)(4). Pub. L. 101–625, § 327, added par. (4).
Subsec. (s). Pub. L. 101–625, § 329, added subsec. (s) relating to disclosure regarding interest due upon mortgage prepayment.
Subsec. (t). Pub. L. 101–625, § 330, added subsec. (t).
1989—Subsec. (b)(2). Pub. L. 101–144 inserted ‘‘(185 percent during fiscal year 1990)’’ after ‘‘(A) 150 percent’’.
Subsec. (g)(2). Pub. L. 101–235, § 143(b), redesignated
par. (3) as (2) and struck out former par. (2) which read
as follows: ‘‘The occupancy requirement established in
paragraph (1) shall apply only if the mortgage involves
a principal obligation that exceeds, as appropriate, 75
percent of—
‘‘(A) the appraised value of the dwelling;
‘‘(B) the estimate of the Secretary of the replacement cost of the property;
‘‘(C) the sum of the estimates of the Secretary of
the cost of repair and rehabilitation and the value of
the property before repair and rehabilitation; or
‘‘(D) the sum of the estimates of the Secretary of
the cost of repair and rehabilitation and the amount
(as determined by the Secretary) required to refinance existing indebtedness secured by the property,
and, in the case of a property refinanced under section 1715k(d)(3)(A) of this title, any existing indebtedness incurred in connection with improving, repairing, or rehabilitating the property.’’
Subsec. (g)(2)(A). Pub. L. 101–235, § 143(a)(1), inserted
‘‘, or any other State or local government or an agency
thereof’’ before semicolon at end.
Subsec. (g)(2)(B). Pub. L. 101–235, § 143(a)(2), inserted
‘‘, or other private nonprofit organization that is exempt from taxation under section 501(c)(3) of title 26
and intends to sell or lease the mortgaged property to
low or moderate-income persons, as determined by the
Secretary’’ before semicolon at end.
Subsec. (g)(3), (4). Pub. L. 101–235, § 143(b)(2), redesignated par. (4) as (3). Former par. (3) redesignated (2).
Subsec. (r). Pub. L. 101–235, § 132(a)(1), amended first
sentence generally, substituting ‘‘the single-family
mortgage insurance programs carried out under this
subchapter’’ for ‘‘the mortgage insurance program carried out under this section’’.
Subsec. (r)(2), (3). Pub. L. 101–235, § 132(a)(2), amended
pars. (2) and (3) generally. Prior to amendment, pars.
(2) and (3) read as follows:
‘‘(2) requiring reviews of the credit standing of each
person seeking to assume a mortgage insured under
this section (A) during the 12-month period following
the date on which the mortgage is executed, or (B) during the 24-month period following the date on which
the mortgage is executed in the case of an investor
originated mortgage; and
‘‘(3) in any case where a mortgage is assumed after
the period specified in paragraph (2), requiring that the
original mortgagor be advised of the procedures by
which he or she may be released from liability.’’
Subsec. (s). Pub. L. 101–235, § 135, added subsec. (s).
1988—Subsec. (b)(2). Pub. L. 100–628, §§ 1061, 1062(b),
clarified amendments by Pub. L. 100–242, §§ 405(1),
406(b)(1)(B).
Pub. L. 100–242, § 406(b)(1)(A), struck out ‘‘(whether or
not such one- or two-family residence may be intended
to be rented temporarily for school purposes)’’ after ‘‘in
the case of a two-family residence’’ in first sentence.
Pub. L. 100–242, § 404, substituted ‘‘150 percent’’ for
‘‘1331⁄3 per centum’’ in cl. (A) of first sentence.
Pub. L. 100–242, § 423, inserted definition of ‘‘area’’.
Pub. L. 100–242, § 406(b)(1)(B), struck out ‘‘to be occupied as the principal residence of the owner’’ after ‘‘residence’’.

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TITLE 12—BANKS AND BANKING

Pub. L. 100–242, § 405(1), which directed insertion of
‘‘, except that persons enlisting in the armed forces
after September 7, 1980, or entering active duty after
October 16, 1981, shall have their eligibility determined
in accordance with section 3103A(d) of title 38’’ before
period at end of first undesignated paragraph, was executed by making the insertion after ‘‘other than dishonorable’’ at end of sentence defining ‘‘veteran’’, to
reflect the probable intent of Congress.
Subsec. (b)(8). Pub. L. 100–242, § 406(b)(2), struck out
par. (8) which related to eligibility for insurance of a
mortgage in the case of a mortgagor who is not occupant of the property.
Subsec. (c). Pub. L. 100–242, § 403, inserted provisions
at end relating to total premium charge to be fixed by
Secretary in case of any mortgage secured by 1- to 4family dwelling.
Subsec. (g). Pub. L. 100–242, § 406(a), added subsec. (g).
Subsec. (g)(3)(F). Pub. L. 100–628, § 1062(a), added subpar. (F).
Subsec. (h). Pub. L. 100–707, § 109(e)(2), struck out
‘‘riot or civil disorder’’ after ‘‘hurricane, earthquake,
storm,’’ and substituted ‘‘5170’’ for ‘‘5141’’.
Pub. L. 100–242, § 406(b)(3), struck out ‘‘is the owner
and occupant and’’ after ‘‘where the mortgagor’’.
Subsec. (i). Pub. L. 100–242, § 406(b)(4), struck out
‘‘Provided, That if the mortgagor is not the occupant of
the property at the time of insurance, the principal obligation of the mortgage shall not exceed 85 per centum
of the appraised value of the property:’’ after ‘‘for a single-family residence:’’ and substituted ‘‘Provided, That
the Secretary’’ for ‘‘Provided further, That the Secretary’’.
Subsec. (k)(3)(B). Pub. L. 100–242, § 429(c), substituted
‘‘borrower and the financial institution’’ for ‘‘mortgagor and the mortgagee’’.
Subsec. (m). Pub. L. 100–242, § 406(c), struck out subsec. (m) which related to insurance of mortgages on
dwellings that need not be designed for year-round occupancy.
Subsec. (o)(2). Pub. L. 100–242, § 406(b)(5), substituted
‘‘owner’’ for ‘‘owner occupant’’ in first sentence.
Subsec. (p)(2). Pub. L. 100–242, § 406(b)(6), substituted
‘‘owner’’ for ‘‘owner-occupant’’ in first sentence.
Subsec. (q)(1). Pub. L. 100–242, § 422(b), substituted
‘‘Secretary shall’’ for ‘‘Secretary may’’.
Subsec. (r). Pub. L. 100–242, § 407(a)(1), added subsec.
(r).
Subsec. (r)(2)(A), (B). Pub. L. 100–628, § 1063(a), substituted ‘‘date on which the mortgage is executed’’ for
‘‘date on which the mortgage is endorsed for insurance’’.
1986—Subsec. (q). Pub. L. 99–601 added subsec. (q).
1984—Subsec. (n)(2)(A). Pub. L. 98–479 substituted ‘‘a’’
for ‘‘an’’ before ‘‘cooperative ownership’’.
1983—Subsec. (b)(2). Pub. L. 98–181, § 424(a), struck out
‘‘(except as provided in the next to the last sentence of
this paragraph)’’ and inserted ‘‘(except as otherwise
provided in this paragraph)’’ and inserted after first
sentence ‘‘If the mortgage to be insured under this section covers property on which there is located a one- to
four-family residence to be occupied as the principal
residence of the owner, and the appraised value of the
property, as of the date the mortgage is accepted for insurance, does not exceed $50,000, the principal obligation may be in an amount not to exceed 97 percent of
such appraised value.’’
Pub. L. 98–181, § 423(b)(1), struck out ‘‘: Provided, That
the foregoing maximum mortgage amounts may be increased by the amount of the mortgage insurance premium paid at the time the mortgage is insured’’ after
‘‘150 per centum of such median price’’.
Subsec. (b)(5). Pub. L. 98–181, § 404(b)(2), substituted
provision that the interest rate be at such rate as
agreed upon by the mortgagor and the mortgagee for
provision that the interest rate, exclusive of premium
charges for insurance and service charges if any, not
exceed 5 per centum per annum on the amount of the
principal obligation outstanding at any time, or not exceed such per centum per annum not in excess of 6 per

Page 534

centum as the Secretary finds necessary to meet the
mortgage market.
Subsec. (b)(8). Pub. L. 98–181, § 425, substituted ‘‘the
lesser of (A) the otherwise applicable maximum dollar
amount prescribed under paragraph (2), or (B) 85 percent of the appraised value of the property as of the
date the mortgage is accepted for insurance’’ for ‘‘85
per centum of the amount computed under the provisions of paragraph (2) of this subsection’’.
Subsec. (c). Pub. L. 98–181, § 447, inserted ‘‘(1) under
section 1715z–10, 1715z–12, 1715z–16, 1715z–17, or 1715z–18 of
this title, or any other financing mechanism providing
alternative methods for repayment of a mortgage that
is determined by the Secretary to involve additional
risk, or (2)’’ after ‘‘fixed for insurance’’.
Subsec. (d). Pub. L. 98–181, § 423(a), added subsec. (d).
Subsec. (h). Pub. L. 98–63 substituted ‘‘the applicable
maximum dollar limit under subsection (b)’’ for
‘‘$14,400’’.
Subsec. (k)(3)(B). Pub. L. 98–181, § 404(b)(3), substituted provision that interest be at such a rate as
agreed upon by the mortgagor and mortgagee for provision that interest be at a rate permitted by the Secretary for mortgages insured under this section, except
that the Secretary could permit a higher rate with respect to the period beginning with the making of the
loan and ending with the completion of the rehabilitation or such earlier time as determined by the Secretary.
Subsec. (n)(1). Pub. L. 98–181, § 419(1), inserted ‘‘or the
construction of which was completed more than a year
prior to the application for the mortgage insurance’’
after ‘‘under this chapter’’.
Subsec. (n)(2)(A). Pub. L. 98–181, § 419(2), struck out
‘‘nonprofit’’ before ‘‘cooperative’’.
1982—Subsec. (b)(2). Pub. L. 97–253, § 201(a)(1), inserted
provision that the foregoing maximum mortgage
amounts may be increased by the amount of the mortgage insurance premium paid at the time the mortgage
is insured.
Subsec. (b)(9). Pub. L. 97–253, § 201(a)(2), inserted ‘‘(excluding the mortgage insurance premium paid at the
time the mortgage is insured)’’ after ‘‘cost of acquisition’’.
Subsec. (c). Pub. L. 97–253, § 201(b), inserted provision
that with respect to mortgages for which the Secretary
requires, at the time the mortgage is insured, the payment of a single premium charge to cover the total premium obligation for the insurance of the mortgage, and
on which the principal obligation is paid before the
number of years on which the premium with respect to
a particular mortgage was based, or the property is
sold subject to the mortgage or is sold and the mortgage is assumed prior to such time, the Secretary shall
provide for refunds, where appropriate, of a portion of
the premium paid and shall provide for appropriate allocation of the premium cost among the mortgagors
over the term of the mortgage, in accordance with procedures established by the Secretary which take into
account sound financial and actuarial considerations.
1980—Subsec. (b)(2). Pub. L. 96–399, § 336(a), inserted
provisions authorizing the Secretary to increase maximum dollar amounts with respect to four-family residences.
Subsec. (b)(3). Pub. L. 96–399, § 333(a), struck out provisions relating to applicability to criteria of threequarters of the Secretary’s estimate of the remaining
economic life of the building improvements.
Subsec. (k)(5). Pub. L. 96–399, § 321, substituted provisions relating to insurance benefits paid with respect to
loans secured by a first mortgage, and insured under
this subsection, and those secured by a mortgage other
than a first mortgage, and insured under this subsection, for provisions relating to insurance benefits
paid with respect to loans insured under this subsection.
Subsec. (p). Pub. L. 96–399, § 328, added subsec. (p).
1979—Subsec. (b)(2). Pub. L. 96–153, §§ 310, 312(a), excepted dwellings covered by a consumer protection or
warranty plan acceptable to the Secretary and satisfy-

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ing all requirements which would have been applicable
if such dwellings had been approved for mortgage insurance prior to the beginning of construction from the
limit on the maximum amount of mortgage on dwellings not approved for mortgage insurance prior to the
beginning of construction, and substituted ‘‘$67,500’’ for
‘‘$60,000’’, ‘‘$76,000’’ for ‘‘$65,000’’ where it first appeared,
‘‘$92,000’’ for ‘‘$65,000’’ where it appeared the second
time, and ‘‘$107,000’’ for ‘‘$75,000’’.
Subsec. (i). Pub. L. 96–153, § 318, substituted ‘‘two and
one-half or more acres in size adjacent to an all-weather public road’’ for ‘‘five or more acres in size adjacent
to a public highway’’ in last proviso.
1978—Subsec. (b)(2). Pub. L. 95–619 inserted provision
that the amount insurable under this section could be
increased by up to 20 per centum if such increase were
necessary to account for the increased cost of a residence due to the installation of a solar energy system.
Subsec. (c). Pub. L. 95–557, § 101(c)(2), substituted
‘‘subsections (n) and (k) are not required’’ for ‘‘subsection (n) is not required’’ and ‘‘subsection (n) or (k)
exceed 1 per centum’’ for ‘‘subsection (n) exceed 1 per
centum’’.
Subsec. (k). Pub. L. 95–557, § 101(c)(1), generally revised subsec. (k) to meet the credit needs of owners of
from one-to-four family properties who can afford market rate borrowing by insuring one hundred percent of
the loan amount and covering the cost of rehabilitation, rehabilitation and refinancing existing debt, or
the purchase and rehabilitation of properties.
1977—Subsec. (b)(2). Pub. L. 95–128, §§ 303(a), 304(a),
substituted ‘‘$60,000’’ for ‘‘$45,000’’, ‘‘$65,000’’ for
‘‘$48,750’’ wherever appearing, and ‘‘$75,000’’ for
‘‘$56,000’’ in provisions preceding cl. (i); struck out in
cl. (i) following ‘‘97 per centum’’ parenthetical text
‘‘(but, in any case where the dwelling is not approved
for mortgage insurance prior to the beginning of construction, unless the construction of the dwelling was
completed more than one year prior to the application
for mortgage insurance, or the dwelling was approved
for guaranty, insurance, or direct loan under chapter 37
of title 38 prior to the beginning of construction, 90 per
centum)’’; substituted in first sentence ‘‘and (ii) 95 per
centum of such value in excess of $25,000’’ for ‘‘(ii) 90
per centum of such value in excess of $25,000 but not in
excess of $35,000, and (iii) 80 per centum of such value
in excess of $35,000’’ and in second sentence ‘‘and (ii) 95
per centum of such value in excess of $25,000’’ for ‘‘(ii)
90 per centum of such value in excess of $25,000 but not
in excess of $35,000, and (iii) 85 per centum of such value
in excess of $35,000’’; and inserted following the second
sentence provision limiting the mortgage to 90 per centum of the entire appraised value of the property as of
the date the mortgage is accepted for insurance where
the dwelling is not approved for mortgage insurance
prior to the beginning of construction.
Subsec. (c). Pub. L. 95–128, § 305, inserted proviso respecting premium charges for insurance under subsec.
(n) of this section.
Subsec. (i). Pub. L. 95–128, § 303(g), substituted provision which authorizes the Secretary to insure a mortgage hereunder which involves a principal obligation
not in excess of 75 per centum of the limit on the principal obligation applicable to a one-family residence
under subsec. (b) of this section for prior limitation of
such insurance on a mortgage which involved a principal obligation not in excess of $16,200.
Subsec. (o). Pub. L. 95–128, § 307, added subsec. (o).
1974—Subsec. (b)(2). Pub. L. 93–383, § 302(a), substituted ‘‘$45,000’’ for ‘‘$33,000’’, ‘‘$48,750’’ for ‘‘$35,750’’
wherever appearing therein, and ‘‘$56,000’’ for ‘‘$41,250’’
in provisions preceding cl. (i).
Subsec. (b)(2)(i). Pub. L. 93–383, § 310(a)(1), substituted
‘‘$25,000’’ for ‘‘$15,000’’ in first and second sentences.
Subsec. (b)(2)(ii). Pub. L. 93–383, § 310(a)(2), substituted
‘‘$25,000’’ for ‘‘$15,000’’ and ‘‘$35,000’’ for ‘‘$25,000’’ in first
and second sentences.
Subsec. (b)(2)(iii). Pub. L. 93–383, § 310(a)(3), substituted ‘‘$35,000’’ for ‘‘$25,000’’ in first and second sentences.

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Subsec. (h). Pub. L. 93–288 substituted ‘‘sections
5122(2) and 5141 of title 42’’ for ‘‘section 4402(1) of title
42’’.
Subsec. (n). Pub. L. 93–449 added subsec. (n).
1970—Subsec. (h). Pub. L. 91–606 substituted reference
to section ‘‘4402(1)’’ for ‘‘1855a(a)’’ of title 42.
1969—Subsec. (b)(2). Pub. L. 91–152, §§ 102(a), 113(a)(1),
substituted ‘‘$25,000’’ for ‘‘$20,000’’ wherever appearing,
‘‘$33,000’’ for ‘‘$30,000’’, ‘‘$35,750’’ for ‘‘$32,500’’ wherever
appearing, and ‘‘$41,250’’ for ‘‘$37,500’’.
Subsec. (h). Pub. L. 91–152, § 113(a)(2), substituted
‘‘$14,400’’ for ‘‘$12,000’’.
Subsec. (i). Pub. L. 91–152, § 113(a)(3), substituted
‘‘$16,200’’ for ‘‘$13,500’’.
Subsec. (m). Pub. L. 91–152, § 113(a)(4), substituted
‘‘$18,000’’ for ‘‘$15,000’’.
1968—Subsec. (h). Pub. L. 90–448, § 1106(d), authorized
insurance of mortgages for reconstruction of homes destroyed or damaged as a result of riot or civil disorder.
Subsec. (i). Pub. L. 90–448, § 317, substituted ‘‘$13,500’’
for ‘‘$12,500’’.
Subsec. (l). Pub. L. 90–448, § 103(b), repealed subsec. (l)
which authorized insurance of mortgages in areas affected by civil disorders. See section 1715n(e) of this
title.
Subsec. (m). Pub. L. 90–448, § 318, added subsec. (m).
1967—Pub. L. 90—19, § 1(a)(3), substituted ‘‘Secretary’’
for ‘‘Commissioner’’ wherever appearing in subsecs. (a),
(b)(1) to (9), (c), (e), (h), (i), and (k).
Subsec. (b)(3), (9). Pub. L. 90—19, § 1(a)(4), substituted
‘‘Secretary’s’’ for ‘‘Commissioner’s’’.
1966—Subsec. (b)(2). Pub. L. 89–754, § 301, substituted
‘‘If the mortgagor is a veteran,’’ for ‘‘If the mortgagor
is a veteran who has not received any direct, guaranteed, or insured loan under laws administered by the
Veterans’ Administration for the purchase, construction, or repair of a dwelling (including a farm dwelling)
which was to be owned and occupied by him as his
home,’’.
Subsec. (l). Pub. L. 89–754, § 302, added subsec. (l).
1965—Subsec. (b)(2). Pub. L. 89–117, §§ 203, 206(a), substituted ‘‘and (except as provided in the next to the last
sentence of this paragraph) not to exceed’’ for ‘‘and not
to exceed’’, and ‘‘80 per centum’’ for ‘‘75 per centum’’,
and inserted provisions prescribing the amount of the
principal obligation for veterans and defining ‘‘veteran’’.
Subsec. (b)(9). Pub. L. 89–117, §§ 204, 206(b), inserted
‘‘(except in a case to which the next to the last sentence of paragraph (2) applies)’’ and ‘‘or with respect to
a mortgage covering a single-family home being purchased under the low-income housing demonstration
project assisted pursuant to section 1436 of title 42’’.
Subsec. (i). Pub. L. 89–117, § 205, substituted ‘‘$12,500’’
for ‘‘$11,000’’.
Subsec. (k). Pub. L. 89–117, § 1108(c), substituted ‘‘the
General Insurance Fund’’ for ‘‘a separate section 203
Home Improvement Account to be maintained as hereinafter provided under the Mutual Mortgage Insurance
Fund’’ in cl. (3) of the first sentence and ‘‘the General
Insurance Fund or in debentures executed in the name
of such Fund’’ for ‘‘the section 203 Home Improvement
Account or in debentures executed in the name of such
Account’’ in cl. (4), and removed references to section
220 Housing Insurance Fund and section 203 Home Improvement Account elsewhere in the subsec., including
provisions for the funding of a special revolving fund
for carrying out the provisions of the subsec.
1964—Subsec. (b)(2). Pub. L. 88–560, § 102(a), increased
maximum amount of the principal obligation for onefamily residences from $25,000 to $30,000, for two-family
residences from $27,500 to $32,500, for three-family residences from $27,500 to $32,500, and for four-family residences from $35,000 to $37,500.
Subsec. (i). Pub. L. 88–560, § 102(b), increased maximum amount of the principal obligation from $9,000 to
$11,000.
Subsec. (k). Pub. L. 88–560, §§ 103, 105(c)(1), substituted
in cl. (2) ‘‘an acceptable risk’’ for ‘‘economically
sound’’, in cl. (4) provision for payment of insurance

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TITLE 12—BANKS AND BANKING

benefits ‘‘in cash out of the Section 203 Home Improvement Account or in debentures executed in the name of
such Account’’ for provision for such payment ‘‘in debentures executed in the name of the Section 203 Home
Improvement Account’’, and in the third sentence ‘‘Insurance benefits paid with respect to loans insured
under this subsection shall be paid’’ for ‘‘Debentures issued with respect to loans insured under this subsection shall be issued’’; and inserted the provision that
‘‘If the insurance payment is made in cash, there shall
be added to such payment an amount equivalent to the
interest which the debentures would have earned, computed to a date to be established pursuant to regulations issued by the Commissioner.’’, respectively.
1961—Subsec. (a). Pub. L. 87–70, § 604(b), struck out
proviso which limited the aggregate amount of principal obligations of all mortgages insured under this
chapter to not more than $7,750,000,000, and which permitted additional increases in such sum by not more
than $1,250,000,000 in the aggregate.
Subsec. (b)(2). Pub. L. 87–70, § 605(a), (b), increased
maximum amount of the principal obligation for onefamily residences from $22,500 to $25,000, and for twofamily residences from $25,000 to $27,500, and substituted ‘‘$15,000’’ for ‘‘$13,500’’ in two places, ‘‘$20,000’’
for ‘‘$18,000’’ in two places, and ‘‘75 per centum’’ for ‘‘70
per centum’’.
Subsec. (b)(3). Pub. L. 87–70, §§ 605(c), 612(a)(1), substituted ‘‘thirty-five years (or thirty years if such
mortgage is not approved for insurance prior to construction) from the date of the beginning of amortization of the mortgage’’ for ‘‘thirty years from the date
of the insurance of the mortgage’’.
Subsec. (c). Pub. L. 87–70, §§ 606, 612(a)(2), reduced
minimum premium charge from an amount equivalent
to one-half of 1 per centum per annum to an amount
equivalent to one-fourth of 1 per centum per annum,
permitted the Commissioner to make the reduced premium charge applicable to each insured mortgage outstanding under the section or sections involved at the
time the reduced charge is fixed, struck out provisos
which related to premium charges for mortgages insured prior to Feb. 3, 1938, and for mortgages described
in section 203(b)(2)(B) of the National Housing Act accepted for insurance prior to July 1, 1939, and substituted ‘‘particular insurance fund or account’’ for
‘‘particular insurance fund’’ in the first proviso of the
second sentence.
Subsec. (e). Pub. L. 87–70, § 102(b)(1), (2), substituted
‘‘eligibility of the loan or mortgage’’ for ‘‘eligibility of
the mortgage’’, and ‘‘approved financial institution or
approved mortgagee’’ for ‘‘approved mortgagee’’ in two
places.
Subsec. (k). Pub. L. 87–70 § 102(b)(3), added subsec. (k).
1959—Subsec. (b)(2). Pub. L. 86–372, § 102(a), increased
maximum amount of the principal obligation for onefamily residences from $20,000 to $22,500, and for twofamily residences from $20,000 to $25,000, increased the
maximum amount of loans over $13,500 from 85 per centum of the value in excess of $13,500 but not in excess
of $16,000 to 90 per centum of the value in excess of
$13,500 but not in excess of $18,000, and inserted provisions relating to dwellings approved for guaranty, insurance, or direct loan under chapter 37 of title 38 prior
to the beginning of construction.
Subsec. (b)(8). Pub. L. 86–372, § 102(b), inserted proviso
making the 85 per centum limitation inapplicable if the
mortgagor and mortgagee assume responsibility for the
reduction of the mortgage by an amount not less than
15 per centum of the outstanding principal amount
thereof in the event the mortgaged property is not,
prior to the due date of the 18th amortization payment
of the mortgage, sold to a purchaser acceptable to the
Commissioner who is the occupant of the property and
who assumes and agrees to pay the mortgage indebtedness.
Subsec. (i). Pub. L. 86–372, § 103, increased maximum
amount of the principal obligation from $8,000 to $9,000,
inserted parenthetical clause, and struck out provisions that limited the total amount of insurance out-

Page 536

standing at any one time for farm homes to not more
than $100,000,000.
Subsec. (j). Pub. L. 86–372, § 809, added subsec. (j).
1958—Subsec. (b)(2). Pub. L. 85–364 substituted
‘‘$13,500’’ for ‘‘$10,000’’ in two places.
1957—Subsec. (b)(2). Pub. L. 85–104, § 101(a), increased
maximum amount of loan from 95 per centum of the
first $9,000 plus 75 per centum of excess above $9,000, to
97 per centum of the first $10,000 plus 85 per centum of
the next $6,000 and 70 per centum of the remainder, and
struck out provisions authorizing President to increase
former $9,000 figure to $10,000, eliminated provision that
principal of mortgage shall not exceed 85 per centum if
mortgagor is not occupant of property, and eliminated
provision that mortgagor shall have paid at least 5 per
centum cash payment. See subsec. (b)(8), (9).
Subsec. (b)(8), (9). Pub. L. 85–104, § 101(b), added pars.
(8) and (9).
Subsec. (d). Pub. L. 85–104, § 106, repealed provisions
which related to insurance of mortgages on farm properties.
Subsec. (i). Pub. L. 85–104, § 101(c), amended provisions
generally, and, among other changes, increased maximum loan from $6,650 to $8,000, and from 95 per centum
to 97 per centum of value, and substituted provisions
that mortgage obligation shall not exceed 85 per centum of value if mortgagor is not occupant, for provisions that (1) mortgagor be the owner and occupant and
had paid at least 5 per centum cash, or (2) mortgagor
be owner and occupant with whom a person or corporation having satisfactory credit standing had contracted
to pay on his behalf all or part of downpayment, taking
as security a note at not more than 4 per centum interest, and to guarantee payment of insured mortgage, or
(3) to be the builder constructing the dwelling in which
case principal should not exceed 85 per centum of value
or $5,950.
1956—Subsec. (b)(2). Act Aug. 7, 1956, §§ 102(a), 104(a),
inserted ‘‘unless the construction of the dwelling was
completed more than one year prior to the application
for mortgage insurance’’ before ‘‘90 per centum’’ in parenthetical clause, and inserted provision that in cases
where mortgagor is a person 60 years of age or older,
the downpayment required could be paid by a person
other than the mortgagor under conditions prescribed
by the Commissioner.
Subsec. (h). Act Aug. 7, 1956, § 102(b), substituted
‘‘$12,000’’ for ‘‘$7,000’’.
1954—Subsec. (b)(2). Act Aug. 2, 1954, § 104, generally
amended provisions to provide, among others, for an increase in, and equalization of, maximum mortgage
amounts, with respect to new housing, substitution of
a loan to value ratio of 95 per centum of the $9,000 of
value plus 75 per centum of the balance in excess of
$9,000, with Presidential authority to increase the $9,000
figure to $10,000 under certain conditions, and with respect to existing housing, substitution of a loan to
value ratio of 90 per centum of the first $9,000 of value
plus 75 per centum of the balance in excess of $9,000,
with Presidential authority to increase the $9,000 figure
to $10,000, and inserted a provision limiting the maximum loan to value ratio where the builder becomes the
mortgagor, not to exceed 85 per centum of the mortgage loan which an owner-occupant could obtain.
Subsec. (b)(3). Act Aug. 2, 1954, § 105, substituted a
provision for a maximum maturity of 30 years or threequarters of the Commissioner’s estimate of the remaining economic life of the building improvements, whichever is the lesser, for former provision carrying varying
limits ranging from twenty to thirty years.
Subsec. (b)(5). Act Aug. 2, 1954, § 106, fixed maximum
statutory interest rate on mortgages at 5 per centum
with authority in the Commissioner to increase the
rate to not to exceed 6 per centum as he finds it necessary to meet the mortgage market; and permitted
the allowance of service charges.
Subsec. (c). Act Aug. 2, 1954, § 107, provided that debentures presented in payment of premium charges
shall represent obligations of the particular insurance
fund to which such premium charges are to be credited.

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Subsec. (d). Act Aug. 2, 1954, § 108, prohibited insurance of mortgages pursuant to this subsection after
Aug. 2, 1954, except pursuant to commitments to insure
issued on or before such date.
Subsecs. (f), (g). Act Aug. 2, 1954, § 109, repealed subsec. (f) which related to refinance mortgages and subsec. (g) which related to higher loan to value ratio and
longer maturity for single-family residences. See subsecs. (b)(2) and (b)(3) of this section.
Subsecs. (h), (i). Act Aug. 2, 1954, § 110, added subsecs.
(h) and (i).
1953—Subsec. (g). Act June 30, 1953, added subsec. (g).
1950—Act Apr. 20, 1950, § 122, substituted ‘‘Commissioner’’ for ‘‘Administrator’’ wherever appearing.
Subsec. (a). Act Apr. 20, 1950, § 103, increased statutory amount of insurance authority from $6,750,000,000
to $7,500,000,000 and provided that an additional
$1,250,000,000 in insurance authority could be made
available with the authority of the President.
Subsec. (b)(2). Act Apr. 20, 1950, § 104(a), inserted proviso to clause (A) to allow the Commissioner to increase the dollar limitation by not exceeding $4,500 for
each additional family dwelling unit, in excess of two
located on such property, repealed clause (B), changed
‘‘$9,500’’ to read ‘‘$9,450’’, ‘‘90’’ to ‘‘95’’ in clause (C), and
changed clause (D) to provide that an insured mortgage
could not exceed $6,650 in amount and not exceed 95 per
centum of the appraised value, except that the Commissioner is given discretionary authority to increase
such dollar amount limitation by not exceeding $950 for
each additional bedroom in excess of two, and also to
give Commissioner authority to increase the insurance
limitation in any geographical area where he finds that
cost levels so require.
1949—Subsec. (a). Joint Res. Oct. 25, 1949, substituted
‘‘$6,000,000,000’’ for ‘‘$5,500,000,000’’, and ‘‘$6,750,000,000’’
for ‘‘$6,000,000,000’’.
Act Aug. 30, 1949 substituted ‘‘$5,500,000,000’’ for
‘‘$5,300,000,000’’ and ‘‘$6,000,000,000’’ for ‘‘$5,500,000,000’’.
Act July 15, 1949, substituted ‘‘$5,300,000,000’’ for
‘‘$4,000,000,000’’ and ‘‘$5,500,000,000’’ for ‘‘$5,000,000,000’’.
1948—Subsec. (b)(2). Act Aug. 10, 1948, § 101(g),
(h)(1)–(3), (j)(1), substituted ‘‘$6,300’’ for ‘‘$5,400’’ in subpar. (B), substituted ‘‘$9,500’’ for ‘‘$8,600’’, ‘‘$7,000’’ for
‘‘$6,000’’, and ‘‘$11,000’’ for ‘‘$10,000’’ in subpar. (C), and
added subpar. (D).
Subsec. (b)(3). Act Aug. 10, 1948, § 101(i), (j)(2), substituted ‘‘on property approved for insurance prior to
the beginning of construction’’ for ‘‘of the character described in paragraph (2)(B) of this subsection’’ and inserted ‘‘or not to exceed thirty years in the case of a
mortgage insured under paragraph (2)(D) of this subsection’’, at the end thereof.
Subsec. (b)(5). Act Aug. 10, 1948, § 101(j)(3), inserted
‘‘or not to exceed 4 per centum per annum in the case
of a mortgage insured under paragraph (2)(D) of this
subsection, or not to exceed such percentum per
annum, not in excess of 5 per centum, as the Administrator finds necessary to meet the mortgage market’’
at the end thereof.
Subsec. (c). Act Aug. 10, 1948, § 101(k)(1), (2), struck
out of last sentence ‘‘under this section or section 1715a
of this title’’ after ‘‘accepted for insurance’’ and ‘‘and
a mortgage on the same property is accepted for insurance at the time of such payment’’ after ‘‘herein set
forth’’.
1946—Subsec. (a). Act July 1, 1946, struck out second
and third provisos providing for a limitation on the aggregate amount of mortgages outstanding, and limiting
insuring of mortgages after July 1, 1946, respectively.
1943—Subsec. (a). Act Oct. 15, 1943, substituted ‘‘1946’’
for ‘‘1944’’ in third proviso.
1941—Subsec. (a). Act June 28, 1941, substituted
‘‘$4,000,000,000’’ for ‘‘$3,000,000,000’’, ‘‘$5,000,000,000’’ for
‘‘$4,000,000,000’’; and affected second and third provisos.
1939—Subsec. (a). Act June 3, 1939, § 6, substituted
‘‘$3,000,000’’ for ‘‘$2,000,000’’, ‘‘$4,000,000’’ for ‘‘$3,000,000’’,
generally revised second proviso and inserted third proviso.
Subsec. (b)(3). Act June 3, 1939, § 7, struck out ‘‘until
July 1, 1939’’.

§ 1709

Subsecs. (e), (f). Act June 3, 1939, § 8, added subsecs.
(e) and (f).
1938—Subsecs. (a) to (d). Act Feb. 3, 1938, amended
provisions generally.
1935—Subsec. (a)(1). Act Aug. 23, 1935, inserted ‘‘property and’’ before ‘‘project’’.
Subsec. (c). Act May 28, 1935, inserted part of last sentence before the semicolon.
EFFECTIVE DATE OF 2011 AMENDMENT
Pub. L. 112–78, title IV, § 402(b), Dec. 23, 2011, 125 Stat.
1289, provided that the amendment made by section
402(b) is effective Oct. 1, 2021.
EFFECTIVE DATE OF 2008 AMENDMENT
Pub. L. 110–289, div. B, title I, § 2112(c), July 30, 2008,
122 Stat. 2831, provided that: ‘‘The amendments made
by subsection (a) [amending this section] shall take effect upon the expiration of the date described in section
202(a) of the Economic Stimulus Act of 2008 (Public
Law 110–185; 122 Stat. 620) [Dec. 31, 2008].’’
EFFECTIVE DATE OF 2004 AMENDMENTS
Pub. L. 108–447, div. I, title II, § 223, Dec. 8, 2004, 118
Stat. 3321, provided in part that: ‘‘This provision
[amending this section] shall apply to loans that become insured on or after date of enactment of this Act
[Dec. 8, 2004].’’
Amendment by Pub. L. 108–386 effective Oct. 30, 2004,
and, except as otherwise provided, applicable with respect to fiscal year 2005 and each succeeding fiscal
year, see sections 8(i) and 9 of Pub. L. 108–386, set out
as notes under section 321 of this title.
EFFECTIVE DATE OF 2001 AMENDMENT
Pub. L. 107–73, title II, § 207(b), Nov. 26, 2001, 115 Stat.
675, provided that: ‘‘The amendments made by subsection (a) [amending this section] shall—
‘‘(1) apply only to mortgages that are executed on
or after the date of enactment of this Act [Nov. 26,
2001]; and
‘‘(2) be implemented in advance of any necessary
conforming changes to regulations.’’
APPLICABILITY OF 1994 AMENDMENT
Pub. L. 103–211, title I, Feb. 12, 1994, 108 Stat. 12, provided in part that: ‘‘For higher mortgage limits and improved access to mortgage insurance for victims of the
January 1994 earthquake in Southern California, title
II of the National Housing Act, as amended [12 U.S.C.
1707 et seq.], is further amended, as follows:
‘‘(1) [Amended this section.]
‘‘(2) [Amended this section.]
‘‘(3) [Amended section 1715y of this title.]
‘‘Eligibility for loans made under the authority
granted by the preceding paragraph [amending this section and section 1715y of this title] shall be limited to
persons whose principal residence was damaged or destroyed as a result of the January 1994 earthquake in
Southern California: Provided, That the provisions
under this heading [amending this section and section
1715y of this title] shall be effective only for the 18month period following the date of enactment of this
Act [Feb. 12, 1994].’’
EFFECTIVE DATE OF 1992 AMENDMENT
Pub. L. 102–550, title V, § 503(b), Oct. 28, 1992, 106 Stat.
3779, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply only to
mortgages executed on or after January 1, 1993.’’
Pub. L. 102–550, title V, § 506(b), Oct. 28, 1992, 106 Stat.
3781, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply to mortgages for which commitments for insurance are issued
after the expiration of the 12-month period beginning
on the date of the enactment of this Act [Oct. 28, 1992].’’
EFFECTIVE DATE OF 1990 AMENDMENTS
Pub. L. 101–625, title III, § 326(b), Nov. 28, 1990, 104
Stat. 4137, provided that: ‘‘The amendments made by

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TITLE 12—BANKS AND BANKING

subsection (a) [amending this section] shall apply only
with respect to—
‘‘(1) mortgages insured—
‘‘(A) pursuant to a conditional commitment issued after the expiration of the 60-day period beginning on the date of the enactment of this Act [Nov.
28, 1990]; or
‘‘(B) in accordance with the direct endorsement
program, if the approved underwriter of the mortgages signs the appraisal report for the property
after the expiration of the 60-day period beginning
on the date of the enactment of this Act; and
‘‘(2) the approval of substitute mortgagors, if the
original mortgagor was subject to such amendments.’’
Amendment by Pub. L. 101–402 deemed to have taken
effect as if enacted September 29, 1990, see section 1(a)
of Pub. L. 101–494, set out as an Effective Date of Temporary Extension of Emergency Low Income Housing
Preservation Act of 1987 and Correction of Any Repeal
note under section 1715l of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Pub. L. 101–235, title I, § 132(b), Dec. 15, 1989, 103 Stat.
2027, provided that: ‘‘The amendments made by subsection (a) [amending this section] shall apply only
with respect to—
‘‘(1) mortgages insured—
‘‘(A) pursuant to a conditional commitment issued on or after the date of the enactment of this
Act [Dec. 15, 1989]; or
‘‘(B) in accordance with the direct endorsement
program (24 C.F.R. 200.163), if the approved underwriter of the mortgage signs the appraisal report
for the property on or after the date of the enactment of this Act; and
‘‘(2) the approval of substitute mortgagors, if the
original mortgagor was subject to such amendments.’’
Pub. L. 101–235, title I, § 143(c), Dec. 15, 1989, 103 Stat.
2036, provided that: ‘‘The amendments made by this
section [amending this section] shall apply only with
respect to—
‘‘(1) mortgages insured—
‘‘(A) pursuant to a conditional commitment issued on or after the date of the enactment of this
Act [Dec. 15, 1989]; or
‘‘(B) in accordance with the direct endorsement
program, if the approved underwriter of the mortgagee signs the appraisal report for the property on
or after the date of the enactment of this Act; and
‘‘(2) the approval of substitute mortgagors, if the
original mortgagor was subject to such amendments.’’
EFFECTIVE DATE OF 1988 AMENDMENT
Pub. L. 100–242, title IV, § 406(d), Feb. 5, 1988, 101 Stat.
1902, provided that: ‘‘The amendments made by this
section [amending this section and sections 1715d,
1715g, 1715k, 1715l, 1715m, 1715n, 1715y, and 1715z of this
title] shall apply only with respect to—
‘‘(1) mortgages insured—
‘‘(A) pursuant to a conditional commitment issued on or after the date of the enactment of this
Act [Feb. 5, 1988]; or
‘‘(B) in accordance with the direct endorsement
program (24 CFR 200.163), if the approved underwriter of the mortgagee signs the appraisal report
for the property on or after the date of the enactment of this Act; and
‘‘(2) the approval of substitute mortgagors, referred
to in the amendment made by subsection (a) [amending this section], if the original mortgagor was subject to such amendment.’’
Pub. L. 100–242, title IV, § 407(a)(2), Feb. 5, 1988, 101
Stat. 1902, as amended by Pub. L. 100–628, title X,
§ 1063(b), Nov. 7, 1988, 102 Stat. 3274, provided that: ‘‘The
amendment made by paragraph (1) [amending this section] shall apply to each mortgage originated pursuant

Page 538

to an application for commitment for insurance signed
by the applicant on or after December 1, 1986.’’
EFFECTIVE DATE OF 1983 AMENDMENT
Pub. L. 98–181, title I [title IV, § 424(b)], Nov. 30, 1983,
97 Stat. 1217, provided that: ‘‘The amendment made by
subsection (a) [amending this section] shall take effect
only if the Secretary finds and reports to the Congress
that such amendment, taking into account the higher
loan-to-value ratio resulting from the advance payment of mortgage insurance premiums, will not adversely affect the actuarial soundness of the Federal
Housing Administration mortgage insurance program.’’
[For finding and report by Secretary and rule implementing the amendments effective June 24, 1985, see 49
F.R. 39686 and 50 F.R. 19924.]
Pub. L. 98–181, title I [title IV, § 423(c)], Nov. 30, 1983,
97 Stat. 1217, provided that: ‘‘The amendments made by
this section [amending this section and sections 1715e,
1715l, 1715y, and 1715z of this title] shall take effect only
if the Secretary of Housing and Urban Development determines that the program of advance payment of insurance premiums, with specific regard to the effect of
the provisions authorized by the amendments made by
such sections, is actuarially sound.’’ [For determination by Secretary and rule implementing the amendments effective May 10, 1984, see 49 F.R. 12693.]
EFFECTIVE DATE OF 1978 AMENDMENT
Pub. L. 95–557, title I, § 104, Oct. 31, 1978, 92 Stat. 2084,
provided that: ‘‘The amendments made by this title
[enacting section 5319 of Title 42, The Public Health
and Welfare, and amending this section, sections 1706e
and 1717 of this title, and sections 1452b, 5304, 5305, 5307,
and 5318 of Title 42] shall become effective October 1,
1978.’’
EFFECTIVE DATE OF 1974 AMENDMENT
Amendment by Pub. L. 93–288 effective Apr. 1, 1974,
see section 605 of Pub. L. 93–288, formerly set out as an
Effective Date note under section 5121 of Title 42, The
Public Health and Welfare.
EFFECTIVE DATE OF 1970 AMENDMENT
Amendment by Pub. L. 91–606 effective Dec. 31, 1970,
see section 304 of Pub. L. 91–606, set out as a note under
section 165 of Title 26, Internal Revenue Code.
EFFECTIVE DATE OF 1949 AMENDMENT
Amendment by act July 15, 1949, effective June 30,
1949, see section 202 of that act, set out as a note under
section 1703 of this title.
REGULATIONS
Pub. L. 105–276, title II, § 225(b), Oct. 21, 1998, 112 Stat.
2490, provided that: ‘‘The Secretary of Housing and
Urban Development shall develop the disclosure notice
under subsection (a) [amending this section] within 150
days of the enactment [Oct. 21, 1998] through notice and
comment rulemaking.’’
IMPLEMENTATION
Pub. L. 111–229, § 1(b), Aug. 11, 2010, 124 Stat. 2483, provided that: ‘‘The Secretary may adjust the amount of
any initial or annual premium charged pursuant to
subsection (a) [amending this section] through notice
published in the Federal Register or mortgagee letter.
Such notice or mortgagee letter shall establish the effective date of any premium adjustment therein.’’
TEMPORARY EXTENSION OF FHA MORTGAGE LIMIT
Pub. L. 101–494, § 4, Oct. 31, 1990, 104 Stat. 1185, provided that:
‘‘(a) EXTENSION.—If upon enactment of this Act [see
Effective Date of 1990 Amendments note above], section
203(b)(2) of the National Housing Act (12 U.S.C.
1709(b)(2)) provides for an increase in the maximum dollar amount limitations on the principal obligations of

Page 539

TITLE 12—BANKS AND BANKING

mortgages insured under such section until October 31,
1990, then notwithstanding such section, such maximum dollar amount limitations may be increased (to
the percent specified in such section) until November
30, 1990.
‘‘(b) LIMITATIONS.—If upon enactment of this Act such
section 203(b)(2) [12 U.S.C. 1709(b)(2)] provides for an increase in the maximum dollar amount limitations (referred to in subsection (a)) until a date other than October 31, 1990, this section shall not apply. This section
shall not apply with respect to any amendment to section 203(b)(2) of the National Housing Act made after
the date of the enactment of this Act [Oct. 31, 1990].’’
TRANSITION PROVISIONS OF 1990 AMENDMENTS
Pub. L. 101–625, title III, § 326(c), Nov. 28, 1990, 104
Stat. 4137, provided that: ‘‘Any mortgage insurance
provided under title II of the National Housing Act
[this subchapter] before the expiration of the 60-day period beginning on the date of the enactment of this Act
[Nov. 28, 1990], shall continue to be governed (to the extent applicable) by the provisions of section 203(g)(1) of
the National Housing Act [12 U.S.C. 1709(g)(1)], as such
provisions existed before the date of the enactment of
this Act.’’
Pub. L. 101–508, title II, § 2103(b), (c), Nov. 5, 1990, 104
Stat. 1388–18, 1388–19, as amended by Pub. L. 102–550,
title I, § 185(c)(3), title V, § 507(b), Oct. 28, 1992, 106 Stat.
3748, 3782, provided that:
‘‘(b) TRANSITION PROVISIONS.—Notwithstanding section 203(c) of the National Housing Act [12 U.S.C.
1709(c)] (as amended by subsection (a)), mortgage insurance premiums on mortgages executed during fiscal
years 1991 through 1994 and that are obligations of the
Mutual Mortgage Insurance Fund or of the General Insurance Fund pursuant to section 203(v) of the National
Housing Act shall be subject to the following requirements:
‘‘(1) 1991 AND 1992.—For mortgages executed during
fiscal years 1991 and 1992 (but after the date of the effectiveness of regulations issued under subsection
(c)), the Secretary shall establish and collect the following premiums:
‘‘(A) UP-FRONT.—At the time of insurance, a single premium payment in an amount not exceeding
3.80 percent of the amount of the original insured
principal obligation of the mortgage.
‘‘(B) ANNUAL.—In addition to the premium under
subparagraph (A), annual premium payments in an
amount not exceeding 0.50 percent of the remaining
insured principal balance (excluding the portion of
the remaining balance attributable to the premium
collected under subparagraph (A) and without taking into account delinquent payments or prepayments), for any mortgage involving an original
principal obligation (excluding any premium collected under subparagraph (A)) that is—
‘‘(i) less than 90 percent of the appraised value
of the property (as of the date the mortgage is accepted for insurance), for the first 5 years of the
mortgage term;
‘‘(ii) greater than or equal to 90 percent of such
value but equal to or less than 95 percent of such
value, for the first 8 years of the mortgage term;
and
‘‘(iii) greater than 95 percent of such value, for
the first 10 years of the mortgage term.
‘‘(2) 1993 AND 1994.—For mortgages executed during
fiscal years 1993 and 1994, the Secretary shall establish and collect the following premiums:
‘‘(A) UP-FRONT.—At the time of insurance, a single premium payment in an amount not exceeding
3.00 percent of the amount of the original insured
principal obligation of the mortgage.
‘‘(B) ANNUAL.—In addition to the premium under
subparagraph (A), annual premium payments in an
amount not exceeding 0.50 percent of the remaining
insured principal balance (excluding the portion of
the remaining balance attributable to the premium
collected under subparagraph (A) and without tak-

§ 1709

ing into account delinquent payments or prepayments), for any mortgage involving an original
principal obligation (excluding any premium collected under subparagraph (A)) that is—
‘‘(i) less than 90 percent of the appraised value
of the property (as of the date the mortgage is accepted for insurance), for the first 7 years of the
mortgage term;
‘‘(ii) greater than or equal to 90 percent of such
value but equal to or less than 95 percent of such
value, for the first 12 years of the mortgage term;
and
‘‘(iii) greater than 95 percent of such value, for
the first 30 years of the mortgage term.
‘‘(3) REFUNDS.—With respect to any mortgage subject to premiums under this subsection, the Secretary shall refund all of the unearned premium
charges paid on a mortgage pursuant to paragraph
(1)(A) or (2)(A) upon payment in full of the principal
obligation of the mortgage prior to the maturity
date.
‘‘(c) REGULATIONS.—The Secretary shall issue regulations to carry out this section and the amendments
made by this section [amending this section] not later
than the expiration of the 90-day period beginning on
the date of the enactment of this Act [Nov. 5, 1990].’’
TRANSITION PROVISIONS OF 1989 AMENDMENT
Pub. L. 101–235, title I, § 132(c), Dec. 15, 1989, 103 Stat.
2027, provided that: ‘‘Any mortgage insurance provided
under title II of the National Housing Act [this subchapter] as it existed immediately before the date of
the enactment of this Act [Dec. 15, 1989], shall continue
to be governed (to the extent applicable) by the provisions of section 203(r) of the National Housing Act [12
U.S.C. 1709(r)], as such section existed immediately before such date.’’
Pub. L. 101–235, title I, § 143(d), Dec. 15, 1989, 103 Stat.
2036, provided that: ‘‘Any mortgage insurance provided
under title II of the National Housing Act [this subchapter], as it existed immediately before the date of
the enactment of this Act [Dec. 15, 1989], shall continue
to be governed (to the extent applicable) by the provisions amended by subsections (a) and (b) [amending
this section] as such provisions existed immediately before such date.’’
TRANSITION PROVISIONS OF 1988 AMENDMENT
Pub. L. 100–242, title IV, § 406(e), Feb. 5, 1988, 101 Stat.
1902, provided that: ‘‘Any mortgage insurance provided
under title II of the National Housing Act [this subchapter], as it existed immediately before the date of
the enactment of this Act [Feb. 5, 1988], shall continue
to be governed (to the extent applicable) by the provisions specified in subsections (a) through (c) [this section and sections 1715d, 1715g, 1715k, 1715l, 1715m, 1715n,
1715y, 1715z of this title], as such provisions existed immediately before such date.’’
IMPLEMENTATION OF 1982 AMENDMENT
Pub. L. 97–253, title II, § 201(g), Sept. 8, 1982, 96 Stat.
790, provided that: ‘‘The amendments made by this section [amending this section and sections 1715e, 1715l,
1715y, and 1715z of this title], other than by subsection
(b) [amending subsec. (c) of this section], may be implemented only if the Secretary determines that the program of advance payment of insurance premiums, with
specific regard to the effect of the provisions authorized by the amendments made by this section, is actuarially sound.’’
EFFECT OF REPEAL OF SUBSEC. (b)(2)(B) OF THIS
SECTION
Act Apr. 20, 1950, ch. 94, title I, § 104(b), 64 Stat. 52,
provided that: ‘‘The repeal of section 203(b)(2)(B) of said
Act [former subsection (b)(2)(B) of this section], as provided by subsection (a) of this section, shall not affect
the right of the Commissioner to insure under said section any mortgage (1) for the insurance of which appli-

§ 1709–1

TITLE 12—BANKS AND BANKING

cation has been filed prior to the effective date of this
Act [Apr. 20, 1950], or (2) with respect to a property covered by a mortgage insured under any section of the
National Housing Act, as amended [this chapter].’’
LIMITATION ON MORTGAGE INSURANCE PREMIUM
INCREASES
Pub. L. 110–289, div. B, title I, § 2130, July 30, 2008, 122
Stat. 2842, provided that:
‘‘(a) IN GENERAL.—Notwithstanding any other provision of law, including any provision of this title [see
Short Title of 2008 Amendment note set out under section 1701 of this title] and any amendment made by this
title—
‘‘(1) for the period beginning on the date of the enactment of this title [July 30, 2008] and ending on October 1, 2009, the premiums charged for mortgage insurance under multifamily housing programs under
the National Housing Act [12 U.S.C. 1701 et seq.] may
not be increased above the premium amounts in effect under such program on October 1, 2006, unless the
Secretary of Housing and Urban Development determines that, absent such increase, insurance of additional mortgages under such program would, under
the Federal Credit Reform Act of 1990 [2 U.S.C. 661 et
seq.], require the appropriation of new budget authority to cover the costs (as such term is defined in section 502 of the Federal Credit Reform Act of 1990 (2
U.S.C. 661a)[)] of such insurance; and
‘‘(2) a premium increase pursuant to paragraph (1)
may be made only if not less than 30 days prior to
such increase taking effect, the Secretary of Housing
and Urban Development—
‘‘(A) notifies the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives of such increase; and
‘‘(B) publishes notice of such increase in the Federal Register.
‘‘(b) WAIVER.—The Secretary of Housing and Urban
Development may waive the 30-day notice requirement
under subsection (a)(2), if the Secretary determines
that waiting 30-days before increasing premiums would
cause substantial damage to the solvency of multifamily housing programs under the National Housing Act
[12 U.S.C. 1701 et seq.].’’
MUTUAL MORTGAGE INSURANCE FUND PREMIUMS
Pub. L. 103–66, title III, § 3005, Aug. 10, 1993, 107 Stat.
340, provided that: ‘‘To improve the actuarial soundness
of the Mutual Mortgage Insurance Fund under the National Housing Act [12 U.S.C. 1701 et seq.], the Secretary of Housing and Urban Development shall increase the rate at which the Secretary earns the single
premium payment collected at the time of insurance of
a mortgage that is an obligation of such Fund (with respect to the rate in effect on the date of the enactment
of this Act [Aug. 10, 1993]). In establishing such increased rate, the Secretary shall consider any current
audit findings and reserve analyses and information regarding the expected average duration of mortgages
that are obligations of such Fund and may consider any
other information that the Secretary determines to be
appropriate.’’
REPORT ON HOME EQUITY CONVERSION MORTGAGES FOR
THE ELDERLY
Pub. L. 98–181, title I [title IV, § 448], Nov. 30, 1983, 97
Stat. 1228, directed Secretary of Housing and Urban Development to evaluate existing use of home equity conversion mortgages for the elderly and, not later than
the expiration of the 1-year period following Nov. 30,
1983, submit to Congress a report setting forth the results of such evaluation. Such report to include an
evaluation of whether use of such mortgages improves
financial situation, or otherwise meets special needs, of
elderly homeowners; an evaluation of any risks incurred by mortgagors as a result of use of such mortgages, and any recommendations of Secretary for ap-

Page 540

propriate safeguards to be included in such mortgages
to minimize such risks; an evaluation of the potential
for acceptance of such mortgages in the private market; and any recommendations of Secretary for establishment of a Federal program of insuring such mortgages.
STUDIES OF MORTGAGE INSURANCE PREMIUMS AND
ALTERNATIVES TO STATUTORY MORTGAGE AMOUNTS
Pub. L. 96–153, title III, § 309, Dec. 21, 1979, 93 Stat.
1114, directed Secretary of Housing and Urban Development to (a) conduct a study of the relative risks of loss
for various classes of mortgages which may be insured
under sections 1709(b) and 213 of this title, for the purpose of making recommendations on the advisability of
reducing mortgage insurance premiums, and transmit
the recommendations to Congress within 18 months
from Dec. 21, 1979, and (b) conduct a study of alternatives to the present system of fixed statutory maximum amounts for mortgages insured under subchapters
I and II of this chapter and report to Congress on the
results of the study together with recommendations for
legislative, by Mar. 1, 1980.
INSURANCE PROGRAM OR HOMEOWNERS TO MEET MORTGAGE PAYMENTS IN TIMES OF PERSONAL ECONOMIC
ADVERSITY
Pub. L. 90–448, § 109, authorized Secretary of Housing
and Urban Development to develop a plan of insurance
to help homeowners meet mortgage payments in times
of personal economic adversity, i.e., death, disability,
illness, and unemployment; required the program to be
actuarially sound through the use of premiums, fees,
extended or increased payment schedules, or other
similar methods in conjunction with federal participation as necessary; directed the Secretary to report to
Congress within 6 months of Aug. 1, 1968 and to recommend legislation, authorizing him to contract with
companies, corporations, or joint enterprises formed to
provide home mortgage insurance protection for the
purpose of reinsuring insurance reserve funds, subsidizing premium payments for lower income mortgagors,
or otherwise making possible insurance protection of
homeowners; and authorized the Secretary, in preparing his recommendations, to consult with other agencies or instrumentalities of the United States which insure or guarantee home mortgages in order that any
recommended legislation afford equal benefits to mortgagors participating in their programs.

§ 1709–1. Repealed. Pub. L. 98–181, title I [title IV,
§ 404(a)], Nov. 30, 1983, 97 Stat. 1208
Section, Pub. L. 90–301, § 3(a), May 7, 1968, 82 Stat. 113;
Pub. L. 90–448, title III, § 315, Aug. 1, 1968, 82 Stat. 512;
Pub. L. 91–78, § 3, Sept. 30, 1969, 83 Stat. 125; Pub. L.
91–152, title IV, § 401, Dec. 24, 1969, 83 Stat. 394; Pub. L.
91–351, title VI, § 601, July 24, 1970, 84 Stat. 461; Pub. L.
92–213, § 1, Dec. 22, 1971, 85 Stat. 775; Pub. L. 92–335, § 1,
July 1, 1972, 86 Stat. 405; Pub. L. 93–85, § 2, Aug. 10, 1973,
87 Stat. 220; Pub. L. 93–117, § 3, Oct. 2, 1973, 87 Stat. 422;
Pub. L. 93–234, title II, § 208, Dec. 31, 1973, 87 Stat. 984;
Pub. L. 93–383, title III, §§ 309(e), 317, Aug. 22, 1974, 88
Stat. 682, 685; Pub. L. 95–60, § 2, June 30, 1977, 91 Stat.
257; Pub. L. 95–80, § 2, July 31, 1977, 91 Stat. 339; Pub. L.
95–128, title III, § 302, Oct. 12, 1977, 91 Stat. 1131; Pub. L.
95–406, § 2, Sept. 30, 1978, 92 Stat. 880; Pub. L. 95–557, title
III, § 302, Oct. 31, 1978, 92 Stat. 2096; Pub. L. 96–71, § 2,
Sept. 28, 1979, 93 Stat. 501; Pub. L. 96–105, § 2, Nov. 8,
1979, 93 Stat. 794; Pub. L. 96–153, title III, § 302, Dec. 21,
1979, 93 Stat. 1112; Pub. L. 96–372, § 3, Oct. 3, 1980, 94
Stat. 1364; Pub. L. 96–399, title III, §§ 302, 332, Oct. 8, 1980,
94 Stat. 1639, 1652; Pub. L. 97–35, title III, § 332, Aug. 13,
1981, 95 Stat. 413; Pub. L. 97–289, § 2, Oct. 6, 1982, 96 Stat.
1231; Pub. L. 98–35, § 2, May 26, 1983, 97 Stat. 197; Pub. L.
98–109, § 2, Oct. 1, 1983, 97 Stat. 746, authorized the Secretary, until Dec. 1, 1983, to set the maximum interest
rates for certain mortgage insurance programs, notwithstanding the authority of the Secretary of Housing

Page 541

§ 1709a

TITLE 12—BANKS AND BANKING

and Urban Development to establish such rates, specified the criteria to be considered in establishing such
rates, authorized the Secretary to provide that the interest rate applicable under section 1709(b) of this title
be the negotiated interest rate specified in the commitment agreement, limited the amount of mortgages
with such negotiated interest rates which may be insured and prohibited such negotiated interest rates
with respect to mortgages subject to section 1715z–10 of
this title.
MORTGAGE CREDIT INTEREST RATES
Pub. L. 90–301, § 4, May 7, 1968, 82 Stat. 114, as amended by Pub. L. 90–565, Oct. 12, 1968, 82 Stat. 1001; Pub. L.
91–9, Apr. 11, 1969, 83 Stat. 7; Pub. L. 91–38, July 1, 1969,
83 Stat. 43, which established a Commission to study
mortgage interest rates and to make recommendations
to assure the availability of an adequate supply of
mortgage credit at a reasonable cost to the consumer,
directed the Commission to make an interim report not
later than July 1, 1969, and a final report of its study
and recommendations not later than August 1, 1969, to
enable the President, Congress, and the Secretary of
Housing and Urban Development to take necessary action before October 1, 1969, when the authorization for
the increase in interest rates above present statutory
ceilings will expire, and provided that the Commission
cease to exist sixty days after the submission of its
final report, was repealed by Pub. L. 98–181, title I [title
IV, § 404(a)], Nov. 30, 1983, 97 Stat. 1208.

§ 1709–1a. State constitutional and legal limits
upon interest chargeable on loans, mortgages, or other interim financing arrangements; applicability; covered arrangements
(a) The provisions of the constitution of any
State expressly limiting the amount of interest
which may be charged, taken, received, or reserved by certain classes of lenders and the provisions of any law of that State expressly limiting the amount of interest which may be
charged, taken, received, or reserved shall not
apply to—
(1) any loan or mortgage which is secured by
a one- to four-family dwelling and which is (A)
insured under title I or II [12 U.S.C. 1702 et seq.
or 1707 et seq.] of the National Housing Act, or
(B) insured, guaranteed, or made under chapter 37 of title 38; or
(2) any temporary construction loan or other
interim financing if at the time such loan is
made or financing is arranged, the intention
to obtain permanent financing substantially
by means of loans or mortgages so insured,
guaranteed, or made is declared.
(b) The provisions of this section shall apply
to such loans, mortgages, or other interim financing made or executed in any State until the
effective date (after June 30, 1976) of a provision
of law of that State limiting the amount of interest which may be charged, taken, received, or
reserved on such loans, mortgages, or financing.
(Pub. L. 94–324, § 8, June 30, 1976, 90 Stat. 722.)
REFERENCES IN TEXT
The National Housing Act, referred to in subsec.
(a)(1), is act June 27, 1934, ch. 847, 48 Stat. 1246, as
amended. Titles I and II of the National Housing Act
are classified generally to subchapters I (§ 1702 et seq.)
and II (§ 1707 et seq.), respectively, of this chapter. For
complete classification of this Act to the Code, see section 1701 of this title and Tables.

CODIFICATION
Section was enacted as part of the Veterans Housing
Amendments Act of 1976, and not as part of the National Housing Act which comprises this chapter.
EFFECTIVE DATE
Section effective June 30, 1976, see section 9(a) of Pub.
L. 94–324, set out as a note under section 3701 of Title
38, Veterans’ Benefits.

§ 1709–2. Equity skimming; penalty; persons liable; one dwelling exemption
Whoever, with intent to defraud, willfully engages in a pattern or practice of—
(1) purchasing one- to four-family dwellings
(including condominiums and cooperatives)
which are subject to a loan in default at time
of purchase or in default within one year subsequent to the purchase and the loan is secured by a mortgage or deed of trust insured
or held by the Secretary of Housing and Urban
Development or guaranteed by the Department of Veterans Affairs, or the loan is made
by the Department of Veterans Affairs,
(2) failing to make payments under the
mortgage or deed of trust as the payments become due, regardless of whether the purchaser
is obligated on the loan, and
(3) applying or authorizing the application of
rents from such dwellings for his own use,
shall be fined not more than $250,000 or imprisoned not more than 5 years, or both. This section shall apply to a purchaser of such a dwelling, or a beneficial owner under any business organization or trust purchasing such dwelling, or
to an officer, director, or agent of any such purchaser. Nothing in this section shall apply to
the purchaser of only one such dwelling.
(Pub. L. 91–609, title IX, § 912, Dec. 31, 1970, 84
Stat. 1814; Pub. L. 100–242, title IV, § 416(a), Feb.
5, 1988, 101 Stat. 1907; Pub. L. 102–54, § 13(d)(1),
June 13, 1991, 105 Stat. 274.)
CODIFICATION
Section was enacted as part of the Housing and Urban
Development Act of 1970, and not as part of the National Housing Act which comprises this chapter.
AMENDMENTS
1991—Par. (1). Pub. L. 102–54 substituted ‘‘Department
of Veterans Affairs’’ for ‘‘Veterans’ Administration’’ in
two places.
1988—Pub. L. 100–242 inserted parenthetical reference
to condominiums and cooperatives in par. (1), substituted ‘‘due, regardless of whether the purchaser is
obligated on the loan’’ for ‘‘due’’ in par. (2), and substituted ‘‘$250,000’’ for ‘‘$5,000’’ and ‘‘5’’ for ‘‘three’’ in
closing provisions.

§ 1709a. Determination of loan-to-value ratios
The Secretary of Housing and Urban Development, in establishing maximum loan-to-value
ratios for mortgages insured by him under the
National Housing Act [12 U.S.C. 1701 et seq.], as
amended by sections 101, 102, and 103 of this Act,
shall determine that such ratios are in the public interest after taking into consideration (1)
the effect of such ratios on the national economy and on conditions in the building industry,
and (2) the availability or unavailability of residential mortgage credit assisted under the Servicemen’s Readjustment Act of 1944, as amended.

§ 1709b

TITLE 12—BANKS AND BANKING

(Pub. L. 85–104, title I, § 104, July 12, 1957, 71 Stat.
296; Pub. L. 90–19, § 14(a), May 25, 1967, 81 Stat.
24.)
REFERENCES IN TEXT
The National Housing Act, referred to in text, is act
June 27, 1934, ch. 847, 48 Stat. 1246, as amended, which
is classified principally to this chapter (§ 1701 et seq.).
For complete classification of this Act to the Code, see
section 1701 of this title and Tables.
Amendments by sections 101, 102, and 103 of this act,
referred to in text, refers to amendment of sections
1709(b), (i), 1715k(d)(3), and 1715m(b) of this title by Pub.
L. 85–104. Section 1709(i) of this title was repealed by
Pub. L. 110–289, div. B, title I, § 2120(a)(1), July 30, 2008,
122 Stat. 2835. Section 1715m of this title was repealed
by Pub. L. 110–289, div. B, title I, § 2120(a)(5), July 30,
2008, 122 Stat. 2835.
The Servicemen’s Readjustment Act of 1944, as
amended, referred to in text, is act June 22, 1944, ch.
268, 58 Stat. 284, as amended, which was classified generally to chapter 11C (§§ 693 to 697g) of former Title 38,
Pensions, Bonuses, and Veterans’ Relief, and which was
repealed by section 14(87) of Pub. L. 85–857, Sept. 2, 1958,
72 Stat. 1273, the first section of which enacted Title 38,
Veterans’ Benefits. For distribution of sections 693 to
697g of former Title 38 to Title 38, Veterans’ Benefits,
see Table preceding section 101 of Title 38, Veterans’
Benefits.
CODIFICATION
Section was enacted as part of the Housing Act of
1957, and not as part of the National Housing Act which
comprises this chapter.
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary of Housing
and Urban Development’’ for ‘‘Federal Housing Commissioner’’.

§ 1709b. Repealed. Pub. L. 85–364, § 6, Apr. 1, 1958,
72 Stat. 77
Section, Pub. L. 85–104, title VI, § 605, July 12, 1957, 71
Stat. 305, authorized Federal Housing Commissioner
and Administrator of Veterans’ Affairs to fix reasonable limits on charges, fees, and discounts imposed
upon builders, sellers, or purchasers.

§ 1710. Payment of insurance
(a) In general
(1) Authorized claims procedures
The Secretary may, in accordance with this
subsection and terms and conditions prescribed by the Secretary, pay insurance benefits to a mortgagee for any mortgage insured
under section 1709 of this title through any of
the following methods:
(A) Assignment of mortgage
The Secretary may pay insurance benefits
whenever a mortgage has been in a monetary default for not less than 3 full monthly
installments or whenever the mortgagee is
entitled to foreclosure for a nonmonetary
default. Insurance benefits shall be paid pursuant to this subparagraph only upon the assignment, transfer, and delivery to the Secretary of—
(i) all rights and interests arising under
the mortgage;
(ii) all claims of the mortgagee against
the mortgagor or others arising out of the
mortgage transaction;
(iii) title evidence satisfactory to the
Secretary; and

Page 542

(iv) such records relating to the mortgage transaction as the Secretary may require.
(B) Conveyance of title to property
The Secretary may pay insurance benefits
if the mortgagee has acquired title to the
mortgaged property through foreclosure or
has otherwise acquired such property from
the mortgagor after a default upon—
(i) the prompt conveyance to the Secretary of title to the property which meets
the standards of the Secretary in force at
the time the mortgage was insured and
which is evidenced in the manner provided
by such standards; and
(ii) the assignment to the Secretary of
all claims of the mortgagee against the
mortgagor or others, arising out of mortgage transaction or foreclosure proceedings, except such claims as may have been
released with the consent of the Secretary.
The Secretary may permit the mortgagee to
tender to the Secretary a satisfactory conveyance of title and transfer of possession
directly from the mortgagor or other appropriate grantor, and may pay to the mortgagee the insurance benefits to which it would
otherwise be entitled if such conveyance had
been made to the mortgagee and from the
mortgagee to the Secretary.
(C) Claim without conveyance of title
The Secretary may pay insurance benefits
upon sale of the mortgaged property at foreclosure where such sale is for at least the
fair market value of the property (with appropriate adjustments), as determined by
the Secretary, and upon assignment to the
Secretary of all claims referred to in clause
(ii) of subparagraph (B).
(D) Preforeclosure sale
The Secretary may pay insurance benefits
upon the sale of the mortgaged property by
the mortgagor after default and the assignment to the Secretary of all claims referred
to in clause (ii) of subparagraph (B), if—
(i) the sale of the mortgaged property
has been approved by the Secretary;
(ii) the mortgagee receives an amount at
least equal to the fair market value of the
property (with appropriate adjustments),
as determined by the Secretary; and
(iii) the mortgagor has received an appropriate disclosure, as determined by the
Secretary.
(2) Payment for loss mitigation
The Secretary may pay insurance benefits to
the mortgagee to recompense the mortgagee
for all or part of any costs of the mortgagee
for taking loss mitigation actions that provide
an alternative to foreclosure of a mortgage
that is in default or faces imminent default, as
defined by the Secretary (including but not
limited to actions such as special forbearance,
loan modification, support for borrower housing counseling, partial claims, borrower incentives, preforeclosure sale, and deeds in lieu of
foreclosure, but not including assignment of
mortgages to the Secretary under section sub-

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TITLE 12—BANKS AND BANKING

section 1 (a)(1)(A) or section 1715u(c) of this
title). No actions taken under this paragraph,
nor any failure to act under this paragraph, by
the Secretary or by a mortgagee shall be subject to judicial review.
(3) Determination of claims procedure
The Secretary shall publish guidelines for
determining which of the procedures for payment of insurance under paragraph (1) are
available to a mortgagee when it claims insurance benefits. At least one of the procedures
for payment of insurance benefits specified in
paragraph (1)(A) or (1)(B) shall be available to
a mortgagee with respect to a mortgage, but
the same procedure shall not be required to be
available for all of the mortgages held by a
mortgagee.
(4) Servicing of assigned mortgages
If a mortgage is assigned to the Secretary
under paragraph (1)(A), the Secretary may
permit the assigning mortgagee or its servicer
to continue to service the mortgage for reasonable compensation and on terms and conditions determined by the Secretary. Neither
the Secretary nor any servicer of the mortgage shall be required to forbear from collection of amounts due under the mortgage or
otherwise pursue loss mitigation measures.
(5) Calculation of insurance benefits
Insurance benefits shall be paid in accordance with section 1735d of this title and shall
be equal to the original principal obligation of
the mortgage (with such additions and deductions as the Secretary determines are appropriate) which was unpaid upon the date of—
(A) assignment of the mortgage to the Secretary;
(B) the institution of foreclosure proceedings;
(C) the acquisition of the property after
default other than by foreclosure; or
(D) sale of the mortgaged property by the
mortgagor.
(6) Forbearance and recasting after default
The mortgagee may, upon such terms and
conditions as the Secretary may prescribe—
(A) extend the time for the curing of the
default and the time for commencing foreclosure proceedings or for otherwise acquiring title to the mortgaged property, to such
time as the mortgagee determines is necessary and desirable to enable the mortgagor
to complete the mortgage payments, including an extension of time beyond the stated
maturity of the mortgage, and in the event
of a subsequent foreclosure or acquisition of
the property by other means the Secretary
may include in the amount of insurance benefits an amount equal to any unpaid mortgage interest; or
(B) provide for a modification of the terms
of the mortgage for the purpose of recasting,
over the remaining term of the mortgage or
over such longer period pursuant to guidelines as may be prescribed by the Secretary,
the total unpaid amount then due, with the
1 So

in original.

§ 1710

modification to become effective currently
or to become effective upon the termination
of an agreed-upon extension of the period for
curing the default; and the principal amount
of the mortgage, as modified, shall be considered the ‘‘original principal obligation of
the mortgage’’ for purposes of paragraph (5).
(7) Termination of premium obligation
The obligation of the mortgagee to pay the
premium charges for insurance shall cease
upon fulfillment of the appropriate requirements under which the Secretary may pay insurance benefits, as described in paragraph (1).
The Secretary may also terminate the mortgagee’s obligation to pay mortgage insurance
premiums upon receipt of an application filed
by the mortgagee for insurance benefits under
paragraph (1), or in the event the contract of
insurance is terminated pursuant to section
1715t of this title.
(8) Effect on payment of insurance benefits
under section 1715u
Nothing in this section shall limit the authority of the Secretary to pay insurance benefits under section 1715u of this title.
(9) Treatment of mortgage assignment program
Notwithstanding any other provision of law,
or the Amended Stipulation entered as a consent decree on November 8, 1979, in Ferrell v.
Cuomo, No. 73 C 334 (N.D. Ill.), or any other
order intended to require the Secretary to operate the program of mortgage assignment
and forbearance that was operated by the Secretary pursuant to the Amended Stipulation
and under the authority of section 1715u of
this title, prior to its amendment by section
407(b) of The Balanced Budget Downpayment
Act, I (Public Law 104–99; 110 Stat. 45), no
mortgage assigned under this section may be
included in any mortgage foreclosure avoidance program that is the same or substantially equivalent to such a program of mortgage assignment and forbearance.
(b) Consent to release of mortgagor or property
The Secretary may at any time, under such
terms and conditions as he may prescribe, consent to the release of the mortgagor from his liability under the mortgage or the credit instrument secured thereby, or consent to the release
of parts of the mortgaged property from the lien
of the mortgage.
(c) Debentures; form and amounts
Debentures issued under this section—
(1) shall be in such form and amounts;
(2) shall be subject to such terms and conditions;
(3) shall include such provisions for redemption, if any, as may be prescribed by the Secretary of Housing and Urban Development,
with the approval of the Secretary of the
Treasury; and
(4) may be in book entry or certificated registered form, or such other form as the Secretary of Housing and Urban Development
may prescribe in regulations.

§ 1710

TITLE 12—BANKS AND BANKING

(d) Debentures; issuance; negotiability; terms;
tax exemptions
The debentures issued under this section to
any mortagee 2 with respect to mortgages insured under section 1709 of this title shall be issued in the name of the Mutual Mortgage Insurance Fund as obligor and shall be negotiable,
and, if in book entry form, transferable, in the
manner described by the Secretary in regulations. All such debentures shall be dated as of
the date foreclosure proceedings were instituted,
or the property was otherwise acquired by the
mortgagee after default: Provided, That debentures issued pursuant to claims for insurance
filed on or after September 2, 1964 shall be dated
as of the date of default or as of such later date
as the Secretary, in his discretion, may establish by regulation. The debentures shall bear interest from such date at a rate established by
the Secretary pursuant to section 1715o of this
title, payable semiannually on the 1st day of
January and the 1st day of July of each year,
and shall mature twenty years after the date
thereof. Such debentures as are issued in exchange for property covered by mortgages insured under section 1709 or section 1713 of this
title prior to February 3, 1938 shall be subject
only to such Federal, State, and local taxes as
the mortgages in exchange for which they are issued would be subject to in the hands of the
holder of the debentures and shall be a liability
of the Mutual Mortgage Insurance Fund, but
such debentures shall be fully and unconditionally guaranteed as to principal and interest by
the United States; but any mortgagee entitled
to receive any such debentures may elect to receive in lieu thereof a cash adjustment and debentures issued as hereinafter provided and
bearing the current rate of interest. Such debentures as are issued in exchange for property covered by the mortgages insured after February 3,
1938, shall be exempt, both as to principal and
interest, from all taxation (except surtaxes, estate, inheritance, and gift taxes) now or hereafter imposed by the United States, by any Territory, dependency, or possession thereof, or by
any State, county, municipality, or local taxing
authority; and such debentures shall be paid out
of the Mutual Mortgage Insurance Fund, which
shall be primarily liable therefor, and they shall
be fully and unconditionally guaranteed as to
principal and interest by the United States, and,
in the case of debentures issued in certificated
registered form, such guaranty shall be expressed on the face of the debentures. In the
event that the Mutual Mortgage Insurance Fund
fails to pay upon demand, when due, the principal of or interest on any debentures issued
under this section, the Secretary of the Treasury shall pay to the holders the amount thereof
which is authorized to be appropriated, out of
any money in the Treasury not otherwise appropriated, and thereupon to the extent of the
amount so paid the Secretary of the Treasury
shall succeed to all the rights of the holders of
such debentures.
(e) Certificate of claim
(1) Subject to paragraph (2), the certificate of
claim issued by the Secretary to any mortgagee
2 So

in original. Probably should be ‘‘mortgagee’’.

Page 544

shall be for an amount which the Secretary determines to be sufficient, when added to the face
value of the debentures issued and the cash adjustment paid to the mortgagee, to equal the
amount which the mortgagee would have received if, at the time of the conveyance to the
Secretary of the property covered by the mortgage, the mortgagor had redeemed the property
and paid in full all obligations under the mortgage and a reasonable amount for necessary expenses incurred by the mortgagee in connection
with the foreclosure proceedings, or the acquisition of the mortgaged property otherwise, and
the conveyance thereof to the Secretary. Each
such certificate of claim shall provide that there
shall accrue to the holder of such certificate
with respect to the face amount of such certificate, an increment at the rate of 3 per centum
per annum which shall not be compounded. The
amount to which the holder of any such certificate shall be entitled shall be determined as provided in subsection (f).
(2) A certificate of claim shall not be issued
and the provisions of paragraph (1) of this subsection shall not be applicable in the case of a
mortgage accepted for insurance pursuant to a
commitment issued on or after September 2,
1964.
(f) Division of excess proceeds; settlement of certificates of claims and refunds to mortgagors
(1) If, after deducting (in such manner and
amount as the Secretary shall determine to be
equitable and in accordance with sound accounting practice) the expenses incurred by the Secretary, the net amount realized from any property conveyed to the Secretary under this section and the claims assigned therewith exceed
the face value of the debentures issued and the
cash paid in exchange for such property plus all
interest paid on such debentures, such excess
shall be divided as follows:
(i) If such excess is greater than the total
amount payable under the certificate of claim
issued in connection with such property, the
Secretary shall pay to the holder of such certificate the full amount so payable, and any
excess remaining thereafter shall be paid to
the mortgagor of such property if the mortgage was insured under section 1709 of this
title: Provided, That on and after September 2,
1964, any excess remaining after payment to
the holder of the full amount of the certificate
of claim, together with the accrued interest
increment thereon, shall be retained by the
Secretary and credited to the applicable insurance fund; and
(ii) If such excess is equal to or less than the
total amount payable under such certificate of
claim, the Secretary shall pay to the holder of
such certificate the full amount of such excess.
(2) Notwithstanding any other provisions of
this section, the Secretary is authorized, with
respect to mortgages insured pursuant to commitments for insurance issued after August 11,
1955, and, with the consent of the mortgagee or
mortgagor, as the case may be, with respect to
mortgages insured pursuant to commitments issued prior to such date, to effect the settlement
of certificates of claim and refunds to mortga-

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TITLE 12—BANKS AND BANKING

gors at any time after the sale or transfer of
title to the property conveyed to the Secretary
under this section and without awaiting the
final liquidation of such property for the purpose of determining the net amount to be realized therefrom: Provided, That the settlement
authority created by the Housing Amendments
of 1955 shall be terminated with respect to any
certificates of claim outstanding as of September 2, 1964.
(3) With the consent of the holder thereof, the
Secretary is authorized, without awaiting the
final liquidation of the Secretary’s interest in
the property, to settle any certificate of claim
issued pursuant to subsection (e), with respect
to which settlement had not been effected prior
to September 2, 1964, by making payment in
cash to the holder thereof of such amount not
exceeding the face amount of the certificate of
claim, together with the accrued interest thereon, as the Secretary may consider appropriate:
Provided, That in any case where the certificate
of claim is settled in accordance with the provisions of this paragraph, any amounts realized
after September 2, 1964, in the liquidation of the
Secretary’s interest in the property, shall be retained by the Secretary and credited to the applicable insurance fund.
(g) Handling and disposal of property; settlement
of claims
Notwithstanding any other provision of law
relating to the acquisition, handling, or disposal
of real property by the United States, the Secretary shall have power to deal with, complete,
rent, renovate, modernize, insure, or sell for
cash or credit, in his discretion, any properties
conveyed to him in exchange for debentures and
certificates of claim as provided in this section;
and notwithstanding any other provision of law,
the Secretary shall also have power to pursue to
final collection, by way of compromise or otherwise, all claims against mortgagors assigned by
mortgagees to the Secretary as provided in this
section: Provided, That section 6101 of title 41
shall not be construed to apply to any contract
for hazard insurance, or to any purchase or contract for services or supplies on account of such
property if the amount thereof does not exceed
$1,000. The Secretary shall, by regulation, carry
out a program of sales of such properties and
shall develop and implement appropriate credit
terms and standards to be used in carrying out
the program. The power to convey and to execute in the name of the Secretary deeds of conveyance, deeds of release, assignments and satisfactions of mortgages, and any other written instrument relating to real or personal property
or any interest therein heretofore or hereafter
acquired by the Secretary pursuant to the provisions of this chapter, may be exercised by an officer appointed by him, without the execution of
any express delegation of power or power of attorney: Provided, That nothing in this subsection shall be construed to prevent the Secretary from delegating such power by order or
by power of attorney, in his discretion, to any
officer, agent, or employee he may appoint: And
provided further, That a conveyance or transfer
of title to real or personal property or an interest therein to the Secretary of Housing and

§ 1710

Urban Development, his successors and assigns,
without identifying the Secretary therein, shall
be deemed a proper conveyance or transfer to
the same extent and of like effect as if the Secretary were personally named in such conveyance or transfer. The Secretary may sell real
and personal property acquired by the Secretary
pursuant to the provisions of this chapter on
such terms and conditions as the Secretary may
prescribe.
(h) Disposition of assets in revitalization areas
(1) In general
The purpose of this subsection is to require
the Secretary to carry out a program under
which eligible assets (as such term is defined
in paragraph (2)) shall be made available for
sale in a manner that promotes the revitalization, through expanded homeownership opportunities, of revitalization areas. Notwithstanding the authority under the last sentence
of subsection (g), the Secretary shall dispose
of all eligible assets under the program and
shall establish the program in accordance with
the requirements under this subsection.
(2) Eligible assets
For purposes of this subsection, the term
‘‘eligible asset’’ means any of the following
categories of assets of the Secretary, unless
the Secretary determines at any time that the
asset property is economically or otherwise
infeasible to rehabilitate or that the best use
of the asset property is as open space (including park land):
(A) Properties
Any property that—
(i) is designed as a dwelling for occupancy by 1 to 4 families;
(ii) is located in a revitalization area;
(iii) was previously subject to a mortgage insured under the provisions of this
chapter; and
(iv) is owned by the Secretary pursuant
to the payment of insurance benefits under
this chapter.
(B) Mortgages
Any mortgage that—
(i) is an interest in a property that meets
the requirements of clauses (i) and (ii) of
subparagraph (A);
(ii) was previously insured under the provisions of this chapter except for mortgages insured under or made pursuant to
sections 1715z, 1715z–12, or 1715z–20 of this
title; and
(iii) is held by the Secretary pursuant to
the payment of insurance benefits under
this chapter.
For purposes of this subsection, an asset
under this subparagraph shall be considered
to be located in a revitalization area, or in
the asset control area of a preferred purchaser, if the property described in clause (i)
is located in such area.
(3) Revitalization areas
The Secretary shall designate areas as revitalization areas for purposes of this subsection. Before designation of an area as a re-

§ 1710

TITLE 12—BANKS AND BANKING

vitalization area, the Secretary shall consult
with affected units of general local government, States, and Indian tribes and interested
nonprofit organizations. The Secretary may
designate as revitalization areas only areas
that meet one of the following requirements:
(A) Very-low income area
The median household income for the area
is less than 60 percent of the median household income for—
(i) in the case of any area located within
a metropolitan area, such metropolitan
area; or
(ii) in the case of any area not located
within a metropolitan area, the State in
which the area is located.
(B) High concentration of eligible assets
A high rate of default or foreclosure for
single family mortgages insured under this
chapter has resulted, or may result, in the
area—
(i) having a disproportionately high concentration of eligible assets, in comparison
with the concentration of such assets in
surrounding areas; or
(ii) being detrimentally impacted by eligible assets in the vicinity of the area.
(C) Low home ownership rate
The rate for home ownership of single family homes in the area is substantially below
the rate for homeownership in the metropolitan area.
(4) Preference for sale to preferred purchasers
The Secretary shall provide a preference,
among prospective purchasers of eligible assets, for sale of such assets to any purchaser
who—
(A) is—
(i) the unit of general local government,
State, or Indian tribe having jurisdiction
with respect to the area in which are located the eligible assets to be sold; or
(ii) a nonprofit organization;
(B) in making a purchase under the program under this subsection—
(i) establishes an asset control area,
which shall be an area that consists of part
or all of a revitalization area; and
(ii) purchases all assets of the Secretary
in the category or categories of eligible assets set forth in the sale agreement required under paragraph (7) that, at any
time during the period which shall be set
forth in the sale agreement—
(I) are or become eligible for purchase
under this subsection; and
(II) are located in the asset control
area of the purchaser; and
(C) has the capacity to carry out the purchase of the category or categories of eligible assets set forth in the sale agreement
under the program under this subsection and
under the provisions of this paragraph.
(5) Agreements required for purchase
(A) Preferred purchasers
Under the program under this subsection,
the Secretary may sell an eligible asset as

Page 546

provided in paragraph (4) to a preferred purchaser only pursuant to a binding agreement
by the preferred purchaser that the eligible
asset will be used in conjunction with a
home ownership plan that provides as follows:
(i) The plan has as its primary purpose
the expansion of home ownership in, and
the revitalization of, the asset control
area, established pursuant to paragraph
(4)(B)(i) by the purchaser, in which the eligible asset is located.
(ii) Under the plan, the preferred purchaser has established, and agreed to
meet, specific performance goals for increasing the rate of home ownership for eligible assets in the asset control area that
are under the purchaser’s control. The
plan shall provide that the Secretary may
waive or modify such goals or deadlines
only upon a determination by the Secretary that a good faith effort has been
made in complying with the goals through
the homeownership plan and that exceptional neighborhood conditions prevented
attainment of the goal.
(iii) Under the plan, the preferred purchaser has established rehabilitation
standards that meet or exceed the standards for housing quality established under
subparagraph (B)(iii) by the Secretary, and
has agreed that each asset property for an
eligible asset purchased will be rehabilitated in accordance with such standards.
(B) Non-preferred purchasers
Under the program under this subsection,
the Secretary may sell an eligible asset to a
purchaser who is not a preferred purchaser
only pursuant to a binding agreement by the
purchaser that complies with the following
requirements:
(i) The purchaser has agreed to meet specific performance goals established by the
Secretary for home ownership of the asset
properties for the eligible assets purchased
by the purchaser, except that the Secretary may, by including a provision in the
sale agreement required under paragraph
(7), provide for a lower rate of home ownership in sales involving exceptional circumstances.
(ii) The purchaser has agreed that each
asset property for an eligible asset purchased will be rehabilitated to comply
with minimum standards for housing quality established by the Secretary for purposes of the program under this subsection.
(6) Discount for preferred purchasers
(A) In general
For the purpose of providing a public purpose discount for the bulk sales of eligible
assets made under the program under this
subsection by preferred purchasers, each eligible asset sold through the program under
this subsection to a preferred purchaser
shall be sold at a price that is discounted
from the value of the asset, as based on the
appraised value of the asset property (as
such term is defined in paragraph (8)).

Page 547

TITLE 12—BANKS AND BANKING

(B) Appraisals
The Secretary shall require that each appraisal of an eligible asset under this paragraph is based upon—
(i) the market value of the asset property in its ‘‘as is’’ physical condition,
which shall take into consideration age
and condition of major mechanical and
structural systems; and
(ii) the value of the property appraised
for home ownership.
(C) Discounts
The Secretary, in the sole discretion of the
Secretary, shall establish the discount under
this paragraph for an eligible asset. In determining the discount, the Secretary may consider the condition of the asset property, the
extent of resources available to the preferred
purchaser, the comprehensive revitalization
plan undertaken by such purchaser, the financial safety and soundness of the Mutual
Mortgage Insurance Fund, and any other circumstances the Secretary considers appropriate 3
(7) Sale agreement
The Secretary may sell an eligible asset
under this subsection only pursuant to a sale
agreement entered into under this paragraph
with the purchaser, which shall include the
following provisions:
(A) Assets
The sale agreement shall identify the category or categories of eligible assets to be
purchased and, based on the purchaser’s capacity to manage and dispose of assets, the
maximum number of assets owned by the
Secretary at the time the sale agreement is
executed that shall be sold to the purchaser.
(B) Revitalization area and asset control area
The sale agreement shall identify—
(i) the boundaries of the specific revitalization areas (or portions thereof) in which
are located the eligible assets that are covered by the agreement; and
(ii) in the case of a preferred purchaser,
the asset control area established pursuant
to paragraph (4)(B)(i) that is covered by
the agreement.
(C) Financing
The sale agreement shall identify the
sources of financing for the purchase of the
eligible assets.
(D) Binding agreements
The sale agreement shall contain binding
agreements by the purchaser sufficient to
comply with—
(i) in the case of a preferred purchaser,
the requirements under paragraph (5)(A),
which agreements shall provide that the
eligible assets purchased will be used in
conjunction with a home ownership plan
meeting the requirements of such paragraph, and shall set forth the terms of the
homeownership plan, including—
(I) the goals of the plan for the eligible
assets purchased and for the asset control area subject to the plan;
3 So

in original. There probably should be a period.

§ 1710

(II) the revitalization areas (or portions thereof) in which the homeownership plan is operating or will operate;
(III) the specific use or disposition of
the eligible assets under the plan; and
(IV) any activities to be conducted and
services to be provided under the plan; or
(ii) in the case of a purchaser who is not
a preferred purchaser, the requirements
under paragraph (5)(B).
(E) Purchase price and discount
The sale agreement shall establish the
purchase price of the eligible assets, which
in the case of a preferred purchaser shall
provide for a discount in accordance with
paragraph (6).
(F) Housing quality
The sale agreement shall provide for compliance of the eligible assets purchased with
the rehabilitation standards established
under paragraph (5)(A)(iii) or the minimum
standards for housing quality established
under paragraph (5)(B)(ii), as applicable, and
shall specify such standards.
(G) Performance goals and sanctions
The sale agreement shall set forth the specific performance goals applicable to the
purchaser, in accordance with paragraph (5),
shall set forth any sanctions for failure to
meet such goals and deadlines, and shall require the purchaser to certify compliance
with such goals.
(H) Period covered
The sale agreement shall establish—
(i) in the case of a preferred purchaser,
the time period referred to in paragraph
(4)(B)(ii); and
(ii) in the case of a purchaser who is not
a preferred purchaser, the time period for
purchase of eligible assets that may be
covered by the purchase.
(I) Other terms
The agreement shall contain such other
terms and conditions as may be necessary to
require that eligible assets purchased under
the agreement are used in accordance with
the program under this subsection.
(8) Definitions
For purposes of this subsection, the following definitions shall apply:
(A) Asset control area
The term ‘‘asset control area’’ means the
area established by a preferred purchaser
pursuant to paragraph (4)(B)(i).
(B) Asset property
The term ‘‘asset property’’ means—
(i) with respect to an eligible asset that
is a property, such property; and
(ii) with respect to an eligible asset that
is a mortgage, the property that is subject
to the mortgage.
(C) Eligible asset
The term ‘‘eligible asset’’ means an asset
described in paragraph (2).
(D) Nonprofit organization
The term ‘‘nonprofit organization’’ means
a private organization that—

§ 1710

TITLE 12—BANKS AND BANKING

(i) is organized under State or local laws;
(ii) has no part of its net earnings inuring to the benefit of any member, shareholder, founder, contributor, or individual;
and
(iii) complies with standards of financial
responsibility that the Secretary may require.
(E) Preferred purchaser
The term ‘‘preferred purchaser’’ means a
purchaser described in paragraph (4).
(F) Unit of general local government
The term ‘‘unit of general local government’’ means any city, town, township,
county, parish, village, or other general purpose political subdivision of a State, and any
agency or instrumentality thereof that is established pursuant to legislation and designated by the chief executive officer to act
on behalf of the jurisdiction with regard to
the provisions of this subsection.
(G) State
The term ‘‘State’’ means any State of the
United States, the District of Columbia, the
Commonwealth of Puerto Rico, Guam,
American Samoa, the Virgin Islands, the
Northern Mariana Islands, or any agency or
instrumentality thereof that is established
pursuant to legislation and designated by
the chief executive officer to act on behalf of
the State with regard to provisions of this
subjection.4
(H) Indian tribe
The term ‘‘Indian tribe’’ has the same
meaning as in section 1715z–13(i)(I) 5 of this
title.
(9) Secretary’s discretion
The Secretary shall have the authority to
implement and administer the program under
this subsection in such manner as the Secretary may determine. The Secretary may, in
the sole discretion of the Secretary, enter into
contracts to provide for the proper administration of the program with such public or
nonprofit entities as the Secretary determines
are qualified.
(10) Regulations
The Secretary shall issue regulations to implement the program under this subsection
through rulemaking in accordance with the
procedures established under section 553 of
title 5 regarding substantive rules. Such regulations shall take effect not later than the expiration of the 2-year period beginning on October 21, 1998.
(i) Mortgagor’s or mortgagee’s interest in property or claim conveyed
No mortgagee or mortgagor shall have, and no
certificate of claim shall be construed to give to
any mortgagee or mortgagor, any right or interest in any property conveyed to the Secretary or
in any claim assigned to him; nor shall the Secretary owe any duty to any mortgagee or mort4 So
5 So

in original. Probably should be ‘‘subsection.’’
in original. Probably should be section ‘‘1715z–13(i)(1)’’.

Page 548

gagor with respect to the handling or disposal of
any such property or the collection of any such
claim.
(j) Foreclosure; payment and cessation of obligation
In the event that any mortgagee under a mortgage insured under section 1709 of this title
(other than a mortgagee receiving insurance
benefits under clause (1)(A) of the second sentence of subsection (a)) forecloses on the mortgaged property but does not convey such property to the Secretary in accordance with this
section, and the Secretary is given written notice thereof, or in the event that the mortgagor
pays the obligation under the mortgage in full
prior to the maturity thereof, and the mortgagee pays any adjusted premium charge required
under the provisions of section 1709(c) of this
title, and the Secretary is given written notice
by the mortgagee of the payment of such obligation, the obligation to pay any subsequent premium charge for insurance shall cease, and all
rights of the mortgagee and the mortgagor
under this section shall terminate as of the date
of such notice.
(k) Repealed. Pub. L. 105–276, title VI, § 601(c),
Oct. 21, 1998, 112 Stat. 2673
(l) Nullification of right of redemption of single
family mortgagors
(1) Whenever the Secretary or a contract
mortgagee (pursuant to its contract with the
Secretary) forecloses on a Secretary-held single
family mortgage in any Federal or State court
or pursuant to a power of sale in a mortgage, the
purchaser at the foreclosure sale shall be entitled to receive a conveyance of title to, and possession of, the property, subject to the interests
senior to the interests of the Secretary or the
contract mortgagee, as the case may be. Notwithstanding any State law to the contrary,
there shall be no right of redemption (including
in all instances any right to possession based
upon any right of redemption) in the mortgagor
or any other person subsequent to the foreclosure sale in connection with a Secretary-held
single family mortgage. The appropriate State
official or the trustee, as the case may be, shall
execute and deliver a deed or other appropriate
instrument conveying title to the purchaser at
the foreclosure sale, consistent with applicable
procedures in the jurisdiction and without regard to any such right of redemption.
(2) The following actions shall be taken in
order to verify title in the purchaser at the foreclosure sale:
(A) In the case of a judicial foreclosure in
any Federal or State court, there shall be included in the petition and in the judgment of
foreclosure a statement that the foreclosure is
in accordance with this subsection and that
there is no right of redemption in the mortgagor or any other person.
(B) In the case of a foreclosure pursuant to
a power of sale provision in the mortgage, the
statement required in subparagraph (A) shall
be included in the advertisement of the sale
and either in the recitals of the deed or other
appropriate instrument conveying title to the
purchaser at the foreclosure sale or in an affidavit or addendum to the deed.

Page 549

(3) For purposes of this subsection:
(A) The term ‘‘contract mortgagee’’ means a
person or entity under a contract with the
Secretary that provides for the assignment of
a single-family mortgage from the Secretary
to the person or entity for the purpose of pursuing foreclosure.
(B) the 6 term ‘‘mortgage’’ means a deed of
trust, mortgage, deed to secure debt, security
agreement, or any other form of instrument
under which any interest in property, real,
personal, or mixed, or any interest in property, including leaseholds, life estates, reversionary interests, and any other estates under
applicable State law, is conveyed in trust,
mortgaged, encumbered, pledged, or otherwise
rendered subject to a lien, for the purpose of
securing the payment of money or the performance of an obligation.
(C) The term ‘‘Secretary-held single family
mortgage’’ means a single-family mortgage
held by the Secretary or by a contract mortgagee at the time of initiation of foreclosure
that—
(i) was formerly insured by the Secretary
under any section of this subchapter; or
(ii) was taken by the Secretary as a purchase money mortgage in connection with
the sale or other transfer of Secretaryowned property under any section of this
subchapter.
(D) the term ‘‘single-family mortgage’’
means a mortgage that covers property on
which is located a 1-to-4 family residence.
(June 27, 1934, ch. 847, title II, § 204, 48 Stat. 1249;
May 28, 1935, ch. 150, § 29(c), 49 Stat. 300; Feb. 19,
1937, ch. 12, 50 Stat. 20; Feb. 3, 1938, ch. 13, § 3, 52
Stat. 12; June 3, 1939, ch. 175, §§ 9, 10, 53 Stat. 806;
June 28, 1941, ch. 261, § 9, 55 Stat. 365; Oct. 14,
1943, ch. 258, § 1, 57 Stat. 570; Aug. 10, 1948, ch. 832,
title I, § 101(l), (q), 62 Stat. 1273, 1274; Apr. 20,
1950, ch. 94, title I, §§ 105, 122, 64 Stat. 52, 59; Sept.
1, 1951, ch. 378, title VI, § 604(a), 65 Stat. 314; Aug.
2, 1954, ch. 649, title I, §§ 111, 112(a), 113, 68 Stat.
593, 594; Aug. 11, 1955, ch. 783, title I, § 102(a), 69
Stat. 635; Pub. L. 85–104, title I, §§ 107, 108(a),
July 12, 1957, 71 Stat. 297; Pub. L. 86–372, title I,
§§ 114(b), 117, Sept. 23, 1959, 73 Stat. 662, 664; Pub.
L. 87–70, title VI, § 612(b), (c), June 30, 1961, 75
Stat. 180; Pub. L. 88–560, title I, §§ 104(a), 105(a),
Sept. 2, 1964, 78 Stat. 769, 770; Pub. L. 89–117, title
XI, § 1108(d), Aug. 10, 1965, 79 Stat. 504; Pub. L.
90–19, § 1(a)(2), (3), (4), (d), May 25, 1967, 81 Stat.
17, 18; Pub. L. 98–181, title I [title IV, § 426], Nov.
30, 1983, 97 Stat. 1218; Pub. L. 100–242, title V,
§ 569, Feb. 5, 1988, 101 Stat. 1948; Pub. L. 100–628,
title X, § 1064(a), (b), Nov. 7, 1988, 102 Stat. 3275;
Pub. L. 101–235, title I, § 136, Dec. 15, 1989, 103
Stat. 2028; Pub. L. 102–550, title V, § 516(a), Oct.
28, 1992, 106 Stat. 3790; Pub. L. 104–99, title IV,
§ 407(a), Jan. 26, 1996, 110 Stat. 45; Pub. L. 104–134,
title I, § 101(e) [title II, § 221(a)], Apr. 26, 1996, 110
Stat. 1321–257, 1321–290; renumbered title I, Pub.
L. 104–140, § 1(a), May 2, 1996, 110 Stat. 1327; Pub.
L. 105–276, title VI, §§ 601(a), (c), (d), 602, Oct. 21,
1998, 112 Stat. 2670, 2673, 2674; Pub. L. 108–447, div.
I, title II, § 221, Dec. 8, 2004, 118 Stat. 3320; Pub.
L. 111–22, div. A, title II, § 203(c), May 20, 2009, 123
Stat. 1644.)
6 So

§ 1710

TITLE 12—BANKS AND BANKING

in original. Probably should be capitalized.

REFERENCES IN TEXT
The Housing Amendments of 1955, referred to in subsec. (f)(2), is act Aug. 11, 1955, ch. 783, 69 Stat. 635, as
amended. For complete classification of this Act to the
Code, see Short Title of 1955 Amendments note set out
under section 1701 of this title and Tables.
This chapter, referred to in subsecs. (g) and (h), was
in the original ‘‘this Act’’, meaning act June 27, 1934,
ch. 847, 48 Stat. 1246, which is classified principally to
this chapter (§ 1701 et seq.). For complete classification
of this Act to the Code, see Tables.
CODIFICATION
In subsec. (g), ‘‘section 6101 of title 41’’ substituted
for ‘‘section 3709 of the Revised Statutes’’ on authority
of Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat. 3854,
which Act enacted Title 41, Public Contracts.
AMENDMENTS
2009—Subsec. (a)(2). Pub. L. 111–22, § 203(c)(3), substituted ‘‘subsection (a)(1)(A) or section 1715u(c) of this
title’’ for ‘‘paragraph (1)(A)’’.
Pub. L. 111–22, § 203(c)(1), (2), inserted ‘‘or faces imminent default, as defined by the Secretary’’ after ‘‘default’’ and ‘‘support for borrower housing counseling,
partial claims, borrower incentives, preforeclosure
sale,’’ after ‘‘loan modification,’’.
2004—Subsec. (h)(2). Pub. L. 108–447, § 221(1)(A), substituted ‘‘following categories of assets of the Secretary, unless the Secretary determines at any time
that the asset property is economically or otherwise infeasible to rehabilitate or that the best use of the asset
property is as open space (including park land)’’ for
‘‘following assets of the Secretary’’ in introductory
provisions.
Subsec. (h)(2)(B)(ii). Pub. L. 108–447, § 221(1)(B), inserted ‘‘except for mortgages insured under or made
pursuant to sections 1715z, 1715z–12, or 1715z–20 of this
title’’ after ‘‘chapter’’.
Subsec. (h)(2)(C). Pub. L. 108–447, § 221(1)(C), struck
out heading and text of subpar. (C). Text read as follows: ‘‘Any contingent future interest of the Secretary
in an asset described in subparagraph (A) or (B).’’
Subsec. (h)(3). Pub. L. 108–447, § 221(2), inserted
‘‘, States, and Indian tribes’’ after ‘‘government’’ in
second sentence.
Subsec. (h)(4)(A)(i). Pub. L. 108–447, § 221(3)(A), inserted ‘‘, State, or Indian tribe’’ after ‘‘government’’.
Subsec. (h)(4)(B)(ii). Pub. L. 108–447, § 221(3)(B),
amended cl. (ii) generally. Prior to amendment, cl. (ii)
read as follows: ‘‘purchases all interests of the Secretary in all assets of the Secretary that, at any time
during the period which shall be set forth in the sale
agreement required under paragraph (7)—
‘‘(I) are or become eligible assets; and
‘‘(II) are located in the asset control area of the
purchaser; and’’.
Subsec. (h)(4)(C). Pub. L. 108–447, § 221(3)(C), substituted ‘‘purchase of the category or categories of eligible assets set forth in the sale agreement under’’ for
‘‘purchase of eligible assets under’’.
Subsec. (h)(6)(C). Pub. L. 108–447, § 221(4)(A), amended
heading and text of subpar. (C) generally. Prior to
amendment, subpar. (C) set out discount classes, including standard, deep, and minimal discounts.
Subsec. (h)(6)(D). Pub. L. 108–447, § 221(4)(B), struck
out heading and text of subpar. (D). Text read as follows: ‘‘The Secretary shall, in the sole discretion of the
Secretary, establish a method for determining which
discount under clause (i) or (ii) subparagraph (C) shall
be provided for an eligible asset that is described in
such clause (i) and sold to a preferred purchaser. The
method may result in the assignment of discounts on
any basis consistent with subparagraph (C) that the
Secretary considers appropriate to carry out the purposes of this subsection.’’
Subsec. (h)(7)(A). Pub. L. 108–447, § 221(5), substituted
‘‘category or categories of eligible assets to be purchased and, based on the purchaser’s capacity to man-

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TITLE 12—BANKS AND BANKING

age and dispose of assets, the maximum number of assets owned by the Secretary at the time the sale agreement is executed that shall be sold to the purchaser’’
for ‘‘eligible assets to be purchased and the interests
sold’’.
Subsec. (h)(8)(F). Pub. L. 108–447, § 221(6)(A), inserted
‘‘, and any agency or instrumentality thereof that is
established pursuant to legislation and designated by
the chief executive officer to act on behalf of the jurisdiction with regard to the provisions of this subsection’’ after ‘‘State’’.
Subsec. (h)(8)(G), (H). Pub. L. 108–447, § 221(6)(B),
added subpars. (G) and (H).
1998—Subsec. (a). Pub. L. 105–276, § 601(a), inserted
heading and amended text generally, substituting
present provisions for provisions which authorized
mortgagee of foreclosed property to receive insurance
benefit upon conveyance to Secretary of title and assignment of claims, or upon foreclosure sale or approved sale after default where at least fair market
value was received, set maintenance of property as condition of receipt of benefit, provided that obligation to
pay premium would cease upon conveyance and assignment and debentures would issue having par value
equal to value of mortgage, and set forth provisions detailing amounts to be included in debentures or cash
payment and provisions authorizing extension or modification of mortgage where default was due to circumstances beyond control of mortgagor.
Subsec. (g). Pub. L. 105–276, § 601(d), inserted at end
‘‘The Secretary may sell real and personal property acquired by the Secretary pursuant to the provisions of
this chapter on such terms and conditions as the Secretary may prescribe.’’
Subsecs. (h), (i). Pub. L. 105–276, § 602, added subsec.
(h) and redesignated former subsec. (h) as (i).
Subsec. (k). Pub. L. 105–276, § 601(c), struck out subsec.
(k) which read as follows: ‘‘Notwithstanding any other
provision of this section or of section 1739 or 1750c of
this title and with respect to any debentures issued in
exchange for properties conveyed to and accepted by
the Secretary after September 23, 1959 in accordance
with such sections, the Secretary may (1) include in debentures reasonable payments made by the mortgagee
with the approval of the Secretary for the purpose of
protecting, operating, or preserving the property, and
taxes imposed upon any deed or any other instrument
by which the property was acquired by the mortgagee
and transferred or conveyed to the Secretary; (2) include in debentures as a portion of foreclosure costs (to
the extent that foreclosure costs may be included in
such debentures by any other provision of this chapter)
payments made by the mortgagee for the cost of acquiring the property and conveying and evidencing
title to the property to the Secretary; and (3) terminate the mortgagee’s obligation to pay mortgage insurance premiums upon receipt of an application for debentures filed by the mortgagee, or in the event the
contract of insurance is terminated pursuant to section
1715t of this title.’’
1996—Subsec. (a). Pub. L. 104–134, in penultimate proviso of last sentence, substituted ‘‘special forebearance’’ for ‘‘special foreclosure’’.
Pub. L. 104–99 inserted ‘‘: And provided further, That
the Secretary may pay insurance benefits to the mortgagee to recompense the mortgagee for its actions to
provide an alternative to the foreclosure of a mortgage
that is in default, which actions may include special
foreclosure, loan modification, and deeds in lieu of foreclosure, all upon terms and conditions as the mortgagee shall determine in the mortgagee’s sole discretion,
within guidelines provided by the Secretary, but which
may not include assignment of a mortgage to the Secretary: And provided further, That for purposes of the
preceding proviso, no action authorized by the Secretary and no action taken, nor any failure to act, by
the Secretary or the mortgagee shall be subject to judicial review.’’ before period at end of last sentence.
1992—Subsec. (a). Pub. L. 102–550, § 516(a)(1), in fifth
sentence, substituted ‘‘issue to the mortgagee deben-

Page 550

tures having a par value’’ for ‘‘, subject to the cash adjustment hereinafter provided, issue to the mortgagee
debentures having a total face value’’.
Subsec. (c). Pub. L. 102–550, § 516(a)(2), added subsec.
(c) and struck out former subsec. (c) which read as follows: ‘‘Debentures issued under this section 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 Secretary 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 $350, shall be adjusted by the payment of cash
by the Secretary to the mortgagee from the Mutual
Mortgage Insurance Fund.’’
Subsec. (d). Pub. L. 102–550, § 516(a)(3), (4), in first sentence, substituted ‘‘issued in the name of’’ for ‘‘executed in the name of’’ and ‘‘and shall be negotiable,
and, if in book entry form, transferable, in the manner
described by the Secretary in regulations’’ for ‘‘, shall
be signed by the Secretary by either his written or engraved signature, and shall be negotiable’’ and in fifth
sentence, substituted ‘‘and, in the case of debentures issued in certificated registered form, such guaranty’’ for
‘‘and such guaranty’’.
1989—Subsec. (a). Pub. L. 101–235, § 136(a), inserted
after third sentence ‘‘As a condition of the receipt of
such benefits, the mortgagee shall maintain or assure
the maintenance of the mortgaged property (in such
manner as the Secretary shall by regulation provide)
during the period beginning on the taking of the possession or other acquisition of the mortgaged property
by the mortgagee and ending on conveyance to the Secretary or other disposition of the mortgaged property
in accordance with this section, and funds expended by
the mortgagee in meeting such obligation shall be included, to the extent provided in this subsection or in
subsection (k) of this section, in debentures or other insurance payment pursuant to this section.’’
Subsec. (g). Pub. L. 101–235, § 136(b), inserted after
first sentence ‘‘The Secretary shall, by regulation,
carry out a program of sales of such properties and
shall develop and implement appropriate credit terms
and standards to be used in carrying out the program.’’
1988—Subsec. (a). Pub. L. 100–628, § 1064(a)(1), (2), in
second sentence, substituted ‘‘(1)(A) upon sale’’ for ‘‘(1)
upon sale’’, inserted cl. (B), and substituted ‘‘; and (2)’’
for ‘‘, and (2)’’.
Pub. L. 100–628, § 1064(b)(1), in third sentence, substituted ‘‘November 30, 1983 (on or after November 7,
1988, with respect to the payment of benefits under
clause (1)(B) of the preceding sentence),’’ for ‘‘the effective date of this sentence’’.
Pub. L. 100–628, § 1064(b)(2)(A), in fifth sentence,
struck out ‘‘foreclosure’’ before ‘‘sale of the property:
Provided’’.
Subsec. (j). Pub. L. 100–628, § 1064(b)(2)(B), inserted
‘‘clause (1)(A) of’’ before ‘‘the second sentence’’.
Subsec. (l). Pub. L. 100–242 added subsec. (l).
1983—Subsec. (a). Pub. L. 98–181, § 426(a), inserted provision authorizing the Secretary to make the benefit of
the insurance available to the mortgagee upon sale of
the insured property at foreclosure and assignment of
all claims to the Secretary and provision relating to
payment of benefits pursuant to a commitment to insure issued on or after the effective date of this sentence [Nov. 30, 1983], and substituted ‘‘any amount received as rent or other income from the property, less
reasonable expenses incurred in handling the property,
after either of such dates, and, in the case of insurance
benefits paid in accordance with the second sentence of
this section, any amount received upon the foreclosure
sale of the property’’ for ‘‘and any amount received as
rent or other income from the property, less reasonable
expenses incurred in handling the property, after either
of such dates’’.
Subsec. (j). Pub. L. 98–181, § 426(b), inserted ‘‘(other
than a mortgagee receiving insurance benefits under

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TITLE 12—BANKS AND BANKING

the second sentence of subsection (a))’’ after ‘‘section
1709 of this title’’.
1967—Pub. L. 90–19, § 1(a)(2), substituted ‘‘Secretary of
Housing and Urban Development’’ for ‘‘Federal Housing
Commissioner’’ in subsec. (g).
Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’ for
‘‘Commissioner’’ wherever appearing in subsecs. (a) to
(d), (e)(1), (f)(1), (f)(1)(i), (ii), (f)(2), (3), (g), (h), (j), and
(k).
Subsec. (f)(3). Pub. L. 90–19, § 1(a)(4), substituted ‘‘Secretary’s’’ for ‘‘Commissioner’s’’ wherever appearing.
Subsec. (g). Pub. L. 90–19, § 1(d), substituted ‘‘an officer’’ for ‘‘the Commissioner or by any Assistant Commissioner’’.
1965—Subsec. (a). Pub. L. 89–117, § 1108(d)(1), struck
out reference to section 1715a of this title after reference to section 1709 of this title in first sentence.
Subsec. (c). Pub. L. 89–117, § 1108(d)(2), substituted
‘‘Mutual Mortgage Insurance Fund’’ for ‘‘Fund as to
mortgages insured under section 1709 of this title and
from the Housing Fund as to mortgages insured under
section 1715a of this title’’.
Subsec. (d). Pub. L. 89–117, § 1108(d)(3)–(6), removed all
references to debentures issued with respect to mortgages insured under section 1715a of this title and to
the Housing Insurance Fund and substituted Mutual
Mortgage Insurance Fund for Fund wherever appearing.
Subsec. (f). Pub. L. 89–117, § 1108(d)(7), struck out provision of subpar. (1)(i) calling for retention of excess by
Commissioner and credit to the Housing Insurance
Fund in the case of mortgages insured under section
1713 of this title.
1964—Subsec. (a). Pub. L. 88–560, §§ 104(a), 105(a)(1)–(3),
(6)(B), amended provisions as follows; section 104(a), in
proviso reading ‘‘And provided further, That with respect to any mortgage covering a one-, two-, three-, or
four-family residence’’, struck out ‘‘and it is probable
that the mortgage will be restored to good standing
within a reasonable period of time’’ after ‘‘control of
the mortgagor’’, substituted ‘‘upon such terms and conditions’’ for ‘‘under such regulations and conditions’’,
incorporated authority of Commissioner to ‘‘extend the
time for curing default and enter into an agreement
with the mortgage providing that if the mortgage is
subsequently foreclosed, any interest accruing after the
date of the agreement which is not paid by the mortgagor may be included in the debentures’’ in cl. (1), and
provided for remainder of cl. (1), cl. (2) and consideration of the principal amount of the mortgage, as modified, as the ‘‘original principal obligation of the mortgage’’ for purpose of computing total face value of debentures to be issued or cash payment to be made by
Commissioner to a mortgagee; section 105(a)(1) substituted in third sentence ‘‘charges for the administration, operation, maintenance and repair of communityowned property or the maintenance and repair of the
mortgaged property, the obligation for which arises out
of a covenant filed for record and approved by the Commissioner prior to the insurance of the mortgage, insurance on the mortgaged property, and any mortgage
insurance premiums’’ for ‘‘insurance on the mortgaged
property, and any mortgage insurance premiums paid
after either of such dates’’; section 105(a)(2) inserted
provisos reading ‘‘And provided further, That with respect to a mortgage accepted for insurance pursuant to
a commitment issued on or after September 2, 1964, the
Commissioner may include in debentures or in the cash
payment on amount not to exceed the foreclosure, acquisition, and conveyance costs actually paid by the
mortgagee and approved by the Commissioner’’ and
‘‘And provided further, That with respect to a mortgage
accepted for insurance pursuant to a commitment issued prior to September 2, 1964, the Commissioner may,
with the consent of the mortgagee (in lieu of issuing a
certificate of claim as provided in subsection (e)), included in debentures or in the cash payment, in addition to amounts otherwise allowed for such costs, an
amount not to exceed one-third of the total foreclosure,
acquisition, and conveyance costs actually paid by the
mortgagee and approved by the Commissioner, but in

§ 1710

no event may the total allowance for such costs exceed
the amount actually paid by the mortgagee:’’; section
105(a)(3) struck out from proviso reading ‘‘And provided
further, That with respect to mortgages to which the
provisions of sections 532 and 536 of Appendix To Title
50 apply’’ the words ‘‘and the payment of insurance premiums’’ after ‘‘on account of interest on debentures’’
and inserted after such proviso ‘‘And provided further,
That where the claim is paid in cash there shall be included in the cash payment an amount equivalent to
the compensation for loss of debenture interest that
would be included in computing debentures if such
claim were being paid in debentures’’; and section
105(a)(6)(B) substituted ‘‘and (subject to subsection
(e)(2) of this section) a certificate of claim’’ for ‘‘and a
certificate of claim’’ in second sentence.
Subsec. (c). Pub. L. 88–560, § 105(a)(4), increased limitation on the difference between the value of the mortgage and the aggregate face value of the debentures issued from $50 to $350.
Subsec. (d). Pub. L. 88–560, § 105(a)(5), substituted
‘‘: Provided, That debentures issued pursuant to claims
for insurance filed on or after September 2, 1964 shall be
dated as of the date of default or as of such later date
as the Commissioner, in his discretion, may establish
by regulation. The debentures’’ for ‘‘, except that debentures issued pursuant to the provisions of section
1715k(f), 1715l(g), and 1715x of this title may be dated as
of the date the mortgage is assigned (or the property is
conveyed) to the Commissioner, and’’ in second sentence.
Subsec. (e). Pub. L. 88–560, § 105(a)(6)(A), designated
existing provisions as par. (1), substituted ‘‘Subject to
paragraph (2), the certificate’’ for ‘‘The certificate’’,
and added par. (2).
Subsec. (f). Pub. L. 88–560, § 105(a)(7)–(11), designated
introductory par. as par. (1) and substituted ‘‘If, after
deducting (in such manner and amount as the Commissioner shall determine to be equitable and in accordance with sound accounting practice) the expenses incurred by the Commissioner, the net amount realized
from any property conveyed to the Commissioner under
this section and the claims assigned therewith exceed
the face value’’ for ‘‘If the net amount realized from
any property conveyed to the Commissioner under this
section and the claims assigned therewith, after deducting all expenses incurred by the Commissioner in
handling, dealing with, and disposing of such property
and in collecting such claims, exceeds the face value’’;
redesignated former par. (1) as (i) and inserted proviso;
redesignated former par. (2) as (ii); designated concluding par. as par. (2) and inserted proviso; and added par.
(3), respectively.
1961—Subsec. (d). Pub. L. 87–70, § 612(b), permitted debentures issued pursuant to provisions of section
1715k(f), 1715l(g), and 1715x of this title to be dated as of
the date the mortgage is assigned (or the property is
conveyed) to the Commissioner.
Subsec. (g). Pub. L. 87–70, § 612(c), included instruments relating to personal property, and inserted proviso requiring that a conveyance or transfer of title to
real or personal property or an interest therein to the
Federal Housing Commissioner, his successors and assigns, without identifying the Commissioner therein,
shall be deemed a proper conveyance or transfer.
1959—Subsec. (a). Pub. L. 86–372, § 114(b), authorized
the Commissioner, with respect to any mortgage covering a one-, two-, three-, or four-family residence insured under this chapter, if he finds after notice of default, that the default was due to circumstances beyond
the control of the mortgagor and it is probable that the
mortgage will be restored to good standing within a
reasonable period of time, to extend the time for curing
default and to enter into an agreement with the mortgagee providing that if the mortgage is subsequently
foreclosed, any interest accruing after the date of the
agreement which is not paid by the mortgagor may be
included in the debentures.
Subsec. (k). Pub. L. 86–372, § 117, substituted ‘‘and
with respect to any debentures issued in exchange for

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properties conveyed to and accepted by the Commissioner after September 23, 1959 in accordance with such
section’’ for ‘‘with respect to any debentures issued
pursuant to this section or section 1739 or 1750c of this
title’’, and inserted provisions authorizing inclusion as
a portion of the foreclosure costs payments made by
the mortgagee for the cost of acquiring the property
and conveying the evidencing title to the property to
the Commissioner, and permitting the termination of
the mortgagee’s obligation to pay mortgage insurance
premiums in the event the contract of insurance is terminated pursuant to section 1715t of this title.
1957—Subsec. (d). Pub. L. 85–104, § 108(a), substituted
‘‘established by the Commissioner pursuant to section
1715o of this title’’ for ‘‘determined by the Commissioner, with the approval of the Secretary of the Treasury, at the time the mortgage was offered for insurance, but not to exceed 3 per centum per annum’’ in
second sentence.
Subsec. (k). Pub. L. 85–104, § 107, added subsec. (k).
1955—Subsec. (f). Act Aug. 11, 1955, authorized the
Commissioner to effect the settlement of certificates of
claim and refunds to mortgagors.
1954—Subsec. (a). Act Aug. 2, 1954, § 111(l), permitted a
mortgagee to receive in debentures amounts paid by it
for Federal taxes imposed on a deed to it and on a deed
to the Commissioner; (2) substituted, in second proviso,
‘‘or under section 1715e of this title, or with respect to
any mortgage accepted for insurance under section 1709
of this title on or after August 2, 1954,’’ for ‘‘or under
section 1715e of this title’’; and (3) inserted proviso permitting direct conveyances to the Commissioner.
Subsec. (d). Act Aug. 2, 1954, § 112(a), substituted provision for a straight 20-year maturity on debentures for
former provision that the debentures should mature
‘‘three years after the 1st day of July following the maturity date of the mortgage on the property in exchange for which the debentures were issued, except
that debentures issued with respect to mortgages insured under section 1715e of this title shall mature
twenty years after the date of such debentures’’ in second sentence.
Subsec. (j). Act Aug. 2, 1954, § 113, added subsec. (j).
1951—Subsec. (d). Sept. 1, 1951, inserted in second sentence the provision that debentures issued with respect
to mortgages insured under section 1715e of this title
shall mature twenty years after the date of such debentures.
1950—Act Apr. 20, 1950, § 122, substituted ‘‘Commissioner’’ for ‘‘Administrator’’ wherever appearing.
Subsec. (a). Act Apr. 20, 1950, § 105, inserted ‘‘or under
section 1715e of this title’’ in second proviso.
1948—Subsec. (a). Act Aug. 10, 1948, § 101(l)(1), (2),
struck out ‘‘prior to July 1, 1944’’ in first proviso and
inserted second proviso.
Subsec. (f). Act Aug. 10, 1948, § 101(q), inserted ‘‘if the
mortgage was insured under section 1709 of this title
and shall be retained by the Administrator and credited
to the Housing Insurance Fund if the mortgage was insured under section 1713 of this title’’ before the colon
in par. (1).
1943—Subsec. (a). Act Oct. 14, 1943, inserted proviso.
1941—Subsec. (a). Act June 28, 1941, substituted ‘‘July
1, 1944’’ for ‘‘July 1, 1941’’ in last sentence.
1939—Subsec. (a). Act June 3, 1939, § 9, amended last
sentence generally.
Subsec. (g). Act June 3, 1939, § 10, inserted last sentence.
1938—Subsecs. (a) to (f). Act Feb. 3, 1938, amended
provisions generally.
Subsecs. (g), (h). Act Feb. 3, 1938, added subsecs. (g)
and (h).
1937—Subsec. (b). Act Joint Res. Feb. 19, 1937, substituted ‘‘July 1, 1939’’ for ‘‘July 1, 1937’’.
1935—Subsec. (a). Act May 28, 1935, amended last sentence generally.
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105–276, title VI, § 601(b), Oct. 21, 1998, 112 Stat.
2673, provided that: ‘‘The Secretary shall publish a no-

Page 552

tice in the Federal Register stating the effective date
of the terms and conditions prescribed by the Secretary
under section 204(a)(1) of the National Housing Act [12
U.S.C. 1710(a)(1)], as amended by subsection (a) of this
section. Subsections (a) and (k) of section 204 of the National Housing Act [12 U.S.C. 1710(a), (k)], as in effect
immediately before such effective date, shall continue
to apply to any mortgage insured under section 203 of
the National Housing Act [12 U.S.C. 1709] before such
effective date, except that the Secretary may, at the
request of the mortgagee, pay insurance benefits as
provided in subparagraphs (A) and (D) of section
204(a)(1) of such Act [12 U.S.C. 1710(a)(1)(A), (D)] to calculate insurance benefits in accordance with section
204(a)(5) of such Act [12 U.S.C. 1710(a)(5)].’’
EFFECTIVE DATE OF 1996 AMENDMENT
Pub. L. 104–99, title IV, § 407(c), Jan. 26, 1996, 110 Stat.
46, as amended by Pub. L. 104–134, title I, § 101(e) [title
II, § 221(d)], Apr. 26, 1996, 110 Stat. 1321–257, 1321–291; renumbered title I, Pub. L. 104–140, § 1(a), May 2, 1996, 110
Stat. 1327; Pub. L. 104–204, title II, § 203, Sept. 26, 1996,
110 Stat. 2894; Pub. L. 105–33, title II, § 2002(1), Aug. 5,
1997, 111 Stat. 257, provided that: ‘‘Except as provided in
subsection (e) [110 Stat. 46, repealed by Pub. L. 105–33,
§ 2002(2)], the amendments made by subsections (a) and
(b) [amending this section and section 1715u of this
title] shall apply with respect to mortgages insured
under the National Housing Act [12 U.S.C. 1701 et seq.]
that are executed before, on, or after October 1, 1997.’’
EFFECTIVE DATE OF 1954 AMENDMENT
Act Aug. 2, 1954, ch. 649, title I, § 112(e), 68 Stat. 593,
provided that: ‘‘This section [amending this section and
sections 1713, 1748b, and 1750c of this title] shall not
apply in any case where the mortgage involved was insured or the commitment for such insurance was issued
prior to the effective date of the Housing Act of 1954
[Aug. 2, 1954].’’
REGULATIONS
Pub. L. 104–134, title I, § 101(e) [title II, § 221(c)(1)],
Apr. 26, 1996, 110 Stat. 1321–291, provided that: ‘‘Not
later than 30 days after the date of enactment of this
Act [Apr. 26, 1996], the Secretary of Housing and Urban
Development shall issue interim regulations to implement section 407 of the Balanced Budget Downpayment
Act, I [Pub. L. 104–99, amending this section and section 1715u of this title and enacting provisions set out
as a note above], and the amendments to the National
Housing Act made by that section.’’
Pub. L. 104–99, title IV, § 407(d), Jan. 26, 1996, 110 Stat.
46, which directed the Secretary of Housing and Urban
Development to issue interim regulations to implement
section 407 of Pub. L. 104–99 and amendments made by
that section (amending this section and section 1715u of
this title and enacting provisions set out as a note
above) not later than 60 days after Jan. 26, 1996, was repealed by Pub. L. 104–134, title I, § 101(e) [title II,
§ 221(c)(2)], Apr. 26, 1996, 110 Stat. 1321–257, 1321–291; renumbered title I, Pub. L. 104–140, § 1(a), May 2, 1996, 110
Stat. 1327.
Pub. L. 100–628, title X, § 1064(c), Nov. 7, 1988, 102 Stat.
3275, provided that: ‘‘In developing regulations to carry
out the amendments made by this section [amending
this section], the Secretary of Housing and Urban Development may delegate to mortgagees the authority
to make determinations on behalf of the Secretary, and
the Secretary shall rely on certifications and post
audit reviews to the greatest extent possible.’’
HOMEOWNERSHIP PRESERVATION
Pub. L. 110–289, div. B, title I, § 2125, July 30, 2008, 122
Stat. 2840, provided that: ‘‘The Secretary of Housing
and Urban Development and the Commissioner of the
Federal Housing Administration, in consultation with
industry, the Neighborhood Reinvestment Corporation,
and other entities involved in foreclosure prevention
activities, shall—

Page 553

TITLE 12—BANKS AND BANKING

‘‘(1) develop and implement a plan to improve the
Federal Housing Administration’s loss mitigation
process; and
‘‘(2) report such plan to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives.’’
ASSET CONTROL AREA DEMONSTRATION PROGRAM
AGREEMENTS, CONTRACTS, AND REGULATIONS
Pub. L. 107–206, title I, § 1303, Aug. 2, 2002, 116 Stat.
897, provided that: ‘‘The Secretary of Housing and
Urban Development shall begin to enter into new
agreements and contracts pursuant to the Asset Control Area Demonstration Program as provided in section 602 of Public Law 105–276 [amending this section]
not later than September 15, 2002: Provided, That any
agreement or contract entered into pursuant to such
program shall be consistent with the requirements of
such section 602: Provided further, That the Department
shall develop proposed regulations for this program not
later than September 15, 2002.’’
TRANSFER OF HUD ASSETS IN REVITALIZATION AREAS
Pub. L. 106–554, § 1(a)(7) [title I, § 142], Dec. 21, 2000, 114
Stat. 2763, 2763A–618, provided that: ‘‘In carrying out
the program under section 204(h) of the National Housing Act (12 U.S.C. 1710(h)), upon the request of the chief
executive officer of a county or the government of appropriate jurisdiction and not later than 60 days after
such request is made, the Secretary of Housing and
Urban Development shall designate as a revitalization
area all portions of such county that meet the criteria
for such designation under paragraph (3) of such section.’’
SETTLEMENT COSTS IN THE FINANCING OF FEDERAL
HOUSING ADMINISTRATION AND VETERANS’ ADMINISTRATION ASSISTED HOUSING; STUDY AND RECOMMENDATIONS TO CONGRESS ON REDUCTION AND STANDARDIZATION OF COSTS
Pub. L. 91–351, title VII, § 701, July 24, 1970, 84 Stat.
461, provided that:
‘‘(a) With respect to housing built, rehabilitated, or
sold with assistance provided under the National Housing Act [this chapter] or under chapter 37 of title 38,
United States Code, the Secretary of Housing and
Urban Development and the Administrator of Veterans’
Affairs are respectively authorized and directed to prescribe standards governing the amounts of settlement
costs allowable in connection with the financing of
such housing in any such area. Such standards shall—
‘‘(1) be established after consultation between the
Secretary and the Administrator;
‘‘(2) be consistent in any area for housing assisted
under the National Housing Act and housing assisted
under chapter 37 of title 38, United States Code; and
‘‘(3) be based on the Secretary’s and the Administrator’s estimates of the reasonable charge for necessary services involved in settlements for particular
classes of mortgages and loans.
‘‘(b) The Secretary and the Administrator shall undertake a joint study and make recommendations to
the Congress not later than one year after the date of
enactment of this Act [July 24, 1970] with respect to
legislative and administrative actions which should be
taken to reduce mortgage settlement costs and to
standardize these costs for all geographic areas.’’

§ 1711. General Surplus and Participating Reserve Accounts
(a) Establishment; abolishment of General Reinsurance Account
The Secretary shall establish as of July 1, 1954,
in the Mutual Mortgage Insurance Fund a General Surplus Account and a Participating Reserve Account. All of the assets of the General

§ 1711

Reinsurance Account shall be transferred to the
General Surplus Account whereupon the General
Reinsurance Account shall be abolished. There
shall be transferred from the various group accounts to the Participating Reserve Account as
of July 1, 1954, an amount equal to the aggregate
amount which would have been distributed
under the provisions of this section in effect on
June 30, 1954, if all outstanding mortgages in
such group accounts had been paid in full on
said date. All of the remaining balances of said
group accounts shall as of said date be transferred to the General Surplus Account whereupon all of said group accounts shall be abolished.
(b) Credits and charges
The aggregate net income thereafter received
or any net loss thereafter sustained by the Mutual Mortgage Insurance Fund in any semiannual period shall be credited or charged to the
General Surplus Account and/or the Participating Reserve Account in such manner and
amounts as the Secretary may determine to be
in accord with sound actuarial and accounting
practice.
(c) Distribution of funds to terminating mortgagors
Upon termination of the insurance obligation
of the Mutual Mortgage Insurance Fund by payment of any mortgage insured thereunder, the
Secretary is authorized to distribute to the
mortgagor a share of the Participating Reserve
Account in such manner and amount as the Secretary shall determine to be equitable and in accordance with sound actuarial and accounting
practice: Provided, That, in no event, shall any
such distributable share exceed the aggregate
scheduled annual premiums of the mortgagor to
the year of termination of the insurance. The
Secretary shall not distribute any share to an
eligible mortgagor under this subsection beginning on the date which is 6 years after the date
the Secretary first transmitted written notification of eligibility to the last known address of
the mortgagor, unless the mortgagor has applied
in accordance with procedures prescribed by the
Secretary for payment of the share within the 6year period. The Secretary shall transfer any
amounts no longer eligible for distribution
under the previous sentence from the Participating Reserve Account to the General Surplus
Account.
(d) Rights and liabilities
No mortgagor or mortgagee of any mortgage
insured under section 1709 of this title shall have
any vested right in a credit balance in any such
account or be subject to any liability arising out
of the mutuality of the Fund and the determination of the Secretary as to the amount to be
paid by him to any mortgagor shall be final and
conclusive.
(e) Actuarial status of entire Fund
In determining whether there is a surplus for
distribution to mortgagors under this section,
the Secretary shall take into account the actuarial status of the entire Fund.

§ 1712

TITLE 12—BANKS AND BANKING

(f) Capital ratio for Mutual Mortgage Insurance
Fund
(1) The Secretary shall ensure that the Mutual
Mortgage Insurance Fund attains a capital ratio
of not less than 1.25 percent within 24 months
after November 5, 1990, and maintains such ratio
thereafter, subject to paragraph (2).
(2) The Secretary shall endeavor to ensure
that the Mutual Mortgage Insurance Fund attains a capital ratio of not less than 2.0 percent
within 10 years after November 5, 1990, and shall
ensure that the Fund maintains at least such
capital ratio at all times thereafter.
(3) Upon the expiration of the 24-month period
beginning on November 5, 1990, the Secretary
shall submit to the Congress a report describing
the actions the Secretary will take to ensure
that the Mutual Mortgage Insurance Fund attains the capital ratio required under paragraph
(2).
(4) For purposes of this subsection:
(A) The term ‘‘capital’’ means the economic
net worth of the Mutual Mortgage Insurance
Fund, as determined by the Secretary under
the annual audit required under section
1735f–16 of this title.
(B) The term ‘‘capital ratio’’ means the ratio
of capital to unamortized insurance-in-force.
(C) The term ‘‘economic net worth’’ means
the current cash available to the Fund, plus
the net present value of all future cash inflows
and outflows expected to result from the outstanding mortgages in the Fund.
(D) The term ‘‘unamortized insurance-inforce’’ means the remaining obligation on outstanding mortgages which are obligations of
the Mutual Mortgage Insurance Fund, as estimated by the Secretary.
(June 27, 1934, ch. 847, title II, § 205, 48 Stat. 1250;
May 28, 1935, ch. 150, § 29(b), 49 Stat. 300; Feb. 3,
1938, ch. 13, § 3, 52 Stat. 15; June 3, 1939, ch. 175,
§ 11, 53 Stat. 807; Apr. 20, 1950, ch. 94, title I, § 122,
64 Stat. 59; June 30, 1953, ch. 170, § 4, 67 Stat. 122;
Aug. 2, 1954, ch. 649, title I, § 114, 68 Stat. 594;
Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17;
Pub. L. 101–508, title II, §§ 2104, 2105, Nov. 5, 1990,
104 Stat. 1388–19; Pub. L. 102–550, title V, § 508(a),
Oct. 28, 1992, 106 Stat. 3782; Pub. L. 110–289, div.
B, title I, § 2118(c)(1), July 30, 2008, 122 Stat. 2835.)
AMENDMENTS
2008—Subsecs. (g), (h). Pub. L. 110–289 struck out subsecs. (g) and (h) which related to annual independent
audit of Mutual Mortgage Insurance Fund and adjustment of premiums, respectively.
1992—Subsec. (c). Pub. L. 102–550 inserted at end ‘‘The
Secretary shall not distribute any share to an eligible
mortgagor under this subsection beginning on the date
which is 6 years after the date the Secretary first
transmitted written notification of eligibility to the
last known address of the mortgagor, unless the mortgagor has applied in accordance with procedures prescribed by the Secretary for payment of the share within the 6-year period. The Secretary shall transfer any
amounts no longer eligible for distribution under the
previous sentence from the Participating Reserve Account to the General Surplus Account.’’
1990—Subsec. (e). Pub. L. 101–508, § 2104, added subsec.
(e).
Subsecs. (f) to (h). Pub. L. 101–508, § 2105, added subsecs. (f) to (h).
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing in subsecs. (a) to (d) of
this section.

Page 554

1954—Act Aug. 2, 1954, amended section generally to
eliminate the former group accounts and substitute
therefor a general surplus account and participating reserve account.
1953—Subsec. (c). Act June 30, 1953, inserted sentence
relating to semi-annual transfer of group accounts,
and, in remainder of section, changed the provisions relating to settlement of accounts.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.
1939—Subsec. (b). Act June 3, 1939, inserted ‘‘prior to
July 1, 1939’’.
1938—Subsecs. (a) to (f). Act Feb. 3, 1938, amended
provisions generally, and among other changes, struck
out subsec. (f).
1935—Subsec. (f). Act May 28, 1935, substituted ‘‘annual premium charge’’ for ‘‘premium charge’’ in first
sentence.
EXCEPTION TO STATUTE OF LIMITATIONS
Pub. L. 102–550, title V, § 508(b), Oct. 28, 1992, 106 Stat.
3782, provided that: ‘‘Notwithstanding the 6-year limitation on distribution of shares of the Participating
Reserve Account under section 205(c) of the National
Housing Act [12 U.S.C. 1711(c)], the Secretary shall distribute a share to an otherwise eligible mortgagor in
accordance with section 205(c), if the mortgagor applies
for payment of the share within 1 year after the date of
enactment of this Act [Oct. 28, 1992] in accordance with
procedures in effect on such date.’’

§ 1712. Investment of funds
Moneys in the Fund not needed for the current
operations of the Department of Housing and
Urban Development related to insurance under
section 1709 of this title shall be deposited with
the Treasurer of the United States to the credit
of the Fund, or invested in bonds or other obligations of, or in bonds or other obligations guaranteed as to principal and interest by, the
United States or any agency of the United
States: Provided, That such moneys shall to the
maximum extent feasible be invested in such
bonds or other obligations the proceeds of which
will be used to directly support the residential
mortgage market. The Secretary may, with the
approval of the Secretary of the Treasury, purchase in the open market debentures issued
under the provisions of section 1710 of this title.
Such purchases shall be made at a price which
will provide an investment yield of not less than
the yield obtainable from other investments authorized by this section. Debentures so purchased shall be canceled and not reissued, and
the several group accounts to which such debentures have been charged shall be charged with
the amounts used in making such purchases.
(June 27, 1934, ch. 847, title II, § 206, 48 Stat. 1252;
Feb. 3, 1938, ch. 13, § 3, 52 Stat. 16; Apr. 20, 1950,
ch. 94, title I, § 122, 64 Stat. 59; Pub. L. 90–19,
§ 1(a)(1), (3), (e), May 25, 1967, 81 Stat. 17, 18; Pub.
L. 91–609, title I, § 117(a), Dec. 31, 1970, 84 Stat.
1774.)
AMENDMENTS
1970—Pub. L. 91–609 provided for guarantee as to principal and interest by any agency of the United States
and for investment of monies in bonds or other obligations the proceeds of which will be used to directly support the residential mortgage market.
1967—Pub. L. 90–19 substituted ‘‘Department of Housing and Urban Development’’ and ‘‘Secretary’’ for
‘‘Federal Housing Administration’’ and ‘‘Commissioner’’, respectively, and inserted ‘‘related to insur-

Page 555

TITLE 12—BANKS AND BANKING

ance under section 1709 of this title’’ before ‘‘shall be
deposited’’.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’.
1938—Act Feb. 3, 1938, among other changes, inserted
‘‘or in bonds or other obligations guaranteed as to principal and interest by’’ in first sentence, and inserted
third sentence.

§ 1712a. Indexing of FHA multifamily housing
loan limits
(a) Method of indexing
The dollar amounts set forth in—
(1) section 1713(c)(3)(A) of this title;
(2) section 1715e(b)(2)(A) of this title;
(3) section 1715k(d)(3)(B)(iii)(I) of this title;
(4) section 1715l(d)(3)(ii)(I) of this title;
(5) section 1715l(d)(4)(ii)(I) of this title;
(6) section 1715v(c)(2)(A) of this title; and
(7) section 1715y(e)(3)(A) of this title;
(collectively hereinafter referred to as the ‘‘Dollar Amounts’’) shall be adjusted annually (commencing in 2004) on the effective date of the Federal Reserve Board’s adjustment of the $400 figure in the Home Ownership and Equity Protection Act of 1994 (HOEPA). The adjustment of the
Dollar Amounts shall be calculated using the
percentage change in the Consumer Price Index
for All Urban Consumers (CPI–U) as applied by
the Federal Reserve Board for purposes of the
above-described HOEPA adjustment.
(b) Notification
The Federal Reserve Board on a timely basis
shall notify the Secretary, or his designee, in
writing of the adjustment described in subsection (a) and of the effective date of such adjustment in order to permit the Secretary to undertake publication in the Federal Register of
corresponding adjustments to the Dollar
Amounts. The dollar amount of any adjustment
shall be rounded to the next lower dollar.
(June 27, 1934, ch. 847, title II, § 206A, as added
Pub. L. 107–326, § 5(a), Dec. 4, 2002, 116 Stat. 2794.)
REFERENCES IN TEXT
The Home Ownership and Equity Protection Act of
1994, referred to in subsec. (a), is subtitle B (§§ 151–158)
of title I of Pub. L. 103–325, Sept. 23, 1994, 108 Stat. 2190,
which enacted sections 1639 and 1648 of Title 15, Commerce and Trade, amended sections 1602, 1604, 1610, 1640,
1641, and 1647 of Title 15, and enacted provisions set out
as notes under sections 1601 and 1602 of Title 15. For
complete classification of this Act to the Code, see
Short Title of 1994 Amendment note set out under section 1601 of Title 15 and Tables.

§ 1713. Rental housing insurance
(a) Definitions
As used in this section—
(1) The term ‘‘mortgage’’ means a first mortgage on real estate in fee simple, or on the interest of either the lessor or lessee thereof (A)
under a lease for not less than ninety-nine
years which is renewable or (B) under a lease
having a period of not less than fifty years to
run from the date the mortgage was executed,
upon which there is located or upon which
there is to be constructed a building or buildings designed principally for residential use,
or upon which there is located or to be con-

§ 1713

structed facilities for manufactured homes,
and the term ‘‘first mortgage’’ means such
classes of first liens as are commonly given to
secure advances (including but not being limited to advances during construction) on, or
the unpaid purchase price of, real estate under
the laws of the State, in which the real estate
is located, together with the credit instrument
or instruments, if any, secured thereby, and
may be in the form of trust mortgages or
mortgage indentures or deeds of trust securing
notes, bonds, or other credit instruments.
(2) The term ‘‘mortgagee’’ means the original lender under a mortgage, and its successors and assigns, and includes the holders of
credit instruments issued under a trust mortgage or deed of trust pursuant to which such
holders act by and through a trustee therein
named.
(3) The term ‘‘mortgagor’’ means the original borrower under a mortgage and its successors and assigns.
(4) The term ‘‘maturity date’’ means the
date on which the mortgage indebtedness
would be extinguished if paid in accordance
with the periodic payments provided for in the
mortgage.
(5) The term ‘‘slum or blighted area’’ means
any area where dwellings predominate which,
by reason of dilapidation, overcrowding, faulty
arrangement or design, lack of ventilation,
light or sanitation facilities, or any combination of these factors, are detrimental to safety, health, or morals.
(6) The term ‘‘rental housing’’ means housing, the occupancy of which is permitted by
the owner thereof in consideration of the payment of agreed charges, whether or not, by the
terms of the agreement, such payment over a
period of time will entitle the occupant to the
ownership of the premises or space in a manufactured home court or park properly arranged
and equipped to accommodate manufactured
homes.
(7) The term ‘‘State’’ includes the several
States, and Puerto Rico, the District of Columbia, Guam, the Trust Territory of the Pacific Islands, American Samoa, and the Virgin
Islands.
(b) Insurance of additional mortgages
In addition to mortgages insured under section 1709 of this title, the Secretary is authorized to insure mortgages as defined in this section (including advances on such mortgages during construction) which cover property held
by—
(1) Federal or State instrumentalities, municipal corporate instrumentalities of one or
more States, or limited dividend or redevelopment or housing corporations restricted by
Federal or State laws or regulations of State
banking or insurance departments as to rents,
charges, capital structure, rate of return, or
methods of operation; or
(2) any other mortgagor approved by the
Secretary. The Secretary may, in the Secretary’s discretion, require any such mortgagor to be regulated or restricted as to rents or
sales, charges, capital structure, rate of return, and methods of operation so as to pro-

§ 1713

TITLE 12—BANKS AND BANKING

vide reasonable rentals to tenants and a reasonable return on the investment. Any such
regulations or restrictions shall continue for
such period or periods as the Secretary, in the
Secretary’s discretion, may require, including
until the termination of all obligations of the
Secretary under the insurance and during such
further period of time as the Secretary shall
be the owner, holder, or reinsurer of the mortgage. The Secretary may make such contracts
with and acquire, for not to exceed $100, such
stock or interest in the mortgagor as he may
deem necessary to render effective any such
regulations or restrictions. The stock or interest acquired by the Secretary shall be paid for
out of the General Insurance Fund, and shall
be redeemed by the mortgagor at par upon the
termination of all obligations of the Secretary
under the insurance.
The insurance of mortgages under this section
is intended to facilitate particularly the production of rental accommodations, at reasonable
rents, of design and size suitable for family living. The Secretary is, therefore, authorized in
the administration of this section to take action, by regulation or otherwise, which will direct the benefits of mortgage insurance hereunder primarily to those projects which make
adequate provision for families with children,
and in which every effort has been made to
achieve moderate rental charges.
Notwithstanding any other provisions of this
section, the Secretary may not insure any mortgage under this section (except a mortgage with
respect to a manufactured home park designed
exclusively for occupancy by elderly persons)
unless the mortgagor certifies under oath that
in selecting tenants for the property covered by
the mortgage he will not discriminate against
any family by reason of the fact that there are
children in the family, and that he will not sell
the property while the insurance is in effect unless the purchaser so certifies, such certification
to be filed with the Secretary. Violation of any
such certification shall be a misdemeanor punishable by a fine of not to exceed $500.
(c) Eligibility for insurance; mortgage limits
To be eligible for insurance under this section
a mortgage on any property or project shall involve a principal obligation in an amount—
(1) Repealed. Pub. L. 93–383, title III,
§ 304(a)(1), Aug. 22, 1974, 88 Stat. 677.
(2) Not to exceed 90 per centum of the estimated value of the property or project (when
the proposed improvements are completed):
Provided, That this limitation shall not apply
to mortgages on housing in Alaska or in
Guam, but such a mortgage may involve a
principal obligation in an amount not to exceed 90 per centum of the amount which the
Secretary estimates will be the replacement
cost of the property or project when the proposed improvements are completed (the value
of the property or project as such term is used
in this paragraph may include the land, the
proposed physical improvements, utilities
within the boundaries of the property or
project, architect’s fees, taxes, and interest
accruing during construction, and other miscellaneous charges incident to construction

Page 556

and approved by the Secretary): And provided
further, That nothing contained in this section
shall preclude the insurance of mortgages covering existing construction located in slum or
blighted areas, as defined in paragraph (5) of
subsection (a) of this section, and the Secretary may require such repair or rehabilitation work to be completed as is, in his discretion, necessary to remove conditions detrimental to safety, health, or morals; and
(3)(A) Not to exceed, for such part of the
property or project as may be attributable to
dwelling use (excluding exterior land improvements as defined by the Secretary), $38,025 per
family unit without a bedroom, $42,120 per
family unit with one bedroom, $50,310 per family unit with two bedrooms, $62,010 per family
unit with three bedrooms, and $70,200 per family unit with four or more bedrooms, or not to
exceed $17,460 per space; except that as to
projects to consist of elevator type structures
the Secretary may in his discretion, increase
the dollar amount limitations per family unit
to not to exceed $43,875 per family unit without a bedroom, $49,140 per family unit with one
bedroom, $60,255 per family unit with two bedrooms, $75,465 per family unit with three bedrooms, and $85,328 per family unit with four or
more bedrooms, as the case may be, to compensate for the higher costs incident to the
construction of elevator-type structures of
sound standards of construction and design;
(B) the Secretary may, by regulation, increase any of the dollar amount limitations in
subparagraph (A) (as such limitations may
have been adjusted in accordance with section
1712a of this title) by not to exceed 170 percent
in any geographical area where the Secretary
finds that cost levels so require and by not to
exceed 170 percent, or 215 percent in high cost
areas, where the Secretary determines it necessary on a project-by-project basis, but in no
case may any such increase exceed 90 percent
where the Secretary determines that a mortgage purchased or to be purchased by the Government National Mortgage Association in implementing its special assistance functions
under section 1720 1 of this title (as such section existed immediately before November 30,
1983) is involved. Notwithstanding any other
provision of this paragraph, the amount which
may be insured under this section may be increased by up to 20 percent if such increase is
necessary to account for the increased cost of
the project due to the installation therein of a
solar energy system (as defined in subparagraph (3) of the last paragraph of section
1703(a) of this title) or residential energy conservation measures (as defined in section
8211(11)(A) through (G) and (I) of title 42) 1 in
cases where the Secretary determines that
such measures are in addition to those required under the minimum property standards
and will be cost-effective over the life of the
measure.
The mortgage shall provide for complete amortization by periodic payments (unless otherwise approved by the Secretary) within such
1 See

References in Text note below.

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TITLE 12—BANKS AND BANKING

term as the Secretary shall prescribe, and shall
bear interest at such rate as may be agreed upon
by the mortgagor and the mortgagee. The Secretary may consent to the release of a part or
parts of the mortgaged property from the lien of
the mortgage upon such terms and conditions as
he may prescribe and the mortgage may provide
for such release. No mortgage shall be accepted
for insurance under this section or section
1715a 1 of this title unless the Secretary finds
that the property or project, with respect to
which the mortgage is executed, is economically
sound. Such property or project may include
five or more family units and may include such
commercial and community facilities as the
Secretary deems adequate to serve the occupants.
(d) Premium, appraisal, and inspection charges
The Secretary shall collect a premium charge
for the insurance of mortgages under this section which shall be payable annually in advance
by the mortgagee, either in cash or in debentures issued by the Secretary under any subchapter and section of this chapter, except debentures of the Mutual Mortgage Insurance
Fund, or of the Cooperative Management Housing Insurance Fund at par plus accrued interest.
In addition to the premium charge herein provided for the Secretary is authorized to charge
and collect such amounts as he may deem reasonable for the appraisal of a property or project
offered for insurance and for the inspection of
such property or project during construction:
Provided, That such charges for appraisal and inspection shall not aggregate more than 1 per
centum of the original principal face amount of
the mortgage.
(e) Adjusted premium charge on payment of
mortgage
In the event that the principal obligation of
any mortgage accepted for insurance under this
section is paid in full prior to the maturity date,
the Secretary is authorized in his discretion to
require the payment by the mortgagee of an adjusted premium charge in such amount as the
Secretary determines to be equitable, but not in
excess of the aggregate amount of the premium
charges that the mortgagee would otherwise
have been required to pay if the mortgage had
continued to be insured until such maturity
date.
(f) Repealed. Pub. L. 89–117, title XI, § 1108(e)(3),
Aug. 10, 1965, 79 Stat. 504
(g) Payment of insurance after default
The failure of the mortgagor to make any payment due under or provided to be paid by the
terms of a mortgage insured under this section
shall be considered a default under such mortgage and, if such default continues for a period
of thirty days, the mortgagee shall be entitled
to receive the benefits of the insurance as hereinafter provided, upon assignment, transfer, and
delivery to the Secretary, within a period and in
accordance with rules and regulations to be prescribed by the Secretary of (1) all rights and interests arising under the mortgage so in default;
(2) all claims of the mortgagee against the mortgagor or others, arising out of the mortgage

§ 1713

transactions; (3) all policies of title or other insurance or surety bonds or other guaranties and
any and all claims thereunder; (4) any balance of
the mortgage loans not advanced to the mortgagor; (5) any cash or property held by the mortgagee, or to which it is entitled, as deposits made
for the account of the mortgagor and which have
not been applied in reduction of the principal of
the mortgage indebtedness; and (6) all records,
documents, books, papers, and accounts relating
to the mortgage transactions. Upon such assignment, transfer, and delivery the obligation of
the mortgagee to pay the premium charges for
mortgage insurance shall cease, and the Secretary shall issue to the mortgagee a certificate
of claim as provided in subsection (h), and debentures having a par value equal to the original principal face amount of the mortgage plus
such amount as the mortgagee may have paid
for (A) taxes, special assessments, and water
rates, which are liens prior to the mortgage; (B)
insurance on the property; and (C) reasonable
expenses for the completion and preservation of
the property and any mortgage insurance premiums paid after default, less the sum of (i) that
part of the amount of the principal obligation
that has been repaid by the mortgagor, (ii) an
amount equivalent to 1 per centum of the unpaid amount of such principal obligation, and
(iii) any net income received by the mortgagee
from the property: Provided, That the mortgagee
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 Secretary, 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 herein
provided, upon (1) the prompt conveyance to the
Secretary of title to the property which meets
the requirements of the rules and regulations of
the Secretary 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
Secretary. Upon such conveyance and assignment, the obligation of the mortgagee to pay
the premium charges for insurance shall cease
and the mortgagee shall be entitled to receive
the benefits of the insurance as provided in this
subsection, except that in such event the 1 per
centum deduction, set out in (ii) hereof, shall
not apply. Notwithstanding any other provision
of this chapter, upon receipt, after September 2,
1964, of an application for insurance benefits on
a mortgage insured under this chapter, the Secretary may terminate the mortgagee’s obligation to pay premium charges on the mortgage.
(h) Certificate of claim; division of excess proceeds
The certificate of claim issued under this section shall be for an amount which the Secretary
determines to be sufficient, when added to the
face value of the debentures issued and the cash
adjustment paid to the mortgagee, to equal the
amount which the mortgagee would have re-

§ 1713

TITLE 12—BANKS AND BANKING

ceived if, on the date of the assignment, transfer
and delivery to the Secretary provided for in
subsection (g), the mortgagor had extinguished
the mortgage indebtedness by payment in full of
all obligations under the mortgage and a reasonable amount for necessary expenses incurred by
the mortgagee in connection with the foreclosure proceedings, or the acquisition of the
mortgaged property otherwise, and the conveyance thereof to the Secretary. Each such certificate of claim shall provide that there shall accrue to the holder of such certificate with respect to the face amount of such certificate, an
increment at the rate of 3 per centum per
annum which shall not be compounded. If the
net amount realized from the mortgage, and all
claims in connection therewith, so assigned,
transferred, and delivered, and from the property covered by such mortgage and all claims in
connection with such property, after deducting
all expenses incurred by the Secretary in handling, dealing with, acquiring title to, and disposing of such mortgage and property and in
collecting such claims, exceeds the face value of
the debentures issued and the cash adjustment
paid to the mortgagee plus all interest paid on
such debentures, such excess shall be divided as
follows:
(1) If such excess is greater than the total
amount payable under the certificate of claim
issued in connection with such property, the
Secretary shall pay to the holder of such certificate the full amount so payable, and any
excess remaining thereafter shall be retained
by the Secretary and credited to the General
Insurance Fund; and
(2) If such excess is equal to or less than the
total amount payable under such certificate of
claim, the Secretary shall pay to the holder of
such certificate the full amount of such excess.
(i) Debentures; execution; negotiability; terms;
tax exemptions
Debentures issued under this section shall be
executed in the name of the General Insurance
Fund as obligor, shall be negotiable, and, if in
book entry form, transferable, in the manner described by the Secretary in regulations, and
shall be dated as of the date of default as determined in subsection (g) of this section, except
that debentures issued pursuant to the provisions of section 1715k(f), section 1715l(g), and section 1715x of this title may be dated as of the
date the mortgage is assigned (or the property is
conveyed) to the Secretary and shall bear interest from such date. They shall bear interest at
a rate established by the Secretary pursuant to
section 1715o of this title payable semiannually
on the 1st day of January and the 1st day of July
of each year, and shall mature twenty years
after the date thereof. Such debentures as are issued in exchange for mortgages insured after
February 3, 1938, shall be exempt, both as to
principal and interest, from all taxation (except
surtaxes, estate, inheritance, and gift taxes)
now or hereafter imposed by the United States,
by any Territory, dependency, or possession
thereof, or by any State, county, municipality,
or local taxing authority. They shall be paid out
of the General Insurance Fund which shall be

Page 558

primarily liable therefor, and they shall be fully
and unconditionally guaranteed as to principal
and interest by the United States, and, in the
case of debentures issued in certificated registered form, such guaranty shall be expressed
on the face of the debentures. In the event the
General Insurance Fund fails to pay upon demand, when due, the principal of or interest on
any debentures so guaranteed, the Secretary of
the Treasury shall pay to the holders the
amount thereof which is authorized to be appropriated out of any money in the Treasury not
otherwise appropriated, and thereupon, to the
extent of the amount so paid, the Secretary of
the Treasury shall succeed to all the rights of
the holders of such debentures.
(j) Debentures; form and amounts
Debentures issued under this section—
(1) shall be in such form and amounts;
(2) shall be subject to such terms and conditions;
(3) shall include such provisions for redemption, if any, as may be prescribed by the Secretary of Housing and Urban Development,
with the approval of the Secretary of the
Treasury; and
(4) may be in book entry or certificated registered form, or such other form as the Secretary of Housing and Urban Development
may prescribe in regulations.
(k) Acquisition of property by conveyance or
foreclosure
The Secretary is authorized either to (1) acquire possession of and title to any property,
covered by a mortgage insured under this section and assigned to him, by voluntary conveyance in extinguishment of the mortgage indebtedness, or (2) institute proceedings for foreclosure on the property covered by any such insured mortgage and prosecute such proceedings
to conclusion. The Secretary at any sale under
foreclosure may, in his discretion, for the protection of the General Insurance Fund, bid any
sum up to but not in excess of the total unpaid
indebtedness secured by the mortgage, plus
taxes, insurance, foreclosure costs, fees, and
other expenses, and may become the purchaser
of the property at such sale. In determining the
amount to be bid, the Secretary shall act consistently with the goal established in section
1701z–11(a)(1) of this title. The Secretary is authorized to pay from the General Insurance
Fund such sums as may be necessary to defray
such taxes, insurance, costs, fees, and other expenses in connection with the acquisition or
foreclosure of property under this section. Pending such acquisition by voluntary conveyance or
by foreclosure, the Secretary is authorized, with
respect to any mortgage assigned to him under
the provisions of subsection (g), to exercise all
the rights of a mortgagee under such mortgage,
including the right to sell such mortgage, and to
take such action and advance such sums as may
be necessary to preserve or protect the lien of
such mortgage.
(l) Handling and disposal of property; settlement
of claims
Notwithstanding any other provisions of law
relating to the acquisition, handling, or disposal

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TITLE 12—BANKS AND BANKING

of real and other property by the United States,
the Secretary shall also have power, for the protection of the interests of the General Insurance
Fund, to pay out of the General Insurance Fund
all expenses or charges in connection with, and
to deal with, complete, reconstruct, rent, renovate, modernize, insure, make contracts for the
management of, or establish suitable agencies
for the management of, or sell for cash or credit
or lease in his discretion, any property acquired
by him under this section, and notwithstanding
any other provision of law, the Secretary shall
also have power to pursue to final collection by
way of compromise or otherwise all claims assigned and transferred to him in connection
with the assignment, transfer, and delivery provided for in this section, and at any time, upon
default, to foreclose on any property secured by
any mortgage assigned and transferred to or
held by him: Provided, That section 6101 of title
41 shall not be construed to apply to any contract for hazard insurance, or to any purchase or
contract for services or supplies on account of
such property if the amount thereof does not exceed $1,000.
(m) Repealed. Pub. L. 89–117, title XI, § 1108(e)(3),
Aug. 10, 1965, 79 Stat. 504
(n) Default or payment; rights of parties
In the event that a mortgage insured under
this section becomes in default through failure
of the mortgagor to make any payment due
under or provided to be paid by the terms of the
mortgage and such mortgage continues in default for a period of thirty days, but the mortgagee does not foreclose on or otherwise acquire
the property, or does not assign and transfer
such mortgage and the credit instrument secured thereby to the Secretary, in accordance
with subsection (g), and the Secretary is given
written notice thereof, or in the event that the
mortgagor pays the obligation under the mortgage in full prior to the maturity thereof, and
the mortgagee pays any adjusted premium
charge required under the provisions of subsection (e), and the Secretary is given written
notice by the mortgagee of the payment of such
obligation, the obligation to pay the annual premium charge for insurance shall cease, and all
rights of the mortgagee and the mortgagor
under this section shall terminate as of the date
of such notice.
(o) Reissue of prior insurance
The Secretary, with the consent of the mortgagee and the mortgagor of a mortgage insured
under this section prior to February 3, 1938,
shall be empowered to reissue such mortgage insurance in accordance with the provisions of
this section as amended by the National Housing
Act Amendments of 1938, and any such insurance
not so reissued shall not be affected by the enactment of such Act.

§ 1713

(p) Repealed. Pub. L. 89–117, title XI, § 1108(e)(3),
Aug. 10, 1965, 79 Stat. 504
(q) Repealed. Pub. L. 85–104, title I, § 111, July 12,
1957, 71 Stat. 297
(r) Service charge for mortgages assigned to and
held by the Secretary
Notwithstanding any other provision of this
chapter, the Secretary is authorized to include
in any mortgage insured under any subchapter
of this chapter after September 23, 1959, a provision requiring the mortgagor to pay a service
charge to the Secretary in the event such mortgage is assigned to and held by the Secretary.
Such service charge shall not exceed the amount
prescribed by the Secretary for mortgage insurance premiums applicable to such mortgage.
(June 27, 1934, ch. 847, title II, § 207, 48 Stat. 1252;
Aug. 23, 1935, ch. 614, title III, § 344(d), 49 Stat.
722; Feb. 3, 1938, ch. 13, § 3, 52 Stat. 16; June 3,
1939, ch. 175, § 12, 53 Stat. 807; Mar. 28, 1941, ch. 31,
§ 4(b), 55 Stat. 62; July 1, 1948, ch. 784, § 6, 62 Stat.
1209; Aug. 10, 1948, ch. 832, title I, § 101 (m–p, r),
62 Stat. 1273, 1274; Apr. 20, 1950, ch. 94, title I,
§§ 106–112, 122, 64 Stat. 52–54, 59; Sept. 1, 1951, ch.
378, title VI, §§ 604(b), 605, 65 Stat. 314; July 14,
1952, ch. 723, § 10(a)(2), 66 Stat. 603; June 30, 1953,
ch. 170, § 5, 67 Stat. 122; Aug. 2, 1954, ch. 649, title
I, §§ 112(b), 115–117, 68 Stat. 593–595; Aug. 11, 1955,
ch. 783, title I, § 102(b), (c), 69 Stat. 635; Aug. 7,
1956, ch. 1029, title I, §§ 103, 104(b), (c), 70 Stat.
1092; Pub. L. 85–104, title I, §§ 108(b), 109–111, July
12, 1957, 71 Stat. 297; Pub. L. 86–70, § 10(a), (b),
June 25, 1959, 73 Stat. 142; Pub. L. 86–372, title I,
§ 104, Sept. 23, 1959, 73 Stat. 655; Pub. L. 86–624,
§ 6, July 12, 1960, 74 Stat. 411; Pub. L. 87–70, title
VI, § 607, June 30, 1961, 75 Stat. 178; Pub. L.
88–560, title I, §§ 105(b), 106, 107(a), 108, Sept. 2,
1964, 78 Stat. 772, 774, 776; Pub. L. 89–117, title II,
§ 207(a), title XI, § 1108(e), Aug. 10, 1965, 79 Stat.
467, 504; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81
Stat. 17; Pub. L. 90–301, § 3(b), May 7, 1968, 82
Stat. 114; Pub. L. 91–152, title I, §§ 103(a), (b),
113(b), title IV, § 403(c)(2), Dec. 24, 1969, 83 Stat.
380, 383, 395; Pub. L. 93–383, title III, §§ 303(a),
304(a), Aug. 22, 1974, 88 Stat. 676, 677; Pub. L.
94–173, § 3, Dec. 23, 1975, 89 Stat. 1027; Pub. L.
94–375, § 8(a), (b)(1), Aug. 3, 1976, 90 Stat. 1071;
Pub. L. 95–557, title III, § 311(a), Oct. 31, 1978, 92
Stat. 2098; Pub. L. 95–619, title II, § 248(b), Nov. 9,
1978, 92 Stat. 3235; Pub. L. 96–153, title III,
§§ 313(b), 314, Dec. 21, 1979, 93 Stat. 1117; Pub. L.
96–399, title III, §§ 308(c)(1), 310(a), Oct. 8, 1980, 94
Stat. 1640, 1641; Pub. L. 97–35, title III, §§ 338(b),
339B(a), (c), Aug. 13, 1981, 95 Stat. 416, 417; Pub.
L. 97–377, title I, § 101(g), Dec. 21, 1982, 96 Stat.
1908; Pub. L. 98–181, title I [title IV, §§ 404(b)(4),
407(c), 431(a), 435, 446(a)], Nov. 30, 1983, 97 Stat.
1209, 1211, 1220, 1222, 1228; Pub. L. 98–479, title II,
§ 204(a)(3), Oct. 17, 1984, 98 Stat. 2232; Pub. L.
100–242, title I, § 182, title IV, § 426(a), (h), Feb. 5,
1988, 101 Stat. 1871, 1915, 1916; Pub. L. 102–550,
title V, §§ 509(a), 516(b), Oct. 28, 1992, 106 Stat.
3782, 3790; Pub. L. 103–233, title III, § 306, Apr. 11,
1994, 108 Stat. 373; Pub. L. 107–73, title II, § 213(a),
Nov. 26, 2001, 115 Stat. 676; Pub. L. 107–326,
§ 5(b)(1), Dec. 4, 2002, 116 Stat. 2794; Pub. L.
108–186, title III, § 302(b),(c)(1), Dec. 16, 2003, 117
Stat. 2692; Pub. L. 110–161, div. K, title II, § 221(1),
Dec. 26, 2007, 121 Stat. 2436.)

§ 1713

TITLE 12—BANKS AND BANKING
REFERENCES IN TEXT

Section 1715a of this title, referred to in subsec. (c),
which related to additional housing insurance, was repealed by act June 3, 1939, ch. 175, § 13, 53 Stat. 807.
Section 1720 of this title, referred to in subsec.
(c)(3)(B), was repealed by Pub. L. 98–181, title I [title IV,
§ 483(a)], Nov. 30, 1983, 97 Stat. 1240.
Section 8211 of title 42, referred to in subsec. (c)(3)(B),
was omitted from the Code pursuant to section 8229 of
Title 42, The Public Health and Welfare, which terminated authority under that section on June 30, 1989.
This chapter, referred to in subsecs. (d), (g) and (r),
was in the original ‘‘this Act’’, meaning act June 27,
1934, ch. 847, 48 Stat. 1246, which is classified principally
to this chapter (§ 1701 et seq.). For complete classification of this Act to the Code, see Tables.
The National Housing Act Amendments of 1938, referred to in subsec. (o), is act Feb. 3, 1938, ch. 13, 42
Stat. 8, as amended, section 3 of which amended this
section generally. For complete classification of this
Act to the Code, see section 1701a of this title and
Tables.
CODIFICATION
In subsec. (l), ‘‘section 6101 of title 41’’ substituted for
‘‘section 3709 of the Revised Statutes’’ on authority of
Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat. 3854, which
Act enacted Title 41, Public Contracts.
AMENDMENTS
2007—Subsec. (c)(3)(B). Pub. L. 110–161 substituted
‘‘170 percent’’ for ‘‘140 percent’’ after ‘‘not to exceed’’ in
two places and ‘‘215 percent in high cost areas’’ for ‘‘170
percent in high cost areas’’.
2003—Subsec. (c)(3)(A). Pub. L. 108–186, § 302(c)(1), substituted ‘‘$17,460’’ for ‘‘$11,250’’.
Subsec. (c)(3)(B). Pub. L. 108–186, § 302(b), substituted
‘‘140 percent in’’ for ‘‘110 percent in’’ and inserted ‘‘, or
170 percent in high cost areas,’’ after ‘‘and by not to exceed 140 percent’’.
2002—Subsec. (c)(3). Pub. L. 107–326, § 5(b)(1)(B), which
directed substitution of ‘‘(B) the Secretary may, by
regulation, increase any of the dollar amount limitations in subparagraph (A) (as such limitations may
have been adjusted in accordance with section 1712a of
this title)’’ for ‘‘and accept that the Secretary’’
through ‘‘in this paragraph’’, was executed by making
the substitution for ‘‘and except that the Secretary
may, by regulation, increase any of the foregoing dollar
amount limitations contained in this paragraph’’, to
reflect the probable intent of Congress.
Pub. L. 107–326, § 5(b)(1)(A), inserted subpar. (A) designation after ‘‘(3)’’.
2001—Subsec. (c)(3). Pub. L. 107–73 substituted
‘‘$38,025’’, ‘‘$42,120’’, ‘‘$50,310’’, ‘‘$62,010’’, and ‘‘$70,200’’
for ‘‘$30,420’’, ‘‘$33,696’’, ‘‘$40,248’’, ‘‘$49,608’’, and
‘‘$56,160’’, respectively, ‘‘$11,250’’ for ‘‘$9,000’’, and
‘‘$43,875’’, ‘‘$49,140’’, ‘‘$60,255’’, ‘‘$75,465’’, and ‘‘$85,328’’
for ‘‘$35,100’’, ‘‘$39,312’’, ‘‘$48,204’’, ‘‘$60,372’’, and
‘‘$68,262’’, respectively.
1994—Subsec. (c)(3). Pub. L. 103–233 substituted
‘‘$56,160’’ for ‘‘$59,160’’.
1992—Subsec. (c)(3). Pub. L. 102–550, § 509(a), substituted ‘‘$30,420’’, ‘‘$33,696’’, ‘‘$40,248’’, ‘‘$49,608’’, and
‘‘$59,160’’ for ‘‘$25,350’’, ‘‘$28,080’’, ‘‘$33,540’’, ‘‘$41,340’’,
and ‘‘$46,800’’, respectively, and ‘‘$35,100’’, ‘‘$39,312’’,
‘‘$48,204’’, ‘‘$60,372’’, and ‘‘$68,262’’ for ‘‘$29,250’’,
‘‘$32,760’’, ‘‘$40,170’’, ‘‘$50,310’’, and ‘‘$56,885’’, respectively.
Subsec. (g). Pub. L. 102–550, § 516(b)(1), in second sentence, substituted ‘‘issue to the mortgagee a certificate
of claim as provided in subsection (h), and debentures
having a par value’’ for ‘‘, subject to the cash adjustment provided for in subsection (j), issue to the mortgagee a certificate of claim as provided in subsection
(h), and debentures having a total face value’’.
Subsec. (i). Pub. L. 102–550, § 516(b)(2), (3), in first sentence, substituted ‘‘shall be negotiable, and, if in book
entry form, transferable, in the manner described by

Page 560

the Secretary in regulations’’ for ‘‘shall be signed by
the Secretary, by either his written or engraved signature, shall be negotiable’’, and in fourth sentence substituted ‘‘and, in the case of debentures issued in certificated registered form, such guaranty’’ for ‘‘and such
guaranty’’.
Subsec. (j). Pub. L. 102–550, § 516(b)(4), added subsec. (j)
and struck out former subsec. (j) which read as follows:
‘‘Debentures issued under this section shall be in such
form and denominations in multiples of $50, shall be
subject to such terms and conditions, and shall include
such provision for redemption, if any, as may be prescribed by the Secretary with the approval of the Secretary of the Treasury, and may be in coupon or registered form. Any difference between the amount of debentures to which the mortgagee is entitled under this
section, and the aggregate face value of the debentures
issued, not to exceed $50, shall be adjusted by the payment of cash by the Secretary to the mortgagee from
the General Insurance Fund.’’
1988—Subsec. (c)(3). Pub. L. 100–242, § 426(a), (h), substituted ‘‘$25,350’’, ‘‘$28,080’’, ‘‘$33,540’’, ‘‘$41,340’’, and
‘‘$46,800’’ for ‘‘$19,500’’, ‘‘$21,600’’, ‘‘$25,800’’, ‘‘$31,800’’,
and ‘‘$36,000’’, respectively, and ‘‘$29,250’’, ‘‘$32,760’’,
‘‘$40,170’’, ‘‘$50,310’’, and ‘‘$56,885’’ for ‘‘$22,500’’,
‘‘$25,200’’, ‘‘$30,900’’, ‘‘$38,700’’, and ‘‘$43,758’’, respectively, and substituted ‘‘not to exceed 110 percent in
any geographical area where the Secretary finds that
cost levels so require and by not to exceed 140 percent
where the Secretary determines it necessary on a
project-by-project basis, but in no case may any such
increase exceed 90 percent where the Secretary determines that a mortgage purchased or to be purchased by
the Government National Mortgage Association in implementing its special assistance functions under section 1720 of this title (as such section existed immediately before November 30, 1983) is involved’’ for ‘‘not
to exceed 75 per centum in any geographical area where
he finds that cost levels so require, except that, where
the Secretary determines it necessary on a project by
project basis, the foregoing dollar amount limitations
contained in this paragraph may be exceeded by not to
exceed 90 per centum (by not to exceed 140 per centum
where the Secretary determines that a mortgage other
than one purchased or to be purchased under section
1720 of this title by the Government National Mortgage
Association in implementing its special assistance
functions is involved) in such an area.’’
Subsec. (k). Pub. L. 100–242, § 182, inserted provisions
after second sentence directing the Secretary to act
consistently with the goal established in section
1701z–11(a)(1) of this title in determining the amount to
be bid.
1984—Subsec. (i). Pub. L. 98–479 substituted ‘‘section
1715k(f), section 1715l(g), and section 1715x of this title’’
for ‘‘section 1715k(f), 1715l(g), and section 1715x of this
title’’.
1983—Subsec. (a)(7). Pub. L. 98–181, § 407(c), inserted
‘‘American Samoa,’’ after ‘‘Pacific Islands,’’.
Subsec. (b). Pub. L. 98–181, § 431(a)(3), in first undesignated par. following par. (2) struck out ‘‘and directed’’
after ‘‘therefore, authorized’’.
Pub. L. 98–181, § 435, in second undesignated par. following par. (2) substituted ‘‘the Secretary may not insure any mortgage under this section (except a mortgage with respect to a manufactured home park designed exclusively for occupancy by elderly persons)’’
for ‘‘no mortgage shall be insured hereunder’’.
Subsec. (b)(2). Pub. L. 98–181, § 431(a)(1), (2), substituted provision permitting the Secretary discretionary authority to regulate rents and other charges
for such period or periods as the Secretary, in his discretion, may require for provision which required the
Secretary to regulate rents and other charges until the
termination of all obligations of the Secretary under
the insurance and during such further time as the Secretary was owner, holder, or reinsurer of the mortgage,
and substituted ‘‘any such regulations and restrictions’’ for ‘‘the regulations and restrictions’’.
Subsec. (c). Pub. L. 98–181, § 446(a), which directed
that ‘‘(unless otherwise approved by the Secretary)’’ be

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TITLE 12—BANKS AND BANKING

inserted after ‘‘periodic payments’’ in first undesignated par. of par. (3), was executed to the undesignated
par. following par. (3) to reflect the probable intent of
Congress.
Pub. L. 98–181, § 404(b)(4), which directed the substitution of provision that the interest rate for the mortgage be such a rate as agreed upon by the mortgagor
and mortgagee for provision that the rate of interest,
exclusive of premium charges for insurance, not exceed
51⁄4 per centum per annum on the amount of the principal obligation outstanding at any time, or not exceed
such per centum per annum not in excess of 6 per centum per annum as the Secretary finds necessary to
meet the mortgage market in first undesignated par. of
par. (3), was executed to the undesignated par. following par. (3) to reflect the probable intent of Congress.
1982—Subsec. (c)(3). Pub. L. 97–377 inserted ‘‘(by not
to exceed 140 per centum where the Secretary determines that a mortgage other than one purchased or to
be purchased under section 1720 of this title by the Government National Mortgage Association in implementing its special assistance functions is involved)’’ after
‘‘90 per centum’’.
1981—Subsec. (a)(1), (6). Pub. L. 97–35, § 339B(c), provided that for purposes of section 308(c)(1) of Pub. L.
96–399, the terms ‘‘mobile home’’ and ‘‘manufactured
home’’ shall be deemed to include the terms ‘‘mobile
homes’’ and ‘‘manufactured homes’’, respectively. See
1980 Amendment note below.
Subsec. (c)(3). Pub. L. 97–35, §§ 338(b), 339B(a), substituted ‘‘$9,000’’ for ‘‘$8,000’’ and made minor changes
in nomenclature.
1980—Subsec. (a)(1), (6). Pub. L. 96–399, § 308(c)(1),
which directed substitution of ‘‘manufactured home’’
for ‘‘mobile home’’ wherever appearing, was executed
by substituting ‘‘manufactured home’’ for ‘‘mobile
home’’ and ‘‘manufactured homes’’ for ‘‘mobile homes’’
wherever appearing pursuant to Pub. L. 97–35, § 339B(c).
See 1981 Amendment note above.
Subsec. (c)(3). Pub. L. 96–399, § 310(a), inserted provisions relating to residential energy conservation measures.
1979—Subsec. (c)(3). Pub. L. 96–153, §§ 313(b), 314, in
first sentence of first unnumbered par. substituted
‘‘$8,000’’ for ‘‘$3,900’’, ‘‘75 per centum’’ for ‘‘50 per centum’’ and inserted exception that where the Secretary
determines it necessary on a project by project basis,
the dollar amount limitations may be exceeded by not
to exceed 90 per centum in such an area.
1978—Subsec. (c). Pub. L. 95–557 substituted ‘‘may include five’’ for ‘‘may include eight’’ in concluding par.
Subsec. (c)(3). Pub. L. 95–619 provided that the
amount insurable under this section could be increased
by up to 20 per centum if such increase were necessary
to account for the increased cost of a residence due to
the installation of a solar energy system.
1976—Subsec. (c)(3). Pub. L. 94–375 substituted ‘‘50 per
centum in any geographical area’’ for ‘‘75 per centum in
any geographical area’’, ‘‘$19,500’’ for ‘‘$13,000’’,
‘‘$21,600’’ for ‘‘$18,000’’, ‘‘$25,800’’ for ‘‘$21,500’’, ‘‘$31,800’’
for ‘‘$26,500’’, ‘‘$36,000’’ for ‘‘$30,000’’, ‘‘$3,900’’ for
‘‘$3,250’’, ‘‘$22,500’’ for ‘‘$15,000’’, ‘‘$25,200’’ for ‘‘$21,000’’,
‘‘$30,900’’ for ‘‘$25,750’’, ‘‘$38,700’’ for ‘‘$32,250’’, and
‘‘$43,758’’ for ‘‘$36,465’’.
1975—Subsec. (c)(3). Pub. L. 94–173 raised from 45 per
centum to 75 per centum the amount by which any dollar limitation may, by regulation, be increased.
1974—Subsec. (c)(1). Pub. L. 93–383, § 304(a)(1), struck
out par. (1) which set forth limits on principal obligation of not to exceed $20,000,000, or not to exceed
$50,000,000 if executed by a mortgagor under subsec.
(b)(1) of this section.
Subsec. (c)(3). Pub. L. 93–383, §§ 303(a), 304(a)(2), substituted ‘‘$3,250’’ for ‘‘$2,500’’, ‘‘$13,000’’ for ‘‘$9,900’’,
‘‘$15,000’’ for ‘‘$11,550’’, ‘‘$18,000’’ for ‘‘$13,750’’, ‘‘$21,000’’
for ‘‘$16,500’’, ‘‘$21,500’’ for ‘‘$16,500’’, ‘‘$25,750’’ for
‘‘$19,800’’, ‘‘$26,500’’ for ‘‘$20,350’’, ‘‘$30,000’’ for ‘‘$23,100’’,
‘‘$32,250’’ for ‘‘$24,750’’, and ‘‘$36,465’’ for ‘‘$28,050’’, and
struck out limitation of $1,000,000 per mortgage for
trailer courts or parks.

§ 1713

1969—Subsec. (a)(1). Pub. L. 91–152, § 103(a)(1)(A), substituted ‘‘mobile homes’’ for ‘‘trailer coach mobile
dwellings’’.
Subsec. (a)(6). Pub. L. 91–152, § 103(a)(1)(B), (C), substituted ‘‘mobile home court’’ for ‘‘trailer court’’ and
‘‘mobile homes’’ for ‘‘trailer coach mobile dwellings’’.
Subsec. (a)(7). Pub. L. 91–152, § 403(c)(2), inserted ‘‘the
Trust Territory of the Pacific Islands,’’ after ‘‘Guam,’’.
Subsec. (c)(3). Pub. L. 91–152, §§ 103(a)(2), (b), 113(b)(1),
(2), substituted ‘‘$2,500 per space or $1,000,000 per mortgage for mobile home courts or parks’’ for ‘‘$1,800 per
space or $500,000 per mortgage for trailer courts or
parks’’, ‘‘$9,900’’ for ‘‘$9,000’’, ‘‘$11,550’’ for ‘‘$10,500’’,
‘‘$13,750’’ for ‘‘$12,500,’’ ‘‘$16,500’’ from ‘‘$15,000’’ wherever appearing therein, ‘‘$19,800’’ for ‘‘$18,000’’, ‘‘$20,350’’
for ‘‘$18,500’’, ‘‘$23,100’’ for ‘‘$21,000’’, ‘‘$24,750’’ for
‘‘$22,500’’, and ‘‘$28,050’’ for ‘‘$25,500’’.
1968—Subsec. (c)(3). Pub. L. 90–301 limited interest
rate on mortgages to such per centum per annum not
in excess of 6 per centum as the Secretary finds necessary to meet the mortgage market.
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing in subsecs. (b), (b)(2),
(c)(2), (3), (d), (e), (g), (h), (h)(1), (h)(2), (h)(2)(i), (j) to (l),
(n), (o), and (r).
1965—Subsec. (b). Pub. L. 89–117, § 1108(e)(4), substituted ‘‘General Insurance Fund’’ for ‘‘Housing
Fund’’.
Subsec. (c)(3). Pub. L. 89–117, § 207(a), substituted
‘‘$18,500 per family unit with three bedrooms, and
$21,000 per family unit with four or more bedrooms’’ for
‘‘and $18,500 per family unit with three or more bedrooms’’ and ‘‘$22,500 per family unit with three bedrooms, and $25,000 per family unit with four or more
bedrooms’’ for ‘‘and $22,500 per family unit with three
or more bedrooms’’.
Subsec. (d). Pub. L. 89–117, § 1108(e)(1), (2), removed
reference to collection of premium charges for the insurance of mortgages under section 1715a of this title
and substituted ‘‘debentures issued by the Commissioner under any subchapter and section of this chapter, except debentures of the Mutual Mortgage Insurance Fund, or of the Cooperative Management Housing
Insurance Fund’’ for ‘‘debentures of the Housing Insurance Fund issued by the Commissioner under this subchapter’’.
Subsec. (f). Pub. L. 89–117, § 1108(e)(3), repealed subsec.
(f) which created the Housing Insurance Fund.
Subsecs. (h) to (l). Pub. L. 89–117, § 1108(e)(4), substituted ‘‘General Insurance Fund’’ for ‘‘Housing Insurance Fund’’ and ‘‘Housing Fund’’ wherever appearing.
Subsec. (m). Pub. L. 89–117, § 1108(e)(3), repealed subsec. (m) which provided for credits and charges in the
Housing Insurance Fund.
Subsec. (p). Pub. L. 89–117, § 1108(e)(3), repealed subsec. (p) which provided for the disposition of surplus
moneys in the Housing Insurance Fund and the investment of such moneys.
1964—Subsec. (c)(2). Pub. L. 88–560, § 106, substituted
‘‘Provided, That this limitation shall not apply’’ for
‘‘Provided, That except with respect to a mortgage executed by a mortgagor coming within the provisions of
subsection (b)(1) of this section or a mortgage on a
trailer court or park, such mortgage shall not exceed
the amount which the Commissioner estimates will be
the cost of the completed physical improvements on
the property or project exclusive of public utilities and
streets and organization and legal expenses: Provided,
further, That this limitation shall not apply’’ before ‘‘to
mortgages on housing in Alaska.’’
Subsec. (c)(3). Pub. L. 88–560, § 107(a), changed limits
on mortgages for property or project attributable to
dwelling use from ‘‘$2,500 per room (or $9,000 per family
unit if the number of rooms in such property or project
is less than four per family unit)’’ to ‘‘$9,000 per family
unit without a bedroom, $12,500 per family unit with
one bedroom, $15,000 per family unit with two bedrooms, and $18,500 per family unit with three or more
bedrooms’’, changed such mortgage limits on project
consisting of elevator-type structures from a sum ‘‘of

§ 1713

TITLE 12—BANKS AND BANKING

$2,500 per room to not exceed $3,000 per room and the
dollar amount limitation of $9,000 per family unit to
not exceed $9,400 per family unit’’ to dollar amount
limitations ‘‘per family unit to not to exceed $10,500 per
family unit without a bedroom, $15,000 per family unit
with one bedroom, $18,000 per family unit with two bedrooms, and $22,500 per family unit with three or more
bedrooms’’, and substituted provision authorizing an
increase ‘‘by not to exceed 45 per centum’’ of any of
such limits because of cost levels for former provision
authorizing such an increase ‘‘by not to exceed $1,250
per room without regard to the number of rooms being
less than four, or four or more’’.
Subsec. (g). Pub. L. 88–560, § 105(b), inserted provision
for termination of mortgagee’s obligation to pay premium charges on the mortgage.
Subsec. (k). Pub. L. 88–560, § 108, struck out second
sentence providing for mandatory acquisition or foreclosure within one year of multifamily project in default.
1961—Subsec. (b)(2). Pub. L. 87–70, § 607(1), struck out
provisions from first paragraph which limited the Commissioner’s authority to insure mortgages to property
held by private corporations, associations, cooperative
societies which are legal agents of owner-occupants, or
trusts formed or created for the purpose of rehabilitating slum or blighted areas, or providing housing for
rent or sale.
Subsec. (c)(3). Pub. L. 87–70, § 607(2), (3), inserted ‘‘(excluding exterior land improvements as defined by the
Commissioner)’’ and substituted ‘‘$1,800 per space’’ for
‘‘$1,500 per space’’.
Subsec. (i). Pub. L. 87–70, § 607(4), permitted debentures issued pursuant to the provisions of section
1715k(f), 1715l(g), and 1715x of this title to be dated as of
the date the mortgage is assigned (or the property is
conveyed) to the Commissioner.
1960—Subsec. (a)(7). Pub. L. 86–624 struck out ‘‘Hawaii,’’ before ‘‘Puerto Rico’’.
1959—Subsec. (a)(7). Pub. L. 86–70, § 10(a), struck out
‘‘Alaska,’’ before ‘‘Hawaii’’.
Subsec. (b). Pub. L. 86–372, § 104(e)(1), struck out exceptions that related to housing for elderly persons
from the two unnumbered paragraphs following par. (2).
Subsec. (c). Pub. L. 86–372, § 104(c), (e)(2), struck out
provisions that authorized insurance of mortgages not
more than $8,100 if the entire property or project was
specially designed for the use and occupancy of elderly
persons and the mortgagor is a financially qualified
nonprofit organization, and substituted in the unnumbered paragraph following par. (3) ‘‘51⁄4 per centum per
annum’’ for ‘‘41⁄2 per centum per annum’’.
Subsec. (c)(1). Pub. L. 86–372, § 104(a), substituted
‘‘$20,000,000’’ for ‘‘$12,500,000’’.
Subsec. (c)(2). Pub. L. 86–70, § 10(b), substituted ‘‘Alaska’’ for ‘‘the Territory of Alaska’’.
Subsec. (c)(3). Pub. L. 86–372, § 104(b), substituted
‘‘$2,500’’ for ‘‘$2,250’’ in two places, ‘‘$9,000’’ for ‘‘$8,100’’
in two places, ‘‘$3,000’’ for ‘‘$2,700’’, ‘‘$9,400’’ for ‘‘$8,400’’,
‘‘$1,250 per room’’ for ‘‘$1,000 per room’’, ‘‘$1,500 per
space’’ for ‘‘$1,000 per space’’, and ‘‘$500,000’’ for
‘‘$300,000’’.
Subsec. (f). Pub. L. 86–372, § 104(e)(3), substituted ‘‘sections 1715a, 1715e, 1715v, and 1715w of this title’’ for
‘‘sections 1715a and 1715e of this title’’ in two places.
Subsec. (r). Pub. L. 86–372, § 104(d), added subsec. (r).
1957—Subsec. (c). Pub. L. 85–104, § 110, inserted in unnumbered paragraph following par. (3), ‘‘(or $8,400 per
family unit in the case of projects to consist of elevator-type structures)’’ and ‘‘and may permit single elderly persons to use and occupy such units’’.
Subsec. (c)(3). Pub. L. 85–104, § 109, struck out ‘‘per
room’’ after ‘‘limitations’’, and inserted ‘‘without regard to the number of rooms being less than four, or
four or more,’’.
Subsec. (i). Pub. L. 85–104, § 108(b), substituted in second sentence, ‘‘established by the Commissioner pursuant to section 1715o of this title’’ for ‘‘determined by
the Commissioner, with the approval of the Secretary
of the Treasury, at the time the mortgage was insured,
but not to exceed 3 per centum per annum’’.

Page 562

Subsec. (q). Pub. L. 85–104, § 111, repealed provisions
which related to insurance of mortgages by Federal National Mortgage Association. See section 1715e of this
title.
1956—Subsec. (b). Act Aug. 7, 1956, § 104(b), inserted
‘‘(except provisions relating to housing for elderly persons)’’ before ‘‘to take’’ in paragraph following par. (2),
and inserted ‘‘(except with respect to housing designed
for elderly persons, with occupancy preference therefor,
as provided in the paragraph following paragraph (3) of
subsection (c) of this section)’’ after ‘‘hereunder’’ in
second unnumbered par. following par. (2).
Subsec. (c). Act Aug. 7, 1956, § 104(c), substituted provisions of unnumbered par. following par. (3) that in
certain housing for elderly persons, the mortgage may
involve a principal obligation of $8,100 per family unit
and 90 percent of the replacement cost, for former provisions that if the number of bedrooms is equal or exceeds two per family unit, and the principal obligation
does not exceed $7,200 per family unit, the mortgage
may involve a principal obligation not in excess of 90
percent of the value of the property.
Subsec. (c)(2). Act Aug. 7, 1956, § 103(a), substituted
‘‘90 per centum’’ for ‘‘80 per centum’’.
Subsec. (c)(3). Act Aug. 7, 1956, § 103(b), increased limits on mortgages from $2,000 per room to $2,250 per
room, from $7,200 to $8,100 where the number of rooms
in the project is less than 4 per family unit, from $2,400
to $2,700 per room and $7,500 to $8,400 per family unit for
elevator type structures, and inserted provision allowing Commissioner to increase dollar amount limitations by not to exceed $1,000 per room.
1955—Subsec. (a). Act Aug. 11, 1955, § 102(b)(1), (2), inserted provisions relating to trailer coach mobile
dwellings in par. (1)(B), and included space in a trailer
court or park in the definition of ‘‘rental housing’’ in
par. (6).
Subsec. (c). Act Aug. 11, 1955, § 102(b)(5), amended last
paragraph to authorize insurance of mortgages on rental properties having eight or more family units.
Subsec. (c)(1). Act Aug. 11, 1955, § 102(c), increased
from $5,000,000 to $12,500,000 the limitation on the maximum amount of a mortgage.
Subsec. (c)(2). Act Aug. 11, 1955, § 102(b)(3), inserted
‘‘or mortgage on a trailer court or park’’.
Subsec. (c)(3). Act Aug. 11, 1955, § 102(b)(4), inserted
‘‘or not to exceed $1,000 per space or $300,000 per mortgage for trailer courts or parks’’.
1954—Subsec. (c)(2). Act Aug. 2, 1954, § 115(1), (2), inserted the proviso relating to mortgage insurance with
respect to construction in slum or blighted areas, and
inserted the reference to Guam.
Subsec. (c)(3). Act Aug. 2, 1954, § 115(3), struck out the
$10,000 per family-unit limitation, and inserted provisions permitting an increase in the limitations of $2,000
per room and $7,200 per family unit (less than four
rooms) to $2,400, and $7,500, respectively, for elevatortype structures.
Subsec. (d). Act Aug. 2, 1954, § 116, inserted in first
sentence ‘‘of the Housing Insurance Fund’’ after ‘‘debentures’’.
Subsec. (h). Act Aug. 2, 1954, § 117, at end of first sentence, inserted provision relating to inclusion of foreclosure costs, costs of acquisition, and costs of conveyance to the Commissioner.
Subsec. (i). Act Aug. 2, 1954, § 112(b), substituted in
second sentence a twenty-year period for the ten-year
period, with respect to the maturity of debentures.
1953—Subsec. (c). Act June 30, 1953, § 5(a), added par.
following par. (3).
Subsec. (c)(2). Act June 30, 1953, § 5(a), substituted ‘‘80
per centum of the estimated value of the property or
project (when the proposed improvements are completed)’’ for limitation of 90 per centum of value attributable to dwelling use up to $7,000 per family unit, 60
per centum of such value over $7,000 and up to $10,000,
and 90 per centum of value attributable to non-dwelling
use.
Subsec. (c)(3). Act June 30, 1953, § 5(a), substituted
provisions for maximum mortgage amount of $2,000 per

Page 563

§ 1713

TITLE 12—BANKS AND BANKING

room (or $7,200 per family unit if the number of rooms
does not equal or exceed four per family unit), up to
$10,000 per family unit, for provisions which fixed a limitation of $8,100 per family unit (or $7,200 if the number
of rooms was less than four per family unit), provided
for amortization of the mortgage and rate of interest,
provided for consent to release of part of mortgaged
property, prohibited acceptance of mortgages on properties not economically sound, and provided for inclusion with mortgaged properties adequate commercial
and community facilities.
Subsec. (i). Act June 30, 1953, § 5(b), substituted in second sentence, ‘‘ten’’ years for ‘‘twenty’’ years.
1952—Subsec. (a)(7). Act July 14, 1952, inserted
‘‘Guam,’’ after ‘‘District of Columbia,’’.
1951—Subsec. (c)(2). Act Sept. 1, 1951, § 605, in cl. (i),
substituted ‘‘of the property or project attributable to
dwelling use’’ for ‘‘of the property or project’’; in cl.
(ii), inserted ‘‘and’’ after ‘‘unit’’; and added cl. (iii).
Subsec. (c)(3). Act Sept. 1, 1951, § 605, substituted
‘‘four per family unit’’ for ‘‘four and one-half per family
unit’’.
Subsec. (i). Act Sept. 1, 1951, § 604(b), substituted in
second sentence the provision that such debentures
shall mature twenty years after the date thereof, for
the provision that they should mature three years after
the first day of July following the maturity date of the
mortgage in exchange for which the debentures were issued.
1950—Act Apr. 20, 1950, § 122, substituted ‘‘Commissioner’’ for ‘‘Administrator’’ wherever appearing.
Subsec. (b). Act Apr. 20, 1950, § 106, added last two unnumbered pars.
Subsec. (c)(2). Act Apr. 20, 1950, § 107(1), provided that
the mortgage would not exceed 90% of the first $7,000
estimated value of the property and 60% of such estimated value in excess of $7,000 and not in excess of
$10,000.
Subsec. (c)(3). Act Apr. 20, 1950, § 107(2), (3), provided
a dollar mortgage limitation of $8,100 per family unit or
$7,200 per family unit if the number of rooms did not
equal or exceed four and one-half per family unit, and
struck out ‘‘, except that with respect to mortgages insured under the provisions of the second proviso of
paragraph (2) of this subsection, which mortgages are
authorized to have a maturity of not exceeding forty
years from the date of insurance of the mortgage, such
interest rate shall not exceed 4 per centum per annum’’
in first sentence of last par.
Subsec. (d). Act Apr. 20, 1950, § 108, struck out ‘‘onehalf of’’ before ‘‘1 per centum’’ in proviso.
Subsec. (f). Act Apr. 20, 1950, § 109, inserted ‘‘and section 1715e’’ before ‘‘of this title’’ wherever appearing.
Subsec. (g). Act Apr. 20, 1950, § 110, inserted ‘‘and any
mortgage insurance premiums paid after default’’ after
‘‘preservation of the property’’ in cl. (C) of last sentence, and substituted proviso of last sentence for the
one reading ‘‘That the mortgagee in event of a default
under the mortgage, may, at its option and in accordance with rules and regulations to be prescribed by the
Commissioner, proceed to foreclose on or otherwise acquire the property as provided in the case of a mortgage which is in default under section 1715a of this title
and receive the benefits of the insurance as provided in
such section’’.
Subsec. (h). Act Apr. 20, 1950, § 111, substituted ‘‘under
this section’’ after ‘‘claim issued’’ in first sentence for
‘‘by the Commissioner to any mortgagee upon the assignment of the mortgage to the Commissioner’’.
Subsec. (i). Act Apr. 20, 1950, § 112, struck out first
sentence and substituted ‘‘Debentures issued under this
section shall be executed in the name of the Housing
Insurance Fund as obligor, shall be signed by the Commissioner by either his written or engraved signature,
shall be negotiable, and shall be dated as of the date of
default as determined in subsection (g) of this section
and shall bear interest from such date’’.
1948—Subsec. (b)(1) Act Aug. 10, 1948, § 101(m), substituted ‘‘restricted by Federal or State laws or regulations of State banking or insurance departments’’ for

‘‘formed under and restricted by Federal or State housing laws’’.
Subsec. (c). Act Aug. 10, 1948, § 101(n)(1)–(3), amended
first sentence generally, inserted ‘‘except that with respect to mortgages insured under the provisions of the
second proviso of paragraph numbered (2) of this subsection, which mortgages are hereby authorized to have
a maturity of not exceeding forty years from the date
of the insurance of the mortgage, such interest rate
shall not exceed 4 per centum per annum’’ at end of second sentence, and inserted last sentence.
Act July 1, 1948, inserted proviso.
Subsec. (g). Act Aug. 10, 1948, § 101(o), substituted, in
cl. (ii), ‘‘(1)’’ for ‘‘(2)’’.
Subsec. (h). Act Aug. 10, 1948, § 101(p), substituted ‘‘retained by the Housing Administrator and credited to
the Housing Insurance Fund’’ for ‘‘paid to the mortgagor of such property’’.
Subsec. (q). Act Aug. 10, 1948, § 101(r), added subsec.
(q).
1941—Subsec. (a)(1). Act Mar. 28, 1941, § 4(b)(1), struck
out ‘‘district or territory’’.
Subsec. (a)(7). Act Mar. 28, 1941, § 4(b)(2), added par.
(7).
1939—Subsec. (c). Act June 3, 1939, amended first sentence generally.
1938—Act of Feb. 3, 1938, amended section generally.
1935—Act Aug. 23, 1935, inserted ‘‘property’’ before
‘‘project’’ in last sentence.
EFFECTIVE DATE OF 1983 AMENDMENT
Pub. L. 98–181, title I [title IV, § 431(c)], Nov. 30, 1983,
97 Stat. 1220, provided that: ‘‘The amendments made in
this section [amending this section and section 1715y of
this title] shall not apply with respect to mortgages insured by the Secretary of Housing and Urban Development before the date of the enactment of this Act [Nov.
30, 1983].’’
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
EFFECTIVE DATE OF 1954 AMENDMENT
Amendment by section 112(b) of act Aug. 2, 1954, as
not applicable in any case where the mortgage involved
was insured or the commitment for the insurance was
issued prior to Aug. 2, 1954, see section 112(e) of that
act, set out as a note under section 1710 of this title.
REPEALS
The directory language of, but not the amendment
made by, Pub. L. 90–301, § 3(b), May 7, 1968, 82 Stat. 114,
cited as a credit to this section, was repealed by Pub.
L. 98–181, title I [title IV, § 404(a)], Nov. 30, 1983, 97 Stat.
1208.
REGULATIONS
Pub. L. 102–550, title V, § 509(h), Oct. 28, 1992, 106 Stat.
3783, provided that: ‘‘The Secretary of Housing and
Urban Development shall issue regulations necessary
to carry out the amendments made by subsections (a)
through (g) [amending this section and sections 1715e,
1715k, 1715l, 1715v, and 1715y of this title], which shall
take effect not later than the expiration of the 1-year
period beginning on the date of the enactment of this
Act [Oct. 28, 1992].’’
TERMINATION OF TRUST TERRITORY OF THE PACIFIC
ISLANDS
For termination of Trust Territory of the Pacific Islands, see note set out preceding section 1681 of Title
48, Territories and Insular Possessions.
DELEGATION OF PROCESSING OF MORTGAGE INSURANCE
Pub. L. 101–625, title III, § 328, Nov. 28, 1990, 104 Stat.
4138, as amended by Pub. L. 102–242, title II, § 226, Dec.
19, 1991, 105 Stat. 2307, provided that:

§ 1714

TITLE 12—BANKS AND BANKING

‘‘(a) AUTHORITY.—Not later than the expiration of the
60-day period beginning on the date of enactment this
Act [Nov. 28, 1990], the Secretary of Housing and Urban
Development shall implement a system of mortgage insurance for mortgages insured under section 207, 221,
223, 232, or 241 of the National Housing Act [12 U.S.C.
1713, 1715l, 1715n, 1715w, 1715z–6] that delegates processing functions to selected approved mortgagees or other
individuals and entities expressly approved by the Department of Housing and Urban Development. Under
such system, the Secretary shall retain the authority
to approve rents, expenses, property appraisals, and
mortgage amounts and to execute a firm commitment.
‘‘(b) FULL INSURANCE PROGRAM.—Notwithstanding
subsection (a), the Secretary shall maintain a viable
system for full insurance programs under such Act
[this chapter] under which all processing functions are
performed by officers and employees of the Department
of Housing and Urban Development.’’
LIMITATION ON NUMBER OF DWELLING UNITS WITH
MORTGAGES NOT PROVIDING FOR COMPLETE AMORTIZATION

Pub. L. 98–181, title I [title IV, § 446(f)], Nov. 30, 1983,
97 Stat. 1228, provided that: ‘‘The aggregate number of
dwelling units included in properties covered by mortgages insured pursuant to the authority granted in the
amendments made by this section [amending sections
1713, 1715k, 1715l, and 1715v of this title] in any fiscal
year may not exceed 10,000.’’
AMENDMENTS TO PROVISIONS FOR FAMILY UNIT LIMITS
ON RENTAL HOUSING; EQUITABLE APPLICATION OF
SUCH AMENDMENTS OR PRE-AMENDMENT PROVISIONS
TO PROJECTS SUBMITTED FOR CONSIDERATION PRIOR
TO SEPTEMBER 2, 1964
Pub. L. 88–560, title I, § 107(g), Sept. 2, 1964, 78 Stat.
776, as amended by Pub. L. 90–19, § 21(a), May 25, 1967, 81
Stat. 25, provided that if the Secretary of Housing and
Urban Development determined that it would be inequitable to apply the provisions of the National Housing Act as amended by section 107 [amending sections
1713, 1715e, 1715k, 1715l, 1715v, and 1748h–2 of this title]
to a project which had been submitted for his consideration prior to Sept. 2, 1964, such provisions could be applied to such project without regard to the amendments made by section 107.

§ 1714. Taxation
Nothing in this subchapter shall be construed
to exempt any real property acquired and held
by the Secretary under this subchapter from
taxation by any State or political subdivision
thereof, to the same extent, according to its
value, as other real property is taxed.
(June 27, 1934, ch. 847, title II, § 208, 48 Stat. 1252;
Feb. 3, 1938, ch. 13, § 3, 52 Stat. 22; Apr. 20, 1950,
ch. 94, title I, § 122, 64 Stat. 59; Pub. L. 90–19,
§ 1(a)(3), May 25, 1967, 81 Stat. 17.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’.
1938—Act Feb. 3, 1938, corrected error in spelling of
‘‘subdivision’’.

§ 1715. Statistical and economic surveys
The Secretary shall cause to be made in connection with the insurance programs such statistical surveys and legal and economic studies
as he shall deem useful to guide the development of housing and the creation of a sound
mortgage market in the United States, and shall

Page 564

publish from time to time the results of such
surveys and studies. Expenses of such studies
and surveys, and expenses of publication and
distribution of the results of such studies and
surveys, shall be charged as a general expense of
such insurance fund or funds, as the Secretary
shall determine.
(June 27, 1934, ch. 847, title II, § 209, 48 Stat. 1252;
Feb. 3, 1938, ch. 13, § 3, 52 Stat. 22; Mar. 28, 1941,
ch. 31, § 4(c), 55 Stat. 62; Apr. 20, 1950, ch. 94, title
I, § 122, 64 Stat. 59; Pub. L. 87–70, title VI, § 612(d),
June 30, 1961, 75 Stat. 181; Pub. L. 89–117, title XI,
§ 1108(f), Aug. 10, 1965, 79 Stat. 504; Pub. L. 90–19,
§ 1(a)(3), (f), May 25, 1967, 81 Stat. 17, 18.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing and inserted ‘‘in connection with the insurance programs’’ after ‘‘made’’.
1965—Pub. L. 89–117 struck out ‘‘or account or accounts,’’ after ‘‘fund or funds,’’.
1961—Pub. L. 87–70 substituted ‘‘shall be charged as a
general expense of such insurance fund or funds, or account or accounts, as the Commissioner shall determine’’ for ‘‘shall be charged as a general expense of the
Fund, the Housing Fund, and the Defense Housing Insurance Fund in such proportion as the Commissioner
shall determine’’.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.
1941—Act Mar. 28, 1941, substituted ‘‘Fund, the Housing Fund, and the Defense Housing Insurance Fund’’ for
‘‘Fund and the Housing Fund’’.
1938—Act Feb. 3, 1938, inserted ‘‘and the Housing
Fund in such proportion as the Administrator shall determine’’ after ‘‘Fund’’.

§ 1715a. Repealed. June 3, 1939, ch. 175, § 13, 53
Stat. 807
Section, act June 27, 1934, ch. 847, title II, § 210, as
added by act Feb. 3, 1938, ch. 13, § 3, 52 Stat. 22, related
to additional housing insurance.
APPLICATIONS PRIOR TO REPEAL
Act June 3, 1939, ch. 175, § 13, 53 Stat. 807, which repealed this section, also provided: ‘‘That the Administrator is authorized to insure under said section [this
section] any mortgage for the insurance of which an application has been filed with him prior to the effective
date of this act [June 3, 1939].’’

§ 1715b. Rules and regulations
The Secretary is authorized and directed to
make such rules and regulations as may be necessary to carry out the provisions of this subchapter.
(June 27, 1934, ch. 847, title II, § 211, as added Feb.
3, 1938, ch. 13, § 3, 52 Stat. 23; amended Apr. 20,
1950, ch. 94, title I, § 122, 64 Stat. 59; Pub. L. 90–19,
§ 1(a)(3), May 25, 1967, 81 Stat. 17.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’.
REGULATIONS
Pub. L. 98–479, title I, § 104(f), Oct. 17, 1984, 98 Stat.
2226, required Secretary of Housing and Urban Development, not later than Oct. 31, 1984, to issue regulations
to carry out amendments made to section 1715z–7 of
this title by section 436 of Housing and Urban-Rural Recovery Act of 1983, Pub. L. 98–181, title I [titles I–V].

Page 565

TITLE 12—BANKS AND BANKING

§ 1715c. Labor standards
(a) The Secretary shall not insure under section 1713 or section 1715a of this title or under
section 1743 of this title pursuant to any application for insurance filed subsequent to the effective date of this section, or under section 1715e
of this title, or under subchapter VII pursuant
to any application filed subsequent to sixty days
after April 20, 1950, or under section 1748b or
1748h–2 of this title, or under section 1750g of
this title, a mortgage or investment which covers property on which there is or is to be located
a dwelling or dwellings, or a housing project, the
construction of which was or is to be commenced subsequent to such date, unless the principal contractor files a certificate or certificates
(at such times, in course of construction or
otherwise, as the Secretary may prescribe) certifying that the laborers and mechanics employed in the construction of the dwelling or
dwellings or the housing project involved have
been paid not less than the wages prevailing in
the locality in which the work was performed
for the corresponding classes of laborers and mechanics employed on construction of a similar
character, as determined by the Secretary of
Labor, in accordance with sections 3141–3144,
3146, and 3147 of title 40, prior to the beginning
of construction and after the date of the filing of
the application for insurance. The provisions of
this section shall also apply to the insurance of
any loan or mortgage under section 1715k or section 1715x of this title which covers property on
which there is located a dwelling or dwellings
designed principally for residential use for
twelve or more families. The provisions of this
section shall apply to the insurance under section 1715l of this title of any mortgage described
in subsection (d)(3) or (d)(4) and (deeming the
term ‘‘construction’’ as used in the first sentence of this subsection to mean rehabilitation)
of any mortgage described in subsection (h)(1) or
section 1715z(j)(1) of this title which covers property on which there is located a dwelling or
dwellings designed principally for residential
use for more than eight families; except that
compliance with such provisions may be waived
by the Secretary—
(1) with respect to mortgages described in
such subsection (d)(3) or (d)(4), in cases or
classes of cases where laborers or mechanics
(not otherwise employed at any time in the
construction of the project) voluntarily donate their services without compensation for
the purpose of lowering their housing costs in
a cooperative housing project and the Secretary determines that any amounts saved
thereby are fully credited to the cooperative
undertaking the construction, and
(2) with respect to mortgages described in
such subsection (h)(1) or section 1715z(j)(1) of
this title, in cases or classes of cases where
prospective owners of such dwellings, voluntarily donate their services without compensation, or other persons (not otherwise employed
at any time in the rehabilitation of the property) voluntarily donate their services without compensation, and the Secretary determines that any amounts saved thereby are
fully credited to the nonprofit organization
undertaking the rehabilitation.

§ 1715c

The provisions of this section shall also apply to
the insurance of any mortgage under sections
1715v, 1715w, or 1715z–1 of this title except that
compliance with such provisions may be waived
by the Secretary in cases or classes of cases
where laborers or mechanics, not otherwise employed at any time on the project, voluntarily
donate their services without full compensation
for the purpose of lowering the costs of construction and the Secretary determines that any
amounts thereby saved are fully credited to the
nonprofit corporation, association, or other organization undertaking the construction. The
provisions of this section shall also apply to the
insurance of any mortgage under section
1715y(d) of this title. The provisions of this section shall also apply to the insurance of any
mortgage under section 1715z–7 of this title, except that compliance with such provisions may
be waived by the Secretary in cases or classes of
cases where laborers or mechanics, not otherwise employed at any time on the project, voluntarily donate their services without compensation for the purpose of lowering the costs
of construction and the Secretary determines
that any amounts thereby saved are fully credited to the nonprofit corporation, association, or
other organization undertaking the construction; and each laborer or mechanic employed on
any facility covered by a mortgage insured
under section 1715z–7 of this title shall receive
compensation at a rate not less than one and
one-half times his basic rate of pay for all hours
worked in any workweek in excess of eight
hours in any workday or forty hours in the
workweek, as the case may be. The provisions of
this section shall also apply to the insurance of
any mortgage under subchapter IX–B; and each
laborer or mechanic employed on any facility
covered by a mortgage insured under such subchapter IX–B shall receive compensation at a
rate not less than one and one-half times his
basic rate of pay for all hours worked in any
workweek in excess of eight hours in any workday or forty hours in the workweek, as the case
may be.
(b) The Secretary is authorized to make such
rules and regulations as may be necessary to
carry out the provisions of this section.
(c) There is authorized to be appropriated for
the remainder of the fiscal year ending June 30,
1939, and for each fiscal year thereafter, a sum
sufficient to meet all necessary expenses of the
Department of Labor in making the determinations provided for in subsection (a).
(June 27, 1934, ch. 847, title II, § 212, as added
June 3, 1939, ch. 175, § 14, 53 Stat. 807; amended
May 26, 1942, ch. 319, § 10, 56 Stat. 303; Aug. 8,
1949, ch. 403, § 3, 63 Stat. 576; Apr. 20, 1950, ch. 94,
title I, §§ 113, 122, 64 Stat. 54, 59; Sept. 1, 1951, ch.
378, title II, § 203, 65 Stat. 303; Aug. 2, 1954, ch.
649, title I, § 118, 68 Stat. 595; Pub. L. 86–372, title
I, § 110(f), title II, § 201(b), title VII, § 704(c), Sept.
23, 1959, 73 Stat. 661, 667, 686; Pub. L. 87–70, title
VI, § 612(e), June 30, 1961, 75 Stat. 181; Pub. L.
88–349, § 3, July 2, 1964, 78 Stat. 239; Pub. L.
88–560, title I, § 119(b), Sept. 2, 1964, 78 Stat. 782;
Pub. L. 89–117, title I, § 102(c), title II, § 201(b)(4),
Aug. 10, 1965, 79 Stat. 454, 465; Pub. L. 89–754,
title III, § 311, title V, § 503, Nov. 3, 1966, 80 Stat.
1270, 1277; Pub. L. 90–19, § 1(a) (3), May 25, 1967, 81

§ 1715d

TITLE 12—BANKS AND BANKING

Stat. 17; Pub. L. 90–448, title I, § 101(d), title II,
§ 201(b)(1), title XV, § 1502, Aug. 1, 1968, 82 Stat.
484, 501, 600; Pub. L. 91–609, title I, § 110(c), Dec.
31, 1970, 84 Stat. 1772; Pub. L. 101–235, title I,
§ 133(d)(2), Dec. 15, 1989, 103 Stat. 2027.)
REFERENCES IN TEXT
Section 1715a of this title, referred to in subsec. (a),
which related to additional housing insurance, was repealed by section 13 of act June 3, 1939, ch. 175, 53 Stat.
807.
Effective date of this section, referred to in subsec.
(a), probably means June 3, 1939, the date of enactment
of act June 3, 1939.
Subsections (d)(3), (d)(4), and (h)(1), referred to in subsec. (a), are references to such subsections in section
1715l of this title.
CODIFICATION
‘‘Sections 3141–3144, 3146, and 3147 of title 40’’ substituted in subsec. (a) for ‘‘the Davis-Bacon Act, as
amended’’ on authority of Pub. L. 107–217, § 5(c), Aug.
21, 2002, 116 Stat. 1303, the first section of which enacted
Title 40, Public Buildings, Property, and Works.
AMENDMENTS
1989—Subsec. (a). Pub. L. 101–235 struck out seventh
sentence which read as follows: ‘‘The provisions of this
section shall also apply to insurance under subchapter
IX–A of this chapter with respect to laborers and mechanics employed in land development financed with
the proceeds of any mortgage insured under that subchapter.’’
1970—Subsec. (a). Pub. L. 91–609 inserted reference to
other organization in sixth sentence.
1968—Subsec. (a). Pub. L. 90–448 inserted references to
sections 1715z(j)(1) and 1715z–1 of this title, and made
provisions of this section applicable to the insurance of
mortgages under section 1715z–7 of this title, permitted
waiver of compliance in cases or classes of cases where
laborers or mechanics, not otherwise employed on the
project, voluntarily donate their services without compensation for the purpose of lowering costs and savings
are fully credited to the nonprofit corporation or association, and required payment of overtime to laborers
or mechanics employed on facilities covered by a mortgage insured under section 1715z–7 of this title.
1967—Subsecs. (a), (b). Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.
1966—Subsec. (a). Pub. L. 89–754 defined ‘‘construction’’ in third sentence, made provisions of this section
applicable to mortgage described in subsec. (h)(1) covering property improved with residential dwellings for
use by more than eight families, provided for waiver of
requirement of compliance with respect to mortgages
described in subsec. (d)(3) or (d)(4) and subsec. (h)(1),
made the provisions of this section applicable to insurance of mortgage under subchapter IX–B of this chapter, and provided for overtime compensation for work
on group practice facilities covered by mortgage insurance under such subchapter IX–B.
1965—Subsec. (a). Pub. L. 89–117 substituted ‘‘described in subsection (d)(3) or (d)(4)’’ for ‘‘described in
subsection (d)(3) in the case of a cooperative or a limited profit mortgagor, or in subsection (d)(4) thereof’’,
and applied provisions of this section to insurance
under subchapter IX–A of this chapter with respect to
laborers and mechanics employed in land development
financed with the proceeds of any mortgage insured
under that subchapter.
1964—Subsec. (a). Pub. L. 88–560 inserted provision
that this section shall also apply to the insurance of
any mortgage under section 1715y(d) of this title.
Pub. L. 88–349 inserted ‘‘in accordance with the DavisBacon Act, as amended’’.
1961—Subsec. (a). Pub. L. 87–70 made section applicable to the insurance of mortgages under section 1715x of
this title and to insurance under section 1715l of this

Page 566

title of mortgages described in subsec. (d)(3) thereof in
the case of a cooperative or a limited profit mortgagor.
1959—Subsec. (a). Pub. L. 86–372 substituted ‘‘or under
section 1748b or 1748h–2 of this title’’ for ‘‘or under subchapter VIII of this chapter’’, and inserted provisions
making this section applicable to the insurance under
section 1715 of this title of any mortgage described in
subsection (d)(4) thereof, and to the insurance of any
mortgage under section 1715v or 1715w of this title.
1954—Subsec. (a). Act Aug. 2, 1954, inserted sentence
making section applicable to insurance of any mortgage under section 1715k of this title which covers property on which is located a dwelling or dwellings designed principally for residential use for twelve or more
families.
1951—Subsec. (a). Act Sept. 1, 1951, inserted reference
to section 1750g of this title after ‘‘subchapter VIII of
this chapter,’’.
1950—Act Apr. 20, 1950, § 122, substituted ‘‘Commissioner’’ for ‘‘Administrator’’ wherever appearing.
Subsec. (a). Act Apr. 20, 1950, § 113, substituted ‘‘or
under section 213 of this title, or under title VII pursuant to any application filed subsequent to sixty days
after the date of enactment of the Housing Act of 1950,
or under title VIII, a mortgage or investment’’ for ‘‘or
under subchapter VIII of this chapter’’.
1949—Subsec. (a). Act Aug. 8, 1949, inserted ‘‘, or
under subchapter VIII of this chapter’’ after ‘‘effective
date of this section’’.
1942—Subsec. (a). Act May 26, 1942, inserted reference
to section 1743 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Pub. L. 88–349, § 4, July 2, 1964, 78 Stat. 240, provided
that: ‘‘The amendments made by this Act [amending
this section, section 276a of former Title 40, Public
Buildings, Property, and Works, and section 1114 of
former Title 49, Transportation] shall take effect on
the ninetieth day after the date of enactment of this
Act [July 2, 1964], but shall not affect any contract in
existence on such effective date or made thereafter pursuant to invitations for bids outstanding on such effective date and the rate of payments specified by section
1(b)(2) of the Act of March 3, 1931, as amended by this
Act [now 40 U.S.C. 3141(2)(B)], shall, during a period of
two hundred and seventy days after such effective date,
become effective only in those cases and reasonable
classes of cases as the Secretary of Labor, acting as
rapidly as practicable to make such rates of payments
fully effective, shall by rule of regulation provide.’’
ENFORCEMENT OF LABOR STANDARDS
Labor standards under provisions of this section to be
prescribed and enforced by Secretary of Labor, see
Reorg. Plan No. 14 of 1950, eff. May 24, 1950, 15 F.R. 3176,
64 Stat. 1267, set out in the Appendix to Title 5, Government Organization and Employees.

§ 1715d. Insurance of mortgages on property in
Alaska, Guam, Hawaii, and Virgin Islands
If the Secretary of Housing and Urban Development finds that, because of higher costs prevailing in Alaska, Guam, Hawaii, or the Virgin
Islands, it is not feasible to construct dwellings
or manufactured home courts or parks on property located in Alaska, Guam, Hawaii, or the
Virgin Islands without sacrifice of sound standards of construction, design, or livability, within the limitations as to maximum or maxima
mortgage amounts provided in this chapter, the
Secretary may, by regulations or otherwise, prescribe, with respect to dollar amount, a higher
maximum or maxima for the principal obligation of mortgages insured under this chapter
covering property located in Alaska, Guam, Hawaii, or the Virgin Islands in such amounts as
he shall find necessary to compensate for such

Page 567

§ 1715d

TITLE 12—BANKS AND BANKING

higher costs but not to exceed, in any event, the
maximum or maxima otherwise applicable (including increased mortgage amounts in geographical areas where cost levels so require) by
more than one-half thereof. No mortgage with
respect to a project or property in Alaska,
Guam, Hawaii, or the Virgin Islands shall be accepted for insurance under this chapter unless
the Secretary finds that the project or property
is an acceptable risk giving consideration to the
acute housing shortage in Alaska, Guam, Hawaii, or the Virgin Islands: Provided, That any
such mortgage may be insured or accepted for
insurance without regard to any requirement in
any other section of this chapter that the Secretary find the project or property to be economically sound or an acceptable risk. Notwithstanding any of the provisions of this chapter or
any other law, the Alaska Housing Authority or
the Government of Guam, the Virgin Islands, or
Hawaii or any agency or instrumentality thereof shall be eligible as mortgagor or mortgagee,
as the case may be, for any of the purposes of
mortgage insurance under the provisions of this
chapter. Upon application by the mortgagee (1)
where the mortgagor is regulated or restricted
pursuant to the last sentence of this section or
(2) where the Alaska Housing Authority or the
Government of Guam, the Virgin Islands, or Hawaii or any agency or instrumentality thereof is
the mortgagor or mortgagee, for the insurance
of a mortgage under any provisions of this chapter, the Secretary is authorized to insure the
mortgage (including advances thereon where
otherwise authorized), and to make commitments for the insuring of any such mortgages
prior to the date of their execution or disbursement thereon, under such provision (and this
section) without regard to any requirement that
the mortgagor shall have paid a prescribed
amount on account of such property. Without
limiting the authority of the Secretary under
any other provision of law, the Secretary is authorized, with respect to any mortgagor in such
case (except where the Alaska Housing Authority is the mortgagor or mortgagee), to require
the mortgagor to be regulated or restricted as to
rents or sales, charges, capital structure, rate of
return, and methods of operation to such an extent and in such manner as the Secretary determines advisable to provide reasonable rentals
and sales prices and a reasonable return on the
investment.
(June 27, 1934, ch. 847, title II, § 214, as added Apr.
23, 1949, ch. 89, § 2(a), 63 Stat. 57; amended Sept.
1, 1951, ch. 378, title VI, § 606, 65 Stat. 315; July 14,
1952, ch. 723, § 10(a)(3), 66 Stat. 603; June 30, 1953,
ch. 170, § 25(a), (c), 67 Stat. 128; Pub. L. 86–70,
§ 10(c), June 25, 1959, 73 Stat. 142; Pub. L. 86–372,
title I, § 106, Sept. 23, 1959, 73 Stat. 657; Pub. L.
90–19, § 1(a)(2), (3), May 25, 1967, 81 Stat. 17; Pub.
L. 91–152, title IV, § 418(e), Dec. 24, 1969, 83 Stat.
402; Pub. L. 96–399, title III, § 308(c)(1), Oct. 8,
1980, 94 Stat. 1640; Pub. L. 98–479, title II,
§ 204(a)(4), Oct. 17, 1984, 98 Stat. 2232; Pub. L.
100–242, title IV, § 406(b)(7), Feb. 5, 1988, 101 Stat.
1901; Pub. L. 101–625, title III, § 333, Nov. 28, 1990,
104 Stat. 4141.)

1246, which is classified principally to this chapter
(§ 1701 et seq.). For complete classification of this Act
to the Code, see Tables.
CODIFICATION
Section is comprised of section 214 of act June 27,
1934, as added by section 2(a) of act Apr. 23, 1949, which
insofar as Alaska, Hawaii, and Guam individually are
concerned, was, formerly, also set out as sections 484d,
723, and 1425 of Title 48, Territories and Insular Possessions. Section 2(b) of act Apr. 23, 1949, which was formerly classified to sections 484e, 724 and 1426 of Title 48,
was repealed by act Aug. 2, 1954, ch. 649, title II, § 205,
68 Stat. 622.
AMENDMENTS
1990—Pub. L. 101–625 amended section catchline generally, inserting reference to Virgin Islands, substituted ‘‘Alaska, Guam, Hawaii, or the Virgin Islands,’’ for ‘‘Alaska, Guam, or Hawaii,’’ after ‘‘costs
prevailing in’’, ‘‘Alaska, Guam, Hawaii, or the Virgin
Islands’’ for ‘‘Alaska or in Guam or Hawaii’’ wherever
appearing, and inserted ‘‘, the Virgin Islands,’’ after
‘‘Government of Guam’’ wherever appearing.
1988—Pub. L. 100–242 struck out ‘‘shall be the owner
and occupant of the property or’’ before ‘‘shall have
paid a prescribed amount’’ in fourth sentence.
1984—Pub. L. 98–479 substituted ‘‘Insurance of mortgages on property in Alaska, Guam, and Hawaii’’ for
‘‘Construction of dwellings or mobile home courts or
parks in Alaska, Guam, and Hawaii; increased maximum for mortgage insurance; conditions and limitations’’ in section catchline, and substituted ‘‘Notwithstanding’’ for ‘‘Nowithstanding’’ at beginning of third
sentence.
1980—Pub. L. 96–399 substituted ‘‘manufactured’’ for
‘‘mobile’’.
1969—Pub. L. 91–152 extended to mobile home courts
or parks the special provisions applicable to properties
located in Alaska, Guam, or Hawaii.
1967—Pub. L. 90–19 substituted ‘‘Secretary of Housing
and Urban Development’’ for ‘‘Federal Housing Commissioner’’ and ‘‘Secretary’’ for ‘‘Commissioner’’, respectively, wherever appearing.
1959—Pub. L. 86–372 inserted ‘‘(including increased
mortgage amounts in geographical areas where cost
levels so require)’’ after ‘‘maximum or maxima otherwise applicable’’.
Pub. L. 86–70 substituted ‘‘Alaska, Guam,’’ for ‘‘the
Territory of Alaska or in Guam’’.
1953—Act June 30, 1953, § 25(a), inserted ‘‘or Hawaii’’
after ‘‘Guam’’ wherever appearing.
Act June 30, 1953, § 25(c), substituted in fourth sentence ‘‘Upon application by the mortgagee (1) where
the mortgagor is regulated or restricted pursuant to
the last sentence of this section or (2)’’ for ‘‘Upon application by the mortgagee,’’; and inserted sentence beginning ‘‘Without limiting the authority’’.
1952—Act July 14, 1952, inserted ‘‘or in Guam’’ after
‘‘Alaska’’ wherever appearing, inserted ‘‘or maxima’’
after ‘‘maximum,’’ and inserted ‘‘or the Government of
Guam or any agency or instrumentality thereof’’ after
‘‘Alaska Housing Authority’’ wherever appearing.
1951—Act Sept. 1, 1951, substituted ‘‘one-half’’ for
‘‘one-third’’ in first sentence.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100–242 applicable only with
respect to mortgages insured pursuant to conditional
commitment issued on or after Feb. 5, 1988, or in accordance with direct endorsement program (24 CFR
200.163), if approved underwriter of mortgagee signs appraisal report for property on or after Feb. 5, 1988, see
section 406(d) of Pub. L. 100–242, set out as a note under
section 1709 of this title.

REFERENCES IN TEXT

STUDY AND REPORT RESPECTING UTILIZATION OF FACTORY-BUILT AND OTHER APPROPRIATE TYPES OF
HOUSING FOR INDIAN, ETC., HOUSING PROGRAMS

This chapter, referred to in text, was in the original
‘‘this Act’’, meaning act June 27, 1934, ch. 847, 48 Stat.

Pub. L. 96–399, title III, § 323, Oct. 8, 1980, 94 Stat. 1647,
directed Secretary of Housing and Urban Development

§ 1715e

TITLE 12—BANKS AND BANKING

to study feasibility of utilizing factory-built and other
appropriate types of housing (other than the traditional type of site-built housing), to the extent practicable, in carrying out housing programs for Indians
and Alaskan Natives, and not later than eighteen
months after Oct. 8, 1980, to transmit a report to Congress containing the findings and conclusions of such
study, including a comparison of costs and benefits of
utilizing the traditional type of site-built housing and
of utilizing other types of housing in situations in
which either type of housing could be used.
TERMINATION OF PURCHASES OF OBLIGATIONS
No additional notes or obligations to be purchased
after June 24, 1954, from funds appropriated pursuant to
the Alaska Housing Act, as amended, which is classified, in part, to this section, see section 1701g–5 of this
title, and References in Text note thereunder.
REVOLVING FUND
Establishment of revolving fund under which to account for assets and liabilities in connection with notes
and other obligations purchased pursuant to the Alaska
Housing Act, as amended, which is classified, in part,
to this section, see section 1701g–5 of this title, and References in Text note thereunder.
ADMISSION OF ALASKA AND HAWAII TO STATEHOOD
Alaska was admitted into the Union on Jan. 3, 1959,
on issuance of Proc. No. 3269, Jan. 3, 1959, 24 F.R. 81, 73
Stat. c16, and Hawaii was admitted into the Union on
Aug. 21, 1959, on issuance of Proc. No. 3309, Aug. 21, 1959,
24 F.R. 6868. 73 Stat. c74. For Alaska Statehood Law,
see Pub. L. 85–508, July 7, 1958, 72 Stat. 339, set out as
a note preceding section 21 of Title 48, Territories and
Insular Possessions. For Hawaii Statehood Law, see
Pub. L. 86–3, Mar. 18, 1959, 73 Stat. 4, set out as a note
preceding section 491 of Title 48.

§ 1715e. Cooperative housing insurance
(a) Projects insurable
In addition to mortgages insured under section 1713 of this title, the Secretary is authorized to insure mortgages as defined in section
1713(a) of this title (including advances on such
mortgages during construction), which cover
property held by—
(1) a nonprofit cooperative ownership housing corporation or nonprofit cooperative ownership housing trust, the permanent occupancy of the dwellings of which is restricted to
members of such corporation or to beneficiaries of such trust;
(2) a nonprofit corporation or nonprofit trust
organized for the purpose of construction of
homes for members of the corporation or for
beneficiaries of the trust; or
(3) a mortgagor, approved by the Secretary
which (A) has certified to the Secretary, as a
condition of obtaining the insurance of a
mortgage under this section, that upon completion of the property or project covered by
such mortgage it intends to sell such property
or project to a nonprofit corporation or nonprofit trust of the character described in paragraph (1) of this subsection at the actual cost
of such property or project as certified pursuant to section 1715r of this title and will faithfully and diligently make and carry out all
reasonable efforts to consummate such sale,
and (B) shall be regulated or restricted by the
Secretary as to rents, charges, capital structure, rate of return, and methods of operation
during any period while it holds the mort-

Page 568

gaged property or project; and for such purpose the Secretary may make such contracts
with, and acquire for not to exceed $100 such
stock or interest in, any such mortgagor as
the Secretary may deem necessary to render
effective such restriction or regulation, such
stock or interest to be paid for out of the Cooperative Management Housing Insurance
Fund and to be redeemed by such mortgagor
at par upon the sale of such property or
project to such nonprofit corporation or nonprofit trust;
which corporations or trusts referred to in paragraphs (1) and (2) of this subsection are regulated or restricted for the purposes and in the
manner provided in paragraphs (1) and (2) of subsection (b) of section 1713 of this title: Provided,
That as applied to mortgages the mortgage insurance for which is the obligation of the Management Fund, the reference to the General Insurance Fund in section 1713(b)(2) of this title
shall be construed to refer to the Management
Fund. Nothing in this section may be construed
to prevent membership in a nonprofit housing
cooperative from being held in the name of a
trust, the beneficiary of which shall occupy the
dwelling unit in accordance with rules and regulations prescribed by the Secretary.
(b) Eligibility conditions for projects under subsection (a)(1) of this section
To be eligible for insurance under this section
a mortgage on any property or project of a corporation or trust of the character described in
paragraph (1) of subsection (a) of this section
shall involve a principal obligation in an
amount—
(1) Repealed. Pub. L. 93–383, title III, § 304(b),
Aug. 22, 1974, 88 Stat. 678.
(2)(A) not to exceed, for such part of the
property or project as may be attributable to
dwelling use (excluding exterior land improvements as defined by the Secretary), $41,207 per
family unit without a bedroom, $47,511 per
family unit with one bedroom, $57,300 per family unit with two bedrooms, $73,343 per family
unit with three bedrooms, and $81,708 per family unit with four or more bedrooms, and not
to exceed 98 per centum of the amount which
the Secretary estimates will be the replacement cost of the property or project when the
proposed physical improvements are completed: Provided, That as to projects to consist
of elevator-type structures the Secretary may,
in his discretion, increase the dollar amount
limitations per family unit to not to exceed
$43,875 per family unit without a bedroom,
$49,710 per family unit with one bedroom,
$60,446 per family unit with two bedrooms,
$78,197 per family unit with three bedrooms,
and $85,836 per family unit with four or more
bedrooms, as the case may be, to compensate
for the higher costs incident to the construction of elevator-type structures of sound
standards of construction and design; (B)(i)
the Secretary may, by regulation, increase
any of the dollar amount limitations in subparagraph (A) (as such limitations may have
been adjusted in accordance with section 1712a
of this title) by not to exceed 170 percent in
any geographical area where the Secretary

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TITLE 12—BANKS AND BANKING

finds that cost levels so require and by not to
exceed 170 percent, or 215 percent in high cost
areas, where the Secretary determines it necessary on a project-by-project basis, but in no
case may any such increase exceed 90 percent
where the Secretary determines that a mortgage purchased or to be purchased by the Government National Mortgage Association in implementing its special assistance functions
under section 1720 1 of this title (as such section existed immediately before November 30,
1983) is involved; and (ii) in the case of a mortgagor of the character described in paragraph
(3) of subsection (a) the mortgage shall involve
a principal obligation in an amount not to exceed 90 per centum of the amount which the
Secretary estimates will be the replacement
cost of the property or project when the proposed physical improvements are completed;
and (iii) upon the sale of a property or project
by a mortgagor of the character described in
paragraph (3) of subsection (a) to a nonprofit
cooperative ownership housing corporation or
trust within two years after the completion of
such property or project the mortgage given
to finance such sale shall involve a principal
obligation in an amount not to exceed the
maximum amount computed in accordance
with this subparagraph (B)(i)..2
(c) Eligibility conditions for projects under subsection (a)(2) of this section
To be eligible for insurance under this section
a mortgage on any property or project of a corporation or trust of the character described in
paragraph (2) of subsection (a) of this section
shall involve a principal obligation in an
amount not to exceed a sum computed on the
basis of a separate mortgage for each singlefamily dwelling (irrespective of whether such
dwelling has a party wall or is otherwise physically connected with another dwelling or dwellings) comprising the property or project, equal
to the total of each of the maximum principal
obligations of such mortgages which would meet
the requirements of section 1709(b)(2) of this
title if the mortgagor were the owner and occupant who had made any required payment on account of the property prescribed in such paragraph.
(d) Amortization; release from mortgage lien; individual insurance; commercial and community facilities
Any mortgage insured under this section shall
provide for complete amortization by periodic
payments within such term as the Secretary
may prescribe but not to exceed 40 years from
the beginning of amortization of the mortgage,
and shall bear interest at such rate as may be
agreed upon by the mortgagor and the mortgagee. The Secretary may consent to the release of
a part or parts of the mortgaged property from
the lien of the mortgage upon such terms and
conditions as he may prescribe and the mortgage may provide for such release, and a mortgage on any project of a corporation or trust of
the character described in paragraph (2) of subsection (a) of this section may provide that, at
1 See
2 So

References in Text note below.
in original.

§ 1715e

any time after the completion of the construction of the project, such mortgage may be replaced, in whole or in part, by individual mortgages covering each individual dwelling in the
project in amounts not to exceed the unpaid balance of the blanket mortgage allocable to the
individual property. Each such individual mortgage may be insured under this section. Property covered by a mortgage, insured under this
section, on a property or project of a corporation or trust of the character described in paragraph (1) of subsection (a) of this section may
include five or more family units and may include such commercial and community facilities
as the Secretary deems adequate to serve the occupants. Property held by a corporation or trust
of the character described in paragraph numbered (2) of subsection (a) of this section which
is covered by a mortgage insured under this section may include such community facilities, and
property held by a mortgagor of the character
described in paragraph numbered (3) of subsection (a) of this section which is covered by a
mortgage insured under this section may include such commercial and community facilities, as the Secretary deems adequate to serve
the occupants.
(e) Applicability of sections 1710 and 1713 of this
title
The provisions of subsections (d), (e), (g), (h),
(i), (j), (k), (l), and (n) of section 1713 of this title
shall be applicable to mortgages insured under
this section except individual mortgages insured
pursuant to subsection (d) of this section covering the individual dwellings in the project, and
as to such individual mortgages the provisions
of subsections (a), (c), (d), (e), (f), (g), (h),1 (j),
and (k) 1 of section 1710 of this title shall be applicable: Provided, That as applied to mortgages
or loans the insurance for which is the obligation of the Management Fund (1) all references
to the General Insurance Fund shall be construed to refer to the Management Fund, and (2)
all references to section 1713 of this title shall be
construed to refer to subsections (a)(1), (a)(3) (if
the project involved is acquired by a cooperative
corporation), (i), and (j) of this section.
(f) Technical advice and assistance
The Secretary is authorized, with respect to
mortgages insured or to be insured under this
section, to furnish technical advice and assistance in the organization of corporations or
trusts of the character described in subsection
(a) of this section and in the planning, development, construction, and operation of their housing projects.
(g) Housing projects designed for single person
occupancy
Nothing in this chapter shall be construed to
prevent the insurance of a mortgage under this
section covering a housing project designed for
occupancy by single persons, and dwelling units
in such a project shall constitute family units
within the meaning of this section.
(h) Failure to sell to a nonprofit organization
In the event that a mortgagor of the character
described in paragraph (3) of subsection (a) obtains an insured mortgage loan pursuant to this

§ 1715e

TITLE 12—BANKS AND BANKING

section and fails to sell the property or project
covered by such mortgage to a nonprofit housing
corporation or nonprofit housing trust of the
character described in paragraph (1) of subsection (a), the Secretary is authorized to
refuse, for such period of time as he shall deem
appropriate under the circumstances, to insure
under this section any additional investor-sponsor type mortgage loans made to such mortgagor or to any other investor-sponsor mortgagor
where, in the determination of the Secretary,
any of its stockholders were identified with such
mortgagor.
(i) Mortgages executed by consumer cooperatives covering existing structures
Nothing in this chapter shall be construed to
prevent the insurance of a mortgage executed by
a mortgagor of the character described in paragraph (1) of subsection (a) of this section covering property upon which dwelling units and related facilities have been constructed prior to
the filing of the application for mortgage insurance hereunder: Provided, That the Secretary determines that the consumer interest is protected and that the mortgagor will be a consumer cooperative. In the case of properties
other than new construction, the limitations in
this section upon the amount of the mortgage
shall be based upon the appraised value of the
property for continued use as a cooperative
rather than upon the Secretary’s estimate of the
replacement cost. As to any project on which
construction was commenced after September
23, 1959, the mortgage on such project shall be
eligible for insurance under this section only in
those cases where the construction was subject
to inspection by the Secretary and where there
was compliance with the provisions of section
1715c of this title. As to any project on which
construction was commenced prior to September 23, 1959, such inspection, and compliance
with the provisions of section 1715c of this title,
shall not be a prerequisite.
(j) Insurance of supplementary cooperative loans
(1) With respect to any property covered by a
mortgage insured under this section (or any cooperative housing project covered by a mortgage
insured under section 1713 of this title as in effect prior to April 20, 1950), the Secretary is authorized, upon such terms and conditions as he
may prescribe, to make commitments to insure
and to insure supplementary cooperative loans
(including advances during construction or improvement) made by financial institutions approved by the Secretary. The Secretary is further authorized to make commitments to insure
and to insure supplementary cooperative loans
(including advances during construction or improvement) with respect to any property purchased from the Federal Government by a nonprofit corporation or trust of the character described in paragraph (1) of subsection (a), if the
property is covered by an uninsured mortgage
representing a part of the purchase price. As
used in this subsection ‘‘supplementary cooperative loan’’ means a loan, advance of credit, or
purchase of an obligation representing a loan or
advance of credit made for the purpose of financing any of the following:
(A) Improvements or repairs of the property
covered by such mortgage;

Page 570

(B) Community facilities necessary to serve
the occupants of the property; or
(C) Cooperative purchases and resales of
memberships in order to provide necessary refinancing for resales of memberships which involve increases in equity; but in such resales
by the cooperative the downpayments by the
new members shall not be less than those
made on the original sales of such memberships.
(2) To be eligible for insurance under this subsection, a supplementary cooperative loan
shall—
(A) be limited to an amount which, when
added to the outstanding mortgage indebtedness on the property, creates a total outstanding indebtedness which does not exceed the
original principal obligation of the mortgage;
except that, in the case of improvements or
additional community facilities, the outstanding indebtedness may be increased by an
amount equal to 97 per centum of the amount
which the Secretary estimates will be the
value of such improvements or facilities, and
the new outstanding indebtedness may exceed
the original principal obligation of the mortgage if such new outstanding indebtedness
does not exceed the limitations imposed by
subsection (b);
(B) have a maturity satisfactory to the Secretary but not to exceed the remaining term
of the mortgage; except that, in the case of repairs or improvements to a property covered
by an uninsured mortgage dated more than
twenty years prior to the date of the commitment to insure, of such magnitude that the
Secretary deems them to be a major rehabilitation or modernization of such property, the
loan may have a maturity date up to ten years
in excess of the remaining term of the uninsured mortgage;
(C) be secured in such manner as the Secretary may require;
(D) contain such other terms, conditions,
and restrictions as the Secretary may prescribe; and
(E) represent the obligation of a borrower of
the character described in paragraph (1) of
subsection (a).
(k) Cooperative Management Housing Insurance
Fund
There is hereby created a Cooperative Management Housing Insurance Fund (hereinafter referred to as the ‘‘Management Fund’’). The Management Fund shall be used by the Secretary as
a revolving fund for carrying out the provisions
of this section with respect to mortgages or
loans insured, on or after August 10, 1965, under
subsections (a)(1), (a)(3) (if the project is acquired by a cooperative corporation), (i), and (j).
The Management Fund shall also be used as a
revolving fund for mortgages, loans, and commitments transferred to it pursuant to subsection (m). The Secretary is directed to transfer to the Management Fund from the General
Insurance Fund an amount equal to the total of
the premium payments theretofore made with
respect to the insurance of mortgages and loans
transferred to the Management Fund pursuant
to subsection (m) minus the total of any admin-

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TITLE 12—BANKS AND BANKING

istrative expenses theretofore incurred in connection with such mortgages and loans, plus
such other amounts as the Secretary determines
to be necessary and appropriate. General expenses of operation of the Department of Housing and Urban Development relating to mortgages or loans which are the obligation of the
Management Fund may be charged to the Management Fund.
(l) General Surplus Account; Participating Reserve Account
The Secretary shall establish in the Management Fund, as of August 10, 1965, a General Surplus Account and a Participating Reserve Account. The aggregate net income thereafter received or any net loss thereafter sustained by
the Management Fund, in any semiannual period, shall be credited or charged to the General
Surplus Account or the Participating Reserve
Account or both in such manner and amounts as
the Secretary may determine to be in accord
with sound actuarial and accounting practice.
Upon termination of the insurance obligation of
the Management Fund by payment of any mortgage or loan insured under this section, and at
such time or times prior to such termination as
the Secretary may determine, the Secretary is
authorized to distribute to the mortgagor or
borrower a share of the Participating Reserve
Account in such manner and amount as the Secretary shall determine to be equitable and in accordance with sound actuarial and accounting
practice: Provided, That in no event shall the
amount of the distributable share exceed the aggregate scheduled annual premiums of the mortgagor or borrower to the year of payment of the
share less the total amount of any share or
shares previously distributed by the Secretary
to the mortgagor or borrower: And provided further, That in no event may a distributable share
be distributed until any funds transferred from
the General Insurance Fund to the Management
Fund pursuant to subsection (o) have been repaid in full to the General Insurance Fund. No
mortgagor, mortgagee, borrower, or lender shall
have any vested right in a credit balance in any
such account or be subject to any liability arising out of the mutuality of the Management
Fund. The determination of the Secretary as to
the amount to be paid by him to any mortgagor
or borrower shall be final and conclusive.
(m) Transfer of insurance to Management Fund
The Secretary is authorized to transfer to the
Management Fund commitments for insurance
issued under subsections (a)(1), (i), and (j) prior
to August 10, 1965, and to transfer to the Management Fund the insurance of any mortgage or
loan insured prior to August 10, 1965, under subsection (a)(1), (a)(3) (if the project is acquired by
a cooperative corporation), (i), or (j): Provided,
That the insurance of any mortgage or loan
shall not be transferred under the provisions of
this subsection if on August 10, 1965, the mortgage or loan is in default and the mortgagee or
lender has notified the Secretary in writing of
its intention to file an insurance claim. Any insurance or commitment not so transferred shall
continue to be an obligation of the General Insurance Fund.

§ 1715e

(n) Payment of premium charges in debentures
Notwithstanding the limitations contained in
other provisions of this chapter, premium
charges for mortgages or loans the insurance of
which is the obligation of either the Management Fund or the General Insurance Fund may
be payable in debentures issued in connection
with mortgages or loans transferred to the Management Fund or in connection with mortgages
or loans insured pursuant to commitments
transferred to the Management Fund, as provided in subsection (m) of this section. Premium
charges on the insurance of mortgages or loans
transferred to the Management Fund or insured
pursuant to commitments transferred to the
Management Fund may be payable in debentures which are the obligation of either the
Management Fund or the General Insurance
Fund.
(o) Transfer of funds between Management Fund
and General Insurance Fund; investment of
monies
Notwithstanding any other provision of this
chapter the Secretary is authorized to transfer
funds between the Cooperative Management
Housing Insurance Fund and the General Insurance Fund in such amounts and at such times as
he may determine, taking into consideration the
requirements of each such Fund, to assist in carrying out effectively the insurance programs for
which such Funds were respectively established.
Moneys in the Cooperative Management Housing Insurance Fund not needed for current operations of the fund shall be deposited with the
Treasurer of the United States to the credit of
the Cooperative Management Housing Insurance
Fund or invested in bonds or other obligations
of, or in bonds or other obligations guaranteed
as to principal and interest by, the United
States or any agency of the United States: Provided, That such moneys shall to the maximum
extent feasible be invested in such bonds or
other obligations the proceeds of which will be
used to directly support the residential mortgage market. The Secretary may, with the approval of the Secretary of the Treasury, purchase in the open market debentures which are
the obligations of the Cooperative Management
Housing Insurance Fund. Such purchases shall
be made at a price which will provide an investment yield of not less than the yield obtainable
from other investments authorized by this subsection. Debentures so purchased shall be canceled and not reissued.
(p) Increase in maximum mortgage amounts for
solar energy systems and energy conservation measures
Notwithstanding any other provision of this
section, the project mortgage amounts which
may be insured under this section may be increased by up to 20 per centum if such increase
is necessary to account for the increased cost of
the project due to the installation therein of a
solar energy system (as defined in subparagraph
(3) of the last paragraph of section 1703(a) of this
title) or residential energy conservation measures (as defined in section 8211(11)(A) through
(G) and (I) of title 42) 1 in cases where the Secretary determines that such measures are in ad-

§ 1715e

TITLE 12—BANKS AND BANKING

dition to those required under the minimum
property standards and will be cost-effective
over the life of the measure.
(June 27, 1934, ch. 847, title II, § 213, as added Apr.
20, 1950, ch. 94, title I, § 114, 64 Stat. 54; amended
Oct. 26, 1951, ch. 577, § 4, 65 Stat. 648; June 30,
1953, ch. 170, § 6, 67 Stat. 123; Aug. 2, 1954, ch. 649,
title I, §§ 119, 120, 68 Stat. 595, 596; Aug. 11, 1955,
ch. 783, title I, § 102(c)–(e), 69 Stat. 635; Aug. 7,
1956, ch. 1029, title I, § 105(a)–(c), 70 Stat. 1093,
1094; Pub. L. 85–104, title I, § 112, July 12, 1957, 71
Stat. 297; Pub. L. 86–372, title I, §§ 105, 116(b),
Sept. 23, 1959, 73 Stat. 655, 664; Pub. L. 87–70, title
VI, § 608, June 30, 1961, 75 Stat. 179; Pub. L.
88–560, title I, §§ 107(b), 109(a), Sept. 2, 1964, 78
Stat. 774, 777; Pub. L. 89–117, title II, §§ 207(b), 208,
title XI, § 1108(g), Aug. 10, 1965, 79 Stat. 467, 468,
505; Pub. L. 89–754, title III, §§ 303, 304, Nov. 3,
1966, 80 Stat. 1266, 1267; Pub. L. 90–19, § 1(a)(1), (3),
(4), May 25, 1967, 81 Stat. 17; Pub. L. 90–301, § 3(c),
May 7, 1968, 82 Stat. 114; Pub. L. 90–488, title III,
§ 313, title XVII, § 1722(e), Aug. 1, 1968, 82 Stat.
511, 610; Pub. L. 91–152, title I, § 113(c), Dec. 24,
1969, 83 Stat. 383; Pub. L. 91–609, title I, § 117(b),
Dec. 31, 1970, 84 Stat. 1774; Pub. L. 93–383, title
III, §§ 303(b), 304(b), (c), 311(b), Aug. 22, 1974, 88
Stat. 677, 678, 683; Pub. L. 94–173, § 3, Dec. 23, 1975,
89 Stat. 1027; Pub. L. 94–375, § 8(a), (b)(2), Aug. 3,
1976, 90 Stat. 1071; Pub. L. 96–153, title III, § 314,
Dec. 21, 1979, 93 Stat. 1117; Pub. L. 96–399, title
III, § 310(b), Oct. 8, 1980, 94 Stat. 1642; Pub. L.
97–35, title III, § 339B(a), Aug. 13, 1981, 95 Stat.
417; Pub. L. 97–253, title II, § 201(c), Sept. 8, 1982,
96 Stat. 789; Pub. L. 97–377, title I, § 101(g), Dec.
21, 1982, 96 Stat. 1908; Pub. L. 98–181, title I [title
IV, §§ 404(b)(5), 423(b)(2)], Nov. 30, 1983, 97 Stat.
1209, 1216; Pub. L. 100–242, title IV, § 426(b), (h),
Feb. 5, 1988, 101 Stat. 1915, 1916; Pub. L. 102–550,
title V, § 509(b), Oct. 28, 1992, 106 Stat. 3783; Pub.
L. 103–233, title III, § 306, Apr. 11, 1994, 108 Stat.
373; Pub. L. 106–74, title II, § 221, Oct. 20, 1999, 113
Stat. 1076; Pub. L. 107–73, title II, § 213(b), Nov.
26, 2001, 115 Stat. 676; Pub. L. 107–326, § 5(b)(2),
Dec. 4, 2002, 116 Stat. 2794; Pub. L. 108–186, title
III, § 302(b), (c)(2), Dec. 16, 2003, 117 Stat. 2692;
Pub. L. 110–161, div. K, title II, § 221(1), Dec. 26,
2007, 121 Stat. 2436.)
REFERENCES IN TEXT
Section 1720 of this title, referred to in subsec.
(b)(2)(B)(i), was repealed by Pub. L. 98–181, title I [title
IV, § 483(a)], Nov. 30, 1983, 97 Stat. 1240.
Subsection (h) of section 1710 of this title, referred to
in subsec. (e), was redesignated subsec. (i) by Pub. L.
105–276, title VI, § 602(1), Oct. 21, 1998, 112 Stat. 2674.
Subsection (k) of section 1710 of this title, referred to
in subsec. (e), was repealed by Pub. L. 105–276, title VI,
§ 601(c), Oct. 21, 1998, 112 Stat. 2673.
This chapter, referred to in subsecs. (g), (i), (n) and
(o), was in the original ‘‘this Act’’, meaning act June
27, 1934, ch. 847, 48 Stat. 1246, which is classified principally to this chapter (§ 1701 et seq.). For complete
classification of this Act to the Code, see Tables.
Section 8211 of title 42, referred to in subsec. (p), was
omitted from the Code pursuant to section 8229 of Title
42, The Public Health and Welfare, which terminated
authority under that section on June 30, 1989.
AMENDMENTS
2007—Subsec. (b)(2)(B)(i). Pub. L. 110–161 substituted
‘‘170 percent’’ for ‘‘140 percent’’ after ‘‘not to exceed’’ in
two places and ‘‘215 percent in high cost areas’’ for ‘‘170
percent in high cost areas’’.

Page 572

2003—Subsec. (b)(2)(A). Pub. L. 108–186, § 302(c)(2), substituted ‘‘$41,207’’, ‘‘$47,511’’, ‘‘$57,300’’, ‘‘$73,343’’,
‘‘$81,708’’, ‘‘$49,710’’, ‘‘$60,446’’, ‘‘$78,197’’, and ‘‘$85,836’’
for ‘‘$38,025’’, ‘‘$42,120’’, ‘‘$50,310’’, ‘‘$62,010’’, ‘‘$70,200’’,
‘‘$49,140’’, ‘‘$60,255’’, ‘‘ $75,465’’, and ‘‘$85,328’’, respectively.
Subsec. (b)(2)(B)(i). Pub. L. 108–186, § 302(b), substituted ‘‘140 percent in’’ for ‘‘110 percent in’’ and inserted ‘‘, or 170 percent in high cost areas,’’ after ‘‘and
by not to exceed 140 percent’’.
2002—Subsec. (b)(2). Pub. L. 107–326 inserted subpar.
(A) designation after ‘‘(2)’’ and substituted ‘‘; (B)(i) the
Secretary may, by regulation, increase any of the dollar amount limitations in subparagraph (A) (as such
limitations may have been adjusted in accordance with
section 1712a of this title)’’ for ‘‘: Provided further, That
the Secretary may, by regulation, increase any of the
foregoing dollar amount limitations contained in this
paragraph’’, ‘‘; and (ii) in the case of a mortgagor’’ for
‘‘: Provided further, That in the case of a mortgagor’’,
‘‘; and (iii) upon the sale of a property’’ for ‘‘: And provided further, That upon the sale of a property’’, and
‘‘with this subparagraph (B)(i).’’ for ‘‘with this subsection without regard to the preceding proviso’’.
2001—Subsec. (b)(2). Pub. L. 107–73 substituted
‘‘$38,025’’, ‘‘$42,120’’, ‘‘$50,310’’, ‘‘$62,010’’, and ‘‘$70,200’’
for ‘‘$30,420’’, ‘‘$33,696’’, ‘‘$40,248’’, ‘‘$49,608’’, and
‘‘$56,160’’, respectively, and ‘‘$43,875’’, ‘‘$49,140’’,
‘‘$60,255’’, ‘‘$75,465’’, and ‘‘$85,328’’ for ‘‘$35,100’’,
‘‘$39,312’’, ‘‘$48,204’’, ‘‘$60,372’’, and ‘‘$68,262’’, respectively.
1999—Subsec. (a). Pub. L. 106–74 inserted at end
‘‘Nothing in this section may be construed to prevent
membership in a nonprofit housing cooperative from
being held in the name of a trust, the beneficiary of
which shall occupy the dwelling unit in accordance
with rules and regulations prescribed by the Secretary.’’.
1994—Subsec. (b)(2). Pub. L. 103–233 substituted
‘‘$56,160’’ for ‘‘$59,160’’.
1992—Subsec. (b)(2). Pub. L. 102–550 substituted
‘‘$30,420’’, ‘‘$33,696’’, ‘‘$40,248’’, ‘‘$49,608’’, and ‘‘$59,160’’
for ‘‘$25,350’’, ‘‘$28,080’’, ‘‘$33,540’’, ‘‘$41,340’’, and
‘‘$46,800’’, respectively, and ‘‘$35,100’’, ‘‘$39,312’’,
‘‘$48,204’’, ‘‘$60,372’’, and ‘‘$68,262’’ for ‘‘$29,250’’,
‘‘$32,760’’, ‘‘$40,170’’, ‘‘$50,310’’, and ‘‘$56,885’’, respectively.
1988—Subsec. (b)(2). Pub. L. 100–242 substituted
‘‘$25,350’’, ‘‘$28,080’’, ‘‘$33,540’’, ‘‘$41,340’’, and ‘‘$46,800’’
for ‘‘$19,500’’, ‘‘$21,600’’, ‘‘$25,800’’, ‘‘$31,800’’, and
‘‘$36,000’’, respectively, and ‘‘$29,250’’, ‘‘$32,760’’,
‘‘$40,170’’, ‘‘$50,310’’, and ‘‘$56,885’’ for ‘‘$22,500’’,
‘‘$25,200’’, ‘‘$30,900’’, ‘‘$38,700’’, and ‘‘$43,758’’, respectively, and substituted ‘‘not to exceed 110 percent in
any geographical area where the Secretary finds that
cost levels so require and by not to exceed 140 percent
where the Secretary determines it necessary on a
project-by-project basis, but in no case may any such
increase exceed 90 percent where the Secretary determines that a mortgage purchased or to be purchased by
the Government National Mortgage Association in implementing its special assistance functions under section 1720 of this title (as such section existed immediately before November 30, 1983) is involved’’ for ‘‘not
to exceed 75 per centum in any geographical area where
he finds that cost levels so require, except that, where
the Secretary determines it necessary on a project by
project basis, the foregoing dollar amount limitations
contained in this paragraph may be exceeded by not to
exceed 90 per centum (by not to exceed 140 per centum
where the Secretary determines that a mortgage other
than one purchased or to be purchased under section
1720 of this title by the Government National Mortgage
Association in implementing its special assistance
functions is involved) in such an area’’.
1983—Subsec. (b)(2). Pub. L. 98–181, § 423(b)(2), struck
out ‘‘: Provided further, That the foregoing maximum
mortgage amounts may be increased by the amount of
the mortgage insurance premium paid at the time the
mortgage is insured’’ after ‘‘involved) in such area’’.

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Subsec. (d). Pub. L. 98–181, § 404(b)(5), substituted provision that the interest rate for the mortgage be such
a rate as agreed upon by the mortgagor and mortgagee
for provision that the rate of interest, exclusive of premium charges for insurance, not exceed 51⁄4 per centum
per annum on the amount of the principal obligation
outstanding at any time, or not exceed such per centum per annum not in excess of 6 per centum per
annum as the Secretary finds necessary to meet the
mortgage market.
1982—Subsec. (b)(2). Pub. L. 97–377 inserted ‘‘(by not
to exceed 140 per centum where the Secretary determines that a mortgage other than one purchased or to
be purchased under section 1720 of this title by the Government National Mortgage Association in implementing its special assistance functions is involved)’’ after
‘‘90 per centum’’.
Pub. L. 97–253 inserted provision that the foregoing
maximum mortgage amounts may be increased by the
amount of the mortgage insurance premium paid at the
time the mortgage is insured.
1981—Subsec. (p). Pub. L. 97–35 inserted ‘‘therein’’
after ‘‘installation’’ and struck out ‘‘therein’’ after
‘‘measure’’.
1980—Subsec. (p). Pub. L. 96–399 added subsec. (p).
1979—Subsec. (b)(2). Pub. L. 96–153 in second proviso
substituted ‘‘75 per centum’’ for ‘‘50 per centum’’, and
inserted exception that the dollar amount limitations
may be exceeded not to exceed 90 per centum where the
Secretary determines it necessary.
1976—Subsec. (b)(2). Pub. L. 94–375 substituted ‘‘50 per
centum in any geographical area’’ for ‘‘75 per centum in
any geographical area’’, ‘‘$19,500’’ for ‘‘$13,000’’,
‘‘$21,600’’ for ‘‘$18,000’’, ‘‘$25,800’’ for ‘‘$21,500’’, ‘‘$31,800’’
for ‘‘$26,500’’, ‘‘$36,000’’ for ‘‘$30,000’’, ‘‘$22,500’’ for
‘‘$15,000’’, ‘‘$25,200’’ for ‘‘$21,000’’, ‘‘$30,900’’ for ‘‘$25,750’’,
‘‘$38,700’’ for ‘‘$32,250’’, and ‘‘$43,758’’ for ‘‘$36,465’’.
1975—Subsec. (b)(2). Pub. L. 94–173 raised from 45 per
centum to 75 per centum the amount by which any dollar limitation may, by regulation, be increased.
1974—Subsec. (b)(1). Pub. L. 93–383, § 304(b), struck out
par. (1) which set forth limits on principal obligation of
not to exceed $20,000,000, or not to exceed $25,000,000 if
mortgage is executed by a mortgagor regulated under
Federal, State, local laws.
Subsec. (b)(2), Pub. L. 93–383, §§ 303(b), 311(b), substituted ‘‘$13,000’’ for ‘‘$9,900’’, ‘‘$15,000’’ for ‘‘$11,550’’,
‘‘$18,000’’ for ‘‘$13,750’’, ‘‘$21,000’’ for ‘‘$16,500’’, ‘‘$21,500’’
for ‘‘$16,500’’, ‘‘$25,750’’ for ‘‘$19,800’’, ‘‘$26,500’’ for
‘‘$20,350’’, ‘‘$30,000’’ for ‘‘$23,100’’, ‘‘$32,250’’ for ‘‘$24,750’’,
‘‘$36,465’’ for ‘‘$28,050’’, and ‘‘98 per centum’’ for ‘‘97 per
centum’’.
Subsec. (c). Pub. L. 93–383, § 304(c), struck out ‘‘not to
exceed $12,500,000 and’’ after ‘‘an amount’’.
1970—Subsec. (o). Pub. L. 91–609 provided for guarantee as to principal and interest by any agency of the
United States and for investment of monies in bonds or
other obligations the proceeds of which will be used to
directly support the residential mortgage market.
1969—Subsec. (b)(2). Pub. L. 91–152 substituted
‘‘$9,900’’ for ‘‘$9,000’’, ‘‘$11,550’’ for ‘‘$10,500’’, ‘‘$13,750’’
for ‘‘$12,500’’, ‘‘$16,500’’ for ‘‘$15,000’’ wherever appearing, ‘‘$19,800’’ for ‘‘$18,000’’, ‘‘$20,350’’ for ‘‘$18,500’’,
‘‘$23,100’’ for ‘‘$21,000’’, ‘‘$24,750’’ for ‘‘$22,500’’, and
‘‘$28,050’’ for ‘‘$25,500’’.
1968—Subsec. (d). Pub. L. 90–301 substituted provisions limiting interest rate on mortgages to such per
centum per annum not in excess of 6 per centum as the
Secretary finds necessary to meet the mortgage market for former provisions limiting the rate to 53⁄4 per
centum per annum on individual mortgages covering
individual dwellings in the project.
Subsec. (j)(1). Pub. L. 90–448, § 313(1), authorized the
Secretary to make commitments to insure and to insure supplementary cooperative loans with respect to
any property purchased from the Federal Government
by a nonprofit corporation or trust of the character described in subsec. (a) (1) of this section, if the property
is covered by an uninsured mortgage representing a
part of the purchase price.

§ 1715e

Subsec. (j)(2)(B). Pub. L. 90–448, § 313(2), permitted the
loan to have a maturity date up to ten years in excess
of the remaining term of the uninsured mortgage in the
case of repairs or improvements to a property covered
by an uninsured mortgage dated more than twenty
years prior to the date of the commitment to insure, of
such magnitude that the Secretary deems them to be a
major rehabilitation or modernization of such property.
Subsec. (o). Pub. L. 90–448, § 1722(e), required deposit
with the Treasurer or investment in bonds or other obligations of, or in bonds or obligations guaranteed as to
principal and interest by, the United States, of moneys
in the Cooperative Management Housing Insurance
Fund not needed for current operations of the fund, authorized purchase in the open market of debentures
which are obligations of the fund, and directed that debentures so purchased be canceled and not reissued.
1967—Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’
for ‘‘Commissioner’’ wherever appearing in subsecs. (a),
(a)(3), (b)(2), (d), (f), (h), (i), (j)(1), (2)(B), (C), (k) to (m),
and (o).
Subsec. (i). Pub. L. 90–19, § 1(a)(4), substituted ‘‘Secretary’s’’ for ‘‘Commissioner’s’’.
Subsec. (k). Pub. L. 90–19, § 1(a)(1), substituted ‘‘Department of Housing and Urban Development’’ for
‘‘Federal Housing Administration’’.
1966—Subsec. (j)(2)(A). Pub. L. 89–754, § 304, provided
that, in case of improvements or additional community
facilities, the outstanding indebtedness may be increased by an amount equal to 97 per centum of the
amount which the Secretary estimates will be the
value of such improvements or facilities, and the new
outstanding indebtedness may exceed the original principal obligation of the mortgage if such new outstanding indebtedness does not exceed the limitations imposed by subsec. (b) of this section.
Subsec. (k). Pub. L. 89–754, § 303(c)(1), directed the
Secretary rather than the Commissioner to transfer to
the Management Fund from the General Insurance
Fund an amount equal to the total of the premium payments theretofore made with respect to the insurance
of mortgages and loans transferred to the Management
Fund pursuant to subsec. (m) of this section minus the
total of any administrative expenses theretofore incurred in connection with such mortgages and loans.
Subsec. (l). Pub. L. 89–754, § 303(c)(2), struck out reference to subsec. (k) in second proviso.
Subsec. (m). Pub. L. 89–754, § 303(a), struck out before
the proviso ‘‘, but only in cases where the consent of
the mortgagee or lender to the transfer is obtained or
a request by the mortgagee or lender for the transfer is
received by the Commissioner within such period of
time after August 10, 1965, as the Commissioner shall
prescribe’’.
Subsec. (n). Pub. L. 89–754, § 303(b), substituted ‘‘the
insurance of which is the obligation of either the Management Fund or the General Insurance Fund’’ for ‘‘insured under this section and sections 1713, 1715v and
1715w of this title’’ and inserted provision for payment
of premium charges on the insurance of mortgages or
loans transferred to the Management Fund or insured
pursuant to commitments transferred to the Management Fund in debentures which are the obligation of either the Management Fund or the General Insurance
Fund.
1965—Subsec. (a). Pub. L. 89–117, §§ 208(b)(1), 1108(g)(1),
inserted proviso construing reference to General Insurance Fund in section 1713(b)(2) of this title as a reference to Management Fund and substituted ‘‘Cooperative Management Housing Insurance Fund’’ for ‘‘Housing Fund’’ in par. (3).
Subsec. (b)(2). Pub. L. 89–117, § 207(b)(1), substituted
‘‘$18,500 per family unit with three bedrooms, and
$21,000 per family unit with four or more bedrooms’’ for
‘‘and $18,500 per family unit with three or more bedrooms’’ and ‘‘$22,500 per family unit with three bedrooms, and $25,500 per family unit with four or more
bedrooms’’ for ‘‘and $22,500 per family unit with three
or more bedrooms’’.

§ 1715e

TITLE 12—BANKS AND BANKING

Subsec. (c). Pub. L. 89–117, § 207(b)(2), struck out limitation which prohibited the principal obligation from
exceeding a sum equal to the maximum amount which
does not exceed either of the limitations on the amount
of the principal obligations of the mortgage prescribed
by par. (2) of subsec. (b) of this section.
Subsec. (e). Pub. L. 89–177, §§ 208(b)(2), 1108(g)(2), inserted proviso construing all references to General Insurance Fund as references to Management Fund and
all references to section 1713 of this title as references
to subsecs. (a)(1), (a)(3), (i) and (j) of this section and
struck out reference to subsecs. (m) and (p) of section
1713 of this title.
Subsecs. (k) to (o). Pub. L. 89–117, § 208(a), added subsecs. (k) to (o).
1964—Subsec. (b)(2). Pub. L. 88–560, § 107(b), changed
limits on mortgages for property or project attributable to dwelling use from ‘‘$2,500 per room (or $9,000
per family unit if the number of rooms in such property
or project is less than four per family unit)’’ to ‘‘$9,000
per family unit without a bedroom, $12,500 per family
unit with one bedroom, $15,000 per family unit with two
bedrooms, and $18,500 per family unit with three or
more bedrooms’’, changed such mortgage limits on
project consisting of elevator-type structures from a
sum ‘‘of $2,500 per room to not exceed $3,000 per room
and the dollar amount limitation of $9,000 per family
unit to not exceed $9,400 per family unit’’ to dollar
amount limitations ‘‘per family unit to not to exceed
$10,500 per family unit without a bedroom, $15,000 per
family unit with one bedroom, $18,000 per family unit
with two bedrooms, and $22,500 per family unit with
three or more bedrooms’’, and substituted provision authorizing an increase ‘‘by not to exceed 45 per centum’’
of any of such limits because of cost levels for former
provision authorizing such an increase ‘‘by not to exceed $1,250 per room without regard to the number of
rooms being less than four, or four or more’’.
Subsec. (j)(1)(C). Pub. L. 88–560, § 109(a), added cl. (C).
1961—Subsec. (b)(2). Pub. L. 87–70, § 608(a)(1), inserted
‘‘(excluding exterior land improvements as defined by
the Commissioner)’’.
Subsec. (d). Pub. L. 87–70, § 608(a)(2), substituted ‘‘five
or more family units’’ for ‘‘eight or more family units’’.
Subsec. (h). Pub. L. 87–70, § 608(a)(3), substituted ‘‘the
Commissioner is authorized to refuse, for such period of
time as he shall deem appropriate under the circumstances, to insure under this section any additional investor-sponsor type mortgage loans made to such mortgagor or to any other investor-sponsor mortgagor
where, in the determination of the Commissioner, any
of its stockholders were identified with such mortgagor’’ for ‘‘such mortgagor shall not thereafter be eligible by reason of such paragraph (3) for insurance of any
additional mortgage loans pursuant to this section’’.
Subsec. (j). Pub. L. 87–70, § 608(b), added subsec. (j).
1959—Subsec. (b)(1). Pub. L. 86–372, § 105(a), substituted ‘‘$20,000,000’’ for ‘‘$12,500,000’’.
Subsec. (b)(2). Pub. L. 86–372, § 105(b), increased mortgage limits per room from $2,250 to $2,500 and per family unit from $8,100 to $9,000 for elevator type structures from $2,700 to $3,000 per room and from $8,400 to
$9,400 per family unit, maximum amount of loan from
90 per centum to 97 per centum of replacement cost and
in case of a mortgagor of character described in subsec.
(a)(3) of this section from 85 per centum to 90 per centum of replacement cost, changed authorization of
Commissioner to increase dollar amount limitation per
room where cost levels so require by increasing room
limit from $1,000 to $1,250, and struck out provisions
which authorized a loan of 95 per centum of replacement cost if 50 per centum of membership consisted of
veterans.
Subsec. (d). Pub. L. 86–372, § 105(c), (d), substituted
‘‘51⁄4 per centum’’ for ‘‘41⁄2 per centum’’ and ‘‘53⁄4 per centum’’, for ‘‘5 per centum’’, and inserted provisions permitting property held by a corporation or trust of the
character described in subsec. (a)(2) of this section
which is covered by a mortgage insured under this section to include such community facilities, and property

Page 574

held by a mortgagor of the character described in subsec. (a)(3) of this section which is covered by a mortgage insured under this section to include such commercial and community facilities, as the Commissioner
deems adequate to serve the occupants.
Subsec. (e). Pub. L. 86–372, § 116(b), inserted reference
to subsec. (k) of section 1710 of this title.
Subsec. (i). Pub. L. 86–372, § 105(e), added subsec. (i).
1957—Subsec. (e). Pub. L. 85–104 substituted ‘‘(h), and
(j) of section 1710 of this title’’ for ‘‘and (h) of section
1710 of this title’’.
1956—Subsec. (a). Act Aug. 7, 1956, § 105(a), struck out
‘‘or’’ at end of par. (1), inserted ‘‘or’’ at end of par. (2),
added par. (3), and inserted ‘‘referred to in paragraphs
(1) and (2) of this subsection’’ after ‘‘which corporations
or trusts’’ in provisions following par. (3).
Subsec. (b)(2). Act Aug. 7, 1956, § 105(b), substituted
‘‘50 per centum’’ for ‘‘65 per centum’’, inserted for purposes of defining ‘‘veteran’’; service from Apr. 6, 1917, to
Nov. 12, 1918, substituted service prior to Feb. 1, 1955,
for former provision leaving determination of date to
President, and inserted provision authorizing Commissioner to increase dollar limits per room by not to exceed $1,000 per room.
Subsec. (h). Act Aug. 7, 1956, § 105(c), added subsec.
(h).
1955—Subsec. (b)(1). Act Aug. 11, 1955, § 102(c), increased from $5,000,000 to $12,500,000 the limitation on
maximum amount of a mortgage.
Subsec. (b)(2). Act Aug. 11, 1955, § 102(d), provided that
maximum amount of a mortgage to be insured may be
determined on basis of estimated replacement cost.
Subsec. (c). Act Aug. 11, 1955, § 102(c), increased from
$5,000,000 to $12,500,000 the limitation on maximum
amount of a mortgage.
Subsec. (d). Act Aug. 11, 1955, § 102(e), authorized
mortgage insurance for structures consisting of eight
or more family units.
1954—Subsec. (b)(1). Act Aug. 2, 1954, § 119(a), permitted insured cooperative housing mortgages to be as
high as $25,000,000 in amount if the mortgagor cooperative is regulated or supervised by Federal or State law
as to rents, charges, and methods of operations.
Subsec. (b)(2). Act Aug. 2, 1954, amended par. (2) generally, to:
1. Change, with respect to nonveteran projects, the
per family or per room mortgage amount limitations
from $8,100 per family unit or $1,800 per room, to $2,250
per room and with a per family unit limitation of $8,100
applicable only if the number of rooms is less than
four;
2. Provide for changing from a cost basis to a valuation basis;
3. Change the basis for allowing increases for veteran
membership so that in all cases such increases would be
made only if 65 per cent of members are veterans, instead of making such increases on the basis of percentage allowances for percentage of veteran membership;
and
4. Authorize an increase to the per room and per family mortgage amount limitation for elevator-type
structures.
Subsec. (c)(1). Act Aug. 2, 1954, § 119(b), with respect
to the reference to section 1709(b)(2) of this title, struck
out the reference to ‘‘paragraph (A), paragraph (C), or
paragraph (D)’’ of the section, the paragraph designations having been struck out by another section of the
same act.
Subsec. (f). Act Aug. 2, 1954, § 120, struck out sentence
providing for the appointment of an Assistant Commissioner.
1953—Subsec. (d). Act June 30, 1953, substituted, in
first sentence, ‘‘41⁄2 per centum per annum, except that
individual mortgages insured pursuant to this subsection covering the individual dwellings in the project
may bear interest at not to exceed 5 per centum per
annum,’’ for ‘‘4 per centum per annum’’.
1951—Subsec. (b)(2). Act Oct. 26, 1951, struck out ‘‘of
World War II’’ wherever appearing and inserted proviso
thus making section applicable to veterans of Korean
war.

Page 575

§ 1715h

TITLE 12—BANKS AND BANKING

EFFECTIVE DATE OF 1983 AMENDMENT
For effective date of amendment by section 423(b)(2)
of Pub. L. 98–181, see section 423(c) of Pub. L. 98–181, set
out as a note under section 1709 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
IMPLEMENTATION OF 1982 AMENDMENT
Amendment by Pub. L. 97–253 to be implemented only
if the Secretary determines that the program of advance payment of insurance premiums, considering the
effect of said amendment, is actuarially sound, see section 201(g) of Pub. L. 97–253, set out as a note under section 1709 of this title.
REPEALS
The directory language of, but not the amendment
made by, Pub. L. 90–301, § 3(c), May 7, 1968, 82 Stat. 114,
cited as a credit to this section, was repealed by Pub.
L. 98–181, title I [title IV, § 404(a)], Nov. 30, 1983, 97 Stat.
1208.
SPECIAL ASSISTANT FOR COOPERATIVE HOUSING
Act Aug. 11, 1955, ch. 783, title I, § 102(h), 69 Stat. 636,
as amended by Pub. L. 89–754, title X § 1020(h), Nov. 3,
1966, 80 Stat. 1296; Pub. L. 94–375, § 18, Aug. 3, 1976, 90
Stat. 1077, provided that: ‘‘In the performance of, and
with respect to, the functions, powers, and duties vested in him by section 213 of the National Housing Act
[this section], section 221(d)(3), section 235, section 236,
section 241, section 243, section 246, and section 203(n) of
the National Housing Act [sections 1715l(d)(3), 1715z,
1715z–1, 1715z–6, 1715z–8, 1715z–11, and 1709(n) of this
title], and section 101 of the Housing and Urban Development Act of 1965 [section 1701s of this title] or section 8 of the United States Housing Act of 1937 [section
1437f of Title 42, The Public Health and Welfare] (insofar as the provisions of such sections relate to cooperative housing), the Secretary of Housing and Urban Development, notwithstanding the provisions of any other
law, shall appoint a Special Assistant for Cooperative
Housing, and provide the Special Assistant with adequate staff, whose sole responsibility will be to expedite operations under such sections and to eliminate
obstacles to the full utilization of such sections under
the direction and supervision of the Commissioner and
Assistant Secretary for Housing Management. The person so appointed shall be fully sympathetic with the
purposes of such sections.’’
AMENDMENTS TO PROVISIONS FOR FAMILY UNIT LIMITS
ON RENTAL HOUSING; EQUITABLE APPLICATION OF
SUCH AMENDMENTS OR PRE-AMENDMENT PROVISIONS
TO PROJECTS SUBMITTED FOR CONSIDERATION PRIOR
TO SEPTEMBER 2, 1964
Equitable application of amendment to subsec. (b)(2)
of this section by section 107(b) of Pub. L. 88–560 or preamendment provisions to projects submitted for consideration prior to Sept. 2, 1964, see section 107(g) of
Pub. L. 88–560, set out as a note under section 1713 of
this title.

§ 1715f. Process of applications and issuance of
commitments
The Secretary is authorized to process applications and issue commitments with respect to
insurance of mortgages under section 1706c of
this title and subchapter II, VI, VIII, or X of this
chapter, even though the permanent mortgage
financing may not be insured under this chapter,
and in the event the mortgage is not so insured
the Secretary is authorized to charge an additional application fee determined by him to be

reasonable. The Secretary is authorized to make
such rules and regulations as may be necessary
to carry out the provisions of this section.
(June 27, 1934, ch. 847, title II, § 215, as added Apr.
20, 1950, ch. 94, title I, § 115, 64 Stat. 56; amended
Sept. 1, 1951, ch. 378, title II, § 204, 65 Stat. 303;
Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17.)
REFERENCES IN TEXT
This chapter, referred to in text, was in the original
‘‘this Act’’, meaning act June 27, 1934, ch. 847, 48 Stat.
1246, which is classified principally to this chapter
(§ 1701 et seq.). For complete classification of this Act
to the Code, see Tables.
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.
1951—Act Sept. 1, 1951, inserted a reference to subchapter X of this chapter.

§ 1715g. Insurance of mortgage where mortgagor
is not occupant of property
The Secretary is hereby authorized to insure
any mortgage otherwise eligible for insurance
under any of the provisions of this chapter without regard to any requirement with respect to
the occupancy of the mortgagor of the property
at the time of insurance, where the Secretary is
satisfied that the inability of the mortgagor to
meet such requirement is by reason of his entry
on active duty in a uniformed service subsequent to the filing of an application for insurance and the mortgagor expresses an intent to
meet such requirement upon his release from active duty.
(June 27, 1934, ch. 847, title II, § 216, as added
Sept. 1, 1951, ch. 378, title VI, § 607, 65 Stat. 315;
amended Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81
Stat. 17; Pub. L. 91–621, § 7(a), Dec. 31, 1970, 84
Stat. 1865; Pub. L. 100–242, title IV, § 406(b)(8),
Feb. 5, 1988, 101 Stat. 1901.)
REFERENCES IN TEXT
This chapter, referred to in text, was in the original
‘‘this Act’’, meaning act June 27, 1934, ch. 847, 48 Stat.
1246, which is classified principally to this chapter
(§ 1701 et seq.). For complete classification of this Act
to the Code, see Tables.
AMENDMENTS
1988—Pub. L. 100–242 substituted ‘‘with respect to the
occupancy of the mortgagor’’ for ‘‘that the mortgagor
be the occupant’’ and ‘‘meet such requirement’’ for ‘‘occupy the property’’ wherever appearing.
1970—Pub. L. 91–621 substituted ‘‘on active duty in a
uniformed service’’ and ‘‘release from active duty’’ for
‘‘into military service’’ and ‘‘discharge from military
service’’.
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100–242 applicable only with
respect to mortgages insured pursuant to conditional
commitment issued on or after Feb. 5, 1988, or in accordance with direct endorsement program (24 CFR
200.163), if approved underwriter of mortgagee signs appraisal report for property on or after Feb. 5, 1988, see
section 406(d) of Pub. L. 100–242, set out as a note under
section 1709 of this title.

§ 1715h. Repealed. Pub. L. 100–242, title IV,
§ 401(a)(1), Feb. 5, 1988, 101 Stat. 1898
Section, act June 27, 1934, ch. 847, title II, § 217, as
added Sept. 1, 1951, ch. 378, title VI, § 607, 65 Stat. 315;

§ 1715i

TITLE 12—BANKS AND BANKING

amended July 14, 1952, ch. 723, § 2, 66 Stat. 601; June 30,
1953, ch. 170, § 7, 67 Stat. 123; Aug. 2, 1954, ch. 649, title
I, § 121, 68 Stat. 596; Mar. 11, 1955, ch. 10, 69 Stat. 11; Aug.
11, 1955, ch. 783, title I, § 102(f), 69 Stat. 636; Aug. 7, 1956,
ch. 1029, title I, § 106, 70 Stat. 1094; June 4, 1958, Pub. L.
85–442, 72 Stat. 176; Sept. 23, 1959, Pub. L. 86–372, title I,
§ 107, 73 Stat. 657; May 25, 1961, Pub. L. 87–38, 75 Stat. 85;
June 30, 1961, Pub. L. 87–70, title VI, § 604(c), 75 Stat. 177;
Aug. 10, 1965, Pub. L. 89–117, title II, § 202(b), 79 Stat. 465;
Sept. 30, 1969, Pub. L. 91–78, § 2(b), 83 Stat. 125; Dec. 24,
1969, Pub. L. 91–152, title I, § 101(b), 83 Stat. 379; Oct. 2,
1970, Pub. L. 91–432, § 1(b), 84 Stat. 887; Oct. 21, 1970, Pub.
L. 91–473, § 1(b), 84 Stat. 1064; Dec. 1, 1970, Pub. L. 91–525,
§ 1(b), 84 Stat. 1384; Dec. 31, 1970, Pub. L. 91–609, title I,
§ 101(b), 84 Stat. 1770; Oct. 18, 1972, Pub. L. 92–503, § 1(b),
86 Stat. 906; Aug. 10, 1973, Pub. L. 93–85, § 1(b), 87 Stat.
220; Oct. 2, 1973, Pub. L. 93–117, § 1(b), 87 Stat. 421; Aug.
22, 1974, Pub. L. 93–383, title III, § 316(b), 88 Stat. 685;
June 30, 1977, Pub. L. 95–60, § 1(b), 91 Stat. 257; July 31,
1977, Pub. L. 95–80, § 1(b), 91 Stat. 339; Oct. 12, 1977, Pub.
L. 95–128, title III, § 301(b), 91 Stat. 1131; Sept. 30, 1978,
Pub. L. 95–406, § 1(b), 92 Stat. 879; Oct. 31, 1978, Pub. L.
95–557, title III, § 301(b), 92 Stat. 2096; Sept. 28, 1979, Pub.
L. 96–71, § 1(b), 93 Stat. 501; Nov. 8, 1979, Pub. L. 96–105,
§ 1(b), 93 Stat. 794; Dec. 21, 1979, Pub. L. 96–153, title III,
§ 301(b), 93 Stat. 1111; Oct. 3, 1980, Pub. L. 96–372, § 1(b),
94 Stat. 1363; Oct. 8, 1980, Pub. L. 96–399, title III,
§ 301(b), 94 Stat. 1638; Aug. 13, 1981, Pub. L. 97–35, title
III, § 331(b), 95 Stat. 412; Oct. 6, 1982, Pub. L. 97–289,
§ 1(b), 96 Stat. 1230; May 26, 1983, Pub. L. 98–35, § 1(b), 97
Stat. 197; Oct. 1, 1983, Pub. L. 98–109, § 1(b), 97 Stat. 745;
Nov. 30, 1983, Pub. L. 98–181, title I [title IV, § 401(b)], 97
Stat. 1207; Oct. 17, 1984, Pub. L. 98–479, title II,
§ 204(a)(5), 98 Stat. 2232; Oct. 8, 1985, Pub. L. 99–120, § 1(b),
99 Stat. 502; Nov. 15, 1985, Pub. L. 99–156, § 1(b), 99 Stat.
815; Dec. 26, 1985, Pub. L. 99–219, § 1(b), 99 Stat. 1730; Mar.
27, 1986, Pub. L. 99–267, § 1(b), 100 Stat. 73; Apr. 7, 1986,
Pub. L. 99–272, title III, § 3007(b), 100 Stat. 104; May 2,
1986, Pub. L. 99–289, § 1(b), 100 Stat. 412; June 24, 1986,
Pub. L. 99–345, § 1, 100 Stat. 673; Sept. 30, 1986, Pub. L.
99–430, 100 Stat. 986; Sept. 30, 1987, Pub. L. 100–122, § 1,
101 Stat. 793; Nov. 5, 1987, Pub. L. 100–154, 101 Stat. 890;
Nov. 17, 1987, Pub. L. 100–170, 101 Stat. 914; Dec. 3, 1987,
Pub. L. 100–179, 101 Stat. 1018; Dec. 21, 1987, Pub. L.
100–200, 101 Stat. 1327, prohibited (except with respect to
insurance of a loan or mortgage pursuant to section
1703, 1715l, 1715z, 1715z–1, 1715z–9, or 1715z–10 of this title
or subchapter VIII, IX–A, or IX–B of this chapter (subject to any limitations thereunder on the time of such
insurance)) the insurance of any loan or mortgage
under this chapter after Mar. 15, 1988, except pursuant
to a commitment to insure before such date.

§ 1715i. Repealed. Pub. L. 86–372, title I, § 108,
Sept. 23, 1959, 73 Stat. 657
Section, act June 27, 1934, ch. 847, title II, § 218, as
added July 14, 1952, ch. 723, § 8, 66 Stat. 603, authorized
a credit for application fees paid in cases where an application for mortgage insurance under section 1743 of
this title was received on or before March 1, 1950, and
the mortgagee applied for insurance of a mortgage
under section 1713 of this title with respect to the same
property or project.

§ 1715j. Repealed. Pub. L. 89–117, title
§ 1108(aa), Aug. 10, 1965, 79 Stat. 507

XI,

Section, act June 27, 1934, ch. 847, title II, § 219, as
added June 30, 1953, ch. 170, § 8, 67 Stat. 123; amended
Aug. 2, 1954, ch. 649, title I, § 122, 68 Stat. 596; July 12,
1957, Pub. L. 85–104, title I, § 113, 71 Stat. 298; June 30,
1961, Pub. L. 87–70, title VI, § 612(f), 75 Stat. 181, authorized the Commissioner to transfer funds from one or
more to one or more of the following funds and accounts as he deems necessary to carry out programs for
which such funds and accounts were established: Title
I Insurance Account, Title I Housing Insurance Fund,
Section 203 Home Improvement Account, Housing Insurance Fund, War Housing Insurance Fund, Housing

Page 576

Investment Insurance Fund, Armed Services Housing
Mortgage Insurance Fund, National Defense Housing
Insurance Fund, Section 220 Housing Insurance Fund,
Section 220 Home Improvement Account, Section 221
Housing Insurance Fund, Experimental Housing Insurance Fund, Apartment Unit Insurance Fund, and the
Servicemen’s Mortgage Insurance Fund.
For establishment of the General Insurance Fund, see
section 1735c of this title.

§ 1715k. Rehabilitation and neighborhood conservation housing insurance
(a) Purpose of section
The purpose of this section is to aid in the
elimination of slums and blighted conditions
and the prevention of the deterioration of residential property by supplementing the insurance of mortgages under sections 1709 and 1713 of
this title with a system of loan and mortgage insurance designed to assist the financing required
for the rehabilitation of existing dwelling accommodations and the construction of new
dwelling accommodations where such dwelling
accommodations are located in an area referred
to in paragraph (1) of subsection (d) of this section.
(b) Authorization
The Secretary is authorized, upon application
by the mortgagee, to insure, as hereinafter provided, any mortgage (including advances during
construction on mortgages covering property of
the character described in paragraph (3)(B) of
subsection (d) of this section) which is eligible
for insurance as hereinafter provided, and, upon
such terms and conditions as he may prescribe,
to make commitments for the insurance of such
mortgages prior to the date of their execution or
disbursement thereon.
(c) Definitions
As used in this section, the terms ‘‘mortgage’’,
‘‘first mortgage’’, ‘‘mortgagee’’, ‘‘mortgagor’’,
‘‘maturity date’’, and ‘‘State’’ shall have the
same meaning as in section 1707 of this title.
(d) Eligibility for insurance; conditions; limits
To be eligible for insurance under this section
a mortgage shall meet the following conditions:
(1) The mortgaged property shall—
(A) be located in (i) the area of a slum
clearance and urban redevelopment project
covered by a Federal-aid contract executed
or a prior approval granted, pursuant to title
I of the Housing Act of 1949 [42 U.S.C. 1450 et
seq.] before August 2, 1954, or (ii) an urban
renewal area (as defined in title I of the
Housing Act of 1949, as amended), or (iii) the
area of an urban renewal project assisted
under section 111 of the Housing Act of 1949
[42 U.S.C. 1462], or (iv) an area in which a
program of concentrated code enforcement
activities is being carried out pursuant to
section 117 of the Housing Act of 1949 [42
U.S.C. 1468], or (v) an area, designated by the
Secretary, where concentrated housing,
physical development, and public service activities are being or will be carried out in a
coordinated manner, pursuant to a locally
developed strategy for neighborhood improvement, conservation, or preservation:
Provided, That, in the case of an area within

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TITLE 12—BANKS AND BANKING

the purview of clause (i) or (ii) of this subparagraph, a redevelopment plan or an urban
renewal plan (as defined in title I of the
Housing Act of 1949, as amended), as the case
may be, has been approved for such area by
the governing body of the locality involved
and by the Secretary of Housing and Urban
Development, and the Secretary has determined that such plan conforms to a general
plan for the locality as a whole and that
there exist the necessary authority and financial capacity to assure the completion of
such redevelopment or urban renewal plan:
And provided further, That, in the case of an
area within the purview of clause (iii) of this
subparagraph, an urban renewal plan (as required for projects assisted under such section 111 [42 U.S.C. 1462]) has been approved
for such area by such governing body and by
the Secretary, and the Secretary has determined that such plan conforms to definite
local objectives respecting appropriate land
uses, improved traffic, public transportation, public utilities, recreational and
community facilities, and other public improvements, and that there exist the necessary authority and financial capacity to
assure the completion of such urban renewal
plan, and
(B) meet such standards and conditions as
the Secretary shall prescribe to establish
the acceptability of such property for mortgage insurance under this section.
(2) The mortgaged property shall be held
by—
(A) a mortgagor approved by the Secretary, and the Secretary may in his discretion require such mortgagor to be regulated
or restricted as to rents or sales, charges,
capital structure, rate of return and methods of operation, and for such purpose the
Secretary may make such contracts with
and acquire for not to exceed $100 stock or
interest in any such mortgagor as the Secretary may deem necessary to render effective such restriction or regulations. Such
stock or interest shall be paid for out of the
General Insurance Fund and shall be redeemed by the mortgagor at par upon the
termination of all obligations of the Secretary under the insurance; or
(B) by Federal or State instrumentalities,
municipal corporate instrumentalities of
one or more States, or limited dividend or
redevelopment or housing corporations or
other legal entities restricted by or under
Federal or State laws or regulations of State
banking or insurance departments as to
rents, charges, capital structure, rate of return, or methods of operation.
(3) The mortgage shall—
(A)(i) involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the
Secretary shall approve) in an amount not
to exceed the applicable maximum principal
obligation which may be insured in the area
under section 1709(b) of this title; or in the
case of a dwelling designed principally for
residential use for more than four families

§ 1715k

(but not exceeding such additional number
of family units as the Secretary may prescribe) the applicable maximum principal
obligation secured by a four-family residence which may be insured in the area
under section 1709(b) of this title plus not to
exceed $9,165 for each additional family unit
in excess of four located on such property;
and not to exceed an amount equal to the
sum of (1) 97 per centum (but, in any case
where the dwelling is not approved for mortgage insurance prior to the beginning of construction, unless the construction of the
dwelling was completed more than one year
prior to the application for mortgage insurance, 90 per centum) of $25,000 of the Secretary’s estimate of replacement cost of the
property, as of the date the mortgage is accepted for insurance and (2) 95 per centum of
such value in excess of $25,000: Provided, That
in the case of properties other than new construction, the foregoing limitations upon
the amount of the mortgage shall be based
upon the sum of the estimated cost of repair
and rehabilitation and the Secretary’s estimate of the value of the property before repair and rehabilitation rather than upon the
Secretary’s estimate of the replacement
cost: Provided further, That if the mortgagor
is a veteran and the mortgage to be insured
under this section covers property upon
which there is located a dwelling designed
principally for a one-family residence, the
principal obligation may be in an amount
equal to the sum of (1) 100 per centum of
$25,000 of the Secretary’s estimate of replacement cost of the property, as of the
date the mortgage is accepted for insurance
and (2) 95 per centum of such value in excess
of $25,000. As used herein, the term ‘‘veteran’’ means any person who served on active duty in the Armed Forces of the United
States for a period of not less than ninety
days (or is certified by the Secretary of Defense as having performed extrahazardous
service), and who was discharged or released
therefrom under conditions other than dishonorable, except that persons enlisting in
the armed forces after September 7, 1980, or
entering active duty after October 16, 1981,
shall have their eligibility determined in accordance with section 5303A(d) of title 38;
and
(ii) in no case involving refinancing have a
principal obligation in an amount exceeding
the sum of the estimated cost of repair and
rehabilitation and the amount (as determined by the Secretary) required to refinance existing indebtedness secured by the
property or project, plus any existing indebtedness incurred in connection with improving, repairing, or rehabilitating the
property; or
(B)(i) Repealed. Pub. L. 93–383, title III,
§ 304(d), Aug. 22, 1974, 88 Stat. 678.
(ii) not exceed 90 per centum of the
amount which the Secretary estimates will
be the replacement cost of the property or
project when the proposed improvements are
completed (the replacement cost of the property or project may include the land, the

§ 1715k

TITLE 12—BANKS AND BANKING

proposed physical improvements, utilities
within the boundaries of the property or
project, architect’s fees, taxes, and interest
during construction, and other miscellaneous charges incident to construction and approved by the Secretary, and shall include
an allowance for builder’s and sponsor’s
profit and risk of 10 per centum of all of the
foregoing items except the land unless the
Secretary, after certification that such allowance is unreasonable, shall by regulation
prescribe a lesser percentage): Provided, That
in the case of properties other than new construction, the foregoing limitations upon
the amount of the mortgage shall be based
upon the sum of the estimated cost of repair
and rehabilitation and the Secretary’s estimate of the value of the property before repair and rehabilitation rather than upon the
Secretary’s estimate of the replacement
cost: Provided further, That the mortgage
may involve the financing of the purchase of
property which has been rehabilitated by a
local public agency with Federal assistance
pursuant to section 110(c)(8) of the Housing
Act of 1949 [42 U.S.C. 1460(c)(8)], and, in such
case the foregoing limitations upon the
amount of the mortgage shall be based upon
the appraised value of the property as of the
date the mortgage is accepted for insurance;
(iii)(I) not exceed, for such part of the
property or project as may be attributable
to dwelling use (excluding exterior land improvements as defined by the Secretary),
$38,025 per family unit without a bedroom,
$42,120 per family unit with one bedroom,
$50,310 per family unit with two bedrooms,
$62,010 per family unit with three bedrooms,
and $70,200 per family unit with four or more
bedrooms; except that as to projects to consist of elevator-type structures the Secretary may, in his discretion, increase the
dollar amount limitations per family unit to
not to exceed $43,875 per family unit without
a bedroom, $49,140 per family unit with one
bedroom, $60,255 per family unit with two
bedrooms, $75,465 per family unit with three
bedrooms, and $85,328 per family unit with
four or more bedrooms, as the case may be,
to compensate for the higher costs incident
to the construction of elevator-type structures of sound standards of construction and
design; and (II) with respect to rehabilitation projects involving not more than five
family units, the Secretary may by regulation increase by 25 per centum any of the
dollar amount limitations in subparagraph
(B)(iii)(I) (as such limitations may have been
adjusted in accordance with section 1712a of
this title) which are applicable to units with
two, three, or four or more bedrooms; (III)
the Secretary may, by regulation, increase
the dollar amount limitations contained in
subparagraph (B)(iii)(I) (as such limitations
may have been adjusted in accordance with
section 1712a of this title) by not to exceed
170 percent in any geographical area where
the Secretary finds that cost levels so require and by not to exceed 170 percent, or 215
percent in high cost areas, where the Secretary determines it necessary on a project-

Page 578

by-project basis, but in no case may any
such increase exceed 90 percent where the
Secretary determines that a mortgage purchased or to be purchased by the Government National Mortgage Association in implementing its special assistance functions
under section 1720 1 of this title (as such section existed immediately before November
30, 1983) is involved; (IV) That nothing contained in this 2 subparagraph (B)(iii)(I) shall
preclude the insurance of mortgages covering existing multifamily dwellings to be rehabilitated or reconstructed for the purposes
set forth in subsection (a) of this section; (V)
the Secretary may further increase any of
the dollar limitations which would otherwise apply to such projects by not to exceed
20 per centum if such increase is necessary
to account for the increased cost of the
project due to the installation therein of a
solar energy system (as defined in subparagraph (3) of the last paragraph of section
1703(a) of this title) or residential energy
conservation measures (as defined in section
8211(11)(A) through (G) and (I) of title 42) 1 in
cases where the Secretary determines that
such measures are in addition to those required under the minimum property standards and will be cost-effective over the life of
the measure; and
(iv) include such nondwelling facilities as
the Secretary deems desirable and consistent with the urban renewal plan or, where
appropriate, with the locally developed
strategy for neighborhood improvement,
conservation or preservation: Provided, That
the project shall be predominantly residential and any nondwelling facility included in
the mortgage shall be found by the Secretary to contribute to the economic feasibility of the project, and the Secretary
shall give due consideration to the possible
effect of the project on other business enterprises in the community.
(4) The mortgage shall provide for complete
amortization by periodic payments (unless
otherwise approved by the Secretary) within
such terms as the Secretary may prescribe,
but as to mortgages coming within the provisions of paragraph (3)(A) of this subsection not
to exceed the maximum maturity prescribed
by the provisions of section 1709(b)(3) of this
title. The mortgage shall bear interest at such
rate as may be agreed upon by the mortgagor
and the mortgagee and contain such terms and
provisions with respect to the application of
the mortgagor’s periodic payment to amortization of the principal of the mortgage, insurance, repairs, alterations, payment of taxes,
default reserves, delinquency charges, foreclosure proceedings, anticipation of maturity,
additional and secondary liens, and other matters as the Secretary may in the Secretary’s
discretion prescribe.
(e) Release of mortgagor or part of property
The Secretary may at any time, under such
terms and conditions as he may prescribe, con1 See
2 So

References in Text note below.
in original. The word ‘‘this’’ probably should not appear.

Page 579

TITLE 12—BANKS AND BANKING

sent to the release of the mortgagor from his liability under the mortgage or the credit instrument secured thereby, or consent to the release
of parts of the mortgaged property from the lien
of the mortgage.
(f) Entitlement of mortgagee to benefits; payment in cash or debentures; acquisition of
mortgages; applicability of other provisions
The mortgagee shall be entitled to receive the
benefits of the insurance as hereinafter provided—
(1) as to mortgages meeting the requirements of paragraph (3)(A) of subsection (d) of
this section as provided in section 1710(a) of
this title with respect to mortgages insured
under section 1709 of this title, and the provisions of subsections (b), (c), (d), (e), (f), (g),
(h),1 (j), and (k) 1 of section 1710 of this title
shall be applicable to such mortgages insured
under this section, except that all references
therein to the Mutual Mortgage Insurance
Fund or the Fund shall be construed to refer
to the General Insurance Fund and all references therein to section 1709 of this title
shall be construed to refer to this section;
(2) as to mortgages meeting the requirements of paragraph (3)(B) of subsection (d) of
this section, as provided in section 1713(g) of
this title with respect to mortgages insured
under said section 1713, and the provisions of
subsections (h), (i), (j), (k), and (l) of section
1713 of this title shall be applicable to such
mortgages insured under this section, and all
references therein to the Housing Insurance
Fund or the Housing Fund shall be construed
to refer to the General Insurance Fund; or
(3) as to mortgages meeting the requirements of this section that are insured or initially endorsed for insurance on or after June
30, 1961, notwithstanding the provisions of
paragraphs (1) and (2) of this subsection, the
Secretary in his discretion, in accordance with
such regulations as he may prescribe, may
make payments pursuant to such paragraphs
in cash or in debentures (as provided in the
mortgage insurance contract), or may acquire
a mortgage loan that is in default and the security therefor upon payment to the mortgagee in cash or in debentures (as provided in
the mortgage insurance contract) of a total
amount equal to the unpaid principal balance
of the loan plus any accrued interest and any
advances approved by the Secretary and made
previously by the mortgagee under the provisions of the mortgage. After the acquisition of
the mortgage by the Secretary the mortgagee
shall have no further rights, liabilities, or obligations with respect to the loan or the security for the loan. The appropriate provisions of
sections 1710 and 1713 of this title relating to
the rights, liabilities, and obligations of a
mortgagee shall apply with respect to the Secretary when he has acquired an insured mortgage under this paragraph, in accordance with
and subject to regulations (modifying such
provisions to the extent necessary to render
their application for such purposes appropriate and effective) which shall be prescribed
by the Secretary, except that as applied to
mortgages so acquired (A) all references in

§ 1715k

section 1710 of this title to the Mutual Mortgage Insurance Fund or the Fund shall be construed to refer to the General Insurance Fund,
and (B) all references in section 1710 of this
title to section 1709 of this title shall be construed to refer to this section. If the insurance
payment is made in cash, there shall be added
to such payment an amount equivalent to the
interest which the debentures would have
earned, computed to a date to be established
pursuant to regulations issued by the Secretary.
(g) Repealed. Pub. L. 89–117, title XI, § 1108(h)(3),
Aug. 10, 1965, 79 Stat. 505
(h) Home improvement loans; eligibility; conditions; refinancing; premium charge; defaults;
debentures; exception; limitation
(1) To assist further in the conservation, improvement, repair, and rehabilitation of property located in the area of an urban renewal
project or in an area in which a program of concentrated code enforcement activities is being
carried out pursuant to section 117 of the Housing Act of 1949 [42 U.S.C. 1468], as provided in
paragraph (1) of subsection (d) of this section,
the Secretary is authorized upon such terms and
conditions as he may prescribe to make commitments to insure and to insure home improvement loans (including advances during construction or improvement) made by financial institutions on and after June 30, 1961. As used in this
subsection—
(A) the term ‘‘home improvement loan’’
means a loan, advance of credit, or purchase of
an obligation representing a loan or advance
of credit made—
(i) for the purpose of financing the improvement of an existing structure (or in
connection with an existing structure) which
was constructed not less than ten years
prior to the making of such loan, advance of
credit, or purchase, and which is used or will
be used primarily for residential purposes:
Provided, That a home improvement loan
shall include a loan, advance, or purchase
with respect to the improvement of a structure which was constructed less than ten
years prior to the making of such loan, advance, or purchase if the proceeds are or will
be used primarily for major structural improvements, or to correct defects which were
not known at the time of the completion of
the structure or which were caused by fire,
flood, windstorm, or other casualty; or
(ii) for the purpose of enabling the borrower to pay that part of the cost of the construction or installation of sidewalks, curbs,
gutters, street paving, street lights, sewers,
or other public improvements, adjacent to or
in the vicinity of property owned by him and
used primarily for residential purposes,
which is assessed against him or for which
he is otherwise legally liable as the owner of
such property;
(B) the term ‘‘improvement’’ means conservation, repair, restoration, rehabilitation,
conversion, alteration, enlargement, or remodeling; and
(C) the term ‘‘financial institution’’ means a
lender approved by the Secretary as eligible

§ 1715k

TITLE 12—BANKS AND BANKING

for insurance under section 1703 of this title or
a mortgagee approved under section 1709(b)(1)
of this title.
(2) To be eligible for insurance under this subsection, a home improvement loan shall—
(i) not exceed the Secretary’s estimate of
the cost of improvement, or $12,000 per family
unit, whichever is the lesser, and be limited as
required by paragraph (11): Provided, That the
Secretary may, by regulation, increase such
amount by not to exceed 45 per centum in any
geographical area where he finds that cost levels so require;
(ii) be limited to an amount which when
added to any outstanding indebtedness related
to the property (as determined by the Secretary) creates a total outstanding indebtedness which does not exceed the limits provided
in subsection (d)(3) for properties (of the same
type) other than new construction;
(iii) bear interest at such rate as may be
agreed upon by the mortgagor and the mortgagee;
(iv) have a maturity satisfactory to the Secretary, but not to exceed twenty years from
the beginning of amortization of the loan;
(v) comply with such other terms, conditions, and restrictions as the Secretary may
prescribe; and
(vi) represent the obligation of a borrower
who is the owner of the property improved, or
a lessee of the property under a lease for not
less than 99 years which is renewable or under
a lease having an expiration date in excess of
10 years later than the maturity date of the
loan.
(3) Any home improvement loan insured under
this subsection may be refinanced and extended
in accordance with such terms and conditions as
the Secretary may prescribe, but in no event for
an additional amount or term in excess of the
maximum provided for in this subsection.
(4) Repealed. Pub. L. 89–117, title XI,
§ 1108(h)(3), Aug. 10, 1965, 79 Stat. 505.
(5) The Secretary is authorized to fix a premium charge for the insurance of home improvement loans under this subsection but in the case
of any such loan such charge shall not be less
than an amount equivalent to one-half of 1 per
centum per annum nor more than an amount
equivalent to 1 per centum per annum of the
amount of the principal obligation of the loan
outstanding at any time, without taking into
account delinquent payments or prepayments.
Such premium charges shall be payable by the
financial institution either in cash or in debentures (at par plus accrued interest) issued by the
Secretary as obligations of the General Insurance Fund, in such manner as may be prescribed
by the Secretary, and the Secretary may require
the payment of one or more such premium
charges at the time the loan is insured, at such
discount rate as he may prescribe not in excess
of the interest rate specified in the loan. If the
Secretary finds upon presentation of a loan for
insurance and the tender of the initial premium
charge or charges so required that the loan complies with the provisions of this subsection, such
loan may be accepted for insurance by endorsement or otherwise as the Secretary may pre-

Page 580

scribe. In the event the principal obligation of
any loan accepted for insurance under this subsection is paid in full prior to the maturity date,
the Secretary is authorized to refund to the financial institution for the account of the borrower all, or such portions as he shall determine
to be equitable, of the current unearned premium charges theretofore paid.
(6) In cases of defaults on loans insured under
this subsection, upon receiving notice of default,
the Secretary, in accordance with such regulations as he may prescribe, may acquire the loan
and any security therefor upon payment to the
financial institution in cash or in debentures (as
provided in the loan insurance contract) of a
total amount equal to the unpaid principal balance of the loan, plus any accrued interest, any
advances approved by the Secretary made previously by the financial institution under the
provisions of the loan instruments, and reimbursement for such collection costs, court costs,
and attorney fees as may be approved by the
Secretary. If the insurance payment is made in
cash, there shall be added to such payment an
amount equivalent to the interest which the debentures would have earned, computed to a date
to be established pursuant to regulations issued
by the Secretary.
(7) Debentures issued under this subsection
shall be executed in the name of the General Insurance Fund as obligor, shall be negotiable,
and, if in book entry form, transferable, in the
manner described by the Secretary in regulations, and shall be dated as of the date the loan
is assigned to the Secretary and shall bear interest from that date. They shall bear interest at a
rate established by the Secretary pursuant to
section 1715o of this title, payable semiannually
on the 1st day of January and the 1st day of July
of each year, and shall mature ten years after
their date of issuance. They shall be exempt
from taxation as provided in section 1713(i) of
this title with respect to debentures issued
under that section. They shall be paid out of the
General Insurance Fund which shall be primarily liable therefor and they shall be fully
and unconditionally guaranteed as to principal
and interest by the United States, and, in the
case of debentures issued in certificated registered form, the guaranty shall be expressed on
the face of the debentures. In the event the General Insurance Fund fails to pay upon demand,
when due, the principal of or interest on any debentures so guaranteed, the Secretary of the
Treasury shall pay to the holders the amount
thereof which is authorized to be appropriated,
out of any money in the Treasury not otherwise
appropriated, and thereupon, to the extent of
the amounts so paid, the Secretary of the Treasury shall succeed to all the rights of the holders
of such debentures. Debentures issued under this
subsection shall be in such form and amounts;
shall be subject to such terms and conditions;
and shall include such provisions for redemption, if any, as may be prescribed by the Secretary of Housing and Urban Development, with
the approval of the Secretary of the Treasury;
and may be in book entry or certificated registered form, or such other form as the Secretary of Housing and Urban Development may
prescribe in regulations.

Page 581

TITLE 12—BANKS AND BANKING

(8) The provisions of subsections (c), (d), and
(h) of section 1703 of this title shall apply to
home improvement loans insured under this subsection, and for the purposes of this subsection
references in subsections (c), (d), and (h) of section 1703 of this title to ‘‘this section’’ or ‘‘this
subchapter’’ shall be construed to refer to this
subsection.
(9)(A) Notwithstanding any other provisions of
this chapter, no home improvement loan executed in connection with the improvement of a
structure for use as rental accommodations for
five or more families shall be insured under this
subsection unless the borrower has agreed (i) to
certify, upon completion of the improvement
and prior to final endorsement of the loan, either that the actual cost of improvement
equaled or exceeded the proceeds of the home
improvement loan, or the amount by which the
proceeds of the loan exceed the actual cost, as
the case may be, and (ii) to pay forthwith to the
financial institution, for application to the reduction of the principal of the loan, the amount,
if any, certified to be in excess of the actual cost
of improvement. Upon the Secretary’s approval
of the borrower’s certification as required under
this paragraph, the certification shall be final
and incontestable, except for fraud or material
misrepresentation on the part of the borrower.
(B) As used in subparagraph (A), the term ‘‘actual cost’’ means the cost to the borrower of the
improvement, including the amounts paid for
labor, materials, construction contracts, off-site
public utilities, streets, organization and legal
expenses, such allocations of general overhead
items as are acceptable to the Secretary, and
other items of expense approved by the Secretary, plus a reasonable allowance for builder’s
profit if the borrower is also the builder, as defined by the Secretary, and excluding the
amount of any kickbacks, rebates, or trade discounts received in connection with the improvement.
(10) Notwithstanding any other provision of
this chapter, the Secretary is authorized and
empowered (i) to make expenditures and advances out of funds made available by this chapter to preserve and protect his interest in any
security for, or the lien or priority of the lien
securing, any loan or other indebtedness owing
to, insured by, or acquired by the Secretary or
by the United States under this subsection, or
section 1703 or 1709(k) of this title; and (ii) to bid
for and to purchase at any foreclosure or other
sale or otherwise acquire property pledged,
mortgaged, conveyed, attached, or levied upon
to secure the payment of any loan or other indebtedness owing to or acquired by the Secretary or by the United States under this subsection or section 1703 or 1709(k) of this title.
The authority conferred by this paragraph may
be exercised as provided in the last sentence of
section 1710(g) of this title.
(11) Notwithstanding any other provision of
this chapter, no home improvement loan made
in whole or in part for the purpose specified in
clause (A)(ii) of the second sentence of paragraph (1) shall be insured under this subsection
if such loan (or the portion thereof which is attributable to such purpose), when added to the
aggregate principal balance of any outstanding

§ 1715k

loans insured under this subsection or section
1709(k) of this title which were made to the same
borrower for the purpose so specified (or the portion of such aggregate balance which is attributable to such purpose), would exceed $10,000 or
such additional amount as the Secretary has by
regulation prescribed in any geographical area
where he finds cost levels so require pursuant to
the authority vested in him by the proviso in
paragraph (2)(i) of this subsection.
(June 27, 1934, ch. 847, title II, § 220, as added
Aug. 2, 1954, ch. 649, title I, § 123, 68 Stat. 596;
amended Aug. 11, 1955, ch. 783, title I, § 102(c), (g),
69 Stat. 635, 636; Aug. 7, 1956, ch. 1029, title I,
§ 107, title III, § 307(b), 70 Stat. 1094, 1102; Pub. L.
85–10, § 3, Mar. 27, 1957, 71 Stat. 8; Pub. L. 85–104,
title I, §§ 102, 112, July 12, 1957, 71 Stat. 295, 297;
Pub. L. 85–364, § 1(b), Apr. 1, 1958, 72 Stat. 73; Pub.
L. 86–372, title I, §§ 109, 116(b), Sept. 23, 1959, 73
Stat. 657, 664; Pub. L. 87–70, title I, § 102(a), title
VI, §§ 609, 612(g), June 30, 1961, 75 Stat. 154, 179,
181; Pub. L. 88–560, title I, §§ 105(c)(1), 107(c),
110–113, Sept. 2, 1964, 78 Stat. 772, 775, 777, 778;
Pub. L. 89–117, title II, §§ 207(c), 209–211, title III,
§ 311(c), (d), title XI, § 1108(h), Aug. 10, 1965, 79
Stat. 467, 469, 470, 478, 505; Pub. L. 89–754, title
III, §§ 305, 306, Nov. 3, 1966, 80 Stat. 1267; Pub. L.
90–19, § 1(a)(3), (4), (g), May 25, 1967, 81 Stat. 17,
18; Pub. L. 90–448, title III, § 311(a), title XVII,
§ 1722(g), Aug. 1, 1968, 82 Stat. 510, 611; Pub. L.
91–152, title I, §§ 102(b), 104, 113(d), Dec. 24, 1969, 83
Stat. 380, 381, 384; Pub. L. 93–383, title III,
§§ 302(b), 303(c), 304(d), 310(b), Aug. 22, 1974, 88
Stat. 676–678, 682; Pub. L. 94–173, § 3, Dec. 23, 1975,
89 Stat. 1027; Pub. L. 94–375, § 8(a), (b)(3), Aug. 3,
1976, 90 Stat. 1071, 1072; Pub. L. 95–24, title I,
§ 105(b), Apr. 30, 1977, 91 Stat. 56; Pub. L. 95–128,
title III, §§ 303(b), 304(b), Oct. 12, 1977, 91 Stat.
1132, 1133; Pub. L. 96–153, title III, §§ 312(b), 314,
Dec. 21, 1979, 93 Stat. 1116, 1117; Pub. L. 96–399,
title III, §§ 310(c), 311, 333(b), 336(b), Oct. 8, 1980,
94 Stat. 1642, 1643, 1653, 1654; Pub. L. 97–35, title
III, § 339B(a), Aug. 13, 1981, 95 Stat. 417; Pub. L.
97–377, title I, § 101(g), Dec. 21, 1982, 96 Stat. 1908;
Pub. L. 98–181, title I [title IV, §§ 404(b)(6), (7),
432(a), 446(c)], Nov. 30, 1983, 97 Stat. 1209, 1220,
1228; Pub. L. 100–242, title IV, §§ 405(2), 406(b)(9),
426(c), (h), Feb. 5, 1988, 101 Stat. 1899, 1901, 1916;
Pub. L. 102–40, title IV, § 402(d)(2), May 7, 1991,
105 Stat. 239; Pub. L. 102–550, title V, §§ 509(c),
516(c), Oct. 28, 1992, 106 Stat. 3783, 3791; Pub. L.
103–233, title III, § 306, Apr. 11, 1994, 108 Stat. 373;
Pub. L. 107–73, title II, § 213(c), Nov. 26, 2001, 115
Stat. 676; Pub. L. 107–326, § 5(b)(3), Dec. 4, 2002,
116 Stat. 2795; Pub. L. 108–186, title III,
§ 302(b),(d), Dec. 16, 2003, 117 Stat. 2692; Pub. L.
108–213, § 2, Apr. 1, 2004, 118 Stat. 571; Pub. L.
110–161, div. K, title II, § 221(2), Dec. 26, 2007, 121
Stat. 2436.)
REFERENCES IN TEXT
The Housing Act of 1949, as amended, referred to in
subsecs. (d)(1)(A), (B)(ii), and (h)(1), is act July 15, 1949,
ch. 338, 63 Stat. 413, as amended. Title I of the Housing
Act of 1949, which was classified generally to subchapter II (§ 1450 et seq.) of chapter 8A of Title 42, The
Public Health and Welfare, including sections 110, 111,
and 117 [42 U.S.C. 1460, 1462, 1468], was omitted from the
Code pursuant to section 5316 of Title 42 which terminated the authority to make loans or grants under such
title I after Jan. 1, 1975. For complete classification of
this Act to the Code, see Short Title note set out under
section 1441 of Title 42 and Tables.

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Section 1720 of this title, referred to in subsec.
(d)(3)(B)(iii)(III), was repealed by Pub. L. 98–181, title I
[title IV, § 483(a)], Nov. 30, 1983, 97 Stat. 1240.
Section 8211 of title 42, referred to in subsec.
(d)(3)(B)(iii)(V), was omitted from the Code pursuant to
section 8229 of Title 42, The Public Health and Welfare,
which terminated authority under that section on June
30, 1989.
Subsection (h) of section 1710 of this title, referred to
in subsec. (f)(1), was redesignated subsec. (i) by Pub. L.
105–276, title VI, § 602(1), Oct. 21, 1998, 112 Stat. 2674.
Subsection (k) of section 1710 of this title, referred to
in subsec. (f)(1), was repealed by Pub. L. 105–276, title
VI, § 601(c), Oct. 21, 1998, 112 Stat. 2673.
This chapter, referred to in subsec. (h)(9) to (11), was
in the original ‘‘this Act’’, meaning act June 27, 1934,
ch. 847, 48 Stat. 1246, which is classified principally to
this chapter (§ 1701 et seq.). For complete classification
of this Act to the Code, see Tables.
AMENDMENTS
2007—Subsec. (d)(3)(B)(iii)(III). Pub. L. 110–161 substituted ‘‘section 1712a of this title) by not to exceed
170 percent in any geographical area where the Secretary finds that cost levels so require and by not to
exceed 170 percent, or 215 percent in high cost areas,
where the Secretary determines it necessary on a
project-by-project basis’’ for ‘‘section 1712a of this
title)) by not to exceed 140 percent in any geographical
area where the Secretary finds that cost levels so require and by not to exceed 140 percent, or 170 percent
in high cost areas, where the Secretary determines it
necessary on a project-by-project basis’’.
2004—Subsec. (d)(3)(B)(iii)(V). Pub. L. 108–213 struck
out ‘‘with respect to rehabilitation projects involving
not more than five family units,’’ after ‘‘(V)’’.
2003—Subsec. (d)(3)(B)(iii). Pub. L. 108–186 substituted
‘‘; (III)’’ for ‘‘with respect to dollar amount limitations
applicable to rehabilitation projects described in subclause (II),’’, redesignated subcls. (III) and (IV) as (IV)
and (V), respectively, substituted ‘‘140 percent in’’ for
‘‘110 percent in’’, and inserted ‘‘, or 170 percent in high
cost areas,’’ after ‘‘and by not to exceed 140 percent’’.
2002—Subsec. (d)(3)(B)(iii). Pub. L. 107–326 inserted
subcl. (I) designation after ‘‘(iii)’’ and substituted ‘‘design; and (II)’’ for ‘‘design; and except that’’, ‘‘any of
the dollar amount limitations in subparagraph
(B)(iii)(I) (as such limitations may have been adjusted
in accordance with section 1712a of this title)’’ for ‘‘any
of the foregoing dollar amount limitations contained in
this clause’’, ‘‘with respect to dollar amount limitations applicable to rehabilitation projects described in
subclause (II), the Secretary may, by regulation, increase the dollar amount limitations contained in subparagraph (B)(iii)(I) (as such limitations may have been
adjusted in accordance with section 1712a of this title)’’
for ‘‘: Provided, That the Secretary may, by regulation,
increase any of the foregoing dollar amount limitations
contained in this clause (as determined after the application of the preceding proviso’’, ‘‘; (III)’’ for
‘‘: Provided further,’’, ‘‘subparagraph (B)(iii)(I) shall
preclude’’ for ‘‘subparagraph shall preclude’’, and
‘‘; (IV) with respect to rehabilitation projects involving
not more than five family units, the Secretary may further increase any of the dollar limitations which would
otherwise apply to such projects’’ for ‘‘: And provided
further, That the Secretary may further increase any of
the dollar amount limitations which would otherwise
apply for the purpose of this clause’’.
2001—Subsec. (d)(3)(B)(iii). Pub. L. 107–73 substituted
‘‘$38,025’’, ‘‘$42,120’’, ‘‘$50,310’’, ‘‘$62,010’’, and ‘‘$70,200’’
for ‘‘$30,420’’, ‘‘$33,696’’, ‘‘$40,248’’, ‘‘$49,608’’, and
‘‘$56,160’’, respectively, and ‘‘$43,875’’, ‘‘$49,140’’,
‘‘$60,255’’, ‘‘$75,465’’, and ‘‘$85,328’’ for ‘‘$35,100’’,
‘‘$39,312’’, ‘‘$48,204’’, ‘‘$60,372’’, and ‘‘$68,262’’, respectively.
1994—Subsec. (d)(3)(B)(iii). Pub. L. 103–233 substituted
‘‘$56,160’’ for ‘‘$59,160’’.
1992—Subsec. (d)(3)(B)(iii). Pub. L. 102–550, § 509(c),
substituted ‘‘$30,420’’, ‘‘$33,696’’, ‘‘$40,248’’, ‘‘$49,608’’, and

Page 582

‘‘$59,160’’ for ‘‘$25,350’’, ‘‘$28,080’’, ‘‘$33,540’’, ‘‘$41,340’’,
and ‘‘$46,800’’, respectively, and ‘‘$35,100’’, ‘‘$39,312’’,
‘‘$48,204’’, ‘‘$60,372’’, and ‘‘$68,262’’ for ‘‘$29,250’’,
‘‘$32,760’’, ‘‘$40,170’’, ‘‘$50,310’’, and ‘‘$56,885’’, respectively.
Subsec. (h)(7). Pub. L. 102–550, § 516(c), in first sentence, substituted ‘‘shall be negotiable, and, if in book
entry form, transferable, in the manner described by
the Secretary in regulations’’ for ‘‘shall be signed by
the Secretary, by either his written or engraved signature, shall be negotiable’’, in fourth sentence, substituted ‘‘and, in the case of debentures issued in certificated registered form, the guaranty’’ for ‘‘and the
guaranty’’, inserted after fifth sentence ‘‘Debentures issued under this subsection shall be in such form and
amounts; shall be subject to such terms and conditions;
and shall include such provisions for redemption, if
any, as may be prescribed by the Secretary of Housing
and Urban Development, with the approval of the Secretary of the Treasury; and may be in book entry or
certificated registered form, or such other form as the
Secretary of Housing and Urban Development may prescribe in regulations.’’ and struck out at end ‘‘Debentures issued under this subsection 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 Secretary with the approval of the Secretary of
the Treasury, and they may be in coupon or registered
form. Any difference between the amount of the debentures to which the financial institution is entitled, and
the aggregate face value of the debentures issued, not
to exceed $50, shall be adjusted by the payment of cash
by the Secretary to the financial institution from the
General Insurance Fund.’’
1991—Subsec. (d)(3)(A)(i). Pub. L. 102–40 substituted
‘‘section 5303A(d) of title 38’’ for ‘‘section 3103A(d) of
title 38’’.
1988—Subsec. (d)(3)(A)(i). Pub. L. 100–242, § 405(2), inserted before semicolon at end ‘‘, except that persons
enlisting in the armed forces after September 7, 1980, or
entering active duty after October 16, 1981, shall have
their eligibility determined in accordance with section
3103A(d) of title 38’’.
Subsec. (d)(3)(A)(ii) to (iv). Pub. L. 100–242, § 406(b)(9),
redesignated former cl. (iv) as (ii) and struck out ‘‘(except as provided in cl. (iii))’’, and struck out former cls.
(ii) and (iii) which read as follows:
‘‘(ii) in a case where the mortgagor is not the occupant of the property and intends to hold the property
for rental purposes, have a principal obligation in an
amount not to exceed 93 per centum of the amount
computed under the provisions of clause (i);
‘‘(iii) in a case where the mortgagor is not the occupant of the property and intends to hold the property
for the purpose of sale, have a principal obligation in
an amount not to exceed 85 per centum of the amount
computed under the provisions of clause (i), or in the
alternative, in an amount equal to the amount computed under the provisions of clause (i) if the mortgagor and mortgagee assume responsibility in a manner
satisfactory to the Secretary for the reduction of the
mortgage by an amount not less than 15 per centum of
the outstanding principal amount thereof, or by such
greater amount as may be required to meet the limitations of clause (iv), in the event the mortgaged property is not, prior to the due date of the eighteenth amortization payment of the mortgage, sold to a purchaser acceptable to the Secretary who is the occupant
of the property and who assumes and agrees to pay the
mortgage indebtedness; and’’.
Subsec. (d)(3)(B)(iii). Pub. L. 100–242, § 426(c), (h), substituted ‘‘$25,350’’, ‘‘$28,080’’, ‘‘$33,540’’, ‘‘$41,340’’, and
‘‘$46,800’’ for ‘‘$19,500’’, ‘‘$21,600’’, ‘‘$25,800’’, ‘‘$31,800’’,
and ‘‘$36,000’’, respectively, and ‘‘$29,250’’, ‘‘$32,760’’,
‘‘$40,170’’, ‘‘$50,310’’, and ‘‘$56,885’’ for ‘‘$22,500’’,
‘‘$25,200’’, ‘‘$30,900’’, ‘‘$38,700’’, and ‘‘$43,758’’, respectively, and substituted ‘‘not to exceed 110 percent in
any geographical area where the Secretary finds that
cost levels so require and by not to exceed 140 percent

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TITLE 12—BANKS AND BANKING

where the Secretary determines it necessary on a
project-by-project basis, but in no case may any such
increase exceed 90 percent where the Secretary determines that a mortgage purchased or to be purchased by
the Government National Mortgage Association in implementing its special assistance functions under section 1720 of this title (as such section existed immediately before November 30, 1983) is involved’’ for ‘‘not
to exceed 75 per centum in any geographical area where
he finds that cost levels so require, except that, where
the Secretary determines it necessary on a project by
project basis, the foregoing dollar amount limitations
contained in this paragraph may be exceeded by not to
exceed 90 per centum (by not to exceed 140 per centum
where the Secretary determines that a mortgage other
than one purchased or to be purchased under section
1720 of this title by the Government National Mortgage
Association in implementing its special assistance
functions is involved) in such an area’’.
1983—Subsec. (d)(3)(B)(ii). Pub. L. 98–181, § 432(a),
struck out proviso that in no case involving refinancing would the mortgage exceed the estimated cost of
repair and rehabilitation and the amount, as determined by the Secretary, required to refinance existing
indebtedness secured by the property or project.
Subsec. (d)(4). Pub. L. 98–181, § 404(b)(6), substituted
provision that the interest rate be at such rate as
agreed upon by the mortgagor and mortgagee for provision that the interest rate, exclusive of premium
charges for insurance and service charges if any, not
exceed 5 per centum per annum on the amount of the
principal obligation outstanding at any time, or not exceed such per centum per annum not in excess of 6 per
centum as the Secretary finds necessary to meet the
mortgage market.
Pub. L. 98–181, § 446(c), inserted ‘‘(unless otherwise approved by the Secretary)’’ after ‘‘periodic payments’’.
Subsec. (h)(2)(iii). Pub. L. 98–181, § 404(b)(7), substituted provision that the rate of interest be such rate
as agreed upon by the mortgagor and mortgagee for
provision that the rate of interest not exceed the rate
prescribed by the Secretary, but not in excess of 6 per
centum per annum of the amount of the principal obligation outstanding at any time, and such other charges
as approved by the Secretary.
1982—Subsec. (d)(3)(B)(iii). Pub. L. 97–377 inserted
‘‘(by not to exceed 140 per centum where the Secretary
determines that a mortgage other than one purchased
or to be purchased under section 1720 of this title by the
Government National Mortgage Association in implementing its special assistance functions is involved)’’
after ‘‘90 per centum’’.
1981—Subsec. (d)(3)(B)(iii). Pub. L. 97–35 inserted
‘‘therein’’ after ‘‘installation’’ and struck out ‘‘therein’’ after ‘‘measure’’.
1980—Subsec. (d)(1)(A)(v). Pub. L. 96–399, § 311(a),
added cl. (v).
Subsec. (d)(3)(A)(i). Pub. L. 96–399, § 336(b), substituted
provisions relating to the applicable maximum principal obligation which may be insured in the area under
section 1709(b) of this title, for provisions setting forth
dollar amounts of $67,500 for one-family property,
$76,000 for two-family, $92,000 for three-family, and
$107,000 for four-family or more than four-family, and
substituted ‘‘$9,165’’ for ‘‘$8,250’’.
Subsec. (d)(3)(B)(iii). Pub. L. 96–399, § 310(c), inserted
proviso relating to increases in dollar amount limitations.
Subsec. (d)(3)(B)(iv). Pub. L. 96–399, § 311(b), inserted
provisions relating to locally developed strategy for
neighborhood improvement, etc.
Subsec. (h)(2)(iv). Pub. L. 96–399, § 333(b), struck out
‘‘or three-quarters of the remaining economic life of
the structure, whichever is the lesser’’ after ‘‘loan’’.
1979—Subsec. (d)(3)(A)(i). Pub. L. 96–153, § 312(b), substituted ‘‘$67,500’’ for ‘‘$60,000’’, ‘‘$76,000’’ for ‘‘$65,000’’
where it first appeared, ‘‘$92,000’’ for ‘‘$65,000’’ where it
appeared the second time, ‘‘$107,000’’ for ‘‘$75,000’’, and
‘‘$8,250’’ for ‘‘$7,700’’.
Subsec. (d)(3)(B)(iii). Pub. L. 96–153, § 314, in first proviso substituted ‘‘75 per centum’’ for ‘‘50 per centum’’

§ 1715k

and inserted exception that the dollar amount limitations may be exceeded not to exceed 90 per centum
where the Secretary determines it to be necessary.
1977—Subsec. (d)(1)(A)(ii). Pub. L. 95–24 struck out ‘‘in
a community respecting which the Secretary of Housing and Urban Development has made the determination provided for by section 101(c) of the Housing Act of
1949, as amended’’ after ‘‘(as defined in title I of the
Housing Act of 1949, as amended)’’.
Subsec. (d)(3)(A). Pub. L. 95–128 substituted ‘‘$60,000’’
for ‘‘$45,000’’, ‘‘$65,000’’ for ‘‘$48,750’’ and ‘‘$75,000’’ for
‘‘$56,000’’ wherever appearing in provisions preceding cl.
(1); substituted in text preceding first proviso ‘‘and (2)
95 per centum of such value in excess of $25,000’’ for
‘‘, (2) 90 per centum of such replacement cost in excess
of $25,000 but not in excess of $35,000, (3) 80 per centum
of such replacement cost in excess of $35,000’’ and in
second proviso ‘‘and (2) 95 per centum of such value in
excess of $25,000’’ for ‘‘, (2) 90 per centum of such replacement cost in excess of $25,000 but not in excess of
$35,000, and (3) 85 per centum of such replacement cost
in excess of $35,000’’.
1976—Subsec. (d)(3)(B)(iii). Pub. L. 94–375 substituted
‘‘50 per centum in any geographical area’’ for ‘‘75 per
centum in any geographical area’’, ‘‘$19,500’’ for
‘‘$13,000’’, ‘‘$21,600’’ for ‘‘$18,000’’, ‘‘$25,800’’ for ‘‘$21,500’’,
‘‘$31,800’’ for ‘‘$26,500’’, ‘‘$36,000’’ for ‘‘$30,000’’, ‘‘$22,500’’
for ‘‘$15,000’’, ‘‘$25,200’’ for ‘‘$21,000’’, ‘‘$30,900’’ for
‘‘$25,750’’, ‘‘$38,700’’ for ‘‘$32,250’’, and ‘‘$43,758’’ for
‘‘$36,465’’.
1975—Subsec. (d)(3)(B)(iii). Pub. L. 94–173 raised from
45 per centum to 75 per centum the amount by which
any dollar limitation may, by regulation, be increased.
1974—Subsec. (d)(3)(A)(i). Pub. L. 93–383, § 302(b), substituted ‘‘$45,000’’ for ‘‘$33,000’’, ‘‘$48,750’’ for ‘‘$35,750’’,
and ‘‘$56,000’’ for ‘‘$41,250’’ wherever appearing in provisions preceding cl. (1).
Subsec. (d)(3)(A)(i)(1). Pub. L. 93–383, § 310(b)(1), substituted ‘‘$25,000’’ for ‘‘$15,000’’.
Subsec. (d)(3)(A)(i)(2). Pub. L. 93–383, § 310(b)(2), substituted ‘‘$25,000’’ for ‘‘$15,000’’ and ‘‘$35,000’’ for
‘‘$25,000’’.
Subsec. (d)(3)(A)(i)(3). Pub. L. 93–383, § 310(b)(3), substituted ‘‘$35,000’’ for ‘‘$25,000’’.
Subsec. (d)(3)(B)(i). Pub. L. 93–383, § 304(d), struck out
cl. (i) which set forth mortgage ceiling of $50,000,000.
Subsec. (d)(3)(B)(iii). Pub. L. 93–383, § 303(c), substituted ‘‘$13,000’’ for ‘‘$9,900’’, ‘‘$15,000’’ for ‘‘$11,550’’,
‘‘$18,000’’ for ‘‘$13,750’’, ‘‘$21,000’’ for ‘‘$16,500’’, ‘‘$21,500’’
for ‘‘$16,500’’, ‘‘$25,750’’ for ‘‘$19,800’’, ‘‘$26,500’’ for
‘‘$20,350’’, ‘‘$30,000’’ for ‘‘$23,100’’, ‘‘$32,250’’ for ‘‘$24,750’’,
and ‘‘$36,465’’ for ‘‘$28,050’’.
1969—Subsec. (d)(3)(A)(i). Pub. L. 91–152, §§ 102(b),
113(d)(1), substituted ‘‘$7,700’’ for ‘‘$7,000’’, ‘‘$25,000’’ for
‘‘$20,000’’ wherever appearing, ‘‘$33,000’’ for ‘‘$30,000’’,
‘‘$35,750’’ for ‘‘$32,500’’, and ‘‘$41,250’’ for ‘‘$37,500’’ wherever appearing.
Subsec. (d)(3)(B)(i). Pub. L. 91–152, § 104, substituted
provisions that the mortgage not exceed $50,000,000 for
provisions that the mortgage not exceed $30,000,000, or,
if executed by a mortgagor within subsec. (d)(2)(B) of
this section, not exceed $50,000,000.
Subsec. (d)(3)(B)(iii). Pub. L. 91–152, § 113(d)(2), (3),
substituted ‘‘$9,900’’ for ‘‘$9,000’’, ‘‘$11,550’’ for ‘‘$10,500’’,
‘‘$13,750’’ for ‘‘$12,500’’, ‘‘$16,500’’ for ‘‘$15,000’’ wherever
appearing, ‘‘$19,800’’ for ‘‘$18,000’’, ‘‘$20,350’’ for
‘‘$18,500’’, ‘‘$23,100’’ for ‘‘$21,000’’, ‘‘$24,750’’ for ‘‘$22,500’’,
and ‘‘$28,050’’ for ‘‘$25,000’’.
Subsec. (h)(2)(i). Pub. L. 91–152, § 113(d)(4), substituted
‘‘$12,000’’ for ‘‘$10,000’’.
1968—Subsec. (d)(2)(B). Pub. L. 90–448, § 1722(g), substituted ‘‘corporations or other legal entities restricted
by or under’’ for ‘‘corporations restricted by’’.
Subsec. (d)(3)(B)(ii). Pub. L. 90–448, § 311(a), inserted
proviso to permit the mortgage to involve the financing of the purchase of property which has been rehabilitated by a local public agency with Federal assistance
pursuant to section 1460(c)(8) of Title 42.
1967—Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’
for ‘‘Commissioner’’ wherever appearing in subsecs. (b),

§ 1715k

TITLE 12—BANKS AND BANKING

(d)(1)(B), (d)(2)(A), (d)(3)(A)(i), (iii), (iv), (d)(3) (B)(ii) to
(iv), (d)(4), (e), (f)(3), (h) (1), (h)(1)(C), (h)(2)(i) to (v),
(h)(3), (5) to (7), (h)(9)(B), and (h)(10), (11).
Pub. L. 90–19, § 1(a)(4), substituted ‘‘Secretary’s’’ for
‘‘Commissioner’s’’ wherever appearing in subsecs.
(d)(3)(A)(i)(B), (ii) and (h)(2)(i), (9)(A).
Subsec. (d)(1)(A). Pub. L. 90–19, § 1(g)(1)–(4), substituted ‘‘Secretary of Housing and Urban Development’’ and ‘‘Secretary’’ for ‘‘Housing and Home Finance Administrator’’ and ‘‘Administrator’’ wherever
appearing, ‘‘determination’’ for ‘‘certification to the
Commissioner’’, and ‘‘determined’’ for ‘‘certified to the
Commissioner’’ wherever appearing, respectively.
1966—Subsec. (d)(3)(A)(i). Pub. L. 89–754, § 305, increased the rate in cl. (3) from 75 to ‘‘80 per centum of
such replacement cost in excess of $20,000’’ and inserted
proviso respecting mortgage limits of a mortgagor who
is a veteran and the mortgage to be insured covers
property upon which there is located a dwelling designed principally for a one-family residence and definition of ‘‘veteran’’.
Subsec. (d)(3)(B)(iii). Pub. L. 89–754, § 306, provided
that with respect to rehabilitation projects involving
not more than five family units, the Secretary may by
regulation increase by 25 per centum any of the dollar
amount limitations contained in this clause which are
applicable to units with two, three, or four or more
bedrooms, inserted ‘‘as determined after the application of the preceding proviso’’ before ‘‘by not to exceed
45 per centum’’, and substituted ‘‘Provided further, That
nothing’’ for ‘‘Provided, That nothing’’.
1965—Subsec. (d)(1)(A). Pub. L. 89–117, § 311(c), inserted
cl. (iv).
Subsec. (d)(2). Pub. L. 89–117, § 1108(h)(1), substituted
‘‘the General Insurance Fund’’ for ‘‘the section 220
Housing Insurance Fund’’ wherever appearing.
Subsec. (d)(3)(A)(i). Pub. L. 89–117, § 209(1), struck out
a second proviso which, in a case involving refinancing,
prohibited the mortgage to exceed the estimated cost
of repair and rehabilitation and the amount required to
refinance existing indebtedness secured by the property
or project.
Subsec. (d)(3)(A)(ii). Pub. L. 89–117, § 209(2), substituted provisions prohibiting the mortgage, in a case
where the mortgagor is not the occupant of the property and intends to hold the property for rental purposes, to have a principal obligation in an amount in
excess of 93 per centum of the amount computed under
the provisions of cl. (i) for provisions which prohibited
the mortgage, in a case where a mortgagor is not the
occupant of the property, to have a principal obligation
in excess of an amount equal to 85 per centum of the
amount computed under cl. (i).
Subsec. (d)(3)(A)(iii), (iv). Pub. L. 89–117, § 209(2),
added cls. (iii) and (iv).
Subsec. (d)(3)(B)(iii). Pub. L. 89–117, § 207(c), substituted ‘‘$18,500 per family unit with three bedrooms,
and $21,000 per family unit with four or more bedrooms’’ for ‘‘and $18,500 per family unit with three or
more bedrooms’’ and ‘‘$22,500 per family unit with three
bedrooms, and $25,500 per family unit with four or more
bedrooms’’ for ‘‘and $22,500 per family unit with three
or more bedrooms’’.
Subsec. (d)(3)(B)(iv). Pub. L. 89–117, § 210, substituted
‘‘desirable and consistent with the urban renewal plan’’
for ‘‘adequate to serve the needs of the occupants of the
property and of other housing in the neighborhood’’,
and inserted proviso.
Subsec. (f). Pub. L. 89–117, § 1108(h)(1), (2), substituted
‘‘the General Insurance Fund’’ for ‘‘the section 220
Housing Insurance Fund’’ wherever appearing and, in
par. (3), struck out provision that, as to mortgages acquired hereunder, all references in section 1713 of this
title to the Housing Insurance Fund, the Housing Fund,
or the Fund shall be construed to refer to the section
220 Housing Insurance Fund.
Subsec. (g). Pub. L. 89–117, § 1108(h)(3), repealed subsec. (g) which created the section 220 Housing Insurance
Fund, provided for transfer of funds thereto, and authorized purchase and cancellation of debentures and
the receipt and payment of charges and fees.

Page 584

Subsec. (h)(1). Pub. L. 89–117, § 311(d), inserted ‘‘or in
an area in which a program of concentrated code enforcement activities is being carried out pursuant to
section 1468 of title 42’’.
Subsec. (h)(2)(i). Pub. L. 89–117, § 211(a), inserted proviso permitting the Commissioner by regulation to increase the amount by not to exceed 45 per centum in
any geographical area where he finds that cost levels so
require.
Subsec. (h)(4). Pub. L. 89–117, § 1108(h)(3), repealed par.
which created the Home Improvement Account and
provided for the transfer of funds thereto, credit and
charges to such Account, and disposition of surplus
moneys.
Subsec. (h)(5), (7). Pub. L. 89–117, § 1108(h)(4), substituted ‘‘General Insurance Fund’’ for ‘‘section 220
Home Improvement Account’’ wherever appearing.
Subsec. (h)(11). Pub. L. 89–117, § 211(b), inserted ‘‘or
such additional amount as the Commissioner has by
regulation prescribed in any geographical area where
he finds cost levels so require pursuant to the authority vested in him by proviso in paragraph (2)(i) of this
subsection’’.
1964—Subsec. (d)(3)(A)(i). Pub. L. 88–560, § 110, increased the maximum amount of the principal obligation for one-family residences from $25,000 to $30,000,
for two-family residences from $27,500 to $32,500, for
three-family residences from $30,000 to $32,500, for fourfamily residences from $35,000 to $37,500, and for morethan-four-family residences from $35,000 to $37,500.
Subsec. (d)(3)(B)(i). Pub. L. 88–560, § 111, substituted
‘‘$30,000,000’’ for ‘‘$20,000,000’’.
Subsec. (d)(3)(B)(iii). Pub. L. 88–560, § 107(c), changed
limits on mortgages for property or project attributable to dwelling use from ‘‘$2,500 per room (or $9,000
per family unit if the number of rooms in such property
or project is less than four per family unit)’’ to ‘‘$9,000
per family unit without a bedroom, $12,500 per family
unit with one bedroom, $15,000 per family unit with two
bedrooms, and $18,500 per family unit with three or
more bedrooms’’, changed such mortgage limits on
project consisting of elevator-type structures from a
sum ‘‘of $2,500 per room to not exceed $3,000 per room
and the dollar amount limitation of $9,000 per family
unit to not exceed $9,400 per family unit’’ to dollar
amount limitations ‘‘per family unit to not to exceed
$10,500 per family unit without a bedroom, $15,000 per
family unit with one bedroom, $18,000 per family unit
with two bedrooms, and $22,500 per family unit with
three or more bedrooms’’, and substituted provision authorizing an increase ‘‘by not to exceed 45 per centum’’
of any of such limits because of cost levels for former
provision authorizing such an increase ‘‘by not to exceed $1,250 per room without regard to the number of
rooms being less than four, or four or more’’.
Subsec. (f)(3). Pub. L. 88–560, § 105(c)(1), inserted ‘‘If
the insurance payment is made in cash, there shall be
added to such payment an amount equivalent to the interest which the debentures would have earned, computed to a date to be established pursuant to regulations issued by the Commissioner’’.
Subsec. (h)(1). Pub. L. 88–560, § 112(a), designated definitions of ‘‘home improvement loan’’, ‘‘improvement’’,
and ‘‘financial institution’’ in second sentence as cls.
(A)(i), (B), and (C), respectively, and added cl. (A)(ii) to
definition of ‘‘home improvement loan’’.
Subsec. (h)(2)(i). Pub. L. 88–560, § 112(b), inserted
‘‘, and be limited as required by paragraph (11) of this
subsection’’.
Subsec. (h)(2)(vi). Pub. L. 88–560, § 113, substituted ‘‘an
expiration date in excess of 10 years later than the maturity date of the loan’’ for ‘‘a period of not less than
50 years to run from the date of the loan’’.
Subsec. (h)(6). Pub. L. 88–560, § 105(c)(1), inserted ‘‘If
the insurance payment is made in cash, there shall be
added to such payment an amount equivalent to the interest which the debentures would have earned, computed to a date to be established pursuant to regulations issued by the Commissioner’’.
Subsec. (h)(11). Pub. L. 88–560, § 112(c), added par. (11).

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TITLE 12—BANKS AND BANKING

1961—Subsec. (a). Pub. L. 87–70, § 102(a)(2), substituted
‘‘loan and mortgage insurance’’ for ‘‘mortgage insurance’’.
Subsec. (d)(3)(A)(i). Pub. L. 87–70, §§ 102(a)(1), 609, increased the maximum amount of the principal obligation for one-family residences from $22,500 to $25,000,
and for two-family residences from $25,000 to $27,500,
substituted ‘‘$15,000’’ for ‘‘$13,500’’ in two places,
‘‘$20,000’’ for ‘‘$18,000’’ in two places, ‘‘75 per centum’’
for ‘‘70 per centum’’, and ‘‘shall be based upon the sum
of the estimated cost of repair and rehabilitation and
the Commissioner’s estimate of the value of the property before repair and rehabilitation rather than upon
the Commissioner’s estimate of the replacement cost’’
for ‘‘shall be based upon appraised value rather than
upon the Commissioner’s estimate of the replacement
cost’’ in proviso relating to limitations upon the
amount of the mortgage in the case of properties other
than new construction, and inserted proviso which limits, in cases involving refinancing, the amount of the
mortgage to not more than the estimated cost of repair
and rehabilitation and the amount (as determined by
the Commissioner) required to refinance existing indebtedness secured by the property or project.
Subsec. (d)(3)(B)(ii). Pub. L. 87–70, § 102(a)(1), substituted ‘‘shall be based upon the sum of the estimated
cost of repair and rehabilitation and the Commissioner’s estimate of the value of the property before repair and rehabilitation rather than upon the Commissioner’s estimate of the replacement cost’’ for ‘‘shall be
based upon appraised value rather than upon the Commissioner’s estimate of the replacement cost’’ in proviso relating to limitations upon the amount of the
mortgage in the case of properties other than new construction, and inserted the proviso which limits, in
cases involving refinancing, the amount of the mortgage to not more than the estimated cost of repair and
rehabilitation and the amount (as determined by the
Commissioner) required to refinance existing indebtedness secured by the property or project.
Subsec. (f)(3). Pub. L. 87–70, § 612(g), added par. (3).
Subsec. (h). Pub. L. 87–70, § 102(a)(3), added subsec. (h).
1959—Subsec. (d)(3)(A)(i). Pub. L. 86–372, § 109(a)(1), (2),
increased the maximum amount of the principal obligation for one-family residences from $20,000 to $22,500,
for two-family residences from $20,000 to $25,000, and for
three-family residences from $27,500 to $30,000, and increased the maximum amount of loans over $13,500
from 85 percent of the value in excess of $13,500 but not
in excess of $16,000 to 90 percent of the value in excess
of $13,500 but not in excess of $18,000.
Pub. L. 86–372, § 109(a)(3), inserted proviso in subsec.
(d)(3)(A)(ii) making the 85 per centum limitation inapplicable if the mortgagor and mortgagee assume responsibility for the reduction of the mortgage by an
amount not less than 15 per centum of the outstanding
principal amount thereof in the event the mortgaged
property is not, prior to the due date of the 18th amortization payment of the mortgage, sold to a purchaser
acceptable to the Commissioner who is the occupant of
the property and who assumes and agrees to pay the
mortgage indebtedness.
Subsec. (d)(3)(B)(i). Pub. L. 86–372, § 109(b), substituted
‘‘$20,000,000’’ for ‘‘$12,500,000’’.
Subsec. (d)(3)(B)(iii). Pub. L. 86–372, § 109(c)–(e), inserted ‘‘(excluding exterior land improvements as defined by the Commissioner)’’ after ‘‘dwelling use’’, and
substituted ‘‘$2,500’’ for ‘‘$2,250’’ in two places, ‘‘$9,000’’
for ‘‘$8,100’’ in two places, ‘‘$3,000’’ for ‘‘$2,700’’, ‘‘$9,400’’
for ‘‘$8,400’’, and ‘‘$1,250’’ for ‘‘$1,000’’.
Subsec. (d)(3)(B)(iv). Pub. L. 86–372, § 109(e), added cl.
(iv).
Subsec. (f)(1). Pub. L. 86–372, § 116(b), inserted reference to subsec. (k) of section 1710 of this title.
1958—Subsec. (d)(3)(A)(i). Pub. L. 85–364 substituted
‘‘$13,500’’ for ‘‘$10,000’’ in two places.
1957—Subsec. (d)(3). Pub. L. 85–104, § 102, amended provisions generally, and, among other changes, raised
maximum mortgage obligation from 95 to 97 percent,
inserted ‘‘unless the construction of the dwelling was

§ 1715k

completed more than one year prior to the application
for mortgage insurance’’, and as to estimated replacement cost, raised figure from $9,000 to $10,000 and provided for 85 percent of such replacement cost in excess
of $10,000 and 70 percent in excess of $16,000, in lieu of
former provisions allowing 75 percent of such cost in
excess of $9,000 with Presidential authority to increase
dollar amounts to $10,000.
Subsec. (d)(3)(B)(iii). Pub. L. 85–10 substituted ‘‘without regard to the number of rooms being less than four,
or four or more’’ for ‘‘or per family unit, as the case
may be’’, in second proviso.
Subsec. (f)(1). Pub. L. 85–104, § 112, substituted ‘‘(h),
and (j) of section 1710 of this title’’ for ‘‘and (h) of section 1710 of this title’’.
1956—Subsec. (d)(1)(A). Act Aug. 7, 1956, § 307(b), provided mortgage insurance assistance for urban renewal
areas under section 1462 of this title without requiring
the programs required of areas in cl. (i) or cl. (ii).
Subsec. (d)(3)(B)(ii). Act Aug. 7, 1956, § 107(a), inserted
‘‘, and shall include an allowance for builder’s and
sponsor’s profit and risk of 10 per centum of all of the
foregoing items except the land unless the Commissioner, after certification that such allowance is unreasonable, shall by regulation prescribe a lesser percentage’’ after ‘‘approved by the Secretary’’.
Subsec. (d)(3)(B)(iii). Act Aug. 7, 1956, § 107(b), substituted ‘‘Provided further’’ for ‘‘except’’, substituted
‘‘any of the foregoing dollar amount limitations’’ for
‘‘the foregoing limits’’ and inserted ‘‘or per family unit,
as the case may be,’’ after ‘‘$1,000 per room’’.
1955—Subsec. (d)(3)(A). Act Aug. 11, 1955, § 102(g)(1),
provided that the maximum amount of a mortgage to
be insured may be determined on the bases of estimated
replacement cost, and required determination upon appraised value in case of properties other than new construction.
Subsec. (d)(3)(B). Act Aug. 11, 1955, § 102(c), (g)(2), increased from $5,000,000 to $12,500,000 the limitation on
the maximum amount of a mortgage, provided that the
maximum amount of a mortgage to be insured may be
determined on the bases of estimated replacement cost,
and required determination upon appraised value in
case of properties other than new construction.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 406(b)(9) of Pub. L. 100–242 applicable only with respect to mortgages insured pursuant to conditional commitment issued on or after Feb.
5, 1988, or in accordance with direct endorsement program (24 CFR 200.163), if approved underwriter of mortgagee signs appraisal report for property on or after
Feb. 5, 1988, see section 406(d) of Pub. L. 100–242, set out
as a note under section 1709 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
LIMITATION ON NUMBER OF DWELLING UNITS WITH
MORTGAGES NOT PROVIDING FOR COMPLETE AMORTIZATION

For limitation on the number of dwelling units with
mortgages not providing for complete amortization
pursuant to authority granted by amendment to subsec. (d)(4) by section 446 of Pub. L. 98–181, see section
446(f) of Pub. L. 98–181, set out as a note under section
1713 of this title.
AMENDMENTS TO PROVISIONS FOR FAMILY UNIT LIMITS
ON RENTAL HOUSING; EQUITABLE APPLICATION OF
SUCH AMENDMENTS OR PRE-AMENDMENT PROVISIONS
TO PROJECTS SUBMITTED FOR CONSIDERATION PRIOR
TO SEPTEMBER 2, 1964
Equitable application of amendments to subsec.
(d)(3)(B)(iii) of this section by section 107(c) of Pub. L.
88–560 or pre-amended provisions to projects submitted
for consideration prior to Sept. 2, 1964, see section

§ 1715l

TITLE 12—BANKS AND BANKING

107(g) of Pub. L. 88–560, set out as a note under section
1713 of this title.
LABOR STANDARDS
Application of section 1715c of this title, relating to
labor standards, to certain mortgage insurance under
this section, see subsec. (a) of section 1715c.

§ 1715l. Housing for moderate income and displaced families
(a) Purpose
This section is designed to assist private industry in providing housing for low and moderate income families and displaced families.
(b) Authorization
The Secretary is authorized, upon application
by the mortgagee, to insure under this section
as hereinafter provided any mortgage (including
advances during construction on mortgages covering property of the character described in
paragraphs (3) and (4) of subsection (d) of this
section) which is eligible for insurance as provided herein and, upon such terms and conditions as the Secretary may prescribe, to make
commitments for the insurance of such mortgages prior to the date of their execution or disbursement thereon.
(c) Definitions
As used in this section, the terms ‘‘mortgage’’,
‘‘first mortgage’’, ‘‘mortgagee’’, ‘‘mortgagor’’,
‘‘maturity date’’ and ‘‘State’’ shall have the
same meaning as in section 1707 of this title.
(d) Eligibility for insurance; conditions; limits
To be eligible for insurance under this section,
a mortgage shall—
(1) have been made to and be held by a mortgagee approved by the Secretary as responsible and able to service the mortgage properly;
(2) be secured by property upon which there
is located a dwelling conforming to applicable
standards prescribed by the Secretary under
subsection (f) of this section, and meeting the
requirements of all State laws, or local ordinances or regulations, relating to the public
health or safety, zoning, or otherwise, which
may be applicable thereto, and shall involve a
principal obligation (including such initial
service charges, appraisal, inspection, and
other fees as the Secretary shall approve) in
an amount (A) not to exceed (i) $31,000 (or
$36,000, if the mortgagor’s family includes five
or more persons) in the case of a property
upon which there is located a dwelling designed principally for a single-family residence, (ii) $35,000 in the case of a property
upon which there is located a dwelling designed principally for a two-family residence,
(iii) $48,600 in the case of a property upon
which there is located a dwelling designed
principally for a three-family residence, or (iv)
$59,400 in the case of a property upon which
there is located a dwelling designed principally for a four-family residence, except that
the Secretary may increase the foregoing
amounts to not to exceed $36,000 (or $42,000 if
the mortgagor’s family includes five or more
persons), $45,000, $57,600, and $68,400, respectively, in any geographical area where he finds

Page 586

that cost levels so require; and (B) not to exceed the appraised value of the property (as of
the date the mortgage is accepted for insurance): Provided, That (i)(1) in the case of a displaced family, he shall have paid on account of
the property at least $200 in the case of a single-family dwelling, $400 in the case of a twofamily dwelling, $600 in the case of a threefamily dwelling, and $800 in the case of a fourfamily dwelling, or (2) in the case of any other
family, he shall have paid on account of the
property at least 3 per centum of the Secretary’s estimate of its acquisition cost (excluding the mortgage insurance premium paid
at the time the mortgage is insured), in cash
or its equivalent; which amount in either instance may include amounts to cover settlement costs and initial payments for taxes,
hazard insurance, and other prepaid expenses;
or (ii) in the case of repair and rehabilitation,
the amount of the mortgage shall not exceed
the sum of the estimated cost of repair and rehabilitation and the Secretary’s estimate of
the value of the property before repair and rehabilitation, except that in no case involving
refinancing shall such mortgage exceed such
estimated cost of repair and rehabilitation and
the amount (as determined by the Secretary)
required to refinance existing indebtedness secured by the property: Provided further, That
the mortgagor shall to the maximum extent
feasible be given the opportunity to contribute
the value of his labor as equity in such dwelling; or
(3) if executed by a mortgagor which is a
public body or agency (and, except with respect to a project assisted or to be assisted
pursuant to section 8 of the United States
Housing Act of 1937 [42 U.S.C. 1437f], which certifies that it is not receiving financial assistance from the United States exclusively pursuant to such Act [42 U.S.C. 1437 et seq.]) a cooperative (including an investor-sponsor who
meets such requirements as the Secretary
may impose to assure that the consumer interest is protected), or a limited dividend corporation (as defined by the Secretary), or a
private nonprofit corporation or association,
or other mortgagor approved by the Secretary,
and regulated or supervised under Federal or
State laws or by political subdivisions of
States, or agencies thereof, or by the Secretary under a regulatory agreement or otherwise, as to rents, charges, and methods of operation, in such form and in such manner as in
the opinion of the Secretary will effectuate
the purposes of this section—
(i) Repealed. Pub. L. 93–383, title III,
§ 304(e)(1), Aug. 22, 1974, 88 Stat. 678.
(ii)(I) not exceed, for such part of the property or project as may be attributable to
dwelling use (excluding exterior land improvements as defined by the Secretary)
$42,048 per family unit without a bedroom,
$48,481 per family unit with one bedroom,
58,469 1 per family unit with two bedrooms,
$74,840 per family unit with three bedrooms,
and $83,375 per family unit with four or more
bedrooms; except that as to projects to con1 So

in original. Probably should be preceded by a dollar sign.

Page 587

TITLE 12—BANKS AND BANKING

sist of elevator-type structures the Secretary may, in his discretion, increase the
dollar amount limitations per family unit to
not to exceed $44,250 per family unit without
a bedroom, $50,724 per family unit with one
bedroom, $61,680 per family unit with two
bedrooms, $79,793 per family unit with three
bedrooms, and $87,588 per family unit with
four or more bedrooms, as the case may be,
to compensate for the higher costs incident
to the construction of elevator-type structures of sound standards of construction and
design; (II) the Secretary may, by regulation, increase any of the dollar amount limitations in subclause (I) (as such limitations
may have been adjusted in accordance with
section 1712a of this title) by not to exceed
170 percent in any geographical area where
the Secretary finds that cost levels so require and by not to exceed 170 percent, or 215
percent in high cost areas, where the Secretary determines it necessary on a projectby-project basis, but in no case may any
such increase exceed 90 percent where the
Secretary determines that a mortgage purchased or to be purchased by the Government National Mortgage Association in implementing its special assistance functions
under section 1720 2 of this title (as such section existed immediately before November
30, 1983) is involved; and
(iii) not exceed (1) in the case of new construction, the amount which the Secretary
estimates will be the replacement cost of the
property or project when the proposed improvements are completed (the replacement
cost may include the land, the proposed
physical improvements, utilities within the
boundaries of the land, architect’s fees,
taxes, interest during construction, and
other miscellaneous charges incident to construction and approved by the Secretary), or
(2) in the case of repair and rehabilitation,
the sum of the estimated cost of repair and
rehabilitation and the Secretary’s estimate
of the value of the property before repair
and rehabilitation: Provided, That the mortgage may involve the financing of the purchase of property which has been rehabilitated by a local public agency with Federal
assistance pursuant to section 110(c)(8) of
the Housing Act of 1949 [42 U.S.C. 1460(c)(8)],
and, in such case, the amount of the mortgage shall not exceed the appraised value of
the property as of the date the mortgage is
accepted for insurance: Provided further,
That in the case of any mortgagor other
than a nonprofit corporation or association,
cooperative (including an investor-sponsor),
or public body, or a mortgagor meeting the
special requirements of subsection (e)(1), the
amount of the mortgage shall not exceed 90
per centum of the amount otherwise authorized under this section: Provided further,
That such property or project, when constructed, or repaired and rehabilitated, shall
be for use as a rental or cooperative project,
and low and moderate income families or
displaced families shall be eligible for occu2 See

References in Text note below.

§ 1715l

pancy in accordance with such regulations
and procedures as may be prescribed by the
Secretary and the Secretary may adopt such
requirements as he determines to be desirable regarding consultation with local public
officials where such consultation is appropriate by reason of the relationship of such
project to projects under other local programs; or
(4) if executed by a mortgagor and which is
approved by the Secretary—
(i) Repealed. Pub. L. 93–383, title III,
§ 304(e)(2), Aug. 22, 1974, 88 Stat. 678.
(ii)(I) not exceed, for such part of the property or project as may be attributable to
dwelling use (excluding exterior land improvements as defined by the Secretary),
$37,843 per family unit without a bedroom,
$42,954 per family unit with one bedroom,
$51,920 per family unit with two bedrooms,
$65,169 per family unit with three bedrooms,
and $73,846 per family unit with four or more
bedrooms; except that as to projects to consist of elevator-type structures the Secretary may, in his discretion, increase the
dollar amount limitations per family unit to
not to exceed $40,876 per family unit without
a bedroom, $46,859 per family unit with one
bedroom, $56,979 per family unit with two
bedrooms, $73,710 per family unit with three
bedrooms, and $80,913 per family unit with
four or more bedrooms, as the case may be,
to compensate for the higher costs incident
to the construction of elevator-type structures of sound standards of construction and
design; (II) the Secretary may, by regulation, increase any of the dollar limitations
in subclause (I) (as such limitations may
have been adjusted in accordance with section 1712a of this title) by not to exceed 170
percent in any geographical area where the
Secretary finds that cost levels so require
and by not to exceed 170 percent, or 215 percent in high cost areas, where the Secretary
determines it necessary on a project-byproject basis, but in no case may any such
increase exceed 90 percent where the Secretary determines that a mortgage purchased or to be purchased by the Government National Mortgage Association in implementing its special assistance functions
under section 1720 2 of this title (as such section existed immediately before November
30, 1983) is involved;
(iii) not exceed (in the case of a property
or project approved for mortgage insurance
prior to the beginning of construction) 90 per
centum of the amount which the Secretary
estimates will be the replacement cost of the
property or project when the proposed improvements are completed (the replacement
cost may include the land, the proposed
physical improvements, utilities within the
boundaries of the land, architect’s fees,
taxes, interest during construction, and
other miscellaneous charges incident to construction and approved by the Secretary,
and shall include an allowance for builder’s
and sponsor’s profit and risk of 10 per centum of all of the foregoing items, except the
land, unless the Secretary, after certifi-

§ 1715l

TITLE 12—BANKS AND BANKING

cation that such allowance is unreasonable,
shall by regulation prescribe a lesser percentage); and
(iv) not exceed 90 per centum of the sum of
the estimated cost of repair and rehabilitation (including the cost of evaluating and reducing lead-based paint hazards, as such
terms are defined in section 4851b of title 42)
and the Secretary’s estimate of the value of
the property before repair and rehabilitation
if the proceeds of the mortgage are to be
used for the repair and rehabilitation of a
property or project: Provided, That the Secretary may, in his discretion, require the
mortgagor to be regulated or restricted as to
rents or sales, charges, capital structure,
rate of return, and methods of operation,
and for such purpose the Secretary may
make such contracts with and acquire for
not to exceed $100 such stock or interest in
any such mortgagor as the Secretary may
deem necessary to render effective such restrictions or regulations, with such stock or
interest being paid for out of the General Insurance Fund and being required to be redeemed by the mortgagor at par upon the
termination of all obligations of the Secretary under the insurance;
(5) bear interest at such rate as may be
agreed upon by the mortgagor and the mortgagee; and contain such terms and provisions
with respect to the application of the mortgagor’s periodic payment to amortization of the
principal of the mortgage, insurance, repairs,
alterations, payment of taxes, default reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional
and secondary liens, and other matters as the
Secretary may in his discretion prescribe: Provided, That a mortgage insured under the provisions of subsection (d)(3) shall bear interest
(exclusive of any premium charges for insurance and service charge, if any) at not less
than the lower of (A) 3 per centum per annum,
or (B) the annual rate of interest determined,
from time to time by the Secretary of the
Treasury at the request of the Secretary, by
estimating the average market yield to maturity on all outstanding marketable obligations
of the United States, and by adjusting such
yield to the nearest one-eighth of 1 per centum, and there shall be no differentiation in
the rate of interest charged under this proviso
as between mortgagors under subsection (d)(3)
on the basis of differences in the types or
classes of such mortgagors, and
(6) provide for complete amortization by
periodic payments (unless otherwise approved
by the Secretary) within such terms as the
Secretary may prescribe, but as to mortgages
coming within the provisions of subsection
(d)(2) not to exceed from the date of the beginning of amortization of the mortgage (i) 40
years in the case of a displaced family, (ii) 35
years in the case of any other family if the
mortgage is approved for insurance prior to
construction, except that the period in such
case may be increased to not more than 40
years where the mortgagor is not able, as determined by the Secretary, to make the required payments under a mortgage having a

Page 588

shorter amortization period, and (iii) 30 years
in the case of any other family where the
mortgage is not approved for insurance prior
to construction.
(e) ‘‘Mortgagor’’ defined; release of mortgagor or
part of property
(1) A mortgagor which may be approved by the
Secretary as provided in subsection (d)(3) includes a mortgagor which, as a condition of obtaining insurance of the mortgage and prior to
the submission of its application for such insurance, has entered into an agreement (in form
and substance satisfactory to the Secretary)
with a private nonprofit corporation eligible for
an insured mortgage under the provisions of subsection (d)(3), that the mortgagor will sell the
project when it is completed to the corporation
at the actual cost of the project, as certified
pursuant to section 1715r of this title. The mortgagor to whom the property is sold shall be regulated or supervised by the Secretary as provided in subsection (d)(3) to effectuate its purposes.
(2) The Secretary may at any time, under such
terms and conditions as he may prescribe, consent to the release of the mortgagor from his liability under the mortgage or the credit instrument secured thereby, or consent to the release
of parts of the mortgaged property from the lien
of the mortgage.
(f) Compliance with standards; nondwelling facilities in projects in urban renewal areas;
number of family units; premium charges;
housing for low-income purchasers; expiration of mortgage insurance authority; ‘‘family’’ defined; single occupants in subsection
(d)(3) housing; use of certain housing facilities for classroom purposes; return of advances for capital improvements
The property or project shall comply with
such standards and conditions as the Secretary
may prescribe to establish the acceptability of
such property for mortgage insurance and may
include such commercial and community facilities as the Secretary deems adequate to serve
the occupants: Provided, That in the case of any
such property or project located in an urban renewal
area,
the
provisions
of
section
1715k(d)(3)(B)(iv) of this title shall apply with respect to the nondwelling facilities which may be
included in the mortgage: Provided further, That,
in the case of a mortgage which bears interest
at the below-market interest rate prescribed in
the proviso of subsection (d)(5), the provisions of
section 1715k(d)(3)(B)(iv) of this title shall only
apply if the mortgagor waives the right to receive dividends on its equity investment in the
portion thereof devoted to commercial facilities.
A property or project covered by a mortgage
insured under the provisions of subsection (d)(3)
or (d)(4) shall include five or more family units:
Provided, That such units, in the case of a
project designed primarily for occupancy by displaced, elderly, or handicapped families, need
not, with the approval of the Secretary, contain
kitchen facilities, and such projects may include
central dining and other shared facilities. The
Secretary is authorized to adopt such procedures and requirements as he determines are desirable to assure that the dwelling accommoda-

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TITLE 12—BANKS AND BANKING

tions provided under this section are available
to displaced families. Notwithstanding any provision of this chapter, the Secretary, in order to
assist further the provision of housing for low
and moderate income families, in his discretion
and under such conditions as he may prescribe,
may insure a mortgage which meets the requirements of subsection (d)(3) of this section as in
effect after June 30, 1961, or which meets the requirements of subsection (h), (i), or (j) with no
premium charge, with a reduced premium
charge, or with a premium charge for such period or periods during the time the insurance is
in effect as the Secretary may determine, and
there is authorized to be appropriated, out of
any money in the Treasury not otherwise appropriated, such amounts as may be necessary to
reimburse the General Insurance Fund for any
net losses in connection with such insurance.
Any person who is sixty-two years of age or
over, or who is a handicapped person within the
meaning of section 1701q 2 of this title, or who is
a displaced person, shall be deemed to be a family within the meaning of the terms ‘‘family’’
and ‘‘families’’ as those terms are used in this
section. Low- and moderate-income persons who
are less than 62 years of age shall be eligible for
occupancy of dwelling units in a project financed with a mortgage insured under subsection (d)(3). In any case in which it is determined in accordance with regulations of the
Secretary that facilities in existence or under
construction on December 31, 1970, which could
appropriately be used for classroom purposes are
available in any such property or project and
that public schools in the community are overcrowded due in part to the attendance at such
schools of residents of the property or project,
such facilities may be used for such purposes to
the extent permitted in such regulations (without being subject to any of the requirements of
the proviso in section 1715k(d)(3)(B)(iv) of this
title except the requirement that the project be
predominantly residential).
As used in this section the terms ‘‘displaced
family’’, ‘‘displaced families’’, and ‘‘displaced
person’’ shall mean a family or families, or a
person, displaced from an urban renewal area, or
as a result of governmental action, or as a result
of a major disaster as determined by the President pursuant to the Disaster Relief and Emergency Assistance Act [42 U.S.C. 5121 et seq.].
In order to induce advances by owners for capital improvements (excluding any owner contributions that may be required by the Secretary as a condition for assistance under section 201 of the Housing and Community Development Amendments of 1978) to benefit projects
covered by a mortgage under the provisions of
subsection (d)(3) that bears a below market interest rate prescribed in the proviso to subsection (d)(5), in establishing the rental charge
for the project the Secretary may include an
amount that would permit a return of such advances with interest to the owner out of project
income, on such terms and conditions as the
Secretary may determine. Any resulting increase in rent contributions shall be—
(A) to a level not exceeding the lower of 30
percent of the adjusted income of the tenant
or the published existing fair market rent for

§ 1715l

comparable housing established under section
8(c) of the United States Housing Act of 1937
[42 U.S.C. 1437f(c)];
(B) phased in equally over a period of not
less than 3 years, if such increase is 30 percent
or more; and
(C) limited to not more than 10 percent per
year if such increase is more than 10 percent
but less than 30 percent.
Assistance under section 8 of the United States
Housing Act of 1937 [42 U.S.C. 1437f] shall be provided, to the extent available under appropriations Acts, if necessary to mitigate any adverse
effects on income-eligible tenants.
(g) Entitlement of mortgagee to benefits; applicability of other provisions; debentures; ‘‘going
Federal rate’’ defined; transfer of original
credit instrument
The mortgagee shall be entitled to receive the
benefits of the insurance as hereinafter provided—
(1) as to mortgages meeting the requirements of paragraph (2) of subsection (d) of this
section, paragraph (5) of subsection (h) of this
section, or paragraph (2) of subsection (i) of
this section, as provided in section 1710(a) of
this title with respect to mortgages insured
under section 1709 of this title, and the provisions of subsections (b), (c), (d), (e), (f), (g),
(h),2 (j), and (k) 2 of section 1710 of this title
shall be applicable to such mortgages insured
under this section, except that all references
therein to the Mutual Mortgage Insurance
Fund or the Fund shall be construed to refer
to the General Insurance Fund and all references therein to section 1709 of this title
shall be construed to refer to this section; or
(2) as to mortgages meeting the requirements of paragraph (3) or (4) of subsection (d)
of this section, paragraph (1) of subsection (h)
of this section, or paragraph (2) of subsection
(j) of this section as provided in section 1713(g)
of this title with respect to mortgages insured
under said section 1713, and the provisions of
subsections (h), (i), (j), (k), and (l) of section
1713 of this title shall be applicable to such
mortgages insured under this section; or
(3) as to mortgages meeting the requirements of this section which are insured or initially endorsed for insurance on or after June
30, 1961, notwithstanding the provisions of
paragraphs (1) and (2) of this subsection, the
Secretary in his discretion, in accordance with
such regulations as he may prescribe, may
make payments pursuant to such paragraphs
in cash or in debentures (as provided in the
mortgage insurance contract), or may acquire
a mortgage loan that is in default and the security therefor upon payment to the mortgagee in cash or in debentures (as provided in
the mortgage insurance contract) of a total
amount equal to the unpaid principal balance
of the loan plus any accrued interest and any
advances approved by the Secretary and made
previously by the mortgagee under the provisions of the mortgage, and after the acquisition of any such mortgage by the Secretary
the mortgagee shall have no further rights, liabilities, or obligations with respect to the
loan or the security for the loan. The appro-

§ 1715l

TITLE 12—BANKS AND BANKING

priate provisions of sections 1710 and 1713 of
this title relating to the issuance of debentures shall apply with respect to debentures issued under this paragraph, and the appropriate
provisions of sections 1710 and 1713 of this title
relating to the rights, liabilities, and obligations of a mortgagee shall apply with respect
to the Secretary when he has acquired an insured mortgage under this paragraph, in accordance with and subject to regulations
(modifying such provisions to the extent necessary to render their application for such
purposes appropriate and effective) which
shall be prescribed by the Secretary, except
that as applied to mortgages so acquired (A)
all references in section 1710 of this title to
the Mutual Mortgage Insurance Fund or the
Fund shall be construed to refer to the General Insurance Fund, and (B) all references in
section 1710 of this title to section 1709 of this
title shall be construed to refer to this section. If the insurance is paid in cash, there
shall be added to such payment an amount
equivalent to the interest which the debentures would have earned, computed to a date
to be established pursuant to regulations issued by the Secretary.
(4)(A) in the event any mortgage insured
under this section pursuant to a commitment
to insure entered into before November 30,
1983, is not in default at the expiration of
twenty years from the date the mortgage was
endorsed for insurance, the mortgagee shall,
within a period thereafter to be determined by
the Secretary, have the option to assign,
transfer, and deliver to the Secretary the
original credit instrument and the mortgage
securing the same and receive the benefits of
the insurance as hereinafter provided in this
paragraph, upon compliance with such requirements and conditions as to the validity
of the mortgage as a first lien and such other
matters as may be prescribed by the Secretary
at the time the loan is endorsed for insurance.
Upon such assignment, transfer, and delivery
the obligation of the mortgagee to pay the
premium charges for insurance shall cease,
and the Secretary shall issue to the mortgagee
debentures having a par value equal to the
amount of the original principal obligation of
the mortgage which was unpaid on the date of
the assignment, plus accrued interest to such
date. Debentures issued pursuant to this paragraph shall be issued in the same manner and
subject to the same terms and conditions as
debentures issued under paragraph (1) of this
subsection, except that the debentures issued
pursuant to this paragraph shall be dated as of
the date the mortgage is assigned to the Secretary, shall mature ten years after such date,
and shall bear interest from such date at the
going Federal rate determined at the time of
issuance. The term ‘‘going Federal rate’’ as
used herein means the annual rate of interest
which the Secretary of the Treasury shall
specify as applicable to the six-month period
(consisting of January through June or July
through December) which includes the issuance date of such debentures, which applicable
rate for each such six-month period shall be
determined by the Secretary of the Treasury

Page 590

by estimating the average yield to maturity,
on the basis of daily closing market bid
quotations or prices during the month of May
or the month of November, as the case may be,
next preceding such six-month period, on all
outstanding marketable obligations of the
United States having a maturity date of eight
to twelve years from the first day of such
month of May or November (or, if no such obligations are outstanding, the obligation next
shorter than eight years and the obligation
next longer than twelve years, respectively,
shall be used), and by adjusting such estimated average annual yield to the nearest
one-eight of 1 per centum. The Secretary shall
have the same authority with respect to mortgages assigned to him under this paragraph as
contained in sections 1713(k) and 1713(l) of this
title as to mortgages insured by the Secretary
and assigned to him under section 1713 of this
title.
(B) In processing a claim for insurance benefits under this paragraph, the Secretary may
direct the mortgagee to assign, transfer, and
deliver the original credit instrument and the
mortgage securing it directly to the Government National Mortgage Association in lieu of
assigning, transferring, and delivering the
credit instrument and the mortgage to the
Secretary. Upon the assignment, transfer, and
delivery of the credit instrument and the
mortgage to the Association, the mortgage insurance contract shall terminate and the
mortgagee shall receive insurance benefits as
provided in subparagraph (A). The Association
is authorized to accept such loan documents in
its own name and to hold, service, and sell
such loans as agent for the Secretary. The
mortgagor’s obligation to pay a service charge
in lieu of a mortgage insurance premium shall
continue as long as the mortgage is held by
the Association or by the Secretary. The Secretary shall have the same authority with respect to mortgages assigned to the Secretary
or the Association under this subparagraph as
provided by section 1715n(c) of this title.
(C)(i) In lieu of accepting assignment of the
original credit instrument and the mortgage
securing the credit instrument under subparagraph (A) in exchange for receipt of debentures, the Secretary shall arrange for the sale
of the beneficial interests in the mortgage
loan through an auction and sale of the (I)
mortgage loans, or (II) participation certificates, or other mortgage-backed obligations in
a form acceptable to the Secretary (in this
subparagraph referred to as ‘‘participation
certificates’’). The Secretary shall arrange the
auction and sale at a price, to be paid to the
mortgagee, of par plus accrued interest to the
date of sale. The sale price shall also include
the right to a subsidy payment described in
clause (iii).
(ii)(I) The Secretary shall conduct a public
auction to determine the lowest interest rate
necessary to accomplish a sale of the beneficial interests in the original credit instrument and mortgage securing the credit instrument.
(II) A mortgagee who elects to assign a
mortgage shall provide the Secretary and per-

Page 591

TITLE 12—BANKS AND BANKING

sons bidding at the auction a description of
the characteristics of the original credit instrument and mortgage securing the original
credit instrument, which shall include the
principal mortgage balance, original stated interest rate, service fees, real estate and tenant
characteristics, the level and duration of applicable Federal subsidies, and any other information determined by the Secretary to be
appropriate. The Secretary shall also provide
information regarding the status of the property with respect to the provisions of the
Emergency Low Income Housing Preservation
Act of 1987 or any subsequent Act with respect
to eligibility to prepay the mortgage, a statement of whether the owner has filed a notice
of intent to prepay or a plan of action under
the Emergency Low Income Housing Preservation Act of 1987 or any subsequent Act, and the
details with respect to incentives provided
under the Emergency Low Income Housing
Preservation Act of 1987 or any subsequent Act
in lieu of exercising prepayment rights.
(III) The Secretary shall, upon receipt of the
information in subclause (II), promptly advertise for an auction and publish such mortgage
descriptions in advance of the auction. The
Secretary may conduct the auction at any
time during the 6-month period beginning
upon receipt of the information in subclause
(II) but under no circumstances may the Secretary conduct an auction before 2 months
after receiving the mortgagee’s written notice
of intent to assign its mortgage to the Secretary.
(IV) In any auction under this subparagraph,
the Secretary shall accept the lowest interest
rate bid for purchase that the Secretary determines to be acceptable. The Secretary shall
cause the accepted bid to be published in the
Federal Register. Settlement for the sale of
the credit instrument and the mortgage securing the credit instrument shall occur not later
than 30 business days after the date winning
bidders are selected in the auction, unless the
Secretary determines that extraordinary circumstances require an extension (not to exceed 60 days) of the period.
(V) If no bids are received, the bids that are
received are not acceptable to the Secretary,
or settlement does not occur within the period
under subclause (IV), the mortgagee shall retain all rights (including the right to interest,
at a rate to be determined by the Secretary,
for the period covering any actions taken
under this subparagraph) under this section to
assign the mortgage loan to the Secretary.
(iii) As part of the auction process, the Secretary shall agree to provide a monthly interest subsidy payment from the General Insurance Fund to the purchaser under the auction
of the original credit instrument or the mortgage securing the credit instrument (and any
subsequent holders or assigns who are approved mortgagees). The subsidy payment
shall be paid on the first day of each month in
an amount equal to the difference between the
stated interest due on the mortgage loan and
the lowest interest rate necessary to accomplish a sale of the mortgage loan or participation certificates (less the servicing fee, if ap-

§ 1715l

propriate) for the then unpaid principal balance plus accrued interest at a rate determined by the Secretary. Each interest subsidy
payment shall be treated by the holder of the
mortgage as interest paid on the mortgage.
The interest subsidy payment shall be provided until the earlier of—
(I) the maturity date of the loan;
(II) prepayment of the mortgage loan in
accordance with the Emergency Low Income
Housing Preservation Act of 1987 or any subsequent Act, where applicable; or
(III) default and full payment of insurance
benefits on the mortgage loan by the Federal Housing Administration.
(iv) The Secretary shall require that the
mortgage loans or participation certificates
presented for assignment are auctioned as
whole loans with servicing rights released and
also are auctioned with servicing rights retained by the current servicer.
(v) To the extent practicable, the Secretary
shall encourage State housing finance agencies, nonprofit organizations, and organizations representing the tenants of the property
securing the mortgage, or a qualified mortgagee participating in a plan of action under the
Emergency Low Income Housing Preservation
Act of 1987 or subsequent Act to participate in
the auction.
(vi) The Secretary shall implement the requirements imposed by this subparagraph
within 30 days from November 5, 1990, and not
be subject to the requirement of prior issuance
of regulations in the Federal Register. The
Secretary shall issue regulations implementing this section within 6 months of November
5, 1990.
(vii) Nothing in this subparagraph shall diminish or impair the low income use restrictions applicable to the project under the original regulatory agreement or the revised agreement entered into pursuant to the Emergency
Low Income Housing Preservation Act of 1987
or subsequent Act, if any, or other agreements
for the provision of Federal assistance to the
housing or its tenants.
(viii) This subparagraph shall not apply
after December 31, 2002, except that this subparagraph shall continue to apply if the Secretary receives a mortgagee’s written notice
of intent to assign its mortgage to the Secretary on or before such date. Not later than
January 31 of each year (beginning in 1992),
the Secretary shall submit to the Congress a
report including statements of the number of
mortgages auctioned and sold and their value,
the amount of subsidies committed to the program under this subparagraph, the ability of
the Secretary to coordinate the program with
the incentives provided under the Emergency
Low Income Housing Preservation Act of 1987
or subsequent Act, and the costs and benefits
derived from the program for the Federal Government.
(ix) The authority of the Secretary to conduct multifamily auctions under this paragraph shall be effective for any fiscal year
only to the extent and in such amounts as are
approved in appropriations Acts for the costs
of loan guarantees (as defined in section 661a

§ 1715l

TITLE 12—BANKS AND BANKING

of title 2), including the cost of modifying
loans.
(h) Insurance of mortgages to finance purchase
and rehabilitation by nonprofit organizations of housing for resale to low-income purchasers, and insurance of mortgages executed for the purpose of financing rehabilitation or improvement of dwellings owned and
occupied by mortgagors who purchased from
nonprofit organizations
(1) In addition to mortgages insured under the
other provisions of this section, the Secretary is
authorized, upon application by the mortgagee,
to insure under this subsection as hereinafter
provided any mortgage (including advances
under such mortgage during rehabilitation)
which is executed by a nonprofit organization to
finance the purchase and rehabilitation of deteriorating or substandard housing for subsequent
resale to low-income home purchasers and, upon
such terms and conditions as the Secretary may
prescribe, to make commitments for the insurance of such mortgages prior to the date of their
execution or disbursement thereon.
(2) To be eligible for insurance under paragraph (1) of this subsection, a mortgage shall—
(A) be executed by a private nonprofit corporation or association, approved by the Secretary, for financing the purchase and rehabilitation (with the intention of subsequent
resale) of property comprising one or more
tracts or parcels, whether or not contiguous,
upon which there is located deteriorating or
substandard housing consisting of (i) four or
more single-family dwellings of detached,
semidetached, or row construction, or (ii) four
or more one-family units in a structure or
structures for which a plan of family unit ownership approved by the Secretary is established;
(B) be secured by the property which is to be
purchased and rehabilitated with the proceeds
thereof;
(C) be in a principal amount not exceeding
the appraised value of the property at the
time of its purchase under the mortgage plus
the estimated cost of the rehabilitation;
(D) bear interest (exclusive of premium
charges for insurance and service charge, if
any) at the rate in effect under the proviso in
subsection (d)(5) at the time of execution;
(E) provide for complete amortization (subject to paragraph (5)(E)) by periodic payments
within such term as the Secretary may prescribe; and
(F) provide for the release of individual single-family dwellings from the lien of the mortgage upon the sale of the rehabilitated dwellings in accordance with paragraph (5).
(3) No mortgage shall be insured under paragraph (1) unless the mortgagor shall have demonstrated to the satisfaction of the Secretary
that (A) the property to be rehabilitated is located in a neighborhood which is sufficiently
stable and contains sufficient public facilities
and amenities to support long-term values, or
(B) the rehabilitation to be carried out by the
mortgagor plus its related activities and the activities of other owners of housing in the neighborhood, together with actions to be taken by

Page 592

public authorities, will be of such scope and
quality as to give reasonable promise that a stable environment will be created in the neighborhood.
(4) The aggregate principal balance of all
mortgages insured under paragraph (1) and outstanding at any one time shall not exceed
$50,000,000.
(5)(A) No mortgage shall be insured under
paragraph (1) unless the mortgagor enters into
an agreement (in form and substance satisfactory to the Secretary) that it will offer to sell
the dwellings involved, upon completion of their
rehabilitation, to individuals or families (hereinafter referred to as ‘‘low-income purchasers’’)
determined by the Secretary to have incomes
below the maximum amount specified (with respect to the area involved) in section 1701s(c)(1)
of this title.
(B) The Secretary is authorized to insure
under this paragraph mortgages executed to finance the sale of individual dwellings to low-income purchasers as provided in subparagraph
(A). Any such mortgage shall—
(i) be in a principal amount equal to that
portion of the unpaid balance of the principal
mortgage covering the property (insured under
paragraph (1)) which is allocable to the individual dwelling involved; and
(ii) bear interest at the same rate as the
principal mortgage or such lower rate, not less
than 1 per centum, as the Secretary may prescribe if in his judgment the purchaser’s income is sufficiently low to justify the lower
rate, and provide for complete amortization
within a term equal to the remaining term
(determined without regard to subparagraph
(E)) of such principal mortgage: Provided,
That, if the rate of interest initially prescribed is less than the rate borne by the principal mortgage and the purchaser’s income (as
determined on the basis of periodic review)
subsequently rises, the rate of interest so prescribed shall be increased (but not above the
rate borne by such principal mortgage), under
regulations of the Secretary, to the extent appropriate to reflect the increase in such income, and the mortgage shall so provide.
(C) The price for which any individual dwelling is sold to a low-income purchaser under this
paragraph shall be the amount of the mortgage
covering the sale as determined under subparagraph (B), except that the purchaser shall in addition thereto be required to pay on account of
the property at the time of purchase such
amount (which shall not be less than $200, but
which may be applied in whole or in part toward
closing costs) as the Secretary may determine
to be reasonable and appropriate in the circumstances.
(D) Upon the sale under this paragraph of any
individual dwelling, such dwelling shall be released from the lien of the principal mortgage,
and such mortgage shall thereupon be replaced
by an individual mortgage insured under this
paragraph to the extent of the portion of its unpaid balance which is allocable to the dwelling
covered by such individual mortgage. Until all
of the individual dwellings in the property covered by the principal mortgage have been sold,
the mortgagor shall hold and operate the dwell-

Page 593

TITLE 12—BANKS AND BANKING

ings remaining unsold at any given time as
though they constituted rental units in a
project covered by a mortgage which is insured
under subsection (d)(3) (and which receives the
benefits of the interest rate provided for in the
proviso in subsection (d)(5)).
(E) Upon the sale under this paragraph of all
of the individual dwellings in the property covered by the principal mortgage, and the release
of all individual dwellings from the lien of the
principal mortgage, the insurance of the principal mortgage shall be terminated and no adjusted premium charge shall be charged by the
Secretary upon such termination.
(F) Any mortgage insured under this paragraph shall contain a provision that if the lowincome mortgagor does not continue to occupy
the property the interest rate shall increase to
the highest rate permissible under this section
and the regulations of the Secretary effective at
the time of commitment for insurance of the
principal mortgage; except that the increase in
interest rate shall not be applicable if the property is sold and the purchaser is (i) the nonprofit
organization which executed the principal mortgage, (ii) a public housing agency having jurisdiction under the United States Housing Act of
1937 [42 U.S.C. 1437 et seq.] over the area where
the dwelling is located, or (iii) a low-income
purchaser approved for the purposes of this
paragraph by the Secretary.
(6) In addition to the mortgages that may be
insured under paragraphs (1) and (5), the Secretary is authorized to insure under this subsection at any time within one year after August 1, 1968, upon such terms and conditions as
he may prescribe, mortgages which are executed
by individuals or families that meet the income
criteria prescribed in paragraph (5)(A) and are
executed for the purpose of financing the rehabilitation or improvement of single-family
dwellings of detached, semidetached, or row construction that are owned in each instance by a
mortgagor who has purchased the dwelling from
a nonprofit organization of the type described in
this subsection. To be eligible for such insurance, a mortgage shall—
(A) be in a principal amount not exceeding
the lesser of $18,000 or the sum of the estimated cost of repair and rehabilitation and
the Secretary’s estimate of the value of the
property before repair and rehabilitation, except that in no case involving refinancing
shall such mortgage exceed such estimated
cost of repair and rehabilitation and the
amount (as determined by the Secretary) required to refinance existing indebtedness secured by the property;
(B) bear interest (exclusive of premium
charges for insurance and service charge, if
any) at 3 per centum per annum or such lower
rate, not less than 1 per centum, as the Secretary may prescribe if in his judgment the
mortgagor’s income is sufficiently low to justify the lower rate: Provided, That, if the rate
of interest initially prescribed is less than 3
per centum per annum and the mortgagor’s income (as determined on the basis of periodic
review) subsequently rises, the rate shall be
increased (but not above 3 per centum), under
regulations of the Secretary, to the extent ap-

§ 1715l

propriate to reflect the increase in such income, and the mortgage shall so provide;
(C) involve a mortgagor that shall have paid
on account of the property at the time of the
rehabilitation such amount (which shall not
be less than $200 in cash or its equivalent, but
which may be applied in whole or in part toward closing costs) as the Secretary may determine to be reasonable and appropriate
under the circumstances; and
(D) contain a provision that, if the low-income mortgagor does not continue to occupy
the property, the interest rate shall increase
to the highest rate permissible under this section and the regulations of the Secretary effective at the time the commitment was issued for insurance of the mortgage; except
that the increase in interest rate shall not be
applicable if the property is sold and the purchaser is (i) a nonprofit organization which
has been engaged in purchasing and rehabilitating deteriorating and substandard housing
with financing under a mortgage insured
under paragraph (1) of this subsection, (ii) a
public housing agency having jurisdiction
under the United States Housing Act of 1937
[42 U.S.C. 1437 et seq.] over the area where the
dwelling is located, or (iii) a low-income purchaser approved for the purposes of this paragraph by the Secretary.
(7) Where the Secretary has approved a plan of
family unit ownership, the terms ‘‘single-family
dwelling’’, ‘‘single-family dwellings’’, ‘‘individual dwelling’’, and ‘‘individual dwellings’’ shall
mean a family unit or family units, together
with the undivided interest (or interests) in the
common areas and facilities.
(8) For purposes of this subsection, the terms
‘‘single-family dwelling’’ and ‘‘single-family
dwellings’’ (except for purposes of paragraph (7))
shall include a two-family dwelling which has
been approved by the Secretary.
(i) Conversion of insured project to plan of family unit ownership; sale of units; agreements
for maintenance; release from lien of project
mortgage; insurance of mortgages financing
purchase of individual family units; eligibility for insurance; definitions
(1) The Secretary is authorized, with respect
to any project involving a mortgage insured
under subsection (d)(3) which bears interest at
the below-market interest rate prescribed in the
proviso of subsection (d)(5), to permit a conversion of the ownership of such project to a plan
of family unit ownership. Under such plan, each
family unit shall be eligible for individual ownership and provision shall be included for the
sale of the family units, together with an undivided interest in the common areas and facilities which serve the project, to low or moderate
income purchasers. The Secretary shall obtain
such agreements as he determines to be necessary to assure continued maintenance of the
common areas and facilities. Upon such sale, the
family unit and the undivided interest in the
common areas shall be released from the lien of
the project mortgage.
(2)(A) The Secretary is authorized, upon application by the mortgagee, to insure under this
subsection mortgages financing the purchase of

§ 1715l

TITLE 12—BANKS AND BANKING

individual family units under the plan prescribed in paragraph (1). Commitments may be
issued by the Secretary for the insurance of such
mortgages prior to the date of their execution or
disbursement thereon, upon such terms and conditions as the Secretary may prescribe. To be eligible for such insurance, the mortgage shall—
(i) be executed by a mortgagor having an income within the limits prescribed by the Secretary for occupants of projects financed with
a mortgage insured under subsection (d)(3)
which bears interest at the below-market rate
prescribed in the proviso of subsection (d)(5);
(ii) involve a principal obligation (including
such initial service charges, and such appraisal, inspection, and other fees, as the Secretary shall approve) in an amount not to exceed the Secretary’s estimate of the appraised
value of the family unit, including the mortgagor’s interest in the common areas and facilities, as of the date the mortgage is accepted for insurance;
(iii) bear interest at a rate determined by
the Secretary (which may vary in accordance
with the regulations of the Secretary promulgated pursuant to the last sentence of paragraph (4) of this subsection) but not less than
the below-market rate in effect under the proviso of subsection (d)(5) at the date of the commitment for insurance; and
(iv) provide for complete amortization by
periodic payments within such term as the
Secretary may prescribe, but not to exceed
forty years from the beginning of amortization of the mortgage.
(B) The price for which the individual family
unit is sold to the low or moderate income purchaser shall not exceed the appraised value of
the property, as determined under subparagraph
(A)(ii), except that the purchaser shall be required to pay on account of the property at the
time of purchase at least such amount, in cash
or its equivalent (which shall be not less than 3
per centum of such price, but which may be applied in whole or in part toward closing costs),
as the Secretary may determine to be reasonable and appropriate.
(3) Upon the sale of all of the family units covered by the project mortgage, and the release of
all of the family units (including the undivided
interest allocable to each unit in the common
areas and facilities) from the lien of the project
mortgage, the insurance of the project mortgage
shall be terminated and no adjusted premium
charge shall be collected by the Secretary upon
such termination.
(4) Any mortgage covering an individual family unit insured under this subsection shall contain a provision that, if the original mortgagor
does not continue to occupy the property, the
interest rate shall increase to the highest rate
permissible under this section and the regulations of the Secretary effective at the time the
commitment was issued for the insurance of the
project mortgage; except that the requirement
for an increase in interest rate shall not be applicable if the property is sold and the purchaser
is (i) a nonprofit purchaser approved by the Secretary, or (ii) a low or moderate income purchaser who has an income within the limits prescribed by the Secretary for occupants of

Page 594

projects financed with a mortgage insured under
subsection (d)(3) which bears interest at the
below-market rate prescribed in the proviso of
subsection (d)(5). The mortgage shall also contain a provision that, if the Secretary determines that the annual income of the original
mortgagor (or a purchaser described in clause
(ii) of the preceding sentence) has increased to
an amount enabling payment of a greater rate of
interest, the interest rate of the individual
mortgage may be increased up to the highest
rate permissible under the regulations of the
Secretary for mortgages insured under this section, effective at the time the commitment was
issued for the insurance of the mortgage.
(5) For the purpose of this subsection—
(i) the term ‘‘mortgage’’, when used in relation to a mortgage insured under paragraph (2)
of this subsection, includes a first mortgage
given to secure the unpaid purchase price of a
fee interest in, or a long-term lease-hold interest in, a one-family unit in a multifamily
project and an undivided interest in the common areas and facilities which serve the
project; and
(ii) the term ‘‘common areas and facilities’’
includes the land and such commercial, community, and other facilities as are approved by
the Secretary.
(j) Conversion of insured rental projects to cooperatives; eligibility for membership; insurance of cooperative mortgages financing purchase of projects; eligibility for insurance
(1) The Secretary is authorized, with respect
to any rental project involving a mortgage insured under subsection (d)(3) which bears interest at the below-market interest rate prescribed
in the proviso of subsection (d)(5), to permit a
conversion of the ownership of such project to a
cooperative approved by the Secretary. Membership in such cooperative shall be made available
only to those families having an income within
the limits prescribed by the Secretary for occupants of projects financed with a mortgage insured under subsection (d)(3) which bears interest at such below-market rate: Provided, That
families residing in the rental project at the
time of its conversion to a cooperative who do
not meet such income limits may be permitted
to become members in the cooperative under
such special terms and conditions as the Secretary may prescribe.
(2) The Secretary is authorized, upon application by the mortgagee, to insure under this subsection cooperative mortgages financing the
purchase of projects meeting the requirements
of paragraph (1). Commitments may be issued by
the Secretary for the insurance of such mortgages prior to the date of their execution or disbursement thereon, upon such terms and conditions as the Secretary may prescribe. To be eligible for such insurance, the mortgage shall—
(i) involve a principal obligation (including
such initial service charges and appraisal, inspection, and other fees as the Secretary shall
approve) in an amount not exceeding the appraised value of the property for continued use
as a cooperative, which value shall be based
upon a mortgage amount on which the debt
service can be met from the income of the

Page 595

TITLE 12—BANKS AND BANKING

property when operated on a nonprofit basis,
after the payment of all operating expenses,
taxes, and required reserves;
(ii) bear interest at the below-market rate
prescribed in the proviso of subsection (d)(5);
and
(iii) provide for complete amortization within such term as the Secretary may prescribe.
(k) Increase in maximum insurance amounts for
costs incurred from solar energy systems and
energy conservation measures
With respect to any project insured under subsection (d)(3) or (d)(4), the Secretary may further increase the dollar amount limitations
which would otherwise apply for the purpose of
those subsections by up to 20 per centum if such
increase is necessary to account for the increased cost of the project due to the installation therein of a solar energy system (as defined
in subparagraph (3) of the last paragraph of section 1703(a) of this title) or residential energy
conservation measures (as defined in section
8211(11)(A) through (G) and (I) of title 42) 3 in
cases where the Secretary determines that such
measures are in addition to those required under
the minimum property standards and will be
cost-effective over the life of the measure.
(l) Rental charges; ‘‘eligible multifamily housing’’
defined
(1) Notwithstanding any other provision of
law, tenants residing in eligible multifamily
housing whose incomes exceed 80 percent of area
median income shall pay as rent not more than
the lower of the following amounts: (A) 30 percent of the family’s adjusted monthly income;
or (B) the relevant fair market rental established under section 8(b) of the United States
Housing Act of 1937 [42 U.S.C. 1437f(b)] for the jurisdiction in which the housing is located. An
owner shall phase in any increase in rents for
current tenants resulting from this subsection.
(2) For purposes of this subsection, the term
‘‘eligible multifamily housing’’ means any housing financed by a loan or mortgage that is (A)
insured or held by the Secretary under subsection (d)(3) and assisted under section 1701s of
this title or section 8 of the United States Housing Act of 1937 [42 U.S.C. 1437f]; or (B) insured or
held by the Secretary and bears interest at a
rate determined under the proviso of subsection
(d)(5).
(June 27, 1934, ch. 847, title II, § 221, as added
Aug. 2, 1954, ch. 649, title I, § 123, 68 Stat. 599;
amended Aug. 11, 1955, ch. 783, title I, § 102(c), (j),
69 Stat. 635; Aug. 7, 1956, ch. 1029, title I, § 108,
title III, § 307(c), 70 Stat. 1094, 1102; Pub. L.
85–104, title I, § 112, July 12, 1957, 71 Stat. 297;
Pub. L. 86–372, title I, §§ 110(a)(1), (2), (b)–(e),
116(b), Sept. 23, 1959, 73 Stat. 658–661, 664; Pub. L.
87–70, title I, § 101(a), June 30, 1961, 75 Stat. 149;
Pub. L. 88–54, June 29, 1963, 77 Stat. 73; Pub. L.
88–560, title I, §§ 105(c)(2), 107(d), 114, title II,
§§ 202, 203(b), Sept. 2, 1964, 78 Stat. 772, 775, 778,
783, 784; Pub. L. 89–117, title I, § 102(a), (b), title
II, § 207(d), title XI, § 1108(i), Aug. 10, 1965, 79
Stat. 454, 467, 505; Pub. L. 89–754, title III,
§§ 307–310(c), Nov. 3, 1966, 80 Stat. 1268–1270; Pub.
3 See

References in Text note below.

§ 1715l

L. 89–769, § 4, Nov. 6, 1966, 80 Stat. 1317; Pub. L.
90–19, § 1(a)(3), (4), May 25, 1967, 81 Stat. 17; Pub.
L. 90–448, title I, §§ 101(b), (c), 105, title III, §§ 305,
306, 311(b), 316, Aug. 1, 1968, 82 Stat. 483, 488, 508,
510, 512; Pub. L. 91–78, § 2(c), Sept. 30, 1969, 83
Stat. 125; Pub. L. 91–152, title I, §§ 101(c), 113(e),
Dec. 24, 1969, 83 Stat. 379, 384; Pub. L. 91–432,
§ 1(c), Oct. 2, 1970, 84 Stat. 887; Pub. L. 91–473,
§ 1(c), Oct. 21, 1970, 84 Stat. 1064; Pub. L. 91–525,
§ 1(c), Dec. 1, 1970, 84 Stat. 1384; Pub. L. 91–606,
title III, § 301(d), Dec. 31, 1970, 84 Stat. 1758; Pub.
L. 91–609, title I, §§ 101(c), 114(a), 114[115](a), Dec.
31, 1970, 84 Stat. 1770, 1773; Pub. L. 92–503, § 1(c),
Oct. 18, 1972, 86 Stat. 906; Pub. L. 93–85, § 1(c),
Aug. 10, 1973, 87 Stat. 220; Pub. L. 93–117, § 1(c),
Oct. 2, 1973, 87 Stat. 421; Pub. L. 93–288, title VII,
§ 702(d), formerly title VI, § 602(d), May 22, 1974,
88 Stat. 163, renumbered title VII, § 702(d), Pub.
L. 103–337, div. C, title XXXIV, § 3411(a)(1), (2),
Oct. 5, 1994, 108 Stat. 3100; Pub. L. 93–383, title
III, §§ 302(c), 303(d), (e), 304(e), 316(c), 319(a), Aug.
22, 1974, 88 Stat. 676–678, 685, 686; Pub. L. 94–173,
§§ 3, 4(a), Dec. 23, 1975, 89 Stat. 1027; Pub. L.
94–375, §§ 3(d), 8(a), (b)(4), (5), Aug. 3, 1976, 90 Stat.
1069, 1071, 1072; Pub. L. 95–24, title I, § 106, Apr. 30,
1977, 91 Stat. 56; Pub. L. 95–60, § 1(c), June 30,
1977, 91 Stat. 257; Pub. L. 95–80, § 1(c), July 31,
1977, 91 Stat. 339; Pub. L. 95–128, title III,
§§ 301(c), 303(c), Oct. 12, 1977, 91 Stat. 1131, 1132;
Pub. L. 95–406, § 1(c), Sept. 30, 1978, 92 Stat. 879;
Pub. L. 95–557, title III, §§ 301(c), 325, Oct. 31, 1978,
92 Stat. 2096, 2104; Pub. L. 96–71, § 1(c), Sept. 28,
1979, 93 Stat. 501; Pub. L. 96–105, § 1(c), Nov. 8,
1979, 93 Stat. 794; Pub. L. 96–153, title III,
§§ 301(c), 314, Dec. 21, 1979, 93 Stat. 1111, 1117; Pub.
L. 96–372, § 1(c), Oct. 3, 1980, 94 Stat. 1363; Pub. L.
96–399, title III, §§ 301(c), 310(d), 333(c), (d), Oct. 8,
1980, 94 Stat. 1638, 1642, 1653; Pub. L. 97–35, title
III, §§ 331(c), 339B(a), Aug. 13, 1981, 95 Stat. 412,
417; Pub. L. 97–253, title II, § 201(d), Sept. 8, 1982,
96 Stat. 789; Pub. L. 97–289, § 1(c), Oct. 6, 1982, 96
Stat. 1230; Pub. L. 97–377, title I, § 101(g), Dec. 21,
1982, 96 Stat. 1908; Pub. L. 98–35, § 1(c), May 26,
1983, 97 Stat. 197; Pub. L. 98–109, § 1(c), Oct. 1,
1983, 97 Stat. 745; Pub. L. 98–181, title I [title IV,
§§ 401(c), 404(b)(8), 408, 409, 423(b)(3), 432(b), (c),
446(d)], Nov. 30, 1983, 97 Stat. 1207, 1209, 1211, 1217,
1220, 1228; Pub. L. 98–479, title II, § 204(a)(6), Oct.
17, 1984, 98 Stat. 2232; Pub. L. 99–120, § 1(c), Oct.
8, 1985, 99 Stat. 502; Pub. L. 99–156, § 1(c), Nov. 15,
1985, 99 Stat. 815; Pub. L. 99–219, § 1(c), Dec. 26,
1985, 99 Stat. 1730; Pub. L. 99–267, § 1(c), Mar. 27,
1986, 100 Stat. 73; Pub. L. 99–272, title III,
§ 3007(c), Apr. 7, 1986, 100 Stat. 104; Pub. L. 99–289,
§ 1(b), May 2, 1986, 100 Stat. 412; Pub. L. 99–345,
§ 1, June 24, 1986, 100 Stat. 673; Pub. L. 99–430,
Sept. 30, 1986, 100 Stat. 986; Pub. L. 100–122, § 1,
Sept. 30, 1987, 101 Stat. 793; Pub. L. 100–154, Nov.
5, 1987, 101 Stat. 890; Pub. L. 100–170, Nov. 17, 1987,
101 Stat. 914; Pub. L. 100–179, Dec. 3, 1987, 101
Stat. 1018; Pub. L. 100–200, Dec. 21, 1987, 101 Stat.
1327; Pub. L. 100–242, title IV, §§ 401(a)(2),
406(b)(10)–(13), 426(d), (e), (h), Feb. 5, 1988, 101
Stat. 1898, 1901, 1916; Pub. L. 100–707, title I,
§ 109(e)(3), Nov. 23, 1988, 102 Stat. 4708; Pub. L.
101–508, title II, § 2201, Nov. 5, 1990, 104 Stat.
1388–21; Pub. L. 101–625, title VI, §§ 611(b)(2),
612(b), Nov. 28, 1990, 104 Stat. 4278, 4279; Pub. L.
102–550, title V, §§ 509(d), (e), 516(d), title X,
§ 1012(l), Oct. 28, 1992, 106 Stat. 3783, 3791, 3907;
Pub. L. 104–134, title I, § 101(e) [title II, § 219],

§ 1715l

TITLE 12—BANKS AND BANKING

Apr. 26, 1996, 110 Stat. 1321–257, 1321–290; renumbered title I, Pub. L. 104–140, § 1(a), May 2, 1996,
110 Stat. 1327; Pub. L. 105–276, title II, § 222, Oct.
21, 1998, 112 Stat. 2489; Pub. L. 106–377, § 1(a)(1)
[title II, § 209(b)], Oct. 27, 2000, 114 Stat. 1441,
1441A–25; Pub. L. 107–73, title II, § 213(d), (e), Nov.
26, 2001, 115 Stat. 676, 677; Pub. L. 107–326,
§ 5(b)(4), (5), Dec. 4, 2002, 116 Stat. 2795; Pub. L.
108–186, title III, § 302(b), Dec. 16, 2003, 117 Stat.
2692; Pub. L. 110–161, div. K, title II, § 221(1), Dec.
26, 2007, 121 Stat. 2436.)
REFERENCES IN TEXT
The General Insurance Fund, referred to in text, was
established by section 1735c of this title.
Section 1720 of this title, referred to in subsec.
(d)(3)(ii)(II), (4)(ii)(II) was repealed by Pub. L. 98–181,
title I [title IV, § 483(a)], Nov. 30, 1983, 97 Stat. 1240.
The United States Housing Act of 1937, and ‘‘such
act’’, referred to in subsecs. (d)(3), (h)(5)(F), (6)(D), is
act Sept. 1, 1937, ch. 896, as revised generally by Pub. L.
93–383, title II, § 201(a), Aug. 22, 1974, 88 Stat. 653, which
is classified generally to chapter 8 (§ 1437 et seq.) of
Title 42, The Public Health and Welfare. For complete
classification of this Act to the Code, see Short Title
note set out under section 1437 of Title 42 and Tables.
Section 110 of the Housing Act of 1949 [42 U.S.C. 1460],
referred to in subsec. (d)(3)(iii), was omitted from the
Code pursuant to section 5316 of Title 42, which terminated authority to make grants or loans under title I
of that Act [42 U.S.C. 1450 et seq.] after Jan. 1, 1975.
This chapter, referred to in subsec. (f), was in the
original ‘‘this Act’’, meaning act June 27, 1934, ch. 847,
48 Stat. 1246, which is classified principally to this
chapter (§ 1701 et seq.). For complete classification of
this Act to the Code, see Tables.
Section 1701q of this title, referred to in subsec. (f),
was amended generally by Pub. L. 101–625, title VIII,
§ 801(a), Nov. 28, 1990, 104 Stat. 4297, and, as so amended,
no longer contains provisions related to handicapped
persons.
The Disaster Relief and Emergency Assistance Act,
referred to in subsec. (f), is Pub. L. 93–288, May 22, 1974,
88 Stat. 143, as amended, known as the Robert T. Stafford Disaster Relief and Emergency Assistance Act,
which is classified principally to chapter 68 (§ 5121 et
seq.) of Title 42, The Public Health and Welfare. For
complete classification of this Act to the Code, see
Short Title note set out under section 5121 of Title 42
and Tables.
Section 201 of the Housing and Community Development Amendments of 1978, referred to in subsec. (f), is
section 201 of Pub. L. 95–557, title II, Oct. 31, 1978, 92
Stat. 2084, as amended, which enacted section 1715z–1a
of this title and amended section 1715z–1 of this title.
Subsection (h) of section 1710 of this title, referred to
in subsec. (g)(1), was redesignated subsec. (i) by Pub. L.
105–276, title VI, § 602(1), Oct. 21, 1998, 112 Stat. 2674.
Subsection (k) of section 1710 of this title, referred to
in subsec. (g)(1), was repealed by Pub. L. 105–276, title
VI, § 601(c), Oct. 21, 1998, 112 Stat. 2673.
The Emergency Low Income Housing Preservation
Act of 1987, referred to in subsec. (g)(4)(C), is title II of
Pub. L. 100–242, Feb. 5, 1988, 101 Stat. 1877, which, as
amended by Pub. L. 101–625, is known as the Low-Income Housing Preservation and Resident Homeownership Act of 1990. Subtitles A and B of title II, which
were formerly set out as a note under this section and
which amended section 1715z–6 of this title, were
amended generally by Pub. L. 101–625 and are classified
to subchapter I (§ 4101 et seq.) of chapter 42 of this title.
Subtitles C and D of title II amended section 1715z–15 of
this title and sections 1437f, 1472, 1485, and 1487 of Title
42, The Public Health and Welfare. Another subtitle C
of title II of Pub. L. 100–242, as added by Pub. L. 102–550,
is classified generally to subchapter II (§ 4141 et seq.) of
chapter 42 of this title. For complete classification of
this Act to the Code, see Short Title note set out under
section 4101 of this title and Tables.

Page 596

Section 8211 of title 42, referred to in subsec. (k), was
omitted from the Code pursuant to section 8229 of Title
42, which terminated authority under that section on
June 30, 1989.
CODIFICATION
In subsec. (g)(4)(A), ‘‘November 30, 1983,’’ was substituted for ‘‘the effective date of this clause’’, meaning
the date of enactment of Pub. L. 98–181.
AMENDMENTS
2007—Subsec. (d)(3)(ii)(II), (4)(ii)(II). Pub. L. 110–161
substituted ‘‘170 percent’’ for ‘‘140 percent’’ after ‘‘not
to exceed’’ in two places and ‘‘215 percent in high cost
areas’’ for ‘‘170 percent in high cost areas’’.
2003—Subsec. (d)(3)(ii)(II), (4)(ii)(II). Pub. L. 108–186
substituted ‘‘140 percent in’’ for ‘‘110 percent in’’ and inserted ‘‘, or 170 percent in high cost areas,’’ after ‘‘and
by not to exceed 140 percent’’.
2002—Subsec. (d)(3)(ii). Pub. L. 107–326, § 5(b)(4), inserted ‘‘(I)’’ after ‘‘(ii)’’ and substituted ‘‘; (II) the Secretary may, by regulation, increase any of the dollar
amount limitations in subclause (I) (as such limitations may have been adjusted in accordance with section 1712a of this title)’’ for ‘‘; and except that the Secretary may, by regulation, increase any of the foregoing dollar amount limitations contained in this
clause’’.
Subsec. (d)(4)(ii). Pub. L. 107–326, § 5(b)(5), inserted
‘‘(I)’’ after ‘‘(ii)’’ and substituted ‘‘; (II) the Secretary
may, by regulation, increase any of the dollar limitations in subclause (I) (as such limitations may have
been adjusted in accordance with section 1712a of this
title)’’ for ‘‘; and except that the Secretary may, by
regulation, increase any of the foregoing dollar amount
limitations contained in this clause’’.
2001—Subsec. (d)(3)(ii). Pub. L. 107–73, § 213(d), substituted ‘‘$42,048’’, ‘‘$48,481’’, ‘‘58,469’’, ‘‘$74,840’’, and
‘‘$83,375’’ for ‘‘$33,638’’, ‘‘$38,785’’, ‘‘$46,775’’, ‘‘$59,872’’,
and ‘‘$66,700’’, respectively, and ‘‘$44,250’’, ‘‘$50,724’’,
‘‘$61,680’’, ‘‘$79,793’’, and ‘‘$87,588’’ for ‘‘$35,400’’,
‘‘$40,579’’, ‘‘$49,344’’, ‘‘$63,834’’, and ‘‘$70,070’’, respectively.
Subsec. (d)(4)(ii). Pub. L. 107–73, § 213(e), substituted
‘‘$37,843’’, ‘‘$42,954’’, ‘‘$51,920’’, ‘‘$65,169’’, and ‘‘$73,846’’
for ‘‘$30,274’’, ‘‘$34,363’’, ‘‘$41,536’’, ‘‘$52,135’’, and
‘‘$59,077’’, respectively, and ‘‘$40,876’’, ‘‘$46,859’’,
‘‘$56,979’’, ‘‘$73,710’’, and ‘‘$80,913’’ for ‘‘$32,701’’,
‘‘$37,487’’, ‘‘$45,583’’, ‘‘$58,968’’, and ‘‘$64,730’’, respectively.
2000—Subsec. (g)(4)(C)(viii). Pub. L. 106–377 inserted
‘‘, except that this subparagraph shall continue to
apply if the Secretary receives a mortgagee’s written
notice of intent to assign its mortgage to the Secretary
on or before such date’’ after ‘‘December 31, 2002’’.
1998—Subsec. (g)(4)(C)(viii). Pub. L. 105–276, § 222(1),
substituted ‘‘December 31, 2002’’ for ‘‘September 30,
1996’’ in first sentence.
Subsec. (g)(4)(C)(ix). Pub. L. 105–276, § 222(2), added cl.
(ix).
1996—Subsec. (g)(4)(C)(viii). Pub. L. 104–134 substituted ‘‘1996’’ for ‘‘1995’’ in first sentence.
1992—Subsec. (d)(3)(ii). Pub. L. 102–550, § 509(d), substituted ‘‘$33,638’’, ‘‘$38,785’’, ‘‘$46,775’’, ‘‘$59,872’’,
‘‘$66,700’’, ‘‘$35,400’’, ‘‘$40,579’’, ‘‘$49,344’’, ‘‘$63,834’’, and
‘‘$70,070’’ for ‘‘$28,032’’, ‘‘$32,321’’, ‘‘$38,979’’, ‘‘$49,893’’,
‘‘$55,583’’, ‘‘$29,500’’, ‘‘$33,816’’, ‘‘$41,120’’, ‘‘$53,195’’, and
‘‘$58,392’’, respectively.
Subsec. (d)(4)(ii). Pub. L. 102–550, § 509(e), substituted
‘‘$30,274’’, ‘‘$34,363’’, ‘‘$41,536’’, ‘‘$52,135’’, ‘‘$59,077’’,
‘‘$32,701’’, ‘‘$37,487’’, ‘‘$45,583’’, ‘‘$58,968’’, and ‘‘$64,730’’
for ‘‘$25,228’’, ‘‘$28,636’’, ‘‘$34,613’’, ‘‘$43,446’’, ‘‘$49,231’’,
‘‘$27,251’’, ‘‘$31,239’’, ‘‘$37,986’’, ‘‘$49,140’’, and ‘‘$53,942’’,
respectively.
Subsec. (d)(4)(iv). Pub. L. 102–550, § 1012(l), inserted
‘‘(including the cost of evaluating and reducing leadbased paint hazards, as such terms are defined in section 4851b of title 42)’’ after ‘‘cost of repair and rehabilitation’’.

Page 597

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Subsec. (g)(4)(A). Pub. L. 102–550, § 516(d), which directed substitution of ‘‘issue to the mortgagee debentures having a par value’’ for ‘‘, subject to the cash adjustment provided herein, issue to the mortgagee debentures having total face value’’, was executed to text
which read ‘‘having a total face value’’ instead of ‘‘having total face value’’, to reflect the probable intent of
Congress.
1990—Subsec. (f). Pub. L. 101–625, § 611(b)(2), added
fourth undesignated paragraph relating to authority of
Secretary in establishing rental charges for project
covered by mortgage bearing below market interest
rate prescribed in proviso to subsec. (d)(3) of this section to include an amount that would permit return of
advances to owner.
Subsec. (g)(4)(C). Pub. L. 101–508 added subpar. (C).
Subsec. (l). Pub. L. 101–625, § 612(b), added subsec. (l).
1988—Subsec. (d)(2). Pub. L. 100–242, § 406(b)(10)(A),
substituted ‘‘residence, except that the Secretary’’ for
‘‘residence: Provided, That a mortgage secured by property upon which there is located a dwelling designed
principally for a two-, three-, or four-family residence
shall not be insured under this section except in the
case of a dwelling for occupancy by the mortgagor: Provided further, That the Secretary’’.
Pub. L. 100–242, § 406(b)(10)(B), which directed that
par. (2) be amended by striking out ‘‘Provided, That (i)’’
and all that follows through ‘‘(1) in’’ and inserting
‘‘Provided, That (i)(1) in’’, was executed by substituting
‘‘Provided, That (i)(1) in the case of a displaced family’’
for ‘‘Provided further, That (i) if the mortgagor is the
owner and an occupant of the property at the time of
insurance, (1) in the case of a displaced family’’, to reflect the probable intent of Congress and the fact that
the provision being struck out began with ‘‘Provided
further’’ rather than ‘‘Provided’’.
Pub. L. 100–242, § 406(b)(10)(C), struck out ‘‘Provided
further, That nothing contained herein shall preclude
the Secretary from issuing a commitment to insure,
and insuring a mortgage pursuant thereto, where the
mortgagor is not the owner and an occupant of the
property, if the property is to be built or acquired and
repaired or rehabilitated for sale, and the insured mortgage financing is required to facilitate the construction, or the repair or rehabilitation, of the dwelling and
to provide financing pending the subsequent sale thereof to a qualified owner who is also an occupant thereof,
but in such instances the mortgage shall not exceed 85
per centum of the appraised value:’’.
Pub. L. 100–242, § 406(b)(10)(D), which directed that
par. (2) be amended in last proviso by substituting
‘‘That the mortgagor shall’’ for ‘‘That, if the mortgagor is the owner and an occupant of the property such
mortgagor shall’’, was executed by substituting ‘‘That
the mortgagor shall’’ for ‘‘That, if the mortgagor is the
owner and an occupant of the property, such mortgagor
shall’’, to reflect the probable intent of Congress and
the fact that a comma appears before ‘‘such’’ in provisions being struck out.
Subsec. (d)(3)(ii). Pub. L. 100–242, § 426(d), substituted
‘‘$28,032’’, ‘‘$38,979’’, ‘‘$49,893’’, ‘‘$55,583’’, ‘‘$29,500’’,
‘‘$33,816’’, ‘‘$41,120’’, ‘‘$53,195’’, and ‘‘$58,392’’ for
‘‘$21,563’’, ‘‘$29,984’’, ‘‘$38,379’’, ‘‘$42,756, ‘‘$22,692’’,
‘‘$26,012’’, ‘‘$31,631’’, ‘‘$40,919’’, and ‘‘$44,917’’, respectively.
Pub. L. 100–242, § 426(d), which directed that cl. (ii) be
amended by substituting ‘‘$32,321’’ for ‘‘$24,862’’, was executed by substituting ‘‘$32,321’’ for ‘‘$24,662’’ to reflect
the probable intent of Congress.
Pub. L. 100–242, § 426(h), substituted ‘‘not to exceed 110
percent in any geographical area where the Secretary
finds that cost levels so require and by not to exceed
140 percent where the Secretary determines it necessary on a project-by-project basis, but in no case may
any such increase exceed 90 percent where the Secretary determines that a mortgage purchased or to be
purchased by the Government National Mortgage Association in implementing its special assistance functions under section 1720 of this title (as such section existed immediately before November 30, 1983) is in-

§ 1715l

volved’’ for ‘‘not to exceed 75 per centum in any geographical area where he finds that cost levels so require, except that, where the Secretary determines it
necessary on a project by project basis, the foregoing
dollar amount limitations contained in this paragraph
may be exceeded by not to exceed 90 per centum (by not
to exceed 140 per centum where the Secretary determines that a mortgage other than one purchased or to
be purchased under section 1720 of this title by the Government National Mortgage Association in implementing its special assistance functions is involved) in such
an area’’.
Subsec. (d)(4)(ii). Pub. L. 100–242, § 426(e), (h), substituted ‘‘$25,228’’, ‘‘$28,636’’, ‘‘$34,613’’, ‘‘$43,446’’,
‘‘$49,231’’, ‘‘$27,251’’, ‘‘$31,239’’, ‘‘$37,986’’, ‘‘$49,140’’, and
‘‘$53,942’’ for ‘‘$19,406’’, ‘‘$22,028’’, ‘‘$26,625’’, ‘‘$33,420’’,
‘‘$37,870’’, ‘‘$20,962’’, ‘‘$24,030’’, ‘‘$29,220’’, ‘‘$37,800’’, and
‘‘$41,494’’, respectively, and substituted ‘‘not to exceed
110 percent in any geographical area where the Secretary finds that cost levels so require and by not to
exceed 140 percent where the Secretary determines it
necessary on a project-by-project basis, but in no case
may any such increase exceed 90 percent where the Secretary determines that a mortgage purchased or to be
purchased by the Government National Mortgage Association in implementing its special assistance functions under section 1720 of this title (as such section existed immediately before November 30, 1983) is involved’’ for ‘‘not to exceed 75 per centum in any geographical area where he finds that cost levels so require, except that, where the Secretary determines it
necessary on a project by project basis, the foregoing
dollar amount limitations contained in this paragraph
may be exceeded by not to exceed 90 per centum (by not
to exceed 140 per centum where the Secretary determines that a mortgage other than one purchased or to
be purchased under section 1720 of this title by the Government National Mortgage Association in implementing its special assistance functions is involved) in such
an area’’.
Subsec. (d)(6)(ii). Pub. L. 100–242, § 406(b)(11), struck
out ‘‘is an owner-occupant of the property and’’ after
‘‘where the mortgagor’’.
Subsec. (f). Pub. L. 100–707 substituted ‘‘and Emergency Assistance Act’’ for ‘‘Act of 1974’’.
Pub. L. 100–242, § 401(a)(2), struck out ‘‘No mortgage
shall be insured under this section after March 15, 1988,
except pursuant to a commitment to insure before that
date, or except a mortgage covering property which the
Secretary finds will assist in the provision of housing
for displaced families.’’
Pub. L. 100–200 substituted ‘‘March 15, 1988’’ for ‘‘December 16, 1987’’.
Pub. L. 100–179 substituted ‘‘December 16, 1987’’ for
‘‘December 2, 1987’’.
Pub. L. 100–170 substituted ‘‘December 2, 1987’’ for
‘‘November 15, 1987’’.
Pub. L. 100–154 substituted ‘‘November 15, 1987’’ for
‘‘October 31, 1987’’.
Pub. L. 100–122 substituted ‘‘October 31, 1987’’ for
‘‘September 30, 1987’’.
Subsec. (h)(6). Pub. L. 100–242, § 406(b)(12), struck out
‘‘and occupied’’ after ‘‘or row construction that are
owned’’ in introductory provisions.
Subsec. (h)(8). Pub. L. 100–242, § 406(b)(13), struck out
‘‘if one of the units is to be occupied by the owner’’
after ‘‘approved by the Secretary’’.
1986—Subsec. (f). Pub. L. 99–430 substituted ‘‘September 30, 1987’’ for ‘‘September 30, 1986’’.
Pub. L. 99–345 substituted ‘‘September 30, 1986’’ for
‘‘June 6, 1986’’.
Pub. L. 99–289 substituted ‘‘June 6, 1986’’ for ‘‘April 30,
1986’’.
Pub. L. 99–272 made amendment identical to Pub. L.
99–219. See 1985 Amendment note below.
Pub. L. 99–267 substituted ‘‘April 30, 1986’’ for ‘‘March
17, 1986’’.
1985—Subsec. (f). Pub. L. 99–219 substituted ‘‘March
17, 1986’’ for ‘‘December 15, 1985’’.
Pub. L. 99–156 substituted ‘‘December 15, 1985’’ for
‘‘November 14, 1985’’.

§ 1715l

TITLE 12—BANKS AND BANKING

Pub. L. 99–120 substituted ‘‘November 14, 1985’’ for
‘‘September 30, 1985’’.
1984—Subsec. (d)(3)(iii). Pub. L. 98–479 substituted
‘‘rehabilitated’’ for ‘‘rehabilited’’ before ‘‘by a local
public agency’’.
1983—Subsec. (d)(2)(A). Pub. L. 98–181, § 423(b)(3),
struck out ‘‘: Provided further, That the foregoing maximum mortgage amounts may be increased by the
amount of the mortgage insurance premium paid at the
time the mortgage is insured’’ before ‘‘; and (B)’’.
Subsec. (d)(3)(iii). Pub. L. 98–181, § 432(b), struck out
proviso that in no case involving refinancing would the
mortgage exceed the estimated cost of repair and rehabilitation and the amount, as determined by the Secretary, required to refinance existing indebtedness secured by the property or project, and substituted ‘‘Provided, That’’ for ‘‘Provided further, That’’.
Subsec. (d)(4)(iv). Pub. L. 98–181, § 432(c), struck out
proviso that in no case involving refinancing would the
mortgage exceed the estimated cost of repair and rehabilitation and the amount, as determined by the Secretary, required to refinance existing indebtedness secured by the property or project, and substituted ‘‘Provided, That’’ for ‘‘Provided further, That’’.
Subsec. (d)(5). Pub. L. 98–181, § 404(b)(8), substituted
‘‘at such rate as may be agreed upon by the mortgagor
and the mortgagee’’ for ‘‘(exclusive of premium charges
for insurance and service charge, if any) at not to exceed 5 per centum per annum on the amount of the
principal obligation outstanding at any time, or not to
exceed such per centum per annum not in excess of 6
per centum as the Secretary finds necessary to meet
the mortgage market’’.
Subsec. (d)(6). Pub. L. 98–181, § 446(d), inserted ‘‘(unless otherwise approved by the Secretary)’’ after ‘‘periodic payments’’.
Subsec. (f). Pub. L. 98–181, § 401(c), substituted ‘‘September 30, 1985’’ for ‘‘November 30, 1983’’.
Pub. L. 98–109 substituted ‘‘November 30, 1983’’ for
‘‘September 30, 1983’’.
Pub. L. 98–35 substituted ‘‘September 30, 1983’’ for
‘‘May 20, 1983’’.
Subsec. (g)(4)(A). Pub. L. 98–181, §§ 408, 409, designated
existing provision as subpar. (A) and inserted ‘‘pursuant to a commitment to insure entered into before November 30, 1983,’’ after ‘‘this section’’.
Subsec. (g)(4)(B). Pub. L. 98–181, § 408, added subpar.
(B).
1982—Subsec. (d)(2)(A). Pub. L. 97–253, § 201(d)(1), inserted provision that the foregoing maximum mortgage
amounts may be increased by the amount of the mortgage insurance premium paid at the time the mortgage
is insured.
Subsec. (d)(2)(B)(i)(2). Pub. L. 97–253, § 201(d)(2), (3), inserted ‘‘(excluding the mortgage insurance premium
paid at the time the mortgage is insured)’’ after ‘‘of its
acquisition cost’’ and struck out ‘‘mortgage insurance
premium,’’ after ‘‘hazard insurance,’’.
Subsec. (d)(3)(ii). Pub. L. 97–377 inserted ‘‘(by not to
exceed 140 per centum where the Secretary determines
that a mortgage other than one purchased or to be purchased under section 1720 of this title by the Government National Mortgage Association in implementing
its special assistance functions is involved)’’ after ‘‘90
per centum’’.
Subsec. (d)(4)(ii). Pub. L. 97–377 inserted ‘‘(by not to
exceed 140 per centum where the Secretary determines
that a mortgage other than one purchased or to be purchased under section 1720 of this title by the Government National Mortgage Association in implementing
its special assistance functions is involved)’’ after ‘‘90
per centum’’.
Subsec. (f). Pub. L. 97–289 substituted ‘‘May 20, 1983’’
for ‘‘September 30, 1982’’.
1981—Subsec. (f). Pub. L. 97–35, § 331(c), substituted
‘‘1982’’ for ‘‘1981’’.
Subsec. (k). Pub. L. 97–35, § 339B(a), inserted ‘‘therein’’ after ‘‘installation’’ and struck out ‘‘therein’’ after
‘‘measure’’.
1980—Subsec. (d)(6). Pub. L. 96–399, § 333(c), struck out
proviso relating to maturity of a mortgage insured
under subsection (d)(2) of this section.

Page 598

Subsec. (f). Pub. L. 96–399, § 301(c), substituted ‘‘September 30, 1981’’ for ‘‘October 15, 1980’’.
Pub. L. 96–372 substituted ‘‘October 15, 1980’’ for ‘‘September 30, 1980’’.
Subsec. (i)(2)(A)(iv). Pub. L. 96–399, § 333(d), struck out
applicability to determinations of lesser amount, if so
determined, of three-quarters of the Secretary’s estimate of the remaining economic life of the building improvements.
Subsec. (k). Pub. L. 96–399, § 310(d), added subsec. (k).
1979—Subsec. (d)(3)(ii). Pub. L. 96–153, § 314, substituted ‘‘75 per centum’’ for ‘‘50 per centum’’ and inserted exception that the dollar amount limitations
may be exceeded not to exceed 90 per centum where the
Secretary determines it to be necessary.
Subsec. (d)(4)(ii). Pub. L. 96–153, § 314, substituted ‘‘75
per centum’’ for ‘‘50 per centum’’ and inserted exception that the dollar amount limitations may be exceeded by not to exceed 90 per centum where the Secretary
determines it to be necessary.
Subsec. (f). Pub. L. 96–153 substituted ‘‘September 30,
1980’’ for ‘‘November 30, 1979’’.
Pub. L. 96–105 substituted ‘‘November 30, 1979’’ for
‘‘October 31, 1979’’.
Pub. L. 96–71 substituted ‘‘October 31, 1979’’ for ‘‘September 30, 1979’’.
1978—Subsec. (d)(3)(ii). Pub. L. 95–557, § 325(a), substituted ‘‘$21,563’’, ‘‘$24,662’’, ‘‘$29,984’’, ‘‘$38,379’’, and
‘‘$42,756’’ for ‘‘$16,860’’, ‘‘$18,648’’, ‘‘$22,356’’, ‘‘$28,152’’
and ‘‘$31,884’’, respectively, and ‘‘$22,692’’, ‘‘$26,012’’,
‘‘$31,631’’, ‘‘$40,919’’, and ‘‘$44,917’’ for ‘‘$19,680’’,
‘‘$22,356’’, ‘‘$26,496’’, ‘‘$33,120’’, and ‘‘$38,400’’, respectively.
Subsec. (d)(4)(ii). Pub. L. 95–557, § 325(b), substituted
‘‘$19,406’’, ‘‘$22,028’’, ‘‘$26,625’’, ‘‘$33,420’’, and ‘‘$37,870’’
for ‘‘$18,450’’, ‘‘$20,625’’, ‘‘$24,630’’, ‘‘$29,640’’ and
‘‘$34,846’’, respectively.
Subsec. (f). Pub. L. 95–557, § 301(c), substituted ‘‘September 30, 1979’’ for ‘‘October 31, 1978’’.
Pub. L. 95–406 substituted ‘‘October 31, 1978’’ for ‘‘September 30, 1978’’.
1977—Subsec. (d)(2)(A). Pub. L. 95–128, § 303(c), substituted ‘‘$31,000’’ for ‘‘$25,000’’, ‘‘$36,000’’ for ‘‘$29,000’’
in two places, ‘‘$42,000’’ for ‘‘$33,000’’, ‘‘$35,000’’ for
‘‘$28,000’’, ‘‘$48,600’’ for ‘‘$38,880’’, ‘‘$59,400’’ for ‘‘$47,520’’,
‘‘$45,000’’ for ‘‘$36,000’’, ‘‘$57,600’’ for ‘‘$46,080’’ and
‘‘$68,400’’ for ‘‘$54,720’’.
Subsec. (d)(4). Pub. L. 95–24 struck out ‘‘other than a
mortgagor referred to in subsection (d)(3) of this section,’’ after ‘‘if executed by a mortgagor’’.
Subsec. (f). Pub. L. 95–128, § 301(c), substituted ‘‘September 30, 1978’’ for ‘‘September 30, 1977’’.
Pub. L. 95–80 substituted ‘‘September 30, 1977’’ for
‘‘July 31, 1977’’.
Pub. L. 95–60 substituted ‘‘July 31, 1977’’ for ‘‘June 30,
1977’’.
1976—Subsec. (d)(2)(A). Pub. L. 94–375, § 3(d), substituted ‘‘$25,000’’ for ‘‘$21,600’’, ‘‘$29,000’’ for ‘‘$25,200’’
in two places, and ‘‘$33,000’’ for ‘‘$28,800’’.
Subsec. (d)(3)(ii). Pub. L. 94–375, § 8(b)(4), substituted
‘‘50 per centum in any geographical area’’ for ‘‘75 per
centum in any geographical area’’, ‘‘$16,860’’ for
‘‘$11,240’’, ‘‘$18,648’’ for ‘‘$15,540’’, ‘‘$22,356’’ for ‘‘$18,630’’,
‘‘$28,152’’ for ‘‘$23,460’’, ‘‘$31,884’’ for ‘‘$26,570’’, ‘‘$19,680’’
for ‘‘$13,120’’, ‘‘$22,356’’ for ‘‘$18,630’’, ‘‘$26,496’’ for
‘‘$22,080’’, ‘‘$33,120’’ for ‘‘$27,600’’, and ‘‘$38,400’’ for
‘‘$32,000’’.
Subsec. (d)(4)(ii). Pub. L. 94–375, § 8(b)(5), substituted
‘‘50 per centum in any geographical area’’ for ‘‘75 per
centum in any geographical area’’, ‘‘$18,450’’ for
‘‘$12,300’’, ‘‘$20,625’’ for ‘‘$17,188’’, ‘‘$24,630’’ for ‘‘$20,525’’,
‘‘$29,640’’ for ‘‘$24,700’’, ‘‘$34,846’’ for ‘‘$29,038’’, ‘‘$20,962’’
for ‘‘$13,975’’, ‘‘$24,030’’ for ‘‘$20,025’’, ‘‘$29,220’’ for
‘‘$24,350’’, ‘‘$37,800’’ for ‘‘$31,500’’, and ‘‘$41,494’’ for
‘‘$34,578’’.
1975—Subsec. (d)(3)(ii). Pub. L. 94–173, § 3, raised from
45 per centum to 75 per centum the amount by which
any dollar limitation may, by regulation, be increased.
Subsec. (d)(4)(ii). Pub. L. 94–173, § 3, raised from 45 per
centum to 75 per centum the amount by which any dollar limitation may, by regulation, be increased.

Page 599

TITLE 12—BANKS AND BANKING

Subsec. (f). Pub. L. 94–173, § 4(a), struck out a provision limiting to 10 per centum the number of dwelling
units available to low and moderate income persons
under the age of 62 in a project financed with a mortgage issued under subsection (d)(3) of this section.
1974—Subsec. (d)(2)(A). Pub. L. 93–383, § 302(c), substituted ‘‘$21,600’’ for ‘‘$18,000’’, ‘‘$25,200’’ for ‘‘$21,000’’
wherever appearing, ‘‘$28,000’’ for ‘‘$24,000’’, ‘‘$28,800’’
for ‘‘$24,000’’, ‘‘$36,000’’ for ‘‘$30,000’’, ‘‘$38,880’’ for
‘‘$32,400’’, ‘‘$46,080’’ for ‘‘$38,400’’, ‘‘$47,520’’ for ‘‘$39,600’’,
and ‘‘$54,720’’ for ‘‘$45,600’’.
Subsec. (d)(3). Pub. L. 93–383, § 319(a), inserted exception for certification of projects assisted or to be assisted pursuant to section 8 of the United States Housing Act of 1937.
Subsec. (d)(3)(i). Pub. L. 93–383, § 304(e)(1), struck out
cl. (i) which set forth mortgage ceiling of $12,500,000.
Subsec. (d)(3)(ii). Pub. L. 93–383, § 303(d), substituted
‘‘$11,240’’ for ‘‘$9,200’’, ‘‘$13,120’’ for ‘‘$10,925’’, ‘‘$15,540’’
for ‘‘$12,937.50’’, ‘‘$16,200’’ for ‘‘$13,500’’, ‘‘$18,630’’ for
‘‘$15,525’’, ‘‘$22,080’’ for ‘‘$18,400’’, ‘‘$23,460’’ for ‘‘$19,550’’
‘‘$26,570’’ for ‘‘$22,137.50’’, ‘‘$27,600’’ for ‘‘$23,000’’, and
‘‘$32,000’’ for ‘‘$26,162.50’’.
Subsec. (d)(4)(i). Pub. L. 93–383, § 304(e)(2), struck out
cl. (i) which set forth mortgage ceiling of $12,500,000.
Subsec. (d)(4)(ii). Pub. L. 93–383, § 303(e), substituted
‘‘$12,300’’ for ‘‘$9,200’’, ‘‘$13,975’’ for ‘‘$10,525’’, ‘‘$17,188’’
for ‘‘$12,937.50’’, ‘‘$20,025’’ for ‘‘$15,525’’, ‘‘$20,525’’ for
‘‘$15,525’’, ‘‘$24,350’’ for ‘‘$18,400’’, ‘‘$24,700’’ for ‘‘$19,550’’,
‘‘$29,038’’ for ‘‘$22,137.50’’, ‘‘$31,500’’ for ‘‘$23,000’’, and
‘‘$34,578’’ for ‘‘$26,162.50’’.
Subsec. (f). Pub. L. 93–383, § 316(c), substituted ‘‘June
30, 1977’’ for ‘‘October 1, 1974’’.
Pub. L. 93–288 substituted ‘‘the Disaster Relief Act of
1974’’ for ‘‘the Disaster Relief Act of 1970’’.
1973—Subsec. (f). Pub. L. 93–117 extended the mortgage insurance authority under this section from Oct.
1, 1973, to Oct. 1, 1974.
Pub. L. 93–85 extended the mortgage insurance authority under this section from June 30, 1973, to Oct. 1,
1973.
1972—Subsec. (f). Pub. L. 92–503 extended the mortgage insurance authority under this section from October 1, 1972 to June 30, 1973.
1970—Subsec. (f). Pub. L. 91–609 in second par., substituted ‘‘October 1, 1972’’ for ‘‘January 1, 1971’’; provided for use of certain housing facilities for classroom
purposes where public schools in the community are
overcrowded due in part to attendance of residents of
the property or project; dispensed with need for kitchen
facilities in family units in projects for displaced, elderly, or handicapped families, but permitted inclusion
of central dining and other shared facilities; provided
that any person who is a displaced person shall be
deemed to be a family; and, in third par., substituted
‘‘the terms ‘displaced family’, ‘displaced families’, and
‘displaced person’ shall mean a family or families, or a
person’’ for ‘‘the terms ‘displaced family’ and ‘displaced
families’ shall mean a family or families’’, respectively.
Pub. L. 91–606 substituted ‘‘the Disaster Relief Act of
1970’’ for ‘‘the Act entitled ‘An Act to authorize Federal
assistance to States and local governments in major
disasters, and for other purposes’, approved September
30, 1950, as amended’’.
Pub. L. 91–525 substituted ‘‘January 1, 1971’’ for ‘‘December 1, 1970’’.
Pub. L. 91–473 substituted ‘‘December 1, 1970’’ for ‘‘November 1, 1970’’.
Pub. L. 91–432 substituted ‘‘November 1, 1970’’ for ‘‘October 1, 1970’’.
1969—Subsec. (d)(2). Pub. L. 91–152, § 113(e)(1), (2), substituted ‘‘$18,000’’ for ‘‘$15,000’’, ‘‘$21,000’’ for ‘‘$17,500’’,
wherever appearing, ‘‘$24,000’’ for ‘‘$20,000’’ wherever appearing, ‘‘$30,000’’ for ‘‘$25,000’’, ‘‘$32,400’’ for ‘‘$27,000’’,
‘‘$38,400’’ for ‘‘$32,000’’, ‘‘$39,600’’ for ‘‘$33,000’’, and
‘‘$45,600’’ for ‘‘$38,000’’.
Subsec. (d)(3)(ii). Pub. L. 91–152, § 113(e)(3), (4), substituted ‘‘$9,200’’ for ‘‘$8,000’’, ‘‘$10,925’’ for ‘‘$9,500’’,
‘‘$12,937.50’’ for ‘‘$11,250’’, ‘‘$15,525’’ for ‘‘$13,500’’ wher-

§ 1715l

ever appearing, ‘‘$18,400’’ for ‘‘$16,000’’, ‘‘$19,550’’ for
‘‘$17,000’’, ‘‘$22,137.50’’ for ‘‘$19,250’’, ‘‘$23,000’’ for
‘‘$20,000’’, and ‘‘$26,162.50’’ for ‘‘$22,750’’.
Subsec. (d)(4)(ii). Pub. L. 91–152, § 113(e)(5), (6), substituted ‘‘$9,200’’ for ‘‘$8,000’’, ‘‘$10,925’’ for ‘‘$9,500’’,
‘‘$12,937.50’’ for ‘‘$11,250’’, ‘‘$15,525’’ for ‘‘$13,500’’ wherever appearing, ‘‘$18,400’’ for ‘‘$16,000’’, ‘‘$19,550’’ for
‘‘$17,000’’, ‘‘$22,137.50’’ for ‘‘$19,250’’, ‘‘$23,000’’ for
‘‘$20,000’’, and ‘‘$26,162.50’’ for ‘‘$22,750’’.
Subsec. (f). Pub. L. 91–152, § 101(c), substituted ‘‘October 1, 1970’’ for ‘‘January 1, 1970’’.
Pub. L. 91–78 substituted ‘‘January 1, 1970’’ for ‘‘October 1, 1969’’.
Subsec. (h)(6)(A). Pub. L. 91–152, § 113(e)(7), substituted ‘‘$18,000’’ for ‘‘$15,000’’.
1968—Subsec. (d)(2)(A). Pub. L. 90–448, §§ 101(b)(1), 305,
increased maximum amount of mortgages for singlefamily residences from $12,500 to $15,000 (or $17,500 if
mortgagor’s family includes five or more persons), and
in geographical areas where costs levels so require from
$15,000 to $17,500 (or $20,000 if the mortgagor’s family includes five or more persons), and § 305(d)(2)(A) substituted ‘‘the mortgagor’’ for ‘‘a displaced family’’ in
first proviso.
Subsec. (d)(2)(B). Pub. L. 90–448, § 101(b)(2), inserted
‘‘, in cash or its equivalent’’ in cl. (2), and inserted proviso directing that a mortgagor who is the owner and
an occupant of the property be given the opportunity
to contribute the value of his labor as equity in such
dwelling.
Subsec. (d)(3)(iii). Pub. L. 90–448, § 311(b), inserted proviso to permit the mortgage to involve the financing of
the purchase of property which has been rehabilitated
by a local public agency with Federal assistance pursuant to section 1460(c)(8) of title 42.
Subsec. (f). Pub. L. 90–448, §§ 105(d), 306, authorized the
Secretary to insure mortgages meeting the requirements of subsec. (i) or (j) of this section, struck out ‘‘if
the mortgagor waives the right to receive dividends on
its equity investment in the portion thereof devoted to
community and shopping facilities’’ from first proviso,
and inserted proviso making provisions of section
1715k(d)(3)(B)(iv) applicable, in the case of a mortgage
which bears interest at the below-market interest rate
prescribed in subsec. (d)(5) of this section, only if the
mortgagor waives the right to receive dividends on its
equity investment in the portion thereof devoted to
commercial facilities.
Subsec. (g)(1). Pub. L. 90–448, § 105(b), included mortgages meeting requirements of par. (2) of subsec. (i) of
this section.
Subsec. (g)(2). Pub. L. 90–448, § 105(c), included mortgages meeting requirements of par. (2) of subsec. (j) of
this section.
Subsec. (h)(2)(A). Pub. L. 90–448, § 316(a), reduced number of one-family dwellings from five or more to four or
more, and permitted the mortgage to cover four or
more one-family units in a structure or structures for
which a plan of family unit ownership approved by the
Secretary is established.
Subsec. (h)(4). Pub. L. 90–448, § 101(c)(2), increased aggregate principal balance of mortgages insured from
$20,000,000 to $50,000,000.
Subsec. (h)(5)(B)(ii). Pub. L. 90–448, § 101(c)(1), permitted mortgage to bear interest at such lower rate,
not less than 1 per centum, as the Secretary may prescribe if in his judgment purchaser’s income is sufficiently low to justify the lower rate, and inserted proviso requiring rate of interest to be increased if purchaser’s income subsequently rises.
Subsec. (h)(6). Pub. L. 90–448, § 101(c)(3), added par. (6).
Subsec. (h)(7), (8). Pub. L. 90–448, § 316(b), added pars.
(7) and (8).
Subsecs. (i), (j). Pub. L. 90–448, § 105(a), added subsecs.
(i) and (j).
1967—Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’
for ‘‘Commissioner’’ wherever appearing in subsecs. (b),
(d)(1) to (3), (d)(3)(ii), (iii), (d)(4), (d)(4)(ii) to (iv), (d)(5),
(6), (e)(1), (2), (f), and (g)(3), (4).
Subsec. (d). Pub. L. 90–19, § 1(a)(4), substituted ‘‘Secretary’s’’ for ‘‘Commissioner’s’’ wherever appearing in
pars. (2), (3)(iii), (4)(iv), and (6).

§ 1715l

TITLE 12—BANKS AND BANKING

1966—Subsec. (a). Pub. L. 89–769, § 4(a), substituted
‘‘displaced families’’ for ‘‘families displaced from urban
renewal areas or as a result of governmental action’’.
Subsec. (d)(2), (6). Pub. L. 89–769, § 4(a), substituted
‘‘displaced family’’ for ‘‘family displaced from an urban
renewal area or as a result of governmental action’’
wherever appearing.
Subsec. (d)(2)(A). Pub. L. 89–754, § 307, increased maximum amount of mortgages for single-family and twofamily residences from $11,000 and $18,000 to $12,500 and
$20,000, respectively.
Subsec. (d)(3)(iii). Pub. L. 89–769, § 4(a), substituted
‘‘displaced families’’ for ‘‘families displaced by urban
renewal or other governmental action’’.
Subsec. (f). Pub. L. 89–769, § 4(a), (b), substituted ‘‘displaced families’’ for ‘‘families displaced from urban renewal areas or as a result of governmental action’’, and
inserted definition of ‘‘displaced family’’ and ‘‘displaced families’’.
Pub. L. 89–754, §§ 308, 309, 310(c), inserted in first sentence provision for nondwelling facilities in projects in
urban renewal areas, inserted provision respecting single occupants in housing under subsec. (d)(3) of this section, and inserted in fourth sentence ‘‘or which meet
the requirements of subsection (h)’’, respectively.
Subsec. (g)(1). Pub. L. 89–754, § 310(b)(1), inserted ‘‘or
paragraph (5) of subsection (h) of this section’’.
Subsec. (g)(2). Pub. L. 89–754, § 310(b)(2), inserted ‘‘or
paragraph (1) of subsection (h) of this section’’.
Subsec. (h). Pub. L. 89–754, § 310(a), added subsec. (h).
A prior subsec. (h) was repealed by Pub. L. 89–117, title
XI, § 1108(i)(4), Aug. 10, 1965, 79 Stat. 505.
1965—Subsec. (d)(3)(ii). Pub. L. 89–117, § 207(d), substituted ‘‘$17,000 per family unit with three bedrooms,
and $19,250 per family unit with four or more bedrooms’’ for ‘‘and $17,000 per family unit with three or
more bedrooms’’ and ‘‘$20,000 per family unit with three
bedrooms, and $22,750 per family unit with four or more
bedrooms’’ for ‘‘and $20,000 per family unit with three
or more bedrooms’’.
Subsec. (d)(4). Pub. L. 89–117, §§ 207(d), 1108(i)(1), substituted ‘‘$17,000 per family unit with three bedrooms,
and $19,250 per family unit with four or more bedrooms’’ for ‘‘and $17,000 per family unit with three or
more bedrooms’’ and ‘‘$20,000 per family unit with three
bedrooms, and $22,750 per family unit with four or more
bedrooms’’ for ‘‘and $20,000 per family unit with three
or more bedrooms’’ in subpar. (ii) and substituted
‘‘General Insurance Fund’’ for ‘‘section 221 Housing Insurance Fund’’ wherever appearing.
Subsec. (d)(5). Pub. L. 89–117, § 102(b), substituted ‘‘not
less than the lower of (A) 3 per centum per annum, or
(B) the annual rate of interest determined’’ for ‘‘not
less than the annual rate of interest determined’’ in
proviso.
Subsec. (f). Pub. L. 89–117, §§ 102(a), 1108(i)(1), substituted ‘‘this section after October 1, 1969’’ for ‘‘subsection (d)(2) or (d)(4) after September 30, 1965, or under
subsection (d)(3) after September 30, 1965’’ and substituted ‘‘General Insurance Fund’’ for ‘‘section 221
Housing Insurance Fund’’.
Subsec. (g)(1). Pub. L. 89–117, § 1108(i)(1), substituted
‘‘General Insurance Fund’’ for ‘‘section 221 Housing Insurance Fund’’.
Subsec. (g)(2). Pub. L. 89–117, § 1108(i)(2), struck out
provision that all references in section 1713 to the
Housing Insurance Fund or the Housing Fund shall be
construed to refer to the section 221 Housing Insurance
Fund.
Subsec. (g)(3). Pub. L. 89–117, § 1108(i)(1), (3), substituted ‘‘General Insurance Fund’’ for ‘‘section 221
Housing Insurance Fund’’ and struck out provision that
all references in section 1713 of this title to the Housing
Insurance Fund, the Housing Fund, or the Fund shall
be construed to refer to the section 221 Housing Insurance Fund.
Subsec. (h). Pub. L. 89–117, § 1108(i)(4), repealed subsec.
(h) which created the section 221 Housing Insurance
Fund, provided for the transfer of funds thereto, authorized the purchase and cancellation of debentures
and the credit and payment of charges and fees.

Page 600

1964—Subsec. (d)(3). Pub. L. 88–560, § 114(a), inserted
‘‘, or other mortgagor approved by the Commissioner,
and’’ after ‘‘or association’’.
Subsec. (d)(3)(ii), (4)(ii). Pub. L. 88–560, § 107(d)(1), (2),
changed limits on mortgages for property or project attributable to dwelling use from ‘‘$2,250 per room (or
$8,500 per family unit if the number of rooms in such
property or project is less than four per family unit)’’
to ‘‘$8,000 per family unit without a bedroom, $11,250
per family unit with one bedroom, $13,500 per family
unit with two bedrooms, and $17,000 per family unit
with three or more bedrooms’’, changed such mortgage
limits on project consisting of elevator-type structures
from a sum ‘‘of $2,250 per room to not to exceed $2,750
per room, and the dollar amount limitation of $8,500 per
family unit to not to exceed $9,000 per family unit’’ to
dollar amount limitations ‘‘per family unit to not to
exceed $9,500 per family unit without a bedroom, $13,500
per family unit with one bedroom, $16,000 per family
unit with two bedrooms, and $20,000 per family unit
with three or more bedrooms’’, and substituted provision authorizing an increase ‘‘by not to exceed 45 per
centum’’ of any of such limits because of cost levels for
former provision authorizing such an increase ‘‘by not
to exceed $1,000 per room without regard to the number
of rooms being less than four, or four or more’’.
Subsec. (d)(3)(iii). Pub. L. 88–560, § 114(c), inserted
‘‘Provided further, That in the case of any mortgagor
other than a nonprofit corporation or association, cooperative (including an investor-sponsor), or public
body, or a mortgagor meeting the special requirements
of subsection (e)(1), the amount of the mortgage shall
not exceed 90 per centum of the amount otherwise authorized under this section’’.
Subsec. (e). Pub. L. 88–560, § 114(b), added par. (1) and
designated existing provisions as par. (2).
Subsec. (f). Pub. L. 88–560, §§ 114(d), 202, 203(b), extended the mortgage insurance authority under subsec.
(d)(2) and (4) of this section from July 1, 1965 to Sept.
30, 1965, inserted definition of ‘‘family’’, and substituted
in such definition ‘‘person who is sixty-two years of age
or over, or who is a handicapped person within the
meaning of section 1701q of this title,’’ for ‘‘person who
is sixty-two years of age or over’’.
Subsec. (g)(3). Pub. L. 88–560, § 105(c)(2), substituted a
period for ‘‘; or’’ and inserted ‘‘If the insurance is paid
in cash, there shall be added to such payment an
amount equivalent to the interest which the debentures would have earned, computed to a date to be established pursuant to regulations issued by the Commissioner.’’
1963—Subsec. (f). Pub. L. 88–54 extended mortgage insurance authority under subsec. (d)(2) and (4) of this
section from July 1, 1963, to July 1, 1965.
1961—Pub. L. 87–70, § 101(a)(1), added section catchline.
Subsec. (a). Pub. L. 87–70, § 101(a)(2), redefined the
purpose of this section as one to assist private industry
in providing housing for low and moderate income families and families displaced from urban renewal areas or
as a result of governmental action, and eliminated provisions which required localities, communities or environs of communities to request the mortgage insurance, which limited the number of dwelling units to not
more than the aggregate number which the Housing
Administrator certified to the Commissioner, and
which authorized assistance for relocation of families
to be displaced as the result of governmental action in
a community to those cases in which a certification by
the Housing Administrator pursuant to section 1451(c)
of title 42 has been made, or there is being carried out
a project covered by a Federal aid contract executed, or
prior approval granted, under subchapter II of chapter
8A of title 42, or there is being carried out an urban renewal project assisted under section 1462 of title 42.
Subsec. (b). Pub. L. 87–70, § 101(a)(3), empowered the
Commissioner to insure advances during construction
on mortgages covering property of the character described in pars. (3) and (4) of subsec. (d) of this section.
Subsec. (d)(2). Pub. L. 87–70, § 101(a)(4), (5), increased
the maximum amount of mortgages for single-family

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TITLE 12—BANKS AND BANKING

residences from $9,000 to $11,000, three-family residences from $25,000 to $27,000 and for four-family residences from $32,000 to $33,000, increased the maximum
amount of mortgages that the Commissioner may authorize in cases where he finds the cost levels so require from $12,000 to $15,000 for single-family residences, $20,000 to $25,000 for two-family residences,
$27,500 to $32,000 for three-family residences and $35,000
to $38,000 for four-family residences, required families
other than those displaced from an urban renewal area
or as a result of Government action to pay on account
of the property at least 3 per centum of the Commissioner’s estimate of its acquisition cost, prohibited insurance of mortgages for dwellings designed principally
for two-, three-, or four-family residences except in the
case of dwellings for occupancy by a family displaced
from an urban renewal area or as a result of governmental action, and eliminated provisions which required the Commissioner to prescribe procedures relating to priorities in occupancy of the remaining units of
two-, three-, and four-family dwellings after occupancy
of one unit by the owner.
Subsec. (d)(3). Pub. L. 87–70, § 101(a)(6), included public
bodies and agencies which certify that they are not receiving financial assistance exclusively pursuant to the
United States Housing Act of 1937 cooperatives, and
limited dividend corporations, increased the maximum
amount of mortgages from not more than $9,000 per
family unit for such part of such property or project as
may be attributable to dwelling use to not more than
$2,250 per room (or $8,500 per family unit if the number
of rooms is less than four per family unit) for such part
of such property or project as may be attributable to
dwelling use (excluding exterior land improvements),
empowered the Commissioner to increase the maximum from $2,250 to $2,750 per room and from $8,500 to
$9,000 per family unit to compensate for higher costs incident to the construction of elevator-type structures,
and in geographical areas which the cost levels so require from $2,250 to $3,250 per room, increased the maximum amount of the mortgage in the case of repair and
rehabilitation from not more than the Commissioner’s
estimate of the value of the property when the proposed repair and rehabilitation is completed to not
more than the sum of the estimated cost of repair and
rehabilitation and the Commissioner’s estimate of the
value of the property before repair and rehabilitation,
limited, in cases involving refinancing, the amount of
the mortgage to not more than the estimated cost of
repair and rehabilitation and the amount (as determined by the Commissioner) required to refinance existing indebtedness secured by the property or project,
and eliminated provisions which required the property
or project to be for use as rental accommodations for
ten or more families eligible for occupancy.
Subsec. (d)(4). Pub. L. 87–70, § 101(a)(7)–(10), substituted ‘‘other than a mortgagor referred to in subsection (d)(3) of this section’’ for ‘‘which is not a nonprofit organization’’ in opening provisions, increased
the maximum amount of mortgages from not more
than $9,000 per family unit for such part of such property or project as may be attributable to dwelling use
to not more than $2,250 per room (or $8,500 per family
unit if the number of rooms is less than four per family
unit) for such part of such property or project as may
be attributable to dwelling use (excluding exterior land
improvements), empowered the Commissioner to increase the maximum from $2,250 to $2,750 per room and
from $8,500 to $9,000 per family unit to compensate for
higher costs incident to the construction of elevatortype structures, and in geographical areas which the
cost levels so require from $2,250 to $3,250 per room, increased the maximum amount of the mortgage in the
case of repair and rehabilitation from not more than 90
per centum of the Commissioner’s estimate of the
value of the property or project when the proposed repair and rehabilitation is completed to not more than
90 per centum of the sum of the estimated cost of repair
and rehabilitation and the Commissioner’s estimate of
the value of the property before repair and rehabilita-

§ 1715l

tion, limited, in cases involving refinancing, the
amount of the mortgage to not more than the estimated cost of repair and rehabilitation and the amount
(as determined by the Commissioner) required to refinance existing indebtedness secured by the property of
project, and eliminated provisions which required the
property or project to be for use as rental accommodations for ten or more families eligible for occupancy.
Subsec. (d)(5). Pub. L. 87–70, § 101(a)(10), (11), struck
out provisions which required the mortgage to provide
for complete amortization by periodic payments within
such terms as the Commissioner may prescribe, but not
to exceed 40 years from the date of insurance of the
mortgage or three-quarters of the Commissioner’s estimate of the remaining economic life of the building improvements, whichever is the lesser, and inserted proviso requiring the mortgage to bear interest at not less
than the annual rate of interest determined by estimating the average market yield to maturity on all outstanding marketable obligations of the United States,
and by adjusting such yield to the nearest one-eighth of
1 per centum.
Subsec. (d)(6). Pub. L. 87–70, § 101(a)(10), added par. (6).
Subsec. (f). Pub. L. 87–70, § 101(a)(12), required a property or project covered by a mortgage insured under
subsec. (d)(3) or (d)(4) of this section to include five or
more family units, empowered the Commissioner to
adopt such procedures and requirements to assure that
the dwelling accommodations provided under this section are available to families displaced from urban renewal areas or as a result of governmental action, authorized the Commissioner to insure a mortgage which
meets subsec. (d)(3) of this section with no premium
charge, with a reduced premium charge, or with a premium charge for such period or periods during the time
the insurance is in effect as he may determine, and prohibited insurance of mortgages under subsec. (d)(2) or
(d)(4) of this section after July 1, 1963, or under subsec.
(d)(3) of this section after July 1, 1965, except pursuant
to a commitment to insure before that date or except
a mortgage covering property which will assist in the
provision of housing for families displaced from urban
renewal areas or as a result of governmental action.
Subsec. (g)(3), (4). Pub. L. 87–70, § 101(a)(13), (14), added
par. (3), redesignated former par. (3) as (4), and substituted ‘‘this paragraph’’ for ‘‘this paragraph (3)’’.
Subsec. (h). Pub. L. 87–70, § 101(a)(15), inserted ‘‘cash
payments,’’ after ‘‘cash adjustments,’’ in last sentence.
1959—Subsec. (a). Pub. L. 86–372, § 110(a)(1), (2), inserted provisions in first par. to authorize assistance in
relocating families residing in the environs of a community described in cl. (2) which are to be displaced as
the result of governmental action, inserted provisions
in second par. making mortgage insurance available in
environs of communities and substituted ‘‘in or near
any such community’’ for ‘‘in any such community’’ in
second proviso of second par.
Subsec. (d)(2). Pub. L. 86–372, § 110(b), required a mortgage to be secured by property upon which there is located a dwelling conforming to applicable standards
prescribed by the Commissioner under subsec. (f) of
this section, and meeting the requirements of all State
laws, or local ordinances or regulations, relating to the
public health or safety, zoning, or otherwise, which
may be applicable thereto, increased the maximum
amount of the mortgage on a single-family residence in
a high cost area from $10,000 to $12,000, authorized insurance of mortgages for two-, three-, and four-family
residences and required the Commissioner to prescribe
such procedures as are necessary to secure to families,
referred to in subsec. (a) of this section, priorities in
occupancy of the remaining units of two-, three-, and
four-family dwellings after occupancy of one unit by
the owner.
Subsec. (d)(3). Pub. L. 86–372, § 110(c)(1), (2), substituted ‘‘$12,000’’ for ‘‘$10,000’’, and ‘‘not in excess of (1)
in the case of new construction, the amount which the
Commissioner estimates will be the replacement cost
of the property or project when the proposed improvements are completed (the replacement cost may in-

§ 1715l

TITLE 12—BANKS AND BANKING

clude the land, the proposed physical improvements
utilities within the boundaries of the land, architect’s
fees, taxes, interest during construction, and other miscellaneous charges incident to construction and approved by the Commissioner), or (2) in the case of repair and rehabilitation, the Commissioner’s estimate of
the value of the property when the proposed repair and
rehabilitation is completed: Provided, That such property or project, when constructed, or repaired and rehabilitated, shall be for use as rental accommodations for
ten or more families eligible for occupancy as provided
in this section; or’’ for ‘‘not in excess of the Commissioner’s estimate of the value of the property or project
when constructed, or repaired and rehabilitated, for use
as rental accommodations for ten or more families eligible for occupancy as provided in this section; and’’.
Subsec. (d)(4), (5). Pub. L. 86–372, § 110(c)(3), added par.
(4) and redesignated former par. (4) as (5).
Subsec. (f). Pub. L. 86–372, § 110(d), authorized the
property or project to include such commercial and
community facilities as the Commissioner deems adequate to serve the occupants.
Subsec. (g)(1). Pub. L. 86–372, § 116(b), inserted reference to subsec. (k) of section 1710 of this title.
Subsec. (g)(2). Pub. L. 86–372, § 110(e), substituted
‘‘paragraph (3) or (4)’’ for ‘‘paragraph (3)’’.
1957—Subsec. (g)(1). Pub. L. 85–104 substituted ‘‘(h),
and (j) of section 1710 of this title’’ for ‘‘and (h) of section 1710 of this title’’.
1956—Subsec. (a). Act Aug. 7, 1956, § 307(c), inserted in
first sentence ‘‘, or (3) there is being carried out an
urban renewal project assisted under section 1462 of
title 42’’ and substituted ‘‘clause (2) or (3)’’ for ‘‘clause
(2)’’ each place it appears in last proviso.
Subsec. (d). Act Aug. 7, 1956, § 108, substituted ‘‘$9,000’’
for ‘‘$7,600’’ and ‘‘$10,000’’ for ‘‘$8,600’’ in pars. (2) and
(3); amended par. (2) to allow mortgage insurance for
appraised value and to require at least $200 initial payment, which amount could include prepaid expenses, in
lieu of former provisions which allowed mortgage to be
insured up to 95 percent of the appraised value and required at least a 5 percent initial payment; eliminated
‘‘95 per centum of’’ after ‘‘not in excess of’’ and inserted
‘‘or the Federal Housing Commissioner’’ after ‘‘agencies thereof’’ in par. (3) and substituted ‘‘forty’’ for
‘‘thirty’’ in par. (4).
1955—Subsec. (a). Act Aug. 11, 1955, § 102(j), authorized
assistance in relocating families from urban renewal
areas even though such families are not required to
leave the area.
Subsec. (d)(3). Act Aug. 11, 1955, § 102(c), increased
from $5,000,000 to $12,500,000 the limitation on the maximum amount of a mortgage.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 406(b)(10)–(13) of Pub. L.
100–242 applicable only with respect to mortgages insured pursuant to conditional commitment issued on or
after Feb. 5, 1988, or in accordance with direct endorsement program (24 CFR 200.163), if approved underwriter
of mortgagee signs appraisal report for property on or
after Feb. 5, 1988, see section 406(d) of Pub. L. 100–242,
set out as a note under section 1709 of this title.
EFFECTIVE DATE OF 1983 AMENDMENT
For effective date of amendment by section 423(b)(3)
of Pub. L. 98–181, see section 423(c) of Pub. L. 98–181, set
out as a note under section 1709 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
EFFECTIVE DATE OF 1974 AMENDMENT
Amendment by Pub. L. 93–288 effective Apr. 1, 1974,
see section 605 of Pub. L. 93–288, formerly set out as an
Effective Date note under section 5121 of Title 42, The
Public Health and Welfare.

Page 602

EFFECTIVE DATE OF 1970 AMENDMENT
Amendment by Pub. L. 91–606 effective Dec. 31, 1970,
see section 304 of Pub. L. 91–606, set out as a note under
section 165 of Title 26, Internal Revenue Code.
IMPLEMENTATION OF 1982 AMENDMENT
Amendment by Pub. L. 97–253 to be implemented only
if Secretary determines that program of advance payment of insurance premiums, considering the effect of
said amendment, is actuarially sound, see section 201(g)
of Pub. L. 97–253, set out as a note under section 1709 of
this title.
DELEGATION OF PROCESSING OF MORTGAGE INSURANCE
Secretary of Housing and Urban Development to implement system of mortgage insurance for mortgages
insured under this section that delegates processing
functions to selected approved mortgagees, with Secretary to retain authority to approve rents, expenses,
property appraisals, and mortgage amounts and to execute firm commitments, see section 328 of Pub. L.
101–625, set out as a note under section 1713 of this title.
EFFECTIVE DATE OF TEMPORARY EXTENSION OF EMERGENCY LOW INCOME HOUSING PRESERVATION ACT OF
1987 AND CORRECTION OF ANY REPEAL
Pub. L. 101–494, § 1, Oct. 31, 1990, 104 Stat. 1185, provided that:
‘‘(a) EFFECTIVE DATE OF EXTENDER.—Public Law
101–402 [amending section 1709 of this title and section
11319 of Title 42, The Public Health and Welfare, and
amending provisions set out as a note below] shall be
deemed to have taken effect as if such law were enacted
on September 29, 1990.
‘‘(b) STATUS OF ACT.—The Emergency Low Income
Housing Preservation Act of 1987 [title II of Pub. L.
100–242] (12 U.S.C. 1715l note) shall be deemed to have
been in effect on and after September 29, 1990, as if Public Law 101–402 had been enacted on September 29, 1990.
‘‘(c) CORRECTION OF ANY REPEAL.—The provisions of
the Emergency Low Income Housing Preservation Act
of 1987 (12 U.S.C. 1715l note), other than section 203, are
amended to read as such provisions were in effect on
September 29, 1990. The amendment made by this subsection shall take effect as if this Act were enacted on
September 29, 1990.
‘‘(d) EFFECTIVE DATE.—If the Cranston-Gonzalez National Affordable Housing Act [Pub. L. 101–625, which
was approved Nov. 28, 1990] is enacted before the enactment of this Act [Oct. 31, 1990], this section shall be
deemed to have taken effect immediately before the enactment of the Cranston-Gonzalez National Affordable
Housing Act.’’
PRESERVATION OF LOW-INCOME HOUSING
The Emergency Low Income Housing Preservation
Act of 1987, consisting of title II of Pub. L. 100–242, Feb.
5, 1988, 101 Stat. 1877, amended the National Housing
Act, the United States Housing Act of 1937, and the
Housing Act of 1949, and enacted provisions formerly
set out as a note under this section. The provisions set
out as a note under this section consisted of subtitles
A and B [§§ 201–203, 221–230, and 231–235] of title II of
Pub. L. 100–242, as amended by Pub. L. 100–628, title X,
§§ 1021–1027, Nov. 7, 1988, 102 Stat. 3270, 3271; Pub. L.
101–235, title II, §§ 201, 202(a)–(c), 203(b), Dec. 15, 1989, 103
Stat. 2037, 2038; Pub. L. 101–402, § 1, Oct. 1, 1990, 104 Stat.
866; Pub. L. 101–494, §§ 1(c), 2(a), Oct. 31, 1990, 104 Stat.
1185, which set up a temporary program for the prepayment of mortgages on low income housing insured
under the National Housing Act that terminated on the
date of enactment of the Cranston-Gonzalez National
Affordable Housing Act (Nov. 28, 1990). The CranstonGonzalez National Affordable Housing Act [Pub. L.
101–625] amended subtitles A and B of title II of Pub. L.
100–242 generally, changing the name of title II of Pub.
L. 100–242 to the ‘‘Low-Income Housing Preservation
and Resident Homeownership Act of 1990’’. As amended,

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TITLE 12—BANKS AND BANKING

subtitles A and B of title II are classified generally to
subchapter I (§ 4101 et seq.) of chapter 42 of this title.
Prior to the general revision by Pub. L. 101–625, subtitles A and B of title II read as follows:
‘‘SUBTITLE A—GENERAL PROVISIONS
‘‘SEC. 201. SHORT TITLE.
‘‘This title [amending sections 1715z–6 and 1715z–15 of
this title and sections 1437f, 1472, 1485, and 1487 of Title
42, The Public Health and Welfare] may be cited as the
‘Emergency Low Income Housing Preservation Act of
1987’.
‘‘SEC. 202. FINDINGS AND PURPOSE.
‘‘(a) FINDINGS.—The Congress finds that—
‘‘(1) in the next 15 years, more than 330,000 low income housing units insured or assisted under sections
221(d)(3) and 236 of the National Housing Act [12
U.S.C. 1715l(d)(3), 1715z–1] could be lost as a result of
the termination of low income affordability restrictions;
‘‘(2) in the next decade, more than 465,000 low income housing units produced with assistance under
section 8 of the United States Housing Act of 1937 [42
U.S.C. 1437f] could be lost as a result of the expiration
of the rental assistance contracts;
‘‘(3) some 150,000 units of rural low income housing
financed under section 515 of the Housing Act of 1949
[42 U.S.C. 1485] are threatened with loss as a result of
the prepayment of mortgages by owners;
‘‘(4) the loss of this privately owned and federally
assisted housing, which would occur in a period of
sharply rising rents on unassisted housing and extremely low production of additional low rent housing, would inflict unacceptable harm on current tenants and would precipitate a grave national crisis in
the supply of low income housing that was neither
anticipated nor intended when contracts for these
units were entered into;
‘‘(5) the loss of this affordable housing, to encourage the production of which the public has provided
substantial benefits over past years, would irreparably damage hard-won progress toward such important and long-established national objectives as—
‘‘(A) providing a more adequate supply of decent,
safe, and sanitary housing that is affordable to low
income Americans;
‘‘(B) increasing the supply of housing affordable
to low income Americans that is accessible to employment opportunities; and
‘‘(C) expanding housing opportunities for all
Americans, particularly members of disadvantaged
minorities;
‘‘(6) the provision of an adequate supply of low income housing has depended and will continue to depend upon a strong, long-term partnership between
the public and private sectors that accommodates a
fair return on investment;
‘‘(7) recent reductions in Federal housing assistance
and tax benefits related to low income housing have
increased the incentives for private industry to withdraw from the production and management of low income housing;
‘‘(8) efforts to retain this housing must take account of specific financial and market conditions
that differ markedly from project to project;
‘‘(9) a major review of alternative responses to this
threatened loss of affordable housing is now being
undertaken by numerous private sector task forces as
well as State and local organizations; and
‘‘(10) until the Congress can act on recommendations that will emerge from this review, interim
measures are needed to avoid the irreplaceable loss of
low income housing and irrevocable displacement of
current tenants.
‘‘(b) PURPOSE.—It is the purpose of this title—
‘‘(1) to preserve and retain to the maximum extent
practicable as housing affordable to low income families or persons those privately owned dwelling units
that were produced for such purpose with Federal assistance;

§ 1715l

‘‘(2) to minimize the involuntary displacement of
tenants currently residing in such housing; and
‘‘(3) to continue the partnership between all levels
of government and the private sector in the production and operation of housing that is affordable to
low income Americans.
‘‘SEC. 203. TERMINATION OF CERTAIN PROVISIONS.
‘‘(a) IN GENERAL.—Effective on November 30, 1990, or
the date of enactment of the Cranston-Gonzalez National Affordable Housing Act [Nov. 28, 1990], whichever
is earlier—
‘‘(1) subtitles B and D [amending sections 1715z–6
and 1715z–15 of this title and sections 1437f and 1485 of
Title 42, The Public Health and Welfare and enacting
provisions set out in this note] are repealed; and
‘‘(2) each provision of law amended by subtitle B or
D is amended to read as it would without such
amendment.
‘‘(b) SAVINGS PROVISION.—The repeal or amendment
of any provision under subsection (a) shall have no effect on any action taken or authorized under the provision prior to such repeal or amendment.
‘‘SUBTITLE B—PREPAYMENT OF MORTGAGES INSURED
UNDER NATIONAL HOUSING ACT

‘‘SEC. 221. GENERAL PREPAYMENT LIMITATION.
‘‘(a) PRIOR APPROVAL OF PLAN OF ACTION.—An owner
of eligible low income housing may prepay, and a mortgagee may accept prepayment of, a mortgage on such
housing only in accordance with a plan of action approved by the Secretary of Housing and Urban Development under this subtitle. An insurance contract with
respect to eligible low-income housing may be terminated pursuant to section 229 of the National Housing
Act [12 U.S.C. 1715t] only in accordance with a plan of
action approved by the Secretary under this subtitle.
‘‘(b) ALTERNATIVE PREPAYMENT MORATORIUM.—In the
event any court of the United States or any State invalidates the requirements established in this subtitle
(1) an owner of eligible low income housing located in
the geographic area subject to the jurisdiction of such
court may not prepay, and a mortgagee may not accept
prepayment of, a mortgage on such housing during the
2-year period following the date of such invalidation,
and (2) an insurance contract with respect to eligible
low-income housing located in the geographic area subject to the jurisdiction of such court may not be terminated pursuant to section 229 of the National Housing
Act [12 U.S.C. 1715t] during the 2-year period following
the date of such invalidation.
‘‘SEC. 222. NOTICE OF INTENT.
‘‘An owner of eligible low income housing seeking to
initiate prepayment or other changes in the status or
terms of the mortgage or regulatory agreement (including a request to terminate the insurance contract
pursuant to section 229 of the National Housing Act [12
U.S.C. 1715t]) shall file with the Secretary a notice of
the intent of the owner in such form and manner as the
Secretary shall prescribe. The owner shall simultaneously file the notice of intent with any appropriate
State or local government agency for the jurisdiction
within which the housing is located.
‘‘SEC. 223. PLAN OF ACTION.
‘‘(a) PREPARATION AND SUBMISSION.—Upon receipt of a
notice of intent, the Secretary shall provide the owner
with such information as the owner needs to prepare a
plan of action, which information shall include a description of the Federal incentives authorized under
this title, and any relevant market area and demographic information that the Secretary has custody of
and that the owner may use in preparing the plan. The
owner shall submit the plan of action to the Secretary
in such form and manner as the Secretary shall prescribe. The owner may simultaneously submit the plan
of action to any appropriate State or local government
agency for the jurisdiction within which the housing is
located, which agency shall, in reviewing the plan, consult with representatives of the tenants of the housing.

§ 1715l

TITLE 12—BANKS AND BANKING

‘‘(b) CONTENTS.—The plan of action shall include—
‘‘(1) a description of any proposed changes in the
status or terms of the mortgage or regulatory agreement, which may include a request for incentives to
extend the low income use of the housing;
‘‘(2) a description of any assistance that could be
provided by State or local government agencies, as
determined by prior consultation between the owner
and any appropriate State or local agencies;
‘‘(3) a description of any proposed changes in the
low income affordability restrictions;
‘‘(4) a description of any change in ownership that
is related to prepayment;
‘‘(5) an assessment of the effect of the proposed
changes on existing tenants;
‘‘(6) a statement of the effect of the proposed
changes on the supply of housing affordable to lower
and very low income families or persons in the community within which the housing is located and in
the area that the housing could reasonably be expected to serve; and
‘‘(7) any other information that the Secretary determines is necessary to achieve the purposes of this
title.
‘‘(c) REVISIONS.—The owner may from time to time
revise and amend the plan of action as may be necessary to obtain approval of the plan under this subtitle.
‘‘(d) AUTHORITY TO LIMIT CONTENTS OF PLAN.—The
Secretary shall limit the amount of appraisal, market
area, and demographic information required under this
section in the case of a plan of action requesting incentives.
‘‘SEC. 224. INCENTIVES TO EXTEND LOW INCOME
USE.
‘‘(a) AGREEMENTS BY SECRETARY.—After receiving a
plan of action from an owner of eligible low income
housing, the Secretary may enter into such agreements
as are necessary to satisfy the criteria for approval
under section 225.
‘‘(b) PERMISSIBLE INCENTIVES.—Agreements entered
into under subsection (a) that by modifications to the
existing regulatory agreement or mortgage extend the
low income affordability restrictions through the term
of the mortgage or, in the case of the prepayment of a
mortgage, by a recorded instrument impose low income
affordability restrictions (including the obligations
specified in the regulatory agreement) through a period
equivalent to the term of the original mortgage may
include one or more of the following incentives that the
Secretary, after taking into account local market conditions, determines to be necessary to achieve the purposes of this title:
‘‘(1) An increase in the allowable distribution or
other measures to increase the rate of return on investment.
‘‘(2) Revisions to the method of calculating equity.
‘‘(3) Increased access to residual receipts accounts
or excess replacement reserves.
‘‘(4) Provision of insurance for a second mortgage
under section 241(f) of the National Housing Act [12
U.S.C. 1715z–6(f)].
‘‘(5) An increase in the rents permitted under an existing contract under section 8 of the United States
Housing Act of 1937 [42 U.S.C. 1437f], or (subject to the
availability of amounts provided in appropriation
Acts) additional assistance under such section 8 or an
extension of any project-based assistance attached to
the housing.
‘‘(6) Financing of capital improvements under section 201 of the Housing and Community Development
Amendments of 1978 [12 U.S.C. 1715z–1a].
‘‘(7) Other actions, authorized in other provisions of
law, to facilitate a transfer or sale of the project to
a qualified nonprofit organization, limited equity
tenant cooperative, public agency, or other entity acceptable to the Secretary.
‘‘(8) Other incentives authorized in law.
‘‘SEC. 225. CRITERIA FOR APPROVAL OF PLAN OF
ACTION.
‘‘(a) PLAN OF ACTION INVOLVING TERMINATION OF LOW
INCOME AFFORDABILITY RESTRICTIONS.—The Secretary

Page 604

may approve a plan of action that involves termination
of the low income affordability restrictions only upon
a written finding that—
‘‘(1) implementation of the plan of action will not
materially increase economic hardship for current
tenants (and will not in any event result in (A) a
monthly rental payment by a current tenant that exceeds 30 percent of the monthly adjusted income of
the tenant or an increase in the monthly rental payment in any year that exceeds 10 percent (whichever
is lower), or (B) in the case of a current tenant who
already pays more than such percentage, an increase
in the monthly rental payment in any year that exceeds the increase in the Consumer Price Index or 10
percent (whichever is lower)) or involuntarily displace current tenants (except for good cause) where
comparable and affordable housing is not readily
available, determined without regard to the availability of Federal housing assistance that would address any such hardship or involuntary displacement;
and
‘‘(2)(A) the supply of vacant, comparable housing is
sufficient to ensure that such prepayment will not
materially affect—
‘‘(i) the availability of decent, safe, and sanitary
housing affordable to lower income and very low-income families or persons in the area that the housing could reasonably be expected to serve;
‘‘(ii) the ability of lower income and very low-income families or persons to find affordable, decent,
safe, and sanitary housing near employment opportunities; or
‘‘(iii) the housing opportunities of minorities in
the community within which the housing is located; or
‘‘(B) the plan has been approved by the appropriate
State agency and any appropriate local government
agency for the jurisdiction within which the housing
is located as being in accordance with a State strategy approved by the Secretary under section 226.
‘‘(b) PLAN OF ACTION INCLUDING INCENTIVES.—The Secretary may approve a plan of action that includes incentives only upon finding that—
‘‘(1) the package of incentives is necessary to provide a fair return on the investment of the owner;
‘‘(2) due diligence has been given to ensuring that
the package of incentives is, for the Federal Government, the least costly alternative that is consistent
with the full achievement of the purposes of this
title; and
‘‘(3) binding commitments have been made to ensure that—
‘‘(A) the housing will be retained as housing affordable for very low-income families or persons,
lower income families or persons, and moderate income families or persons for the remaining term of
the mortgage;
‘‘(B) throughout such period, adequate expenditures will be made for maintenance and operation
of the housing;
‘‘(C) current tenants shall not be involuntarily
displaced (except for good cause);
‘‘(D) any increase in rent contributions for current tenants shall be to a level that does not exceed
30 percent of the adjusted income of the tenant or
the fair market rent for comparable housing under
section 8(b) of the United States Housing Act of
1937 [42 U.S.C. 1437f(b)], whichever is lower;
‘‘(E)(i) any resulting increase in rents for current
tenants (except for increases made necessary by increased operating costs)—
‘‘(I) shall be phased in equally over a period of
not less than 3 years, if such increase is 30 percent
or more; and
‘‘(II) shall be limited to not more than 10 percent per year if such increase is more than 10 percent but less than 30 percent; and
‘‘(ii) assistance under section 8 of the United
States Housing Act of 1937 shall be provided if necessary to mitigate any adverse affect on current income eligible tenants; and

Page 605

TITLE 12—BANKS AND BANKING

‘‘(F)(i) rents for units becoming available to new
tenants shall be at levels approved by the Secretary
that will ensure, to the extent practicable, that the
units will be available and affordable to the same
proportions of very low-income families or persons,
lower income families or persons, and moderate income families or persons (including families or persons whose incomes are 95 percent or more of area
median income) as resided in the housing as of January 1, 1987 (based on the area median income limits established by the Secretary in February, 1987),
or the date the plan of action is approved, whichever date results in the highest proportion of very
low-income families, except that this limitation
shall not prohibit a higher proportion of very lowincome families from occupying the housing; and
‘‘(ii) in approving rents under this paragraph, the
Secretary shall take into account any additional
incentives provided under this subtitle and shall
make provision for such annual rent adjustments as
may be made necessary by future reasonable increases in operating costs.
‘‘(c) SECTION 8 RENTAL ASSISTANCE.—When providing
rental assistance under section 8 [of the United States
Housing Act of 1937, 42 U.S.C. 1437f], the Secretary may
enter into a contract with an owner, contingent upon
the future availability of appropriations for the purpose of renewing expiring contracts for rental assistance as provided in appropriations Acts, to extend the
term of such rental assistance for such additional period or periods as is necessary to carry out an approved
plan of action. The contract and the approved plan of
action shall provide that, if the Secretary is unable to
extend the term of such rental assistance or is unable
to develop a revised package of incentives providing
benefits to the owner comparable to those received
under the original approved plan of action, the Secretary, upon the request of the owner, shall take the
following actions (subject to the limitations under the
following paragraphs):—
‘‘(1) Modification of the binding commitments made
pursuant to subsection (b) that are dependent on such
rental assistance.
‘‘(2) If action under paragraph (1) is not feasible, release of an owner from the binding commitments
made pursuant to subsection (b) that are dependent
on such rental assistance.
‘‘(3) If action under paragraphs (1) and (2) would, in
the determination of the Secretary, result in the default of the insured loan, approval of the revised plan
of action, notwithstanding subsection (a), that involves the termination of low-income affordability
restrictions.
At least 30 days prior to making a request under the
preceding sentence, an owner shall notify the Secretary
of the owner’s intention to submit the request. The
Secretary shall have a period of 90 days following receipt of such notice to take action to extend the rental
assistance contract and to continue the binding commitments under subsection (b).
‘‘(d) RELOCATION OF DISPLACED TENANTS.—Any plan of
action shall specify actions that the Secretary and the
owner shall take to ensure that any tenants, displaced
as a result of a plan of action approved under subsection (a) or as a result of modifications taken pursuant to subsection (c), are relocated to affordable housing.
‘‘SEC. 226. ALTERNATIVE STATE STRATEGY.
‘‘(a) CRITERIA FOR APPROVAL.—The Secretary may approve a State strategy for purposes of section 225(a)
only upon finding that it is a practicable statewide
strategy that ensures at a minimum that—
‘‘(1) current tenants will not be involuntarily displaced (except for good cause);
‘‘(2) housing opportunities for minorities will not be
adversely affected in the communities within which
the housing is located;
‘‘(3) any increase in rent for current tenants shall
be to a level that does not exceed 30 percent of the ad-

§ 1715l

justed income of the tenants or the fair market rent
for comparable housing under section 8(b) of the
United States Housing Act of 1937 [42 U.S.C. 1437f(b)],
whichever is lower, except that any increase not necessitated by increased operating costs shall be
phased in equally over not less than 3 years if such
increase exceeds 10 percent;
‘‘(4) housing approved under the State strategy will
remain affordable to very low-income, lower income
or moderate income families and persons for not less
than the remaining term of the original mortgage, if
the housing is to be made available for rental, or for
not less than 40 years, if the housing is to be made
available for homeownership;
‘‘(5)(A) not less than 80 of all units in eligible low
income housing approved under the State strategy
shall be retained as affordable to families or persons
meeting the income eligibility standards for initial
occupancy that applies to the housing on January 1,
1987; and
‘‘(B) not less than 60 percent of the units in any one
project shall remain available and affordable to such
families or persons, within which not less than 20 percent of the units shall remain available and affordable to very low income families or persons as determined by the Secretary with adjustments for smaller
and larger families;
‘‘(6) expenditures for rehabilitation, maintenance
and operation shall be at a level necessary to maintain the housing as decent, safe and sanitary for the
period specified in paragraph (4);
‘‘(7) not less than 25 percent of new assistance required to maintain low income affordability in accordance with this section shall be provided through
State and local actions, such as tax exempt financing, low-income tax credits, State or local tax concessions, and other incentives provided by the State
or local governments; and
‘‘(8) for each unit of eligible low income housing approved under the State strategy that is not retained
as affordable to families or persons meeting the income eligibility standards for initial occupancy on
January 1, 1987, the State will provide with State
funds 1 additional unit of comparable housing in the
same market area that is available and affordable to
such families or persons, and such units or funds
shall be made available before the Secretary approves
the State strategy.
‘‘(b) ADDITIONAL REQUIREMENTS.—
‘‘(1) The Secretary may not approve a State strategy until the State has entered into all of the agreements necessary to carry out the strategy.
‘‘(2) Each State strategy shall include any other
provision that the Secretary determines to be necessary to implement an approved State strategy.
‘‘(c) IMPLEMENTATION AGREEMENTS.—The Secretary
may enter into such agreements as are necessary to implement an approved State strategy, which agreements
may include incentives that are authorized in other
provisions of this subtitle.
‘‘SEC. 227. TIMETABLE FOR APPROVAL OF PLAN OF
ACTION.
‘‘(a) NOTIFICATION OF DEFICIENCIES.—Not later than 60
days after receipt of a plan of action, the Secretary
shall notify the owner in writing of any deficiencies
that prevent the plan of action from being approved. If
deficiencies are found, such notice shall describe alternative ways in which the plan could be revised to meet
the criteria for approval.
‘‘(b) NOTIFICATION OF APPROVAL.—
‘‘(1) IN GENERAL.—Not later than 180 days after receipt of a plan of action, or such longer period as the
owner requests, the Secretary shall notify the owner
in writing whether the plan of action, including any
revisions, is approved. If approval is withheld, the notice shall describe—
‘‘(A) the reasons for withholding approval; and
‘‘(B) the actions that could be taken to meet the
criteria for approval.

§ 1715l

TITLE 12—BANKS AND BANKING

‘‘(2) OPPORTUNITY TO REVISE.—The Secretary shall
subsequently give the owner a reasonable opportunity to revise the plan of action and seek approval.
‘‘SEC. 228. MODIFICATION OF EXISTING REGULATORY AGREEMENTS.
‘‘(a) IN GENERAL.—If a plan of action cannot be approved within 300 days after a plan of action is submitted, the Secretary may, upon the request of the owner,
modify existing regulatory agreements to—
‘‘(1) prevent involuntary displacement of current
tenants (except for good cause);
‘‘(2) ensure that adequate expenditures will be made
for maintenance and operation of the housing;
‘‘(3) extend any expiring project-based assistance on
the housing for the term of the agreement;
‘‘(4) permit an increase in the allowable distribution that could be accommodated by a rise in rents
on occupied units to rise to a level no higher than 30
percent of the adjusted income of the current tenants, as determined by the Secretary, except that
rents shall not exceed the fair market rent for comparable housing under section 8(b) of the United
States Housing Act of 1937 [42 U.S.C. 1437f(b)] and any
resulting increase in rents for current tenants shall
be phased in equally over a period of no less than 3
years unless such increase is less than 10 percent; and
‘‘(5) ensure that units becoming vacant during the
term of the agreement are made available in accordance with section 225(b)(3)(F).
‘‘(b) EXPIRATION.—Agreements entered into under
this section shall expire upon the expiration of the 4year period beginning on the date of the enactment of
this Act [Feb. 5, 1988]. Upon the expiration of the agreements, the housing covered by the agreements shall be
subject to any law then affecting low income affordability restrictions.
‘‘SEC. 229. CONSULTATIONS WITH OTHER INTERESTED PARTIES.
‘‘The Secretary shall confer with any appropriate
State or local government agency to confirm any State
or local assistance that is available to achieve the purposes of this title and shall give consideration to the
views of any such agency when making determinations
under section 225. The Secretary shall also confer with
appropriate interested parties that the Secretary believes could assist in the development of a plan of action that best achieves the purposes of this title.
‘‘SEC. 230. RIGHT OF CONVERSION TO ALTERNATIVE PREPAYMENT SYSTEM.
‘‘Any agreement to extend low income affordability
restrictions under section 225(b) shall, for 4 years from
the date of the enactment of this Act [Feb. 5, 1988], provide the owner the right to convert to any system of incentives and restrictions provided in law during such
period, with such adjustments as the Secretary determines are appropriate to compensate for the value of
any benefits the owner had received under this title.
‘‘SEC. 232. REPORT TO CONGRESS.
‘‘Not later than 1 year after the date of the enactment of this Act [Feb. 5, 1988], the Secretary shall submit to the Congress a report setting forth the activities
carried out under this subtitle. The report shall include
a description of the plans of action approved under subsections (a) and (b) of section 225 and an analysis of the
extent to which the plans retain housing affordable for
very low-income families or persons, lower income families or persons, and moderate income families or persons. The report shall also include a detailed description of (1) the actions taken by the Secretary to ensure
meaningful participation by affected tenants; and (2)
the incentives developed by the Secretary under section 224 to ensure compliance with this subtitle.
‘‘SEC. 233. DEFINITIONS.
‘‘For purposes of this subtitle:
‘‘(1) The term ‘eligible low income housing’ means
any housing financed by a loan or mortgage—
‘‘(A) that is—

Page 606

‘‘(i) insured or held by the Secretary under section 221(d)(3) of the National Housing Act [12
U.S.C. 1715l(d)(3)] and assisted under section 101 of
the Housing and Urban Development Act of 1965
[12 U.S.C. 1701s] or section 8 of the United States
Housing Act of 1937 [42 U.S.C. 1437f];
‘‘(ii) insured or held by the Secretary and bears
interest at a rate determined under the proviso of
section 221(d)(5) of the National Housing Act;
‘‘(iii) insured, assisted, or held by the Secretary
or a State or State agency under section 236 of
the National Housing Act [12 U.S.C. 1715z–1]; or
‘‘(iv) held by the Secretary and formerly insured under a program referred to in clause (i),
(ii), or (iii); and
‘‘(B) that, under regulation or contract in effect
before the date of the enactment of this Act [Feb.
5, 1988], is or will within 1 year become eligible for
prepayment without prior approval of the Secretary.
‘‘(2) The term ‘low income affordability restrictions’ means limits imposed by regulation or regulatory agreement on tenant rents, rent contributions,
or income eligibility in eligible low income housing.
‘‘(3) The terms ‘lower income families or persons’
and ‘very low-income families or persons’ mean families or persons whose incomes do not exceed the respective levels established for lower income families
and very low-income families under section 3(b)(2) of
the United States Housing Act of 1937 [42 U.S.C.
1437a(b)(2)].
‘‘(4) The term ‘moderate income families or persons’ means families or persons whose incomes are
between 80 percent and 95 percent of median income
for the area, as determined by the Secretary with adjustments for smaller and larger families.
‘‘(5) The term ‘owner’ means the current or subsequent owner or owners of eligible low income housing.
‘‘(6) The term ‘Secretary’ means the Secretary of
Housing and Urban Development.
‘‘(7) The term ‘termination of low income affordability restrictions’ means any elimination or relaxation of low income affordability restrictions (other
than those permitted under an approved plan of action under section 225(b)).
‘‘SEC. 234. REGULATIONS.
‘‘The Secretary shall issue final regulations to carry
out this subtitle not later than 60 days after the date
of the enactment of this Act [Feb. 5, 1988]. The Secretary shall provide for the regulations to take effect
not later than 45 days after the date on which the regulations are issued.
‘‘SEC. 235. EFFECTIVE DATE.
‘‘The requirements of this subtitle shall apply to any
project that is eligible low income housing on or after
November 1, 1987.’’
[Pub. L. 101–494, § 2(b), Oct. 31, 1990, 104 Stat. 1185, provided that: ‘‘If the Cranston-Gonzalez National Affordable Housing Act [Pub. L. 101–625, which was approved
Nov. 28, 1990] is enacted on or after October 31, 1990, this
section [amending section 203(a) of Pub. L. 100–242 set
out above] shall be deemed to have taken effect on October 30, 1990.’’
NEHEMIAH HOUSING OPPORTUNITY GRANTS
Pub. L. 100–242, title VI (§§ 601–613), Feb. 5, 1988, 101
Stat. 1951, as amended by Pub. L. 102–139, title II, Oct.
28, 1991, 105 Stat. 759; Pub. L. 102–550, title I, § 183, Oct.
28, 1992, 106 Stat. 3738, established the Nehemiah Housing Opportunity Fund to provide assistance in the form
of grants to nonprofit organizations for the construction, rehabilitation, and financing of housing for families not otherwise able to afford homeownership. Pub.
L. 101–625, title II, § 289(a)(3), (b), Nov. 28, 1990, 104 Stat.
4128, which is classified to section 12839(a)(3), (b) of
Title 42, The Public Health and Welfare, provided that,
except with respect to projects and programs for which

Page 607

TITLE 12—BANKS AND BANKING

binding commitments have been entered into prior to
Oct. 1, 1991, no new grants or loans be made after Oct.
1, 1991, under title VI of Pub. L. 100–242, and effective
Oct. 1, 1991, title VI of Pub. L. 100–242 is repealed.
LIMITATION ON NUMBER OF DWELLING UNITS WITH
MORTGAGES NOT PROVIDING FOR COMPLETE AMORTIZATION

For limitation on the number of dwelling units with
mortgages not providing for complete amortization
pursuant to authority granted by amendment to subsec. (d)(6) by section 446 of Pub. L. 98–181, see section
446(f) of Pub. L. 98–181, set out as a note under section
1713 of this title.
AMENDMENTS TO PROVISIONS FOR FAMILY UNIT LIMITS
ON RENTAL HOUSING; EQUITABLE APPLICATION OF
SUCH AMENDMENTS OR PRE-AMENDMENT PROVISIONS
TO PROJECTS SUBMITTED FOR CONSIDERATION PRIOR
TO SEPTEMBER 2, 1964
Equitable application of amendment to subsec. (d)(3)
(ii), (4)(ii) of this section by section 107(d)(1), (2) of Pub.
L. 88–560 or pre-amendment provisions to projects submitted for consideration prior to Sept. 2, 1964, see section 107(g) of Pub. L. 88–560, set out as a note under section 1713 of this title.
TAXATION OF INTEREST PAID ON OBLIGATIONS SECURED
BY INSURED MORTGAGE AND ISSUED BY PUBLIC AGENCY
Pub. L. 93–383, title III, § 319(b), Aug. 22, 1974, 88 Stat.
686, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100
Stat. 2095, provided that: ‘‘With respect to any obligation secured by a mortgage which is insured under section 221(d)(3) of the National Housing Acts [subsec.
(d)(3) of this section] and issued by a public agency as
mortgagor in connection with the financing of a project
assisted under section 8 of the United States Housing
Act of 1937 [section 1437f of title 42], the interest paid
on such obligation shall be included in gross income for
purposes of chapter 1 of the Internal Revenue Code of
1986 [chapter 1 of title 26].’’

§ 1715m. Repealed. Pub. L. 110–289, div. B, title I,
§ 2120(a)(5), July 30, 2008, 122 Stat. 2835
Section, act June 27, 1934, ch. 847, title II, § 222, as
added Aug. 2, 1954, ch. 649, title I, § 124, 68 Stat. 603;
amended Pub. L. 85–104, title I, §§ 103, 112, July 12, 1957,
71 Stat. 296, 297; Pub. L. 86–372, title I, §§ 111, 116(b),
Sept. 23, 1959, 73 Stat. 661, 664; Pub. L. 88–560, title I,
§ 115, Sept. 2, 1964, 78 Stat. 779; Pub. L. 89–117, title II,
§ 212, title XI, § 1108(j), Aug. 10, 1965, 79 Stat. 470, 505;
Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17; Pub. L.
90–448, title III, § 301, Aug. 1, 1968, 82 Stat. 505; Pub. L.
91–152, title I, §§ 102(c), 105, 113(f), Dec. 24, 1969, 83 Stat.
380, 381, 384; Pub. L. 91–621, § 7(b), Dec. 31, 1970, 84 Stat.
1865; Pub. L. 93–383, title III, §§ 302(d), 310(c), Aug. 22,
1974, 88 Stat. 676, 682; Pub. L. 95–128, title III, §§ 303(d),
304(c), Oct. 12, 1977, 91 Stat. 1132, 1133; Pub. L. 96–153,
title III, § 312(c), Dec. 21, 1979, 93 Stat. 1116; Pub. L.
96–399, title III, § 336(c), Oct. 8, 1980, 94 Stat. 1654; Pub.
L. 100–242, title IV, § 406(b)(14), Feb. 5, 1988, 101 Stat.
1901; Pub. L. 109–241, title IX, § 902(f), July 11, 2006, 120
Stat. 567, related to mortgage insurance for servicemen.

§ 1715n. Miscellaneous mortgage insurance
(a) Projects covered
Notwithstanding any of the provisions of this
chapter and without regard to limitations upon
eligibility contained in any section or subchapter of this chapter, other than the limitation in section 1709(g) of this title, the Secretary
is authorized, upon application by the mortgagee, to insure or make commitments to insure
under any section or subchapter of this chapter
any mortgage—

§ 1715n

(1) executed in connection with the sale by
the Government, or any agency or official
thereof, of any housing acquired or constructed under Public Law 849, Seventy-sixth
Congress, as amended; Public Law 781, Seventy-sixth Congress, as amended; or Public
Laws 9, 73, or 353, Seventy-seventh Congress,
as amended (including any property acquired,
held, or constructed in connection with such
housing or to serve the inhabitants thereof);
or
(2) executed in connection with the sale by
the Secretary of Housing and Urban Development, or by any public housing agency with
the approval of the Secretary, of any housing
(including any property acquired, held, or constructed in connection with such housing or to
serve the inhabitants thereof) owned or financially assisted pursuant to the provisions of
Public Law 671, Seventy-sixth Congress; or
(3) executed in connection with the sale by
the Government, or any agency or official
thereof, of any of the so-called Greenbelt
towns, or parts thereof, including projects, or
parts thereof, known as Greenhills, Ohio;
Greenbelt, Maryland; and Greendale, Wisconsin, developed under the Emergency Relief Appropriation Act of 1935, or of any of the village
properties or employee’s housing under the jurisdiction of Tennessee Valley Authority, or of
any housing under the jurisdiction of the Department of the Interior located within the
town area of Coulee Dam, Washington, acquired by the United States for the construction, operation, and maintenance of Grand
Coulee Dam and its appurtenant works: Provided, That for the purpose of the application
of this subchapter to sales by the Secretary of
the Interior pursuant to subsections 3(b)(1)
and 3(b)(2) of the Coulee Dam Community Act
of 1957, the selling price of the property involved shall be deemed to be the appraised
value, of any permanent housing under the jurisdiction of the Department of the Interior
constructed under the Boulder Canyon Project
Act of December 21, 1928, as amended and supplemented [43 U.S.C. 617 et seq.] located within
the Boulder City municipal area: Provided,
That for purposes of the application of this
subchapter to sales by the Secretary of the Interior pursuant to subsections 3(b)(1) and
3(b)(2) of the Boulder City Act of 1958, the selling price of the property involved shall be
deemed to be the appraised value; or
(4) executed in connection with the sale by
the Government, or any agency or official
thereof, of any housing (including any property acquired, held, or constructed in connection therewith or to serve the inhabitants
thereof) pursuant to the Atomic Energy Community Act of 1955, as amended [42 U.S.C. 2301
et seq.]: Provided, That such insurance shall be
issued without regard to any preferences or
priorities except those prescribed by this chapter or the Atomic Energy Community Act of
1955, as amended; or
(5) executed in connection with the sale by a
State or municipality, or an agency, instrumentality, or political subdivision of either, of
a project consisting of any permanent housing
(including any property acquired, held, or con-

§ 1715n

TITLE 12—BANKS AND BANKING

structed in connection therewith or to serve
the inhabitants thereof), constructed by or on
behalf of such State, municipality, agency, instrumentality, or political subdivision, for the
occupancy of veterans of World War II, or Korean veterans, their families, and others; or
(6) executed in connection with the first resale, within two years from the date of its acquisition from the Government, of any portion
of a project or property of the character described in paragraphs (1), (2), (3), and (4) above;
or
(7) given to refinance an existing mortgage
insured under this chapter, or an existing
mortgage held by the Secretary that is subject
to a mortgage restructuring and rental assistance sufficiency plan pursuant to the Multifamily Assisted Housing Reform and Affordability Act of 1997 (42 U.S.C. 1437f note), provided that—
(A) the principal amount of any such refinancing mortgage shall not exceed the original principal amount or the unexpired term
of such existing mortgage and shall bear interest at such rate as may be agreed upon by
the mortgagor and the mortgagee, except
that (i) the principal amount of any such refinancing mortgage may equal the outstanding balance of an existing mortgage insured
pursuant to section 1715z–10 1 of this title, if
the amount of the monthly payment due
under the refinancing mortgage is less than
that due under the existing mortgage for the
month in which the refinancing mortgage is
executed; (ii) a mortgagee may not require a
minimum principal amount to be outstanding on the loan secured by the existing mortgage; (iii) in any case involving the refinancing of a loan in which the Secretary determines that the insurance of a mortgage for
an additional term will inure to the benefit
of the applicable insurance fund, taking into
consideration the outstanding insurance liability under the existing insured mortgage,
such refinancing mortgage may have a term
not more than twelve years in excess of the
unexpired term of such existing insured
mortgage; and (iv) any multifamily mortgage that is refinanced under this paragraph
shall be documented through amendments to
the existing insurance contract and shall not
be structured through the provisions of a
new insurance contract; and
(B) a mortgage of the character described
in paragraphs (1) through (6) of this subsection shall have a maturity and a principal obligation not in excess of the maximums prescribed under the applicable section or subchapter of this chapter, except
that in no case may the principal obligation
of a mortgage referred to in paragraph (5) of
this subsection exceed 90 per centum of the
appraised value of the mortgaged property,
and shall bear interest at such rate as may
be agreed upon by the mortgagor and the
mortgagee;
(C) a mortgage that is subject to a mortgage restructuring and rental assistance sufficiency plan pursuant to the Multifamily
1 See

References in Text note below.

Page 608

Assisted Housing Reform and Affordability
Act of 1997 (42 U.S.C. 1437f note) and is refinanced under this paragraph may have a
term of not more than 30 years; or
(8) executed in connection with the sale by
the Government of any housing acquired pursuant to section 3374 of title 42.
(b) Insurance of mortgages given to refinance
mortgages covering existing property or
projects in urban renewal areas
Notwithstanding any of the provisions of this
subchapter and without regard to limitations
upon eligibility contained in section 1715l of this
title, the Secretary may in his discretion insure
under section 1715l(d)(3) of this title any mortgage executed by a mortgagor of the character
described therein where such mortgage is given
to refinance a mortgage covering an existing
property or project (other than a one- to fourfamily structure) located in an urban renewal
area, if the Secretary finds that such insurance
will facilitate the occupancy of dwelling units in
the property or project by families of low or
moderate income or families displaced from an
urban renewal area or displaced as a result of
governmental action.
(c) Insurance of certain assigned mortgages
The Secretary shall also have authority to insure under this chapter any mortgage assigned
to the Secretary in connection with payment
under a contract of mortgage insurance or executed in connection with the sale by the Secretary, including a sale through another entity
acting under authority of the fourth sentence of
section 1710(g) of this title, of any property acquired under any section or subchapter of this
chapter without regard to any limitations or requirements contained in this chapter upon the
eligibility of the mortgage, upon the payment of
insurance premiums, or upon the terms and conditions of insurance settlement and the benefits
of the insurance to be included in such settlement.
(d) Insurance of loans made to cover operating
losses of certain projects having existing
mortgages insured by Secretary
(1) Notwithstanding any other provision of
this chapter, the Secretary is authorized to insure loans made to cover the operating losses of
certain projects that have existing project mortgages insured by the Secretary. Insurance under
this subsection shall be in the Secretary’s discretion and upon such terms and conditions as
the Secretary may prescribe, and shall be provided in accordance with the provisions of this
subsection. For purposes of this subsection, the
term ‘‘operating loss’’ means the amount by
which the sum of the taxes, interest on the
mortgage debt, mortgage insurance premiums,
hazard insurance premiums, and the expense of
maintenance and operation of the project covered by the mortgage, exceeds the income of the
project.
(2) To be eligible for insurance pursuant to
this paragraph—
(A) the existing project mortgage (i) shall
have been insured by the Secretary at any
time before or after February 5, 1988; and (ii)
shall cover any property, other than a prop-

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TITLE 12—BANKS AND BANKING

erty upon which there is located a 1- to 4-family dwelling;
(B) the operating loss shall have occurred
during the first 24 months after the date of
completion of the project, as determined by
the Secretary; and
(C) the loan shall be in an amount not exceeding the operating loss.
(3) To be eligible for insurance pursuant to
this paragraph—
(A) the existing project mortgage (i) shall
have been insured by the Secretary at any
time before or after February 5, 1988; (ii) shall
cover any property, other than a property
upon which there is located a 1- to 4-family
dwelling; and (iii) shall not cover a subsidized
project, as defined by the Secretary;
(B) the loan shall be in an amount not exceeding 80 percent of the unreimbursed cash
contributions made on or after March 18, 1987,
by the project owner for the use of the project,
during any period of consecutive months (not
exceeding 24 months) in the first 10 years after
the date of completion of the project, as determined by the Secretary, except that in no
event may the amount of the loan exceed the
operating loss during such period;
(C) the loan shall be made within 10 years
after the end of the period of consecutive
months referred to in the preceding subparagraph; and
(D) the project shall meet all applicable underwriting and other requirements of the Secretary at the time the loan is to be made.
(4) Any loan insured pursuant to this subsection shall (A) bear interest at such rate as
may be agreed upon by the mortgagor and mortgagee; (B) be secured in such manner as the Secretary shall require; (C) be limited to a term not
exceeding the unexpired term of the original
mortgage; and (D) be insured under the same
section as the original mortgage. The Secretary
may provide insurance pursuant to paragraph (2)
or (3), or pursuant to both such paragraphs, in
connection with an existing project mortgage,
except that the Secretary may not provide insurance pursuant to both such paragraphs in
connection with the same period of months referred to in paragraphs (2)(B) and (3)(B). The
Secretary is authorized to collect a premium
charge for insurance of loans pursuant to this
subsection in an amount computed at the same
premium rate as is applicable to the original
mortgage. This premium shall be payable in
cash or in debentures of the insurance fund
under which the loan is insured at par plus accrued interest. In the event of a failure of the
borrower to make any payment due under such
loan or under the original mortgage, both the
loan and original mortgage shall be considered
in default, and if such default continues for a period of thirty days, the lender shall be entitled
to insurance benefits, computed in the same
manner as for the original mortgage, except
that in determining the interest rate under section 1715o of this title for the debentures representing the portion of the claim applicable to
the loan, the date of the commitment to insure
the loan and the insurance date of the loan shall
be taken into consideration rather than the

§ 1715n

commitment or insurance date for the original
mortgage.
(5) A loan involving a project covered by a
mortgage insured under section 1715e of this
title that is the obligation of the Cooperative
Management Housing Insurance Fund shall be
the obligation of such fund, and loans involving
projects covered by a mortgage insured under
section 1715z–1 of this title or under any section
of this subchapter pursuant to subsection (e) of
this section shall be the obligation of the Special Risk Insurance Fund.
(6) In determining the amount of an operating
loss loan to be insured pursuant to this subsection, the Secretary shall not reduce such
amount solely to reflect any amounts placed in
escrow (at the time the existing project mortgage was insured) for initial operating deficits.
If an operating loss loan was insured by the Secretary pursuant to this subsection before October 28, 1992, and was reduced solely to reflect the
amount placed in escrow for initial operating
deficits, the Secretary shall insure, to the extent of the availability of insurance authority
provided in appropriation Acts, an increase in
the existing loan or a separate loan, in an
amount equal to the lesser of (A) the maximum
amount permitted under this subsection and the
applicable underwriting requirements established by the Secretary and in effect at the time
the loan is to be made, or (B) the amount of the
escrow for initial operating deficits.
(e) Insurance of mortgages executed in connection with repair, rehabilitation, construction,
or purchase of property in older, declining
urban areas
Notwithstanding any of the provisions of this
chapter except section 1715c of this title, and
without regard to limitations upon eligibility
contained in any section of this subchapter or
subchapter IX–B, other than the limitation in
section 1709(g) of this title, the Secretary is authorized, upon application by the mortgagee, to
insure under any section of this subchapter or
subchapter IX–B a mortgage executed in connection with the repair, rehabilitation, construction, or purchase of property located in an older,
declining urban area in which the conditions are
such that one or more of the eligibility requirements applicable to the section or subchapter
under which insurance is sought could not be
met, if the Secretary finds that (1) the area is
reasonably viable, giving consideration to the
need for providing adequate housing or group
practice facilities for families of low and moderate income in such area, and (2) the property
is an acceptable risk in view of such consideration. The insurance of a mortgage pursuant to
this subsection shall be the obligation of the
Special Risk Insurance Fund.
(f) Insurance of mortgages executed in connection with purchase or refinancing of existing
multifamily housing project; refinancing of
existing debt of existing hospital, or purchase or refinancing of rental rehabilitated
property; terms and conditions, etc.
(1) Notwithstanding any of the provisions of
this chapter, the Secretary is authorized, in his
discretion, to insure under any section of this
subchapter a mortgage executed in connection

§ 1715n

TITLE 12—BANKS AND BANKING

with the purchase of 2 refinancing of an existing
multifamily housing project or the purchase or
refinancing of existing debt of an existing hospital (or existing nursing home, existing assisted living facility, existing intermediate care
facility, existing board and care home, or any
combination thereof).
(2) In the case of the purchase or refinancing
under this subsection of a multifamily housing
project located in an older, declining urban area,
the Secretary shall make available an amount
not to exceed $30,000,000 of available purchase
authority pursuant to section 1720 1 of this title
to reduce interest rates on low- and moderateincome rental housing in projects having 100
units or less which otherwise could not support
refinancing and moderate rehabilitation without
causing excessive rent burdens on current tenants due to rent increases. The Secretary shall
prescribe such terms and conditions as he deems
necessary to assure that—
(A) the refinancing is used to lower the
monthly debt service only to the extent necessary to assure the continued economic viability of the project, taking into account any
rent reductions to be implemented by the
mortgagor; and
(B) during the mortgage term no rental increases shall be made except those which are
necessary to offset actual and reasonable operating expense increases or other necessary expense increases and maintain reasonable profit
levels approved by the Secretary.
(3) For all insurance authorized by this subsection and provided pursuant to a commitment
entered into after October 8, 1980, the Secretary
may not accept an offer to prepay or request refinancing of a mortgage secured by rental housing unless the Secretary takes appropriate action that will obligate the borrower (and successors in interest thereof) to utilize the property
as a rental property for a period of five years
from the date on which the insurance was provided (twenty years in the case of any such
mortgage purchased under section 1720 1 of this
title) unless the Secretary finds that—
(A) the conversion of the property to a cooperative, or condominium form of ownership is
sponsored by a bona fide tenants’ organization
representing a majority of the households in
the project;
(B) continuance of the property as rental
housing is clearly unnecessary to assure adequate rental housing opportunities for lowand moderate-income people in the community; or
(C) continuance of the property as rental
housing would have an undesirable and deleterious effect on the surrounding neighborhood.
(4) In the case of refinancing of an existing
hospital (or existing nursing home, existing assisted living facility, existing intermediate care
facility, existing board and care home, or any
combination thereof) the Secretary shall prescribe such terms and conditions as the Secretary deems necessary to assure that—
(A) the refinancing is employed to lower the
monthly debt service costs (taking into ac2 So

in original. Probably should be ‘‘or’’.

Page 610

count any fees or charges connected with such
refinancing) of such existing hospital (or existing nursing home, existing assisted living facility, existing intermediate care facility, existing board and care home, or any combination thereof);
(B) the proceeds of any refinancing will be
employed only to retire the existing indebtedness and pay the necessary cost of refinancing
on such existing hospital (or existing nursing
home, existing assisted living facility, existing
intermediate care facility, existing board and
care home, or any combination thereof);
(C) such existing hospital (or existing nursing home, existing assisted living facility, existing intermediate care facility, existing
board and care home, or any combination
thereof) is economically viable; and
(D) the applicable requirements for certificates, studies, and statements of section 1715w
of this title (for the existing nursing home, existing assisted living facility, intermediate
care facility, board and care home, or any
combination thereof, proposed to be refinanced) or of section 1715z–7 of this title (for
the existing hospital proposed to be refinanced) have been met.
(5) In the case of any purchase or refinancing
under this subsection involving property to be
rehabilitated or developed under section 1437o 1
of title 42, the Secretary may—
(A) include rehabilitation or development
costs of not to exceed $20,000 per unit, except
that the Secretary may increase such amount
by not to exceed 25 per centum for specific
properties where cost levels so require;
(B) permit subordinated liens securing up to
the full amount of mortgage financing provided by State or local governments or agencies thereof; and
(C) pay such benefits in cash unless the
mortgagee submits a written request for debenture payment.
(g) Insurance of mortgages covering multifamily
housing projects including units not self-contained
Notwithstanding any other provisions of this
chapter, the Secretary may, in his discretion,
insure a mortgage covering a multifamily housing project including units which are not selfcontained.
(June 27, 1934, ch. 847, title II, § 223, as added
Aug. 2, 1954, ch. 649, title I, § 125, 68 Stat. 605;
amended Aug. 4, 1955, ch. 543, ch. 11, § 201, 69
Stat. 484; Aug. 11, 1955, ch. 783, title I, § 102(k), 69
Stat. 636; Pub. L. 85–104, title I, § 114, July 12,
1957, 71 Stat. 298; Pub. L. 85–240, § 4, Aug. 30, 1957,
71 Stat. 528; Pub. L. 85–900, § 12, Sept. 2, 1958, 72
Stat. 1735; Pub. L. 87–70, title I, § 101(d), title VI,
§ 612(h), June 30, 1961, 75 Stat. 154, 182; Pub. L.
88–560, title I, § 116, Sept. 2, 1964, 78 Stat. 779;
Pub. L. 89–117, title I, § 108(e), title II, § 213, Aug.
10, 1965, 79 Stat. 461, 471; Pub. L. 89–754, title X,
§ 1013(h), Nov. 3, 1966, 80 Stat. 1292; Pub. L. 90–19,
§ 1(a)(3), (h), May 25, 1967, 81 Stat. 17, 18; Pub. L.
90–448, title I, § 103(a), title III, § 312, Aug. 1, 1968,
82 Stat. 486, 510; Pub. L. 91–152, title IV, § 418(c),
(d), Dec. 24, 1969, 83 Stat. 402; Pub. L. 93–383, title
III, § 311(a), Aug. 22, 1974, 88 Stat. 683; Pub. L.

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TITLE 12—BANKS AND BANKING

95–557, title III, § 326, Oct. 31, 1978, 92 Stat. 2104;
Pub. L. 96–399, title III, § 327, Oct. 8, 1980, 94 Stat.
1650; Pub. L. 97–35, title III, § 339B(b), Aug. 13,
1981, 95 Stat. 417; Pub. L. 98–181, title I [title III,
§ 303(b)], Nov. 30, 1983, 97 Stat. 1207; Pub. L.
98–479, title II, § 204(a)(7), Oct. 17, 1984, 98 Stat.
2232; Pub. L. 100–242, title IV, §§ 406(b)(15), (16),
408(a), 409(a), (b), 419(b), 427, 429(d), Feb. 5, 1988,
101 Stat. 1901, 1903, 1913, 1916, 1918; Pub. L.
102–550, title V, §§ 510, 511(f), Oct. 28, 1992, 106
Stat. 3784, 3786; Pub. L. 103–327, title II, Sept. 28,
1994, 108 Stat. 2316; Pub. L. 105–276, title VI,
§ 601(e), Oct. 21, 1998, 112 Stat. 2674; Pub. L.
107–116, title VI, § 615, Jan. 10, 2002, 115 Stat. 2225;
Pub. L. 109–115, div. A, title III, § 323, Nov. 30,
2005, 119 Stat. 2466.)
REFERENCES IN TEXT
This chapter, referred to in text, was in the original
‘‘this Act’’, meaning act June 27, 1934, ch. 847, 48 Stat.
1246, which is classified principally to this chapter
(§ 1701 et seq.). For complete classification of this Act
to the Code, see Tables.
Public Law 849, Seventy-sixth Congress, as amended,
referred to in subsec. (a)(1), is act Oct. 14, 1940, ch. 862,
54 Stat. 1125, as amended, known as the ‘‘Lanham Public War Housing Act’’, which is classified generally to
subchapters II to VII (§§ 1521 et seq., 1531 et seq., 1541
et seq., 1561 et seq., 1571 et seq., and 1581 et seq.) of
chapter 9 of Title 42, The Public Health and Welfare.
For complete classification of this Act to the Code, see
Short Title note set out under section 1501 of Title 42
and Tables.
Public Laws 9, 73, and 353, Seventy-seventh Congress,
referred to in subsec. (a)(1), refer to the following acts,
respectively: Public Law 9, Urgent Deficiency Appropriation Act, 1941, act Mar. 1, 1941, ch. 9, 55 Stat. 14;
Public Law 73, Additional Urgent Deficiency Appropriation Act, 1941, act May 24, 1941, ch. 132, 55 Stat. 197;
and Public Law 353, Third Supplemental National Defense Appropriation Act, 1942, act Dec. 17, 1941, ch. 591,
55 Stat. 810. These three acts appropriated a total of
$320,000,000 to the President for the purpose of providing
housing necessary because of national defense activities and conditions arising out of World War II. These
provisions were not classified to the code, although all
three acts are cited in a ‘‘Prior Additional Appropriations’’ note under section 1523 of Title 42.
Public Law 671, Seventy-sixth Congress, referred to in
subsec. (a)(2), is act June 28, 1940, ch. 440, 54 Stat. 676,
as amended. Provisions of the Act relating to housing
are contained in title II, which is classified generally to
subchapter I (§ 1501 et seq.) of chapter 9 of Title 42. For
complete classification of this Act to the Code, see
Tables.
The Emergency Relief Appropriation Act of 1935, referred to in subsec. (a)(3), is Joint Res. Apr. 8, 1935, ch.
48, 49 Stat. 115. It was temporary legislation, and was
formerly set out in a note in former chapter 16 of Title
15, Commerce and Trade. See notes under former sections 721 to 728 of that title.
Subsections 3(b)(1) and 3(b)(2) of the Coulee Dam
Community Act of 1957 [Pub. L. 85–240, Aug. 30, 1957, 71
Stat. 524], referred to in subsec. (a)(3), are set out in a
note under section 835c of Title 16, Conservation.
The Boulder Canyon Project Act of December 21, 1928,
as amended and supplemented, referred to in subsec.
(a)(3), is act Dec. 21, 1928, ch. 42, 45 Stat. 1057, as amended, which is classified generally to subchapter I (§ 617 et
seq.) of chapter 12A of Title 43, Public Lands. For complete classification of this Act to the Code, see section
617t of Title 43 and Tables.
Subsections 3(b)(1) and 3(b)(2) of the Boulder City Act
of 1958 [Pub. L. 85–900, Sept. 2, 1958, 72 Stat. 1726], referred to in subsec. (a)(3), are not classified to the Code.
Subsections (a) to (d) of section 3 read as follows:
‘‘(a) The Secretary is authorized to sell such dwelling
houses, duplex houses or units thereof, and garages,

§ 1715n

with furniture, fixtures, and appurtenances, as are
owned by the United States within the Boulder City
municipal area and are not needed in connection with
the administration, operation, and maintenance of Federal activities located within or near the Boulder City
municipal area.
‘‘(b) Except in the case of property determined to be
substandard under subsection (c) of this section, the
following system of priority shall be established with
respect to property authorized to be sold under subsection (a) of this section:
‘‘(1) Persons employed by the Federal Government
within or near the Boulder City municipal area (and
surviving spouses of such persons who have not remarried) who are tenants in Federal housing in Boulder
City shall be offered the opportunity to purchase the
property in which they are tenants at the appraised
value as established under subsection (d) of this section. This right of priority shall expire unless notice of
intent to purchase has been received by the Secretary
before the expiration of sixty days after the date on
which the property has been offered for sale, and shall
be deemed abandoned unless before the expiration of
sixty days after the Secretary’s tender of the instrument of transfer the prospective purchaser concludes
the sale;
‘‘(2) Persons employed by the Federal Government
within or near the Boulder City municipal area may
apply to purchase housing not purchased under subsection (b)(1) of this section. Applicants to purchase
shall be placed in order of opportunity to choose pursuant to a public drawing, but spouses of such applicants
shall not be entitled to apply. Sales shall be made at
the appraised value as established under subsection (d)
of this section and selections and purchases by successful applicants shall be concluded within limits of time
to be established by the Secretary. A purchase under
subsection (b)(1) or (b)(2) of this section shall render
the purchaser and any spouse of such purchaser ineligible thereafter to purchase under subsection (b)(1) or
(b)(2); and
‘‘(3) Property subject to disposal under this section
and not sold pursuant to subsections (b)(1) and (b)(2) of
this section shall be opened to bids from the general
public, and shall be sold to the highest responsible bidder.
‘‘In the event that incorporation of the municipality
shall be effected within four years after the date of this
Act, persons purchasing housing under this subsection
or their successors, assigns, or legal representatives,
shall be entitled to a reduction in the purchase price
(or rebate as appropriate) of 10 per centum: Provided,
That no person who has purchased a house under the
Act of May 25, 1948 (62 Stat. 268), shall be eligible for
such reduction.
‘‘(c) Where the Secretary determines that property
authorized to be sold under subsection (a) of this section is substandard, he shall sell such property only for
off-site use, such property to be opened to bids from the
general public for sale to the highest responsible bidder.
‘‘(d) The appraised value of all property to be sold
under subsections (b)(1) and (b)(2) of this section, and of
all lots leased or to be leased by the United States for
the purpose of maintaining, locating, or erecting permanent structures thereon, shall be determined by an
appraiser or appraisers to be designated by the Administrator of Housing and Home Finance Agency at the
request of the Secretary. Said appraisals shall be made
promptly after the date of this Act, or immediately
prior to the granting of any lease of lands not previously appraised, as the case may be. The representatives of the Boulder City community, as determined by
the Secretary, shall be granted an opportunity to offer
advice in connection with [sic] such appraisals.’’
The Atomic Energy Community Act of 1955, as
amended, referred to in subsec. (a)(4), is act Aug. 4,
1955, ch. 543, 69 Stat. 472, as amended, which is classified
principally to chapter 24 (§ 2301 et seq.) of Title 42, The
Public Health and Welfare. For complete classification

§ 1715n

TITLE 12—BANKS AND BANKING

of this Act to the Code, see Short Title note set out
under section 2301 of Title 42 and Tables.
The Multifamily Assisted Housing Reform and Affordability Act of 1997, referred to in subsec. (a)(7), is
title V of Pub. L. 105–65, Oct. 27, 1997, 111 Stat. 1384. For
complete classification of this Act to the Code, see
Short Title of 1997 Amendment note set out under section 1701 of this title and Tables.
Section 1715z–10 of this title, referred to in subsec.
(a)(7)(A), was repealed by Pub. L. 110–289, div. B, title I,
§ 2120(a)(7), July 30, 2008, 122 Stat. 2835.
Section 1720 of this title, referred to in subsec. (f)(2),
(3), was repealed by Pub. L. 98–181, title I [title IV,
§ 483(a)], Nov. 30, 1983, 97 Stat. 1240.
Section 1437o of title 42, referred to in subsec. (f)(5),
was repealed by Pub. L. 101–625, title II, § 289(b), Nov. 28,
1990, 104 Stat. 4128.
AMENDMENTS
2005—Subsec. (f)(1). Pub. L. 109–115 inserted ‘‘purchase
or’’ before ‘‘refinancing of existing debt’’.
2002—Subsec. (a)(7). Pub. L. 107–116, § 615(1), substituted ‘‘under this chapter, or an existing mortgage
held by the Secretary that is subject to a mortgage restructuring and rental assistance sufficiency plan pursuant to the Multifamily Assisted Housing Reform and
Affordability Act of 1997 (42 U.S.C. 1437f note), provided
that—’’ for ‘‘under this chapter: Provided, That’’.
Subsec. (a)(7)(A). Pub. L. 107–116, § 615(1)–(5), designated as subpar. (A) existing provisions beginning
‘‘the principal amount of any such refinancing mortgage shall not exceed’’ and ending ‘‘a new insurance
contract’’, redesignated former cls. (A) to (D) as (i) to
(iv), respectively, of subpar. (A), and inserted ‘‘; and’’
at end after ‘‘a new insurance contract’’.
Subsec. (a)(7)(B). Pub. L. 107–116, § 615(6), (7), substituted ‘‘(B) a mortgage’’ for ‘‘: Provided further, That
a mortgage’’ and struck out ‘‘or’’ after ‘‘and the mortgagee;’’. Former cl. (B) redesignated cl. (ii) of subpar.
(A).
Subsec. (a)(7)(C). Pub. L. 107–116, § 615(8), added subpar. (C). Former cl. (C) redesignated cl. (iii) of subpar.
(A).
Subsec. (a)(7)(D). Pub. L. 107–116, § 615(5), redesignated
cl. (D) as cl. (iv) of subpar. (A).
1998—Subsec. (c). Pub. L. 105–276 substituted ‘‘the
Secretary’’ for ‘‘him’’ in two places and inserted
‘‘, including a sale through another entity acting under
authority of the fourth sentence of section 1710(g) of
this title,’’ before ‘‘of any property acquired’’.
1994—Subsec. (a)(7)(D). Pub. L. 103–327 added cl. (D).
1992—Subsec. (d)(6). Pub. L. 102–550, § 510, added par.
(6).
Subsec. (f)(1), (4). Pub. L. 102–550, § 511(f), inserted ‘‘existing assisted living facility,’’ after ‘‘existing nursing
home,’’ wherever appearing.
1988—Subsec. (a). Pub. L. 100–242, § 406(b)(15), inserted
‘‘other than the limitation in section 1709(g) of this
title,’’ after first reference to ‘‘this chapter,’’.
Subsec. (a)(7). Pub. L. 100–242, § 429(d)(1), substituted
in first proviso ‘‘such rate as may be agreed upon by
the mortgagor and the mortgagee’’ for ‘‘a rate not in
excess of the maximum rate prescribed under the applicable section or subchapter of this chapter’’, substituted in second proviso ‘‘maturity and a principal
obligation’’ for ‘‘maturity, a principal obligation, and
an interest rate’’, and inserted before semicolon at end
‘‘, and shall bear interest at such rate as may be agreed
upon by the mortgagor and the mortgagee’’.
Pub. L. 100–242, § 419(b), in first proviso, inserted cl.
(B) and designated former cl. (B) as (C).
Pub. L. 100–242, § 408(a), in first proviso, inserted cl.
(B) designation and added cl. (A).
Subsec. (d). Pub. L. 100–242, § 427, added pars. (1) to (3),
inserted par. (4) designation and ‘‘Any loan insured pursuant to this subsection shall (A) bear interest at such
rate as may be agreed upon by the mortgagor and
mortgagee; (B) be secured in such manner as the Secretary shall require; (C) be limited to a term not exceeding the unexpired term of the original mortgage;

Page 612

and (D) be insured under the same section as the original mortgage. The Secretary may provide insurance
pursuant to paragraph (2) or (3), or pursuant to both
such paragraphs, in connection with an existing project
mortgage, except that the Secretary may not provide
insurance pursuant to both such paragraphs in connection with the same period of months referred to in
paragraphs (2)(B) and (3)(B).’’, inserted par. (5) designation, and struck out former first and second sentences
of subsec. (d) which read as follows: ‘‘With respect to
any mortgage, other than a mortgage covering a oneto four-family structure, heretofore or hereafter insured by the Secretary, and notwithstanding any other
provision of this chapter, when the taxes, interest on
the mortgage debt, mortgage insurance premiums, hazard insurance premiums, and the expense of maintenance and operation of the project covered by such
mortgage during the first two years following the date
of completion of the project, as determined by the Secretary, exceed the project income, the Secretary may,
in his discretion and upon such terms and conditions as
he may prescribe, insure under the same section as the
original mortgage a loan by the mortgagee in an
amount not exceeding the excess of the foregoing expenses over the project income. Such loan shall (1) bear
interest (exclusive of premium charges for insurance)
at not to exceed the per centum per annum currently
permitted for mortgages insured under the section
under which it is to be insured, (2) be secured in such
manner as the Secretary shall require, and (3) be limited to a term not exceeding the unexpired term of the
original mortgage.’’
Pub. L. 100–242, § 429(d)(2), which directed substitution
of ‘‘bear interest at such rate as may be agreed upon by
the mortgagor and the mortgagee’’ for ‘‘bear interest
(exclusive of premium charges for insurance) at not to
exceed the per centum per annum currently permitted
for mortgages insured under the section under which it
is to be insured’’ in cl. (1) of sentence beginning ‘‘Such
loan shall’’, could not be executed because of previous
amendment by Pub. L. 100–242, § 427, see above, which
directed in part the striking out of second sentence of
subsec. (d)(1), which contained the language sought to
be amended.
Subsec. (e). Pub. L. 100–242, § 406(b)(16), inserted reference to limitation in section 1709(g) of this title.
Subsec. (f)(1). Pub. L. 100–242, § 409(b)(1), inserted parenthetical reference to existing nursing homes, intermediate care facilities, board and care homes, or any
combination thereof after ‘‘existing hospital’’.
Subsec. (f)(4)(A) to (C). Pub. L. 100–242, § 409(b)(2), inserted parenthetical reference to existing nursing
homes, intermediate care facilities, board and care
homes, or any combination thereof after ‘‘existing hospital’’ wherever appearing.
Subsec. (f)(4)(D). Pub. L. 100–242, § 409(a), amended
subpar. (D) generally. Prior to amendment, subpar. (D)
read as follows: ‘‘such existing hospital has received
such certifications from a State agency designated in
accordance with section 291d(a)(1) or section 300m of
title 42 for the State in which the hospital is located as
the Secretary deems necessary and appropriate and
comparable to the certification required for hospitals
insured under section 1715z–7 of this title and that such
State agency additionally certify that the services
being provided by such existing hospital at the time of
refinancing are appropriate as determined pursuant to
section 300m–2(a)(6) title 42.’’
1984—Subsec. (f)(2). Pub. L. 98–479 in provisions preceding subpar. (A) inserted ‘‘a’’ before ‘‘multifamily’’.
1983—Subsec. (f)(5). Pub. L. 98–181 added par. (5).
1981—Subsec. (f). Pub. L. 97–35 inserted ‘‘and’’ after
the semicolon at end of par. (2)(A), and redesignated
par. (5) as (4).
1980—Subsec. (f)(1). Pub. L. 96–399, § 327(1), redesignated first sentence of subsec. (f) as par. (1).
Subsec. (f)(2). Pub. L. 96–399, § 327(2)–(6), redesignated
second sentence of subsec. (f) as par. (2), inserted applicability to purchases, provisions authorizing the Secretary to make not to exceed $30,000,000 available for

Page 613

TITLE 12—BANKS AND BANKING

purchase authority, and provisions authorizing rent increases to maintain reasonable profit levels, and substituted ‘‘(A)’’ and ‘‘(B)’’ for ‘‘(1)’’ and ‘‘(2)’’, respectively.
Subsec. (f)(3). Pub. L. 96–399, § 327(7), added par. (3).
Subsec. (f)(5). Pub. L. 96–399, § 327(8), redesignated
third sentence of subsec. (f) as par. (5).
1978—Subsec. (f). Pub. L. 95–557 inserted ‘‘or the refinancing of existing debt of an existing hospital’’ after
‘‘housing project’’, substituted ‘‘multifamily housing
project’’ for ‘‘housing project’’, and inserted provisions
relating to the prescription of terms and conditions in
the case of refinancing of an existing hospital.
1974—Subsecs. (f), (g). Pub. L. 93–383 added subsecs. (f)
and (g).
1969—Subsec. (d). Pub. L. 91–152, § 418(c), inserted provision that any loan involving a project covered by a
mortgage insured under section 1715e, 1715z–1, or any
section of this subchapter pursuant to subsec. (e) of
this section be the obligation of the specified Fund.
Subsec. (e). Pub. L. 91–152, § 418(d), substituted ‘‘this
chapter’’ for ‘‘this subchapter’’ and inserted references
to subchapter IX–B.
1968—Subsec. (a). Pub. L. 90–448, § 312(a)(1), substituted ‘‘chapter’’ for ‘‘subchapter’’, ‘‘any section or
subchapter of this chapter’’ for ‘‘section 1709, 1713,
1715e, 1715k, 1715l, 1715m, 1715v, 1715w, or 1715x of this
title’’ and ‘‘under any section or subchapter of this
chapter’’ for ‘‘under either of said sections’’.
Subsec. (a)(7). Pub. L. 90–448, § 312(a)(2), substituted
‘‘prescribed under the applicable section or subchapter
of this chapter’’ for ‘‘applicable to loans insured under
section 1709, 1713, 1715e, 1715k, 1715l, 1715m, 1715v, 1715w,
or 1715x of this title’’ in two places.
Subsec. (c). Pub. L. 90–448, § 312(a)(3)–(5), substituted
‘‘this chapter’’ for ‘‘this subchapter’’ in two places, and
‘‘any section or subchapter of this chapter’’ for ‘‘subchapters I, II, VI, VII, VIII or X of this chapter’’, and
struck out phrase which required payment of insurance
to be in debentures.
Subsec. (d). Pub. L. 90–448, § 312(b), substituted ‘‘insure under the same section as the original mortgage a
loan by a mortgagee in an amount not exceeding the
excess of the foregoing expenses over the project income’’ for ‘‘permit the excess of the foregoing expenses
over the project income to be added to the amount of
such mortgage, and extend the coverage of the mortgage insurance thereto, and such additional amount
shall be deemed to be part of the original face amount
of the mortgage’’, and inserted sentences requiring the
loan to bear interest at not more than the per centum
per annum currently permitted for mortgages insured
under the section under which it is to be insured, to be
secured, and to be limited to a term not more than the
unexpired term of the original mortgage, authorizing
collection of a premium charge for insurance of loans,
directing the premium to be payable in cash or in debentures of the fund, and making the lender entitled to
insurance benefits in the event of a failure of the borrower to make any payment due under the loan or
under the original mortgage and the default continues
for a period of thirty days.
Subsec. (e). Pub. L. 90–448, § 103(a), added subsec. (e).
1967—Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’
for ‘‘Commissioner’’ wherever appearing in subsecs. (a)
preceding par. (1), (a)(7), and (b) to (d).
Subsec. (a)(2). Pub. L. 90–19, § 1(h), substituted ‘‘Secretary of Housing and Urban Development’’ and ‘‘Secretary’’ for ‘‘Public Housing Administration’’ and ‘‘said
Administration’’, respectively.
1966—Subsec. (a)(8). Pub. L. 89–754 substituted ‘‘Government’’ and ‘‘section 3374 of title 42’’ for ‘‘Commissioner’’ and ‘‘section 1735h of this title’’, respectively.
1965—Subsec. (a)(7). Pub. L. 89–117, § 213, substituted
‘‘this Act’’ for ‘‘section 608 of title VI prior to the effective date of the Housing Act of 1954 or under section
220, 221, 903, or section 908’’, which for purposes of codification has been changed to ‘‘this chapter’’.
Subsec. (a)(8). Pub. L. 89–117, § 108(e)(2), added par. (8).
1964—Subsec. (c). Pub. L. 88–560 substituted ‘‘limitations or requirements contained in this subchapter

§ 1715n

upon the eligibility of the mortgage, upon the payment
of insurance premiums, or upon the terms and conditions of insurance settlement and the benefits of the insurance to be included in such settlement (except that
in any case the payment of insurance shall be in debentures)’’ for ‘‘limitation upon eligibility contained in
this subchapter’’.
1961—Subsec. (a). Pub. L. 87–70, § 612(h)(1), (2), included sections 1715k, 1715l, 1715v, 1715w and 1715x in the
opening provisions, and, in par. (7), substituted ‘‘section 1715k, 1715l, 1750b, or 1750g of this title’’ for ‘‘section 1750b or 1750g of this title,’’ ‘‘1715e, 1715k, 1715l,
1715m, 1715v, 1715w, or 1715x of this title’’ for ‘‘1715e or
1715m of this title’’ in two places, and struck out ‘‘insured under section 1743 of section 1750g of this title’’
after ‘‘refinancing of a loan’’.
Subsecs. (b), (c). Pub. L. 87–70, § 101(d), added subsec.
(b) and redesignated former subsec. (b) as (c).
Subsec. (d). Pub. L. 87–70, § 612(h)(3), added subsec. (d).
1958—Subsec. (a)(3). Pub. L. 85–900 authorized insurance of mortgages executed in connection with the sale
of property constructed under the Boulder Canyon
Project Act and located in Boulder City.
1957—Subsec. (a). Pub. L. 85–104, § 114(1), substituted
‘‘1715e, or 1715m of this title’’ for ‘‘or 1715e of this
title’’.
Subsec. (a)(3). Pub. L. 85–240 authorized insurance of
mortgages executed in connection with the sale of Government housing at Coulee Dam.
Subsec. (a)(4). Pub. L. 85–104, § 114(2), inserted ‘‘this
chapter or’’ after ‘‘prescribed by’’.
Subsec. (a)(7). Pub. L. 85–104, § 114(3), substituted
‘‘1715e, or 1715m of this title’’ for ‘‘or 1715e of this title’’
in first proviso, and substituted provisions of second
proviso for former provisions which required mortgages
described in pars. (1), (2), (3), (4), (5), or (6) to have maturity satisfactory to Commissioner but forbade maturity of such mortgage to exceed maximum terms of
loans insured under sections 1709, 1713, or 1715e of this
title, forbade principal obligation to exceed 90 percent
of value of property, and forbade interest rate to exceed
rate of loans made under either of said sections, with
the exception that where such mortgage covered property held by certain nonprofit cooperatives, principal
obligation should not exceed 95 percent of appraised
value.
1955—Subsec. (a). Act Aug. 11, 1955, substituted ‘‘section 1709, 1713, or 1715e of this title’’ for ‘‘section 1709 or
1713 of this title’’ wherever appearing.
Act Aug. 4, 1955, added par. (4), and redesignated pars.
(4) to (6) as (5) to (7), respectively.
EFFECTIVE DATE OF 2002 AMENDMENT
Pub. L. 107–116, title VI, § 603, Jan. 10, 2002, 115 Stat.
2222, provided that: ‘‘Except as provided in sections
616(a)(2), 633(b), and 634(b) [enacting provisions set out
as notes under section 1701q of this title and sections
1437f and 11301 of Title 42, The Public Health and Welfare], this title [amending this section and sections
1437f and 5305 of Title 42, enacting provisions set out as
notes under section 1701q of this title and sections 1437,
1437f, and 11301 of Title 42, and amending provisions set
out as notes under section 1701q of this title and sections 1437f and 11301 of Title 42] and the amendments
made by this title shall take effect or are deemed to
have taken effect, as appropriate, on the earlier of—
‘‘(1) the date of the enactment of this title [Jan. 10,
2002]; or
‘‘(2) September 30, 2001.’’
EFFECTIVE AND TERMINATION DATES OF 1994
AMENDMENTS
Pub. L. 104–134, title I, § 101(e) [title II, § 209], Apr. 26,
1996, 110 Stat. 1321–257, 1321–285; renumbered title I,
Pub. L. 104–140, § 1(a), May 2, 1996, 110 Stat. 1327, provided that: ‘‘Notwithstanding the 16th paragraph under
the item relating to ‘administrative provisions’ in title
II of the Departments of Veterans Affairs and Housing
and Urban Development, and Independent Agencies Ap-

§ 1715o

TITLE 12—BANKS AND BANKING

propriations Act, 1995 (Public Law 103–327; 108 Stat.
2316) [set out below], the amendments to section
223(a)(7) of the National Housing Act [12 U.S.C.
1715n(a)(7)] made by the 15th paragraph of such Act
shall be effective during fiscal year 1996 and thereafter.’’
Pub. L. 103–327, title II, Sept. 28, 1994, 108 Stat. 2316,
provided in part that: ‘‘The amendments of the two immediately preceding paragraphs [amending this section
and section 1437f of Title 42, The Public Health and
Welfare] shall be effective only during fiscal year 1995.’’
[For provision that amendment by Pub. L. 103–327 to
subsec. (a)(7) of this section be effective during fiscal
year 1996 and thereafter, see Pub. L. 104–134, title I,
§ 101(e) [title II, § 209], set out above.]
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 406(b)(15), (16) of Pub. L.
100–242 applicable only with respect to mortgages insured pursuant to conditional commitment issued on or
after Feb. 5, 1988, or in accordance with direct endorsement program (24 CFR 200.163), if approved underwriter
of mortgagee signs appraisal report for property on or
after Feb. 5, 1988, see section 406(d) of Pub. L. 100–242,
set out as a note under section 1709 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
REGULATIONS
Pub. L. 100–242, title IV, § 409(c), Feb. 5, 1988, 101 Stat.
1904, provided that: ‘‘The Secretary of Housing and
Urban Development shall issue such regulations as may
be necessary to carry out the amendment made by this
section [amending this section] by not later than the
expiration of the 90-day period following the date of the
enactment of this Act [Feb. 5, 1988].’’
STREAMLINED REFINANCING
Pub. L. 103–233, title I, § 103(d), Apr. 11, 1994, 108 Stat.
361, provided that: ‘‘As soon as practicable, the Secretary shall implement a streamlined refinancing program under the authority provided in section 223 of the
National Housing Act [12 U.S.C. 1715n] to prevent the
default of mortgages insured by the FHA which cover
multifamily housing projects, as defined in section
203(b) of the Housing and Community Development
Amendments of 1978 [12 U.S.C. 1701z–11(b)].’’
DELEGATION OF PROCESSING OF MORTGAGE INSURANCE
Secretary of Housing and Urban Development to implement system of mortgage insurance for mortgages
insured under this section that delegates processing
functions to selected approved mortgagees, with Secretary to retain authority to approve rents, expenses,
property appraisals, and mortgage amounts and to execute firm commitments, see section 328 of Pub. L.
101–625, set out as a note under section 1713 of this title.

§ 1715o. Interest rate on debentures; method of
establishment
Notwithstanding any other provisions of this
chapter, debentures issued under any section of
this chapter with respect to a loan or mortgage
accepted for insurance on or after thirty days
following August 2, 1954 (except debentures issued pursuant to paragraph (4) of section 1715l(g)
of this title) shall bear interest at the rate in effect on the date the commitment to insure the
loan or mortgage was issued, or the date the
loan or mortgage was endorsed for insurance, or
(when there are two or more insurance endorsements) the date the loan or mortgage was initially endorsed for insurance, whichever rate is
the highest, except that debentures issued pursuant to section 1715k(f), 1715k(h)(7), 1715l(g),
1715x, or 1715z–3 of this title may, at the discretion of the Secretary, bear interest at the rate
in effect on the date they are issued. The Secretary shall from time to time, with the approval of the Secretary of the Treasury, establish such interest rate in an amount not in excess of the annual rate of interest determined by
the Secretary of the Treasury, at the request of
the Secretary, by estimating the average yield
to maturity, on the basis of daily closing market bid quotations or prices during the calendar
month next preceding the establishment of such
rate of interest, on all outstanding marketable
obligations of the United States having a maturity date of fifteen years or more from the first
day of such next preceding month, and by adjusting such estimated average annual yield to
the nearest one-eighth of 1 per centum. Notwithstanding the preceding sentence and the following paragraph,1 if an insurance claim is paid in
cash for any mortgage that is insured under section 1709 or 1715y of this title and is endorsed for
mortgage insurance after January 23, 2004, the
debenture interest rate for purposes of calculating such a claim shall be the monthly average
yield, for the month in which the default on the
mortgage occurred, on United States Treasury
Securities adjusted to a constant maturity of 10
years.
(June 27, 1934, ch. 847, title II, § 224, as added
Aug. 2, 1954, ch. 649, title I, § 126, 68 Stat. 606;
amended Pub. L. 87–70, title VI, § 612(i), June 30,
1961, 75 Stat. 182; Pub. L. 90–19, § 1(a)(3), May 25,
1967, 81 Stat. 17; Pub. L. 90–448, title I, § 104(b),
Aug. 1, 1968, 82 Stat. 488; Pub. L. 108–199, div. G,
title II, § 215, Jan. 23, 2004, 118 Stat. 394.)

PURPOSE OF SECTION
Act Aug. 2, 1954, ch. 649, title I, § 125, 68 Stat. 605, as
amended by Pub. L. 90–19, § 10(b), May 25, 1967, 81 Stat.
22, in enacting this section, provided in part that the
purpose thereof was to transfer to title II of the National Housing Act [this subchapter] ‘‘the mortgage insurance program in connection with the sale of certain
publicly owned property as contained in section 610 of
title VI [section 1745 of this title]; the insurance of
mortgages to refinance existing loans insured under
section 608 of title VI and sections 903 and 908 of title
IX [sections 1743, 1750b and 1750g of this title]; and to
authorize the insurance under title II [this subchapter]
of mortgages assigned to the Secretary of Housing and
Urban Development under insurance contracts and
mortgages held by the Secretary of Housing and Urban
Development in connection with the sale of property
acquired under insurance contracts’’.

Page 614

REFERENCES IN TEXT
This chapter, referred to in text, was in the original
‘‘this Act’’, meaning act June 27, 1934, ch. 847, 48 Stat.
1246, which is classified principally to this chapter
(§ 1701 et seq.). For complete classification of this Act
to the Code, see Tables.
AMENDMENTS
2004—Pub. L. 108–199, which directed amendment of
section by adding sentence relating to interest rate for
claim paid in cash at end of first paragraph, was executed by adding sentence at end of section to reflect
the probable intent of Congress.
1968—Pub. L. 90–448 included debentures issued pursuant to section 1715z–3 of this title.
1 So

in original.

Page 615

§ 1715q

TITLE 12—BANKS AND BANKING

1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.
1961—Pub. L. 87–70 changed the date for determination of the rate of interest for debentures, other than
those issued pursuant to section 1715k(f), 1715k(h)(7),
1715l(g), 1715l(g)(4), or 1715x, from the rate in effect on
the date the debentures are issued to the rate in effect
on the date the commitment to insure the loan or
mortgage was issued, or the date the loan or mortgage
was endorsed for insurance, or (when there are two or
more insurance endorsements) the date the loan or
mortgage was initially endorsed for insurance, whichever rate is highest.

§ 1715p. Insurance of advances under open-end
mortgages; payment of charges; eligibility
and conditions
Notwithstanding any other provisions of this
chapter, in connection with any mortgage insured pursuant to any section of this chapter
which covers a property upon which there is located a dwelling designed principally for residential use for not more than four families in
the aggregate, the Secretary is authorized, upon
such terms and conditions as he may prescribe,
to insure under said section the amount of any
advance for the improvement or repair of such
property made to the mortgagor pursuant to an
‘‘open-end’’ provision in the mortgage, and to
add the amount of such advance to the original
principal obligation in determining the value of
the mortgage for the purpose of computing the
amounts of debentures and certificate of claim
to which the mortgagee may be entitled: Provided, That the Secretary may require the payment of such charges, including charges in lieu
of insurance premiums, as he may consider appropriate for the insurance of such ‘‘open-end’’
advances: Provided, further, That only advances
for such improvements or repairs as substantially protect or improve the basic livability or
utility of the property involved shall be eligible
for insurance under this section; Provided further, That no such advance shall be insured
under this section if the amount thereof plus the
amount of the unpaid balance of the original
principal obligation of the mortgage would exceed the amount of such original principal obligation unless the mortgagor certifies that the
proceeds of such advance will be used to finance
the construction of additional rooms or other
enclosed space as a part of the dwelling: And
provided further, That the insurance of ‘‘openend’’ advances shall not be taken into account
in determining the aggregate amount of principal obligations of mortgages which may be insured under this chapter.
(June 27, 1934, ch. 847, title II, § 225, as added
Aug. 2, 1954, ch. 649, title I, § 126, 68 Stat. 607;
amended Pub. L. 90–19, § 1(a) (3), May 25, 1967, 81
Stat. 17.)
REFERENCES IN TEXT
This chapter, referred to in text, was in the original
‘‘this Act’’, meaning act June 27, 1934, ch. 847, 48 Stat.
1246, which is classified principally to this chapter
(§ 1701 et seq.). For complete classification of this Act
to the Code, see Tables.
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.

§ 1715q. Delivery of statement of appraisal or estimates to home buyers
The Secretary is authorized and directed to require that in connection with any property upon
which there is located a dwelling designed principally for a single-family residence or a twofamily residence and which is approved for
mortgage insurance under section 1709 or 1715e
of this title with respect to any property or
project of a corporation or trust of the character
described in paragraph (2) of subsection (a) of
section 1715e of this title, or sections 1715k,
1715l, 1715m,1 1715x, 1715y, 1715z(i), 1715z–2,1 or
1750b of this title, the seller or builder or such
other person as may be designated by the Secretary shall agree to deliver, prior to the sale of
the property, to the person purchasing such
dwelling for his own occupancy, a written statement setting forth the amount of the appraised
value of the property as determined by the Secretary. This section shall not apply in any case
where the mortgage involved was insured or the
commitment for such insurance was issued prior
to August 2, 1954. Notwithstanding the first sentence of this section, the Secretary is authorized
to require, in connection with any mortgage
where the mortgage amount is computed on the
basis of the Secretary’s estimate of the replacement cost of the property, or on the basis of any
other estimates of the Secretary, that a written
statement setting forth such estimate or estimates, as the case may be, be furnished under
this section in lieu of a written statement setting forth the amount of the appraised value of
the property.
(June 27, 1934, ch. 847, title II, § 226, as added
Aug. 2, 1954, ch. 649, title I, § 126, 68 Stat. 607;
amended Pub. L. 85–104, title I, § 115, July 12,
1957, 71 Stat. 298; Pub. L. 87–70, title VI, § 612(j),
June 30, 1961, 75 Stat. 182; Pub. L. 90–19, § 1(a)(3),
(4), May 25, 1967, 81 Stat. 17; Pub. L. 90–448, title
I, § 102(b), Aug. 1, 1968, 82 Stat. 486.)
REFERENCES IN TEXT
Section 1715m of this title, referred to in text, was repealed by Pub. L. 110–289, div. B, title I, § 2120(a)(5), July
30, 2008, 122 Stat. 2835.
Section 1715z–2 of this title, referred to in text, was
repealed by Pub. L. 110–289, div. B, title I, § 2120(a)(6),
July 30, 2008, 122 Stat. 2835.
AMENDMENTS
1968—Pub. L. 90–448 inserted references to sections
1715z(i) and 1715z–2 of this title.
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing, and ‘‘Secretary’s’’ for
‘‘Commissioner’s’’.
1961—Pub. L. 87–70 inserted references to sections
1715x and 1715y of this title, and substituted ‘‘or on the
basis of any other estimates of the Commissioner, that
a written statement setting forth such estimate or estimates, as the case may be,’’ for ‘‘that a written statement setting forth such estimate’’.
1957—Pub. L. 85–104 inserted sentence authorizing estimate of replacement cost in lieu of an estimate of
value where mortgage amount is based upon replacement cost.
1 See

References in Text note below.

§ 1715r

TITLE 12—BANKS AND BANKING

§ 1715r. Requirement of builder’s cost certification; definitions
(a) Requirement
Except as provided in subsection (b) and notwithstanding any other provision of this chapter, no mortgage covering new or rehabilitated
multifamily housing or a property or project described in subchapter IX–B shall be insured
under this chapter unless the mortgagor has
agreed (A) to certify, upon completion of the
physical improvements on the mortgaged property or project and prior to final endorsement of
the mortgage, either (i) that the approved percentage of actual cost (as those terms are herein
defined) equaled or exceeded the proceeds of the
mortgage loan or (ii) the amount by which the
proceeds of the mortgage loan exceeded such approved percentage of actual cost, as the case
may be, and (B) to pay forthwith to the mortgagee, for application to the reduction of the principal obligation of such mortgage, the amount,
if any, certified to be in excess of such approved
percentage of actual cost. Upon the Secretary’s
approval of the mortgagor’s certification as required hereunder, such certification shall be
final and incontestable, except for fraud or material misrepresentation on the part of the
mortgagor.
(b) Exemption for certain projects assisted with
low-income housing tax credit
In the case of any mortgage insured under any
provision of this subchapter that is executed in
connection with the construction, rehabilitation, purchase, or refinancing of a multifamily
housing project for which equity 1 provided
through any low-income housing tax credit pursuant to section 42 of title 26, if the Secretary
determines at the time of issuance of the firm
commitment for insurance that the ratio of the
loan proceeds to the actual cost of the project is
less than 80 percent, subsection (a) of this section shall not apply.
(c) Definitions
For purposes of this section, the following
definitions shall apply:
(1) The term ‘‘new or rehabilitated multifamily housing’’ means a project or property
approved for mortgage insurance prior to the
construction or the repair and rehabilitation
involved and covered by a mortgage insured or
to be insured (i) under section 1713 of this
title, (ii) under section 1715e of this title with
respect to any property or project of a corporation or trust of the character described in
paragraph (1) of subsection (a) of section 1715e
of this title or with respect to any property or
project of a mortgagor of the character described in paragraph (3) of subsection (a)
thereof, (iii) under section 1715k of this title if
the mortgage meets the requirements of paragraph (3)(B) of subsection (d) thereof, (iv)
under section 1715l of this title if the mortgage
meets the requirements of paragraph (3) or
paragraph (4) of subsection (d) thereof, (v)
under section 1715v of this title, (vi) under section 1715x of this title if the mortgage meets
the requirements of subsection (b), (vii) under
1 So

in original. Probably should be followed by ‘‘is’’.

Page 616

section 1748h–2 of this title if the mortgage
meets the requirements of subsection (f), (viii)
under section 1715y(d) of this title, or (ix)
under section 1715z–1 of this title;
(2) The term ‘‘approved percentage’’ means
the percentage figure which, under applicable
provisions of this chapter, the Secretary is authorized to apply to his estimate of value,
cost, or replacement costs, as the case may be,
of the property or project in determining the
maximum insurable mortgage amount; except
that if the mortgage is to assist the financing
of repair or rehabilitation and no part of the
proceeds will be used to finance the purchase
of the land or structure involved, the approved
percentage shall be 100 per centum; and
(3) The term ‘‘actual cost’’ has the following
meaning: (i) in case the mortgage is to assist
the financing of new construction, the term
means the actual cost to the mortgagor of
such construction, including amounts paid for
labor, materials, construction contracts, offsite public utilities, streets, organizational
and legal expenses, such allocations of general
overhead items as are acceptable to the Secretary, and other items of expense approved by
the Secretary, plus (I) a reasonable allowance
for builder’s profit if the mortgagor is also the
builder as defined by the Secretary, and (II) an
amount equal to the Secretary’s estimate of
the fair market value of any land (prior to the
construction of the improvements built as a
part of the project) in the property or project
owned by the mortgagor in fee (or, in case the
land in the property or project is held by the
mortgagor under a leasehold or other interest
less than a fee, such amount as the mortgagor
paid for the acquisition of such leasehold or
other interest but, in no event, in excess of the
fair market value of such leasehold or other
interest exclusive of the proposed improvements), but excluding the amount of any kickbacks, rebates, or trade discounts received in
connection with the construction of the improvements, or (ii) in case the mortgage is to
assist the financing of repair or rehabilitation
the term means the actual cost to the mortgagor of such repair or rehabilitation, including
the amounts paid for labor, materials, construction contracts, off-site public utilities,
streets, organization and legal expenses, such
allocations of general overhead items as are
acceptable to the Secretary, and other items
of expense approved by the Secretary, plus (I)
a reasonable allowance for builder’s profit if
the mortgagor is also the builder as defined by
the Secretary, and (II) an additional amount
equal to (A) in case the land and improvements are to be acquired by the mortgagor and
the purchase price thereof is to be financed
with part of the proceeds of the mortgage, the
purchase price of such land and improvements
prior to such repair or rehabilitation, or (B) in
case the land and improvements are owned by
the mortgagor subject to an outstanding indebtedness to be refinanced with part of the
proceeds of the mortgage, the amount of such
outstanding indebtedness secured by such land
and improvements, but excluding (for the purposes of this clause (ii)) the amount of any
kickbacks, rebates, or trade discounts re-

Page 617

TITLE 12—BANKS AND BANKING

ceived in connection with the construction of
the improvements: Provided, That such additional amount under (A) of this clause (ii)
shall in no event exceed the Secretary’s estimate of the fair market value of such land and
improvements prior to such repair or rehabilitation, and such additional amount under (B)
of this clause (ii) shall in no event exceed the
approved percentage of the Secretary’s estimate of the fair market value of such land and
improvements prior to such repair or rehabilitation. In the case of a mortgage insured
under section 1715k, 1715l(d)(3), 1715l(d)(4),
1715v, 1715x, or 1715z–1 of this title where the
mortgagor is also the builder as defined by the
Secretary, there shall be included in the actual cost, in lieu of the allowance for builder’s
profit under clause (i) or (ii) of the preceding
sentence, an allowance for builder’s and sponsor’s profit and risk of 10 per centum (unless
the Secretary, after finding that such allowance is unreasonable, shall by regulation prescribe a lesser percentage) of all other items
entering into the term ‘‘actual cost’’ except
land or amounts paid for a leasehold and
amounts included under either (A) or (B) of
clause (ii) of the preceding sentence. In the
case of a mortgage insured under section
1715k, 1715l(d)(3), 1715l(d)(4), 1715v, 1715x, or
1715z–1 of this title, where the mortgagor is
not also the builder as defined by the Secretary, there shall be included in the actual
cost an allowance for sponsor’s profit and risk
of the said 10 per centum or lesser percentage
of all other items entering into the term ‘‘actual cost’’ except land or amounts paid for a
leasehold, amounts included under either (A)
or (B) of the said clause (ii), and amounts paid
by the mortgagor under a general construction
contract.
(June 27, 1934, ch. 847, title II, § 227, as added
Aug. 2, 1954, ch. 649, title I, § 126, 68 Stat. 607;
amended Aug. 11, 1955, ch. 783, title I, § 102(i), 69
Stat. 636; Aug. 7, 1956, ch. 1029, title I, §§ 105(d),
109, 70 Stat. 1094, 1095; Pub. L. 86–372, title I,
§ 112, Sept. 23, 1959, 73 Stat. 661; Pub. L. 87–70,
title VI, § 612(k), June 30, 1961, 75 Stat. 183; Pub.
L. 88–560, title I, § 119(c), Sept. 2, 1964, 78 Stat.
782; Pub. L. 89–754, title V, § 502(b), title X,
§ 1020(b), Nov. 3, 1966, 80 Stat. 1277, 1295; Pub. L.
90–19, § 1(a)(3), (4), May 25, 1967, 81 Stat. 17; Pub.
L. 90–448, title II, § 201(b)(2), (3), Aug. 1, 1968, 82
Stat. 502; Pub. L. 110–289, div. B, title VIII,
§ 2834(b), July 30, 2008, 122 Stat. 2869.)
REFERENCES IN TEXT
This chapter, referred to in subsecs. (a) and (c)(2), was
in the original ‘‘this Act’’, meaning act June 27, 1934,
ch. 847, 48 Stat. 1246, which is classified principally to
this chapter (§ 1701 et seq.). For complete classification
of this Act to the Code, see Tables.
AMENDMENTS
2008—Pub. L. 110–289 designated introductory provisions as subsec. (a) and inserted heading, in subsec. (a),
as redesignated, substituted ‘‘Except as provided in
subsection (b) and notwithstanding’’ for ‘‘Notwithstanding’’, redesignated cls. (a) and (b) as cls. (A) and
(B), respectively, and struck out ‘‘As used in this section—’’ at end, added subsec. (b), inserted heading and
introductory provisions of subsec. (c), and designated
former subsecs. (a) to (c) as pars. (1) to (3), respectively,

§ 1715r

of subsec. (c) and subcls. (1) and (2) of cls. (i) and (ii) of
former subsec. (c) as subcls. (I) and (II), respectively, of
cls. (i) and (ii), respectively, of par. (3) of subsec. (c).
1968—Subsec. (a). Pub. L. 90–448, § 201(b)(2), included
mortgages insured or to be insured under section
1715z–1 of this title.
Subsec. (c). Pub. L. 90–448, § 201(b)(3), substituted
‘‘section 1715x, or 1715z–1 of this title’’ for ‘‘section
1715x(b)(2) of this title’’, in two places.
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ in subsecs. (b) and (c), and ‘‘Secretary’s’’ for
‘‘Commissioner’s’’ in text preceding subsec. (a) and in
subsec. (c).
1966—Pub. L. 89–754, § 502(b), made the certification
requirement applicable to mortgage covering property
or project described in subchapter IX–B.
Subsec. (a). Pub. L. 89–754, § 1020(b), substituted ‘‘subsection (b)’’ for ‘‘subsection (b)(2)’’ in cl. (vi).
1964—Subsec. (a). Pub. L. 88–560 included mortgages
insured or to be insured under section 1715y(d) of this
title.
1961—Subsec. (a). Pub. L. 87–70, § 612(k)(1), included
property covered by a mortgage insured or to be insured under section 1715x of this title if the mortgage
meets the requirements of subsection (b)(2).
Subsec. (b). Pub. L. 87–70, § 612(k)(2), substituted
‘‘value, cost, or replacement cost’’ for ‘‘value or replacement cost’’.
Subsec. (c). Pub. L. 87–70, § 612(k)(3), substituted ‘‘section 1715l(d)(3), 1715l(d)(4), 1715v, or 1715x(b)(2) of this
title’’ for ‘‘section 1715l of this title if the mortgage
meets the requirements of paragraph (4) of subsection
(d) thereof, or section 1715v of this title’’ in second and
third sentences.
1959—Subsec. (a). Pub. L. 86–372, § 112(a), included
mortgages insured or to be insured under subsec. (d)(4)
of section 1715l of this title, under section 1715v of this
title, and under section 1748h–2 of this title, and struck
out provisions which related to mortgages insured or to
be insured under sections 1748b, 1750b and 1750g of this
title.
Subsec. (c). Pub. L. 86–372, § 112(b), substituted ‘‘under
section 1715k of this title, section 1715l of this title if
the mortgage meets the requirements of paragraph (4)
of subsection (d) thereof, or section 1715v of this title’’
for ‘‘under section 1715k of this title’’ in two places.
1956—Act Aug. 7, 1956, § 109, inserted sentence preceding subsec. (a), that upon Commissioner’s approval, certification shall be final and incontestable, except for
fraud or misrepresentation by mortgagor.
Subsec. (a). Act Aug. 7, 1956, § 105(d), inserted ‘‘or with
respect to any property or project of a mortgagor of the
character described in paragraph (3) of subsection (a) of
section 1715e of this title,’’ before ‘‘(iii)’’.
Subsec. (b). Act Aug. 7, 1956, § 109, inserted provision
that if the insured mortgage is to assist financing of repairs and no part of proceeds will be used to purchase
the land or structure involved, the approved percentage
shall be 100 percent.
Subsec. (c). Act Aug. 7, 1956, § 109, inserted ‘‘such allocations of general overhead items as are acceptable to
the Commissioner,’’ after ‘‘legal expenses’’ wherever
appearing; struck out ‘‘(without reduction by reason of
the application of the approved percentage requirements of this section)’’ before ‘‘secured by such land
and improvements,’’ in cl. (ii)(B), amended proviso to
provide that additional amount under (B) of cl. (ii)
should not exceed the approved percentage of the Commissioner’s estimate of the fair market value of the
land and improvements; and inserted provisions at end
relating to 10 percent allowance for builder’s profit in
mortgages issued under section 1715k.
1955—Act Aug. 11, 1955, substituted ‘‘under section
1715l of this title if the mortgage meets the requirements of paragraph (3) of subsection (d) of such section’’ for ‘‘under section 1715l of this title’’.

§ 1715s

TITLE 12—BANKS AND BANKING

§ 1715s. Treatment of mortgages covering tax
credit projects
(a) Definition
For purposes of this section, the term ‘‘insured
mortgage covering a tax credit project’’ means a
mortgage insured under any provision of this
subchapter that is executed in connection with
the construction, rehabilitation, purchase, or refinancing of a multifamily housing project for
which equity 1 provided through any low-income
housing tax credit pursuant to section 42 of title
26.
(b) Acceptance of letters of credit
In the case of an insured mortgage covering a
tax credit project, the Secretary may not require the escrowing of equity provided by the
sale of any low-income housing tax credits for
the project pursuant to section 42 of title 26, or
any other form of security, such as a letter of
credit.
(c) Asset management requirements
In the case of an insured mortgage covering a
tax credit project for which project the applicable tax credit allocating agency is causing to be
performed periodic inspections in compliance
with the requirements of section 42 of title 26,
such project shall be exempt from requirements
imposed by the Secretary regarding periodic inspections of the property by the mortgagee. To
the extent that other compliance monitoring is
being performed with respect to such a project
by such an allocating agency pursuant to such
section 42, the Secretary shall, to the extent
that the Secretary determines such monitoring
is sufficient to ensure compliance with any requirements established by the Secretary, accept
such agency’s evidence of compliance for purposes of determining compliance with the Secretary’s requirements.
(d) Streamlined processing pilot program
(1) In general
The Secretary shall establish a pilot program to demonstrate the effectiveness of
streamlining the review process, which shall
include all applications for mortgage insurance under any provision of this subchapter
for mortgages executed in connection with the
construction, rehabilitation, purchase, or refinancing of a multifamily housing project for
which equity 1 provided through any low-income housing tax credit pursuant to section 42
of title 26. The Secretary shall issue instructions for implementing the pilot program
under this subsection not later than the expiration of the 180-day period beginning upon
July 30, 2008.
(2) Requirements
Such pilot program shall provide for—
(A) the Secretary to appoint designated
underwriters, who shall be responsible for
reviewing such mortgage insurance applications and making determinations regarding
the eligibility of such applications for such
mortgage insurance in lieu of the processing
functions regarding such applications that
1 So

in original. Probably should be followed by ‘‘is’’.

Page 618

are otherwise performed by other employees
of the Department of Housing and Urban Development;
(B) submission of applications for such
mortgage insurance by mortgagees who have
previously been expressly approved by the
Secretary; and
(C) determinations regarding the eligibility of such applications for such mortgage
insurance to be made by the chief underwriter pursuant to requirements prescribed
by the Secretary, which shall include requiring submission of reports regarding applications of proposed mortgagees by third-party
entities expressly approved by the chief underwriter.
(June 27, 1934, ch. 847, title II, § 228, as added
Pub. L. 110–289, div. B, title VIII, § 2834(c), July
30, 2008, 122 Stat. 2870.)
PRIOR PROVISIONS
A prior section 1715s, which was based in part on act
Aug. 2, 1954, ch. 649, title VIII, § 814, 68 Stat. 647, provided for the keeping of records with respect to multifamily housing and examination and audit thereof. Section 814 of act Aug. 2, 1954, was transferred and is classified in full to section 1434 of Title 42, The Public
Health and Welfare.
APPROVALS BY DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT
Pub. L. 110–289, div. B, title VIII, § 2832, July 30, 2008,
122 Stat. 2867, provided that:
‘‘(a) ADMINISTRATIVE AND PROCEDURAL CHANGES.—
‘‘(1) IN GENERAL.—The Secretary of Housing and
Urban Development (in this section referred to as the
‘Secretary’) shall, not later than the expiration of the
6-month period beginning upon after [sic] the date of
the enactment of this Act [July 30, 2008], implement
administrative and procedural changes to expedite
approval of multifamily housing projects under the
jurisdiction of the Department of Housing and Urban
Development that meet the requirements of the Secretary for such approvals.
‘‘(2) PROJECTS.—The multifamily housing projects
referred to in paragraph (1) shall include—
‘‘(A) projects for which assistance is provided by
such Department in conjunction with any low-income housing tax credits under section 42 of the Internal Revenue Code of 1986 [26 U.S.C. 42] or tax-exempt housing bonds; and
‘‘(B) existing public housing projects and assisted
housing projects, for which approval of the Secretary is necessary for transactions, in conjunction
with any such low-income housing tax credits or
tax-exempt housing bonds, involving the preservation or rehabilitation of the project.
‘‘(3) CHANGES.—The administrative and procedural
changes referred to in paragraph (1) shall include all
actions necessary to carry out paragraph (1), which
may include—
‘‘(A) improving the efficiency of approval procedures;
‘‘(B) simplifying approval requirements,
‘‘(C) establishing time deadlines or target deadlines for required approvals;
‘‘(D) modifying division of approval authority between field and national offices;
‘‘(E) improving outreach to project sponsors regarding information that is required to be submitted for such approvals;
‘‘(F) requesting additional funding for increasing
staff, if necessary; and
‘‘(G) any other actions which would expedite approvals.
Any such changes shall be made in a manner that
provides for full compliance with any existing re-

Page 619

quirements under law or regulation that are designed
to protect families receiving public and assisted
housing assistance, including income targeting, rent,
and fair housing provisions, and shall also comply
with requirements regarding environmental review
and protection and wages paid to laborers.
‘‘(b) CONSULTATION.—The Secretary shall consult
with the Commissioner of the Internal Revenue Service
and take such actions as are appropriate in conjunction
with such consultation to simplify the coordination of
rules, regulations, forms, and approval requirements
for multifamily housing projects projects [sic] for
which assistance is provided by such Department in
conjunction with any low-income housing tax credits
under section 42 of the Internal Revenue Code of 1986
[26 U.S.C. 42] or tax-exempt housing bonds.
implementing
the
‘‘(c)
RECOMMENDATIONS.—In
changes required under this section, the Secretary
shall solicit recommendations regarding such changes
from project owners and sponsors, investors and stakeholders in housing tax credits, State and local housing
finance agencies, public housing agencies, tenant advocates, and other stakeholders in such projects.
‘‘(d) REPORT.—Not later than the expiration of the 9month period beginning on the date of the enactment
of this Act [July 30, 2008], the Secretary shall submit a
report to the Committee on Financial Services of the
House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate that—
‘‘(1) identifies the actions taken by the Secretary to
comply with this section;
‘‘(2) includes information regarding any resulting
improvements in the expedited approval for multifamily housing projects;
‘‘(3) identifies recommendations made pursuant to
subsection (c);
‘‘(4) identifies actions taken by the Secretary to
implement the provisions in the amendments made
by sections 2834 and 2835 of this Act [enacting this
section and sections 1437z–8 and 11403f–1 of Title 42,
The Public Health and Welfare, and amending sections 1701q and 1715r of this title and sections 1437f,
3545, 11403g, 11403h, 11404, 11405, 11405b, 11406, 11407, and
11407b of Title 42]; and
‘‘(5) makes recommendations for any legislative
changes that are needed to facilitate prompt approval
of assistance for such projects.’’

§ 1715t. Voluntary termination of insurance
Notwithstanding any other provision of this
chapter and with respect to any loan or mortgage heretofore or hereafter insured under this
chapter, except under section 1703 of this title
and except as specified under section 1715z–15 of
this title and subtitle B of the Emergency Low
Income Housing Preservation Act of 1987,,1 the
Secretary is authorized to terminate any insurance contract upon request by the borrower or
mortgagor and the financial institution or mortgagee and upon payment of such termination
charge as the Secretary determines to be equitable, taking into consideration the necessity of
protecting the various insurance Funds. Upon
such termination, borrowers and mortgagors
and financial institutions and mortgagees shall
be entitled to the rights, if any, to which they
would be entitled under this chapter if the insurance contract were terminated by payment
in full of the insured loan or mortgage.
(June 27, 1934, ch. 847, title II, § 229, as added
Pub. L. 86–372, title I, § 113, Sept. 23, 1959, 73 Stat.
662; amended Pub. L. 87–70, title VI, § 612(l), June
30, 1961, 75 Stat. 183; Pub. L. 89–117, title XI,

§ 1108(k), Aug. 10, 1965, 79 Stat. 505; Pub. L. 90–19,
§ 1(a)(3), May 25, 1967, 81 Stat. 17; Pub. L. 101–235,
title II, § 202(d)(2), Dec. 15, 1989, 103 Stat. 2037.)
REFERENCES IN TEXT
This chapter, referred to in text, was in the original
‘‘this Act’’, meaning act June 27, 1934, ch. 847, 48 Stat.
1246, which is classified principally to this chapter
(§ 1701 et seq.). For complete classification of this Act
to the Code, see Tables.
The Emergency Low Income Housing Preservation
Act of 1987, referred to in text, is title II of Pub. L.
100–242, Feb. 5, 1988, 101 Stat. 1877, which, as amended
by Pub. L. 101–625, is known as the Low-Income Housing Preservation and Resident Homeownership Act of
1990. Subtitle B of title II, which was formerly set out
as a note under section 1715l of this title and which
amended section 1715z–6 of this title, was amended generally by Pub. L. 101–625 and is classified generally to
subchapter I (§ 4101 et seq.) of chapter 42 of this title.
For complete classification of this Act to the Code, see
Short Title note set out under section 4101 of this title
and Tables.
AMENDMENTS
1989—Pub. L. 101–235 inserted ‘‘and except as specified
under section 1715z–15 of this title and subtitle B of the
Emergency Low Income Housing Preservation Act of
1987,’’ after ‘‘section 1703 of this title’’.
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.
1965—Pub. L. 89–117 struck out ‘‘and Accounts’’ after
‘‘various Insurance Funds’’.
1961—Pub. L. 87–70 amended section generally, authorizing voluntary termination of insurance contracts
with respect to loans insured under this chapter.

§ 1715u. Authority to assist mortgagors in default
(a) Loss mitigation
Upon default or imminent default, as defined
by the Secretary 1 of any mortgage insured
under this subchapter, mortgagees shall engage
in loss mitigation actions for the purpose of providing an alternative to foreclosure (including
but not limited to actions such as special forbearance, loan modification, preforeclosure sale,
support for borrower housing counseling, subordinate lien resolution, borrower incentives, and
deeds in lieu of foreclosure, as required, but not
including assignment of mortgages to the Secretary under section 1710(a)(1)(A) of this title) or
subsection (c),2 as provided in regulations by the
Secretary.
(b) Payment of partial claim
(1) Establishment of program
The Secretary may establish a program for
payment of a partial claim to a mortgagee
that agrees to apply the claim amount to payment of a mortgage on a 1- to 4-family residence that is in default or faces imminent default, as defined by the Secretary.
(2) Payments and exceptions
Any payment of a partial claim under the
program established in paragraph (1) to a
mortgagee shall be made in the sole discretion
of the Secretary and on terms and conditions
acceptable to the Secretary, except that—
(A) the amount of the payment shall be in
an amount determined by the Secretary, not
1 So

in original. Probably should be followed by a comma.
in original. Probably should be ‘‘section 1710(a)(1)(A) of
this title or subsection (c)),’’.
2 So

1 So

in original.

§ 1715u

TITLE 12—BANKS AND BANKING

§ 1715u

TITLE 12—BANKS AND BANKING

to exceed an amount equivalent to 30 percent of the unpaid principal balance of the
mortgage and any costs that are approved by
the Secretary;
(B) the amount of the partial claim payment shall first be applied to any arrearage
on the mortgage, and may also be applied to
achieve principal reduction;
(C) the mortgagor shall agree to repay the
amount of the insurance claim to the Secretary upon terms and conditions acceptable
to the Secretary;
(D) the Secretary may permit compensation to the mortgagee for lost income on
monthly payments, due to a reduction in the
interest rate charged on the mortgage;
(E) expenses related to the partial claim or
modification may not be charged to the borrower;
(F) loans may be modified to extend the
term of the mortgage to a maximum of 40
years from the date of the modification; and
(G) the Secretary may permit incentive
payments to the mortgagee, on the borrower’s behalf, based on successful performance
of a modified mortgage, which shall be used
to reduce the amount of principal indebtedness.
(3) Payments in connection with certain activities
The Secretary may pay the mortgagee, from
the appropriate insurance fund, in connection
with any activities that the mortgagee is required to undertake concerning repayment by
the mortgagor of the amount owed to the Secretary.
(c) Assignment and loan modification
(1) Assignment
(A) Program authority
The Secretary may establish a program for
assignment to the Secretary, upon request of
the mortgagee, of a mortgage on a 1- to 4family residence insured under this chapter.
(B) Program requirements
The Secretary may accept assignment of a
mortgage under this paragraph only if—
(i) the mortgage was in default or facing
imminent default, as defined by the Secretary;
(ii) the mortgagee has modified the
mortgage to cure the default and provide
for mortgage payments within the reasonable ability of the mortgagor to pay, at interest rates not exceeding current market
interest rates; and
(iii) the Secretary arranges for servicing
of the assigned mortgage by a mortgagee
(which may include the assigning mortgagee) through procedures that the Secretary has determined to be in the best interests of the appropriate insurance fund.
(C) Payment of insurance benefits
Upon accepting assignment of a mortgage
under this paragraph, the Secretary may pay
insurance benefits to the mortgagee from
the appropriate insurance fund, in an
amount that the Secretary determines to be
appropriate, not to exceed the amount nec-

Page 620

essary to compensate the mortgagee for the
assignment and any losses and expenses resulting from the mortgage modification.
(2) Assignment and loan modification
(A) Authority
The Secretary may encourage loan modifications for eligible delinquent mortgages
or mortgages facing imminent default, as defined by the Secretary, through the payment
of insurance benefits and assignment of the
mortgage to the Secretary and the subsequent modification of the terms of the mortgage according to a loan modification approved by the mortgagee.
(B) Payment of benefits and assignment
In carrying out this paragraph, the Secretary may pay insurance benefits for a
mortgage, in the amount determined in accordance with section 1710(a)(5) of this title,
without reduction for any amounts modified, but only upon the assignment, transfer,
and delivery to the Secretary of all rights,
interest, claims, evidence, and records with
respect to the mortgage specified in clauses
(i) through (iv) of section 1710(a)(1)(A) of this
title.
(C) Disposition
After modification of a mortgage pursuant
to this paragraph, the Secretary may provide insurance under this subchapter for the
mortgage. The Secretary may subsequently—
(i) re-assign the mortgage to the mortgagee under terms and conditions as are
agreed to by the mortgagee and the Secretary;
(ii) act as a Government National Mortgage Association issuer, or contract with
an entity for such purpose, in order to pool
the mortgage into a Government National
Mortgage Association security; or
(iii) re-sell the mortgage in accordance
with any program that has been established for purchase by the Federal Government of mortgages insured under this subchapter, and the Secretary may coordinate
standards for interest rate reductions
available for loan modification with interest rates established for such purchase.
(D) Loan servicing
In carrying out this paragraph, the Secretary may require the existing servicer of a
mortgage assigned to the Secretary to continue servicing the mortgage as an agent of
the Secretary during the period that the
Secretary acquires and holds the mortgage
for the purpose of modifying the terms of
the mortgage, provided that the Secretary
compensates the existing servicer appropriately, as such compensation is determined by the Secretary consistent, to the
maximum extent possible, with section
1709(b) of this title. If the mortgage is resold
pursuant to subparagraph (C)(iii), the Secretary may provide for the existing servicer
to continue to service the mortgage or may
engage another entity to service the mortgage.

Page 621

TITLE 12—BANKS AND BANKING

(d) Prohibition of judicial review
No decision by the Secretary to exercise or
forego exercising any authority under this section shall be subject to judicial review.
(e) Repealed. Pub. L. 104–134, title I, § 101(e) [title
II, § 221(b)(2)], Apr. 26, 1996, 110 Stat.
1321–257, 1321–291; renumbered title I, Pub.
L. 104–140, § 1(a), May 2, 1996, 110 Stat. 1327
(f) Applicability of other laws
No provision of this chapter, or any other law,
shall be construed to require the Secretary to
provide an alternative to foreclosure for mortgagees with mortgages on 1- to 4-family residences
insured by the Secretary under this chapter, or
to accept assignments of such mortgages.
(June 27, 1934, ch. 847, title II, § 230, as added
Pub. L. 86–372, title I, § 114(a), Sept. 23, 1959, 73
Stat. 662; amended Pub. L. 88–560, title I, § 104(b),
Sept. 2, 1964, 78 Stat. 770; Pub. L. 90–19, § 1(a)(3),
May 25, 1967, 81 Stat. 17; Pub. L. 96–399, title III,
§ 341, Oct. 8, 1980, 94 Stat. 1659; Pub. L. 98–181,
title I [title IV, § 418], Nov. 30, 1983, 97 Stat. 1212;
Pub. L. 100–242, title IV, § 428, Feb. 5, 1988, 101
Stat. 1918; Pub. L. 102–83, § 5(c)(2), Aug. 6, 1991,
105 Stat. 406; Pub. L. 104–99, title IV, § 407(b),
Jan. 26, 1996, 110 Stat. 45; Pub. L. 104–134, title I,
§ 101(e) [title II, § 221(b)(2)], Apr. 26, 1996, 110 Stat.
1321–257, 1321–291; renumbered title I, Pub. L.
104–140, § 1(a), May 2, 1996, 110 Stat. 1327; Pub. L.
105–276, title VI, § 601(f), Oct. 21, 1998, 112 Stat.
2674; Pub. L. 111–22, div. A, title II, § 203(d)(1)–(3),
May 20, 2009, 123 Stat. 1645, 1646.)
REFERENCES IN TEXT
This chapter, referred to in subsecs. (c)(1)(A) and (f),
was in the original ‘‘this Act’’, meaning act June 27,
1934, ch. 847, 48 Stat. 1246, which is classified principally
to this chapter (§ 1701 et seq.). For complete classification of this Act to the Code, see Tables.
AMENDMENTS
2009—Subsec. (a). Pub. L. 111–22, § 203(d)(1)(C)–(E), inserted ‘‘preforeclosure sale, support for borrower housing counseling, subordinate lien resolution, borrower
incentives,’’ after ‘‘loan modification,’’, ‘‘as required,’’
after ‘‘deeds in lieu of foreclosure,’’, and ‘‘or subsection
(c),’’ before ‘‘as provided’’.
Pub. L. 111–22, § 203(d)(1)(B), which directed substitution of ‘‘loan’’ for ‘‘loss’’, was executed by making
the substitution before ‘‘modification’’ to reflect the
probable intent of Congress.
Pub. L. 111–22, § 203(d)(1)(A), inserted ‘‘or imminent
default, as defined by the Secretary’’ after ‘‘default’’.
Subsec. (b). Pub. L. 111–22, § 203(d)(2), amended subsec.
(b) generally. Prior to amendment, text read as follows:
‘‘The Secretary may establish a program for payment
of a partial claim to a mortgagee that agrees to apply
the claim amount to payment of a mortgage on a 1- to
4-family residence that is in default. Any such payment
under such program to the mortgagee shall be made in
the sole discretion of the Secretary and on terms and
conditions acceptable to the Secretary, except that—
‘‘(1) the amount of the payment shall be in an
amount determined by the Secretary, not to exceed
an amount equivalent to 12 of the monthly mortgage
payments and any costs related to the default that
are approved by the Secretary; and
‘‘(2) the mortgagor shall agree to repay the amount
of the insurance claim to the Secretary upon terms
and conditions acceptable to the Secretary.
The Secretary may pay the mortgagee, from the appropriate insurance fund, in connection with any activities
that the mortgagee is required to undertake concerning

§ 1715u

repayment by the mortgagor of the amount owed to the
Secretary.’’
Subsec. (c). Pub. L. 111–22, § 203(d)(3)(A)–(C)(i), designated existing provisions as par. (1), redesignated
former pars. (1) to (3) as subpars. (A) to (C), respectively, of par. (1), and redesignated subpars. (A) to (C)
of former par. (2) as cls. (i) to (iii), respectively, of par.
(1)(B).
Subsec. (c)(1)(B). Pub. L. 111–22, § 203(d)(3)(C)(ii), substituted ‘‘under this paragraph’’ for ‘‘under a program
under this subsection’’ in introductory provisions.
Subsec. (c)(1)(B)(i). Pub. L. 111–22, § 203(d)(3)(C)(iii),
inserted ‘‘or facing imminent default, as defined by the
Secretary’’ after ‘‘default’’.
Subsec. (c)(1)(C). Pub. L. 111–22, § 203(d)(3)(D), which
directed substitution of ‘‘under this paragraph’’ for
‘‘under a program under this subsection’’, was executed
by making the substitution for ‘‘under a program established under this subsection’’ to reflect the probable
intent of Congress.
Subsec. (c)(2). Pub. L. 111–22, § 203(d)(3)(E), added par.
(2). Former par. (2) redesignated subpar. (B) of par. (1).
1998—Pub. L. 105–276 added subsec. (a) and redesignated former subsecs. (a) to (e) as (b) to (f), respectively.
1996—Pub. L. 104–99 amended section generally, substituting subsecs. (a) to (e) relating to authority to assist mortgagors in default for former subsecs. (a) to (d)
relating to temporary mortgage assistance payments
and acquisition of mortgages to avoid foreclosures.
Subsec. (d). Pub. L. 104–134 struck out heading and
text of subsec. (d). Text read as follows: ‘‘Any mortgage
for which the mortgagor has applied to the Secretary,
before the date of enactment of the Departments of
Veterans Affairs and Housing and Urban Development,
and Independent Agencies Appropriations Act, 1996, for
assignment pursuant to subsection (b) of this section as
in effect before such date of enactment shall continue
to be governed by the provisions of this section, as in
effect immediately before such date of enactment.’’
1991—Subsec. (a)(5). Pub. L. 102–83 substituted ‘‘section 3703(c) of title 38’’ for ‘‘section 1803(c) of title 38’’.
1988—Subsec. (a)(5). Pub. L. 100–242 substituted ‘‘The
interest rate on payments made under this subsection
shall be the rate established under section 1803(c) of
title 38. The interest rate to be charged shall be determined when the Secretary approves assistance under
this subsection’’ for ‘‘The Secretary may establish interest charges on payments made under this subsection; except that such charges shall not exceed a
rate which is more than the maximum interest rate applicable with respect to level payment mortgages insured pursuant to section 1709(b) of this title at the
time assistance under this section is approved by the
Secretary.’’
1983—Subsec. (d). Pub. L. 98–181 struck out ‘‘, to the
extent practicable,’’ after ‘‘Secretary shall’’.
1980—Subsec. (a). Pub. L. 96–399 added subsec. (a). Existing undesignated provisions were designated as subsec. (b)(1).
Subsec. (b). Pub. L. 96–399 designated existing undesignated provision as par. (1), made changes in phraseology which included applicability of remedy provided
by subsection (a) of this section and determinations
made pursuant to such subsection, and added pars. (2)
and (3).
Subsecs. (c), (d). Pub. L. 96–399 added subsecs. (c) and
(d).
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.
1964—Pub. L. 88–560 authorized the Commissioner to
acquire the loan and security notwithstanding the fact
that he has previously approved a request of the mortgagee for an extension of the time for curing the default and of the time for commencing foreclosure proceedings or for otherwise acquiring title to the mortgaged property or has approved a modification of the
mortgage for the purpose of changing the amortization
provisions by recasting the unpaid balance and substituted provisions for acquisition of the loan and secu-

§ 1715v

TITLE 12—BANKS AND BANKING

rity upon payment of the insurance benefits in an
amount equal to the unpaid principal balance of the
loan plus any unpaid mortgage interest plus reimbursement for such costs and attorney’s fees as the Commissioner finds were properly incurred in connection with
the defaulted mortgage and its assignment to the Commissioner for former provision for such acquisition
upon issuance to the mortgagee of debentures having a
total face value equal to the unpaid principal balance
of the loan plus any accrued interest.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104–99 applicable with respect
to mortgages insured under this chapter that are executed before, on, or after Oct. 1, 1997, see section 407(c)
of Pub. L. 104–99, as amended, set out as a note under
section 1710 of this title.
SAVINGS PROVISION
Pub. L. 104–134, title I, § 101(e) [title II, § 221(b)(1)],
Apr. 26, 1996, 110 Stat. 1321–257, 1321–291, provided that:
‘‘Any mortgage for which the mortgagor has applied to
the Secretary, before the date of enactment of this Act
[Apr. 26, 1996], for assignment to the Secretary pursuant to section 230(b) of the National Housing Act [12
U.S.C. 1715u(b)] shall continue to be governed by the
provisions of such section, as in effect immediately before enactment of the Balanced Budget Downpayment
Act, I [Pub. L. 104–99, which was approved Jan. 26,
1996].’’
IMPLEMENTATION OF 2009 AMENDMENT
Pub. L. 111–22, div. A, title II, § 203(d)(4), May 20, 2009,
123 Stat. 1647, provided that: ‘‘The Secretary of Housing
and Urban Development may implement the amendments made by this subsection [amending this section]
through notice or mortgagee letter.’’

§ 1715v. Insurance of mortgages for housing for
elderly persons
(a) Purpose; definitions
The purpose of this section is to assist in relieving the shortage of housing for elderly persons and to increase the supply of rental housing
for elderly persons.
For the purposes of this section—
(1) the term ‘‘housing’’ means eight or more
new or rehabilitated living units, not less than
50 per centum of which are specially designed
for the use and occupancy of elderly persons;
(2) the term ‘‘elderly person’’ means any person, married or single, who is sixty-two years
of age or over; and
(3) the terms ‘‘mortgage’’, ‘‘mortgagee’’,
‘‘mortgagor’’, and ‘‘maturity date’’ shall have
the meanings respectively set forth in section
1713 of this title.
(b) Authorization
The Secretary is authorized to insure any
mortgage (including advances on mortgages during construction) in accordance with the provisions of this section upon such terms and conditions as he may prescribe and to make commitments for insurance of such mortgages prior to
the date of their execution or disbursement
thereon.
(c) Eligibility for insurance; maximum amount of
mortgage; terms and conditions
To be eligible for insurance under this section,
a mortgage to provide housing for elderly persons shall—
(1) Repealed. Pub. L. 93–383, title III, § 304(f),
Aug. 22, 1974, 88 Stat. 678.

Page 622

(2)(A) not exceed, for such part of the property or project as may be attributable to
dwelling use (excluding exterior land improvements as defined by the Secretary), $35,978 per
family unit without a bedroom, $40,220 per
family unit with one bedroom, $48,029 per family unit with two bedrooms, $57,798 per family
unit with three bedrooms, and $67,950 per family unit with four or more bedrooms; except
that as to projects to consist of elevator-type
structures the Secretary may, in his discretion, increase the dollar amount limitations
per family unit to not to exceed $40,876 per
family unit without a bedroom, $46,859 per
family unit with one bedroom, $56,979 per family unit with two bedrooms, $73,710 per family
unit with three bedrooms, and $80,913 per family unit with four or more bedrooms, as the
case may be, to compensate for the higher
costs incident to the construction of elevatortype structures of sound standards of construction and design; (B) the Secretary may,
by regulation, increase any of the dollar limitations in subparagraph (A) (as such limitations may have been adjusted in accordance
with section 1712a of this title) by not to exceed 170 percent in any geographical area
where the Secretary finds that cost levels so
require and by not to exceed 170 percent, or 215
percent in high cost areas, where the Secretary determines it necessary on a projectby-project basis, but in no case may any such
increase exceed 90 percent where the Secretary
determines that a mortgage purchased or to be
purchased by the Government National Mortgage Association in implementing its special
assistance functions under section 1720 1 of this
title (as such section existed immediately before November 30, 1983) is involved; (C) the
Secretary may, by regulation, increase any of
the dollar limitations in subparagraph (A) (as
such limitations may have been adjusted in
accordance with section 1712a of this title) by
not to exceed 20 per centum if such increase is
necessary to account for the increased cost of
the project due to the installation therein of a
solar energy system (as defined in subparagraph (3) of the last paragraph of section
1703(a) of this title) or residential energy conservation measures (as defined in section
8211(11)(A) through (G) and (I) of title 42) 1 in
cases where the Secretary determines that
such measures are in addition to those required under the minimum property standards
and will be cost-effective over the life of the
measure;
(3) if executed by a mortgagor which is a
public instrumentality or a private nonprofit
corporation or association or other acceptable
private nonprofit organization regulated or supervised under Federal or State laws or by political subdivisions of States, or agencies
thereof, or by the Secretary under a regulatory agreement or otherwise, as to rents,
charges, and methods of operation, in such
form and in such manner as, in the opinion of
the Secretary, will effectuate the purpose of
this section, involve a principal obligation not
in excess of the amount which the Secretary
1 See

References in Text note below.

Page 623

TITLE 12—BANKS AND BANKING

estimates will be the replacement cost of the
property or project when the proposed improvements are completed (the replacement
cost may include the land, the proposed physical improvements, utilities within the boundaries of the land, architect’s fees, taxes, interest during construction, and other miscellaneous charges incident to construction and approved by the Secretary): Provided, That in the
case of properties other than new construction, the principal obligation shall not exceed
the appraised value rather than the Secretary’s estimate of the replacement cost;
(4) if executed by a mortgagor which is approved by the Secretary but is not a public instrumentality or a private nonprofit organization, involve a principal obligation not in excess (in the case of a property or project approved for mortgage insurance prior to the beginning of construction) of 90 per centum of
the amount which the Secretary estimates
will be the replacement cost of the property or
project when the proposed improvements are
completed (the replacement costs may include
the land, the proposed physical improvements,
utilities within the boundaries of the land, architect’s fees, taxes, interest during construction, and other miscellaneous charges incident
to construction and approved by the Secretary, and shall include an allowance for
builder’s and sponsor’s profit and risk of 10 per
centum of all of the foregoing items except the
land unless the Secretary, after certification
that such allowance is unreasonable, shall by
regulation prescribe a lesser percentage): Provided, That in the case of properties other than
new construction the principal obligation
shall not exceed 90 per centum of the Secretary’s estimate of the value of the property
or project: And provided further, That the Secretary may in his discretion require such
mortgagor to be regulated or restricted as to
rents or sales, charges, capital structure, rate
of return, and methods of operating, and for
such purpose the Secretary may make contracts with and acquire for not to exceed $100
such stock or interest in any such mortgagor
as the Secretary may deem necessary to
render effective such restrictions or regulations; such stock or interest shall be paid for
out of the General Insurance Fund and shall be
redeemed by the mortgagor at par upon the
termination of all obligations of the Secretary
under the insurance;
(5) provide for a complete amortization by
periodic payments (unless otherwise approved
by the Secretary) within such terms as the
Secretary shall prescribe;
(6) bear interest at such rate as may be
agreed upon by the mortgagor and the mortgagee; and
(7) cover a property or project which is approved for mortgage insurance prior to the beginning of construction or rehabilitation, with
50 per centum or more of the units therein specially designed for the use and occupancy of
elderly persons in accordance with standards
established by the Secretary, and which may
include such commercial and special facilities
as the Secretary deems adequate to serve the
occupants.

§ 1715v

(d) Release of part of mortgaged property or
project from lien; preferences and priorities
in rental of dwellings
The Secretary may consent to the release of a
part or parts of the mortgaged property or project from the lien of any mortgage insured under
this section upon such terms and conditions as
he may prescribe, and shall prescribe such procedures as in his judgment are necessary to secure to elderly persons a preference or priority
of opportunity to rent the dwellings included in
such property or project.
(e) Applicability of other laws
The provisions of subsections (d), (e), (g), (h),
(i), (j), (k), (l), and (n) of section 1713 of this title
shall apply to mortgages insured under this section and all references therein to section 1713 of
this title shall refer to this section.
(f) Handicapped family units and facilities; rental preference or priority
Notwithstanding any of the provisions of this
section, the housing provided under this section
may include family units which are specially designed for the use and occupancy of any person
or family qualifying as a handicapped family as
defined in section 1701q 2 of this title, and such
special facilities as the Secretary deems adequate to serve handicapped families (as so defined). The Secretary may also prescribe procedures to secure to such families preference or
priority of opportunity to rent the living units
specially designed for their use and occupancy.
(June 27, 1934, ch. 847, title II, § 231, as added
Pub. L. 86–372, title II, § 201(a), Sept. 23, 1959, 73
Stat. 665; amended Pub. L. 87–70, title VI,
§ 612(m), June 30, 1961, 75 Stat. 183; Pub. L. 88–560,
title I, § 107(e), title II, § 203(c), Sept. 2, 1964, 78
Stat. 776, 784; Pub. L. 89–117, title II, § 207(e),
title XI, § 1108(l), Aug. 10, 1965, 79 Stat. 467, 505;
Pub. L. 90–19, § 1(a)(3), (4), May 25, 1967, 81 Stat.
17; Pub. L. 90–301, § 3(d), May 7, 1968, 82 Stat. 114;
Pub. L. 91–152, title I, § 113(g), Dec. 24, 1969, 83
Stat. 384; Pub. L. 93–383, title III, §§ 303(f), 304(f),
Aug. 22, 1974, 88 Stat. 677, 678; Pub. L. 94–173, § 3,
Dec. 23, 1975, 89 Stat. 1027; Pub. L. 94–375, § 8(a),
(b)(6), Aug. 3, 1976, 90 Stat. 1071, 1072; Pub. L.
96–153, title III, § 314, Dec. 21, 1979, 93 Stat. 1117;
Pub. L. 96–399, title III, § 310(e), Oct. 8, 1980, 94
Stat. 1642; Pub. L. 97–35, title III, § 339B(a), Aug.
13, 1981, 95 Stat. 417; Pub. L. 97–377, title I,
§ 101(g), Dec. 21, 1982, 96 Stat. 1908; Pub. L. 98–181,
title I [title IV, §§ 404(b)(9), 446(e)], Nov. 30, 1983,
97 Stat. 1209, 1228; Pub. L. 100–242, title IV,
§ 426(f), (h), Feb. 5, 1988, 101 Stat. 1916; Pub. L.
102–550, title V, § 509(f), Oct. 28, 1992, 106 Stat.
3783; Pub. L. 107–73, title II, § 213(f), Nov. 26, 2001,
115 Stat. 677; Pub. L. 107–326, § 5(b)(6), Dec. 4,
2002, 116 Stat. 2795; Pub. L. 108–186, title III,
§ 302(b), Dec. 16, 2003, 117 Stat. 2692; Pub. L.
110–161, div. K, title II, § 221(1), Dec. 26, 2007, 121
Stat. 2436.)
REFERENCES IN TEXT
Section 1720 of this title, referred to in subsec.
(c)(2)(B), was repealed by Pub. L. 98–181, title I [title IV,
§ 483(a)], Nov. 30, 1983, 97 Stat. 1240.
Section 8211 of title 42, referred to in subsec. (c)(2)(C),
was omitted from the Code pursuant to section 8229 of
2 See

References in Text note below.

§ 1715v

TITLE 12—BANKS AND BANKING

Title 42, The Public Health and Welfare, which terminated authority under that section on June 30, 1989.
The General Insurance Fund, referred to in subsec.
(c)(4), was established by section 1735c of this title.
Section 1701q of this title, referred to in subsec. (f),
was amended generally by Pub. L. 101–625, title VIII,
§ 801(a), Nov. 28, 1990, 104 Stat. 4297, and, as so amended,
no longer defines the term ‘‘handicapped family’’.
AMENDMENTS
2007—Subsec. (c)(2)(B). Pub. L. 110–161 substituted
‘‘170 percent’’ for ‘‘140 percent’’ after ‘‘not to exceed’’ in
two places and ‘‘215 percent in high cost areas’’ for ‘‘170
percent in high cost areas’’.
2003—Subsec. (c)(2)(B). Pub. L. 108–186 substituted
‘‘140 percent in’’ for ‘‘110 percent in’’ and inserted ‘‘, or
170 percent in high cost areas,’’ after ‘‘and by not to exceed 140 percent’’.
2002—Subsec. (c)(2). Pub. L. 107–326 inserted ‘‘(A)’’
after ‘‘(2)’’ and substituted ‘‘; (B) the Secretary may,
by regulation, increase any of the dollar limitations in
subparagraph (A) (as such limitations may have been
adjusted in accordance with section 1712a of this title)’’
for ‘‘; and except that the Secretary may, by regulation, increase any of the foregoing dollar amount limitations contained in this paragraph’’ and ‘‘; (C) the
Secretary may, by regulation, increase any of the dollar limitations in subparagraph (A) (as such limitations
may have been adjusted in accordance with section
1712a of this title)’’ for ‘‘: Provided, That the Secretary
may further increase the dollar amount limitations
which would otherwise apply for the purpose of this
section’’.
2001—Subsec. (c)(2). Pub. L. 107–73 substituted
‘‘$35,978’’, ‘‘$40,220’’, ‘‘$48,029’’, ‘‘$57,798’’, and ‘‘$67,950’’
for ‘‘$28,782’’, ‘‘$32,176’’, ‘‘$38,423’’, ‘‘$46,238’’, and
‘‘$54,360’’, respectively, and ‘‘$40,876’’, ‘‘$46,859’’,
‘‘$56,979’’, ‘‘$73,710’’, and ‘‘$80,913’’ for ‘‘$32,701’’,
‘‘$37,487’’, ‘‘$45,583’’, ‘‘$58,968’’, and ‘‘$64,730’’, respectively.
1992—Subsec. (c)(2). Pub. L. 102–550 substituted
‘‘$28,782’’, ‘‘$32,176’’, ‘‘$38,423’’, ‘‘$46,238’’, and ‘‘$54,360’’
for ‘‘$23,985’’, ‘‘$26,813’’, ‘‘$32,019’’, ‘‘$38,532’’, and
‘‘$45,300’’, respectively, and ‘‘$32,701’’, ‘‘$37,487’’,
‘‘$45,583’’, ‘‘$58,968’’, and ‘‘$64,730’’ for ‘‘$27,251’’,
‘‘$31,239’’, ‘‘$37,986’’, ‘‘$49,140’’, and ‘‘$53,942’’, respectively.
1988—Subsec. (c)(2). Pub. L. 100–242 substituted
‘‘$23,985’’, ‘‘$26,813’’, ‘‘$32,019’’, ‘‘$38,532’’, and ‘‘$45,300’’
for ‘‘$18,450’’, ‘‘$20,625’’, ‘‘$24,630’’, ‘‘$29,640’’, and
‘‘$34,846’’, respectively, and ‘‘$27,251’’, ‘‘$31,239’’,
‘‘$37,986’’, ‘‘$49,140’’, and ‘‘$53,942’’ for ‘‘$20,962’’,
‘‘$24,030’’, ‘‘$29,220’’, ‘‘$37,800’’, and ‘‘$41,494’’, respectively, and substituted ‘‘not to exceed 110 percent in
any geographical area where the Secretary finds that
cost levels so require and by not to exceed 140 percent
where the Secretary determines it necessary on a
project-by-project basis, but in no case may any such
increase exceed 90 percent where the Secretary determines that a mortgage purchased or to be purchased by
the Government National Mortgage Association in implementing its special assistance functions under section 1720 of this title (as such section existed immediately before November 30, 1983) is involved’’ for ‘‘not
to exceed 75 per centum in any geographical area where
he finds that cost levels so require, except that, where
the Secretary determines it necessary on a project by
project basis, the foregoing dollar amount limitations
contained in this paragraph may be exceeded by not to
exceed 90 per centum (by not to exceed 140 per centum
where the Secretary determines that a mortgage other
than one purchased or to be purchased under section
1720 of this title by the Government National Mortgage
Association in implementing its special assistance
functions is involved) in such an area’’.
1983—Subsec. (c)(5). Pub. L. 98–181, § 446(e), inserted
‘‘(unless otherwise approved by the Secretary)’’ after
‘‘periodic payments’’.
Subsec. (c)(6). Pub. L. 98–181, § 404(b)(9), substituted
provision that the interest rate be at such a rate as

Page 624

agreed upon by the mortgagor and the mortgagee for
provision that the interest rate, exclusive of premium
charges for insurance, not exceed 5 per centum per
annum on the amount of the principal obligation outstanding at any time, or not exceed such per centum
per annum not in excess of 6 per centum as the Secretary finds necessary to meet the mortgage market.
1982—Subsec. (c)(2). Pub. L. 97–377 inserted ‘‘(by not
to exceed 140 per centum where the Secretary determines that a mortgage other than one purchased or to
be purchased under section 1720 of this title by the Government National Mortgage Association in implementing its special assistance functions is involved)’’ after
‘‘90 per centum’’.
1981—Subsec. (c)(2). Pub. L. 97–35 inserted ‘‘therein’’
after ‘‘installation’’ and struck out ‘‘therein’’ after
‘‘measure’’.
1980—Subsec. (c)(2). Pub. L. 96–399 inserted proviso relating to increase of dollar amount limitations due to
installation of a solar energy system.
1979—Subsec. (c)(2). Pub. L. 96–153 substituted ‘‘75 per
centum’’ for ‘‘50 per centum’’ and inserted exception
that the dollar amount limitations may be exceeded by
not be exceed 90 per centum where the Secretary determines it to be necessary.
1976—Subsec. (c)(2). Pub. L. 94–375 substituted ‘‘50 per
centum in any geographical area’’ for ‘‘75 per centum in
any geographical area’’, ‘‘$18,450’’ for ‘‘$12,300’’,
‘‘$20,625’’ for ‘‘$17,188’’, ‘‘$24,630’’ for ‘‘$20,525’’, ‘‘$29,640’’
for ‘‘$24,700’’, ‘‘$34,846’’ for ‘‘$29,038’’, ‘‘$20,962’’ for
‘‘$13,975’’, ‘‘$24,030’’ for ‘‘$20,025’’, ‘‘$29,220’’ for ‘‘$24,350’’,
‘‘$37,800’’ for ‘‘$31,500’’, and ‘‘$41,494’’ for ‘‘$34,578’’.
1975—Subsec. (c)(2). Pub. L. 94–173 raised from 45 per
centum to 75 per centum the amount by which any dollar limitation may, by regulation, be increased.
1974—Subsec. (c)(1). Pub. L. 93–383, § 304(f), struck out
par. (1) which set forth limits on principal obligations
of mortgages.
Subsec. (c)(2). Pub. L. 93–383, § 303(f), substituted
‘‘$12,300’’ for ‘‘$8,800’’, ‘‘$13,975’’ for ‘‘$10,450’’, ‘‘$17,188’’
for ‘‘$12,375’’, ‘‘$20,025’’ for ‘‘$14,850’’, ‘‘$20,525’’ for
‘‘$14,850’’, ‘‘$24,350’’ for ‘‘$17,600’’, ‘‘$24,700’’ for ‘‘$18,700’’,
‘‘$29,038’’ for ‘‘$21,175’’, ‘‘$31,500’’ for ‘‘$22,000’’, and
‘‘$34,578’’ for ‘‘$25,025’’.
1969—Subsec. (c)(2). Pub. L. 91–152 substituted
‘‘$8,800’’ for ‘‘$8,000’’, ‘‘$10,450’’ for ‘‘$9,500’’, ‘‘$12,375’’ for
‘‘$11,250’’, ‘‘$14,850’’ for ‘‘$13,500’’ wherever appearing,
‘‘$17,600’’ for ‘‘$16,000’’, ‘‘$18,700’’ for ‘‘$17,000’’, ‘‘$21,175’’
for ‘‘$19,250’’, ‘‘$22,000’’ for ‘‘$20,000’’, and ‘‘$25,025’’ for
‘‘$22,750’’.
1968—Subsec. (c)(6). Pub. L. 90–301 increased limitation on interest rates from 51⁄2 to 6 per centum per
annum.
1967—Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’
for ‘‘Commissioner’’ wherever appearing in subsecs. (b),
(c)(2) to (7), (d), and (f).
Subsec. (c)(3), (4). Pub. L. 90–19, § 1(a)(4), substituted
‘‘Secretary’s’’ for ‘‘Commissioner’s’’.
1965—Subsec. (c)(2). Pub. L. 89–117, § 207(e), substituted ‘‘$17,000 per family unit with three bedrooms,
and $19,250 per family unit with four or more bedrooms’’ for ‘‘and $17,000 per family unit with three or
more bedrooms’’ and ‘‘$20,000 per family unit with three
bedrooms, and $22,750 per family unit with four or more
bedrooms’’ for ‘‘and $20,000 per family unit with three
or more bedrooms’’.
Subsec. (c)(4). Pub. L. 89–117, § 1108(l)(1), substituted
‘‘General Insurance Fund’’ for ‘‘section 207 Housing Insurance Fund’’.
Subsec. (e). Pub. L. 89–117, § 1108(l)(2), struck out references to subsecs. (f), (m) and (p) of section 1713 of this
title.
1964—Subsec. (c)(2). Pub. L. 88–560, § 107(e), changed
limits on mortgages for property or project attributable to dwelling use from ‘‘$2,250 per room (or $9,000
per family unit if the number of rooms in such property
or project is less than four per family unit)’’ to ‘‘$8,000
per family unit without a bedroom, $11,250 per family
unit with one bedroom, $13,500 per family unit with two
bedrooms, and $17,000 per family unit with three or

Page 625

TITLE 12—BANKS AND BANKING

more bedrooms’’, changed such mortgage limits on
project consisting of elevator-type structures from a
sum ‘‘of $2,250 per room to not to exceed $2,750 per
room, and the dollar amount limitation of $9,000 per
family unit to not to exceed $9,400 per family unit’’ to
dollar amount limitations ‘‘per family unit to not to
exceed $9,500 per family unit without a bedroom, $13,500
per family unit with one bedroom, $16,000 per family
unit with two bedrooms, and $20,000 per family unit
with three or more bedrooms’’, and substituted provisions authorizing an increase ‘‘by not to exceed 45 per
centum’’ of any of such limits because of cost levels for
former provision authorizing such increase ‘‘by not to
exceed $1,250 per room, without regard to the number of
rooms being less than four, or four or more’’.
Subsec. (f). Pub. L. 88–560, § 203(c), added subsec. (f).
1961—Subsec. (c)(2). Pub. L. 87–70 increased the maximum amount of mortgages from not more than $9,000
per dwelling unit for such part of such property or
project as may be attributable to dwelling use to not
more than $2,250 per room (or $9,000 per family unit if
the number of rooms in such property or project is less
than four per family unit) for such part of such property or project as may be attributable to dwelling use
(excluding exterior land improvements), and permitted
an increase of from $2,250 per room to not more than
$2,750 per room to compensate for the higher costs incident to the construction of elevator-type structures.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
REPEALS
The directory language of, but not the amendment
made by, Pub. L. 90–301, § 3(d), May 7, 1968, 82 Stat. 114,
cited as a credit to this section, was repealed by Pub.
L. 98–181, title I [title IV, § 404(a)], Nov. 30, 1983, 97 Stat.
1208.
LIMITATION ON NUMBER OF DWELLING UNITS WITH
MORTGAGES NOT PROVIDING FOR COMPLETE AMORTIZATION

For limitation on the number of dwelling units with
mortgages not providing for complete amortization
pursuant to authority granted by amendment to subsec. (c)(5) by section 446 of Pub. L. 98–181, see section
446(f) of Pub. L. 98–181, set out as a note under section
1713 of this title.
AMENDMENTS TO PROVISIONS FOR FAMILY UNIT LIMITS
ON RENTAL HOUSING; EQUITABLE APPLICATION OF
SUCH AMENDMENTS OR PRE-AMENDMENT PROVISIONS
TO PROJECTS SUBMITTED FOR CONSIDERATION PRIOR
TO SEPTEMBER 2, 1964
Equitable application of amendment to subsec. (c)(2)
of this section by section 107(e) of Pub. L. 88–560 or preamendment provisions to projects submitted for consideration prior to Sept. 2, 1964, see section 107(g) of
Pub. L. 88–560, set out as a note under section 1713 of
this title.

§ 1715w. Mortgage insurance for nursing homes,
intermediate care facilities, and board and
care homes
(a) Purpose
The purpose of this section is to assist in the
provision of facilities for any of the following
purposes or for a combination of such purposes:
(1) The development of nursing homes for
the care and treatment of convalescents and
other persons who are not acutely ill and do
not need hospital care but who require skilled
nursing care and related medical services, including additional facilities for the non-

§ 1715w

resident care of elderly individuals and others
who are able to live independently but who require care during the day.
(2) The development of intermediate care facilities and board and care homes for the care
of persons who, while not in need of nursing
home care and treatment, nevertheless are unable to live fully independently and who are in
need of minimum but continuous care provided by licensed or trained personnel, including additional facilities for the nonresident
care of elderly individuals and others who are
able to live independently but who require
care during the day.
(3) The development of assisted living facilities for the care of frail elderly persons.
(b) Definitions
For the purposes of this section—
(1) the term ‘‘nursing home’’ means a public
facility, proprietary facility or facility of a
private nonprofit corporation or association,
licensed or regulated by the State (or, if there
is no State law providing for such licensing
and regulation by the State, by the municipality or other political subdivision in which the
facility is located), for the accommodation of
convalescents or other persons who are not
acutely ill and not in need of hospital care but
who require skilled nursing care and related
medical services, in which such nursing care
and medical services are prescribed by, or are
performed under the general direction of, persons licensed to provide such care or services
in accordance with the laws of the State where
the facility is located;
(2) the term ‘‘intermediate care facility’’
means a proprietary facility or facility of a
private nonprofit corporation or association
licensed or regulated by the State (or, if there
is no State law providing for such licensing
and regulation by the State, by the municipality or other political subdivision in which the
facility is located) for the accommodation of
persons who, because of incapacitating infirmities, require minimum but continuous care
but are not in need of continuous medical or
nursing services;
(3) the term a 1 ‘‘nursing home’’ or ‘‘intermediate care facility’’ may include such additional facilities as may be authorized by the
Secretary for the nonresident care of elderly
individuals and others who are able to live
independently but who require care during the
day;
(4) the term ‘‘mortgage’’ means a first mortgage on real estate in fee simple, or on the interest of either the lessor or lessee thereof (A)
under a lease for not less than ninety-nine
years which is renewable, or (B) under a lease
having a period of not less than ten years to
run beyond the maturity date of the mortgage.
The term ‘‘first mortgage’’ means such classes
of first liens as are commonly given to secure
advances (including but not limited to advances during construction) on, or the unpaid
purchase price of, real estate under the laws of
the State in which the real estate is located,
together with the credit instrument or instru1 So

in original. The word ‘‘a’’ probably should not appear.

§ 1715w

TITLE 12—BANKS AND BANKING

ments, if any, secured thereby, and any mortgage may be in the form of one or more trust
mortgages or mortgage indentures or deeds of
trust, securing notes, bonds, or other credit instruments, and, by the same instrument or by
a separate instrument, may create a security
interest in initial equipment, whether or not
attached to the realty. The term ‘‘mortgagor’’
shall have the meaning set forth in section
1713(a) of this title;
(5) the term ‘‘board and care home’’ means
any residential facility providing room, board,
and continuous protective oversight that is
regulated by a State pursuant to the provisions of section 1616(e) of the Social Security
Act [42 U.S.C. 1382e(e)], so long as the home is
located in a State that, at the time of an application is made for insurance under this section, has demonstrated to the Secretary that
it is in compliance with the provisions of such
section 1616(e);
(6) the term ‘‘assisted living facility’’ means
a public facility, proprietary facility, or facility of a private nonprofit corporation that—
(A) is licensed and regulated by the State
(or if there is no State law providing for
such licensing and regulation by the State,
by the municipality or other political subdivision in which the facility is located);
(B) makes available to residents supportive services to assist the residents in carrying out activities of daily living, such as
bathing, dressing, eating, getting in and out
of bed or chairs, walking, going outdoors,
using the toilet, laundry, home management, preparing meals, shopping for personal items, obtaining and taking medication, managing money, using the telephone,
or performing light or heavy housework, and
which may make available to residents
home health care services, such as nursing
and therapy; and
(C) provides separate dwelling units for
residents, each of which may contain a full
kitchen and bathroom, and which includes
common rooms and other facilities appropriate for the provision of supportive services to the residents of the facility; and
(7) the term ‘‘frail elderly person’’ has the
meaning given the term in section 8011(k) of
title 42.
(c) Authorization
The Secretary is authorized to insure any
mortgage (including advances on such mortgage
during construction) in accordance with the provisions of this section upon such terms and conditions as he may prescribe and to make commitments for insurance of such mortgage prior
to the date of its execution or disbursement
thereon.
(d) Terms and conditions; limitation on maximum amount of mortgage; amortization; interest; certification from State agency
In order to carry out the purposes of this section, the Secretary is authorized to insure any
mortgage which covers a new or rehabilitated
nursing home,,2 assisted living facility, or inter-

mediate care facility, including a new addition
to an existing nursing home, assisted living facility, or intermediate care facility and regardless of whether the existing home or facility is
being rehabilitated, or any combination of nursing home, assisted living facility, and intermediate care facility or a board and care home,
including equipment to be used in its operation,
subject to the following conditions:
(1) The mortgage shall be executed by a
mortgagor approved by the Secretary. The
Secretary may in his discretion require any
such mortgagor to be regulated or restricted
as to charges and methods of financing, and, in
addition thereto, if the mortgagor is a corporate entity, as to capital structure and rate
of return. As an aid to the regulation or restriction of any mortgagor with respect to any
of the foregoing matters, the Secretary may
make such contracts with and acquire for not
to exceed $100 such stock or interest in such
mortgagor as he may deem necessary. Any
stock or interest so purchased shall be paid for
out of the General Insurance Fund, and shall
be redeemed by the mortgagor at par upon the
termination of all obligations of the Secretary
under the insurance.
(2) The mortgage shall involve a principal
obligation in an amount not to exceed 90 per
centum of the estimated value of the property
or project, or 95 percent of the estimated value
of the property or project in the case of a
mortgagor that is a private nonprofit corporation or association (under the meaning given
such term for purposes of section 1715l(d)(3) of
this title), including—
(A) equipment to be used in the operation
of the home or facility or combined home
and facility when the proposed improvements are completed and the equipment is
installed; or
(B) a solar energy system (as defined in
subparagraph (3) of the last paragraph of section 1703(a) of this title) or residential energy conservation measures (as defined in
section 8211(11)(A) through (G) and (I) of
title 42) 3 in cases where the Secretary determines that such measures are in addition to
those required under the minimum property
standards and will be cost-effective over the
life of the measure.
(3) The mortgage shall—
(A) provide for complete amortization by
periodic payments within such terms as the
Secretary shall prescribe; and
(B) bear interest at such rate as may be
agreed upon by the mortgagor and the mortgagee.
The Secretary shall not promulgate regulations or establish terms or conditions that
interfere with the ability of the mortgagor
and mortgagee to determine the interest rate;
and 4
(4)(A) With respect to nursing homes and intermediate care facilities and combined nursing home and intermediate care facilities, the
Secretary shall not insure any mortgage under
3 See

2 So

in original.

Page 626

4 So

References in Text note below.
in original. The ‘‘; and’’ probably should be a period.

Page 627

TITLE 12—BANKS AND BANKING

this section unless he has received, from the
State agency designated in accordance with
section 604(a)(1) or section 1521 3 of the Public
Health Service Act [42 U.S.C. 291d (a)(1), 300m]
for the State in which is located the nursing
home or intermediate care facility or combined nursing home and intermediate care facility covered by the mortgage, a certification
that (i) there is a need for such home or facility or combined home and facility, and (ii)
there are in force in such State or in the municipality or other political subdivision of the
State in which the proposed home or facility
or combined home and facility is to be located
reasonable minimum standards of licensure
and methods of operation governing it. No
such mortgage shall be insured under this section unless the Secretary has received such assurance as he may deem satisfactory from the
State agency that such standards will be applied and enforced with respect to any home or
facility or combined home and facility located
in the State for which mortgage insurance is
provided under this section. If no such State
agency exists, or if the State agency exists but
is not empowered to provide a certification
that there is a need for the home or facility or
combined home and facility as required in
clause (i) of the first sentence, the Secretary
shall not insure any mortgage under this section unless (i) the State in which the home or
facility or combined home and facility is located has conducted or commissioned and paid
for the preparation of an independent study of
market need and feasibility that (I) is prepared in accordance with the principles established by the American Institute of Certified
Public Accountants; (II) assesses, on a
marketwide basis, the impact of the proposed
home or facility or combined home and facility on, and its relationship to, other health
care facilities and services, the percentage of
excess beds, demographic projections, alternative health care delivery systems, and the
reimbursement structure of the home, facility,
or combined home and facility; (III) is addressed to and is acceptable to the Secretary
in form and substance; and (IV) in the event
the State does not prepare the study, is prepared by a financial consultant who is selected
by the State or the applicant for mortgage insurance and is approved by the Secretary; and
(ii) the State complies with the other provisions of this subparagraph that would otherwise be required to be met by a State agency
designated in accordance with section 604(a)(1)
or section 1521 3 of the Public Health Service
Act. The proposed mortgagor may reimburse
the State for the cost of the independent feasibility study required in the preceding sentence. In the case of a small intermediate care
facility for the mentally retarded or developmentally disabled, or a board and care home
housing less than 10 individuals, the State program agency or agencies responsible for licensing, certifying, financing, or monitoring
the facility or home may, in lieu of the requirements of clause (i) of the third sentence,
provide the Secretary with written support
identifying the need for the facility or home.
(B) With respect to board and care homes,
the Secretary shall not insure any mortgage

§ 1715w

under this section unless he has received from
the appropriate State licensing agency a
statement verifying that the State in which
the home is or is to be located is in compliance with the provisions of section 1616(e) of
the Social Security Act [42 U.S.C. 1382e(e)].
(C) With respect to assisted living facilities
or any such facility combined with any other
home or facility, the Secretary shall not insure any mortgage under this section unless—
(i) the Secretary determines that the level
of financing acquired by the mortgagor and
any other resources available for the facility
will be sufficient to ensure that the facility
contains dwelling units and facilities for the
provision of supportive services in accordance with subsection (b)(6);
(ii) the mortgagor provides assurances satisfactory to the Secretary that each dwelling unit in the facility will not be occupied
by more than 1 person without the consent
of all such occupants; and
(iii) the appropriate State licensing agency
for the State, municipality, or other political subdivision in which the facility is or is
to be located provides such assurances as the
Secretary considers necessary that the facility will comply with any applicable standards and requirements for such facilities.
(e) Release of part of mortgaged property or
project from lien
The Secretary may consent to the release of a
part or parts of the mortgaged property or project from the lien of any mortgage insured under
this section upon such terms and conditions as
he may prescribe.
(f) Applicability of other laws
The provisions of subsections (d), (e), (g), (h),
(i), (j), (k), (l), and (n) of section 1713 of this title
shall apply to mortgages insured under this section and all references therein to section 1713 of
this title shall refer to this section.
(g) Regulations covering intermediate care facilities; consultations
The Secretary shall prescribe such regulations
as may be necessary to carry out the provisions
of this section relating to intermediate care facilities, after consulting with the Secretary of
Health and Human Services with respect to any
health or medical aspects of the program which
may be involved in such regulations.
(h) Consultations concerning need for and availability of intermediate care facilities
The Secretary shall also consult with the Secretary of Health and Human Services as to the
need for and the availability of intermediate
care facilities in any area for which an intermediate care facility is proposed under this section.
(i) Fire safety equipment for nursing homes, assisted living facilities, intermediate care facilities, or board and care homes
(1) The Secretary is authorized upon such
terms and conditions as he may prescribe to
make commitments to insure and to insure
loans made by financial institutions or other approved mortgagees to nursing homes, assisted
living facilities, and intermediate care facilities

§ 1715w

TITLE 12—BANKS AND BANKING

or to board and care homes to provide for the
purchase and installation of fire safety equipment necessary for compliance with the 1967 edition of the Life Safety Code of the National Fire
Protection Association (or any subsequent edition specified by the Secretary of Health and
Human Services) or other such codes or requirements approved by the Secretary of Health and
Human Services as conditions of participation
for providers of services under title XVIII and
title XIX of the Social Security Act [42 U.S.C.
1395 et seq., 1396 et seq.] or as mandated by a
State under the provisions of section 1616(e) of
such Act [42 U.S.C. 1382e(e)].
(2) To be eligible for insurance under this subsection a loan shall—
(A) not exceed the Secretary’s estimate of
the reasonable cost of the equipment fully installed;
(B) bear interest at such rate as may be
agreed upon by the mortgagor and the mortgagee;
(C) have a maturity satisfactory to the Secretary;
(D) be made by a financial institution or
other mortgagee approved by the Secretary as
eligible for insurance under section 1703 of this
title or a mortgagee approved under section
1709(b)(1) of this title;
(E) comply with other such terms, conditions, and restrictions as the Secretary may
prescribe; and
(F) in the case of board and care homes, be
made with respect to such a home located in a
State with respect to which the Secretary has
received from the appropriate State licensing
agency a statement verifying that the State in
which the home is or is to be located is in
compliance with the provisions of section
1616(e) of the Social Security Act [42 U.S.C.
1382e(e)].
(3) The provisions of paragraphs (5), (6), (7), (9),
and (10) of section 1715k(h) of this title shall be
applicable to loans insured under this subsection, except that all references to ‘‘home improvement loans’’ shall be construed to refer to
loans under this subsection.
(4) The provisions of subsections (c), (d), and
(h) of section 1703 of this title shall apply to
loans insured under this subsection, and for the
purpose of this subsection references in such
subsections to ‘‘this section’’ or ‘‘this title’’
shall be construed to refer to this subsection.
(j) Schedules and deadlines for processing and
approval of applications
The Secretary shall establish schedules and
deadlines for the processing and approval (or
provision of notice of disapproval) of applications for mortgage insurance under this section.
The Secretary shall submit a report to the Congress annually describing such schedules and
deadlines and the extent of compliance by the
Department with the schedules and deadlines
during the year.
(June 27, 1934, ch. 847, title II, § 232, as added
Pub. L. 86–372, title I, § 115, Sept. 23, 1959, 73 Stat.
663; amended Pub. L. 87–70, title VI, § 610, June
30, 1961, 75 Stat. 180; Pub. L. 88–560, title I, § 117,
Sept. 2, 1964, 78 Stat. 779; Pub. L. 89–117, title XI,

Page 628

§ 1108(m), Aug. 10, 1965, 79 Stat. 505; Pub. L. 90–19,
§ 1(a)(3), May 25, 1967, 81 Stat. 17; Pub. L. 90–448,
title III, § 314, Aug. 1, 1968, 82 Stat. 511; Pub. L.
91–152, title I, § 111, Dec. 24, 1969, 83 Stat. 382;
Pub. L. 93–204, Dec. 28, 1973, 87 Stat. 883; Pub. L.
93–383, title III, § 304(g), Aug. 22, 1974, 88 Stat. 678;
Pub. L. 95–128, title III, § 308(a), Oct. 12, 1977, 91
Stat. 1135; Pub. L. 95–557, title III, § 312, Oct. 31,
1978, 92 Stat. 2099; Pub. L. 96–399, title III, § 310(f),
Oct. 8, 1980, 94 Stat. 1643; Pub. L. 98–181, title I
[title IV, §§ 404(b)(10), 437], Nov. 30, 1983, 97 Stat.
1209, 1222, 1223; Pub. L. 98–479, title I, § 104(a)(1),
Oct. 17, 1984, 98 Stat. 2224; Pub. L. 100–242, title
IV, §§ 410(a), (b), 429(e), Feb. 5, 1988, 101 Stat. 1904,
1918; Pub. L. 102–550, title V, § 511(a)–(e), Oct. 28,
1992, 106 Stat. 3784–3786; Pub. L. 105–65, title II,
§ 216, Oct. 27, 1997, 111 Stat. 1367; Pub. L. 105–276,
title II, § 214(a), Oct. 21, 1998, 112 Stat. 2486.)
REFERENCES IN TEXT
The General Insurance Fund, referred to in subsec.
(d)(1), was established by section 1735c of this title.
Section 8211 of title 42, referred to in subsec. (d)(2)(B),
was omitted from the Code pursuant to section 8229 of
Title 42, The Public Health and Welfare, which terminated authority under that section on June 30, 1989.
Section 1521 of the Public Health Service Act, referred to in subsec. (d)(4)(A), is section 1521 of act July
1, 1944, which was classified to section 300m of Title 42,
The Public Health and Welfare, prior to repeal, effective Jan. 1, 1987, by Pub. L. 99–660, title VII, § 701(a),
Nov. 14, 1986, 100 Stat. 3799.
The Social Security Act, referred to in subsec. (i)(1),
is act Aug. 13, 1935, ch. 531, 49 Stat. 620, as amended.
Titles XVIII and XIX of the Act are classified generally
to subchapters XVIII (§ 1395 et seq.) and XIX (§ 1396 et
seq.) of chapter 7 of Title 42, The Public Health and
Welfare. For complete classification of this Act to the
Code, see section 1305 of Title 42 and Tables.
AMENDMENTS
1998—Subsec. (b)(4)(B). Pub. L. 105–276 made technical
correction to directory language of Pub. L. 105–65. See
1997 Amendment note below.
1997—Subsec. (b)(4)(B). Pub. L. 105–65, as amended by
Pub. L. 105–276, substituted ‘‘ten years to run beyond
the maturity date of the mortgage’’ for ‘‘fifty years to
run from the date the mortgage was executed’’.
1992—Subsec. (a). Pub. L. 102–550, § 511(a)(1), substituted ‘‘any’’ for ‘‘either’’ in introductory provisions.
Subsec. (a)(3). Pub. L. 102–550, § 511(a)(2), added par.
(3).
Subsec. (b)(6), (7). Pub. L. 102–550, § 511(b), added pars.
(6) and (7).
Subsec. (d). Pub. L. 102–550, § 511(c)(1), in introductory
provisions, inserted ‘‘, assisted living facility,’’ after
‘‘rehabilitated nursing home,’’, substituted ‘‘any combination of nursing home, assisted living facility, and
intermediate care facility’’ for ‘‘combined nursing
home and intermediate care facility’’, and inserted
‘‘, including a new addition to an existing nursing
home, assisted living facility, or intermediate care facility and regardless of whether the existing home or
facility is being rehabilitated,’’ after first reference to
‘‘intermediate care facility’’.
Subsec. (d)(2). Pub. L. 102–550, § 511(c)(2), inserted ‘‘or
95 percent of the estimated value of the property or
project in the case of a mortgagor that is a private nonprofit corporation or association (under the meaning
given such term for purposes of section 1715l(d)(3) of
this title),’’ before ‘‘including’’ in introductory provisions.
Subsec. (d)(3). Pub. L. 102–550, § 511(c)(3), inserted concluding provisions.
Subsec. (d)(4)(C). Pub. L. 102–550, § 511(c)(4), added subpar. (C).
Subsec. (i)(1). Pub. L. 102–550, § 511(d), inserted
‘‘, assisted living facilities,’’ after ‘‘nursing homes’’.

Page 629

TITLE 12—BANKS AND BANKING

Subsec. (j). Pub. L. 102–550, § 511(e), added subsec. (j).
1988—Subsec. (b)(1). Pub. L. 100–242, § 410(a), inserted
‘‘public facility,’’ before ‘‘proprietary’’.
Subsec. (b)(3) to (5). Pub. L. 100–242, § 429(e)(1), indented as par. (3) former run-in cl. (3) defining ‘‘nursing
home’’ and ‘‘intermediate care facility’’, inserted ‘‘the
term’’, and struck out ‘‘and’’ after semicolon at end, redesignated as par. (4) former par. (3) defining ‘‘mortgage’’, and redesignated as par. (5) former par. (4).
Subsec. (d)(4)(A). Pub. L. 100–242, § 410(b), inserted ‘‘If
no such State agency exists, or if the State agency exists but is not empowered to provide a certification
that there is a need for the home or facility or combined home and facility as required in clause (i) of the
first sentence, the Secretary shall not insure any mortgage under this section unless (i) the State in which
the home or facility or combined home and facility is
located has conducted or commissioned and paid for
the preparation of an independent study of market need
and feasibility that (I) is prepared in accordance with
the principles established by the American Institute of
Certified Public Accountants; (II) assesses, on a
marketwide basis, the impact of the proposed home or
facility or combined home and facility on, and its relationship to, other health care facilities and services,
the percentage of excess beds, demographic projections,
alternative health care delivery systems, and the reimbursement structure of the home, facility, or combined
home and facility; (III) is addressed to and is acceptable to the Secretary in form and substance; and (IV)
in the event the State does not prepare the study, is
prepared by a financial consultant who is selected by
the State or the applicant for mortgage insurance and
is approved by the Secretary; and (ii) the State complies with the other provisions of this subparagraph
that would otherwise be required to be met by a State
agency designated in accordance with section 291d(a)(1)
or section 300m of title 42. The proposed mortgagor
may reimburse the State for the cost of the independent feasibility study required in the preceding sentence. In the case of a small intermediate care facility
for the mentally retarded or developmentally disabled,
or a board and care home housing less than 10 individuals, the State program agency or agencies responsible
for licensing, certifying, financing, or monitoring the
facility or home may, in lieu of the requirements of
clause (i) of the third sentence, provide the Secretary
with written support identifying the need for the facility or home.’’
Subsec. (i)(2)(B). Pub. L. 100–242, § 429(e)(2), amended
subpar. (B) generally. Prior to amendment, subpar. (B)
read as follows: ‘‘bear interest at not to exceed a rate
determined by the Secretary to be necessary to meet
the loan market’’.
1984—Pub. L. 98–479 inserted reference to board and
care homes in section catchline.
1983—Subsec. (a)(2). Pub. L. 98–181, § 437(a), inserted
‘‘and board and care homes’’ after ‘‘intermediate care
facilities’’.
Subsec. (b)(4). Pub. L. 98–181, § 437(b), added par. (4).
Subsec. (d). Pub. L. 98–181, § 437(c)(1), in provisions
preceding par. (1) inserted ‘‘or a board and care home’’
after ‘‘and intermediate care facility,’’.
Subsec. (d)(3)(B). Pub. L. 98–181, § 404(b)(10), substituted provision that the interest rate be at such a
rate as agreed upon by the mortgagor and the mortgagee for provision that the interest rate, exclusive of
premium charges for insurance, not exceed 5 per centum per annum on the amount of the principal obligation outstanding at any time, or not exceed such per
centum per annum not in excess of 6 per centum as the
Secretary finds necessary to meet the mortgage market.
Subsec. (d)(4). Pub. L. 98–181, § 437(c)(2), designated existing provision as subpar. (A), substituted ‘‘With respect to nursing homes and intermediate care facilities
and combined nursing home and intermediate care facilities, the’’ for ‘‘The’’ and ‘‘(i)’’ and ‘‘(ii)’’ for ‘‘(A)’’
and ‘‘(B)’’, respectively, and added subpar. (B).
Subsecs. (g), (h). Pub. L. 98–181, § 437(d), (e), substituted ‘‘Health and Human Services’’ for ‘‘Health,
Education, and Welfare’’.

§ 1715w

Subsec. (i)(1). Pub. L. 98–181, § 437(f)(1), inserted ‘‘or to
board and care homes’’ after ‘‘intermediate care facilities’’, ‘‘(or any subsequent edition specified by the Secretary of Health and Human Services)’’ after ‘‘Association’’, and ‘‘or as mandated by a State under provisions
of section 1616(e) of such Act’’ after ‘‘Social Security
Act’’, and substituted ‘‘Health and Human Services’’
for ‘‘Health, Education, and Welfare’’.
Subsec. (i)(2)(F). Pub. L. 98–181, § 437(f)(2), added subpar. (F).
1980—Subsec. (d)(2). Pub. L. 96–399 revised existing
provisions into introductory paragraph and subpar. (A)
and added subpar. (B).
1978—Subsec. (a). Pub. L. 95–557, § 312(a), inserted
‘‘, including additional facilities for the nonresident
care of elderly individuals and others who are able to
live independently but who require care during the
day’’ after pars. (1) and (2).
Subsec. (b)(2). Pub. L. 95–557, § 312(b), inserted ‘‘(3) a
‘nursing home’ or ‘intermediate care facility’ may include such additional facilities as may be authorized by
the Secretary for the nonresident care of elderly individuals and others who are able to live independently
but who require care during the day’’.
1977—Subsec. (d)(4). Pub. L. 95–128 inserted reference
to section 300m of title 42.
1974—Subsec. (d)(2). Pub. L. 93–383 struck out ‘‘not to
exceed $12,500,000, and’’ after ‘‘an amount’’.
1973—Subsec. (i). Pub. L. 93–204 added subsec. (i).
1969—Subsec. (a). Pub. L. 91–152, § 111(1), added to stated purpose of this section of developing nursing homes,
the development of intermediate care facilities or the
development of such facilities in combination with
nursing home facilities.
Subsec. (b). Pub. L. 91–152, § 111(2), (3), struck out
‘‘and’’ after ‘‘is located;’’ in par. (1), redesignated par.
(2) as (3), and added par. (2).
Subsec. (d). Pub. L. 91–152, § 111(4), inserted provision
authorizing the Secretary to insure any mortgage
which covers an intermediate care facility or combined
nursing home and intermediate care facility.
Subsec. (d)(2). Pub. L. 91–152, § 111(5), substituted ‘‘operation of the home or facility or combined home or facility’’ for ‘‘operation of the nursing home’’.
Subsec. (d)(4). Pub. L. 91–152, § 111(6), substituted
‘‘section 291d(a)(1) of title 42’’ for ‘‘section 291b(a)(1) of
title 42’’, and made provisions applicable to the insurance of mortgages covering intermediate care facilities
or combined nursing home and intermediate care facilities.
Subsecs. (g), (h). Pub. L. 91–152, § 111(7), added subsecs.
(g) and (h).
1968—Subsec. (b)(2). Pub. L. 90–448, § 314(1), redefined
term ‘‘mortgage’’ to mean a first mortgage on real estate in fee simple, or on the interest of either the lessor
or lessee thereof under a lease for not less than ninetynine years which is renewable, or under a lease having
a period of not less than fifty years to run from the
date the mortgage was executed, and inserted definition of ‘‘first mortgage’’.
Subsec. (d). Pub. L. 90–448, § 314(2), (3), authorized the
Secretary to insure a mortgage which includes equipment to be used in the operation of a nursing home,
and permitted the value of the equipment to be included in the calculation of the 90 per centum of the estimated value.
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.
1965—Subsec. (d)(1). Pub. L. 89–117, § 1108(m)(1), substituted ‘‘General Insurance Fund’’ for ‘‘section 207
Housing Insurance Fund’’.
Subsec. (f). Pub. L. 89–117, § 1108(m)(2), struck out references to subsecs. (f), (m) and (p) of section 1713 of this
title.
1964—Subsec. (b)(1). Pub. L. 88–560 inserted ‘‘or facility of a private nonprofit corporation or association’’
after ‘‘proprietary facility’’.
1961—Subsec. (d)(2). Pub. L. 87–70 substituted ‘‘90 per
centum’’ for ‘‘75 per centum’’.

§ 1715x

TITLE 12—BANKS AND BANKING
EFFECTIVE DATE OF 1998 AMENDMENT

Pub. L. 105–276, title II, § 214(b), Oct. 21, 1998, 112 Stat.
2486, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall be construed
to have taken effect on October 27, 1997.’’
REGULATIONS
Pub. L. 100–242, title IV, § 410(c), Feb. 5, 1988, 101 Stat.
1904, provided that: ‘‘The Secretary of Housing and
Urban Development shall issue such regulations as may
be necessary to carry out the amendments made by
this section [amending this section] by not later than
the expiration of the 90-day period following the date of
the enactment of this Act [Feb. 5, 1988].’’
TERMINATION OF REPORTING REQUIREMENTS
For termination, effective May 15, 2000, of reporting
provisions in subsec. (j) of this section, see section 3003
of Pub. L. 104–66, as amended, set out as a note under
section 1113 of Title 31, Money and Finance, and page
105 of House Document No. 103–7.
DELEGATION OF PROCESSING OF MORTGAGE INSURANCE
Secretary of Housing and Urban Development to implement system of mortgage insurance for mortgages
insured under this section that delegates processing
functions to selected approved mortgagees, with Secretary to retain authority to approve rents, expenses,
property appraisals, and mortgage amounts and to execute firm commitments, see section 328 of Pub. L.
101–625, set out as a note under section 1713 of this title.

§ 1715x. Experimental housing insurance
(a) Purpose; authorization
(1) In order to assist in lowering housing costs
and improving housing standards, quality, livability, or durability or neighborhood design
through the utilization of advanced housing
technology, or experimental property standards,
the Secretary is authorized to insure and to
make commitments to insure, under this section, mortgages (including home improvement
loans, and including advances on mortgages during construction) secured by properties including dwellings involving the utilization and testing of advanced technology in housing design,
materials, or construction, or experimental
property standards for neighborhood design if
the Secretary determines that (A) the property
is an acceptable risk, giving consideration to
the need for testing advanced housing technology or experimental property standards, (B)
the utilization and testing of the advanced technology or experimental property standards involved will provide data or experience which the
Secretary deems to be significant in reducing
housing costs or improving housing standards,
quality, livability, or durability, or improving
neighborhood design, and (C) the mortgages are
eligible for insurance under the provisions of
this section and under any further terms and
conditions which may be prescribed by the Secretary to establish the acceptability of the
mortgages for insurance.
(2) The Secretary is further authorized to insure and to make commitments to insure, under
this section, mortgages (including advances on
mortgages during construction) secured by properties in projects to be carried out in accordance
with plans approved by the Secretary under section 1701z of this title.
(b) Eligibility for insurance; conditions; limits
To be eligible for insurance under this section,
a mortgage shall meet the requirements of one

Page 630

of the other sections or subchapters of this chapter; except that, in lieu of determining the appraised value or the replacement cost of the
property in cases involving new construction or
the estimated cost of repair and rehabilitation
or improvement in cases involving existing
properties, the Secretary shall estimate the cost
of replacing the property using comparable conventional design, materials, and construction,
and any limitation upon the maximum mortgage amount available to a nonoccupant owner
shall not, in the discretion of the Secretary, be
applicable to mortgages insured under this section.
(c) Contracts, agreements, and financial undertakings with mortgagor
The Secretary may enter into such contracts,
agreements, and financial undertakings with the
mortgagor and others as he deems necessary or
desirable to carry out the purposes of this section, and may expend available funds for such
purposes, including the correction (when he determines it necessary to protect the occupants),
at any time subsequent to insurance of a mortgage, of defects or failures in the dwellings
which the Secretary finds are caused by or related to the advanced housing technology utilized
in their design or construction or experimental
property standards. Any authority which the
Secretary may exercise in connection with a
mortgage, or property covered by a mortgage,
insured under any other section of this subchapter (including payments to reduce rentals
for, or to facilitate homeownership by, lower income families) may be exercised in connection
with a mortgage, or property covered by a mortgage, meeting the requirements of such other
section (except as specified in subsection (b)),
which is insured under this section to the same
extent and in the same manner as if the mortgage insured under this section was insured
under such other section.
(d) Investigations and analysis of data; publication and distribution of reports
The Secretary may make such investigations
and analyses of data, and publish and distribute
such reports, as he determines to be necessary
or desirable to assure the most beneficial use of
the data and information to be acquired as a result of this section.
(e) Entitlement to insurance benefits
Any mortgagee or lender under a mortgage insured under subsection (b) shall be entitled to
insurance benefits determined in the same manner as such benefits would be determined if such
mortgage or loan were insured under the section
or subchapter of this chapter for which it otherwise would have been eligible except for the
experimental feature of the property involved.
(f) Defaults; payment in cash or debentures; acquisition of mortgage
Notwithstanding the provisions of subsection
(e) of this section, in the case of default on any
mortgage insured under this section, the Secretary in his discretion, in accordance with such
regulations as he may prescribe, may make payments pursuant to such subsections in cash or in
debentures (as provided in the mortgage insur-

Page 631

TITLE 12—BANKS AND BANKING

ance contract), or may acquire the mortgage
loan and the security therefor upon payment to
the mortgagee in cash or in debentures (as provided in the mortgage insurance contract) of a
total amount equal to the unpaid principal balance of the loan plus any accrued interest and
any advances approved by the Secretary made
previously by the mortgagee under the provisions of the mortgage. After the acquisition of
the mortgage by the Secretary the mortgagee
shall have no further rights, liabilities, or obligations with respect to the mortgage. The appropriate provisions of sections 1710 and 1713 of
this title relating to the issuance of debentures
shall apply with respect to debentures issued
under this subsection, and the appropriate provisions of sections 1710 and 1713 of this title relating to the rights, liabilities, and obligations
of a mortgagee shall apply with respect to the
Secretary when he has acquired an insured
mortgage under this subsection, in accordance
with and subject to regulations (modifying such
provisions to the extent necessary to render
their application for such purposes appropriate
and effective) which shall be prescribed by the
Secretary, except that as applied to mortgages
insured under this section (1) all references in
section 1710 of this title to the Mutual Mortgage
Insurance Fund or the Fund shall be construed
to refer to the General Insurance Fund, and (2)
all references in section 1710 of this title to section 1709 of this title shall be construed to refer
to this section. If the insurance payment is
made in cash, there shall be added to such payment an amount equivalent to the interest
which the debentures would have earned, computed to a date to be established pursuant to
regulations issued by the Secretary.
(June 27, 1934, ch. 847, title II, § 233, as added
Pub. L. 87–70, title I, § 103, June 30, 1961, 75 Stat.
158; amended Pub. L. 88–560, title I, §§ 105(c)(1),
118, Sept. 2, 1964, 78 Stat. 772, 779; Pub. L. 89–117,
title XI, § 1108(n), Aug. 10, 1965, 79 Stat. 505; Pub.
L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17; Pub.
L. 90–448, title I, § 108(f), title III, § 309, Aug. 1,
1968, 82 Stat. 496, 509.)
REFERENCES IN TEXT
This chapter, referred to in subsecs. (b) and (e), was
in the original ‘‘this Act’’, meaning act June 27, 1934,
ch. 847, 48 Stat. 1246, which is classified principally to
this chapter (§ 1701 et seq.). For complete classification
of this Act to the Code, see Tables.
The General Insurance Fund, referred to in subsec.
(f), was established by section 1735c of this title.
AMENDMENTS
1968—Subsec. (a). Pub. L. 90–448, § 108(f)(1), designated
existing provision as par. (1), redesignated cls. (1), (2),
and (3) as cls. (A), (B), and (C), respectively, and added
par. (2).
Subsec. (b). Pub. L. 90–448, § 309(1), substituted ‘‘one of
the other sections or subchapters of this chapter’’ for
‘‘one of the other sections of this subchapter’’.
Subsec. (c). Pub. L. 90–448, § 108(f)(2), inserted sentence providing that any authority which the Secretary may exercise in connection with a mortgage, or
property covered by a mortgage, insured under any
other section of this subchapter (including payments to
reduce rentals for, or to facilitate homeownership by,
lower income families) may be exercised in connection
with a mortgage, or property covered by a mortgage,
meeting the requirements of such other section (except

§ 1715y

as specified in subsec. (b)), which is insured under this
section to the same extent and in the same manner as
if the mortgage insured under this section was insured
under such other section.
Subsec. (e). Pub. L. 90–448, § 309(2), substituted ‘‘the
section or subchapter of this chapter’’ for ‘‘the section
of this subchapter’’.
1967—Subsecs. (a) to (d), (f). Pub. L. 90–19 substituted
‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.
1965—Subsec. (f). Pub. L. 89–117, § 1108(n)(1), (2), substituted ‘‘General Insurance Fund’’ for ‘‘Experimental
Housing Insurance Fund’’ and struck out provision that
all references in section 1713 of this title to the Housing
Insurance Fund, the Housing Fund, or the Fund shall
be construed to refer to the Experimental Housing Insurance Fund.
Subsec. (g). Pub. L. 89–117, § 1108(n)(3), repealed subsec. (g) which created the Experimental Housing Insurance Fund, provided for transfer of funds thereto, and
authorized the charging of expenses thereto.
1964—Subsec. (a). Pub. L. 88–560, § 118(a), substituted
‘‘home improvement loans, and including advances on
mortgages’’ for ‘‘, in the case of mortgages insured
under subsection (b)(2) of this section, advances on such
mortgages’’.
Subsec. (b). Pub. L. 88–560, § 118(b), substituted provisions which make insurance available for mortgages
meeting the requirements of any other sections of subchapter II of this chapter for provisions which made insurance available for mortgages meeting the requirements of section 1709(b) or 1713(b), (c) of this title and
made the Commissioner’s estimate of replacement cost
of the property applicable to mortgages meeting the requirements of any section of subchapter II of this chapter in lieu of determining the appraised value or the replacement cost of the property in new construction or
estimated cost of repair and rehabilitation or improvement for existing properties.
Subsec. (e). Pub. L. 88–560, § 118(c), substituted provision for entitlement to insurance benefits determined
in the same manner as such benefits would be determined if such mortgage or loan were insured under the
section of this subchapter for which it otherwise would
have been eligible except for the experimental feature
of the property involved for former provision for entitlement to insurance benefits provided in section
1710(a) of this title.
Subsec. (f). Pub. L. 88–560, §§ 105(c)(1), 118(c), (d), added
to subsec. (g), redesignated (f), provision that ‘‘If the
insurance payment is made in cash, there shall be
added to such payment an amount equivalent to the interest which the debentures would have earned, computed to a date to be established pursuant to regulations issued by the Commissioner’’, deleted former provisions of subsec. (f) which related to entitlement to insurance benefits provided in section 1713(g) of this title,
now covered by subsec. (e) of this section, and redesignated former subsec. (g) as (f), substituting in first sentence ‘‘subsection (e)’’ for ‘‘subsections (e) and (f)’’, respectively.
Subsecs. (g), (h). Pub. L. 88–560, § 118(d), redesignated
subsec. (h) as (g). Former subsec. (g) redesignated (f).

§ 1715y. Mortgage insurance for condominiums
(a) Purpose
The purpose of this section is to provide an additional means of increasing the supply of privately owned dwelling units where, under the
laws of the State in which the property is located, real property title and ownership are established with respect to a one-family unit
which is part of a multifamily project.
(b) Definitions
The terms ‘‘mortgage’’, ‘‘mortgagee’’, ‘‘mortgagor’’, ‘‘maturity date’’, and ‘‘State’’ shall
have the meanings respectively set forth in section 1707 of this title, except that the term

§ 1715y

TITLE 12—BANKS AND BANKING

‘‘mortgage’’ for the purposes of subsection (c)
may include a first mortgage given to secure the
unpaid purchase price of a fee interest in, or a
long-term leasehold interest in, a one-family
unit in a multifamily project, including a
project in which the dwelling units are attached,
semi-attached, or detached, and an undivided interest in the common areas and facilities which
serve the project where the mortgage is determined by the Secretary to be eligible for insurance under this section. The term ‘‘common
areas and facilities’’ as used in this section shall
be deemed to include the land and such commercial, community, and other facilities as are approved by the Secretary.
(c) Authorization; eligibility for insurance; conditions; limits
The Secretary is authorized, in his discretion
and under such terms and conditions as he may
prescribe (including the minimum number of
family units in the project which shall be offered for sale and provisions for the protection
of the consumer and the public interest), to insure any mortgage covering a one-family unit in
a multifamily project and an undivided interest
in the common areas and facilities which serve
the project, if (1) the mortgage meets the requirements of this subsection and of section
1709(b) of this title, except as that section is
modified by this subsection, (2) at least 80 percent of the units in the project covered by mortgages insured under this subchapter are occupied by the mortgagors or comortgagors, and (3)
the project has a blanket mortgage insured by
the Secretary under subsection (d). Any project
proposed to be constructed or rehabilitated after
June 30, 1961, with the assistance of mortgage
insurance under this chapter, where the sale of
family units is to be assisted with mortgage insurance under this subsection, shall be subject
to such requirements as the Secretary may prescribe. To be eligible for insurance pursuant to
this subsection, a mortgage shall (A) involve a
principal obligation in an amount not to exceed
the maximum principal obligation of a mortgage which may be insured in the area pursuant
to section 1709(b)(2) of this title or pursuant to
section 1709(h) of this title under the conditions
described in section 1709(h) of this title, and (B)
have a maturity satisfactory to the Secretary,
but not to exceed, in any event, thirty-five years
from the date of the beginning of amortization
of the mortgage. The mortgage shall contain
such provisions as the Secretary determines to
be necessary for the maintenance of common
areas and facilities and the multifamily project.
The mortgagor shall have exclusive right to the
use of the one-family unit covered by the mortgage and, together with the owners of other
units in the multifamily project, shall have the
right to the use of the common areas and facilities serving the project and the obligation of
maintaining all such common areas and facilities. The Secretary may require that the rights
and obligations of the mortgagor and the owners
of other dwelling units in the project shall be
subject to such controls as he determines to be
necessary and feasible to promote and protect
individual owners, the multifamily project, and
its occupants. For the purposes of this sub-

Page 632

section, the Secretary is authorized in his discretion and under such terms and conditions as
he may prescribe to permit one-family units and
interests in common areas and facilities in
multifamily projects covered by mortgages insured under any section of this chapter (other
than section 1715e(a)(1) and (2) of this title) to be
released from the liens of those mortgages.
(d) Blanket mortgages of multifamily projects;
plan of family unit ownership; regulations;
stock purchase and redemption
In addition to individual mortgages insured
under subsection (c), the Secretary is authorized, in his discretion and under such terms and
conditions as he may prescribe, to insure blanket mortgages (including advances on such
mortgages during construction) which cover
multifamily projects to be constructed or rehabilitated in cases where the mortgage is held by
a mortgagor, approved by the Secretary,
which—
(1) has certified to the Secretary, as a condition of obtaining the insurance of a blanket
mortgage under this subsection, that upon
completion of the multifamily project covered
by such mortgage it intends to commit the
ownership of the multifamily project to a plan
of family unit ownership under which each
family unit would be eligible for individual
mortgage insurance under subsection (c) and
will faithfully and diligently make and carry
out all reasonable efforts to establish such
plan of family unit ownership and to sell such
family units to purchasers approved by the
Secretary; and
(2) may, in the Secretary’s discretion, be
regulated or restricted as to rents, charges,
capital structure, rate of return, and methods
of operation until the termination of all obligations of the Secretary under the insurance
and during such further period of time as the
Secretary shall be the owner, holder or reinsurer of the mortgage. The Secretary may
make such contracts with and acquire for not
to exceed $100 such stock or interest in such
mortgagor as he may deem necessary to
render effective any such regulation or restriction of such mortgagor. The stock or interest
acquired by the Secretary shall be paid for out
of the General Insurance Fund, and shall be redeemed by the mortgagor at par at any time
upon the request of the Secretary after the
termination of all obligations of the Secretary
under the insurance.
(e) Eligibility for insurance of blanket mortgages
of multifamily projects
To be eligible for insurance, a blanket mortgage on any multifamily project of a mortgagor
of the character described in subsection (d) shall
involve a principal obligation in an amount—
(1) Repealed. Pub. L. 93–383, title III, § 304(h),
Aug. 22, 1974, 88 Stat. 678;
(2) not to exceed 90 per centum of the
amount which the Secretary estimates will be
the replacement cost of the project when the
proposed physical improvements are completed;
(3)(A) not to exceed, for such part of the
project as may be attributable to dwelling use
(excluding exterior land improvements as de-

Page 633

TITLE 12—BANKS AND BANKING

fined by the Secretary), $42,048 per family unit
without a bedroom, $48,481 per family unit
with one bedroom, $58,469 per family unit with
two bedrooms, $74,840 per family unit with
three bedrooms, and $83,375 per family unit
with four or more bedrooms; except that as to
projects to consist of elevator-type structures
the Secretary may, in his discretion, increase
the dollar amount limitations per family unit
to not to exceed $44,250 per family unit without a bedroom, $50,724 per family unit with one
bedroom, $61,680 per family unit with two bedrooms, $79,793 per family unit with three bedrooms, and $87,588 per family unit with four or
more bedrooms, as the case may be, to compensate for the higher costs incident to the
construction of elevator-type structures of
sound standards of construction and design;
(B) the Secretary may, by regulation, increase
any of the dollar limitations in subparagraph
(A) (as such limitations may have been adjusted in accordance with section 1712a of this
title) by not to exceed 170 percent in any geographical area where the Secretary finds that
cost levels so require and by not to exceed 170
percent, or 215 percent in high cost areas,
where the Secretary determines it necessary
on a project-by-project basis, but in no case
may any such increase exceed 90 percent
where the Secretary determines that a mortgage purchased or to be purchased by the Government National Mortgage Association in implementing its special assistance functions
under section 1720 1 of this title (as such section existed immediately before November 30,
1983) is involved; and
(4) not to exceed an amount equal to the sum
of the unit mortgage amounts determined
under the provisions of subsection (c) assuming the mortgagor to be the owner and occupant of each family unit.
(f) Amortization of blanket mortgages of multifamily projects; interest; releases; extent of
project
Any blanket mortgage insured under subsection (d) shall provide for complete amortization by periodic payments within such terms as
the Secretary may prescribe but not to exceed 40
years from the beginning of amortization of the
mortgage, and shall bear interest at such rate as
may be agreed upon by the mortgagor and the
mortgagee. The Secretary may consent to the
release of a part or parts of the mortgaged property from the lien of the blanket mortgage upon
such terms and conditions as he may prescribe
and the blanket mortgage may provide for such
release. The project covered by the blanket
mortgage may include four or more family units
and such commercial and community facilities
as the Secretary deems adequate to serve the occupants.
(g) Entitlement to insurance benefits as provided
in section 1710(a) of this title
Any mortgagee under a mortgage insured
under subsection (c) of this section is entitled to
receive the benefits of the insurance as provided
in section 1710(a) of this title with respect to
mortgages insured under section 1709 of this
1 See

References in Text note below.

§ 1715y

title, and the provisions of subsections (b), (c),
(d), (e), (f), (g), (h),1 (j), and (k) 1 of section 1710
of this title shall be applicable to the mortgages
insured under subsection (c) of this section.
(h) Applicability of other provisions
The provisions of subsections (d), (e), (g), (h),
(i), (j), (k), (l), and (n) of section 1713 of this title
shall be applicable to mortgages insured under
subsection (d) of this section.
(i) Applicability of other provisions
The provisions of sections 1715p and 1715u of
this title shall be applicable to the mortgages
insured under subsection (c) of this section.
(j) Increase in maximum insurance amounts for
costs incurred from solar energy systems and
energy conservation measures
The Secretary may further increase the dollar
amount limitations which would otherwise
apply under subsection (e) by not to exceed 20
per centum if such increase is necessary to account for the increased cost of a project due to
the installation therein of a solar energy system
(as defined in subparagraph (3) of the last paragraph of section 1703(a) of this title) or residential energy conservation measures (as defined in
section 8211(11)(A) through (G) and (I) of title
42) 1 in cases where the Secretary determines
that such measures are in addition to those required under the minimum property standards
and will be cost-effective over the life of the
measure.
(k) Rental housing conversion
With respect to a unit in any project which
was converted from rental housing, no insurance
may be provided under this section unless (1) the
conversion occurred more than one year prior to
the application for insurance, (2) the mortgagor
or comortgagor was a tenant of that rental
housing, (3) the conversion of the property is
sponsored by a bona fide tenants organization
representing a majority of the households in the
project, or (4) before April 20, 1984 (A) application was made to the Secretary for a commitment to insure a mortgage covering any unit in
the project, (B) in the case of direct endorsement, the mortgagee received the case number
assigned by the Secretary for any unit in the
project, or (C) application was made for approval
of the project for guarantee, insurance, or direct
loan under chapter 37 of title 38.
(June 27, 1934, ch. 847, title II, § 234, as added
Pub. L. 87–70, title I, § 104, June 30, 1961, 75 Stat.
160; amended Pub. L. 88–560, title I, § 119(a), Sept.
2, 1964, 78 Stat. 780; Pub. L. 89–117, title II,
§ 207(f), title XI, § 1108(o), Aug. 10, 1965, 79 Stat.
468, 506; Pub. L. 90–19, § 1(a)(3), (4), May 25, 1967,
81 Stat. 17; Pub. L. 90–301, § 3(e), May 7, 1968, 82
Stat. 114; Pub. L. 90–448, title III, § 303, Aug. 1,
1968, 82 Stat. 507; Pub. L. 91–152, title I, §§ 102(d),
113(h), Dec. 24, 1969, 83 Stat. 380, 384; Pub. L.
93–383, title III, §§ 302(e), 303(g), 304(h), 310(d),
Aug. 22, 1974, 88 Stat. 676–678, 683; Pub. L. 94–173,
§ 3, Dec. 23, 1975, 89 Stat. 1027; Pub. L. 94–375,
§ 8(a), (b)(7), Aug. 3, 1976, 90 Stat. 1071, 1072; Pub.
L. 95–128, title III, §§ 303(e), 304(d), Oct. 12, 1977, 91
Stat. 1132, 1133; Pub. L. 95–557, title III, § 313, Oct.
31, 1978, 92 Stat. 2099; Pub. L. 96–153, title III,
§§ 312(c), 314, Dec. 21, 1979, 93 Stat. 1116, 1117; Pub.

§ 1715y

TITLE 12—BANKS AND BANKING

L. 96–399, title III, §§ 310(g), 318, 333(e), 336(d), Oct.
8, 1980, 94 Stat. 1643, 1646, 1653, 1654; Pub. L. 97–35,
title III, §§ 339(a), 339B(a), (d), Aug. 13, 1981, 95
Stat. 416, 417; Pub. L. 97–253, title II, § 201(e),
Sept. 8, 1982, 96 Stat. 789; Pub. L. 97–377, title I,
§ 101(g), Dec. 21, 1982, 96 Stat. 1908; Pub. L. 98–181,
title I [title IV, §§ 404(b)(11), 420, 423(b)(4), 431(b)],
Nov. 30, 1983, 97 Stat. 1209, 1213, 1217, 1220; Pub.
L. 98–479, title I, § 104(a)(2), Oct. 17, 1984, 98 Stat.
2224; Pub. L. 100–242, title IV, §§ 406(b)(17), 422(a),
426(g), (h), Feb. 5, 1988, 101 Stat. 1901, 1914, 1916;
Pub. L. 102–550, title V, § 509(g), Oct. 28, 1992, 106
Stat. 3783; Pub. L. 103–211, title I, Feb. 12, 1994,
108 Stat. 12; Pub. L. 103–233, title III, § 306, Apr.
11, 1994, 108 Stat. 373; Pub. L. 105–18, title II,
§ 10005, June 12, 1997, 111 Stat. 201; Pub. L. 107–73,
title II, § 213(g), Nov. 26, 2001, 115 Stat. 677; Pub.
L. 107–326, § 5(b)(7), Dec. 4, 2002, 116 Stat. 2796;
Pub. L. 108–186, title III, § 302(b), Dec. 16, 2003, 117
Stat. 2692; Pub. L. 110–161, div. K, title II, § 221(1),
Dec. 26, 2007, 121 Stat. 2436; Pub. L. 110–289, div.
B, title I, § 2117(a), July 30, 2008, 122 Stat. 2832.)
REFERENCES IN TEXT
This chapter, referred to in subsec. (c), was in the
original ‘‘this Act’’, meaning act June 27, 1934, ch. 847,
48 Stat. 1246, which is classified principally to this
chapter (§ 1701 et seq.). For complete classification of
this Act to the Code, see Tables.
The General Insurance Fund, referred to in subsec.
(d)(2), was established by section 1735c of this title.
Section 1720 of this title, referred to in subsec.
(e)(3)(B), was repealed by Pub. L. 98–181, title I [title IV,
§ 483(a)], Nov. 30, 1983, 97 Stat. 1240.
Subsection (h) of section 1710 of this title, referred to
in subsec. (g), was redesignated subsec. (i) by Pub. L.
105–276, title VI, § 602(1), Oct. 21, 1998, 112 Stat. 2674.
Subsection (k) of section 1710 of this title, referred to
in subsec. (g), was repealed by Pub. L. 105–276, title VI,
§ 601(c), Oct. 21, 1998, 112 Stat. 2673.
Section 8211 of title 42, referred to in subsec. (j), was
omitted from the Code pursuant to section 8229 of Title
42, The Public Health and Welfare, which terminated
authority under that section on June 30, 1989.
AMENDMENTS
2008—Subsec. (c). Pub. L. 110–289, § 2117(a)(1), in first
sentence, struck out ‘‘and’’ before ‘‘(2)’’ and inserted
‘‘, and (3) the project has a blanket mortgage insured
by the Secretary under subsection (d)’’ before period at
end.
Subsec. (g). Pub. L. 110–289, § 2117(a)(2), struck out
‘‘, except that (1) all references in section 1710 of this
title to the Mutual Mortgage Insurance Fund or the
Fund shall be construed to refer to the General Insurance Fund, (2) all references therein to section 1709 of
this title shall be construed to refer to subsection (c) of
this section, and (3) the excess remaining, referred to in
section 1710(f)(1) of this title, shall be retained by the
Secretary and credited to the General Insurance Fund’’
before period at end.
2007—Subsec. (e)(3)(B). Pub. L. 110–161 substituted
‘‘170 percent’’ for ‘‘140 percent’’ after ‘‘not to exceed’’ in
two places and ‘‘215 percent in high cost areas’’ for ‘‘170
percent in high cost areas’’.
2003—Subsec. (e)(3)(B). Pub. L. 108–186 substituted
‘‘140 percent in’’ for ‘‘110 percent in’’ and inserted ‘‘, or
170 percent in high cost areas,’’ after ‘‘and by not to exceed 140 percent’’.
2002—Subsec. (e)(3). Pub. L. 107–326 inserted ‘‘(A)’’
after ‘‘(3)’’ and substituted ‘‘$42,048’’ for ‘‘$38,025’’,
‘‘$48,481’’ for ‘‘$42,120’’, ‘‘$58,469’’ for ‘‘$50,310’’, ‘‘$74,840’’
for ‘$62,010’’, ‘‘$83,375’’ for ‘‘$70,200’’, ‘‘$44,250’’ for
‘‘$43,875’’, ‘‘$50,724’’ for ‘‘$49,140’’, ‘‘$61,680’’ for ‘‘$60,255’’,
‘‘$79,793’’ for ‘‘$75,465’’, ‘‘$87,588’’ for ‘‘$85,328’’, and
‘‘; (B) the Secretary may, by regulation, increase any
of the dollar limitations in subparagraph (A) (as such

Page 634

limitations may have been adjusted in accordance with
section 1712a of this title)’’ for ‘‘; except that each of
the foregoing dollar amounts is increased to the
amount established for a comparable unit in section
1715l(d)(3)(ii) of this title; and except that the Secretary
may, by regulation, increase any of the foregoing dollar
amount limitations contained in this paragraph’’.
2001—Subsec. (e)(3). Pub. L. 107–73 substituted
‘‘$38,025’’, ‘‘$42,120’’, ‘‘$50,310’’, ‘‘$62,010’’, and ‘‘$70,200’’
for ‘‘$30,420’’, ‘‘$33,696’’, ‘‘$40,248’’, ‘‘$49,608’’, and
‘‘$56,160’’, respectively, and ‘‘$43,875’’, ‘‘$49,140’’,
‘‘$60,255’’, ‘‘$75,465’’, and ‘‘$85,328’’ for ‘‘$35,100’’,
‘‘$39,312’’, ‘‘$48,204’’, ‘‘$60,372’’, and ‘‘$68,262’’, respectively.
1997—Subsec. (c). Pub. L. 105–18 inserted ‘‘or pursuant
to section 1709(h) of this title under the conditions described in section 1709(h) of this title’’ after ‘‘section
1709(b)(2) of this title’’.
1994—Subsec. (c). Pub. L. 103–211, effective for 18month period following Feb. 12, 1994, for eligible persons, inserted ‘‘or pursuant to section 1709(h) of this
title under the conditions described in section 1709(h) of
this title’’ after ‘‘section 1709(b)(2) of this title’’. See
Applicability of 1994 Amendment note below.
Subsec. (e)(3). Pub. L. 103–233 substituted ‘‘$56,160’’ for
‘‘$59,160’’.
1992—Subsec. (e)(3). Pub. L. 102–550 substituted
‘‘$30,420’’, ‘‘$33,696’’, ‘‘$40,248’’, ‘‘$49,608’’, and ‘‘$59,160’’
for ‘‘$25,350’’, ‘‘$28,080’’, ‘‘$33,540’’, ‘‘$41,340’’, and
‘‘$46,800’’, respectively, and ‘‘$35,100’’, ‘‘$39,312’’,
‘‘$48,204’’, ‘‘$60,372’’, and ‘‘$68,262’’ for ‘‘$29,250’’,
‘‘$32,760’’, ‘‘$40,170’’, ‘‘$50,310’’, and ‘‘$56,885’’, respectively.
1988—Subsec. (c). Pub. L. 100–242, § 406(b)(17), struck
out fourth sentence which read as follows: ‘‘In determining the amount of a mortgage in the case of a nonoccupant mortgagor the reference to paragraph (2) of
section 1709(b) of this title in section 1709(b)(8) of this
title shall be construed to refer to the preceding sentence in this subsection.’’
Subsec. (e)(3). Pub. L. 100–242, § 426(g), substituted
‘‘$25,350’’, ‘‘$28,080’’, ‘‘$33,540’’, ‘‘$41,340’’, and ‘‘$46,800’’
for ‘‘$19,500’’, ‘‘$21,600’’, ‘‘$25,800’’, ‘‘$31,800’’, and
‘‘$36,000’’, respectively, and ‘‘$29,250’’, ‘‘$32,760’’,
‘‘$40,170’’, ‘‘$50,310’’, and ‘‘$56,885’’ for ‘‘$22,500’’,
‘‘$25,200’’, ‘‘$30,900’’, ‘‘$38,700’’, and ‘‘$43,758’’, respectively.
Pub. L. 100–242, § 422(a), inserted ‘‘except that each of
the foregoing dollar amounts is increased to the
amount established for a comparable unit in section
1715l(d)(3)(ii) of this title;’’ after ‘‘design;’’.
Pub. L. 100–242, § 426(h), substituted ‘‘not to exceed 110
percent in any geographical area where the Secretary
finds that cost levels so require and by not to exceed
140 percent where the Secretary determines it necessary on a project-by-project basis, but in no case may
any such increase exceed 90 percent where the Secretary determines that a mortgage purchased or to be
purchased by the Government National Mortgage Association in implementing its special assistance functions under section 1720 of this title (as such section existed immediately before November 30, 1983) is involved’’ for ‘‘not to exceed 75 per centum in any geographical area where he finds that cost levels so require, except that, where the Secretary determines it
necessary on a project by project basis, the foregoing
dollar amount limitations contained in this paragraph
may be exceeded by not to exceed 90 per centum (by not
to exceed 140 per centum where the Secretary determines that a mortgage other than one purchased or to
be purchased under section 1720 of this title by the Government National Mortgage Association in implementing its special assistance functions is involved) in such
an area’’.
1984—Subsec. (k)(4). Pub. L. 98–479 added cl. (4).
1983—Subsec. (c). Pub. L. 98–181, § 423(b)(4), purported
to amend cl. (A) of third sentence of subsec. (c) by
striking out ‘‘: Provided, That the foregoing maximum
mortgage amounts may be increased by the amount of
the mortgage insurance premium paid at the time the

Page 635

TITLE 12—BANKS AND BANKING

mortgage is insured’’, but this provision had been previously struck out by section 420(b) of Pub. L. 98–181.
See second par. below and Effective Date of 1983
Amendment note below.
Pub. L. 98–181, § 420(a), in cl. (2) substituted provision
that at least 80 percent of the units in the project covered by mortgages insured under this subchapter be occupied by mortgagors or comortgagors for provision
that the project be covered by a mortgage insured
under any section of this chapter, except section
1715e(a)(1) and (2) of this title, notwithstanding any requirements in such section that the project be constructed or rehabilitated for providing rental housing
and providing that a one-family unit in a multifamily
project involving eleven or less units, or twelve or more
in the case of a multifamily project the construction of
which was completed more than a year prior to application for mortgage insurance, be eligible for insurance
without having been covered by a project mortgage,
and struck out cl. (3), which provided that the mortgagor is acquiring, or has acquired, a family unit covered
by a mortgage insured under this subsection for his
own use and occupancy and will not own more than
four one-family units covered by mortgages insured
under this subsection.
Pub. L. 98–181, § 420(b), substituted in third sentence
‘‘(A) involve a principal obligation in an amount not to
exceed the maximum principal obligation of a mortgage which may be insured in the area pursuant to section 1709(b)(2) of this title’’ for ‘‘(A) involve a principal
obligation in an amount not to exceed $67,500, except
that the Secretary may increase such maximum dollar
amount on an area-by-area basis to the extent the Secretary deems necessary, after taking into consideration
the extent to which moderate and middle income persons have limited housing opportunities in the area due
to high prevailing housing sales prices, but in no case
may such limit, as so increased, exceed the lesser of 111
per centum of such amount or 95 per centum of the median one-family house price in the area, as determined
by the Secretary: Provided, That the foregoing maximum mortgage amounts may be increased by the
amount of the mortgage insurance premium paid at the
time the mortgage is insured; and not to exceed the
sum of (i) 97 per centum (100 per centum if the mortgagor is a veteran as defined under section 1709(b)(2) of
this title) of $25,000 of the appraised value of the property as of the date the mortgage is accepted for insurance and (ii) 95 per centum of such value in excess of
$25,000’’.
Subsec. (d)(2). Pub. L. 98–181, § 431(b), substituted
‘‘may, in the Secretary’s discretion, be regulated or restricted’’ for ‘‘shall be regulated or restricted by the
Secretary’’, and substituted ‘‘any such regulation or restriction’’ for ‘‘the regulation and restriction’’.
Subsec. (f). Pub. L. 98–181, § 404(b)(11), substituted provision that the interest rate for the mortgage be such
a rate as agreed upon by the mortgagor and mortgagee
for provision that the rate of interest, exclusive of premium charges for insurance, not exceed 51⁄4 per centum
per annum on the amount of the principal obligation
outstanding at any time, or not exceed such per centum per annum not in excess of 6 per centum per
annum as the Secretary finds necessary to meet the
mortgage market.
Subsec. (k). Pub. L. 98–181, § 420(c), added subsec. (k).
1982—Subsec. (c)(A). Pub. L. 97–253 inserted provision
that the foregoing maximum mortgage amounts may
be increased by the amount of the mortgage insurance
premium paid at the time the mortgage is insured.
Subsec. (e)(3). Pub. L. 97–377 inserted ‘‘(by not to exceed 140 per centum where the Secretary determines
that a mortgage other than one purchased or to be purchased under section 1720 of this title by the Government National Mortgage Association in implementing
its special assistance functions is involved)’’ after ‘‘90
per centum’’.
1981—Subsec. (b). Pub. L. 97–35, § 339(a), inserted reference to projects in which the dwelling units are attached, semi-attached, or detached.

§ 1715y

Subsec. (c)(2). Pub. L. 97–35, § 339B(d)(1), reenacted
provisions relating to covered projects in material preceding proviso in cl. (2). Section 339B(d)(2) of Pub. L.
97–35 repealed section 318 of the Housing and Community Development Act of 1980, which previously enacted
these provisions. See Repeals note set out below.
Subsec. (j). Pub. L. 97–35, § 339B(a), inserted ‘‘therein’’
after ‘‘installation’’ and struck out ‘‘therein’’ after
‘‘measure’’.
1980—Subsec. (c). Pub. L. 96–399, §§ 318, 333(e), 336(d),
inserted provisions relating to projects approved under
chapter 37 of title 38, and provisions relating to increases in the maximum dollar amounts on an area-byarea basis, and struck out applicability to determinations of three-quarters of the Secretary’s estimate of
the remaining economic life of the building improvements, if so determined as the lesser amount in the
computations.
Subsec. (j). Pub. L. 96–399, § 310(g), added subsec. (j).
1979—Subsec. (c). Pub. L. 96–153, § 312(c), substituted
‘‘$67,500’’ for ‘‘$60,000’’.
Subsec. (e)(3). Pub. L. 96–153, § 314, substituted ‘‘75 per
centum’’ for ‘‘50 per centum’’ and inserted exception
that the dollar amount limitations may be exceeded
not to exceed 90 per centum where the Secretary determines it to be necessary.
1978—Subsec. (c). Pub. L. 95–557 inserted ‘‘or twelve or
more units in the case of a multifamily project the construction of which was completed more than a year
prior to the application for mortgage insurance’’ after
‘‘less units’’ in cl. (2) and ‘‘(100 per centum if the mortgagor is a veteran as defined under section 1709(b)(2) of
this title)’’ after ‘‘97 per centum’’ in cl. (A)(i).
1977—Subsec. (c). Pub. L. 95–128 substituted in cl. (A)
‘‘$60,000’’ for ‘‘$45,000’’ and ‘‘and (ii) 95 per centum of
such value in excess of $25,000,’’ for ‘‘(ii) 90 per centum
of such value in excess of $25,000 but not in excess of
$35,000, (iii) 80 per centum of such value in excess of
$35,000’’.
1976—Subsec. (e) (3). Pub. L. 94–375 substituted ‘‘50 per
centum in any geographical area’’ for ‘‘75 per centum in
any geographical area’’, ‘‘$19,500’’ for ‘‘$13,000’’,
‘‘$21,600’’ for ‘‘$18,000’’, ‘‘$25,800’’ for ‘‘$21,500’’, ‘‘$31,800’’
for ‘‘$26,500’’, ‘‘$36,000’’ for ‘‘$30,000’’, ‘‘$22,500’’ for
‘‘$15,000’’, ‘‘$25,200’’ for ‘‘$21,000’’, ‘‘$30,900’’ for ‘‘$25,750’’,
‘‘$38,700’’ for ‘‘$32,250’’, and ‘‘$43,758’’ for ‘‘$36,465’’.
1975—Subsec. (e)(3). Pub. L. 94–173 raised from 45 per
centum to 75 per centum the amount by which any dollar limitation may, by regulation, be increased.
1974—Subsec. (c). Pub. L. 93–383, §§ 302(e), 310(d), substituted ‘‘$45,000’’ for ‘‘$33,000’’ in cl. (A), ‘‘$25,000’’ for
‘‘$15,000’’ in cl. (A)(i), ‘‘$25,000’’ for ‘‘$15,000’’ and
‘‘$35,000’’ for ‘‘$25,000’’ in cl. (A)(ii), and ‘‘$35,000’’ for
‘‘$25,000’’ and ‘‘80’’ for ‘‘75’’ in cl. (A)(iii).
Subsec. (e)(1). Pub. L. 93–383, § 304(h), struck out par.
(1) which set forth limitations on principal obligations
of mortgages.
Subsec. (e)(3). Pub. L. 93–383, § 303(g), substituted
‘‘$13,000’’ for ‘‘$9,900’’, ‘‘$15,000’’ for ‘‘$11,550’’, ‘‘$18,000’’
for ‘‘$13,750’’, ‘‘$21,000’’ for ‘‘$16,500’’, ‘‘$21,500’’ for
‘‘$16,500’’, ‘‘$25,750’’ for ‘‘$19,800, ‘‘$26,500’’ for ‘‘$20,350’’,
‘‘$30,000’’ for ‘‘$23,100’’, ‘‘$32,250’’ for ‘‘$25,750’’, and
‘‘$36,465’’ for ‘‘$28,050’’.
1969—Subsec. (c). Pub. L. 91–152, §§ 102(d), 113(h)(1),
substituted ‘‘$25,000’’ for ‘‘$20,000’’ wherever appearing,
and ‘‘$33,000’’ for ‘‘$30,000’’.
Subsec. (e)(3). Pub. L. 91–152, § 113(h)(2), (3), substituted ‘‘$9,900’’ for ‘‘$9,000’’, ‘‘$11,550’’ for ‘‘$10,500’’,
‘‘$13,750’’ for ‘‘$12,500’’, ‘‘$16,500’’ for ‘‘$15,000’’ wherever
appearing, ‘‘$19,800’’ for ‘‘$18,000’’, ‘‘$20,350’’ for
‘‘$18,500’’, ‘‘$23,100’’ for ‘‘$21,000’’, ‘‘$24,750’’ for ‘‘$22,500’’,
and ‘‘$28,050’’ for ‘‘$25,500’’.
1968—Subsec. (c). Pub. L. 90–448, § 303(a), (b), made
one-family units in multifamily projects involving
eleven or less units eligible for insurance without having been covered by a project mortgage, and increased
the maximum mortgage limits from 75 to 80 per centum
of the appraised value of the property in excess of
$20,000.
Subsec. (f). Pub. L. 90–448, § 303(c), permitted blanket
mortgages to cover four or more family units instead of
five or more family units.

§ 1715z

TITLE 12—BANKS AND BANKING

Pub. L. 90–301 limited the interest rate on mortgages
to such per centum per annum not in excess of 6 per
centum as the Secretary finds necessary to meet the
mortgage market.
1967—Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’
for ‘‘Commissioner’’ wherever appearing in subsecs. (b)
to (d), (d)(1), (2), (e)(2), (3), (f), and (g).
Subsec. (c). Pub. L. 90–19, § 1(a)(4), substituted ‘‘Secretary’s’’ for ‘‘Commissioner’s’’.
1965—Subsec. (d)(2). Pub. L. 89–117, § 1108(o)(1), substituted ‘‘General Insurance Fund’’ for ‘‘Apartment
Unit Insurance Fund’’.
Subsec. (e)(3). Pub. L. 89–117, § 207(f), substituted
‘‘$18,500 per family unit with three bedrooms, and
$21,000 per family unit with four or more bedrooms’’ for
‘‘and $18,500 per family unit with three or more bedrooms’’ and ‘‘22,500 per family unit with three bedrooms, and $25,500 per family unit with four or more
bedrooms’’ for ‘‘and $22,500 per family unit with three
or more bedrooms’’.
Subsec. (g). Pub. L. 89–117, § 1108(o)(1), (2), substituted
‘‘General Insurance Fund’’ for ‘‘Apartment Unit Insurance Fund’’.
Subsec. (h). Pub. L. 89–117, § 1108(o)(2), struck out reference to subsec. (m) and (p) of section 1713 of this title
and provision that references therein to the Housing
Insurance Fund or Housing Fund shall be construed to
refer to the Apartment Unit Insurance Fund.
Subsecs. (i), (j). Pub. L. 89–117, § 1108(o)(3), redesignated subsec. (j) as (i) and repealed former subsec. (i),
which created the Apartment Unit Insurance Fund, authorized transfer of funds thereto, and provided for the
charging of expenses thereto.
1964—Pub. L. 88–560, § 119(a)(1), substituted ‘‘Mortgage
insurance for condominiums’’ for ‘‘Mortgage insurance
for individually owned units in multifamily structures’’ in section catchline.
Subsec. (a). Pub. L. 88–560, § 119(a)(2), substituted
‘‘project’’ for ‘‘structure’’.
Subsec. (b). Pub. L. 88–560, § 119(a)(2), (3), substituted
‘‘project’’ for ‘‘structure’’ in two places and ‘‘the term
‘mortgage’ for the purposes of subsection (c)’’ for ‘‘the
term ‘mortgage’ for the purposes of this section’’, respectively.
Subsec. (c). Pub. L. 88–560, § 119(a)(2), (4) to (6), amended provisions as follows.
Section 119(a)(2) substituted ‘‘project’’ for ‘‘structure’’, wherever appearing, and ‘‘projects’’ for ‘‘structures’’ in last sentence;
Section 119(a)(4) substituted ‘‘this subsection’’ for
‘‘this section’’, wherever appearing, and ‘‘under any
section’’ for ‘‘under another section’’ in first sentence;
Section 119(a)(5) substituted ‘‘section 1715e(a)(1) and
(2)’’ for ‘‘section 1715e’’, in two places; and
Section 119(a)(6) substituted in third sentence: in cl.
(A), ‘‘amount not to exceed $30,000’’ for ‘‘amount not to
exceed the limits per room and per family dwelling unit
provided by section 1713(c)(3) of this title’’; in cl. (A)(i),
‘‘$15,000’’ for ‘‘$13,500’’; in cl. (A)(ii), ‘‘$15,000’’ and
‘‘$20,000’’ for ‘‘$13,500’’ and ‘‘$18,000’’, respectively; in cl.
(A)(iii), ‘‘75 per centum’’ and ‘‘$20,000’’ for ‘‘70 per centum’’ and ‘‘$18,000’’, respectively; and in cl. (B), ‘‘thirty-five’’ for ‘‘thirty’’ years.
Subsecs. (d) to (f). Pub. L. 88–560, § 119(a)(7), added
subsecs. (d) to (f). Former subsecs. (d) to (f) renumbered
subsecs. (g), (i), (j).
Subsec. (g). Pub. L. 88–560, § 119(a)(7), (8), redesignated
former subsec. (d) as (g) and substituted ‘‘subsection (c)
of this section’’ for ‘‘this section’’ in three places, respectively.
Subsec. (h). Pub. L. 88–560, § 119(a)(9), added subsec.
(h).
Subsec. (i). Pub. L. 88–560, § 119(a)(7), redesignated
former subsec. (e) as (i).
Subsec. (j). Pub. L. 88–560, § 119(a)(7), (10), redesignated former subsec. (f) as (j), struck out reference to
section 1715t of this title, and substituted ‘‘subsection
(c) of this section’’ for ‘‘this section’’.
APPLICABILITY OF 1994 AMENDMENT
Eligibility for loans made under authority granted by
amendment by Pub. L. 103–211 limited to persons whose

Page 636

principal residence was damaged or destroyed as a result of the January 1994 earthquake in Southern California, with such amendment effective only for 18month period following Feb. 12, 1994, see provision of
title I of Pub. L. 103–211, set out as a note under section
1709 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 406(b)(17) of Pub. L. 100–242 applicable only with respect to mortgages insured pursuant to conditional commitment issued on or after Feb.
5, 1988, or in accordance with direct endorsement program (24 CFR 200.163), if approved underwriter of mortgagee signs appraisal report for property on or after
Feb. 5, 1988, see section 406(d) of Pub. L. 100–242, set out
as a note under section 1709 of this title.
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by section 431(b) of Pub. L. 98–181 not to
apply with respect to mortgages insured by the Secretary of Housing and Urban Development before Nov.
30, 1983, see section 431(c) of Pub. L. 98–181, set out as
a note under section 1713 of this title.
For effective date of amendment by section 423(b)(4)
of Pub. L. 98–181, see section 423(c) of Pub. L. 98–181, set
out as a note under section 1709 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
REPEALS
The directory language of, but not the amendment
made by, Pub. L. 90–301, § 3(e), May 7, 1968, 82 Stat. 114,
cited as a credit to this section, was repealed by Pub.
L. 98–181, title I [title IV, § 404(a)], Nov. 30, 1983, 97 Stat.
1208.
Section 318 of Pub. L. 96–399, cited as a credit to this
section, was repealed by Pub. L. 97–35, title III,
§ 339B(d)(2), Aug. 13, 1981, 95 Stat. 417. See 1981 Amendments note for subsec. (c)(2) set out above.
IMPLEMENTATION OF 1982 AMENDMENT
Amendment by Pub. L. 97–253 to be implemented only
if Secretary determines that program of advance payment of insurance premiums, considering effect of said
amendment, is actuarially sound, see section 201(g) of
Pub. L. 97–253, set out as a note under section 1709 of
this title.

§ 1715z. Homeownership or membership in cooperative association for lower income families
(a) Authorization for periodic assistance payments to mortgagees; assistance to manufactured home buyers
(1) For the purpose of assisting lower income
families in acquiring homeownership or in acquiring membership in a cooperative association
operating a housing project, the Secretary is authorized to make, and to contract to make, periodic assistance payments on behalf of such
homeowners and cooperative members. The assistance shall be accomplished through payments to mortgagees holding mortgages meeting the special requirements specified in this
section or which mortgages are assisted under a
State or local program providing assistance
through loans, loan insurance or tax abatement.
In making such assistance available, the Secretary shall give preference to low-income families who, without such assistance, would be likely to be involuntarily displaced (including those
who would be likely to be displaced from rental
units which are to be converted into a con-

Page 637

TITLE 12—BANKS AND BANKING

dominium project or a cooperative project).
Such assistance may include the acquisition of a
condominium or a membership in a cooperative
association.
(2)(A) Notwithstanding any other provision of
this section, the Secretary is authorized to
make periodic assistance payments under this
section on behalf of families whose incomes do
not exceed the maximum income limits prescribed pursuant to subsection (h)(2) of this section for the purpose of assisting such families in
acquiring ownership of a manufactured home
consisting of two or more modules and a lot on
which such manufactured home is or will be situated, except that periodic assistance payments
pursuant to this paragraph shall not be made
with respect to more than 20 per centum of the
total number of units with respect to which assistance is approved under this section after
January 1, 1976. Assistance payments under this
section pursuant to this paragraph shall be accomplished through payments on behalf of an
owner of lower-income of a manufactured home
as described in the preceding sentence to the financial institution which makes the loan, advance of credit, or purchase of an obligation representing the loan or advance of credit to finance the purchase of the manufactured home
and the lot on which such manufactured home is
or will be situated, but only if insurance under
section 1703 of this title covering such loan, advance of credit, or obligation has been granted
to such institution.
(B) Notwithstanding the provisions of subsection (c) of this section, assistance payments
provided pursuant to this paragraph shall be in
an amount not exceeding the lesser of—
(i) the balance of the monthly payment for
principal, interest, real and personal property
taxes, insurance, and insurance premium
chargeable under section 1703 of this title due
under the loan or advance of credit remaining
unpaid after applying 20 per centum of the
manufactured homeowner’s income; or
(ii) the difference between the amount of the
monthly payment for principal, interest, and
insurance premium chargeable under section
1703 of this title which the manufactured
homeowner is obligated to pay under the loan
or advance of credit and the monthly payment
of principal and interest which the owner
would be obligated to pay if the loan or advance of credit were to bear interest at a rate
derived by subtracting from the interest rate
applicable to such loan or advance of credit
the interest rate differential between the maximum interest rate plus mortgage insurance
premium applicable to mortgages insured
under subsection (i) of this section at the time
such loan or advance of credit is made and the
interest rate which such mortgages are presumed, under regulations prescribed by the
Secretary, to bear for purposes of subsection
(c)(2) of this section.
(b) Qualifications and eligibility requirements
for assistance payments
To qualify for assistance payments, the homeowner or the cooperative member shall be of
lower income and satisfy eligibility requirements prescribed by the Secretary, and—

§ 1715z

(1) the homeowner shall be a mortgagor
under a mortgage which meets the requirements of and is insured under subsection (i) or
(j)(4) of this section: Provided, That a mortgage meeting the requirements of subsection
(i)(3)(A) of this section but insured under section 1715z–2 of this title may qualify for assistance payments if such mortgage was executed
by a mortgagor who is determined not to be an
acceptable credit risk for mortgage insurance
purposes (but otherwise eligible) under subsection (j)(4) of this section or under section
1715l(d)(2) or 1715y(c) of this title and accepted
as a reasonably satisfactory credit risk under
section 1715z–2 1 of this title; or
(2) the cooperative association of which the
family is a member shall operate (A) a housing
project the construction or substantial rehabilitation of which has been financed with a
mortgage insured under section 1715e or section 1715l(d)(3) of this title and which has been
completed within two years prior to the filing
of the application for assistance payments and
the dwelling unit has had no previous occupant other than the family: Provided, That if
any cooperative member who has received assistance payments transfers his membership
and occupancy rights to another person who
satisfies the eligibility requirements prescribed by the Secretary and undertakes the
obligation to pay occupancy charges, the new
cooperative member may qualify for assistance payments upon the filing of an application with respect to the dwelling unit involved
to be occupied by him: Provided further, That
assistance payments may be made with respect to a dwelling unit in an existing cooperative project which meets such standards as
the Secretary may prescribe, if the family
qualifies as a displaced family as defined in
section 1715l(f) of this title, or a family which
includes five or more minor persons, or a family occupying low-rent public housing: Provided further, That the amount of the mortgage attributable to the dwelling unit shall involve a principal obligation not in excess of
$40,000 ($47,500 in any geographical area where
the Secretary authorizes an increase on the
basis of a finding that costs levels so require),
except that with respect to any family with
five or more persons the foregoing limits shall
be $47,500 and $55,000, respectively; or (B) a
housing project which is financed under a
State or local program providing assistance
through loans, loan insurance, or tax abatements, and which prior to completion of construction or rehabilitation is approved for receiving the benefits of this section.
(c) Limitation on payments on behalf of mortgagor; occupancy of property; maximum
amount of payment; recapture of amounts;
determination, applicability, etc.
(1) Subject to the second sentence of this paragraph, the assistance payments to a mortgagee
by the Secretary on behalf of a mortgagor shall
be made during such time as the mortgagor
shall continue to occupy the property which secures the mortgage: Provided, That assistance
1 See

References in Text note below.

§ 1715z

TITLE 12—BANKS AND BANKING

payments may be made on behalf of a homeowner who assumes a mortgage insured under
subsection (i) or (j)(4) with respect to which assistance payments have been made on behalf of
the previous owner, if the homeowner is approved by the Secretary as eligible for receiving
such assistance: Provided further, That the Secretary is authorized to continue making such assistance payments where the mortgage has been
assigned to the Secretary. Assistance payments
pursuant to any new contract, other than a contract in connection with a refinancing under
subsection (r), entered into after September 30,
1983, that utilizes authority approved in appropriation Acts for any fiscal year beginning after
such date may not be made for more than a 10year period. The payment shall be in an amount
not exceeding the lesser of—
(A) the balance of the monthly payment for
principal, interest, taxes, insurance, and mortgage insurance premium due under the mortgage remaining unpaid after applying 20 per
centum of the mortgagor’s income; or
(B) the difference between the amount of the
monthly payment for principal, interest and
mortgage insurance premium which the mortgagor is obligated to pay under the mortgage
and the monthly payment for principal and interest which the mortgagor would be obligated
to pay if the mortgage were to bear interest at
the rate of 1 per centum per annum (4 per centum per annum in the case of a mortgage described in subsection (o)).
(2)(A) Upon disposition by the homeowner of
any property assisted pursuant to this section or
where the homeowner rents such a property (or
the owner’s unit in the case of a two- to fourfamily property) for a period longer than one
year, the Secretary shall provide for the recapture of an amount equal to the lesser of (i) the
amount of assistance actually received under
this section, other than any amount provided
under subsection (e), or (ii) an amount equal to
at least 50 per centum of the net appreciation of
the property, as determined by the Secretary.
For the purpose of this paragraph, the term ‘‘net
appreciation of the property’’ means any increase in the value of the property over the
original purchase price, less the reasonable costs
of sale, the reasonable costs of improvements
made to the property, and any increase in the
mortgage amount as of the time of sale over the
original mortgage balance due to the mortgage
being insured pursuant to section 1715z–10 1 of
this title. Notwithstanding any other provision
of law, any such assistance shall constitute a
debt secured by the property to the extent that
the Secretary may provide for such recapture.
(B) Subparagraph (A) does not apply to any
property with respect to which there is assumption in accordance with paragraph (1) of this
subsection or to any property which is subject
to a mortgage, loan, or other advance of credit
insured pursuant to subsection (q).
(3)(A) There hereby is established in the Treasury of the United States a fund, which, to the
extent approved in appropriation Acts, may be
used by the Secretary for purposes of carrying
out subparagraph (B). There shall be deposited
into such fund (i) any amount recaptured under
paragraph (2); (ii) any authority to make assist-

Page 638

ance payments under subsection (a) that is committed for use in a contract but is unused because the mortgage, loan, or advance of credit
involved is refinanced (except to the extent provided in subsection (r) for mortgages insured
under such subsection) or because such assistance payments are terminated or suspended for
other reasons before the original termination
date of such contract; and (iii) any amount received under subparagraph (C).
(B) In the case of any homeowner whose assistance payments are terminated by reason of the
10-year limitation referred to in paragraph (1),
and who is determined by the Secretary to be
unable to assume the full payments due under
the mortgage, loan, or advance of credit involved, the Secretary shall, to the extent of the
availability of amounts in the fund established
in subparagraph (A), contract to make, and
make, continued assistance payments on behalf
of such homeowner. Such continued assistance
payments shall be made in an amount determined in accordance with the applicable provisions of paragraph (1) or subsection (a)(2)(B) and
for such period as the Secretary determines to
be appropriate.
(C) Any amounts in such fund determined by
the Secretary to be in excess of the amounts
currently required to carry out the provisions of
subparagraph (B) shall be invested by the Secretary in obligations of, or obligations guaranteed as to both principal and interest by, the
United States or any agency of the United
States. Notwithstanding the preceding sentence,
any amounts of budget authority or contract authority recaptured from assistance payments
contracts relating to mortgages that are being
refinanced that are not required for assistance
payments contracts relating to mortgages insured under this subsection, shall be rescinded.
(d) Limitation on payments on behalf of family
holding membership in cooperative association; occupancy; maximum amount of payment
Assistance payments to a mortgagee by the
Secretary on behalf of a family holding membership in a cooperative association operating a
housing project shall be made only during such
time as the family is an occupant of such project and shall be in amounts computed on the
basis of the formula set forth in subsection (c)
applying the cooperative member’s proportionate share of the obligations under the
project mortgage to the items specified in the
formula.
(e) Reimbursement for expenses in handling the
mortgage
The Secretary may include in the payment to
the mortgagee such amount, in addition to the
amount computed under subsection (a)(2)(B), (c),
(d), (j)(7), or (r), as he deems appropriate to reimburse the mortgagee for its expenses in handling the mortgage.
(f) Adoption of procedures for recertifications of
mortgagor’s or cooperative member’s income
Procedures shall be adopted by the Secretary
for recertifications of the mortgagor’s (or cooperative member’s) income at intervals of two
years (or at shorter intervals where the Sec-

Page 639

TITLE 12—BANKS AND BANKING

retary deems it desirable) for the purpose of adjusting the amount of such assistance payments
within the limits of the formula described in
subsection (c).
(g) Regulations to assure that sales price or
other consideration paid is not increased
above appraised value
The Secretary shall prescribe such regulations
as he deems necessary to assure that the sales
price of, or other consideration paid in connection with, the purchase by a homeowner of the
property with respect to which assistance payments are to be made is not increased above the
appraised value on which the maximum mortgage which the Secretary will insure is computed.
(h) Authorization of appropriations; aggregate
amount of assistance payment contracts;
maximum income limits of families; limitation on payments with respect to existing
dwellings or dwelling units in existing
projects and for approved substantial rehabilitation of dwellings or dwelling units in
projects
(1) There are authorized to be appropriated
such sums as may be necessary to carry out the
provisions of this section, including such sums
as may be necessary to make the assistance payments under contracts entered into under this
section. The aggregate amount of outstanding
contracts to make such payments shall not exceed amounts approved in appropriation Acts,
and payments pursuant to such contracts shall
not exceed $75,000,000 per annum prior to July 1,
1969, which maximum dollar amount shall be increased by $125,000,000 on July 1, 1969, by
$150,000,000 on July 1, 1970, by $200,000,000 on July
1, 1971, by such sums as may be approved in appropriation Acts after June 30, 1974, and prior to
July 1, 1976, and by such sums as may be approved in an appropriation Act on or after October 1, 1983 (from the additional authority to
enter into contracts made available on such
date under the first sentence of section
1437c(c)(1) of title 42). The aggregate amount
that may be obligated over the duration of the
contracts entered into with the authority provided on or after October 1, 1983 (other than obligations in connection with mortgages insured
under subsection (r)), may not exceed such sums
of new budget authority as may be appropriated
after November 30, 1983. The Secretary shall
begin issuing new commitments and reservations to provide mortgage insurance and assistance payments under this section before the expiration of the 30-day period following the approval in any appropriation Act of budget authority for this section after November 30, 1983.
Upon the expiration of one year following August 22, 1974, the Secretary shall not enter into
new contracts for assistance payments under
this section utilizing authority approved in appropriation Acts prior to July 1, 1974. The Secretary shall not enter into new contracts for assistance payments under this section (except
under subsection (r)) after May 20, 1983, utilizing
amounts approved in appropriation Acts before
November 30, 1983, except (i) pursuant to a firm
commitment issued on or before May 20, 1983,
(ii) pursuant to other commitments issued by

§ 1715z

the Secretary prior to June 30, 1981, reserving
funds for housing to be assisted under this section where such housing is included in a
project pursuant to section 119 of the Housing
and Community Development Act of 1974 [42
U.S.C. 5318], or (iii) pursuant to other commitments issued on or before September 30, 1981,
where housing under this section is to be developed on land which was municipally owned on
September 30, 1981, and where a local government contributes at least $1,000 per unit of funds
obtained under title I of the Housing and Community Development Act of 1974 [42 U.S.C. 5301
et seq.] and at least $2,000 per unit of additional
funds to assist housing under this section. In no
event may the Secretary enter into any new
contract for assistance payments under this section (other than a contract in connection with a
mortgage insured under subsection (r)) after
September 30, 1989.
(2) Assistance payments under this section
may be made only with respect to a family
whose income at the time of initial occupancy
does not exceed 95 per centum of the median income for the area, as determined by the Secretary with adjustments for smaller and larger
families, except that the Secretary may establish income ceilings higher or lower than 95 per
centum of the median for the area on the basis
of his findings that such variations are necessary because of prevailing levels of construction costs, unusually high or low median family
incomes, or other factors.
(3) Notwithstanding the provisions of subsections (b)(2) and (i)(3)(A) with respect to the
prior construction or rehabilitation of a dwelling, or of the project in which there is a dwelling unit, for which assistance payments may be
made, and notwithstanding the provisions of
subsection (j)(1) authorizing the purchase of
housing which is neither deteriorating nor substandard, not more than—
(A) 25 per centum of the total amount of
contracts for assistance payments authorized
by appropriation Acts to be made prior to July
1, 1969, and
(B) 30 per centum of the total additional
amount of contracts for assistance payments
authorized by appropriation Acts to be made
on or after July 1, 1969,
may be made with respect to existing dwellings,
or dwelling units in existing projects. The preceding sentence shall not apply to contracts in
connection with mortgages insured under subsection (r).
(4) At least 10 per centum of the total amount
of contracts for assistance payments authorized
by appropriation Acts to be made after June 30,
1971, shall be available for use only with respect
to dwellings, or dwelling units in projects, which
are approved by the Secretary prior to substantial rehabilitation.
(i) Insurance of mortgages executed by mortgagors meeting eligibility requirements for assistance payments; issuance of commitment;
eligibility requirements for insurance
(1) The Secretary is authorized, upon application by the mortgagee, to insure a mortgage (including advances with respect to property construction or rehabilitation pursuant to a self-

§ 1715z

TITLE 12—BANKS AND BANKING

help program) executed by a mortgagor who
meets the eligibility requirements for assistance
payments prescribed by the Secretary under
subsection (b). Commitments for the insurance
of such mortgages may be issued by the Secretary prior to the date of their execution or
disbursement thereon, upon such terms and conditions as the Secretary may prescribe.
(2) To be eligible for insurance under this subsection, a mortgage shall meet the requirements
of section 1715l(d)(2) or 1715y(c) of this title, except as such requirements are modified by this
subsection.
(3) A mortgage to be insured under this subsection shall—
(A) involve a single-family or a two-family
dwelling which has been approved by the Secretary prior to the beginning of construction
or substantial rehabilitation, or a three-family dwelling which is approved by the Secretary prior to the beginning of substantial rehabilitation, or a one-family unit in a condominium project (together with an undivided
interest in the common areas and facilities
serving the project) which is released from a
multi-family project, the construction or substantial rehabilitation of which has been completed within two years prior to the filing of
the application for assistance payments with
respect to such family unit and the unit has
had no previous occupant other than the mortgagor: Provided, That the mortgage may involve an existing dwelling or a family unit in
an existing condominium project which meets
such standards as the Secretary may prescribe: Provided further, That the mortgage
may involve an existing dwelling or a family
unit in an existing condominium project if assistance payments have been made on behalf
of the previous owner of the dwelling or family
unit with respect to a mortgage insured under
subsection (j)(4): Provided further, That the
mortgage may involve a dwelling unit in an
existing project covered by a mortgage insured
under section 1715z–1 of this title or in an existing project receiving the benefits of financial assistance under section 101 of the Housing and Urban Development Act of 1965 [12
U.S.C. 1701s];
(B) where it is to cover a one-family unit in
a condominium project, have a principal obligation not exceeding $40,000 ($47,500 in any
geographical area where the Secretary authorizes an increase on the basis of a finding that
cost levels so require), except that with respect to any family with five or more persons
the foregoing limits shall be $47,500 and $55,000,
respectively;
(C) involve, in the case of a dwelling unit
other than a condominium or cooperative
unit, a principal obligation (including such
initial service charges, appraisal, inspection,
and other fees as the Secretary shall approve)
in an amount not to exceed $40,000 ($47,500 in
any geographical area where the Secretary authorizes an increase on the basis of a finding
that cost levels so require), except that with
respect to any family with five or more persons the foregoing limits shall be $47,500 and
$55,000, respectively;
(D) involve, in the case of a two-family or
three-family dwelling, a principal obligation

Page 640

(including such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve) in an amount not to exceed $60,000 ($66,250 in any geographical area
where the Secretary authorizes an increase on
the basis of a finding that cost levels so require);
(E) be executed by a mortgagor who shall
have paid in cash or its equivalent, on account
of the property, at least an amount equal to 3
per centum of the Secretary’s estimate of the
cost of acquisition (excluding the mortgage insurance premium paid at the time the mortgage is insured); and
(F) bear interest at a rate not to exceed such
percent per annum on the amount of the principal obligation outstanding at any time as
the Secretary finds necessary to meet the
mortgage market, taking into consideration
the yields on mortgages in the primary and
secondary markets.
(4) In insuring eligible mortgages under this
subsection, the Secretary may not deny insurance on the basis that a mortgage involves a
two- to three-family dwelling or is to be used to
finance substantial rehabilitation rather than
new construction.
(5) As a condition of insuring a mortgage on a
two- to three-family dwelling, the Secretary
shall require the mortgagor (A) not to discriminate against prospective tenants on the basis of
their receipt of or eligibility for housing assistance under any Federal, State or local housing
assistance program and (B) to agree that during
the term of the mortgage each of the rental
units shall be occupied by, or available for occupancy by, persons and families whose incomes
do not exceed 100 per centum of the area median
income.
(j) Insurance of mortgages executed by nonprofit
organizations or public bodies or agencies;
issuance of commitment; eligibility requirements for insurance; insurance of mortgages
executed to finance sale of individual dwellings to lower income individuals or families;
definitions; assistance payments to mortgagees on behalf of nonprofit organizations or
public bodies and agencies
(1) In addition to mortgages insured under the
provisions of subsection (i), the Secretary is authorized, upon application by the mortgagee, to
insure a mortgage (including advances under
such mortgage during rehabilitation) which is
executed by a nonprofit organization or public
body or agency to finance the purchase of housing, and the rehabilitation of such housing if it
is deteriorating or substandard, for subsequent
resale to lower income home purchasers who
meet the eligibility requirements for assistance
payments prescribed by the Secretary under
subsection (b). Commitments for the insurance
of such mortgages may be issued by the Secretary prior to the date of their execution or
disbursement thereon, upon such terms and conditions as the Secretary may prescribe.
(2) To be eligible for insurance under paragraph (1) of this subsection, a mortgage shall—
(A) be executed by a private nonprofit organization or public body or agency, approved by
the Secretary, for the purpose of financing the

Page 641

TITLE 12—BANKS AND BANKING

purchase (with the intention of subsequent resale), and rehabilitation where the housing involved is deteriorating or substandard, of
property comprising one or more tracts or parcels, whether or not contiguous, consisting of
(i) four or more single-family dwellings of detached, semidetached, or row construction, or
(ii) four or more one-family units in a structure or structures for which a plan of family
unit ownership approved by the Secretary is
established; except that in a case not involving the rehabilitation of deteriorating or substandard housing the property purchased may
consist of one or more such dwellings or units;
(B) be in a principal amount not exceeding
the appraised value of the property at the
time of its purchase under the mortgage plus
the estimated cost of any rehabilitation;
(C) bear interest at a rate not to exceed such
percent per annum on the amount of the principal obligation outstanding at any time as
the Secretary determines is necessary to meet
the mortgage market, taking into consideration the yields on mortgages in the primary
and secondary markets;
(D) provide for complete amortization (subject to paragraph (4)(E)) by periodic payments
within such term as the Secretary may prescribe; and
(E) provide for the release of individual single-family dwellings from the lien of the mortgage upon their sale in accordance with paragraph (4).
(3) No mortgage shall be insured under paragraph (1) unless the mortgagor shall have demonstrated to the satisfaction of the Secretary
that (A) the property involved is located in a
neighborhood which is sufficiently stable and
contains sufficient public facilities and amenities to support long-term values, or (B) the purchase or rehabilitation of such property plus the
mortgagor’s related activities and the activities
of other owners of housing in the neighborhood,
together with actions to be taken by public authorities, will be of such scope and quality as to
give reasonable promise that a stable environment will be created in the neighborhood.
(4)(A) No mortgage shall be insured under
paragraph (1) unless the mortgagor enters into
an agreement, satisfactory to the Secretary,
that it will offer to sell the dwellings involved,
after purchase and upon completion of any rehabilitation, to lower income individuals or families meeting the eligibility requirements established by the Secretary under subsection (b).
(B) The Secretary is authorized to insure
under this paragraph mortgages executed to finance the sale of individual dwellings to lower
income purchasers as provided in subparagraph
(A). Any such mortgage shall—
(i) be in a principal amount not in excess of
that portion of the unpaid principal balance of
the blanket mortgage covering the property
which is allocable to the individual dwelling
involved;
(ii) bear interest at the same rate as the
blanket mortgage; and
(iii) provide for complete amortization by
periodic payments within a term equal to the
remaining term (determined without regard to
subparagraph (E)) of such blanket mortgage.

§ 1715z

(C) The price for which any individual dwelling is sold under this paragraph shall be in an
amount equal to that portion of the unpaid principal balance of the blanket mortgage covering
the property which is allocable to the dwelling
plus such additional amount, not less than $200
(which may be applied in whole or in part toward closing costs and may be paid in cash or its
equivalent), as the Secretary may determine to
be reasonable.
(D) Upon the sale under this paragraph of any
individual dwelling, such dwelling shall be released from the lien of the blanket mortgage.
Until all of the individual dwellings in the property covered by the blanket mortgage have been
sold, the mortgagor shall hold and operate the
dwellings remaining unsold at any given time,
in such manner and under such terms as the
Secretary may prescribe, as though they constituted rental units.
(E) Upon the sale under this paragraph of all
the individual dwellings in the property covered
by the blanket mortgage and the release of all
individual dwellings from the lien of the blanket
mortgage, the insurance of the blanket mortgage shall be terminated and no adjusted premium charge shall be charged by the Secretary
upon such termination.
(5) Where the Secretary has approved a plan of
family unit ownership the terms ‘‘single-family
dwelling’’, ‘‘single-family dwellings’’, ‘‘individual dwelling’’, and ‘‘individual dwellings’’ shall
mean a family unit or family units, together
with the undivided interest (or interests) in the
common areas and facilities.
(6) For purposes of this subsection, the terms
‘‘single-family dwelling’’ and ‘‘single-family
dwellings’’ (except for purposes of paragraph (5))
shall include a two- to three-family dwelling
which has been approved by the Secretary.
(7) In addition to the assistance payments authorized under subsection (b), the Secretary
may make such payments to a mortgagee on behalf of a nonprofit organization or public body
or agency which is a mortgagor under the provisions of paragraph (1) in an amount not exceeding the difference between the monthly payment
for principal, interest, and mortgage insurance
premium which the mortgagor is obligated to
pay under the mortgage and the monthly payment for principal and interest such mortgagor
would be obligated to pay if the mortgage were
to bear interest at the rate of 1 per centum per
annum.
(8) A mortgage covering property which is not
deteriorating or substandard may be insured
under this subsection only if it is situated in an
area in which mortgages may be insured under
section 1715l(h) of this title.
(9) In insuring eligible mortgages under this
subsection, the Secretary may not deny insurance on the basis that a mortgage involves a
two- to three-family dwelling or is to be used to
finance substantial rehabilitation rather than
new construction.
(k) Allocation and transfer of reasonable portion
of total authority to contract to make assistance payments to Secretary of Agriculture
for use in rural areas and small towns
The Secretary shall from time to time allocate and transfer to the Secretary of Agri-

§ 1715z

TITLE 12—BANKS AND BANKING

culture, for use (in accordance with the terms
and conditions of this section) in rural areas and
small towns, a reasonable portion of the total
authority to contract to make assistance payments as approved in appropriation Acts under
subsection (h)(1).
(l) Deductions for minors in determining income
limits; exclusion of earnings of minors
In determining the income of any person for
the purposes of this section, there shall be deducted an amount equal to $300 for each minor
person who is a member of the immediate family
of such person and living with such family, and
the earnings of any such minor person shall not
be included in the income of such person or his
family.
(m) Termination date for insurance of mortgages
No mortgage (except a mortgage insured under
subsection (r)) shall be insured under this section after September 30, 1989, except pursuant to
a commitment to insure before that date.
(n) Percentage limitation of mortgage insurance
on subdivision units; exceptions
No mortgage may be insured under this section on a unit in a subdivision, after October 12,
1977, which, when added to any other mortgages
insured under this section in that subdivision
after such date, represents more than 40 per centum of the total number of units in the subdivision, except that the preceding limitation shall
not apply with regard to any rehabilitated unit,
or to any unit or subdivision located or to be located in an established urban neighborhood or
area, where a sound proposal is involved and
where an aggregation of subsidized units is essential to a community sponsored overall redevelopment plan, as determined by the Secretary
or to a mortgage insured under subsection (r).
(o) Mortgage insurance over maximum limits involving dwellings of community sponsored
programs of concentrated redevelopment or
revitalization
The Secretary may insure a mortgage under
this section involving a principal obligation
which exceeds, by not more than 20 per centum,
the maximum limits specified under subsection
(b)(2) or (i)(3) of this section if the mortgage relates to a dwelling in an urban neighborhood
where the Secretary determines that a community sponsored program of concentrated redevelopment or revitalization is being undertaken
and the Secretary determines that such action
is necessary to enable eligible families residing
in the area who occupy substandard housing or
are being involuntarily displaced to remain in
the area in decent, safe, and sanitary housing.
(p) Mortgage insurance over maximum limits involving dwellings to be occupied by physically handicapped persons; applicability,
etc.
The Secretary may insure a mortgage under
this section involving a principal obligation
which exceeds, by not more than 10 per centum,
the maximum limits specified under subsection
(b)(2) or (i)(3) of this section, or, if applicable,
the maximum principal obligation insurable
pursuant to subsection (o) of this section, if the
mortgage relates to a dwelling to be occupied by

Page 642

a physically handicapped person and the Secretary determines that such action is necessary
to reflect the cost of making such dwelling accessible to and usable by such person.
(q) Periodic assistance payments for emergency
stimulation of housing market; contracts,
terms and conditions, eligibility, etc., for payments
(1) Notwithstanding any other provision of
this section, except subsection (n), if the Secretary determines that there is a substantial
need for emergency stimulation of the housing
market, the Secretary is authorized to make
and enter into contracts to make periodic assistance payments, to the extent of not to exceed 75 per centum of the authority available
pursuant to subsection (h)(1), on behalf of homeowners, including owners of manufactured
homes, to mortgagees or other lenders holding
mortgages, loans, or advances of credit which
meet the requirements of this subsection. The
Secretary may establish such criteria, terms,
and conditions relating to homeowners and
mortgages, loans, or advances of credit assisted
under this subsection as the Secretary deems
appropriate, consistent with the provisions of
this subsection. The Secretary is authorized to
insure a mortgage which meets the requirements of and is to be assisted under this subsection. The authority to enter into contracts to
provide assistance payments and to insure mortgages under this subsection shall terminate on
September 30, 1989, or at such earlier date as the
Secretary may deem appropriate, upon a determination by the Secretary that the conditions
which gave rise to the exercise of authority
under this subsection are no longer present, except pursuant to a commitment entered into
prior to such date.
(2) Payments under this subsection may be
made only on behalf of a homeowner who satisfies such eligibility requirements as may be prescribed by the Secretary and who—
(A)(i) is a mortgagor under a mortgage
which meets the requirements of and is insured under this subsection, or (ii) is the original owner of a new manufactured home consisting of two or more modules and a lot on
which the manufactured home is situated,
where insurance under section 1703 of this title
covering the loan, advance of credit, or purchase of an obligation representing such loan
or advance of credit to finance the purchase of
such manufactured home and lot has been
granted to the lender making such loan, advance of credit, or purchase of an obligation;
and
(B) has a family income, at the time of initial occupancy, which does not exceed 130 per
centum of the area median income for the area
(with adjustments for smaller and larger families, unusually high or low median family income, or other factors), as determined by the
Secretary.
(3) Assistance payments to a mortgagee or
other lender by the Secretary on behalf of a
homeowner shall be made only during such time
as the homeowner shall continue to occupy the
property which secures the mortgage, loan, or
advance of credit. The Secretary may, where a

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TITLE 12—BANKS AND BANKING

mortgage insured under this subsection has been
assigned to the Secretary, continue making
such assistance payments.
(4) The amount of the assistance payments in
the case of a mortgage shall not at any time exceed the lesser of—
(A) the balance of the monthly payment for
principal, interest, taxes, insurance, and any
mortgage insurance premium due under the
mortgage remaining unpaid after applying a
minimum of 25 per centum of the mortgagor’s
income, except that the Secretary may reduce
such per centum of income to the extent he
deems necessary, but not lower than 20 per
centum of the mortgagor’s income; or
(B) the difference between the amount of the
monthly payment for principal, interest, and
any mortgage insurance premium which would
be required if the mortgage were a level payment mortgage bearing interest at a rate
equal to the maximum interest rate which is
applicable to level payment mortgages insured
under section 1709(b) of this title, other than
mortgages subject to section 1709–1(2) 1 of this
title, and the monthly payment for principal
and interest which the mortgagor would be obligated to pay if the mortgage were a level
payment mortgage bearing interest at the rate
of at least 91⁄2 per centum per annum.
(5) Assistance payments on behalf of the owner
of a manufactured home shall not at any time
exceed the lesser of—
(A) the balance of the monthly payment for
principal, interest, real and personal property
taxes, insurance, and insurance premium
chargeable under section 1703 of this title due
under the loan or advance of credit remaining
unpaid after applying a minimum of 25 per
centum of the manufactured homeowner’s income, except that the Secretary may reduce
such per centum of income to the extent he
deems necessary, but not lower than 20 per
centum of the mortgagor’s income; or
(B) the difference between the amount of the
monthly payment for principal, interest, and
insurance premium chargeable under section
1703 of this title which the manufactured
homeowner is obligated to pay under the loan
or advance of credit and the monthly payment
of principal and interest which the owner
would be obligated to pay if the loan or advance of credit were to bear an interest rate
determined by the Secretary which shall not
be less than 12 per centum per annum.
(6) The Secretary may include in the payment
to the mortgagee or other lender such amount,
in addition to the amount computed under paragraph (4) or (5), as the Secretary deems appropriate to reimburse the mortgagee or other lender for its reasonable and necessary expenses in
handling the mortgage, loan, or advance of credit.
(7) The Secretary shall prescribe such regulations as the Secretary deems necessary to assure that the sales price of, or other consideration paid in connection with, the purchase by a
homeowner of the property with respect to
which assistance payments are to be made is not
greater than the appraised value as determined
by the Secretary.

§ 1715z

(8) Assistance payments pursuant to paragraph (5) shall not be made with respect to more
than 20 per centum of the total number of units
with respect to which assistance is approved
under this subsection.
(9) The Secretary may, in addition to mortgages insured under subsection (i) or (j), insure,
upon application by the mortgagee, a mortgage
executed by a mortgagor who meets the eligibility requirements for assistance payments prescribed by the Secretary under paragraph (2).
Commitments for the insurance of such mortgages may be issued by the Secretary prior to
the date of their execution or disbursement
thereon, upon such terms and conditions as the
Secretary may prescribe.
(10) To be eligible for insurance under this subsection, a mortgage shall—
(A) be a first lien on real estate held in fee
simple, or on a leasehold under a lease which
meets terms and conditions established by the
Secretary;
(B) have been made to, and be held by, a
mortgagee approved by the Secretary as responsible and able to service the mortgage
properly;
(C) involve a one- to four-family dwelling
which has been approved by the Secretary
prior to the beginning of construction, or if
not so approved, has been completed within
one year prior to the filing of the application
for insurance and which has never been sold
other than to the mortgagor;
(D) involve a principal residence the sales
price of which does not exceed 82 per centum
of the applicable maximum principal obligation of a mortgage which may be insured in
the area pursuant to section 1709(b)(2) of this
title, determined without regard to the last
sentence of such section;
(E) have maturity and amortization provisions satisfactory to the Secretary;
(F) bear interest (exclusive of premium
charges for insurance, and service charges if
any) at not to exceed the applicable maximum
rate for mortgages insured pursuant to section
1709(b) of this title;
(G) be executed by a mortgagor who shall
have paid in cash or its equivalent, on account
of the property, at least an amount equal to 3
per centum of the Secretary’s estimate of the
cost of acquisition; and
(H) contain such other terms and conditions
as the Secretary may prescribe.
(11) The Secretary shall, to the extent practicable, insure mortgages under this subsection
which are secured by properties which contribute to the conservation of land and energy resources.
(12) A mortgage to be assisted under this subsection shall, where the Secretary deems it appropriate, provide for graduated payments pursuant to section 1715z–10 1 of this title.
(13) The Secretary shall develop and utilize a
system to allocate assistance under this subsection in a manner which assures a reasonable
distribution of such assistance among the various regions of the country and which takes into
consideration such factors as population, relative decline in building permits, the need for
increased housing production, and other factors

§ 1715z

TITLE 12—BANKS AND BANKING

he deems appropriate. Assistance provided under
this subsection shall not be subject to section
1439 of title 42.
(14) Upon the disposition by the homeowner of
any property assisted pursuant to this subsection, or where the homeowner rents the property (or the owner’s unit in the case of a two- to
four-family residence) for a period longer than
one year, the Secretary shall provide for the recapture of an amount equal to the lesser of (A)
the amount of assistance actually received
under this subsection, other than any amount
provided under paragraph (6), or (B) an amount
at least equal to 50 per centum of the net appreciation of the property, as determined by the
Secretary. For the purpose of this paragraph,
the term ‘‘net appreciation of the property’’
means any increase in the value of the property
over the original purchase price, less the reasonable costs of sale, the reasonable costs of improvements made to the property, and any increase in the mortgage balance as of the time of
sale over the original mortgage balance due to
the mortgage being insured pursuant to section
1715z–10 1 of this title. In providing for such recapture, the Secretary shall include incentives
for the homeowner to maintain the property in
a marketable condition. Notwithstanding any
other provision of law, any such assistance shall
constitute a debt secured by the property to the
extent that the Secretary may provide for such
recapture.
(15) Procedures shall be adopted by the Secretary for recertification of the homeowner’s income at intervals of two years (or at shorter intervals where the Secretary deems it desirable)
for the purpose of adjusting the amount of such
assistance payments within the limits of the
formula described in paragraph (4) or (5).
(r) Refinancing
(1) The Secretary is authorized, upon application of a mortgagee, to insure under this subsection a mortgage the proceeds of which are
used to refinance a mortgage insured under this
section.
(2) To be eligible for insurance under this subsection, a mortgage must be executed by a mortgagor meeting the requirements of paragraph (3)
and shall—
(A) be a first lien on real estate held in fee
simple, or on a leasehold under a lease—
(i) for not less than 99 years which is renewable; or
(ii) having a period of not less than 10
years to run beyond the maturity date of the
mortgage;
(B) have been made to, and held by, a mortgagee approved by the Secretary;
(C) be in an amount not exceeding the outstanding principal balance, including any unpaid interest, due on the mortgage being refinanced;
(D) have a maturity not exceeding the unexpired term of the mortgage being refinanced;
(E) bear an interest rate not exceeding such
percent per annum on the amount of the principal obligation outstanding at any time as
the Secretary finds necessary to meet the
mortgage market, taking into consideration

Page 644

the yields on mortgages in the primary and
secondary markets; to the extent that the
amounts described in paragraphs (4)(A) and (B)
are not otherwise paid by the Secretary, the
foregoing interest rate may be increased, in
the discretion of the Secretary, to compensate
the mortgagee for its payment to, or on behalf
of, the mortgagor of such amounts; and
(F) meet the criteria for refinancing as determined by the Secretary.
(3) Notwithstanding the provisions of subsection (h)(2), assistance payments in connection with mortgages insured under paragraph (2)
shall be made only with respect to a family who
is eligible for, and receiving assistance payments with respect to, the insured mortgage
being refinanced.
(4) The Secretary is authorized and, to the extent provided in appropriation Acts, may pay to
the mortgagor (directly, through the mortgagee,
or otherwise)—
(A) an amount, as approved by the Secretary, as an incentive to the mortgagor to refinance a mortgage insured under this section;
and
(B) an amount as approved by the Secretary
for costs incurred in connection with the refinancing, including but not limited to discounts, loan origination fees, and closing
costs.
(5) Amounts of budget authority required for
assistance payments contracts with respect to
mortgages insured under this subsection shall be
derived from amounts recaptured from assistance payments contracts relating to mortgages
that are being refinanced. For purposes of subsection (c)(3)(A), the amount of recaptured budget authority that the Secretary commits for assistance payments contracts relating to mortgages insured under this subsection shall not be
construed as ‘‘unused’’.
(6) The Secretary is authorized to take any actions to identify and communicate with any
mortgagor of a mortgage insured under this section to implement the refinancing of such mortgages with insurance under this subsection. The
Secretary may take such actions directly, or
under contract. Notwithstanding the restriction
of section 552a(b) of title 5, upon the request of
an approved mortgagee, the Secretary may disclose to such mortgagee the name and address of
any mortgagor of a mortgage insured under this
section that meets the criteria for refinancing,
pursuant to paragraph (2)(F), and the unpaid
principal balance and interest rate on such
mortgage.
(7) The Secretary shall implement the provisions of this subsection by a notice published in
the Federal Register.
(June 27, 1934, ch. 847, title II, § 235, as added
Pub. L. 90–448, title I, § 101(a), Aug. 1, 1968, 82
Stat. 477; amended Pub. L. 91–152, title I,
§§ 101(d), 106, 107(a), 109, 113(i), title IV, §§ 412(b),
418(a), Dec. 24, 1969, 83 Stat. 379, 381, 385, 398, 402;
Pub. L. 91–609, title I, §§ 101(d), 102(a), 105–107,
Dec. 31, 1970, 84 Stat. 1770, 1771; Pub. L. 92–503,
§ 1(d), Oct. 18, 1972, 86 Stat. 906; Pub. L. 93–85,
§ 1(d), Aug. 10, 1973, 87 Stat. 220; Pub. L. 93–117,
§ 1(d), Oct. 2, 1973, 87 Stat. 421; Pub. L. 93–383,
title II, § 211, Aug. 22, 1974, 88 Stat. 671; Pub. L.

Page 645

TITLE 12—BANKS AND BANKING

94–375, § 3(a)–(c), (e), (f), Aug. 3, 1976, 90 Stat. 1068,
1069; Pub. L. 95–128, title II, § 205, title III,
§§ 301(d), 303(f), Oct. 12, 1977, 91 Stat. 1130, 1131,
1132; Pub. L. 95–406, § 1(d), Sept. 30, 1978, 92 Stat.
879; Pub. L. 95–557, title III, § 301(d), Oct. 31, 1978,
92 Stat. 2096; Pub. L. 96–71, § 1(d), Sept. 28, 1979,
93 Stat. 501; Pub. L. 96–105, § 1(d), Nov. 8, 1979, 93
Stat. 794; Pub. L. 96–153, title II, § 213, title III,
§ 301(d), Dec. 21, 1979, 93 Stat. 1111; Pub. L. 96–372,
§ 1(d), Oct. 3, 1980, 94 Stat. 1363; Pub. L. 96–399,
title II, §§ 206(a), (b)(1), 207, title III, §§ 301(d),
308(c)(1), (2), Oct. 8, 1980, 94 Stat. 1630, 1631, 1638,
1640; Pub. L. 97–35, title III, §§ 328, 331(d), Aug. 13,
1981, 95 Stat. 407, 412; Pub. L. 97–110, title III,
§ 304, Dec. 26, 1981, 95 Stat. 1515; Pub. L. 97–185,
May 24, 1982, 96 Stat. 100; Pub. L. 97–253, title II,
§ 201(f), Sept. 8, 1982, 96 Stat. 790; Pub. L. 97–289,
§ 1(d), Oct. 6, 1982, 96 Stat. 1230; Pub. L. 98–35,
§ 1(d), May 26, 1983, 97 Stat. 197; Pub. L. 98–109,
§ 1(d), Oct. 1, 1983, 97 Stat. 745; Pub. L. 98–181,
title I [title II, § 226, title IV, §§ 401(d), 404(b)(12),
423(b)(5)], Nov. 30, 1983, 97 Stat. 1194, 1207, 1209,
1217; Pub. L. 98–479, title I, §§ 102(a)(1), 104(a)(3),
title II, § 204(a)(8), Oct. 17, 1984, 98 Stat. 2221,
2224, 2232; Pub. L. 99–120, § 1(d), Oct. 8, 1985, 99
Stat. 502; Pub. L. 99–156, § 1(d), Nov. 15, 1985, 99
Stat. 815; Pub. L. 99–219, § 1(d), Dec. 26, 1985, 99
Stat. 1730; Pub. L. 99–267, § 1(d), Mar. 27, 1986, 100
Stat. 73; Pub. L. 99–272, title III, § 3007(d), Apr. 7,
1986, 100 Stat. 104; Pub. L. 99–289, § 1(b), May 2,
1986, 100 Stat. 412; Pub. L. 99–345, § 1, June 24,
1986, 100 Stat. 673; Pub. L. 99–430, Sept. 30, 1986,
100 Stat. 986; Pub. L. 100–122, § 1, Sept. 30, 1987,
101 Stat. 793; Pub. L. 100–154, Nov. 5, 1987, 101
Stat. 890; Pub. L. 100–170, Nov. 17, 1987, 101 Stat.
914; Pub. L. 100–179, Dec. 3, 1987, 101 Stat. 1018;
Pub. L. 100–200, Dec. 21, 1987, 101 Stat. 1327; Pub.
L. 100–242, §§ 170(a), 401(c), 406(b)(18), (19), Feb. 5,
1988, 101 Stat. 1867, 1898, 1901; Pub. L. 101–144,
title II, Nov. 9, 1989, 103 Stat. 852; Pub. L. 101–235,
title I, § 125(a)–(c), Dec. 15, 1989, 103 Stat.
2022–2024.)
REFERENCES IN TEXT
Section 1715z–2 of this title, referred to in subsec.
(b)(1), was repealed by Pub. L. 110–289, div. B, title I,
§ 2120(a)(6), July 30, 2008, 122 Stat. 2835.
Section 1715z–10 of this title, referred to in subsecs.
(c)(2)(A) and (q)(12), (14), was repealed by Pub. L.
110–289, div. B, title I, § 2120(a)(7), July 30, 2008, 122 Stat.
2835.
The Housing and Community Development Act of
1974, referred to in subsec. (h)(1), is Pub. L. 93–383, Aug.
22, 1974, 88 Stat. 633, as amended. Title I of the Housing
and Community Development Act of 1974 is classified
principally to chapter 69 (§ 5301 et seq.) of Title 42, The
Public Health and Welfare. For complete classification
of this Act to the Code, see Short Title note set out
under section 5301 of Title 42 and Tables.
Section 101 of the Housing and Urban Development
Act of 1965, referred to in subsec. (i)(3)(A), is section 101
of Pub. L. 89–117, title I, Aug. 10, 1965, 79 Stat. 451, as
amended, which enacted section 1701s of this title and
amended sections 1451 and 1465 of Title 42.
Section 1709–1 of this title, referred to in subsec.
(q)(4)(B), was repealed by Pub. L. 98–181, title I [title IV,
§ 404(a)], Nov. 30, 1983, 97 Stat. 1208.
AMENDMENTS
1989—Subsec. (c)(1). Pub. L. 101–235, § 125(c)(1), inserted ‘‘, other than a contract in connection with a refinancing under subsection (r),’’ after ‘‘any new contract’’ in second sentence.
Subsec. (c)(3)(A). Pub. L. 101–235, § 125(c)(2), which directed the insertion of ‘‘(except to the extent provided

§ 1715z

in subsection (r) for mortgages insured under such subsection)’’ after ‘‘refinanced,’’ in second sentence, was
executed by making the insertion after ‘‘refinanced’’ as
the probable intent of Congress.
Subsec. (c)(3)(C). Pub. L. 101–235, § 125(b), inserted at
end ‘‘Notwithstanding the preceding sentence, any
amounts of budget authority or contract authority recaptured from assistance payments contracts relating
to mortgages that are being refinanced that are not required for assistance payments contracts relating to
mortgages insured under this subsection, shall be rescinded.’’
Subsec. (e). Pub. L. 101–235, § 125(c)(3), inserted reference to subsec. (r).
Subsec. (h)(1). Pub. L. 101–235, § 125(c)(4), inserted
‘‘(other than obligations in connection with mortgages
insured under subsection (r))’’ in third sentence, ‘‘(except under subsection (r))’’ in sixth sentence, and
‘‘(other than a contract in connection with a mortgage
insured under subsection (r))’’ in seventh sentence.
Subsec. (h)(3). Pub. L. 101–235, § 125(c)(5), inserted sentence at end providing that the preceding sentence
shall not apply to contracts in connection with mortgages insured under subsec. (r).
Subsec. (m). Pub. L. 101–235, § 125(c)(6), inserted ‘‘(except a mortgage insured under subsection (r))’’ after
‘‘No mortgage’’.
Subsec. (n). Pub. L. 101–235, § 125(c)(7), inserted ‘‘or to
a mortgage insured under subsection (r)’’ before period
at end.
Subsec. (r). Pub. L. 101–235, § 125(a), amended subsec.
(r) generally. Prior to amendment, subsec. (r) read as
follows:
‘‘(1) REVIEW OF ASSISTANCE PAYMENTS CONTRACTS.—
‘‘(A) The Secretary shall periodically review each
contract under which the Secretary is making assistance payments under this section to determine if a
refinancing of the mortgage, loan, or advance of credit involved will result in a sufficient reduction in assistance payments to warrant such refinancing.
‘‘(B) In the case of assistance payments contracts
in effect on November 9, 1989, the Secretary shall
complete such review within 60 days in order to permit the refinancing to be completed during fiscal
year 1990.
‘‘(2) REFINANCING ASSISTANCE.—In any case in which
the Secretary determines that refinancing is warranted, the Secretary shall offer financial assistance
appropriate to encourage the refinancing. The assistance may include the following:
‘‘(A) For lenders and mortgagees providing refinancing, the payment of reasonable mortgage or loan
origination fees, discount points, and other expenses
required to refinance; and
‘‘(B) For the homeowner or cooperative member involved, the payment of an amount that does not exceed 1 percent of the principal amount refinanced.
‘‘(3) METHOD OF PAYMENT OF REFINANCING ASSISTANCE.—In any case in which the Secretary determines
that refinancing is warranted, the Secretary shall provide incentives in a manner that does not increase
total expenditures in fiscal year 1990. The Secretary
shall structure refinancings as follows:
‘‘(A) Lenders and mortgagees providing refinancings under this subsection may charge an interest
rate for refinancing that is not greater than 0.5 percent higher than the prevailing market rate for refinancing.
‘‘(B) Payments to the homeowner or cooperative
member to encourage refinancing shall be paid
through a reduction in the monthly payment of the
homeowner or cooperative member under the mortgage, loan, or advance of credit.
‘‘(4) REVISION OF CONTRACTS AND RESCISSION OF EXCESS
AMOUNTS.—
‘‘(A) The Secretary shall make such revisions in
any assistance payments contract (including the
amount of assistance payments made under the contract) as are necessary to reflect a refinancing obtained pursuant to this subsection. A revised assist-

§ 1715z

TITLE 12—BANKS AND BANKING

ance payments contract under this paragraph shall
not be considered to be a new contract under this section.
‘‘(B) Any contract authority that becomes available
as a result of the revision of an assistance payments
contract under this paragraph shall be rescinded.’’
Pub. L. 101–144 added subsec. (r).
1988—Subsec. (h)(1). Pub. L. 100–242, § 401(c), substituted ‘‘September 30, 1989’’ for ‘‘March 15, 1988’’.
Subsec. (i)(3)(A). Pub. L. 100–242, § 406(b)(18), struck
out ‘‘one of the units of which is to be occupied by the
owner and’’ after ‘‘three-family dwelling’’.
Subsec. (i)(3)(C). Pub. L. 100–242, § 170(a), substituted
‘‘(including’’ for ‘‘including’’.
Subsec. (j)(6). Pub. L. 100–242, § 406(b)(19), struck out
‘‘if one of the units is to be occupied by the owner’’
after ‘‘Secretary’’.
Subsecs. (m), (q)(1). Pub. L. 100–242, § 401(c), substituted ‘‘September 30, 1989’’ for ‘‘March 15, 1988’’.
1987—Subsecs. (h)(1), (m), (q)(1). Pub. L. 100–200 substituted ‘‘March 15, 1988’’ for ‘‘December 16, 1987’’.
Pub. L. 100–179 substituted ‘‘December 16, 1987’’ for
‘‘December 2, 1987’’.
Pub. L. 100–170 substituted ‘‘December 2, 1987’’ for
‘‘November 15, 1987’’.
Pub. L. 100–154 substituted ‘‘November 15, 1987’’ for
‘‘October 31, 1987’’.
Pub. L. 100–122 substituted ‘‘October 31, 1987’’ for
‘‘September 30, 1987’’.
1986—Subsecs. (h)(1), (m), (q)(1). Pub. L. 99–430 substituted ‘‘September 30, 1987’’ for ‘‘September 30, 1986’’.
Pub. L. 99–345 substituted ‘‘September 30, 1986’’ for
‘‘June 6, 1986’’.
Pub. L. 99–289 substituted ‘‘June 6, 1986’’ for ‘‘April 30,
1986’’.
Pub. L. 99–272 made amendment identical to Pub. L.
99–219. See 1985 Amendment note below.
Pub. L. 99–267 substituted ‘‘April 30, 1986’’ for ‘‘March
17, 1986’’.
1985—Subsecs. (h)(1), (m), (q)(1). Pub. L. 99–219 substituted ‘‘March 17, 1986’’ for ‘‘December 15, 1985’’.
Pub. L. 99–156 substituted ‘‘December 15, 1985’’ for
‘‘November 14, 1985’’.
Pub. L. 99–120 substituted ‘‘November 14, 1985’’ for
‘‘September 30, 1985’’.
1984—Subsec. (h)(1). Pub. L. 98–479, § 102(a)(1), inserted
‘‘utilizing amounts approved in appropriation Acts before November 30, 1983,’’ before ‘‘except (i)’’ and substituted ‘‘September 30, 1985’’ for ‘‘November 30, 1983’’
in last sentence.
Subsec. (i)(3)(C). Pub. L. 98–479, § 204(a)(8), substituted
‘‘Secretary’’ for ‘‘Seretary’’ before ‘‘authorizes an increase’’.
Subsec. (j)(2)(C). Pub. L. 98–479, § 104(a)(3), substituted
‘‘bear interest at a rate not to exceed such percent per
annum on the amount of the principal obligation outstanding at any time as the Secretary determines is
necessary to meet the mortgage market, taking into
consideration the yields on mortgages in the primary
and secondary markets’’ for ‘‘bear interest (exclusive of
premium charges for insurance and service charge, if
any) at not to exceed such per centum per annum (not
in excess of 6 per centum), on the amount of the principal obligation outstanding at any time, as the Secretary finds necessary to meet the mortgage market’’.
1983—Subsec. (c)(1). Pub. L. 98–181, § 226(a), substituted ‘‘Subject to the second sentence of this paragraph, the’’ for ‘‘The’’, and inserted provision limiting
to a 10-year period assistance payments pursuant to
any new contract entered into after Sept. 30, 1983, utilizing authority approved in appropriation Acts for any
fiscal year beginning after such date.
Subsec. (c)(3). Pub. L. 98–181, § 226(b), added par. (3).
Subsec. (h)(1). Pub. L. 98–181, § 226(c), struck out
‘‘and’’ after ‘‘on July 1, 1971’’, and inserted ‘‘, and by
such sums as may be approved in an appropriation Act
on or after October 1, 1983 (from the additional authority to enter into contracts made available on such date
under the first sentence of section 1437c(c)(1) of title
42). The aggregate amount that may be obligated over

Page 646

the duration of the contracts entered into with the authority provided on or after October 1, 1983, may not exceed such sums of new budget authority as may be appropriated after November 30, 1983. The Secretary shall
begin issuing new commitments and reservations to
provide mortgage insurance and assistance payments
under this section before the expiration of the 30-day
period following the approval in any appropriation Act
of budget authority for this section after November 30,
1983.’’
Pub. L. 98–109, § 1(d)(1), substituted ‘‘November 30,
1983’’ for ‘‘September 30, 1983’’.
Subsec. (i)(3)(A). Pub. L. 98–181, § 226(d)(1), substituted
‘‘three-family’’ for ‘‘two-family’’, and ‘‘involve a singlefamily or a two-family’’ for ‘‘involve a single-family’’.
Subsec. (i)(3)(B), (C). Pub. L. 98–181, § 423(b)(5)(A), (B),
struck out ‘‘: Provided, That the foregoing maximum
mortgage amounts may be increased by the amount of
the mortgage insurance premium paid at the time the
mortgage is insured’’ after ‘‘$55,000, respectively’’.
Subsec. (i)(3)(D). Pub. L. 98–181, § 423(b)(5)(C), struck
out ‘‘: Provided, That the foregoing maximum mortgage amounts may be increased by the amount of the
mortgage insurance premium paid at the time the
mortgage is insured’’ after ‘‘cost levels so require)’’.
Pub. L. 98–181, § 226(d)(2), inserted ‘‘or three-family’’
and substituted ‘‘$60,000’’ for ‘‘$55,000’’ and ‘‘$66,250’’ for
‘‘$61,250’’.
Subsec. (i)(3)(F). Pub. L. 98–181, § 404(b)(12), added subpar. (F).
Subsec. (i)(4), (5). Pub. L. 98–181, § 226(d)(3), added
pars. (4) and (5).
Subsec. (j)(6). Pub. L. 98–181, § 226(e)(1), substituted
‘‘two- to three-family’’ for ‘‘two-family’’.
Subsec. (j)(9). Pub. L. 98–181, § 226(e)(2), added par. (9).
Subsec. (m). Pub. L. 98–181, § 401(d)(1), substituted
‘‘September 30, 1985’’ for ‘‘November 30, 1983’’.
Pub. L. 98–109, § 1(d)(2), substituted ‘‘November 30,
1983’’ for ‘‘September 30, 1983’’.
Pub. L. 98–35, § 1(d)(1), substituted ‘‘September 30,
1983’’ for ‘‘May 20, 1983’’.
Subsec. (q)(1). Pub. L. 98–181, § 401(d)(2), substituted
‘‘September 30, 1985’’ for ‘‘November 30, 1983’’.
Pub. L. 98–109, § 1(d)(3), substituted ‘‘November 30,
1983’’ for ‘‘September 30, 1983’’.
Pub. L. 98–35, § 1(d)(2), substituted ‘‘September 30,
1983’’ for ‘‘May 20, 1983’’.
1982—Subsec. (h)(1). Pub. L. 97–289, § 1(d)(1), substituted ‘‘May 20, 1983’’ for ‘‘September 30, 1982’’ in two
places.
Subsec. (i)(3)(B). Pub. L. 97–253, § 201(f)(1), inserted
provision that the foregoing maximum mortgage
amounts may be increased by the amount of the mortgage insurance premium paid at the time the mortgage
is insured.
Subsec. (i)(3)(C). Pub. L. 97–253, § 201(f)(2), inserted
provision that the foregoing maximum mortgage
amounts may be increased by the amount of the mortgage insurance premium paid at the time the mortgage
is insured.
Subsec. (i)(3)(D). Pub. L. 97–253, § 201(f)(3), inserted
provision that the foregoing maximum mortgage
amounts may be increased by the amount of the mortgage insurance premium paid at the time the mortgage
is insured.
Subsec. (i)(3)(E). Pub. L. 97–253, § 201(f)(4), inserted
‘‘(excluding the mortgage insurance premium paid at
the time the mortgage is insured)’’ after ‘‘cost of acquisition’’.
Subsec. (m). Pub. L. 97–289, § 1(d)(2), substituted ‘‘May
20, 1983’’ for ‘‘September 30, 1982’’.
Subsec. (q)(1). Pub. L. 97–289, § 1(d)(3), substituted
‘‘May 20, 1983’’ for ‘‘September 30, 1982’’.
1981—Subsec. (c)(2)(A). Pub. L. 97–35, § 328(a), struck
out provisions relating to homeowner ceasing to make
payments for a period of 90 continuous days or more
under the mortgage, etc.
Subsec. (h)(1). Pub. L. 97–110 expanded enumeration of
exceptions to provision that the Secretary not enter
into new contracts for assistance payments under this

Page 647

TITLE 12—BANKS AND BANKING

section after March 31, 1982, by designating the two existing exceptions as cls. (i) and (ii) and by adding cl.
(iii).
Pub. L. 97–35, § 328(b), inserted provisions prohibiting
new contracts for assistance under this section after
Mar. 1, 1982, except pursuant to specified exceptions.
Subsec. (m). Pub. L. 97–35, § 331(d)(1), substituted
‘‘1982’’ for ‘‘1981’’.
Subsec. (q)(1). Pub. L. 97–35, § 331(d)(2), substituted
‘‘September 30, 1982’’ for ‘‘June 1, 1981’’.
Subsec. (q)(14). Pub. L. 97–35, § 328(c), struck out provisions relating to homeowner ceasing to make payments for a period of 90 continuous days or more under
the mortgage, etc.
1980—Subsec. (a)(2)(A). Pub. L. 96–399, § 308(c)(1), substituted ‘‘manufactured home’’ for ‘‘mobile home’’
wherever appearing.
Subsec. (a)(2)(B). Pub. L. 96–399, § 308(c)(2), substituted
‘‘manufactured homeowner’’ and ‘‘manufactured homeowner’s’’ for ‘‘mobile homeowner’’ and ‘‘mobile homeowner’s’’, respectively.
Subsec. (b)(2). Pub. L. 96–399, § 206(a)(1), substituted in
last proviso ‘‘$40,000’’ for ‘‘$32,000’’, ‘‘$47,500’’ for
‘‘$38,000’’ in two places, and ‘‘$55,000’’ for ‘‘$44,000’’.
Subsec. (c). Pub. L. 96–399, § 206(b)(1), designated existing provisions as par. (1), redesignated existing pars. (1)
and (2) as subpars. (A) and (B), respectively, and added
par. (2).
Subsec. (i)(3)(B) to (D). Pub. L. 96–399, § 206(a)(2), (3),
substituted ‘‘$40,000’’ for ‘‘$32,000’’, ‘‘$47,500’’ for
‘‘$38,000’’, ‘‘$55,000’’ for ‘‘$44,000’’, and ‘‘$61,250’’ for
‘‘$49,000’’.
Subsec. (m). Pub. L. 96–399, § 301(d), substituted ‘‘September 30, 1981’’ for ‘‘October 15, 1980’’.
Pub. L. 96–372 substituted ‘‘October 15, 1980’’ for ‘‘September 30, 1980’’.
Subsec. (p). Pub. L. 96–399, § 206(a)(4), added subsec.
(p).
Subsec. (q). Pub. L. 96–399, § 207, added subsec. (q).
1979—Subsec. (a)(1). Pub. L. 96–153, § 213(a), inserted
provision that the Secretary give preference to low-income families who are likely to be displaced without
assistance and that the assistance may include the acquisition of a condominium or membership in a cooperative association.
Subsec. (c)(2). Pub. L. 96–153, § 213(c)(2), inserted parenthetical reference to 4 per centum per annum rate in
the case of a mortgage described in subsec. (o) of this
section.
Subsec. (i)(3)(A). Pub. L. 96–153, § 213(b), substituted
‘‘standards as the Secretary may prescribe:’’ for
‘‘standards as the Secretary may prescribe, if the mortgagor qualifies as a displaced family as defined in section 1715l(f) of this title, or a family which includes five
or more minor persons, or a family occupying low-rent
public housing:’’.
Subsec. (m). Pub. L. 96–153, § 301(d), substituted ‘‘September 30, 1980’’ for ‘‘November 30, 1979’’.
Pub. L. 96–105 substituted ‘‘November 30, 1979’’ for
‘‘October 31, 1979’’.
Pub. L. 96–71 substituted ‘‘October 31, 1979’’ for ‘‘September 30, 1979’’.
Subsec. (o). Pub. L. 96–153, § 213(c)(1), added subsec.
(o).
1978—Subsec. (m). Pub. L. 95–557 substituted ‘‘September 30, 1979’’ for ‘‘October 31, 1978’’.
Pub. L. 95–406 substituted ‘‘October 31, 1978’’ for ‘‘September 30, 1978’’.
1977—Subsec. (b)(2). Pub. L. 95–128, §§ 205, 303(f)(1), inserted reference to section 1715l(d)(3) of this title and
substituted in last proviso ‘‘$32,000’’ for ‘‘$25,000’’,
‘‘$38,000’’ for ‘‘$29,000’’ in two places, and ‘‘$44,000’’ for
‘‘$33,000’’.
Subsec. (i)(3)(B) to (E). Pub. L. 95–128, § 303(f)(2)–(4),
substituted in subpar. (B) ‘‘$32,000’’ for ‘‘$25,000’’,
‘‘$38,000’’ for ‘‘$29,000’’ in two places, and ‘‘$44,000’’ for
‘‘$33,000’’, added subpars. (C) and (D), and redesignated
former subpar. (C) as (E).
Subsec. (m). Pub. L. 95–128, § 301(d), substituted ‘‘September 30, 1978’’ for ‘‘September 30, 1977’’.

§ 1715z

Subsec. (n). Pub. L. 95–128, § 303(f)(5), added subsec.
(n).
1976—Subsec. (a). Pub. L. 94–375, § 3(f)(1), designated
existing provisions as par. (1) and added par. (2).
Subsec. (b)(2). Pub. L. 94–375, § 3(b), substituted
‘‘$25,000’’ for ‘‘$21,600’’, ‘‘$29,000’’ for ‘‘$25,200’’ in two
places, and ‘‘$33,000’’ for ‘‘$28,800’’.
Subsec. (e). Pub. L. 94–375, § 3(f)(2), inserted
‘‘(a)(2)(B),’’ after ‘‘computed under subsection’’.
Subsec. (h)(2). Pub. L. 94–375, § 3(e), substituted ‘‘95
per centum’’ for ‘‘80 per centum’’ wherever appearing.
Subsec. (i)(3)(B). Pub. L. 94–375, § 3(c), substituted
‘‘$25,000’’ for ‘‘$21,600’’, ‘‘$29,000’’ for ‘‘$25,200’’ in two
places, and ‘‘$33,000’’ for ‘‘$28,800’’.
Subsec. (m). Pub. L. 94–375 § 3(a), substituted ‘‘September 30, 1977’’ for ‘‘June 30, 1976’’.
1974—Subsec. (a). Pub. L. 93–383, § 211(b), inserted provisions relating to mortgages assisted under a State or
local program providing assistance through loans, etc.
Subsec. (b)(2). Pub. L. 93–383, § 211(c)(1), substituted
‘‘$21,600’’ for ‘‘$18,000’’, ‘‘$25,200’’ for ‘‘$21,000’’ in two
places, and ‘‘$28,800’’ for ‘‘$24,000’’.
Subsec. (h)(1). Pub. L. 93–383, § 211(a)(1), (2), inserted
provisions relating to increases by such sums as may be
approved in appropriations Acts after June 30, 1974, and
prior to July 1, 1976, and provisions prohibiting new
contracts for assistance payments upon the expiration
of one year following Aug. 22, 1974.
Subsec. (h)(2). Pub. L. 93–383, § 211(a)(3), substituted
provisions setting forth requirements for assistance
payments for families for provisions setting forth maximum income limits of families receiving assistance
payments under contracts and provisions relating to
annual report to Congressional Committees with respect to income levels of families.
Subsec. (h)(3)(B). Pub. L. 93–383, § 211(a)(4), substituted ‘‘on or after July 1, 1969’’ for ‘‘prior to July 1,
1972’’.
Subsec. (i)(1). Pub. L. 93–383, § 211(a)(5), inserted provisions authorizing insurance of advances for property
construction or rehabilitation pursuant to self-help
programs.
Subsec. (i)(3)(B). Pub. L. 93–383, § 211(c)(2), substituted
‘‘$21,600’’ for ‘‘$18,000’’, ‘‘$25,200’’ for ‘‘$21,000’’ in two
places, and ‘‘$28,800’’ for ‘‘$24,000’’.
Subsec. (i)(3)(C). Pub. L. 93–383, § 211(a)(6), struck out
provisions relating to execution by a mortgagor in the
case of a family whose income is not in excess of 135 per
centum of the maximum income limits established in
the area pursuant to specified limitations or any other
family.
Subsec. (m). Pub. L. 93–383, § 211(a)(7), substituted
‘‘June 30, 1976’’ for ‘‘October 1, 1974’’.
1973—Subsec. (m). Pub. L. 93–117 substituted ‘‘October
1, 1974’’ for ‘‘October 1, 1973’’.
Pub. L. 93–85 substituted ‘‘October 1, 1973’’ for ‘‘June
30, 1973’’.
1972—Subsec. (m). Pub. L. 92–503 substituted ‘‘June 30,
1973’’ for ‘‘October 1, 1972’’.
1970—Subsec. (b)(2). Pub. L. 91–609, § 107, designated
existing provisions as cl. (A) and added cl. (B).
Subsec. (h)(1). Pub. L. 91–609, § 102(a), in second sentence, inserted ‘‘outstanding’’ before ‘‘contracts’’ where
first appearing and substituted ‘‘$150,000,000 on July 1,
1970’’ and ‘‘$200,000,000 on July 1, 1971’’ for ‘‘$125,000,000
on July 1, 1970’’ and ‘‘$170,000,000 on July 1, 1971’’.
Subsec. (h)(3)(B). Pub. L. 91–609, § 105(1), substituted
‘‘July 1, 1972’’ for ‘‘July 1, 1971’’.
Subsec. (h)(4). Pub. L. 91–609, § 105(2), added par. (4).
Subsec. (i)(3)(A). Pub. L. 91–609, § 106, substituted ‘‘and
which is approved by the Secretary’’ for ‘‘if the dwelling is purchased with the assistance of a nonprofit organization and is approved by the Secretary’’.
Subsec. (m). Pub. L. 91–609, § 101(d), substituted ‘‘October 1, 1972’’ for ‘‘October 1, 1971’’.
1969—Subsec. (b)(2). Pub. L. 91–152, §§ 106(b), 113(i),
substituted provisions qualifying for assistance payments the transferee of any cooperative member who
has received assistance payments, provided that such
transferee undertakes the obligation to pay occupancy

§ 1715z–1

TITLE 12—BANKS AND BANKING

Page 648

charges, for provisions qualifying for assistance payments the transferee of the initial cooperative member
receiving assistance payments, and substituted
‘‘$18,000’’ for ‘‘$15,000’’, ‘‘$21,000’’ for ‘‘$17,500’’ wherever
appearing, and ‘‘$24,000’’ for ‘‘$20,000’’.
Subsec. (c). Pub. L. 91–152, §§ 106(a), 418(a), inserted
reference to subsection (i) of this section, and inserted
the further proviso authorizing the Secretary to continue making assistance payments.
Subsec. (h)(1). Pub. L. 91–152, § 107(a), substituted
‘‘$125,000,000 on July 1, 1969, by ‘‘$125,000,000 on July 1,
1970, and by $170,000,000 on July 1, 1971’’ for ‘‘$100,000,000
on July 1, 1969, and by $125,000,000 on July 1, 1970’’.
Subsec. (h)(2). Pub. L. 91–152, § 412(b), required the
Secretary to report semiannually instead of annually
to the respective Committees on Banking and Currency
of the Senate and House of Representatives.
Subsec. (h)(3)(A). Pub. L. 91–152, § 109(1), inserted
‘‘and’’ after ‘‘July 1, 1969’’.
Subsec. (h)(3)(B). Pub. L. 91–152, § 109(2), substituted
‘‘30 per centum’’ for ‘‘15 per centum’’ and ‘‘July 1, 1971,’’
for ‘‘July 1, 1970, and’’.
Subsec. (h)(3)(C). Pub. L. 91–152, § 109(2), struck out
subsec. (h)(3)(C) which limited the amount available for
home-ownership assistance payments to 10 per centum
of the total additional amount of contracts for assistance payments authorized by appropriation Acts made
prior to July 1, 1971.
Subsec. (i)(3)(B). Pub. L. 91–152, § 113(i), substituted
‘‘$18,000’’ for ‘‘$15,000’’, ‘‘$21,000’’ for ‘‘$17,500’’ wherever
appearing, and ‘‘$24,000’’ for ‘‘$20,000’’.
Subsec. (m). Pub. L. 91–152, § 101(d), added subsec. (m).

‘‘(2) SAVINGS PROVISION.—The provisions of paragraph
(1) shall not affect—
‘‘(A) any mortgage insurance commitment issued;
or
‘‘(B) any assistance pursuant to a reservation of
funds made;
under section 235 of the National Housing Act prior to
October 1, 1989.’’

EFFECTIVE DATE OF 1988 AMENDMENT

FINANCING PURCHASE OF DWELLING FROM NONPROFIT
ORGANIZATION AFTER AUGUST 1, 1968

Amendment by section 406(b)(18), (19) of Pub. L.
100–242 applicable only with respect to mortgages insured pursuant to conditional commitment issued on or
after Feb. 5, 1988, or in accordance with direct endorsement program (24 CFR 200.163), if approved underwriter
of mortgagee signs appraisal report for property on or
after Feb. 5, 1988, see section 406(d) of Pub. L. 100–242,
set out as a note under section 1709 of this title.
EFFECTIVE DATE OF 1983 AMENDMENT
For effective date of amendment by section 423(b)(5)
of Pub. L. 98–181, see section 423(c) of Pub. L. 98–181, set
out as a note under section 1709 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
EFFECTIVE DATE OF 1980 AMENDMENT
Pub. L. 96–399, title II, § 206(b)(2), Oct. 8, 1980, 94 Stat.
1631, provided: ‘‘The amendment made by paragraph (1)
[amending this section] does not apply to any assistance contract under section 235 of the National Housing
Act [this section] entered into pursuant to a commitment issued within 6 months following the date of enactment of this Act [Oct. 8, 1980].’’

IMPLEMENTATION OF 1982 AMENDMENT
Amendment by Pub. L. 97–253 to be implemented only
if the Secretary determines that the program of advance payment of insurance premiums, considering the
effect of said amendment, is actuarially sound, see section 201(g) of Pub. L. 97–253, set out as a note under section 1709 of this title.
STUDY AND REPORT RESPECTING APPLICATION OF
SUBSECTION (n) TO SUBSECTIONS (a) AND (q) PROGRAMS
Pub. L. 96–399, title II, § 206(c), Oct. 8, 1980, 94 Stat.
1631, directed Secretary of Housing and Urban Development to conduct a study of effects which application of
subsec. (n) of this section has had or is likely to have
on program established by subsec. (a). If program established by subsec. (q) was implemented, Secretary was
to include in study an analysis of effects on subsec. (q)
program of application of subsec. (n) to such program.
Secretary to transmit to Congress, not later than Jan.
1, 1982, a report containing findings and conclusions of
study.

Pub. L. 90–448, title I, § 101(c)(4), Aug. 1, 1968, 82 Stat.
484, provided that: ‘‘The purchase of any individual
dwelling, sold by a nonprofit organization pursuant to
the provisions of section 221(h)(5) of the National Housing Act [12 U.S.C. 1715l(h)(5)] after the date of enactment of this section [Aug. 1, 1968], may be financed
with a mortgage insured under the provisions of section
235(j)(4) of such Act [12 U.S.C. 1715z(j)(4)], but such
mortgage shall bear interest at the rate provided in
section 235(j)(2)(C) of such Act.’’
CEILING ON TOTAL HOMEOWNERSHIP ASSISTANCE
PAYMENTS IN ANY FISCAL YEAR
Pub. L. 90–608, ch. IV, § 401, Oct. 21, 1968, 82 Stat. 1193,
provided in part that the total payments that may be
required in any fiscal year by all contracts entered into
under section 235 of the National Housing Act [this section] shall not exceed $25,000,000.
Pub. L. 91–47, title II, § 201, July 22, 1969, 83 Stat. 53,
increased by $45,000,000 the limitation on total payments that may be required in any fiscal year by all
contracts entered into under section 235 of the National
Housing Act, as amended (82 Stat. 477) [this section].

§ 1715z–1. Rental and cooperative housing for
lower income families

TERMINATION OF PROGRAM; SAVINGS PROVISION
Pub. L. 101–235, title I, § 125(d), Dec. 15, 1989, 103 Stat.
2024, provided that: ‘‘Notwithstanding the termination
of the program under section 235 [this section] pursuant
to section 401(d) of the Housing and Community Development Act of 1987 [Pub. L. 100–242, set out below], the
Secretary of Housing and Urban Development shall
have authority to insure mortgages under section
235(r), to make assistance payments with respect to
such insured mortgages, and to make any other payment or take any other action related to the refinancing of mortgages insured under section 235.’’
Pub. L. 100–242, title IV, § 401(d), Feb. 5, 1988, 101 Stat.
1899, provided that:
‘‘(1) IN GENERAL.—Effective on October 1, 1989, the
program under section 235 of the National Housing Act
[this section] shall terminate.

(a) Authorization for periodic interest reduction
payments on behalf of owner of rental housing project
For the purpose of reducing rentals for lower
income families, the Secretary is authorized to
make, and to contract to make, periodic interest reduction payments on behalf of the owner
of a rental housing project designed for occupancy by lower income families, which shall be
accomplished through payments to morgagees 1
holding mortgages meeting the special requirements specified in this section.
1 So

in original. Probably should be ‘‘mortgagees’’.

Page 649

TITLE 12—BANKS AND BANKING

(b) Restrictions on payments; payments with respect to projects financed under State or
local programs; mortgage insurance premium
Interest reduction payments with respect to a
project shall only be made during such time as
the project is operated as a rental housing project and is subject to a mortgage which meets
the requirements of, and is insured under, subsection (j) of this section: Provided, That the
Secretary is authorized to continue making
such interest reduction payments where the
mortgage has been assigned to the Secretary:
Provided further, That interest reduction payments may be made with respect to a mortgage
or part thereof on a rental or cooperative housing project owned by a private nonprofit corporation or other private nonprofit entity, a
limited dividend corporation or other limited
dividend entity, public 2 entity, or a cooperative
housing corporation, which is financed under a
State or local program providing assistance
through loans, loan insurance, or tax abatements, and which may involve either new or existing construction and which is approved for receiving the benefits of this section. The term
‘‘mortgage insurance premium’’, when used in
this section in relation to a project financed by
a loan under a State or local program, means
such fees and charges, approved by the Secretary, as are payable by the mortgagor to the
State or local agency mortgagee to meet reserve
requirements and administrative expenses of
such agency.
(c) Amount of payments
The interest reduction payments to a mortgagee by the Secretary on behalf of a project
owner shall be in an amount not exceeding the
difference between the monthly payment for
principal, interest, and mortgage insurance premium which the project owner as a mortgagor is
obligated to pay under the mortgage and the
monthly payment for principal and interest
such project owner would be obligated to pay if
the mortgage were to bear interest at the rate of
1 per centum per annum.
(d) Mortgage handling expenses
The Secretary may include in the payment to
the mortgagee such amount, in addition to the
amount computed under subsection (c), as he
deems appropriate to reimburse the mortgagee
for its expenses in handling the mortgage.
(e) Operation of project in accordance with requirements respecting tenant eligibility and
rents prescribed by Secretary
(1) As a condition for receiving the benefits of
interest reduction payments, the project owner
shall operate the project in accordance with
such requirements with respect to tenant eligibility and rents as the Secretary may prescribe.
Procedures shall be adopted by the Secretary for
review of tenant incomes at intervals of one
year (or at shorter intervals where the Secretary deems it desirable).
(2) A project for which interest reduction payments are made under this section and for which
the mortgage on the project has been refinanced
2 So

in original. Probably should be preceded by ‘‘a’’.

§ 1715z–1

shall continue to receive the interest reduction
payments under this section under the terms of
the contract for such payments, but only if the
project owner enters into such binding commitments as the Secretary may require (which shall
be applicable to any subsequent owner) to ensure that the owner will continue to operate the
project in accordance with all low-income affordability restrictions for the project in connection with the Federal assistance for the
project for a period having a duration that is not
less than the term for which such interest reduction payments are made plus an additional 5
years.
(f) Establishment of basic and fair market rental
charges; rental for dwelling units; separate
utility metering; additional assistance payments for low-income tenants; limitations;
amounts; approval of payments
(1)(A)(i) For each dwelling unit there shall be
established, with the approval of the Secretary,
a basic rental charge and fair market rental
charge.
(ii) The basic rental charge shall be—
(I) the amount needed to operate the project
with payments of principal and interest due
under a mortgage bearing interest at the rate
of 1 percent per annum; or
(II) an amount greater than that determined
under clause (ii)(I), but not greater than the
market rent for a comparable unassisted unit,
reduced by the value of the interest reduction
payments subsidy.
(iii) The fair market rental charge shall be—
(I) the amount needed to operate the project
with payments of principal, interest, and
mortgage insurance premium which the mortgagor is obligated to pay under the mortgage
covering the project; or
(II) an amount greater than that determined
under clause (iii)(I), but not greater than the
market rent for a comparable unassisted unit.
(iv) The Secretary may approve a basic rental
charge and fair market rental charge for a unit
that exceeds the minimum amounts permitted
by this subparagraph for such charges only if—
(I) the approved basic rental charge and fair
market rental charges each exceed the applicable minimum charge by the same amount;
and
(II) the project owner agrees to restrictions
on project use or mortgage prepayment that
are acceptable to the Secretary.
(v) The Secretary may approve a basic rental
charge and fair market rental charge under this
paragraph for a unit with assistance under section 1437f of title 42 that differs from the basic
rental charge and fair market rental charge for
a unit in the same project that is similar in size
and amenities but without such assistance, as
needed to ensure equitable treatment of tenants
in units without such assistance.
(B)(i) The rental charge for each dwelling unit
shall be at the basic rental charge or such greater amount, not exceeding the fair market rental
charge determined pursuant to subparagraph
(A), as represents 30 percent of the tenant’s adjusted income, except as otherwise provided in
this subparagraph.

§ 1715z–1

TITLE 12—BANKS AND BANKING

(ii) In the case of a project which contains
more than 5000 units, is subject to an interest
reduction payments contract, and is financed
under a State or local project, the Secretary
may reduce the rental charge ceiling, but in no
case shall the rental charge be below the basic
rental charge set forth in subparagraph
(A)(ii)(I).
(iii) For plans of action approved for capital
grants under the Low-Income Housing Preservation and Resident Homeownership Act of 1990 [12
U.S.C. 4101 et seq.] or the Emergency Low Income Housing Preservation Act of 1987, the rental charge for each dwelling unit shall be at the
minimum basic rental charge set forth in subparagraph (A)(ii)(I) or such greater amount, not
exceeding the lower of: (I) the fair market rental
charge set forth in subparagraph (A)(iii)(I); or
(II) the actual rent paid for a comparable unit in
comparable unassisted housing in the market
area in which the housing assisted under this
section is located, as represents 30 percent of the
tenant’s adjusted income.
(C) With respect to those projects which the
Secretary determines have separate utility metering paid by the tenants for some or all dwelling units, the Secretary may—
(i) permit the basic rental charge and the
fair market rental charge to be determined on
the basis of operating the project without the
payment of the cost of utility services used by
such dwelling units; and
(ii) permit the charging of a rental for such
dwelling units at such an amount less than 30
percent of a tenant’s adjusted income as the
Secretary determines represents a proportionate decrease for the utility charges to be
paid by such tenant, but in no case shall rental be lower than 25 percent of a tenant’s adjusted income.
(2) With respect to 20 per centum of the dwelling units in any project made subject to a contract under this section after August 22, 1974,
the Secretary shall make, and contract to make,
additional assistance payments to the project
owner on behalf of tenants whose incomes are
too low for them to afford the basic rentals (including the amount allowed for utilities in the
case of a project with separate utility metering)
with 30 per centum of their adjusted income.
The additional assistance payments authorized
by this paragraph with respect to any dwelling
unit shall be the amount required to reduce the
rental payment (including the amount allowed
for utilities in the case of a project with separate utility metering) by the tenant to the highest of the following amounts, rounded to the
nearest dollar:
(A) 30 per centum of the tenant’s monthly
adjusted income;
(B) 10 per centum of the tenant’s monthly
income; or
(C) if the family is receiving payments for
welfare assistance from a public agency and a
part of such payments, adjusted in accordance
with the family’s actual housing costs, is specifically designated by such agency to meet
the family’s housing costs, the portion of such
payments which is so designated.
Notwithstanding the foregoing provisions of this
paragraph, the Secretary may—

Page 650

(A) reduce such 20 per centum requirement
in the case of any project if he determines
that such action is necessary to assure the
economic viability of the project; or
(B) increase such 20 per centum requirement
in the case of any project if he determines
that such action is necessary and feasible in
order to assure, insofar as is practicable, that
there is in the project a reasonable range in
the income levels of tenants, or that such action is to be taken to meet the housing needs
of elderly or handicapped families.
(3) The Secretary shall utilize amounts credited to the fund described in subsection (g) for
the sole purpose of carrying out the purposes of
section 201 of the Housing and Community Development Amendments of 1978. No payments
may be made from such fund unless approved in
an appropriation Act. No amount may be so approved for any fiscal year beginning after September 30, 1994.
(4) To ensure that eligible tenants occupying
that number of units with respect to which assistance was being provided under this subsection immediately prior to November 30, 1983,
receive the benefit of assistance contracted for
under paragraph (2), the Secretary shall offer
annually to amend contracts entered into under
this subsection with owners of projects assisted
but not subject to mortgages insured under this
section to provide sufficient payments to cover
100 percent of the necessary rent increases and
changes in the incomes of eligible tenants, subject to the availability of authority for such
purpose under section 1437c(c) of title 42. The
Secretary shall take such actions as may be necessary to ensure that payments, including payments that reflect necessary rent increases and
changes in the incomes of tenants, are made on
a timely basis for all units covered by contracts
entered into under paragraph (2).
(5)(A) In order to induce advances by owners
for capital improvements (excluding any owner
contributions that may be required by the Secretary as a condition for assistance under section 201 of the Housing and Community Development Amendments of 1978) to benefit projects
assisted under this section, in establishing basic
rental charges and fair market rental charges
under paragraph (1) the Secretary may include
an amount that would permit a return of such
advances with interest to the owner out of
project income, on such terms and conditions as
the Secretary may determine. Any resulting increase in rent contributions shall be—
(i) to a level not exceeding the lower of 30
percent of the adjusted income of the tenant
or the published existing fair market rent for
comparable housing established under section
1437f(c) of title 42;
(ii) phased in equally over a period of not
less than 3 years, if such increase is 30 percent
or more; and
(iii) limited to not more than 10 percent per
year if such increase is more than 10 percent
but less than 30 percent.
(B) Assistance under section 1437f of title 42
shall be provided, to the extent available under
appropriations Acts, if necessary to mitigate
any adverse effects on income-eligible tenants.

Page 651

TITLE 12—BANKS AND BANKING

(6) Repealed. Pub. L. 104–99, title IV, § 405(d)(2),
Jan. 26, 1996, 110 Stat. 45.
(7) The Secretary shall determine whether and
under what conditions the provisions of this subsection shall apply to mortgages sold by the
Secretary on a negotiated basis.
(g) Collection of excess rental charges; credit to
reserve for additional assistance payments;
retention by project owner
(1) The project owner shall, as required by the
Secretary, accumulate, safeguard, and periodically pay the Secretary or such other entity as
determined by the Secretary and upon such
terms and conditions as the Secretary deems appropriate, all rental charges collected on a unitby-unit basis in excess of the basic rental
charges. Unless otherwise directed by the Secretary, such excess charges shall be credited to
a reserve used by the Secretary to make additional assistance payments as provided in paragraph (3) of subsection (f).
(2) Notwithstanding any other requirements of
this subsection, a project owner may retain
some or all of such excess charges for project
use if authorized by the Secretary. Such excess
charges shall be used for the project and upon
terms and conditions established by the Secretary, unless the Secretary permits the owner
to retain funds for non-project use after a determination that the project is well-maintained
housing in good condition and that the owner
has not engaged in material adverse financial or
managerial actions or omissions as described in
section 516 of the Multifamily Assisted Housing
Reform and Affordability Act of 1997. In connection with the retention of funds for non-project
use, the Secretary may require the project
owner to enter into a binding commitment
(which shall be applicable to any subsequent
owner) to ensure that the owner will continue to
operate the project in accordance with all lowincome affordability restrictions for the project
in connection with the Federal assistance for
the project for a period having a duration of not
less than the term of the existing affordability
restrictions plus an additional 5 years.
(3) The Secretary shall not withhold approval
of the retention by the owner of such excess
charges because of the existence of unpaid excess charges if such unpaid amount is being remitted to the Secretary over a period of time in
accordance with a workout agreement with the
Secretary, unless the Secretary determines that
the owner is in violation of the workout agreement.
(h) Rules and regulations
In addition to establishing the requirements
specified in subsection (e), the Secretary is authorized to make such rules and regulations, to
enter into such agreements, and to adopt such
procedures as he may deem necessary or desirable to carry out the provisions of this section.
(i) Authorization of appropriations; aggregate
amount of contracts; contracts for assistance
payments; income limitations; availability of
amounts for projects approved prior to rehabilitation and projects for occupancy by elderly or handicapped families; definitions
(1) There are authorized to be appropriated
such sums as may be necessary to carry out the

§ 1715z–1

provisions of this section, including such sums
as may be necessary to make interest reduction
payments under contracts entered into by the
Secretary under this section. The aggregate
amount of outstanding contracts to make such
payments shall not exceed amounts approved in
appropriation Acts, and payments pursuant to
such contracts shall not exceed $75,000,000 per
annum prior to July 1, 1969, which maximum
dollar amount shall be increased by $125,000,000
on July 1, 1969, by $150,000,000 on July 1, 1970, by
$200,000,000 on July 1, 1971 and by $75,000,000 on
July 1, 1974. The Secretary shall utilize, to the
extent necessary after September 30, 1984, any
authority under this section that is recaptured
either as the result of the conversion of housing
projects covered by assistance under subsection
(f)(2) to contracts for assistance under section
1437f of title 42 or otherwise for the purpose of
making assistance payments, including amendments as provided in subsection (f)(4), with respect to housing projects assisted, but not subject to mortgages insured, under this section
that remain covered by assistance under subsection (f)(2).
(2) Contracts for assistance payments under
this section may be entered into only with respect to tenants whose incomes do not exceed 80
per centum of the median family income for the
area, as determined by the Secretary with adjustments for smaller and larger families, except that the Secretary may establish income
ceilings higher or lower than 80 per centum of
the median for the area on the basis of his findings that such variations are necessary because
of prevailing levels of construction costs, unusually high or low family incomes, or other factors.
(3) Not less than 10 per centum of the total
amount of contracts for assistance payments authorized by appropriation Acts to be made after
June 30, 1974, shall be available for use only with
respect to dwellings, or dwelling units in
projects, which are approved by the Secretary
prior to rehabilitation.
(4) At least 20 per centum of the total amount
of contracts for assistance payments authorized
in appropriation Acts to be made after June 30,
1974, shall be available for use only with respect
to projects which are planned in whole or in part
for occupancy by elderly or handicapped families. As used in this paragraph, the term ‘‘elderly families’’ means families which consist of two
or more persons the head of which (or his
spouse) is sixty-two years of age or over or is
handicapped. Such term also means a single person who is sixty-two years of age or over or is
handicapped. A person shall be considered handicapped if such person is determined, pursuant to
regulations issued by the Secretary, to have an
impairment which (A) is expected to be of longcontinued and indefinite duration, (B) substantially impedes his ability to live independently,
and (C) is of such a nature that such ability
could be improved by more suitable housing conditions.

§ 1715z–1

TITLE 12—BANKS AND BANKING

(j) Insurance of mortgages; definitions; eligibility
for insurance; mortgage requirements; property or project requirements; sale of individual dwelling units; release of mortgagor from
liability or release of property from lien of
mortgage
(1) The Secretary is authorized, upon application by the mortgagee, to insure a mortgage (including advances on such mortgage during construction) which meets the requirements of this
subsection. Commitments for the insurance of
such mortgages may be issued by the Secretary
prior to the date of their execution or disbursement thereon, upon such terms and conditions
as he may prescribe.
(2) As used in this subsection—
(A) the terms ‘‘family’’ and ‘‘families’’ shall
have the same meaning as in section 1715l of
this title;
(B) the term ‘‘elderly or handicapped families’’ shall have the same meaning as in section 1701q 3 of this title; and
(C) the terms ‘‘mortgage’’, ‘‘mortgagee’’, and
‘‘mortgagor’’ shall have the same meaning as
in section 1707 of this title.
(3) To be eligible for insurance under this subsection, a mortgage shall meet the requirements
specified in subsections (d)(1) and (d)(3) of section 1715l of this title, except as such requirements are modified by this subsection. In the
case of a project financed with a mortgage insured under this subsection which involves a
mortgagor other than a cooperative or a private
nonprofit corporation or association and which
is sold to a cooperative or a nonprofit corporation or association, the Secretary is further authorized to insure under this subsection a mortgage given by such purchaser in an amount not
exceeding 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, after
payment of all operating expenses, taxes, and required reserves.
(4) A mortgage to be insured under this subsection shall—
(A) be executed by a mortgagor eligible
under subsection (d)(3) or (e) of section 1715l of
this title;
(B) bear interest at a rate not to exceed such
percent per annum on the amount of the principal obligation outstanding at any time as
the Secretary determines is necessary to meet
the mortgage market, taking into consideration the yields on mortgages in the primary
and secondary markets; and
(C) provide for complete amortization by
periodic payments within such term as the
Secretary may prescribe.
(5) The property or project shall—
(A) comply with such standards and conditions as the Secretary may prescribe to establish the acceptability of the property for mortgage insurance and may include such nondwelling facilities as the Secretary deems adequate and appropriate to serve the occupants
and the surrounding neighborhood: Provided,
3 See

References in Text note below.

Page 652

That the project shall be predominantly residential and any nondwelling facility included
in the mortgage shall be found by the Secretary to contribute to the economic feasibility of the project, and the Secretary shall give
due consideration to the possible effect of the
project on other business enterprises in the
community: Provided further, That, in the case
of a project designed primarily for occupancy
by elderly or handicapped families, the project
may include related facilities for use by elderly or handicapped families, including cafeterias or dining halls, community rooms,
workshops, infirmaries, or other inpatient or
outpatient health facilities, and other essential service facilities;
(B) include five or more dwelling units, but
such units, in the case of a project designed
primarily for occupancy by displaced, elderly,
or handicapped families, need not, with the approval of the Secretary, contain kitchen facilities; and
(C) be designed primarily for use as a rental
project to be occupied by lower income families or by elderly or handicapped families: Provided, That lower income persons who are less
than sixty-two years of age shall be eligible
for occupancy in such a project.
In any case in which it is determined in accordance with regulations of the Secretary that facilities in existence or under construction on
December 31, 1970, which could appropriately be
used for classroom purposes are available in any
such property or project and that public schools
in the community are overcrowded due in part
to the attendance at such schools of residents of
the property or project, such facilities may be
used for such purposes to the extent permitted
in such regulations (without being subject to
any of the requirements of the first proviso in
subparagraph (A) except the requirement that
the project be predominantly residential).
(6) With the approval of the Secretary, the
mortgagor may sell the individual dwelling
units to lower income or elderly or handicapped
purchasers. The Secretary may consent to the
release of the mortgagor from his liability under
the mortgage and the credit instrument secured
thereby, or consent to the release of parts of the
mortgaged property from the lien of the mortgage, upon such terms and conditions as he may
prescribe, and the mortgage may provide for
such release.
(k) Definitions
As used in this section the term ‘‘tenant’’ includes a member of a cooperative; the term
‘‘rental housing project’’ includes a cooperative
housing project; and the terms ‘‘rental’’ and
‘‘rental charge’’ mean, with respect to members
of a cooperative, the charges under the occupancy agreements between such members and
the cooperative.
(l) Allocation and transfer of reasonable portion
of total authority to contract to make payments to Secretary of Agriculture for use in
rural areas and small towns
The Secretary shall from time to time allocate and transfer to the Secretary of Agriculture, for use (in accordance with the terms

Page 653

TITLE 12—BANKS AND BANKING

and conditions of this section) in rural areas and
small towns, a reasonable portion of the total
authority to contract to make periodic interest
reduction payments as approved in appropriation Acts under subsection (i).
(m) ‘‘Income’’ defined
For the purpose of this section the term ‘‘income’’ means income from all sources of each
member of the household, as determined in accordance with criteria prescribed by the Secretary, except that any amounts not actually received by the family may not be considered as
income under this subsection. In determining
amounts to be excluded from income, the Secretary may, in the Secretary’s discretion, take
into account the number of minor children in
the household and such other factors as the Secretary may determine are appropriate.
(n) Termination date for insurance of mortgages;
exception
No mortgage shall be insured under this section after November 30, 1983, except pursuant to
a commitment to insure before that date. A
mortgage may be insured under this section
after the date in the preceding sentence in order
to refinance a mortgage insured under this section or to finance pursuant to subsection (j)(3)
the purchase, by a cooperative or nonprofit corporation or association, of a project assisted
under this section.
(o) State funding of interest reduction payments
The Secretary is authorized to enter into
agreements with any State or agency thereof
under which such State or agency thereof contracts to make interest reduction payments,
subject to all the terms and conditions specified
in this section and in rules, regulations and procedures adopted by the Secretary under this section, with respect to all or a part of a project
covered by a mortgage insured under this section. Any funds provided by a State or agency
thereof for the purpose of making interest reduction payments shall be administered, disbursed and accounted for by the Secretary in accordance with the agreements entered into by
the Secretary with the State or agency thereof
and for such fees as shall be specified therein.
Before entering into any agreements pursuant
to this subsection the Secretary shall require
assurances satisfactory to him that the State or
agency thereof is able to provide sufficient funds
for the making of interest reduction payments
for the full period specified in the interest reduction contract.
(p) Contracts with State or local agencies for
monitoring and supervision of management
by private sponsors of assisted projects
The Secretary is authorized to enter into contracts with State or local agencies approved by
him to provide for the monitoring and supervision by such agencies of the management by
private sponsors of projects assisted under this
section. Such contracts shall require that such
agencies promptly report to the Secretary any
deficiencies in the management of such projects
in order to enable the Secretary to take corrective action at the earliest practicable time.

§ 1715z–1

(q) Assistance to residents of covered projects;
contracting authority; applicability
The Secretary may provide assistance under
section 1437f of title 42 with respect to residents
of units in a project assisted under this section.
In entering into contracts under section 1437c(c)
of title 42 with respect to the additional authority provided on October 1, 1980, the Secretary
shall not utilize more than $20,000,000 of such additional authority to provide assistance for elderly or handicapped families which, at the time
of applying for assistance under such section
1437f of title 42, are residents of a project assisted under this section and are expending more
than 50 percent of their income on rental payments.
(r) Payments for benefit of certain projects having mortgages made by State or local housing finance or government agencies
The Secretary shall, not later than 45 days
after receipt of an application by the mortgagee,
provide interest reduction and rental assistance
payments for the benefit of projects assisted
under this section whose mortgages were made
by State or local housing finance agencies or
State or local government agencies for a term
equal to the remaining mortgage term to maturity on projects assisted under this section to
the extent of—
(1) unexpended balances of amounts of authority as set forth in certain letter agreements between the Department of Housing and
Urban Development and such State or local
housing finance agencies or State or local government agencies, and
(2) existing allocation under section 236 contracts on projects whose mortgages were made
by State or local housing finance agencies or
State or local government agencies which are
not being funded, to the extent of such excess
allocation, for any purposes permitted under
the provisions of this section, including without limitation rent supplement and rental assistance payment unit increases and mortgage
increases for any eligible purpose under this
section, including without limitation operating deficit loans.
An application shall be eligible for assistance
under the previous sentence only if the mortgagee submits the application within 548 days
after February 5, 1988, along with a certification
of the mortgagee that amounts hereunder are to
be utilized only for the purpose of either (A) reducing rents or rent increases to tenants, or (B)
making repairs or otherwise increasing the economic viability of a related project. Unexpended
balances referred to in the first sentence of this
subsection which remain after disposition of all
such applications is favorably concluded shall be
rescinded. The calculation of the amount of assistance to be provided under an interest reduction contract pursuant to this subsection shall
be made on the basis of an assumed mortgage
term equal to the lesser of a 40-year amortization period or the term of that part of the mortgage which relates to the additional assistance
provided under this subsection, even though the
additional assistance may be provided for a
shorter period. The authority conferred by this
subsection to provide interest reduction and

§ 1715z–1

TITLE 12—BANKS AND BANKING

rental assistance payments shall be available
only to the extent approved in appropriation
Acts.
(s) Grants and loans for rehabilitation of multifamily projects
(1) In general
The Secretary may make grants and loans
for the capital costs of rehabilitation to owners of projects that meet the eligibility and
other criteria set forth in, and in accordance
with, this subsection.
(2) Project eligibility
A project may be eligible for capital assistance under this subsection under a grant or
loan only—
(A) if—
(i) the project is or was insured under
any provision of subchapter II of this chapter;
(ii) the project was assisted under section 1437f of title 42 on October 27, 1997;
and
(iii) the project mortgage was not held
by a State agency as of October 27, 1997;
(B) if the project owner agrees to maintain
the housing quality standards as required by
the Secretary;
(C) the project owner enters into such
binding commitments as the Secretary may
require (which shall be applicable to any
subsequent owner) to ensure that the owner
will continue to operate the project in accordance with all low-income affordability
restrictions for the project in connection
with the Federal assistance for the project
for a period having a duration that is not
less than the period referred to in paragraph
(5)(C);
(D)(i) if the Secretary determines that the
owner or purchaser of the project has not engaged in material adverse financial or managerial actions or omissions with regard to
such project; or
(ii) if the Secretary elects to make such
determination, that the owner or purchaser
of the project has not engaged in material
adverse financial or managerial actions or
omissions with regard to other projects of
such owner or purchaser that are federally
assisted or financed with a loan from, or
mortgage insured or guaranteed by, an agency of the Federal Government;
(iii) material adverse financial or managerial actions or omissions, as the terms are
used in this subparagraph, include—
(I) materially violating any Federal,
State, or local law or regulation with regard to this project or any other federally
assisted project, after receipt of notice and
an opportunity to cure;
(II) materially breaching a contract for
assistance under section 1437f of title 42,
after receipt of notice and an opportunity
to cure;
(III) materially violating any applicable
regulatory or other agreement with the
Secretary or a participating administrative entity, after receipt of notice and an
opportunity to cure;

Page 654

(IV) repeatedly failing to make mortgage
payments at times when project income
was sufficient to maintain and operate the
property;
(V) materially failing to maintain the
property according to housing quality
standards after receipt of notice and a reasonable opportunity to cure; or
(VI) committing any act or omission
that would warrant suspension or debarment by the Secretary; and
(iv) the term ‘‘owner’’ as used in this subparagraph, in addition to it having the same
meaning as in section 1437f(f) of title 42, also
means an affiliate of the owner; the term
‘‘purchaser’’ as used in this subsection
means any private person or entity, including a cooperative, an agency of the Federal
Government, or a public housing agency,
that, upon purchase of the project, would
have the legal right to lease or sublease
dwelling units in the project, and also means
an affiliate of the purchaser; the terms ‘‘affiliate of the owner’’ and ‘‘affiliate of the
purchaser’’ means any person or entity (including, but not limited to, a general partner or managing member, or an officer of either) that controls an owner or purchaser, is
controlled by an owner or purchaser, or is
under common control with the owner or
purchaser; the term ‘‘control’’ means the direct or indirect power (under contract, equity ownership, the right to vote or determine a vote, or otherwise) to direct the financial, legal, beneficial or other interests
of the owner or purchaser; and
(E) if the project owner demonstrates to
the satisfaction of the Secretary—
(i) using information in a comprehensive
needs assessment, that capital assistance
under this subsection from a grant or loan
(as appropriate) is needed for rehabilitation of the project; and
(ii) that project income is not sufficient
to support such rehabilitation.
(3) Eligible uses
Amounts from a grant or loan under this
subsection may be used only for projects eligible under paragraph (2) for the purposes of—
(A) payment into project replacement reserves;
(B) debt service payments on non-Federal
rehabilitation loans; and
(C) payment of nonrecurring maintenance
and capital improvements, under such terms
and conditions as are determined by the Secretary.
(4) Grant and loan agreements
(A) In general
The Secretary shall provide in any grant
or loan agreement under this subsection
that the grant or loan shall be terminated if
the project fails to meet housing quality
standards, as applicable on October 27, 1997,
or any successor standards for the physical
conditions of projects, as are determined by
the Secretary.
(B) Affordability and use clauses
The Secretary shall include in a grant or
loan agreement under this subsection a re-

Page 655

TITLE 12—BANKS AND BANKING

quirement for the project owners to maintain such affordability and use restrictions
as the Secretary determines to be appropriate and consistent with paragraph (2)(C).
(C) Other terms
The Secretary may include in a grant or
loan agreement under this subsection such
other terms and conditions as the Secretary
determines to be necessary.
(5) Loan terms
A loan under this subsection—
(A) shall provide amounts for the eligible
uses under paragraph (3) in a single loan disbursement of loan principal;
(B) shall be repaid, as to principal and interest, on behalf of the borrower using
amounts recaptured from contracts for interest reduction payments pursuant to
clause (i) or (ii) of paragraph (7)(A);
(C) shall have a term to maturity of a duration not shorter than the remaining period
for which the interest reduction payments
for the insured mortgage or mortgages that
fund repayment of the loan would have continued after extinguishment or writedown of
the mortgage (in accordance with the terms
of such mortgage in effect immediately before such extinguishment or writedown);
(D) shall bear interest at a rate, as determined by the Secretary of the Treasury,
that is based upon the current market yields
on outstanding marketable obligations of
the United States having comparable maturities; and
(E) shall involve a principal obligation of
an amount not exceeding the amount that
can be repaid using amounts described in
subparagraph (B) over the term determined
in accordance with subparagraph (C), with
interest at the rate determined under subparagraph (D).
(6) Delegation
(A) In general
In addition to the authorities set forth in
subsection (p), the Secretary may delegate
to State and local governments the responsibility for the administration of grants
under this subsection. Any such government
may carry out such delegated responsibilities directly or under contracts.
(B) Administration costs
In addition to other eligible purposes,
amounts of grants under this subsection
may be made available for costs of administration under subparagraph (A).
(7) Funding
(A) In general
For purposes of carrying out this subsection, the Secretary may make available
amounts that are unobligated amounts for
contracts for interest reduction payments—
(i) that were previously obligated for
contracts for interest reduction payments
under this section until the insured mortgage under this section was extinguished;
(ii) that become available as a result of
the outstanding principal balance of a
mortgage having been written down;

§ 1715z–1

(iii) that are uncommitted balances
within the limitation on maximum payments that may have been, before October
27, 1997, permitted in any fiscal year; or
(iv) that become available from any
other source.
(B) Liquidation authority
The Secretary may liquidate obligations
entered into under this subsection under section 1305(10) of title 31.
(C) Capital grants
In making capital grants under the terms
of this subsection, using the amounts that
the Secretary has recaptured from contracts
for interest reduction payments, the Secretary shall ensure that the rates and
amounts of outlays do not at any time exceed the rates and amounts of outlays that
would have been experienced if the insured
mortgage had not been extinguished or the
principal amount had not been written
down, and the interest reduction payments
that the Secretary has recaptured had continued in accordance with the terms in effect immediately prior to such extinguishment or write-down.
(D) Loans
In making loans under this subsection
using the amounts that the Secretary has
recaptured from contracts for interest reduction payments pursuant to clause (i) or
(ii) of paragraph (7)(A)—
(i) the Secretary may use such recaptured amounts for costs (as such term is
defined in section 661a of title 2) of such
loans; and
(ii) the Secretary may make loans in any
fiscal year only to the extent or in such
amounts that amounts are used under
clause (i) to cover costs of such loans.
(June 27, 1934, ch. 847, title II, § 236, as added
Pub. L. 90–448, title II, § 201(a), Aug. 1, 1968, 82
Stat. 498; amended Pub. L. 91–152, title I,
§§ 101(e), 107(b), 108, title IV, §§ 412(c), 418(b), Dec.
24, 1969, 83 Stat. 379, 381, 398, 402; Pub. L. 91–609,
title I, §§ 101(e), 102(b), 108, 114(b), 114[115](b),
117(c), 118(a), 121, Dec. 31, 1970, 84 Stat. 1770,
1772–1776; Pub. L. 92–503, § 1(e), Oct. 18, 1972, 86
Stat. 906; Pub. L. 93–85, § 1(e), Aug. 10, 1973, 87
Stat. 220; Pub. L. 93–117, § 1(e), Oct. 2, 1973, 87
Stat. 421; Pub. L. 93–383, title II, § 212, Aug. 22,
1974, 88 Stat. 672; Pub. L. 94–173, § 4(b), Dec. 23,
1975, 89 Stat. 1027; Pub. L. 94–375, § 4, Aug. 3, 1976,
90 Stat. 1070; Pub. L. 95–128, title II, § 206(a)–(c),
title III, § 301(e), Oct. 12, 1977, 91 Stat. 1130, 1131;
Pub. L. 95–406, § 1(e), Sept. 30, 1978, 92 Stat. 879;
Pub. L. 95–557, title II, § 201(k), formerly (i), title
III, § 301(e), Oct. 31, 1978, 92 Stat. 2087, 2096, as renumbered Pub. L. 97–35, title III, § 321(f)(2)(A),
Aug. 13, 1981, 95 Stat. 400; Pub. L. 96–71, § 1(e),
Sept. 28, 1979, 93 Stat. 501; Pub. L. 96–105, § 1(e),
Nov. 8, 1979, 93 Stat. 794; Pub. L. 96–153, title II,
§§ 203(b), 205(b), title III, § 301(e), Dec. 21, 1979, 93
Stat. 1107, 1108, 1111; Pub. L. 96–372, §§ 1(e), 2, Oct.
3, 1980, 94 Stat. 1363; Pub. L. 96–399, title II,
§ 204(b), 211, title III, § 301(e), Oct. 8, 1980, 94 Stat.
1629, 1636, 1638; Pub. L. 97–35, title III, §§ 321(f)(3),
322(f), 331(e), Aug. 13, 1981, 95 Stat. 400, 403, 413;
Pub. L. 97–289, § 1(e), Oct. 6, 1982, 96 Stat. 1230;

§ 1715z–1

TITLE 12—BANKS AND BANKING

Pub. L. 98–35, § 1(e), May 26, 1983, 97 Stat. 197;
Pub. L. 98–109, § 1(e), Oct. 1, 1983, 97 Stat. 745;
Pub. L. 98–181, title I [title II, §§ 217(c), 218], Nov.
30, 1983, 97 Stat. 1186, 1187; Pub. L. 98–479, title I,
§§ 102(a)(2), 104(a)(4), title II, § 204(a)(9), Oct. 17,
1984, 98 Stat. 2221, 2225, 2232; Pub. L. 100–242, title
I, §§ 167(a)(1), (b), 170(b), 186(a), title IV, §§ 429(f),
430(a), Feb. 5, 1988, 101 Stat. 1864, 1867, 1877, 1919;
Pub. L. 101–235, title II, § 203(a)(1), title III, § 301,
Dec. 15, 1989, 103 Stat. 2037, 2043; Pub. L. 101–625,
title V, § 578(a), title VI, §§ 611(a), (b)(1), 612(a),
Nov. 28, 1990, 104 Stat. 4244, 4278, 4279; Pub. L.
102–550, title III, § 331, title IV, § 408(b), Oct. 28,
1992, 106 Stat. 3773, 3778; Pub. L. 104–99, title IV,
§ 405(d), Jan. 26, 1996, 110 Stat. 44; Pub. L. 104–134,
title I, § 101(e) [title II, § 228], Apr. 26, 1996, 110
Stat. 1321–257, 1321–292; renumbered title I, Pub.
L. 104–140, § 1(a), May 2, 1996, 110 Stat. 1327; Pub.
L. 104–204, title II, § 221, Sept. 26, 1996, 110 Stat.
2906; Pub. L. 105–65, title V, § 531, Oct. 27, 1997, 111
Stat. 1409; Pub. L. 105–276, title II, § 227, Oct. 21,
1998, 112 Stat. 2490; Pub. L. 106–74, title V,
§§ 532(a)–(d), 533, Oct. 20, 1999, 113 Stat. 1116, 1117,
1119; Pub. L. 106–377, § 1(a)(1) [title II, § 216], Oct.
27, 2000, 114 Stat. 1441, 1441A–28; Pub. L. 106–569,
title VIII, § 861(a), Dec. 27, 2000, 114 Stat. 3025.)
REFERENCES IN TEXT
The Low-Income Housing Preservation and Resident
Homeownership Act of 1990, referred to in subsec.
(f)(1)(B)(iii), is title II of Pub. L. 100–242, Feb. 5, 1988, 101
Stat. 1877, as amended, which is classified principally
to chapter 42 (§ 4101 et seq.) of this title. For complete
classification of this Act to the Code, see Short Title
note set out under section 4101 of this title and Tables.
The Emergency Low Income Housing Preservation
Act of 1987, referred to in subsec. (f)(1)(B)(iii), is title II
of Pub. L. 100–242, Feb. 5, 1988, 101 Stat. 1877, which, as
amended by Pub. L. 101–625, is known as the Low-Income Housing Preservation and Resident Homeownership Act of 1990. Subtitles A and B of title II, which
were formerly set out as a note under section 1715l of
this title and which amended section 1715z–6 of this
title, were amended generally by Pub. L. 101–625 and
are classified to subchapter I (§ 4101 et seq.) of chapter
42 of this title. Subtitles C and D of title II amended
section 1715z–15 of this title and sections 1437f, 1472,
1485, and 1487 of Title 42, The Public Health and Welfare. Another subtitle C of title II of Pub. L. 100–242, as
added by Pub. L. 102–550, is classified generally to subchapter II (§ 4141 et seq.) of chapter 42 of this title. For
complete classification of this Act to the Code, see
Short Title note set out under section 4101 of this title
and Tables.
Section 201 of the Housing and Community Development Amendments of 1978, referred to in subsec. (f)(3),
(5)(A), is section 201 of Pub. L. 95–557, title II, Oct. 31,
1978, 92 Stat. 2084, which enacted section 1715z–1a of this
title and amended this section.
Section 516 of the Multifamily Assisted Housing Reform and Affordability Act of 1997, referred to in subsec. (g)(2), is section 516 of Pub. L. 105–65, which is set
out as a note under section 1437f of Title 42, The Public
Health and Welfare.
Section 1701q of this title, referred to in subsec.
(j)(2)(B), was amended generally by Pub. L. 101–625, title
VIII, § 801(a), Nov. 28, 1990, 104 Stat. 4297, and, as so
amended, no longer defines the term ‘‘elderly or handicapped families’’.
Section 236 contracts, referred to in subsec. (r)(2),
refer to contracts under this section.
CODIFICATION
Subsec. (o), added as subsec. (n) by Pub. L. 91–609,
§ 121(a), designated subsec. (o) in the Code as a prior
subsec. (n) was added by Pub. L. 91–152, and amended by
Pub. L. 91–609, § 101(e).

Page 656
AMENDMENTS

2000—Subsec. (g)(2). Pub. L. 106–569, § 861(a)(1), substituted ‘‘Notwithstanding’’ for ‘‘Subject to paragraph
(3) and notwithstanding’’.
Subsec. (g)(3). Pub. L. 106–569, § 861(a)(2), redesignated
par. (4) as (3) and struck out former par. (3) which related to authority under par. (2) to retain and use excess
charges.
Subsec. (g)(3)(A). Pub. L. 106–377 substituted ‘‘fiscal
years 2000 and 2001’’ for ‘‘fiscal year 2000’’.
Subsec. (g)(4). Pub. L. 106–569, § 861(a)(2), redesignated
par. (4) as (3).
1999—Subsec. (e). Pub. L. 106–74, § 532(a), designated
existing provisions as par. (1) and added par. (2).
Subsec. (f)(1). Pub. L. 106–74, § 532(d), added par. (1)
and struck out former par. (1) which required that basic
and fair market rental charges be established with the
approval of the Secretary and that the rental charge
for each dwelling unit be within the basic and fair market charges, subject to certain exceptions and refinements.
Subsec. (g). Pub. L. 106–74, § 532(b), (c), designated existing provisions as par. (1), struck out at end ‘‘Notwithstanding any other requirements of this subsection, an owner of a project with a mortgage insured
under this section, or a project previously assisted
under subsection (b) of this section but without a mortgage insured under this section if the project mortgage
was insured under section 1713 of this title before July
30, 1998 pursuant to section 1715n(f) of this title and assisted under subsection (b) of this section, may retain
some or all of such excess charges for project use if authorized by the Secretary and upon such terms and
conditions as established by the Secretary.’’, and added
pars. (2) to (4).
Subsec. (s). Pub. L. 106–74, § 533(a)(1), substituted
‘‘Grants and loans for rehabilitation of multifamily
projects’’ for ‘‘Grant authority’’ in heading.
Subsec. (s)(1). Pub. L. 106–74, § 533(a)(2), inserted ‘‘and
loans’’ after ‘‘grants’’.
Subsec. (s)(2). Pub. L. 106–74, § 533(a)(3)(A), substituted
‘‘capital assistance under this subsection under a grant
or loan only’’ for ‘‘capital grant assistance under this
subsection’’ in introductory provisions.
Subsec. (s)(2)(C). Pub. L. 106–74, § 533(b)(1)(B), added
subpar. (C). Former subpar. (C) redesignated (D).
Subsec. (s)(2)(D). Pub. L. 106–74, § 533(b)(1)(A), redesignated subpar. (C) as (D). Former subpar. (D) redesignated (E).
Subsec. (s)(2)(D)(i). Pub. L. 106–74, § 533(a)(3)(B), substituted ‘‘capital assistance under this subsection from
a grant or loan (as appropriate)’’ for ‘‘capital grant assistance’’.
Subsec. (s)(2)(E). Pub. L. 106–74, § 533(b)(1)(A), redesignated subpar. (D) as (E).
Subsec. (s)(3). Pub. L. 106–74, § 533(a)(4), in par. heading, substituted ‘‘Eligible uses’’ for ‘‘Eligible purposes’’
and in introductory provisions, substituted ‘‘Amounts
from a grant or loan under this subsection may be used
only for projects eligible under paragraph (2) for the
purposes of—’’ for ‘‘The Secretary may make grants to
the owners of eligible projects for the purposes of—’’.
Subsec. (s)(4). Pub. L. 106–74, § 533(a)(5)(A), substituted
‘‘Grant and loan agreements’’ for ‘‘Grant agreement’’
in heading.
Subsec. (s)(4)(A). Pub. L. 106–74, § 533(a)(5)(B), inserted
‘‘or loan’’ after ‘‘grant’’ in two places.
Subsec. (s)(4)(B). Pub. L. 106–74, § 533(a)(5)(B), (b)(2),
inserted ‘‘or loan’’ after ‘‘grant’’ and ‘‘and consistent
with paragraph (2)(C)’’ before period at end.
Subsec. (s)(4)(C). Pub. L. 106–74, § 533(a)(5)(B), inserted
‘‘or loan’’ after ‘‘grant’’.
Subsec. (s)(5). Pub. L. 106–74, § 533(a)(9), added par. (5).
Former par. (5) redesignated (6).
Pub. L. 106–74, § 533(a)(6), which directed the insertion
of ‘‘or loan’’ after ‘‘grant’’ each place it appeared, could
not be executed because the word ‘‘grant’’ did not appear.
Subsec. (s)(6). Pub. L. 106–74, § 533(a)(8), redesignated
par. (5) as (6). Former par. (6) redesignated (7).

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TITLE 12—BANKS AND BANKING

Subsec. (s)(6)(D). Pub. L. 106–74, § 533(a)(7), added subpar. (D).
Subsec. (s)(7). Pub. L. 106–74, § 533(a)(8), redesignated
par. (6) as (7).
1998—Subsec. (g). Pub. L. 105–276 amended subsec. (g)
generally. Prior to amendment, subsec. (g) read as follows: ‘‘The project owner shall, as required by the Secretary, accumulate, safeguard, and periodically pay the
Secretary or such other entity as determined by the
Secretary and upon such terms and conditions as the
Secretary deems appropriate, all rental charges collected on a unit-by-unit basis in excess of the basic
rental charges. Unless otherwise directed by the Secretary, such excess charges shall be credited to a reserve fund to be used by the Secretary to make additional assistance payments as provided in paragraph (3)
of subsection (f) of this section. However, a project
owner with a mortgage insured under this section may
retain some or all of such excess charges for project use
if authorized by the Secretary and upon such terms and
conditions as established by the Secretary.’’
1997—Subsec. (s). Pub. L. 105–65 added subsec. (s).
1996—Subsec. (f)(1). Pub. L. 104–204, § 221(a)(2), which
directed the amendment of second sentence by striking
‘‘or (ii) the fair market rental established under section
1437f(c) of title 42 for the market area in which the
housing is located, or (iii) the actual rent (as determined by the Secretary) paid for a comparable unit in
comparable unassisted housing in the market area in
which the housing assisted under this section is located,’’ after ‘‘pursuant to this paragraph,’’, was executed by striking language which did not include word
‘‘or’’ before ‘‘(ii)’’ to reflect the probable intent of Congress and the amendment by Pub. L. 104–134, § 101(e)
[title II, § 228(a)]. See below.
Pub. L. 104–204, § 221(a)(1), (3), struck out ‘‘the lower
of (i)’’ after ‘‘amount, not exceeding’’, and inserted
after second sentence ‘‘However, in the case of a project
which contains more than 5,000 units, is subject to an
interest reduction payments contract, and is financed
under a State or local program, the Secretary may reduce the rental charge ceiling, but in no case shall the
rent be below basic rent. For plans of action approved
for Capital Grants under the Low-Income Housing Preservation and Resident Homeownership Act of 1990
(LIHPRHA) or the Emergency Low Income Housing
Preservation Act of 1987 (ELIHPA), the rental charge
for each dwelling unit shall be at the basic rental
charge or such greater amount, not exceeding the lower
of (i) the fair market rental charge determined pursuant to this paragraph, or (ii) the actual rent paid for a
comparable unit in comparable unassisted housing in
the market area in which the housing assisted under
this section is located, as represents 30 percent of the
tenant’s adjusted income, but in no case shall the rent
be below basic rent.’’
Pub. L. 104–134, § 101(e) [title II, § 228(a)], in second
sentence, struck out ‘‘or’’ before ‘‘(ii)’’ and substituted
‘‘located, or (iii) the actual rent (as determined by the
Secretary) paid for a comparable unit in comparable
unassisted housing in the market area in which the
housing assisted under this section is located,’’ for ‘‘located,’’.
Pub. L. 104–99, § 405(d)(1), substituted ‘‘The rental
charge for each dwelling unit shall be at the basic rental charge or such greater amount, not exceeding the
lower of (i) the fair market rental charge determined
pursuant to this paragraph, or (ii) the fair market rental established under section 1437f(c) of title 42 for the
market area in which the housing is located, as represents 30 per centum of the tenant’s adjusted income.’’
for ‘‘The rental for each dwelling unit shall be at the
basic rental charge or such greater amount, not exceeding the fair market rental charge, as represents 30 per
centum of the tenant’s adjusted income.’’
Subsec. (f)(6). Pub. L. 104–99, § 405(d)(2), struck out
par. (6) which read as follows:
‘‘(6)(A) Notwithstanding paragraph (1), tenants whose
incomes exceed 80 percent of area median income shall
pay as rent the lower of the following amounts: (A) 30

§ 1715z–1

percent of the family’s adjusted monthly income; or (B)
the relevant fair market rental established under section 1437f(b) of title 42 for the jurisdiction in which the
housing is located.
‘‘(B) An owner shall phase in any increase in rents for
current tenants resulting from subparagraph (A). Rental charges collected in excess of the basic rental
charges shall continue to be credited to the reserve
fund described in subsection (g)(1) of this section.’’
Subsec. (f)(7). Pub. L. 104–204, § 221(b), added par. (7).
Subsec. (g). Pub. L. 104–204, § 221(c), amended subsec.
(g) generally. Prior to amendment, subsec. (g) read as
follows: ‘‘The project owner shall, as required by the
Secretary, accumulate, safeguard, and periodically pay
to the Secretary all rental charges collected on a unitby-unit basis in excess of the basic rental charges. Such
excess charges shall be credited to a reserve fund to be
used by the Secretary to make additional assistance
payments as provided in paragraph (3) of subsection (f)
of this section.’’
Pub. L. 104–134, § 101(e) [title II, § 228(b)], inserted ‘‘on
a unit-by-unit basis’’ after ‘‘collected’’.
1992—Subsec. (f)(3). Pub. L. 102–550, § 408(b), substituted ‘‘September 30, 1994’’ for ‘‘September 30, 1992’’.
Subsec. (j)(4)(A). Pub. L. 102–550, § 331, struck out
‘‘private’’ before ‘‘mortgagor’’.
1990—Subsec. (f)(3). Pub. L. 101–625, § 578(a), substituted ‘‘September 30, 1992’’ for ‘‘September 30, 1991’’.
Subsec. (f)(5). Pub. L. 101–625, § 611(b)(1), added par.
(5).
Subsec. (f)(6). Pub. L. 101–625, § 612(a), added par. (6).
Subsec. (m). Pub. L. 101–625, § 611(a), inserted before
period at end of first sentence ‘‘, except that any
amounts not actually received by the family may not
be considered as income under this subsection’’.
1989—Subsec. (b). Pub. L. 101–235, § 203(a)(1), inserted
‘‘public entity,’’ after ‘‘dividend entity,’’.
Subsec. (f)(3). Pub. L. 101–235, § 301, substituted ‘‘September 30, 1991’’ for ‘‘September 30, 1989’’.
1988—Subsec. (f)(3). Pub. L. 100–242, § 186(a), substituted ‘‘September 30, 1989’’ for ‘‘September 30, 1985’’.
Subsec. (f)(4). Pub. L. 100–242, § 167(a)(1), substituted
‘‘100 percent’’ for ‘‘90 per centum’’.
Subsec. (i)(1). Pub. L. 100–242, §§ 170(b), 429(f), amended
par. (1) identically, substituting ‘‘subsection (f)(4)’’ for
‘‘subsection (h)’’.
Subsec. (n). Pub. L. 100–242, § 167(b), inserted at end
‘‘A mortgage may be insured under this section after
the date in the preceding sentence in order to refinance
a mortgage insured under this section or to finance
pursuant to subsection (j)(3) the purchase, by a cooperative or nonprofit corporation or association, of a
project assisted under this section.’’
Subsec. (r). Pub. L. 100–242, § 430(a), added subsec. (r).
1984—Subsec. (f)(4). Pub. L. 98–479, § 102(a)(2), struck
out ‘‘up to’’ before ‘‘90 per centum’’.
Subsec. (j)(4)(B). Pub. L. 98–479, § 104(a)(4), substituted
‘‘bear interest at a rate not to exceed such percent per
annum on the amount of the principal obligation outstanding at any time as the Secretary determines is
necessary to meet the mortgage market, taking into
consideration the yields on mortgages in the primary
and secondary markets’’ for ‘‘bear interest (exclusive of
premium charges for insurance and service charges, if
any) at not to exceed such per centum per annum (not
in excess of 6 per centum), on the amount of the principal obligation outstanding at any time, as the Secretary finds necessary to meet the mortgage market’’.
Subsec. (j)(5). Pub. L. 98–479, § 204(a)(9), substituted
‘‘of residents’’ for ‘‘or residents’’ in provision following
subpar. (C).
1983—Subsec. (f)(3). Pub. L. 98–181, § 217(c), substituted
‘‘September 30, 1985’’ for ‘‘September 30, 1982’’.
Subsec. (f)(4). Pub. L. 98–181, § 218(a), added par. (4).
Subsec. (i)(1). Pub. L. 98–181, § 218(b), inserted provision relating to utilization by the Secretary of any authority under this section that it recaptured.
Subsec. (n). Pub. L. 98–109 substituted ‘‘November 30,
1983’’ for ‘‘September 30, 1983’’.
Pub. L. 98–35 substituted ‘‘September 30, 1983’’ for
‘‘May 20, 1983’’.

§ 1715z–1

TITLE 12—BANKS AND BANKING

1982—Subsec. (n). Pub. L. 97–289 substituted ‘‘May 20,
1983’’ for ‘‘September 30, 1982’’.
1981—Subsec. (e). Pub. L. 97–35, § 322(f)(1), substituted
‘‘one year’’ for ‘‘two years’’.
Subsec. (f)(1). Pub. L. 97–35, § 322(f)(2), (3), substituted
provisions respecting applicability of specific percentage of tenant’s adjusted income, for provisions respecting applicability of specific percentage of tenant’s income.
Subsec. (f)(2). Pub. L. 97–35, § 322(f)(4)–(6), substituted
provisions respecting applicability of specific percentage of tenant’s adjusted income, for provisions respecting applicability of specific percentage of tenant’s income, and struck out provisions relating to reduction
of rental payment.
Subsec. (f)(3). Pub. L. 97–35, §§ 321(f)(3), 322(f)(7), struck
out subpar. (A) which related to establishment of an
initial operating expense level, redesignated subpar. (B)
as entire provision and substituted ‘‘1982’’ for ‘‘1981’’.
Subsec. (m). Pub. L. 97–35, § 322(f)(8), substituted provisions defining ‘‘income’’ as income from all sources of
each member of the household, subject to certain exclusions, for provisions defining term ‘‘income’’ as income determined under section 1437f of title 42.
Subsec. (n). Pub. L. 97–35, § 331(e), substituted ‘‘1982’’
for ‘‘1981’’.
1980—Subsec. (f)(3)(B). Pub. L. 96–399, § 204(b), substituted ‘‘September 30, 1981’’ for ‘‘October 15, 1980’’ in
third sentence, and struck out ‘‘on or after October 1,
1978, or credited to such fund prior to October 1, 1978,
but remaining unobligation on October 31, 1978,’’ in
first sentence.
Pub. L. 96–372, § 2, substituted ‘‘October 15, 1980’’ for
‘‘September 30, 1980’’.
Subsec. (n). Pub. L. 96–399, § 301(e), substituted ‘‘September 30, 1981’’ for ‘‘October 15, 1980’’.
Pub. L. 96–372, § 1(e), substituted ‘‘October 15, 1980’’
for ‘‘September 30, 1980’’.
Subsec. (q). Pub. L. 96–399, § 211, added subsec. (q).
1979—Subsec. (f)(3)(B). Pub. L. 96–153, § 205(b), substituted ‘‘after October 1, 1978, or credited to such fund
prior to October 1, 1978, but remaining unobligated on
October 31, 1978,’’ for ‘‘after October 1, 1978,’’, and in
provision relating to the restriction on approval of
funds, substituted ‘‘September 30, 1980’’ for ‘‘September
30, 1979’’.
Subsec. (m). Pub. L. 96–153, § 203(b), substituted definition of ‘‘income’’ by reference to section 1437f of title
42 for provisions requiring deduction of $300 for each
minor member of the family in determining the income
and further providing that the earnings of a minor not
be included in the income of person or family.
Subsec. (n). Pub. L. 96–153, § 301(e), substituted ‘‘September 30, 1980’’ for ‘‘November 30, 1979’’.
Pub. L. 96–105 substituted ‘‘November 30, 1979’’ for
‘‘October 31, 1979’’.
Pub. L. 96–71 substituted ‘‘October 31, 1979’’ for ‘‘September 30, 1979.’’
1978—Subsec. (f)(3). Pub. L. 95–557, § 201(k)(1), formerly
§ 201(i)(1), designated existing provisions as par. (A),
substituted ‘‘For each fiscal year prior to the fiscal
year 1979, the’’ for ‘‘The’’, and added par. (B).
Subsec. (g). Pub. L. 95–557, § 201(k)(2), formerly
§ 201(i)(2), struck out provisions authorizing, that if
during any period the balance in reserve fund was adequate to meet additional assistance payments, such excess charges be credited to the appropriation authorized by subsec. (i), and be available until the end of the
next fiscal year for purpose of making assistance payments with respect to rental housing projects, and that
for purpose of this subsection and par. (3) of subsec. (f),
initial operating expense level for any project assisted
under a contract entered into prior to Oct. 12, 1977, be
established by the Secretary not later than 180 days
after Oct. 12, 1977.
Subsec. (n). Pub. L. 95–557, § 301(e), substituted ‘‘September 30, 1979’’ for ‘‘October 31, 1978’’.
Pub. L. 95–406 substituted ‘‘October 31, 1978’’ for ‘‘September 30, 1978’’.
1977—Subsec. (f)(3). Pub. L. 95–128, § 206(a), (b), substituted ‘‘The Secretary is authorized to make, and

Page 658

shall contract to make to the extent of the moneys in
the reserve fund established under subsection (g) of this
section and to the further extent of funds authorized in
appropriation Acts, an additional monthly assistance
payment to the project owner up to the amount by
which the sum of the cost of utilities and local property taxes exceeds the initial operating expense level.’’
for ‘‘At any time subsequent to the establishment of an
initial operating expense level, the Secretary is authorized to make, and contract to make, additional assistance payments to the project owner in an amount up to
the amount by which the sum of the cost of utilities
and local property taxes exceeds the initial operating
expense level, but not to exceed the amount required to
maintain the basic rentals of any units at levels not in
excess of 30 per centum or such lower per centum not
less than 25 per centum as shall reflect the reduction
permitted in clause (ii) of the last sentence of paragraph (1), of the income of tenants occupying such
units.’’, inserted sentence ‘‘Such payment shall be used
by the project owner solely to effect, and there shall be,
a reduction in the basic rental charges established for
the project.’’, and substituted ‘‘Any contract to make
additional monthly assistance payments shall be for a
one-year period and shall be adjusted periodically to
provide, to the extent approved in appropriation Acts,
for continuation of the payments and for an appropriate adjustment in the amount of the assistance payments.’’ for ‘‘Any contract to make additional assistance payments may be amended periodically to provide
for appropriate adjustments in the amount of the assistance payments.’’; and substituted in last sentence
‘‘unless the Secretary finds that the increase in the
cost of utilities or local property taxes is not reasonable or not’’ for ‘‘only if the Secretary finds that the
increase in the cost of utilities or local property taxes,
is reasonable and is’’.
Subsec. (g). Pub. L. 95–128, § 206(c), substituted date of
enactment of Pub. L. 95–128, which is October 12, 1977,
for date of enactment of Pub. L. 93–383, which was August 22, 1974.
Subsec. (n). Pub. L. 95–128, § 301(e), substituted ‘‘September 30, 1978’’ for ‘‘September 30, 1977’’.
1976—Subsec. (f)(2). Pub. L. 94–375, § 4(b), inserted
‘‘(including the amount allowed for utilities in the case
of a project with separate utility metering)’’ after
‘‘basic rentals’’ and ‘‘reduce the rental payment’’, and
struck out ‘‘or such lower per centum as may be established pursuant to the provisions of clause (ii) of the
last sentence of paragraph (1)’’ after ‘‘25 per centum of
their income’’ and ‘‘25 per centum of the tenant’s income’’.
Subsec. (n). Pub. L. 94–375, § 4(a), substituted ‘‘September 30, 1977’’ for ‘‘June 30, 1976’’.
1975—Subsec. (j)(5)(C). Pub. L. 94–173 struck out provision limiting to 10 per centum the number of dwelling
units available to lower income persons under the age
of 62.
1974—Subsec. (f). Pub. L. 93–383, § 212(1), (2), redesignated existing subsec. (f) as (f)(1) and cls. (1) and (2) as
(A) and (B), respectively, and inserted provisions relating to separate utility metering and pars. (2) and (3).
Subsec. (g). Pub. L. 93–383, § 212(3), substituted provisions authorizing the creation of a reserve fund of excess rental charges and providing for use of such fund
for making additional assistance payments, for provisions authorizing the Secretary to deposit excess
charges in a revolving fund used for making interest reduction payments to any housing project receiving assistance, and authorizing investment of monies in
United States obligations.
Subsec. (i)(1). Pub. L. 93–383, § 212(4), inserted authorization for increase by $75,000,000 on July 1, 1974.
Subsec. (i)(2). Pub. L. 93–383, § 212(5), substituted provisions relating to contracts for assistance payments
and income limitations with respect to families involved in such contracts, for provisions relating to contracts for interest reduction payments, income limitations with respect to families involved in such contracts, and semiannual reports to Congressional Com-

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TITLE 12—BANKS AND BANKING

mittees on income levels of families living in assisted
projects.
Subsec. (i)(3). Pub. L. 93–383, § 212(5), substituted provisions relating to availability of not less than 10 per
centum of the total amount of contracts for assistance
payments, for provisions relating to contracts for not
more than 10 per centum of the total amount of interest reduction payments.
Subsec. (i)(4). Pub. L. 93–383, § 212(5), added par. (4).
Subsec. (n). Pub. L. 93–383, § 212(6), substituted ‘‘June
30, 1976’’ for ‘‘October 1, 1974’’.
Subsec. (p). Pub. L. 93–383, § 212(7), added subsec. (p).
1973—Subsec. (n). Pub. L. 93–117 substituted ‘‘October
1, 1974’’ for ‘‘October 1, 1973’’.
Pub. L. 93–85 substituted ‘‘October 1, 1973’’ for ‘‘June
30, 1973’’.
1972—Subsec. (n). Pub. L. 92–503 substituted ‘‘June 30,
1973’’ for ‘‘October 1, 1972’’.
1970—Subsec. (b). Pub. L. 91–609, §§ 108, 118(a), inserted
definition of ‘‘mortgage insurance premium’’ and substituted ‘‘which may involve either new or existing
construction and which’’ for ‘‘which prior to completion of construction or rehabilitation’’ before ‘‘is approved’’, respectively.
Subsec. (g). Pub. L. 91–609, § 117(c), provided for guarantee as to principal and interest by any agency of the
United States and for investment of moneys in bonds or
other obligations the proceeds of which will be used to
directly support the residential mortgage market.
Subsec. (i)(1). Pub. L. 91–609, §§ 102(b), 121(b), in second
sentence inserted ‘‘outstanding’’ before ‘‘contracts’’
where first appearing and substituted ‘‘$150,000,000 on
July 1, 1970’’ and ‘‘$200,000,000 on July 1, 1971’’ for
‘‘$125,000,000 on July 1, 1970’’ and ‘‘$170,000,000 on July 1,
1971’’, respectively, and in first sentence inserted ‘‘by
the Secretary’’ after ‘‘entered into’’.
Subsec. (i)(3). Pub. L. 91–609, § 114[115](b)(2), added par.
(3).
Subsec. (j)(5). Pub. L. 91–609, §§ 114(b), 114[115](b)(1),
provided for use of certain housing facilities for classroom purposes where public schools in the community
are overcrowded due in part to attendance of residents
of the property or project, but dispensed with need for
kitchen facilities in dwelling units in projects for displaced, elderly, or handicapped families.
Subsec. (n). Pub. L. 91–609, § 101(e), substituted ‘‘October 1, 1972’’ for ‘‘October 1, 1971’’.
Subsec. (o). Pub. L. 91–609, § 121(a), added subsec. (o).
See Codification note above.
1969—Subsec. (b). Pub. L. 91–152, §§ 108, 418(b), inserted
proviso authorizing the Secretary to continue making
interest reduction payments where the mortgage has
been assigned to him, and inserted ‘‘mortgage or part
thereof on a’’ after ‘‘with respect to a’’.
Subsec. (i)(1). Pub. L. 91–152, § 107(b), substituted
‘‘$125,000,000 on July 1, 1969, by $125,000,000 on July 1,
1970, and by $170,000,000 on July 1, 1971’’ for ‘‘$100,000,000
on July 1, 1969, and by $125,000,000 on July 1, 1970’’.
Subsec. (i)(2). Pub. L. 91–152, § 412(c), required the Secretary to report semiannually instead of annually to
the respective Committees on Banking and Currency of
the Senate and House of Representatives.
Subsec. (n). Pub. L. 91–152, § 101(e), added subsec. (n).
EFFECTIVE DATE OF 2000 AMENDMENT
Amendment by Pub. L. 106–569 effective Dec. 27, 2000,
unless effectiveness or applicability upon another date
certain is specifically provided for, with provisions relating to effect of regulatory authority, see section 803
of Pub. L. 106–569, set out as a note under section 1701q
of this title.
EFFECTIVE DATE OF 1999 AMENDMENT
Pub. L. 106–74, title V, § 532(f), Oct. 20, 1999, 113 Stat.
1119, provided that: ‘‘This section [amending this section and enacting provisions set out as a note below]
shall take effect, and the amendments made by this
section are made and shall apply, on the date of the enactment of this Act [Oct. 20, 1999].’’

§ 1715z–1

EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 106–74, title V, § 532(e), Oct. 20, 1999, 113 Stat.
1118, provided that: ‘‘Section 236(g) of the National
Housing Act (12 U.S.C. 1715z–1(g)), as amended by section 227 of the Departments of Veterans Affairs and
Housing and Urban Development, and Independent
Agencies Appropriations Act, 1999 (Public Law 105–276;
112 Stat. 2490) shall be effective on the date of the enactment of such Public Law 105–276 [Oct. 21, 1998], and
any excess rental charges referred to in such section
that have been collected since such date of the enactment with respect to projects with mortgages insured
under section 207 of the National Housing Act (12 U.S.C.
1713) may be retained by the project owner unless the
Secretary of Housing and Urban Development specifically provides otherwise. The Secretary may return
any excess charges remitted to the Secretary since
such date of the enactment.’’
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
EFFECTIVE DATE OF 1979 AMENDMENT
Amendment by section 203(b) of Pub. L. 96–153 effective Dec. 21, 1979, and maximum amount of tenant contribution applicable, see section 203(c) of Pub. L. 96–153,
formerly set out as a note under section 1701s of this
title.
EFFECTIVE DATE OF 1978 AMENDMENT
Pub. L. 95–557, title II, § 201(k), formerly (i), Oct. 31,
1978, 92 Stat. 2087, as redesignated by Pub. L. 97–35, title
III, § 321(f)(2)(A), Aug. 13, 1981, 95 Stat. 400, provided
that the amendment made by that section is effective
Oct. 1, 1978.
EFFECTIVE DATE OF 1977 AMENDMENT; APPLICABILITY
Pub. L. 95–128, title II, § 206(d), Oct. 12, 1977, 91 Stat.
1130, provided that: ‘‘The amendments made by this
section [amending this section] shall become effective
on October 1, 1977, and shall apply to assistance payments pursuant to section 236(f)(3) of the National
Housing Act [12 U.S.C. 1715z–1(f)(3)] with respect only to
periods commencing on or after such date.’’
UNCOMMITTED BALANCES OF EXCESS RENTAL CHARGES
Pub. L. 110–161, div. K, title II, Dec. 26, 2007, 121 Stat.
2425, which provided in part for transfer from the Rental Housing Assistance Fund of all uncommitted balances of excess rental charges as of Sept. 30, 2007, and
any collections made during fiscal year 2008 and all
subsequent fiscal years, to the Flexible Subsidy Fund,
was repealed by Pub. L. 113–76, div. L, title II, § 232, Jan.
17, 2014, 128 Stat. 634.
Similar provisions were contained in the following
prior appropriations acts:
Pub. L. 109–115, div. A, title III, Nov. 30, 2005, 119 Stat.
2453, repealed by Pub. L. 112–55, div. C, title II, § 235,
Nov. 18, 2011, 125 Stat. 702.
Pub. L. 108–447, div. I, title II, Dec. 8, 2004, 118 Stat.
3308, repealed by Pub. L. 112–55, div. C, title II, § 235,
Nov. 18, 2011, 125 Stat. 702.
Pub. L. 108–199, div. G, title II, Jan. 23, 2004, 118 Stat.
385.
Pub. L. 108–7, div. K, title II, Feb. 20, 2003, 117 Stat.
494.
Pub. L. 107–73, title II, Nov. 26, 2001, 115 Stat. 669.
Pub. L. 106–377, § 1(a)(1) [title II], Oct. 27, 2000, 114
Stat. 1441, 1441A–19.
Pub. L. 106–74, title II, Oct. 20, 1999, 113 Stat. 1064.
Pub. L. 105–276, title II, Oct. 21, 1998, 112 Stat. 2480.
Pub. L. 105–65, title II, Oct. 27, 1997, 111 Stat. 1361.
Pub. L. 104–134, title I, § 101(e) [title II], Apr. 26, 1996,
110 Stat. 1321–257, 1321–270.
SUBMISSION OF ELECTRONIC INVOICES
Pub. L. 109–115, div. A, title III, § 325, Nov. 30, 2005, 119
Stat. 2466, provided that: ‘‘Notwithstanding any other

§ 1715z–1a

TITLE 12—BANKS AND BANKING

provision of law, for fiscal year 2006 and thereafter, all
mortgagees receiving interest reduction payments
under section 236 of the National Housing Act (12 U.S.C.
1715z–1) shall submit only electronic invoices to the Department of Housing and Development in order to receive such payments. The mortgagees shall comply
with this requirement no later than 90 days from the
date of enactment of this provision [Nov. 30, 2005].’’
TREATMENT OF EXCESS CHARGES PREVIOUSLY
COLLECTED
Pub. L. 106–569, title VIII, § 861(b), Dec. 27, 2000, 114
Stat. 3025, provided that: ‘‘Any excess charges that a
project owner may retain pursuant to the amendments
made by subsections (b) and (c) of section 532 of the Departments of Veterans Affairs and Housing and Urban
Development, and Independent Agencies Appropriations Act, 2000 (Public Law 106–74; 113 Stat. 1116)
[amending this section] that have been collected by
such owner since the date of the enactment of such appropriations Act [Oct. 20, 1999] and that such owner has
not remitted to the Secretary of Housing and Urban
Development may be retained by such owner unless
such Secretary otherwise provides. To the extent that
a project owner has remitted such excess charges to the
Secretary since such date of the enactment, the Secretary may return to the relevant project owner any
such excess charges remitted. Notwithstanding any
other provision of law, amounts in the Rental Housing
Assistance Fund, or heretofore or subsequently transferred from the Rental Housing Assistance Fund to the
Flexible Subsidy Fund, shall be available to make such
return of excess charges previously remitted to the
Secretary, including the return of excess charges referred to in section 532(e) of such appropriations Act
[see Effective Date of 1998 Amendment note above].’’
RENTAL HOUSING ASSISTANCE; EXTENSION OF TIME
WITHIN WHICH TO SUBMIT APPLICATION
Pub. L. 101–45, title II, June 30, 1989, 103 Stat. 127, provided: ‘‘That notwithstanding the second sentence of
such section 236(r) [12 U.S.C. 1715z–1(r)], an application
shall be eligible for assistance under such section if the
mortgagee submits an application within five hundred
and forty-eight days after the effective date of this Act
[June 30, 1989].’’
DIRECT FINANCING STUDY BY SECRETARY OF HOUSING
AND URBAN DEVELOPMENT AND SECRETARY OF THE
TREASURY; REPORT TO CONGRESS; TRANSMITTAL NOT
LATER THAN ONE YEAR AFTER AUGUST 22, 1974
Pub. L. 93–383, title VIII, § 822, Aug. 22, 1974, 88 Stat.
740, directed Secretary of Housing and Urban Development and Secretary of the Treasury to study feasibility
of financing programs authorized under section 236 of
the National Housing Act [this section] and section 802
of this Act [42 U.S.C. 1440] through various financing
methods, including direct loans from Federal Financing Bank, with a view to determining whether there
was any method that would result in net savings to
Federal Government (after taking into account direct
and indirect effects of such method) and to transmit to
Congress a report on study not later than one year
after Aug. 22, 1974.
TRANSFER OF INSURANCE OF MORTGAGES NOT FINALLY
ENDORSED FOR INSURANCE UNDER SECTION 1715l(d)(3)
OF THIS TITLE
Pub. L. 90–448, title II, § 201(c), Aug. 1, 1968, 82 Stat.
502, provided that: ‘‘The Secretary of Housing and
Urban Development is authorized, upon such terms and
conditions as he may prescribe, to transfer to section
236(j) of the National Housing Act [12 U.S.C. 1715z–1(j)]
the insurance of a mortgage which has not be [sic] finally endorsed for insurance under section 221(d)(3) of
such Act [12 U.S.C. 1715l(d)(3)] and which has been approved for the below-market interest rate prescribed in

Page 660

the proviso of section 221(d)(5) of such Act [12 U.S.C.
1715l(d)(5)].’’
INSURANCE OF MORTGAGES GIVEN TO REFINANCE MORTGAGE LOANS MADE UNDER SECTION 1701q OF THIS
TITLE
Pub. L. 90–448, title II, § 201(d), Aug. 1, 1968, 82 Stat.
502, provided that: ‘‘The Secretary of Housing and
Urban Development is authorized, upon such terms and
conditions as he may prescribe, to insure under section
236(j) of the National Housing Act [12 U.S.C. 1715z–1(j)]
a mortgage meeting the requirements of such section
which is given to refinance a mortgage loan made
under section 202 of the Housing Act of 1959 [12 U.S.C.
1701q]: Provided, That the application for such insurance is filed with the Secretary on or before the date
of project completion, or within such reasonable time
thereafter as the Secretary may permit.’’
CEILING ON TOTAL INTEREST REDUCTION PAYMENTS IN
ANY FISCAL YEAR
Pub. L. 90–608, ch. IV, § 401, Oct. 21, 1968, 82 Stat. 1193,
provided in part that the total payments that may be
required in any fiscal year by all contracts entered into
under section 236 of the National Housing Act [this section] shall not exceed $25,000,000.
Pub. L. 91–47, title II, § 201, July 22, 1969, 83 Stat. 53,
increased by $45,000,000 the limitation on total payments that may be required in any fiscal year by all
contracts entered into under section 236 of the National
Housing Act (82 Stat. 498) [this section].

§ 1715z–1a. Assistance for troubled multifamily
housing projects
(a) Purpose
The purposes of this section are to provide assistance to restore or maintain the financial
soundness, to assist in the improvement of the
management, to permit capital improvements to
be made to maintain certain projects as decent,
safe, and sanitary housing, and to maintain the
low- to moderate-income character of certain
projects assisted or approved for assistance
under the National Housing Act [12 U.S.C. 1701
et seq.], the United States Housing Act of 1937
[42 U.S.C. 1437 et seq.], the Housing Act of 1959,
or the Housing and Urban Development Act of
1965, without regard to whether such projects
are insured under the National Housing Act.
(b) Availability of financial assistance
The Secretary of Housing and Urban Development (hereinafter referred to in this section as
the ‘‘Secretary’’) may make available, and contract to make available, to such extent and in
such amounts as may be approved in appropriation Acts, financial assistance to owners of rental or cooperative housing projects meeting the
requirements of this section. Such assistance
shall be made on an annual basis and in accordance with the provisions of this section, without
regard to whether such projects are insured
under the National Housing Act [12 U.S.C. 1701
et seq.].
(c) Eligibility for financial assistance
A rental or cooperative housing project is eligible for assistance under this section only if
such project—
(1)(A) is assisted under section 236 [12 U.S.C.
1715z–1] or the proviso of section 221(d)(5) of
the
National
Housing
Act
[12
U.S.C.
1715l(d)(5)], or under section 101 of the Housing
and Urban Development Act of 1965 [12 U.S.C.

Page 661

TITLE 12—BANKS AND BANKING

1701s], or received a loan under section 202 of
the Housing Act of 1959 [12 U.S.C. 1701q] more
than 15 years before the date on which assistance is made available under this section;
(B) is assisted under section 23 of the United
States Housing Act of 1937 [42 U.S.C. 1421b], as
in effect immediately before January 1, 1975,
section 8 of the United States Housing Act of
1937 [42 U.S.C. 1437f] following conversion to
such assistance from assistance under section
236 of the National Housing Act [12 U.S.C.
1715z–1] or section 101 of the Housing and
Urban Development Act of 1965 [12 U.S.C.
1701s]; or
(C) met the criteria specified in subparagraph (A) of this paragraph before the acquisition of such project by the Secretary and has
been sold by the Secretary, subject to a mortgage insured or held by the Secretary and subject to an agreement (in effect during the period of assistance under this section) which
provides that the low- and moderate-income
character of the project will be maintained;
except that, with respect to projects sold after
October 1, 1978, assistance shall be available
for a period not to exceed three years; and
(2) meets such other requirements consistent
with the purposes of this section as the Secretary may prescribe.
(d) Criteria for granting financial assistance
No assistance may be made available under
this section unless the Secretary has determined
that—
(1) such assistance, when considered with
other resources available to the project, is
necessary and, in the determination of the
Secretary, will restore or maintain the financial or physical soundness of the project and
maintain the low- and moderate-income character of the project, and the owner has agreed
to maintain the low- and moderate-income
character of such project for a period at least
equal to the remaining term of the project
mortgage;
(2) the assistance which could reasonably be
expected to be provided over the useful life of
the project will be less costly to the Federal
Government than other reasonable alternatives by which the Secretary could maintain the low- and moderate-income character
of the project;
(3) the owner of the project, together with
the mortgagee in the case of a project not insured under the National Housing Act [12
U.S.C. 1701 et seq.], has provided or has agreed
to provide assistance to the project in such
manner as the Secretary may determine;
(4) the project is or can reasonably be made
structurally sound, as determined on the basis
of information obtained as a result of an onsite inspection of the project;
(5) the management of the project is being
conducted by persons who meet minimum levels of competency and experience prescribed
by the Secretary;
(6) the project is being operated and managed in accordance with a management-improvement-and-operating plan which is designed to reduce the operating costs of the
project, which has been approved by the Sec-

§ 1715z–1a

retary, and which includes the following: (A) a
detailed maintenance schedule; (B) a schedule
for correcting past deficiencies in maintenance, repairs, and replacements; (C) a plan to
upgrade the project to meet cost-effective energy efficiency standards prescribed by the
Secretary; (D) a plan to improve financial and
management control systems; (E) a detailed
annual operating budget taking into account
such standards for operating costs in the area
as may be determined by the Secretary; and
(F) such other requirements as the Secretary
may determine; except that the Secretary
may excuse an owner from compliance with
the plan requirement set forth in this paragraph in any case in which such owner seeks
only assistance for capital improvements
under this section; and except that the Secretary shall review and approve or disapprove
each plan not later than the expiration of the
30-day period beginning upon the date of submission of the plan to the Secretary by the
owner, but if the Secretary fails to inform the
owner of approval or disapproval of the plan
within such period the plan shall be considered
to have been approved;
(7) all reasonable attempts have been made
to take all appropriate actions and provide
suitable housing for project residents;
(8) the project has a feasible plan to involve
the residents in project decisions;
(9) the affirmative fair housing marketing
plan meets applicable requirements; and
(10) the owner certifies that it will comply
with various equal opportunity statutes.
(e) Consultation with local officials
Prior to making assistance available to a project, the Secretary shall consult with the appropriate officials of the unit of local government
in which such project is located and seek assurances that—
(1) the community in which the project is located is or will provide essential services to
the project in keeping with the community’s
general level of such services;
(2) the real estate taxes on the project are or
will be no greater than would be the case if the
property were assessed in a manner consistent
with normal property assessment procedures
for the community; and
(3) assistance to the project under this section would not be inconsistent with local plans
and priorities.
(f) Amount of financial assistance
(1) The Secretary may, with respect to any
year, provide assistance under this section, and
make commitments to provide such assistance,
with respect to any project (except a project assisted only for capital improvements) in any
amount which the Secretary determines is consistent with the project’s management-improvement-and-operating plan described in subsection
(d)(6) and which does not exceed the sum of—
(A) an amount determined by the Secretary
to be necessary to correct deficiencies in the
project which exist at the beginning of the
first year with respect to which assistance is
made available for the project under this section, which were caused by the deferral of regularly scheduled maintenance and repairs or

§ 1715z–1a

TITLE 12—BANKS AND BANKING

the failure to make necessary and timely replacements of equipment and other components of the project, and for which payment
has not previously been made;
(B) an amount determined by the Secretary
to be necessary to maintain the low- and moderate-income character of the project by reducing deficiencies, which exist at the beginning of the first year with respect to which assistance is made available for the project
under this section and for which payment has
not previously been made, in the reserve funds
established by the project owner for the purpose of replacing capital items;
(C) an amount not greater than the amount
by which the estimated operating expenses (as
described in paragraph (2) of this subsection)
for the year with respect to which such assistance is made available exceeds the estimated
revenues to be received (as described in paragraph (2) of this subsection) by the project
during such year; and
(D) an amount determined by the Secretary
to be necessary to carry out a plan to upgrade
the project to meet cost-effective energy efficiency standards prescribed by the Secretary.
(2) The estimated revenues for any project
under paragraph (1)(C) of this subsection with
respect to any year shall be equal to the sum
of—
(A) the estimated amount of rent which is to
be expended by the tenants of such project
during such year, as determined by the Secretary without regard to section 236(f)(1) of the
National Housing Act [12 U.S.C. 1715z–1(f)(1)];
(B) the estimated amount of rental assistance payments to be made on behalf of such
tenants during such year, other than assistance made under this section;
(C) the estimated amount of assistance payments to be made on behalf of the owner of
such project under section 221(d)(5) or section
236 of the National Housing Act [12 U.S.C.
1715l(d)(5) or 1715z–1] during such year; and
(D) other income attributable to the project
as determined by the Secretary;
except that—
(E) in computing the estimated amount of
rent to be expended by tenants, the Secretary
shall provide that (i) at least 25 percent (or
such lesser percentage as is provided for under
any other Federal housing assistance program
in which such tenant is participating) of the
income of each such tenant is included, or (ii)
in the case of a tenant paying his or her own
utilities, a percentage of income which is less
than 25 percent and which takes into account
the reasonable costs of such utilities; except
that no amount shall be provided for any tenant under clause (i) or (ii) which exceeds the
fair market rental charge as determined pursuant to section 236(f)(1) of the National Housing Act [12 U.S.C. 1715z–1(f)(1)] for such tenant;
and
(F) in computing the estimated amount of
rent to be expended by tenants and the estimated amount of rental assistance payments
to be made on behalf of such tenants, the Secretary may permit a delinquency-and-vacancy
allowance of not more than 6 per centum of

Page 662

the estimated amount of such rent and payments computed without regard to such allowance; except that, with respect to the first
three years in which assistance is provided to
a project under this section, the Secretary
may permit such allowance for such project to
exceed such 6 percent by an amount which the
Secretary determines is appropriate to carry
out the purposes of this section.
For purposes of computing estimated operating
expenses of any such project with respect to any
year, the Secretary shall include all estimated
operating costs which the Secretary determines
to be necessary and consistent with the management-improvement-and-operating plan for the
project for such year, including, but not limited
to, taxes, utilities, maintenance and repairs (except for maintenance and repairs which should
have been performed in previous years), management, insurance, debt service, and payments
made by the owner for the purpose of establishing or maintaining a reserve fund for replacement costs. The Secretary may not include in
such estimated operating expenses any return
on the equity investment of the owner in such
project.
(3) In order to carry out the purposes of this
section, the Secretary may, notwithstanding the
provisions of section 236(f)(1) of the National
Housing Act [12 U.S.C. 1715z–1(f)(1)], provide
that, for purposes of establishing a rental charge
under such section, there may be excluded from
the computation of the cost of operating a
project an amount equivalent to the amount of
assistance payments made for the project under
this section.
(4) Any assistance payments made pursuant to
this section with respect to any project shall be
made on an annual basis, payable at such intervals, but at least quarterly, as the Secretary
may determine, and may be in any amount
(which the Secretary determines to be consistent with the purpose of this section), except that
the sum of such assistance payments for any
year for a project (other than a project receiving
assistance only for capital improvements) may
not exceed the amount computed pursuant to
paragraph (1) of this subsection. The Secretary
shall review the operations of the project at the
time of such payments to determine that such
operations are consistent with the managementimprovement-and-operating plan.
(g) Rules and regulations
The Secretary is authorized to issue such rules
and regulations as may be necessary to carry
out the provisions and purposes of this section,
including regulations requiring the establishment of a project reserve or such other safeguards as the Secretary determines to be necessary for the financial soundness of any project
for which assistance payments are provided, to
the extent applicable.
(h) Limitation on use of financial assistance
The Secretary may not use any of the assistance available under this section during any fiscal year beginning on or after October 1, 1981, to
supplement any contract to make rental assistance payments which was made pursuant to section 101 of the Housing and Urban Development
Act of 1965 [12 U.S.C. 1701s].

Page 663

TITLE 12—BANKS AND BANKING

(i) Repealed. Pub. L. 103–233, title I, § 103(b)(1),
Apr. 11, 1994, 108 Stat. 359
(j) Flexible Subsidy Fund
(1) For purposes of carrying out the provisions
of this section, there is hereby established in the
Treasury of the United States a revolving fund,
to be known as the Flexible Subsidy Fund. The
Fund shall, to the extent approved in appropriation Acts, be available to the Secretary to provide assistance under this section (including assistance for capital improvements) and shall not
(except as provided in Public Law 100–4–4 1 (102
Stat. 1018), as in effect on October 1, 1988) be
available for any other purpose.
(2) The Fund shall consist of (A) any amount
appropriated to carry out the purposes of this
section; (B) any amount repaid on any assistance provided under this section; (C) any
amounts credited to the reserve fund described
in section 236(g) of the National Housing Act [12
U.S.C. 1715z–1(g)]; (D) any other amount received
by the Secretary under this section (including
any amount realized under paragraph (3)),2 and
(E) any amount received by the Secretary pursuant to section 537 of the National Housing Act
[12 U.S.C. 1735f–15] and section 202a of the Housing Act of 1959 [12 U.S.C. 1701q–1].
(3) Any amounts in the Fund determined by
the Secretary to be in excess of the amounts
currently required to carry out the provisions of
this section shall be invested by the Secretary
in obligations of, or obligations guaranteed as to
both principal and interest by, the United States
or any agency of the United States.
(4) The Secretary shall, to the extent of approvable applications and subject to paragraph
(1), use not less than $30,000,000 or 40 percent
(whichever is less) of the amounts available
from the Fund in any fiscal year for purposes of
providing assistance for capital improvements
in accordance with this section. Any amount reserved under this paragraph for assistance for
capital improvements that is not used before the
last 60 days of a fiscal year shall become available for other assistance under this section.
(5) There is authorized to be appropriated for
assistance under the flexible subsidy fund not to
exceed $52,200,000 for fiscal year 1993 and
$54,392,400 for fiscal year 1994.
(k) Assistance for capital improvements; loans as
medium of assistance; owner contributions;
priority of projects
(1) Assistance for capital improvements under
this section shall include assistance for any
major repair or replacement of a capital item in
a multifamily housing project, including any
such repair or replacement required as a result
of deferred or inadequate maintenance. Capital
improvements do not include maintenance of
any such item. Assistance for capital improvements under this section shall be in the form of
a loan.
(2) The owner of a project receiving assistance
for capital improvements shall agree to contribute assistance to such project in such amounts,
from such sources, and in such manner as the
Secretary determines to be appropriate.
1 See

References in Text note below.
2 So in original. The comma probably should be a semicolon.

§ 1715z–1a

(3) The Secretary may provide assistance for
capital improvements under this section if the
Secretary finds that the reserve funds established by the owner of a project for the purpose
of making capital improvements are insufficient
to finance both the capital improvements for
which such assistance is to be used and other
capital improvements that are reasonably expected to be required in the near future, and
such insufficiency is not the result of the failure
of such owner to comply with any standard established by the Secretary for management of
such reserve funds.
(l) Amount of assistance for capital improvements; term of loan; rate of interest; allowance for administrative costs and probable
program losses; nondischargeable liability;
other forms for loans
(1) The principal amount of any assistance for
capital improvements under this section that is
provided to the owner of a project shall not exceed the difference between the contribution
made by the owner in accordance with subsection (k)(2) and the sum of—
(A) the amount determined by the Secretary
to be necessary for such owner to make capital improvements with respect to capital
items that have failed, or are likely to deteriorate seriously or fail in the near future, in
such projects;
(B) the amount determined by the Secretary
to be necessary to carry out a plan to upgrade
the capital items being improved, and any
other capital items determined by the Secretary to be associated with such capital
items being improved and to require upgrading, to meet cost-effective energy efficiency
standards prescribed by the Secretary; and
(C) the amount determined by the Secretary
to be necessary to comply with the requirements of section 794 of title 29.
(2)(A) The term of any assistance for capital
improvements in the form of a loan under this
section shall not exceed the remaining term of
the mortgage of the project with respect to
which such loan is provided.
(B) Each loan for capital improvements provided under this section shall bear interest at a
rate determined by the Secretary to be appropriate, except that—
(i) such rate shall not be more than 3 percentage points below a rate determined by the
Secretary of the Treasury taking into consideration the average interest rate on all interest bearing obligations of the United States
then forming a part of the public debt, computed at the end of the fiscal year next preceding date on which the loan is made, adjusted
to the nearest 1/8 of 1 percent, plus an allowance adequate in the judgment of the Secretary of Housing and Urban Development to
cover administrative costs and probable losses
under the program; and
(ii) such interest rate plus such allowance
shall not exceed 6 percent per annum nor be
less than 3 percent per annum.
(C) Each loan for capital improvements provided under this section shall be considered to
be a liability of the project involved, and shall

§ 1715z–1a

TITLE 12—BANKS AND BANKING

not be dischargeable in any bankruptcy proceeding under section 727, 1141, or 1328(b) of title 11.
(D) The Secretary may establish such additional conditions on loans provided under this
section as the Secretary determines to be appropriate. The Secretary may require owners receiving assistance for capital improvements
under this section to retain the housing as housing affordable for very low-income families or
persons, low-income families or persons and
moderate-income families or persons for the remaining useful life of the housing. For purposes
of this section, the term ‘‘remaining useful life’’
means, with respect to housing assisted under
this section, the period during which the physical characteristics of the housing remain in a
condition suitable for occupancy, assuming normal maintenance and repairs are made and
major systems and capital components are replaced as becomes necessary.
(E) The Secretary may provide more than one
loan or assistance in any other form to any
project under this section, if each loan or other
assistance complies with the provisions of this
section.
(m) Rental payment increases; minimization of
increases
(1) Increases in rental payments that may
occur as a result of the debt service and other
expenses of a loan for capital improvements provided under this section for a project subject to
a plan of action approved under subtitle B of the
Emergency Low Income Housing Preservation
Act of 1987 shall be governed by the rent agreements entered into under such subtitle.
(2) In order to minimize any increases in rental payments that may occur as a result of the
debt service and other expenses of a loan for
capital improvements provided under this section for a project and that would be incurred by
lower income residents of the project involved
whose rental payments are, or would as a result
of such expenses be, in excess of the amount allowable if section 3(a) of the United States
Housing Act of 1937 [42 U.S.C. 1437a(a)] were applicable to such residents, or where appropriate
to implement a plan of action under subtitle B
of the Emergency Low Income Housing Preservation Act of 1987, the Secretary may take any
or all of the following actions:
(A) Provide assistance with respect to such
project under section 8 of the United States
Housing Act of 1937 [42 U.S.C. 1437f], to the extent amounts are available for such assistance
and without regard to section 16 of such Act
[42 U.S.C. 1437n].
(B) Notwithstanding subsection (l)(2)(B), reduce the rate of interest charged on such loan
to a rate of not less than 1 percent.
(C) Increase the term of such loan to a term
that does not exceed the remaining term of
the mortgage on such project.
(D) Increase the amount of assistance to be
provided by the owner of such project under
subsection (k)(2), if applicable, to an amount
not to exceed 30 percent of the total estimated
cost of the capital improvements involved.
(E) Permit repayment of the debt service to
be deferred as long as the low and moderate
income character of the project is maintained
in accordance with subsection (d).

Page 664

(n) Allocation of assistance
(1) Set-aside
In providing, and contracting to provide, assistance for capital improvements under this
section, in each fiscal year the Secretary shall
set aside an amount, as determined by the
Secretary, for projects that are eligible for incentives under section 224(b) of the Emergency
Low Income Housing Preservation Act of 1987,
as such section existed before November 28,
1990. The Secretary may make such assistance
available on a noncompetitive basis.
(2) General rules for allocation
Except as provided in paragraph (3), with respect to assistance under this section not set
aside for projects under paragraph (1), the Secretary—
(A) may award assistance on a noncompetitive basis; and
(B) shall award assistance to eligible
projects on the basis of—
(i) the extent to which the project is
physically or financially troubled, as evidenced by the comprehensive needs assessment submitted in accordance with title
IV of the Housing and Community Development Act of 1992; and
(ii) the extent to which such assistance
is necessary and reasonable to prevent the
default of federally insured mortgages.
(3) Exceptions
The Secretary may make exceptions to selection criteria set forth in paragraph (2)(B) to
permit the provision of assistance to eligible
projects based upon—
(A) the extent to which such assistance is
necessary to prevent the imminent foreclosure or default of a project whose owner
has not submitted a comprehensive needs assessment pursuant to title IV of the Housing
and Community Development Act of 1992;
(B) the extent to which the project presents an imminent threat to the life, health,
and safety of project residents; or
(C) such other criteria as the Secretary
may specify by regulation or by notice
printed in the Federal Register.
(4) Considerations
In providing assistance under this section,
the Secretary shall take into consideration—
(A) the extent to which there is evidence
that there will be significant opportunities
for residents (including a resident council or
resident management corporation, as appropriate) to be involved in the management of
the project (except that this paragraph shall
have no application to projects that are
owned as cooperatives); and
(B) the extent to which there is evidence
that the project owner has provided competent management and complied with all
regulatory and administrative requirements.
(o) Coordination of assistance
The Secretary shall coordinate the allocation
of assistance under this section with assistance
made available under section 8(v) of the United
States Housing Act of 1937 [42 U.S.C. 1437f(v)]
and section 1701z–11 of this title to enhance the

Page 665

§ 1715z–1a

TITLE 12—BANKS AND BANKING

cost effectiveness of the Federal response to
troubled multifamily housing.
(p) Enhanced voucher eligibility
Notwithstanding any other provision of law,
any project that receives or has received assistance under this section and which is the subject
of a transaction under which the project is preserved as affordable housing, as determined by
the Secretary, shall be considered eligible lowincome housing under section 229 of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C. 4119) for purposes of eligibility of residents of such project
for enhanced voucher assistance provided under
section 8(t) of the United States Housing Act of
1937 (42 U.S.C. 1437f(t)) (pursuant to section 223(f)
of the Low-Income Housing Preservation and
Resident Homeownership Act of 1990 (12 U.S.C.
4113(f))).
(Pub. L. 95–557, title II, § 201, Oct. 31, 1978, 92
Stat. 2084; Pub. L. 96–153, title II, §§ 205(a), 211(c),
Dec. 21, 1979, 93 Stat. 1108, 1110; Pub. L. 96–399,
title II, § 204(a), Oct. 8, 1980, 94 Stat. 1629; Pub. L.
97–35, title III, §§ 321(f)(1), (2), 329C, Aug. 13, 1981,
95 Stat. 399, 400, 409; Pub. L. 98–181, title I [title
II, § 217(a), (b)], Nov. 30, 1983, 97 Stat. 1186; Pub.
L. 98–479, title II, § 204(n)(1), (2), Oct. 17, 1984, 98
Stat. 2234; Pub. L. 100–242, title I, §§ 185, 186(b),
Feb. 5, 1988, 101 Stat. 1873, 1877; Pub. L. 100–628,
title X, § 1011(a), Nov. 7, 1988, 102 Stat. 3268; Pub.
L. 101–235, title I, § 109(c), title II, § 203(a)(2), Dec.
15, 1989, 103 Stat. 2011, 2037; Pub. L. 101–625, title
V, § 578(b), (c), Nov. 28, 1990, 104 Stat. 4244, 4245;
Pub. L. 102–550, title IV, §§ 405, 406, 408(a), Oct. 28,
1992, 106 Stat. 3776, 3778; Pub. L. 103–233, title I,
§ 103(b), Apr. 11, 1994, 108 Stat. 359; Pub. L.
105–276, title V, § 550(g), Oct. 21, 1998, 112 Stat.
2610; Pub. L. 106–74, title V, § 536, Oct. 20, 1999, 113
Stat. 1121.)
REFERENCES IN TEXT
The National Housing Act, as amended, referred to in
subsecs. (a), (b), (c)(1)(A), and (d)(3), is act June 27, 1934,
ch. 847, 48 Stat. 1246, as amended, which is classified
principally to this chapter (§ 1701 et seq.). For complete
classification of this Act to the Code, see section 1701
of this title and Tables.
The United States Housing Act of 1937, referred to in
subsec. (a), is act Sept. 1, 1937, ch. 896, as revised generally by Pub. L. 93–383, title II, § 201(a), Aug. 22, 1974, 88
Stat. 653, which is classified generally to chapter 8
(§ 1437 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the
Code, see Short Title note set out under section 1437 of
Title 42 and Tables.
The Housing Act of 1959, referred to in subsec. (a), is
Pub. L. 86–372, Sept. 23, 1959, 73 Stat. 654, as amended.
For complete classification of this Act to the Code, see
Short Title of 1959 Amendment note set out under section 1701 of this title and Tables.
The Housing and Urban Development Act of 1965, as
amended, referred to in subsecs. (a), (c)(1)(A), (B), and
(h), is Pub. L. 89–117, Aug. 10, 1965, 79 Stat. 451, as
amended. Section 101 of the Act enacted section 1701s of
this title and amended sections 1451 and 1465 of Title 42,
The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title of 1965
Amendment note set out under section 1701 of this title
and Tables.
Section 23 of the United States Housing Act of 1937,
referred to in subsec. (c)(1)(B), was classified to section
1421b of Title 42 and was omitted in the general revision
of the United States Housing Act of 1937 by Pub. L.
93–383, title II, § 201(a), Aug. 22, 1974, 88 Stat. 653.

Public Law 100–4–4 (102 Stat. 1018), referred to in subsec. (j)(1), probably means Pub. L. 100–404, Aug. 19, 1988,
102 Stat. 1014, known as the Department of Housing and
Urban Development—Independent Agencies Appropriations Act, 1989. Provisions appearing on 102 Stat. 1018 of
Pub. L. 100–404 relating to transfer of funds from the
‘‘Flexible subsidy fund’’ for carrying out community
development grants programs are not classified to the
Code.
The Emergency Low Income Housing Preservation
Act of 1987, referred to in subsecs. (m) and (n)(1), is title
II of Pub. L. 100–242, Feb. 5, 1988, 101 Stat. 1877, which,
as amended by Pub. L. 101–625, is known as the Low-Income Housing Preservation and Resident Homeownership Act of 1990, and is classified principally to chapter
42 (§ 4101 et seq.) of this title. Section 224(b) and subtitle
B of title II, which were formerly set out as a note
under section 1715l of this title and which amended section 1715z–6 of this title, were amended generally by
Pub. L. 101–625 on Nov. 28, 1990, and are classified generally to subchapter I (§ 4101 et seq.) of chapter 42 of this
title. For provisions similar to those contained in
former section 224(b), see section 4109(b) of this title.
For complete classification of this Act to the Code, see
Short Title note set out under section 4101 of this title
and Tables.
The Housing and Community Development Act of
1992, referred to in subsec. (n)(2)(B)(i), (3)(A), is Pub. L.
102–550, Oct. 28, 1992, 106 Stat. 3672. Title IV of the Act
amended this section, section 1715z–1 of this title, and
section 12710 of Title 42, The Public Health and Welfare,
and enacted provisions set out as a note below. For
complete classification of this Act to the Code, see
Short Title of 1992 Amendment note set out under section 5301 of Title 42 and Tables.
CODIFICATION
Another subsec. (k) of section 201 of Pub. L. 95–557
amended section 1715z–1 of this title.
Section was enacted as part of the Housing and Community Development Amendments of 1978, and not as
part of the National Housing Act which comprises this
chapter.
AMENDMENTS
1999—Subsec. (p). Pub. L. 106–74 added subsec. (p).
1998—Subsec. (m)(2)(A). Pub. L. 105–276 substituted
‘‘section 8’’ for ‘‘section 8(b)(1)’’.
1994—Subsec. (i). Pub. L. 103–233, § 103(b)(1), struck out
subsec. (i) which read as follows: ‘‘Notwithstanding any
other provision of law, in exercising any authority relating to the approval or disapproval of rentals charged
tenants residing in projects which are eligible for assistance under this section, the Secretary—
‘‘(1) shall consider whether the mortgagor could
control increases in utility costs by securing more favorable utility rates, by undertaking energy conservation measures which are financially feasible and
cost effective, or by taking other financially feasible
and cost-effective actions to increase energy efficiency or to reduce energy consumption; and
‘‘(2) may, in his discretion, adjust the amount of a
proposed rental increase where he finds the mortgagor could exercise such control.’’
Subsec. (k)(2). Pub. L. 103–233, § 103(b)(2), substituted
a period for ‘‘, except that—
‘‘(A) such contribution shall not be less than 20 percent of the total estimated cost of the capital improvements involved, unless the Secretary, upon application of the owner, determines that such contribution is financially infeasible and waives or reduces such contribution to the extent necessary;
‘‘(B) the Secretary may not require an amount to
be contributed, from the reserve funds established by
the owner of such projects for the purpose of making
capital improvements, in excess of 50 percent of the
amount of such reserve funds on the date of such
loan;
‘‘(C) The Secretary shall waive the requirements of
this paragraph if such owner is a private nonprofit
corporation or an association; and

§ 1715z–1a

TITLE 12—BANKS AND BANKING

‘‘(D) the Secretary shall give owners credit for advances made to the project during a 3-year period
prior to the application for assistance.’’
Subsec. (n). Pub. L. 103–233, § 103(b)(3), amended subsec. (n) generally. Prior to amendment, subsec. (n) read
as follows:
‘‘(n)(1) The Secretary shall award assistance under
this section to eligible projects on the basis of the following selection criteria:
‘‘(A) The extent to which the project presents an
imminent threat to the life, health, and safety of
project residents.
‘‘(B) The extent to which the project is financially
troubled.
‘‘(C) The extent of physical improvements needed
by the project as evidenced by the comprehensive
needs assessment submitted in accordance with title
IV of the Housing and Community Development Act
of 1992.
‘‘(D) The extent to which there is evidence that
there will be significant opportunities for residents
(including a resident council or resident management
corporation, as appropriate) to be involved in management of the project (except that this paragraph
shall have no application to projects that are owned
as cooperatives).
‘‘(E) The extent to which there is evidence that the
project owner has provided competent management
and complied with all regulatory and administrative
instructions (including such instructions with respect
to the comprehensive servicing of multifamily
projects as the Secretary may issue).
‘‘(F) Such other criteria as the Secretary may
specify by regulation or in a Federal Register notice
of fund availability.
‘‘(2) Eligible projects that have federally insured
mortgages in force are to be selected for award of assistance under this section before any other eligible
project.’’
Subsecs. (o), (p). Pub. L. 103–233, § 103(b)(4) redesignated subsec. (p) as (o) and struck out former subsec.
(o) which read as follows: ‘‘Projects receiving assistance under this section are not eligible for prepayment
incentives under the Emergency Low-Income Housing
Preservation Act of 1987 or the Low-Income Housing
Preservation and Resident Homeownership Act of 1990.
Projects receiving financial assistance under such Acts
are not eligible for assistance under this section.’’
1992—Subsec. (d)(5). Pub. L. 102–550, § 405(a)(1), struck
out ‘‘and’’ at end.
Subsec. (d)(6). Pub. L. 102–550, § 406, which directed insertion, before period at end, of ‘‘; and except that the
Secretary shall review and approve or disapprove each
plan not later than the expiration of the 30-day period
beginning upon the date of submission of the plan to
the Secretary by the owner, but if the Secretary fails
to inform the owner of approval or disapproval of the
plan within such period the plan shall be considered to
have been approved’’, was executed by making the insertion before the concluding semicolon to reflect the
probable intent of Congress and the intervening amendment by Pub. L. 102–550, § 405(a)(2). See below.
Pub. L. 102–550, § 405(a)(2), substituted semicolon for
period at end.
Subsec. (d)(7) to (10). Pub. L. 102–550, § 405(a)(3), added
pars. (7) to (10).
Subsec. (j)(5). Pub. L. 102–550, § 408(a), amended par.
(5) generally. Prior to amendment, par. (5) read as follows: ‘‘There are authorized to be appropriated for assistance under the flexible subsidy fund not to exceed
$50,000,000 for fiscal year 1991 and $52,200,000 for fiscal
year 1992.’’
Subsec. (k)(2)(D). Pub. L. 102–550, § 405(e), added subpar. (D).
Subsec. (k)(4). Pub. L. 102–550, § 405(b)(1), struck out
par. (4) which read as follows: ‘‘In providing, and contracting to provide, assistance for capital improvements under this section, the Secretary shall—
‘‘(A) give priority to projects that are eligible for
incentives under section 224(b) of the Emergency Low
Income Housing Preservation Act of 1987; and

Page 666

‘‘(B) with respect to any amounts not required for
projects under subparagraph (A), give priority among
other projects based on the extent to which—
‘‘(i) the capital improvements for which such assistance is requested are immediately required;
‘‘(ii) the projects serve as the residences of lower
income families, and the extent which other suitable housing is unavailable for such families in the
areas in which such projects are located;
‘‘(iii) the capital improvements for which such assistance is requested involve the life, safety, or
health of the residents of the project or involve
major capital improvements in the projects; and
‘‘(iv) the projects demonstrate the greatest financial distress, while continuing to meet the requirements of subsection (d)(1) of this section.’’
Subsec. (l)(2)(D). Pub. L. 102–550, § 405(c), inserted at
end ‘‘The Secretary may require owners receiving assistance for capital improvements under this section to
retain the housing as housing affordable for very lowincome families or persons, low-income families or persons and moderate-income families or persons for the
remaining useful life of the housing. For purposes of
this section, the term ‘remaining useful life’ means,
with respect to housing assisted under this section, the
period during which the physical characteristics of the
housing remain in a condition suitable for occupancy,
assuming normal maintenance and repairs are made
and major systems and capital components are replaced as becomes necessary.’’
Subsec. (n). Pub. L. 102–550, § 405(b)(2), added subsec.
(n).
Subsec. (o). Pub. L. 102–550, § 405(d), added subsec. (o).
Subsec. (p). Pub. L. 102–550, § 405(f), added subsec. (p).
1990—Subsec. (j)(1). Pub. L. 101–625, § 578(c), inserted
before period at end ‘‘and shall not (except as provided
in Public Law 100–4–4 (102 Stat. 1018), as in effect on October 1, 1988) be made available for any other purpose’’.
Subsec. (j)(5). Pub. L. 101–625, § 578(b), added par. (5).
1989—Subsec. (j)(2). Pub. L. 101–235, § 109(c), added cl.
(E).
Subsec. (m)(2). Pub. L. 101–235, § 203(a)(2)(B)(i), (ii),
struck out ‘‘not subject to paragraph (1)’’ after ‘‘for a
project’’ and inserted ‘‘, or where appropriate to implement a plan of action under subtitle B of the Emergency Low Income Housing Preservation Act of 1987’’
after second reference to ‘‘residents’’.
Subsec. (m)(2)(B). Pub. L. 101–235, § 203(a)(2)(A), substituted ‘‘Notwithstanding subsection (l)(2)(B), reduce’’
for ‘‘Reduce’’.
Subsec. (m)(2)(E). Pub. L. 101–235, § 203(a)(2)(B)(iii),
added subpar. (E).
1988—Pub. L. 100–242, § 185(h), struck out ‘‘Operating’’
before ‘‘assistance’’ in section catchline.
Subsec. (a). Pub. L. 100–242, § 185(a), inserted ‘‘to permit capital improvements to be made to maintain certain projects as decent, safe, and sanitary housing,’’
after ‘‘management,’’.
Pub. L. 100–242, § 186(b)(1), inserted reference to Housing Act of 1959.
Subsec. (c)(1)(A). Pub. L. 100–242, § 186(b)(2), inserted
before semicolon at end ‘‘, or received a loan under section 202 of the Housing Act of 1959 more than 15 years
before the date on which assistance is made available
under this section’’.
Subsec. (c)(1)(B). Pub. L. 100–242, § 185(b), inserted
‘‘section 23 of the United States Housing Act of 1937, as
in effect immediately before January 1, 1975,’’ after ‘‘is
assisted under’’.
Subsec. (d)(1). Pub. L. 100–242, § 185(c)(1), inserted ‘‘or
physical’’ after ‘‘maintain the financial’’.
Subsec. (d)(6). Pub. L. 100–242, § 185(c)(2), inserted at
end ‘‘; except that the Secretary may excuse an owner
from compliance with the plan requirement set forth in
this paragraph in any case in which such owner seeks
only assistance for capital improvements under this
section’’.
Subsec. (f)(1). Pub. L. 100–242, § 185(d)(1), inserted parenthetical exception relating to projects assisted only
for capital improvements.

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TITLE 12—BANKS AND BANKING

Subsec. (f)(4). Pub. L. 100–242, § 185(d)(2), substituted
‘‘payments for any year for a project (other than a
project receiving assistance only for capital improvements) may not exceed’’ for ‘‘payments for any year
may not exceed’’.
Subsec. (g). Pub. L. 100–242, § 185(e), inserted ‘‘, to the
extent applicable’’ after ‘‘provided’’.
Subsec. (j). Pub. L. 100–242, § 185(f), in amending subsec. (j) generally, substituted provisions relating to the
establishment, contents, and use of a revolving fund to
be known as the Flexible Subsidy Fund, for provisions
authorizing appropriations under this section for fiscal
years 1979 through 1982.
Subsec. (j)(4). Pub. L. 100–628 substituted ‘‘shall, to
the extent of approvable applications and subject to
paragraph (1), use not less than $30,000,000 or 40 percent
(whichever is less) of the amounts available’’ for ‘‘may
use not more than $50,000,000’’; and inserted at end
‘‘Any amount reserved under this paragraph for assistance for capital improvements that is not used before
the last 60 days of a fiscal year shall become available
for other assistance under this section.’’
Subsecs. (k) to (m). Pub. L. 100–242, § 185(g), added
subsecs. (k) to (m).
1984—Subsec. (c). Pub. L. 98–479, § 204(n)(1), substituted ‘‘A’’ for ‘‘a’’ in provisions before subpar. (A).
Subsec. (j). Pub. L. 98–479, § 204(n)(2), substituted ‘‘section 236(f)(3)’’ for ‘‘section 236(f)(3)(B)’’.
1983—Subsec. (a). Pub. L. 98–181, § 217(a)(1), (b)(1), inserted ‘‘without regard to whether such projects are insured under the National Housing Act’’, and substituted ‘‘, the United States Housing Act of 1937, or’’
for ‘‘or under’’.
Subsec. (b). Pub. L. 98–181, § 217(a)(2), inserted
‘‘, without regard to whether such projects are insured
under the National Housing Act’’.
Subsec. (c)(1)(A). Pub. L. 98–181, § 217(a)(3), struck out
‘‘; except that, in the case of any such project which is
not insured under the National Housing Act such assistance may not be provided before October 1, 1979’’
after ‘‘Act of 1965’’.
Subsec. (c)(1)(B), (C). Pub. L. 98–181, § 217(b)(2), added
subpar. (B) and redesignated former subpar. (B) as (C).
1981—Subsec. (f)(1)(D). Pub. L. 97–35, § 329C(1), added
subpar. (D).
Subsec. (h). Pub. L. 97–35, § 321(f)(2), added subsec. (h).
Former subsec. (h) redesignated (j).
Subsec. (i). Pub. L. 97–35, § 329C(2), added subsec. (i).
Subsec. (j). Pub. L. 97–35, § 321(f)(1), (2)(A), redesignated former subsec. (h) as (j) and authorized appropriation for fiscal year 1982.
1980—Subsec. (h). Pub. L. 96–399 authorized appropriations for fiscal year 1981.
1979—Subsec. (d)(1). Pub. L. 96–153, § 211(c), inserted
requirement that the owner agree to maintain the lowand moderate-income character of such project for a
period at least equal to the remaining term of the project mortgage.
Subsec. (h). Pub. L. 96–153, § 205(a), authorized appropriations for fiscal year 1980.
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by title V of Pub. L. 105–276 effective and
applicable beginning upon Oct. 1, 1999, except as otherwise provided, with provision that Secretary may implement amendment before such date, except to extent
that such amendment provides otherwise, and with savings provision, see section 503 of Pub. L. 105–276, set out
as a note under section 1437 of Title 42, The Public
Health and Welfare.

§ 1715z–1a

‘‘(2) EXCEPTION.—Section 201(n)(1) of the Housing and
Community Development Amendments of 1978 [subsec.
(n)(1) of this section] (as added by the amendment made
by subsection (b)(3) of this section) shall take effect on
the date of enactment of this Act [Apr. 11, 1994].
‘‘(3) NOTICE.—The Secretary shall, by notice published in the Federal Register, establish any requirements necessary to implement the amendments made
by subsections (a) and (b). The notice shall invite public comments and, not later than 12 months after the
date on which the notice is published, the Secretary
shall issue final regulations based on the initial notice,
taking into consideration any public comments received.’’
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
ALTERNATIVE USES FOR PREVENTION OF DEFAULT
Pub. L. 103–233, title I, § 103(h), Apr. 11, 1994, 108 Stat.
362, provided that:
‘‘(1) IN GENERAL.—Subject to notice to and comment
by existing tenants, to prevent the imminent default of
a multifamily housing project subject to a mortgage
insured under title II of the National Housing Act [12
U.S.C. 1707 et seq.], the Secretary may authorize the
mortgagor to use the project for purposes not contemplated by or permitted under the regulatory agreement, if—
‘‘(A) such other uses are acceptable to the Secretary;
‘‘(B) such other uses would be otherwise insurable
under title II of the National Housing Act;
‘‘(C) the outstanding principal balance on the mortgage covering such project is not increased;
‘‘(D) any financial benefit accruing to the mortgagor shall, subject to the discretion of the Secretary,
be applied to project reserves or project rehabilitation; and
‘‘(E) such other use serves a public purpose.
‘‘(2) DISPLACEMENT PROTECTION.—The Secretary may
take actions under paragraph (1) only if—
‘‘(A) tenant-based rental assistance under section 8
of the United States Housing Act of 1937 [42 U.S.C.
1437f] is made available to each eligible family residing in the project that is displaced as a result of such
actions; and
‘‘(B) the Secretary determines that sufficient habitable, affordable (as such term is defined in section
203(b) of the Housing and Community Development
Amendments of 1978 [12 U.S.C. 1701z–11(b)]) rental
housing is available in the market area in which the
project is located to ensure use of such assistance.
‘‘(3) IMPLEMENTATION.—The Secretary shall, by notice
published in the Federal Register, which shall take effect upon publication, establish such requirements as
may be necessary to implement the amendments made
by this subsection. The notice shall invite public comments and, not later than 12 months after the date on
which the notice is published, the Secretary shall issue
final regulations based on the initial notice, taking
into account any public comments received.’’
MULTIFAMILY HOUSING PLANNING AND INVESTMENT
STRATEGIES

EFFECTIVE DATE OF 1994 AMENDMENT

Pub. L. 102–550, title IV, §§ 401–404, Oct. 28, 1992, 106
Stat. 3773–3775, as amended by Pub. L. 103–233, title I,
§ 103(a)(1)–(5), Apr. 11, 1994, 108 Stat. 358, 359, provided
that:

Pub. L. 103–233, title I, § 103(c), Apr. 11, 1994, 108 Stat.
360, provided that:
‘‘(1) IN GENERAL.—Except as provided in paragraph (2),
the amendments made by subsections (a) and (b)
[amending this section and provisions set out below]
shall apply with respect to amounts made available for
fiscal year 1994 and fiscal years thereafter.

‘‘SEC. 401. DEFINITIONS.
‘‘For purposes of this title [amending this section,
section 1715z–1 of this title and section 12710 of Title 42,
The Public Health and Welfare]:
‘‘(1) COVERED MULTIFAMILY HOUSING PROPERTY.—The
term ‘covered multifamily housing property’ means
any housing—

§ 1715z–1a

TITLE 12—BANKS AND BANKING

‘‘(A) that is—
‘‘(i) reserved for occupancy by very low-income
elderly persons pursuant to section 202(d)(1) of the
Housing Act of 1959 [12 U.S.C. 1701q(d)(1)];
‘‘(ii) assisted under the provisions of section 202
of the Housing Act of 1959 (as such section existed
before the effectiveness of the amendment made
by section 801(a) of the Cranston-Gonzalez National Affordable Housing Act [Pub. L. 101–625]);
‘‘(iii) financed by a loan or mortgage insured,
assisted, or held by the Secretary or a State or
State agency under section 236 of the National
Housing Act [12 U.S.C. 1715z–1]; or
‘‘(iv) financed by a loan or mortgage insured or
held by the Secretary pursuant to section
221(d)(3) of the National Housing Act [12 U.S.C.
1715l(d)(3)]; and
‘‘(B) that is not eligible for assistance under—
‘‘(i) the Low-Income Housing Preservation and
Resident Homeownership Act of 1990 [12 U.S.C.
4101 et seq.];
‘‘(ii) the provisions of the Emergency Low Income Housing Preservation Act of 1987 [see References in Text note above] (as in effect immediately before the date of the enactment of the
Cranston-Gonzalez National Affordable Housing
Act [Nov. 28, 1990]); or
‘‘(iii) the HOME Investment Partnerships Act
[42 U.S.C. 12721 et seq.].
‘‘(2) COVERED MULTIFAMILY HOUSING PROPERTY FOR
THE ELDERLY.—The term ‘covered multifamily housing property for the elderly’ means any multifamily
housing project that was designed or designated to
serve, or is serving, elderly persons or families and is
assisted under a program administered by the Secretary.
‘‘(3) SECRETARY.—The term ‘Secretary’ means the
Secretary of Housing and Urban Development.
‘‘SEC. 402. REQUIRED SUBMISSION.
‘‘(a) IN GENERAL.—The owner of each covered multifamily housing property, and the owner of each covered
multifamily housing property for the elderly, shall submit to the Secretary of Housing and Urban Development a comprehensive needs assessment of the property under this title. The assessment shall be prepared
by an entity that does not have an identity of interest
with the owner.
‘‘(b) TIMING.—To ensure that assessments for all covered multifamily housing properties will be submitted
on or before the conclusion of fiscal year 1997, the Secretary shall require the owners of such properties, including covered multifamily housing properties for the
elderly, to submit the assessments for the properties in
accordance with the following schedule:
‘‘(1) For fiscal year 1994, 10 percent of the aggregate
number of such properties.
‘‘(2) For each of fiscal years 1995, 1996, and 1997, an
additional 30 percent of the aggregate number of such
properties.
‘‘SEC. 403. CONTENTS.
‘‘(a) IN GENERAL.—Each comprehensive needs assessment submitted under this title for a covered multifamily housing property or a covered multifamily housing property for the elderly shall contain the following
information with respect to the property:
‘‘(1) A description of any financial or other assistance currently needed for the property to ensure that
the property is maintained in a livable condition and
to ensure the financial viability of the project.
‘‘(2) A description of any financial or other assistance for the property that, at the time of the assessment, is reasonably foreseeable as necessary to ensure that the property is maintained in a livable condition and to ensure the financial viability of the
project, during the remaining useful life of the property.
‘‘(3) A description of any resources available for
meeting the current and future needs of the property
described under paragraphs (1) and (2) and the likelihood of obtaining such resources.

Page 668

‘‘(4) A description of any assistance needed for the
property under programs administered by the Secretary.
‘‘(b) PROJECTS FOR THE ELDERLY.—Each comprehensive needs assessment for a covered multifamily housing property for the elderly shall include, in addition to
the information required under subsection (a), the following information with respect to the property:
‘‘(1) A description of the supportive service needs of
such residents and any supportive services provided
to elderly residents of the property.
‘‘(2) A description of any modernization needs and
activities for the property.
‘‘(3) A description of any personnel needs for the
property.
‘‘SEC. 404. SUBMISSION AND REVIEW.
‘‘(a) FORM.—The Secretary shall establish the form
and manner of submission of the comprehensive needs
assessments under this title.
‘‘(b) RESIDENT REVIEW.—The Secretary shall require
each owner of a covered multifamily housing property
and each owner of a covered multifamily housing property for the elderly to make available to the residents
of the property the comprehensive needs assessment
that is to be submitted to the Secretary. The Secretary
shall require each owner to provide for such residents
to submit comments and opinions regarding the assessment to the owner before the submission of the assessment.
‘‘(c) STATE HOUSING FINANCE AGENCY REVIEW.—To the
extent that a covered multifamily housing property or
a covered multifamily housing property for the elderly
is financed or assisted by a State housing finance agency (as such term is defined in section 802 of the Housing
and Community Development Act of 1974 [42 U.S.C.
1440]), the Secretary shall require the owner of the
property to submit the comprehensive needs assessment for the property to the State housing finance
agency upon submitting the assessment to the Secretary.
‘‘(d) REVIEW.—
‘‘(1) IN GENERAL.—The Secretary shall review each
comprehensive needs assessment for completeness
and adequacy before the expiration of the 90-day period beginning on the receipt of the assessment and
shall notify the owner of the property for which the
assessment was submitted of the findings of such review.
‘‘(2) INCOMPLETE OR INADEQUATE ASSESSMENTS.—If
the Secretary determines that the assessment is substantially incomplete or inadequate, the Secretary
shall—
‘‘(A) notify the owner of the portion or portions of
the assessment requiring completion or other revision; and
‘‘(B) require the owner to submit an amended assessment to the Secretary not later than 30 days
after such notification.
‘‘(e) COST OF PREPARATION OF STRATEGY.—The Secretary shall consider any costs relating to preparing a
comprehensive needs assessment under this title for a
covered multifamily housing property that do not exceed $5,000 for the property as an eligible project expense for the property. The Secretary shall provide
that an owner may not increase the rental charge for
any unit in a covered multifamily housing property to
provide for the cost of preparing a comprehensive needs
assessment.
‘‘(f) PUBLICATION OF METHOD FOR RECEIVING CAPITAL
NEEDS ASSESSMENT.—The Secretary shall cause to be
published in the Federal Register the method by which
the Secretary determines which capital needs assessments will be received each year in accordance with
section 402(b) and subsection (d) of this section.
‘‘(g) ANNUAL REVIEW AND REPORT OF FUNDING AND
TARGETING FOR COVERED MULTIFAMILY PROPERTIES FOR
THE ELDERLY.—
‘‘(1) REVIEW.—The Secretary shall annually conduct
a comprehensive review of—

Page 669

TITLE 12—BANKS AND BANKING

‘‘(A) the funding levels required to fully address
the needs of covered multifamily housing properties for the elderly identified in the comprehensive needs assessments under section 403(b), specifically identifying any expenses necessary to make
substantial repairs and add features (such as congregate dining facilities and commercial kitchens)
resulting from development of a property in compliance with cost-containment requirements established by the Secretary;
‘‘(B) the adequacy of the geographic targeting of
resources provided under programs of the Department with respect to covered multifamily housing
properties for the elderly, based on information acquired pursuant to section 403(b); and
‘‘(C) local housing markets throughout the
United States, with respect to the need, availability, and cost of housing for elderly persons and families, which shall include review of any information
and plans relating to housing for elderly persons
and families included in comprehensive housing affordability strategies submitted by jurisdictions
pursuant to section 105 of the Cranston-Gonzalez
National Affordable Housing Act [42 U.S.C. 12705].
‘‘(2) REPORT.—The Secretary of Housing and Urban
Development shall submit a report to the Congress
annually describing the results of the annual comprehensive needs assessments under section 402 for covered multifamily housing properties for the elderly
and the annual review conducted under paragraph (1)
of this subsection, which shall contain a description
of the methods used by project owners and by the
Secretary to acquire the information described in
section 402(b) and any findings and recommendations
of the Secretary pursuant to the review.’’
[For termination, effective May 15, 2000, of reporting
provisions in section 404(g)(2) of Pub. L. 102–550, set out
above, see section 3003 of Pub. L. 104–66, as amended, set
out as a note under section 1113 of Title 31, Money and
Finance, and page 104 of House Document No. 103–7.]
FUNDING OF MULTIFAMILY HOUSING PROJECTS; OPERATING, CAPITAL IMPROVEMENT AND LOAN MANAGEMENT
ASSISTANCE; AMOUNTS
Pub. L. 102–550, title IV, § 409, as added by Pub. L.
103–233, title I, § 103(a)(6), Apr. 11, 1994, 108 Stat. 359, provided that:
‘‘(a) ALLOCATION OF ASSISTANCE.—Based upon needs
identified in comprehensive needs assessments, and
subject to otherwise applicable program requirements,
including selection criteria, the Secretary may allocate
the following assistance to owners of covered multifamily housing projects and may provide such assistance on a noncompetitive basis:
‘‘(1) Operating assistance and capital improvement
assistance for troubled multifamily housing projects
pursuant to section 201 of the Housing and Community Development Amendments of 1978 [Pub. L.
95–557, enacting this section, amending section 1715z–1
of this title, and enacting provisions set out as a note
under section 1715z–1 of this title], except for assistance set aside under section 201(n)(1) [subsec. (n)(1) of
this section].
‘‘(2) Loan management assistance available pursuant to section 8 of the United States Housing Act of
1937 [42 U.S.C. 1437f].
‘‘(b) OPERATING ASSISTANCE AND CAPITAL IMPROVEMENT ASSISTANCE.—In providing assistance under subsection (a) the Secretary shall use the selection criteria set forth in section 201(n) of the Housing and
Community Development Amendments of 1978.
‘‘(c) AMOUNT OF ASSISTANCE.—The Secretary may
fund all or only a portion of the needs identified in the
capital needs assessment of an owner selected to receive assistance under this section.’’
CAPITAL ASSESSMENT STUDY
Pub. L. 101–235, title II, § 204(c), Dec. 15, 1989, 103 Stat.
2040, as amended by Pub. L. 101–625, title V, § 583, Nov.

§ 1715z–1b

28, 1990, 104 Stat. 4249, directed Secretary of Housing
and Urban Development to conduct a study to determine physical renovation needs of Nation’s federallyassisted multifamily housing inventory that is distressed, to estimate cost of correcting deficiencies and
subsequently maintaining that inventory in adequate
physical condition, and to establish criteria to determine what housing qualifies as distressed, with such
criteria to include factors such as serious deficiencies
in original design, deferred maintenance, physical deterioration or obsolescence of major systems and other
serious deficiencies in physical plant of a project, such
study to examine and assess adequacy of existing tools
that are available to the Secretary for modernization
efforts including mortgage insurance for rehabilitation
loans, operating assistance and capital improvement
loans under the Flexible Subsidy Program, with a detailed examination and assessment of Flexible Subsidy
Program required, and rental assistance, and not later
than Mar. 1, 1992, to submit to Congress a detailed report setting forth findings as a result of the study.
NATIONAL COMMISSION ON SEVERELY DISTRESSED
PUBLIC HOUSING
Pub. L. 101–235, title V, Dec. 15, 1989, 103 Stat. 2048, as
amended by Pub. L. 102–550, title I, § 127(a), Oct. 28, 1992,
106 Stat. 3710, established a National Commission on
Severely Distressed Public Housing to identify those
public housing projects in the Nation that are in a severe state of distress, to assess most promising strategies to improve condition of severely distressed public
housing projects that have been implemented by public
housing authorities, other Government agencies at
Federal, State and local level, public housing tenants,
and private sector, and to develop national action plan
to eliminate by year 2000 unfit living conditions in public housing projects determined by Commission to be
most severely distressed, provided for membership,
functions, and powers of the Commission, directed that,
not later than 12 months after Commission is established, Commission submit a final report to Secretary
and to Congress containing information, evaluations,
and recommendations, authorized appropriations for
Commission of not to exceed $2,000,000 for fiscal year
1990 and $1,000,000 for fiscal year 1991, and terminated
Commission at the end of Sept. 30, 1992.
MULTIFAMILY HOUSING CAPITAL IMPROVEMENTS ASSISTANCE; REGULATIONS FOR IMPLEMENTATION OF PROGRAM

Pub. L. 100–628, title X, § 1011(b), Nov. 7, 1988, 102 Stat.
3268, provided that: ‘‘To implement the amendments
made by section 185 of the Housing and Community Development Act of 1987 [Pub. L. 100–242, amending this
section], the Secretary of Housing and Urban Development shall issue regulations that become effective not
later than February 5, 1989.’’

§ 1715z–1b. Tenant participation in multifamily
housing projects
(a) Purpose; definitions
The purpose of this section is to recognize the
importance and benefits of cooperation and participation of tenants in creating a suitable living environment in multifamily housing projects and in contributing to the successful operation of such projects, including their good
physical condition, proper maintenance, security, energy efficiency, and control of operating
costs. For the purpose of this section, the term
‘‘multifamily housing project’’ means a project
which is eligible for assistance as described in
section 1715z–1a(c) of this title or section 1701q
of this title, or a project which receives projectbased assistance under section 1437f of title 42 or
enhanced vouchers under the Low-Income Hous-

§ 1715z–1c

TITLE 12—BANKS AND BANKING

ing Preservation and Resident Homeownership
Act of 1990 [12 U.S.C. 4101 et seq.], the provisions
of the Emergency Low Income Housing Preservation Act of 1987, or the Multifamily Assisted
Housing Reform and Affordability Act of 1997.
(b) Rights of tenants
The Secretary shall assure that—
(1) where the Secretary’s written approval is
required with respect to an owner’s request for
rent increase, conversion of residential rental
units to any other use (including commercial
use or use as a unit in any condominium or cooperative project), partial release of security,
or major physical alterations or where the
Secretary proposes to sell a mortgage secured
by a multifamily housing project, tenants
have adequate notice of, reasonable access to
relevant information about, and an opportunity to comment on such actions (and in the
case of a project owned by the Secretary, any
proposed disposition of the project) and that
such comments are taken into consideration
by the Secretary;
(2) project owners not interfere with the efforts of tenants to obtain rent subsidies or
other public assistance;
(3) leases approved by the Secretary provide
that tenants may not be evicted without good
cause or without adequate notice of the reasons therefor and do not contain unreasonable
terms and conditions; and
(4) project owners do not impede the reasonable efforts of resident tenant organizations to
represent their members or the reasonable efforts of tenants to organize.
(c) Regulations
The Secretary shall promulgate regulations to
carry out the provisions of this section not later
than 90 days after October 31, 1978.
(Pub. L. 95–557, title II, § 202, Oct. 31, 1978, 92
Stat. 2088; Pub. L. 97–35, title III, § 329F, Aug. 13,
1981, 95 Stat. 410; Pub. L. 100–242, title I, § 183(a),
(b), Feb. 5, 1988, 101 Stat. 1872; Pub. L. 105–276,
title V, § 599(a), Oct. 21, 1998, 112 Stat. 2660.)
REFERENCES IN TEXT
The Low-Income Housing Preservation and Resident
Homeownership Act of 1990, referred to in subsec. (a), is
title II of Pub. L. 100–242, Feb. 5, 1988, 101 Stat. 1877, as
amended, which is classified principally to chapter 42
(§ 4101 et seq.) of this title. For complete classification
of this Act to the Code, see Short Title note set out
under section 4101 of this title and Tables.
The Emergency Low Income Housing Preservation
Act of 1987, referred to in subsec. (a), is title II of Pub.
L. 100–242, Feb. 5, 1988, 101 Stat. 1877, which, as amended
by Pub. L. 101–625, is known as the Low-Income Housing Preservation and Resident Homeownership Act of
1990. Subtitles A and B of title II, which were formerly
set out as a note under section 1715l of this title and
which amended section 1715z–6 of this title, were
amended generally by Pub. L. 101–625 and are classified
to subchapter I (§ 4101 et seq.) of chapter 42 of this title.
Subtitles C and D of title II amended section 1715z–15 of
this title and sections 1437f, 1472, 1485, and 1487 of Title
42, The Public Health and Welfare. Another subtitle C
of title II of Pub. L. 100–242, as added by Pub. L. 102–550,
is classified generally to subchapter II (§ 4141 et seq.) of
chapter 42 of this title. For complete classification of
this Act to the Code, see Short Title note set out under
section 4101 of this title and Tables.
The Multifamily Assisted Housing Reform and Affordability Act of 1997, referred to in subsec. (a), is title

Page 670

V of Pub. L. 105–65, Oct. 27, 1997, 111 Stat. 1384. For complete classification of this Act to the Code, see Short
Title of 1997 Amendment note set out under section 1701
of this title and Tables.
CODIFICATION
This section was enacted as part of the Housing and
Community Development Amendments of 1978, and not
as part of the National Housing Act which comprises
this chapter.
AMENDMENTS
1998—Subsec. (a). Pub. L. 105–276 inserted before period at end ‘‘, or a project which receives project-based
assistance under section 1437f of title 42 or enhanced
vouchers under the Low-Income Housing Preservation
and Resident Homeownership Act of 1990, the provisions of the Emergency Low Income Housing Preservation Act of 1987, or the Multifamily Assisted Housing
Reform and Affordability Act of 1997’’.
1988—Subsec. (a). Pub. L. 100–242, § 183(a), inserted reference to section 1701q of this title.
Subsec. (b)(1). Pub. L. 100–242, § 183(b), substituted ‘‘or
where the Secretary proposes to sell a mortgage secured by a multifamily housing project’’ for ‘‘and the
Secretary deems it appropriate’’.
1981—Subsec. (b)(1). Pub. L. 97–35 substituted provisions relating to request by the owner for rent increases, etc., for provisions relating to action by the
owner.
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105–276, title V, § 599(b), Oct. 21, 1998, 112 Stat.
2660, provided that: ‘‘The amendment made by this section [amending this section] is made on, and shall
apply beginning upon, the date of the enactment of this
Act [Oct. 21, 1998].’’
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.

§ 1715z–1c. Regulation
projects

of

rents

in

insured

After December 1, 1987, the Secretary of Housing and Urban Development shall control rents
and charges as they were controlled prior to
April 19, 1983, for any multifamily housing
project insured under the National Housing Act
[12 U.S.C. 1701 et seq.] if—
(1) during the period of April 19, 1983,
through December 1, 1987, the project owner
and the Secretary have not executed, and the
project owner has not filed a written request
with the Secretary to enter into, an amendment to the regulatory agreement pursuant to
regulations published by the Secretary on
April 19, 1983, or June 4, 1986, electing to deregulate rents or utilize an alternative formula for determining the maximum allowable
rents pursuant to regulations published by the
Secretary on April 19, 1983, or June 4, 1986; and
(2)(A) the project was, as of December 1, 1987,
receiving a housing assistance payment under
a contract pursuant to section 1437f of title 42
(other than under the existing housing certificate program of section 1437f(b)(1) of title 42);
or
(B) not less than 50 percent of the units in
the project are occupied by lower income families (as defined in section 1437a(a)(2) 1 of title
42).
1 Probably

should be a reference to section 1437a(b)(2).

Page 671

TITLE 12—BANKS AND BANKING

(Pub. L. 100–242, title IV, § 425, Feb. 5, 1988, 101
Stat. 1915.)
REFERENCES IN TEXT
The National Housing Act, as amended, referred to in
text, is act June 27, 1934, ch. 847, 48 Stat. 1246, as
amended, which is classified principally to this chapter
(§ 1701 et seq.). For complete classification of this Act
to the Code, see section 1701 of this title and Tables.
CODIFICATION
Section was enacted as part of the Housing and Community Development Act of 1987, and not as part of the
National Housing Act which comprises this chapter.

§ 1715z–2. Repealed. Pub. L. 110–289, div. B, title
I, § 2120(a)(6), July 30, 2008, 122 Stat. 2835
Section, act June 27, 1934, ch. 847, title II, § 237, as
added Pub. L. 90–448, title I, § 102(a), Aug. 1, 1968, 82
Stat. 485; amended Pub. L. 91–152, title I, §§ 110, 113(j),
Dec. 24, 1969, 83 Stat. 382, 385; Pub. L. 105–276, title V,
§ 599F(a), Oct. 21, 1998, 112 Stat. 2665, related to special
mortgage insurance assistance.

§ 1715z–3. Special Risk Insurance Fund
(a) Entitlement to benefits; computation and
payment of benefits to mortgagee
(1) Any mortgagee under a mortgage insured
under section 1715z(i), (j)(4), 1715z–2, or 1715z–8 of
this title shall be entitled to receive the benefits
of the insurance as provided in section 1710(a) of
this title with respect to mortgages insured
under section 1709 of this title. The provisions of
subsections (b), (c), (d), (g), (j), and (k) 1 of section 1710 of this title shall be applicable to mortgages insured under section 1715z(i), (j)(4),
1715z–2,1 or 1715z–8 of this title, except that all
references therein to the ‘‘Mutual Mortgage Insurance Fund’’ shall be construed to refer to the
‘‘Special Risk Insurance Fund’’, and all references therein to section 1709 of this title shall
be construed to refer to section 1715z(i), (j)(4),
1715z–2, or 1715z–8 of this title, as may be appropriate.
(2) Any mortgagee under a mortgage insured
under section 1715z(j)(1) or 1715z–1 of this title
shall be entitled to receive the benefits of insurance as provided in section 1713(g) of this title
with respect to mortgages insured under section
1713 of this title. The provisions of subsections
(d), (e), (h), (i), (j), (k), (l), and (n) of section 1713
of this title shall be applicable to mortgages insured under section 1715z(j)(1) or 1715z–1 of this
title, except that all references therein to the
‘‘General Insurance Fund’’ shall be construed to
refer to the ‘‘Special Risk Insurance Fund’’ and
the premium charge provided in section 1713(d)
of this title shall be payable only in cash or debentures of the Special Risk Insurance Fund.
(3) In lieu of the amount of insurance benefits
computed pursuant to paragraph (1) or (2) of this
subsection the Secretary, in his discretion and
in accordance with such regulations as he may
prescribe, may (with respect to any mortgage
loan acquired by him) compute and pay insurance benefits to the mortgagee in a total
amount equal to the unpaid principal balance of
the loan plus any accrued interest and any advances approved by the Secretary and made pre1 See

References in Text note below.

§ 1715z–3

viously by the mortgagee under the provisions
of the mortgage.
(b) Creation of fund; authorization for advancements; repayment; crediting of charges and
fees; payments from fund; authorization of
appropriations for losses; deposits to fund;
open-market purchases of debentures which
are obligations of fund
There is hereby created a Special Risk Insurance Fund (hereinafter referred to as the
‘‘fund’’) which shall be used by the Secretary as
a revolving fund for carrying out the mortgage
insurance obligations of sections 1715n(e),
1715x(a)(2), 1715z, 1715z–1, 1715z–2,1 and 1715z–8 of
this title, and the Secretary is hereby authorized to advance to the fund, at such times and in
such amounts as he may determine to be necessary, a total sum of $20,000,000 from the General Insurance Fund established pursuant to the
provisions of section 1735c of this title. Such advance shall be repayable at such times and at
such rates of interest as the Secretary deems appropriate. Premium charges, adjusted premium
charges, inspection and other fees, service
charges, and any other income received by the
Secretary under sections 1715n(e), 1715x(a)(2),
1715z, 1715z–1, 1715z–2, and 1715z–8 of this title, together with all earnings on the assets of the
fund, shall be credited to the fund. All payments
made pursuant to claims of mortgagees with respect to mortgages insured under sections
1715x(a)(2), 1715z, 1715z–1, 1715z–2, and 1715z–8 of
this title or pursuant to section 1715n(e) of this
title, cash adjustments, the principal of and interest paid on debentures which are the obligation of the fund, expenses incurred in connection
with or as a consequence of the acquisition and
disposal of property acquired under such sections, and all administrative expenses in connection with the mortgage insurance operations
under such sections shall be paid out of the fund.
Moneys in the fund not needed for current operations of the fund shall be deposited with the
Treasurer of the United States to the credit of
the fund or invested in bonds or other obligations of, or in bonds or other obligations guaranteed by, the United States or any agency of the
United States: Provided, That such moneys shall
to the maximum extent feasible be invested in
such bonds or other obligations the proceeds of
which will be used to directly support the residential mortgage market. The Secretary, with
the approval of the Secretary of the Treasury,
may purchase in the open market debentures
which are the obligation of the fund. Such purchases shall be made at a price which will provide an investment yield of not less than the
yield obtained from other investments authorized by this section. Debentures so purchased
shall be canceled and not reissued.
(c) Mortgage insurance for military impacted
areas; criteria; obligation of Special Risk Insurance Fund; establishment of premiums
and other charges
(1) Notwithstanding the provisions of this
chapter or any other Act, and without regard to
limitations upon eligibility contained in any
section of this subchapter, the Secretary is authorized, upon application by the mortgagee, to
insure under any section of this subchapter a

§ 1715z–4

TITLE 12—BANKS AND BANKING

mortgage executed in connection with the construction, repair, rehabilitation, or purchase of
property located near any installation of the
Armed Forces of the United States in federally
impacted areas in which the conditions are such
that one or more of the eligibility requirements
applicable to the section under which insurance
is sought could not be met, if (A) the Secretary
finds that the benefits to be derived from such
use outweigh the risk of probable cost to the
Government, and (B) the Secretary of Defense
certifies that there is no intention insofar as
can reasonably be foreseen to curtail substantially the personnel assigned or to be assigned
to such installation. The insurance of a mortgage pursuant to this subsection shall be the obligation of the Special Risk Insurance Fund.
(2) The Secretary is authorized (A) to establish
such premiums and other charges as may be necessary to assure that the mortgage insurance
program pursuant to this subsection is made
available on a basis which, in the Secretary’s
judgment, is designed to be actuarially sound
and likely to maintain the fiscal integrity of
such program, and (B) to prescribe such terms
and conditions relating to insurance pursuant to
this subsection as may be found by the Secretary to be necessary and appropriate, and
which are to the maximum extent possible, consistent with provisions otherwise applicable to
mortgage insurance and payment of insurance
benefits.
(3) The Secretary shall undertake an annual
assessment of the risks associated with each of
the insurance programs comprising the Special
Risk Insurance Fund, and shall present findings
from such review to the Congress in the FHA
Annual Management Report.
(June 27, 1934, ch. 847, title II, § 238, as added
Pub. L. 90–448, title I, § 104(a), Aug. 1, 1968, 82
Stat. 486; amended Pub. L. 91–152, title IV, § 415,
Dec. 24, 1969, 83 Stat. 401; Pub. L. 91–351, title V,
§ 503, July 24, 1970, 84 Stat. 461; Pub. L. 91–609,
title I, § 117(d), Dec. 31, 1970, 84 Stat. 1775; Pub. L.
93–383, title III, § 318, Aug. 22, 1974, 88 Stat. 685;
Pub. L. 95–128, title III, § 309, Oct. 12, 1977, 91
Stat. 1135; Pub. L. 103–233, title I, §§ 103(g)(1),
105(a), Apr. 11, 1994, 108 Stat. 362, 363.)
REFERENCES IN TEXT
Subsection (k) of section 1710 of this title, referred to
in subsec. (a)(1), was repealed by Pub. L. 105–276, title
VI, § 601(c), Oct. 21, 1998, 112 Stat. 2673.
Section 1715z–2 of this title, referred to in subsecs.
(a)(1) and (b), was repealed by Pub. L. 110–289, div. B,
title I, § 2120(a)(6), July 30, 2008, 122 Stat. 2835.
This chapter, referred to in subsec. (c)(1), was in the
original ‘‘this Act’’, meaning act June 27, 1934, ch. 847,
48 Stat. 1246, which is classified principally to this
chapter (§ 1701 et seq.). For complete classification of
this Act to the Code, see Tables.
AMENDMENTS
1994—Subsec. (b). Pub. L. 103–233, § 105(a), struck out
after fourth sentence ‘‘There is authorized to be appropriated such sums as may be needed from time to time
to cover losses sustained by the fund in carrying out
the mortgage insurance obligations of sections 1715n(e),
1715x(a)(2), 1715z, 1715z–1, 1715z–2, and 1715z–8 of this
title.’’
Subsec. (c)(3). Pub. L. 103–233, § 103(g)(1), added par.
(3).
1977—Subsec. (c). Pub. L. 95–128 substituted provisions
of pars. (1) and (2) respecting mortgage insurance for

Page 672

military impacted areas, criteria therefore, and establishment of premiums and other charges for prior subsec. (c), which had authorized use of the Special Risk
Insurance Fund to carry out mortgage insurance obligations of sections 1709 and 1713 of this title to provide
housing for military personnel, Federal civilian employees, and Federal contractor employees assigned to
duty or employed at or in connection with any installation of the Armed Forces in federally impacted areas
where in the judgment of the Secretary (1) the residual
housing requirements for persons not associated with
such installations were insufficient to sustain the housing market in the event of substantial curtailment of
employment of personnel assigned to such installations, and (2) the benefits to be derived from such use
outweighed the risk of possible cost to the Government.
1974—Subsec. (c). Pub. L. 93–383 added subsec. (c).
1970—Subsec. (a)(1). Pub. L. 91–351, § 503(1), inserted
references to section 1715z–8 of this title wherever appearing.
Subsec. (b). Pub. L. 91–609 provided for guarantee as
to principal and interest by any agency of the United
States and for investment of moneys in bonds or other
obligations the proceeds of which will be used to directly support the residential mortgage market.
Pub. L. 91–351, § 503(2), inserted references to section
1715z–8 of this title wherever appearing.
1969—Subsec. (b). Pub. L. 91–152 increased from
$5,000,000 to a total sum of $20,000,000, at such times and
in such amounts as he may determine to be necessary,
the amount authorized to be advanced by the Secretary
to the Fund.

§ 1715z–4. Modifications in terms of mortgages
covering multifamily projects; requests for
extensions to cure defaults or for modification of mortgage terms; regulations
The Secretary shall not consent to any request for an extension of the time for curing a
default under any mortgage covering multifamily housing, as defined in the regulations of the
Secretary, or for a modification of the terms of
such mortgage, except in conformity with regulations prescribed by the Secretary in accordance with the provisions of this section. Such
regulations shall require, as a condition to the
granting of any such request, that, during the
period of such extension or modification, any
part of the rents or other funds derived by the
mortgagor from the property covered by the
mortgage which is not required to meet actual
and necessary expenses arising in connection
with the operation of such property, including
amortization charges under the mortgage, be
held in trust by the mortgagor and distributed
only with the consent of the Secretary; except
that the Secretary may provide for the granting
of consent to any request for an extension of the
time for curing a default under any mortgage
covering multifamily housing, or for a modification of the term of such mortgage, without regard to the foregoing requirement, in any case
or class of cases in which an exemption from
such requirement does not (as determined by the
Secretary) jeopardize the interests of the United
States.
(June 27, 1934, ch. 847, title II, § 239, as added
Pub. L. 90–448, title III, § 302, Aug. 1, 1968, 82
Stat. 506; amended Pub. L. 100–242, title IV,
§ 416(c), Feb. 5, 1988, 101 Stat. 1908.)
AMENDMENTS
1988—Pub. L. 100–242 struck out ‘‘insured’’ before
‘‘mortgages’’ in section catchline, and struck out sub-

Page 673

TITLE 12—BANKS AND BANKING

sec. (a) designation and subsec. (b) which related to violations and penalties imposed for violations of the provisions of former subsec. (a).

§ 1715z–4a. Double damages remedy for unauthorized use of multifamily housing project
assets and income
(a) Action to recover assets or income
(1) The Secretary of Housing and Urban Development (referred to in this section as the ‘‘Secretary’’) may request the Attorney General to
bring an action in a United States district court
to recover any assets or income used by any person in violation of (A) a regulatory agreement
that applies to a multifamily project, nursing
home, intermediate care facility, board and care
home, assisted living facility, or hospital whose
mortgage is or, at the time of the violations,
was insured or held by the Secretary under title
II of the National Housing Act [12 U.S.C. 1707 et
seq.]; (B) a regulatory agreement that applies to
a multifamily project whose mortgage is or, at
the time of the violations, was insured or held
by the Secretary under section 1701q of this title
(including property subject to section 1701q of
this title as it existed before November 28, 1990);
(C) a regulatory agreement or such other form
of regulatory control as may be imposed by the
Secretary that applies to mortgages insured or
held or, at the time of the violations, was 1 insured or held by the Secretary under section
1715z–22 of this title, but not reinsured under
section 1715z–22 of this title; or (D) any applicable regulation. For purposes of this section, a
use of assets or income in violation of the regulatory agreement, or such other form of regulatory control as may be imposed by the Secretary, or any applicable regulation shall include any use for which the documentation in
the books and accounts does not establish that
the use was made for a reasonable operating expense or necessary repair of the property and
has not been maintained in accordance with the
requirements of the Secretary and in reasonable
condition for proper audit.
(2) For purposes of a mortgage insured or held
by the Secretary under title II of the National
Housing Act [12 U.S.C. 1707 et seq.], under section 1701q of this title (including section 1701q of
this title as it existed before November 28, 1990)
and under section 1715z–22 of this title, the term
‘‘any person’’ shall mean any person or entity
that owns or operates a property, as identified
in the regulatory agreement, including but not
limited to—
(A) any stockholder holding 25 percent or
more interest of a corporation that owns that
property;
(B) any beneficial owner of the property
under any business or trust;
(C) any officer, director, or partner of an entity owning or controlling the property;
(D) any nursing home lessee or operator;
(E) any hospital lessee or operator;
(F) any other person or entity that controls
the property regardless of that person or entity’s official relationship to the property; and
(G) any heir, assignee, successor in interest,
or agent of any person or entity described in
the preceding subparagraphs.
1 So

in original.

§ 1715z–4a

(b) Initiation of proceedings and temporary relief
The Attorney General, upon request of the
Secretary, shall have the exclusive authority to
authorize the initiation of proceedings under
this section. Pending final resolution of any action under this section, the court may grant appropriate temporary or preliminary relief, including restraining orders, injunctions, and acceptance of satisfactory performance bonds, to
protect the interests of the Secretary and to
prevent use of assets or income in violation of
the regulatory agreement, or such other form of
regulatory control as may be imposed by the
Secretary, and any applicable regulation and to
prevent loss of value of the realty and personalty involved.
(c) Amount recoverable
In any judgment favorable to the United
States entered under this section, the Attorney
General may recover double the value of the assets and income of the property that the court
determines to have been used in violation of the
regulatory agreement, or such other form of regulatory control as may be imposed by the Secretary, or any applicable regulation, plus all
costs relating to the action, including but not
limited to reasonable attorney and auditing
fees. Notwithstanding any other provision of
law, the Secretary may apply the recovery, or
any portion of the recovery, to the property or
to the applicable insurance fund under the National Housing Act [12 U.S.C. 1701 et seq.] or, in
the case of any project for which the mortgage
is held by the Secretary under section 1701q of
this title (including property subject to section
1701q of this title as it existed before November
28, 1990), to the project or to the Department for
use by the appropriate office within the Department for administrative costs related to enforcement of the requirements of the various
programs administered by the Secretary, as appropriate.
(d) Time limitation
Notwithstanding any other statute of limitations, the Secretary may request the Attorney
General to bring an action under this section at
any time up to and including 6 years after the
latest date that the Secretary discovers any use
of a property’s assets and income in violation of
the regulatory agreement, or such other form of
regulatory control as may be imposed by the
Secretary, or any applicable regulation.
(e) Continued availability of other remedies
The remedy provided by this section is in addition to any other remedies available to the Secretary or the United States.
(Pub. L. 100–242, title IV, § 421, Feb. 5, 1988, 101
Stat. 1913; Pub. L. 105–65, title V, § 563, Oct. 27,
1997, 111 Stat. 1419; Pub. L. 108–447, div. I, title II,
§ 220, Dec. 8, 2004, 118 Stat. 3319; Pub. L. 109–115,
div. A, title III, § 324, Nov. 30, 2005, 119 Stat. 2466.)
REFERENCES IN TEXT
The National Housing Act, referred to in subsecs. (a)
and (c), is act June 27, 1934, ch. 847, 48 Stat. 1246, as
amended, which is classified principally to this chapter
(§ 1701 et seq.). Title II of the National Housing Act is
classified generally to this subchapter (§ 1707 et seq.).

§ 1715z–5

TITLE 12—BANKS AND BANKING

For complete classification of this Act to the Code, see
section 1701 of this title and Tables.
CODIFICATION
Section was enacted as part of the Housing and Community Development Act of 1987, and not as part of the
National Housing Act which comprises this chapter.
AMENDMENTS
2005—Subsec. (a)(1)(A). Pub. L. 109–115, § 324(1), inserted ‘‘or, at the time of the violations, was’’ after
‘‘is’’.
Subsec. (a)(1)(C). Pub. L. 109–115, § 324(2), inserted ‘‘or,
at the time of the violations, was insured or held’’ after
‘‘held’’.
2004—Subsec. (a)(1). Pub. L. 108–447, § 220(3), substituted ‘‘property’’ for ‘‘project’’ in second sentence.
Subsec. (a)(1)(A). Pub. L. 108–447, § 220(1), inserted
‘‘, nursing home, intermediate care facility, board and
care home, assisted living facility, or hospital’’ after
‘‘project’’.
Subsec. (a)(1)(B). Pub. L. 108–447, § 220(2), inserted ‘‘or,
at the time of the violations, was’’ after ‘‘whose mortgage is’’.
Subsec. (a)(2). Pub. L. 108–447, § 220(4), substituted
‘‘that owns or operates a property, as identified in the
regulatory agreement, including but not limited to—’’
and subpars. (A) to (G) for ‘‘which owns a project, as
identified in the regulatory agreement, including but
not limited to any stockholder holding 25 percent or
more interest of a corporation that owns the project;
any beneficial owner under any business or trust; any
officer, director, or partner of an entity owning the
project; and any heir, assignee, successor in interest, or
agent of any owner.’’
Subsec. (c). Pub. L. 108–447, § 220(5), substituted ‘‘property that the court determines’’ for ‘‘project that the
court determines’’ and ‘‘property or to the applicable
insurance fund’’ for ‘‘project or to the applicable insurance fund’’.
Subsec. (d). Pub. L. 108–447, § 220(6), substituted ‘‘a
property’s’’ for ‘‘project’’.
1997—Subsec. (a)(1). Pub. L. 105–65, § 563(1), substituted
‘‘(B) a regulatory agreement that applies to a multifamily project whose mortgage is insured or held by the
Secretary under section 1701q of this title (including
property subject to section 1701q of this title as it existed before November 28, 1990); (C) a regulatory agreement or such other form of regulatory control as may
be imposed by the Secretary that applies to mortgages
insured or held by the Secretary under section 542 of
the Housing and Community Development Act of 1992,
but not reinsured under section 542 of the Housing and
Community Development Act of 1992; or (D)’’ for ‘‘or
(B)’’ in first sentence and inserted ‘‘, or such other
form of regulatory control as may be imposed by the
Secretary,’’ after ‘‘regulatory agreement’’ in second
sentence.
Subsec. (a)(2). Pub. L. 105–65, § 563(2), inserted ‘‘under
section 1701q of this title (including section 1701q of
this title as it existed before November 28, 1990) and
under section 542 of the Housing and Community Development Act of 1992,’’ after ‘‘title II of National Housing
Act,’’.
Subsec. (b). Pub. L. 105–65, § 563(3), inserted ‘‘, or such
other form of regulatory control as may be imposed by
the Secretary,’’ after ‘‘regulatory agreement’’.
Subsec. (c). Pub. L. 105–65, § 563(4), in first sentence,
inserted ‘‘, or such other form of regulatory control as
may be imposed by the Secretary,’’ after ‘‘regulatory
agreement’’ and inserted before period at end of second
sentence ‘‘or, in the case of any project for which the
mortgage is held by the Secretary under section 1701q
of this title (including property subject to section 1701q
of this title as it existed before November 28, 1990), to
the project or to the Department for use by the appropriate office within the Department for administrative
costs related to enforcement of the requirements of the
various programs administered by the Secretary, as appropriate’’.

Page 674

Subsec. (d). Pub. L. 105–65, § 563(5), inserted ‘‘, or such
other form of regulatory control as may be imposed by
the Secretary,’’ after ‘‘regulatory agreement’’.

§ 1715z–5. Purchase of fee simple title from lessors
(a) Authorization to insure loans for purpose of
financing purchases
The Secretary is authorized, upon such terms
and conditions as he may prescribe, to make
commitments to insure and to insure loans
made by financial institutions for the purpose of
financing purchases by homeowners of the fee
simple title to property on which their homes
are located.
(b) Definitions
As used in this section—
(1) the term ‘‘financial institution’’ means a
lender approved by the Secretary as eligible
for insurance under section 1703 of this title or
a mortgagee approved under section 1709(b)(1)
of this title; and
(2) the term ‘‘homeowner’’ means a lessee
under a long-term ground lease.
(c) Eligibility for insurance
To be eligible for insurance under this section,
a loan shall—
(1) relate to property on which there is located a dwelling designed principally for a
one-, two-, three-, or four-family residence;
(2) not exceed the cost of purchasing the fee
simple title, or $10,000 ($30,000, if the property
is located in Hawaii) per family unit, whichever is the lesser;
(3) be limited to an amount which when
added to any outstanding indebtedness related
to the property (as determined by the Secretary) creates a total outstanding indebtedness which does not exceed the applicable
mortgage limit prescribed in section 1709(b) of
this title;
(4) bear interest at such rate as may be
agreed upon by the mortgagor and the mortgagee;
(5) have a maturity satisfactory to the Secretary, but not to exceed twenty years from
the beginning of amortization of the loan; and
(6) comply with such other terms, conditions, and restrictions as the Secretary may
prescribe.
(d) Applicability of other provisions of law
The provisions of paragraphs (3), (5), (6), (7),
(8), and (10) of section 1715k(h) of this title shall
be applicable to loans insured under this section
and, as applied to loans insured under this section, references in those paragraphs to ‘‘home
improvement loans’’ and ‘‘this subsection’’ shall
be construed to refer to loans under this section.
(June 27, 1934, ch. 847, title II, § 240, as added
Pub. L. 90–448, title III, § 304(a), Aug. 1, 1968, 82
Stat. 507; amended Pub. L. 95–557, title III, § 314,
Oct. 31, 1978, 92 Stat. 2099; Pub. L. 96–399, title
III, § 333(f), Oct. 8, 1980, 94 Stat. 1653; Pub. L.
98–181, title I [title IV, § 404(b)(13)], Nov. 30, 1983,
97 Stat. 1210; Pub. L. 98–479, title II, § 204(a)(10),
Oct. 17, 1984, 98 Stat. 2232.)
AMENDMENTS
1984—Subsec. (a). Pub. L. 98–479 substituted ‘‘purchases’’ for ‘‘purchasers’’.

Page 675

TITLE 12—BANKS AND BANKING

1983—Subsec. (c)(4). Pub. L. 98–181 substituted provision that the interest rate be such rate as agreed upon
by the mortgagor and the mortgagee for provision that
the interest rate not exceed such per centum per
annum, not in excess of 6 per centum, on the amount
of the principal obligation outstanding at any time, as
the Secretary finds necessary to meet market conditions, and such other charges as approved by the Secretary.
1980—Subsec. (c)(5). Pub. L. 96–399 struck out ‘‘or
three-quarters of the remaining economic life of the
home, whichever is the lesser’’ after ‘‘loan’’.
1978—Subsec. (c)(2). Pub. L. 95–557 inserted ‘‘($30,000,
if the property is located in Hawaii)’’ after ‘‘$10,000’’.

§ 1715z–6. Supplemental loans for multifamily
projects
(a) Authorization to insure; ‘‘supplemental loan’’
defined
With respect to a multifamily project, hospital, or group practice facility covered by a
mortgage insured under any section or subchapter of this chapter or covered by a mortgage
held by the Secretary, the Secretary is authorized, upon such terms and conditions as he may
prescribe, to make commitments to insure, and
to insure, supplemental loans (including advances during construction or improvement)
made by financial institutions approved by the
Secretary. As used in this section, ‘‘supplemental loan’’ means a loan, advance of credit, or
purchase of an obligation representing a loan or
advance of credit made for the purpose of financing improvements or additions to such project,
hospital, or facility: Provided, That a loan involving a nursing home, hospital, or a group
practice facility may also be made for the purpose of financing equipment to be used in the
operation of such nursing home, hospital, or facility.
(b) Eligibility for insurance
To be eligible for insurance under this section,
a supplemental loan shall—
(1) be limited to 90 per centum of the
amount which the Secretary estimates will be
the value of such improvements, additions,
and equipment, except that such amount when
added to the outstanding balance of the mortgage covering the project or facility, shall not
exceed the maximum mortgage amount insurable under the section or subchapter pursuant
to which the mortgage covering such project
or facility is insured or an amount acceptable
to the Secretary;
(2) have a maturity satisfactory to the Secretary;
(3) bear interest at such rate as may be
agreed upon by the borrower and the financial
institution;
(4) be secured in such manner as the Secretary may require;
(5) be governed by the labor standards provisions of section 1715c of this title that are applicable to the section or subchapter pursuant
to which the mortgage covering the project or
facility is insured or pursuant to which the
original mortgage covering the project or facility was insured; and
(6) contain such other terms, conditions, and
restrictions as the Secretary may prescribe.
(c) Applicability of other provisions of law
The provisions of subsections (d), (e), (g), (h),
(i), (j), (k), (l), and (n) of section 1713 of this title

§ 1715z–6

shall be applicable to loans insured under this
section, except that (1) all references to the
term ‘‘mortgage’’ shall be construed to refer to
the term ‘‘loan’’ as used in this section, (2) loans
involving projects covered by a mortgage insured under section 1715e of this title that is the
obligation of the Cooperative Management
Housing Insurance Fund shall be insured under
and shall be the obligation of such fund, and (3)
loans involving projects covered by a mortgage
insured under section 1715z–1 of this title shall
be insured under and shall be the obligation of
the Special Risk Insurance Fund.
(d) Authorization to insure loans for improvements or additions; terms and conditions;
limitation on amount
Notwithstanding the foregoing, the Secretary
may insure a loan for improvements or additions to a multifamily housing project, or a
group practice or medical practice facility or
hospital or other health facility approved by the
Secretary, which is not covered by a mortgage
insured under this chapter, if he finds that such
a loan would assist in preserving, expanding, or
improving housing opportunities, or in providing protection against fire or other hazards.
Such loans shall have a maturity satisfactory to
the Secretary and shall meet such other conditions as the Secretary may prescribe. In no
event shall such a loan be insured if it is for an
amount in excess of the maximum amount
which could be approved if the outstanding indebtedness, if any, covering the property were a
mortgage insured under this chapter. At any
sale under foreclosure of a mortgage on a
project or facility which is not insured under
this chapter but which is senior to a loan assigned to the Secretary pursuant to subsection
(c), the Secretary is authorized to bid, in addition to amounts authorized under section 1713(k)
of this title, any sum up to but not in excess of
the total unpaid indebtedness secured by such
senior mortgage, plus taxes, insurance, foreclosure costs, fees, and other expenses. In the
event that, pursuant to subsection (c), the Secretary acquires title to, or is assigned, a loan
covering a project or facility which is subject to
a mortgage which is not insured under this
chapter, the Secretary is authorized to make
payments from the General Insurance Fund on
the debt secured by such mortgage, and to take
such other steps as the Secretary may deem appropriate to preserve or protect the Secretary’s
interest in the project or facility.
(e) Loan insurance for energy conserving improvements and solar energy systems
(1) Notwithstanding any other provision of
this section, the Secretary may insure a loan for
purchasing and installing energy conserving improvements (as defined in subparagraph (2) of
the last paragraph of section 1703(a) of this
title), for purchasing and installing a solar energy system (as defined in subparagraph (3) of
the last paragraph of section 1703(a) of this
title), and for purchasing or installing (or both)
individual utility meters in a multifamily housing project if such meters are purchased or installed in connection with other energy conserving improvements or with a solar energy system
or the project meets minimum standards of en-

§ 1715z–6

TITLE 12—BANKS AND BANKING

ergy conservation established by the Secretary,
without regard to whether the project is covered
by a mortgage under this chapter.
(2) Notwithstanding the provisions of subsection (b), a loan insured under this subsection
shall—
(A) not exceed an amount which the Secretary determines is necessary for the purchase and installation of individual utility
meters plus an amount which the Secretary
deems appropriate taking into account
amounts which will be saved in operation
costs over the period of repayment of the loan
by reducing the energy requirements of the
project as a result of the installation of energy
conserving improvements or a solar energy
system therein;
(B) be insured for 90 percent of any loss incurred by the person holding the note for the
loan; except that, for cooperative multifamily
projects receiving assistance under section
1715z–1 of this title or financed with a below
market interest rate mortgage insured under
section 1715l(d)(3) of this title, 100 percent of
any such loss may be insured;
(C) bear an interest rate not to exceed an
amount which the Secretary determines, after
consulting with the Secretary of Energy, to be
necessary to meet market demands;
(D) have a maturity satisfactory to the Secretary;
(E) be insured pursuant to a premium rate
established on a sound actuarial basis to the
extent practicable;
(F) be secured in such manner as the Secretary may require;
(G) be an acceptable risk in that energy conservation or solar energy benefits to be derived outweigh the risks of possible loss to the
Federal Government; and
(H) contain such other terms, conditions,
and restrictions as the Secretary may prescribe.
(3) The provisions of subsection (c) shall apply
to loans insured under this subsection.
(4) The Secretary shall provide that any person obligated on the note for any loan insured
under this section be regulated or restricted,
until the termination of all obligations of the
Secretary under the insurance, by the Secretary
as to rents or sales, charges, capital structure,
rate of return, and methods of operations of the
multifamily project to such an extent and in
such manner as to provide reasonable rentals to
tenants and a reasonable return on the investment.
(f) Repealed. Pub. L. 104–204, title II, Sept. 26,
1996, 110 Stat. 2885
(g) Extension of rental assistance for term of
loan
(1) When underwriting a rehabilitation loan
under this section in connection with eligible
multifamily housing, the Secretary may assume
that any rental assistance provided for purposes
of servicing the additional debt will be extended
for the term of the rehabilitation loan. The Secretary shall exercise prudent underwriting practices in insuring rehabilitation loans under this
section. For purposes of this subsection, the

Page 676

term ‘‘eligible multifamily housing’’ means any
housing financed by a loan or mortgage that is—
(A) insured or held by the Secretary under
section 1715l(d)(3) of this title and assisted
under section 1701s of this title or section 1437f
of title 42;
(B) insured or held by the Secretary and
bears interest at a rate determined under the
proviso of section 1715l(d)(5) of this title; or
(C) insured, assisted or held by the Secretary
under section 1715z–1 of this title.
(2) A mortgagee approved by the Secretary
may not withhold consent to a rehabilitation
loan insured in connection with eligible multifamily housing on which that mortgagee holds a
mortgage.
(June 27, 1934, ch. 847, title II, § 241, as added
Pub. L. 90–448, title III, § 307, Aug. 1, 1968, 82
Stat. 508; amended Pub. L. 91–609, title I, § 111,
Dec. 31, 1970, 84 Stat. 1772; Pub. L. 93–383, title
III, § 313, Aug. 22, 1974, 88 Stat. 684; Pub. L.
94–375, § 5, Aug. 3, 1976, 90 Stat. 1070; Pub. L.
95–557, title III, § 311(b), Oct. 31, 1978, 92 Stat.
2098; Pub. L. 95–619, title II, § 247, Nov. 9, 1978, 92
Stat. 3234; Pub. L. 96–153, title III, § 319, Dec. 21,
1979, 93 Stat. 1119; Pub. L. 96–399, title III, § 314,
Oct. 8, 1980, 94 Stat. 1645; Pub. L. 98–181, title I
[title IV, § 404(b)(14)], Nov. 30, 1983, 97 Stat. 1210;
Pub. L. 98–479, title II, § 204(a)(11), (12), Oct. 17,
1984, 98 Stat. 2232; Pub. L. 100–242, title II, § 231,
title IV, § 429(c), Feb. 5, 1988, 101 Stat. 1884, 1918;
Pub. L. 101–235, title II, §§ 203(c), (d), 204(b), Dec.
15, 1989, 103 Stat. 2038, 2039; Pub. L. 101–625, title
VI, § 602(a), Nov. 28, 1990, 104 Stat. 4275; Pub. L.
102–550, title III, §§ 316(a), (b), 317(c), Oct. 28, 1992,
106 Stat. 3771, 3772; Pub. L. 104–204, title II, Sept.
26, 1996, 110 Stat. 2885.)
REFERENCES IN TEXT
This chapter, referred to in subsecs. (a), (d), and
(e)(1), was in the original ‘‘this Act’’, meaning act June
27, 1934, ch. 847, 48 Stat. 1246, which is classified principally to this chapter (§ 1701 et seq.). For complete
classification of this Act to the Code, see Tables.
AMENDMENTS
1996—Subsec. (f). Pub. L. 104–204 struck out subsec.
(f), which related to insurance for second mortgage financing.
1992—Subsec. (f)(2)(B)(i). Pub. L. 102–550, § 316(a)(1), inserted ‘‘the amount of rehabilitation costs required by
the plan of action and related charges and’’ after
‘‘equal to’’.
Subsec. (f)(2)(B)(ii). Pub. L. 102–550, § 317(c)(1), struck
out ‘‘and’’ at end.
Subsec. (f)(3)(B). Pub. L. 102–550, § 316(a)(2), inserted
‘‘and the amount of rehabilitation costs required by the
plan of action and related charges and’’ after ‘‘1990’’.
Subsec. (f)(5)(A). Pub. L. 102–550, § 316(a)(3)(B), added
subpar. (A) and struck out former subpar. (A) which
read as follows: ‘‘have a maturity and provisions for
amortization satisfactory to the Secretary, bear interest at such rate as may be agreed upon by the mortgagor and mortgagee, and be secured in such manner as
the Secretary may require; and’’.
Subsec. (f)(5)(B), (C). Pub. L. 102–550, § 316(a)(3), added
subpar. (B) and redesignated former subpar. (B) as (C).
Subsec. (f)(6). Pub. L. 102–550, § 317(c)(2), which directed the substitution of ‘‘acquisition loan’’ for
‘‘acquisiton loan’’ in par. (7), was executed by making
the substitution in par. (6) to reflect the probable intent of Congress and the intervening redesignation of
par. (7) as (6) by Pub. L. 102–550, § 316(a)(5). See below.
Pub. L. 102–550, § 316(a)(4), (5), redesignated par. (7) as
(6) and struck out former par. (6) which read as follows:

Page 677

§ 1715z–7

TITLE 12—BANKS AND BANKING

‘‘The Secretary may provide for combination of loans
insured under subsection (d) of this section with equity
and acquisition loans insured under this subsection.’’
Subsec. (f)(7) to (9). Pub. L. 102–550, § 316(a)(5), redesignated pars. (7) to (9) as (6) to (8), respectively.
Subsec. (f)(10). Pub. L. 102–550, § 316(b), added par. (10).
1990—Subsec. (f). Pub. L. 101–625 amended subsec. (f)
generally, substituting present provisions for provisions relating to insurance of ‘‘equity loans’’ under the
Emergency Low Income Housing Preservation Act of
1987, providing for eligibility for such insurance, providing that a qualified nonprofit organization or limited equity tenant cooperative corporation may constitute an owner of housing for purposes of receiving an
insured loan, providing for applicability of certain provisions of section 1713 of this title, and providing that
an approved mortgagee may not withhold consent to an
equity loan on property on which mortgagee holds a
mortgage.
1989—Subsec. (f)(2). Pub. L. 101–235, § 203(c)(1), inserted
at end ‘‘When underwriting an equity loan under this
subsection, the Secretary may assume that the rental
assistance provided in accordance with an approved
plan of action under section 225(b) of the Emergency
Low Income Housing Preservation Act of 1987 will be
extended for the full term of the contract entered into
under section 225(c) of that Act. The Secretary may accelerate repayment of a loan under this section in the
event rental assistance is not extended under section
225(c) of that Act or the Secretary is unable to develop
a revised package of incentives to the owner comparable to those received under the original approved
plan of action.’’
Subsec. (f)(3). Pub. L. 101–235, § 203(c)(2), inserted
‘‘public entity,’’ after ‘‘A’’.
Subsec. (f)(6). Pub. L. 101–235, § 203(d), added par. (6).
Subsec. (g). Pub. L. 101–235, § 204(b), added subsec. (g).
1988—Subsec. (b)(3). Pub. L. 100–242, § 429(c), substituted ‘‘borrower and the financial institution’’ for
‘‘mortgagor and the mortgagee’’.
Subsec. (f). Pub. L. 100–242, § 231, added subsec. (f).
1984—Subsec. (a). Pub. L. 98–479, § 204(a)(11), substituted ‘‘to make’’ for ‘‘to made’’.
Subsec. (b)(1). Pub. L. 98–479, § 204(a)(12), substituted
‘‘or facility’’ for ‘‘of facility’’ before ‘‘is insured’’.
1983—Subsec. (b)(3). Pub. L. 98–181 substituted provision that the interest rate be such a rate as agreed
upon by the mortgagor and the mortgagee for provision
that the interest rate, exclusive of premium charges for
insurance and service charges, not exceed such per centum per annum, not in excess of 6 per centum, on the
amount of the principal obligation outstanding at any
time, as the Secretary finds necessary to meet market
conditions.
1980—Subsec. (e)(1). Pub. L. 96–399 inserted provisions
respecting requirements for purchase or installation in
connection with other energy conserving improvements, etc.
1979—Subsec. (b)(2). Pub. L. 96–153 struck out ‘‘but
not to exceed the remaining term of the mortgage’’
after ‘‘the Secretary’’.
1978—Subsec. (d). Pub. L. 95–557 inserted provision relating to the amounts the Secretary is authorized to
bid at any sale under foreclosure of a mortgage on a
project or facility which is not insured under this chapter but which is senior to a loan assigned to the Secretary pursuant to subsection (c), and such other steps
the Secretary is authorized to take to preserve or protect his interest in the project or facility.
Subsec. (e). Pub. L. 95–619 added subsec. (e).
1976—Subsec. (a). Pub. L. 94–375 inserted ‘‘, hospital,’’
after ‘‘multifamily project’’, ‘‘additions to such
project’’, ‘‘involving a nursing home’’, and ‘‘of such
nursing home’’.
1974—Subsec. (d). Pub. L. 93–383 added subsec. (d).
1970—Subsec. (a). Pub. L. 91–609, § 111(1), (2), inserted
in first sentence ‘‘or covered by a mortgage held by the
Secretary’’ after ‘‘this chapter’’ and substituted in proviso ‘‘a nursing home or a group practice facility’’ for
‘‘a nursing home covered by a mortgage insured under

section 1715w of this title or a loan involving a group
practice facility covered by a mortgage insured under
subchapter IX–B of this chapter’’, respectively.
Subsec. (b)(1). Pub. L. 91–609, § 111(3), inserted ‘‘or an
amount acceptable to the Secretary’’ before semicolon
at end.
Subsec. (b)(5). Pub. L. 91–609, § 111(4), inserted ‘‘or pursuant to which the original mortgage covering the
project or facility was insured’’ before semicolon at
end.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 231 of Pub. L. 100–242 applicable to any project that is eligible low income housing
on or after Nov. 1, 1987, see section 235 of Pub. L.
100–242.
REGULATIONS
Pub. L. 102–550, title III, § 316(c), Oct. 28, 1992, 106 Stat.
3771, directed Secretary, not later than the expiration
of 45-day period beginning on Oct. 28, 1992, to issue regulations implementing subsec. (f)(1) of this section and
provided that such regulations are not subject to requirements of 5 U.S.C. 553.
INSURANCE FOR SECOND MORTGAGE FINANCING NOT TO
BE OFFERED AS INCENTIVE UNDER LIHPRHA AND
ELIHPA
Insurance for second mortgage financing provided
under former subsec. (f) of this section not to be offered
as incentive under the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C.
4101 et seq.) and the Emergency Low Income Housing
Preservation Act of 1987 (Pub. L. 100–242, title II, Feb.
5, 1988, 101 Stat. 1877, as amended), see title II in part
of Pub. L. 104–204, set out as a Low-Income Housing
Preservation note under section 4101 of this title.
DELEGATION OF PROCESSING OF MORTGAGE INSURANCE
Secretary of Housing and Urban Development to implement system of mortgage insurance for mortgages
insured under this section that delegates processing
functions to selected approved mortgagees, with Secretary to retain authority to approve rents, expenses,
property appraisals, and mortgage amounts and to execute firm commitments, see section 328 of Pub. L.
101–625, set out as a note under section 1713 of this title.

§ 1715z–7. Mortgage insurance for hospitals
(a) Purpose
The purpose of this section is to assist the provision of urgently needed hospitals for the care
and treatment of persons who are acutely ill or
who otherwise require medical care and related
services of the kind customarily furnished only
(or most effectively) by hospitals. Such assistance shall be provided regardless of the amount
of public financial or other support a hospital
may receive, and the Secretary shall neither require additional security or collateral to guarantee such support, nor impose more stringent
eligibility or other requirements on publicly
owned or supported hospitals.
(b) Definitions
For the purposes of this section—
(1) the term ‘‘hospital’’ means a facility—
(A) which provides community service for
inpatient medical care of the sick or injured
(including obstetrical care);
(B) not more than 50 per centum of the
total patient days of which during any year
are customarily assignable to the categories
of chronic convalescent and rest, drug and
alcoholic, epileptic, mentally deficient, men-

§ 1715z–7

TITLE 12—BANKS AND BANKING

tal, nervous and mental, and tuberculosis,
unless the facility is a critical access hospital (as that term is defined in section
1861(mm)(1) of the Social Security Act (42
U.S.C. 1395x(mm)(1))); and
(C) which is a public facility, proprietary
facility, or facility of a private nonprofit
corporation or association, licensed or regulated by the State (or, if there is no State
law providing for such licensing or regulation by the State, by the municipality or
other political subdivision in which the facility is located); and
(2) the terms ‘‘mortgage’’ and ‘‘mortgagor’’
shall have the meanings respectfully set forth
in section 1713(a) of this title.
(c) Authorization to insure; prohibition of premiums on guarantees of principal and interest under title VII of the Public Health Service Act
The Secretary is authorized to insure any
mortgage (including advances on such mortgage
during construction) in accordance with the provisions of this section upon such terms and conditions as he may prescribe and to make commitments for insurance of such mortgage prior
to the date of its execution or disbursement
thereon. No mortgage insurance premium shall
be charged with respect to the amount of principal and interest guaranteed by the Department of Health and Human Services under title
VII of the Public Health Service Act [42 U.S.C.
292 et seq.].
(d) Insurance of mortgages covering new or rehabilitated hospitals, including equipment;
terms and conditions
In order to carry out the purpose of this section, the Secretary is authorized to insure any
mortgage which covers a new or rehabilitated
hospital, including equipment to be used in its
operation, subject to the following conditions:
(1) The mortgage shall be executed by a
mortgagor approved by the Secretary. The
Secretary may in his discretion require any
such mortgagor to be regulated or restricted
as to charges and methods of financing, and, in
addition thereto, if the mortgagor is a corporate entity, as to capital structure and rate
of return. As an aid to the regulation or restriction of any mortgagor with respect to any
of the foregoing matters, the Secretary may
make such contracts with and acquire for not
to exceed $100 such stock or interest in such
mortgagor as he may deem necessary. Any
stock or interest so purchased shall be paid for
out of the General Insurance Fund, and shall
be redeemed by the mortgagor at par upon the
termination of all obligations of the Secretary
under the insurance.
(2) The mortgage shall involve a principal
obligation in the amount requested by the
mortgagor if such amount does not exceed 90
percent of the estimated replacement cost of
the property or project including—
(A) equipment to be used in the operation
of the hospital, when the proposed improvements are completed and the equipment is
installed; and
(B) a solar energy system (as defined in
subparagraph (3) of the last paragraph of sec-

Page 678

tion 1703(a) of this title) or residential energy conservation measures (as defined in
section 8211(11)(A) through (G) and (I) of
title 42) 1 in cases where the Secretary determines that such measures are in addition to
those required under the minimum property
standards and will be cost-effective over the
life of the measure.
(3) The mortgage shall—
(A) provide for complete amortization by
periodic payments within such term as the
Secretary shall prescribe; and
(B) bear interest at such rate as may be
agreed upon by the mortgagor and the mortgagee.
(4)(A) The Secretary shall require satisfactory evidence that the hospital will be located
in a State or political subdivision of a State
with reasonable minimum standards of licensure and methods of operation for hospitals
and satisfactory assurance that such standards will be applied and enforced with respect
to the hospital.
(B) The Secretary shall establish the means
for determining need and feasibility for the
hospital, if the State does not have an official
procedure for determining need for hospitals.
If the State has an official procedure for determining need for hospitals, the Secretary shall
require that such procedure be followed before
the application for insurance is submitted, and
the application shall document that need has
also been established under that procedure.
(5) The Secretary shall not insure any mortgage or approve any modification of an existing mortgage insured pursuant to this section
or section 1715n(f) of this title if such insurance or modification is to be made in connection with a guarantee, as authorized pursuant
to section 1721 of this title, of a trust certificate or other security which is exempt from
Federal taxation or which is to be used to
collateralize obligations which are so exempt,
except that the Secretary shall not refuse to
insure such a mortgage or approve such a
modification solely on the basis that such insurance or modification is to be made in connection with a guarantee, as authorized pursuant to section 1721 of this title, of a trust certificate or other security which is exempt
from Federal taxation or which is to be used
to collateralize obligations which are so exempt if—
(A) a written application for such insurance or modification submitted at the express direction of the hospital has been submitted to the appropriate office of the Department of Health and Human Services
prior to March 29, 1979; or
(B) in the case of a nonprofit mortgagor
which is seeking refinancing or modification
of an existing mortgage insured pursuant to
this section or section 1715n(f) of this title,
the mortgagor (i) had engaged an investment banker for the purpose of obtaining
such refinancing or modification, or had
undertaken or arranged for the undertaking
of a market or feasibility study with respect
1 See

References in Text note below.

Page 679

TITLE 12—BANKS AND BANKING

to the advisability of obtaining such refinancing or modification, and had made written notification of its interest in such refinancing or modification to the Department
of Health and Human Services or the Department of Housing and Urban Development
prior to June 7, 1979; and (ii) receives from
the programs established under titles XVIII
[42 U.S.C. 1395 et seq.] and XIX [42 U.S.C. 1396
et seq.] of the Social Security Act a percentage of its total revenue which is greater
than 125 per centum of the national average
for hospitals which derive revenue from such
titles.
This paragraph shall not limit the authority
of the Secretary to approve a mortgage increase on any mortgage eligible for insurance
under this paragraph at any time prior to final
endorsement of the loan for insurance; except
that such mortgage increase may not be approved for the cost of constructing any improvements not included in the original plans
and specifications approved by the Department of Health and Human Services unless approved by the Secretary of Housing and Urban
Development and by the Secretary of Health
and Human Services.
(6) To the extent that a private nonprofit or
public facility mortgagor is required by the
Secretary to provide cash equity in excess of
the amount of the mortgage to complete the
project, the mortgagor shall be entitled, at the
option of the mortgagee, to fund the excess
with a letter of credit. In such event, mortgage proceeds may be advanced to the mortgagor prior to any demand being made on the
letter of credit.
(e) Release of part of property or project from
lien
The Secretary may consent to the release of a
part or parts of the mortgaged property or project from the lien of any mortgage insured under
this section upon such terms and conditions as
he may prescribe.
(f) Encouragement of programs undertaking responsibility to provide comprehensive health
care; immediate processing of applications
for public hospitals
The activities and functions provided for in
this section shall be carried out by the agencies
involved so as to encourage programs that undertake responsibility to provide comprehensive
health care, including outpatient and preventive
care, as well as hospitalization, to a defined population, and, in the case of public hospitals, to
encourage programs that are undertaken to provide essential health care services to all residents of a community regardless of ability to
pay. The Secretary shall begin immediately to
process applications of public facilities for mortgage insurance under this section in accordance
with regulations, guidelines, and procedures applicable to facilities of private nonprofit corporations and associations.
(g) Insurance of mortgages providing permanent
financing or refinancing of existing mortgage
indebtedness; aggregate principal balance of
mortgages
(1) Notwithstanding any of the other provisions of this subchapter, the Secretary may in-

§ 1715z–7

sure under this section a mortgage which provides permanent financing or refinancing of existing mortgage indebtedness in the case of a
hospital whose permanent financing is presently
lacking, if the construction of such hospital was
completed between January 1, 1966, and August
1, 1968.
(2) The aggregate principal balance of all
mortgages insured under paragraph (1) and outstanding at any one time shall not exceed
$20,000,000.
(h) Applicability of other laws
The provisions of subsections (d), (e), (g), (h),
(i), (j), (k), (l), and (n) of section 1713 of this title
shall apply to mortgages insured under this section and all references therein to section 1713 of
this title shall be deemed to refer to this section.
(i) Termination of exemption for critical access
hospitals
(1) In general
The exemption for critical access hospitals
under subsection (b)(1)(B) shall have no effect
after July 31, 2016.
(2) Report to Congress
Not later than 3 years after July 31, 2003, the
Secretary shall submit a report to Congress
detailing the effects of the exemption of critical access hospitals from the provisions of subsection (b)(1)(B) on—
(A) the provision of mortgage insurance to
hospitals under this section; and
(B) the General Insurance Fund established under section 1735c of this title.
(June 27, 1934, ch. 847, title II, § 242, as added
Pub. L. 90–448, title XV, § 1501, Aug. 1, 1968, 82
Stat. 599; amended Pub. L. 91–609, title I, §§ 109,
110(a), Dec. 31, 1970, 84 Stat. 1772; Pub. L. 93–383,
title III, § 304(i), Aug. 22, 1974, 88 Stat. 678; Pub.
L. 95–128, title III, § 308, Oct. 12, 1977, 91 Stat.
1135; Pub. L. 96–88, title V, § 509(b), Oct. 17, 1979,
93 Stat. 695; Pub. L. 96–153, title III, § 315, Dec. 21,
1979, 93 Stat. 1117; Pub. L. 96–399, title III,
§ 310(h), Oct. 8, 1980, 94 Stat. 1643; Pub. L. 97–35,
title III, § 339H, Aug. 13, 1981, 95 Stat. 418; Pub. L.
98–181, title I [title IV, §§ 404(b)(15), 436], Nov. 30,
1983, 97 Stat. 1210, 1222; Pub. L. 98–479, title II,
§§ 201(a)(1), 204(a)(13), Oct. 17, 1984, 98 Stat. 2227,
2232; Pub. L. 100–242, title IV, §§ 411(a), 412(a)–(d),
Feb. 5, 1988, 101 Stat. 1905, 1906; Pub. L. 108–91,
§§ 2(a), 3(a), Oct. 3, 2003, 117 Stat. 1158; Pub. L.
109–240, § 2, July 10, 2006, 120 Stat. 515; Pub. L.
113–76, div. L, title II, § 233, Jan. 17, 2014, 128 Stat.
634.)
REFERENCES IN TEXT
The Public Health Service Act, referred to in subsec.
(c), is act July 1, 1944, ch. 373, 58 Stat. 682, as amended.
Title VII of the Act was added by act July 30, 1956, ch.
779, § 2, 70 Stat. 717, and is classified generally to subchapter V (§ 292 et seq.) of chapter 6A of Title 42, The
Public Health and Welfare. For complete classification
of this Act to the Code, see Short Title note set out
under section 201 of Title 42 and Tables.
Section 8211 of title 42, referred to in subsec. (d)(2)(B),
was omitted from the Code pursuant to section 8229 of
Title 42, The Public Health and Welfare, which terminated authority under that section on June 30, 1989.
The Social Security Act, referred to in subsec.
(d)(5)(B), is act Aug. 14, 1935, ch. 531, 49 Stat. 620, as

§ 1715z–7

TITLE 12—BANKS AND BANKING

amended. Titles XVIII and XIX of the Act are classified
generally to subchapters XVIII (§ 1395 et seq.) and XIX
(§ 1396 et seq.) of chapter 7 of Title 42, The Public
Health and Welfare. For complete classification of this
Act to the Code, see section 1305 of Title 42 and Tables.
AMENDMENTS
2014—Subsec. (i)(1). Pub. L. 113–76 substituted ‘‘July
31, 2016’’ for ‘‘July 31, 2011’’.
2006—Subsec. (i)(1). Pub. L. 109–240 substituted ‘‘July
31, 2011’’ for ‘‘July 31, 2006’’.
2003—Subsec. (b)(1)(B). Pub. L. 108–91, § 3(a)(1), inserted ‘‘, unless the facility is a critical access hospital
(as that term is defined in section 1861(mm)(1) of the
Social Security Act (42 U.S.C. 1395x(mm)(1)))’’ after
‘‘tuberculosis’’.
Subsec. (d)(4). Pub. L. 108–91, § 2(a), amended par. (4)
generally. Prior to amendment, par. (4) read as follows:
‘‘The Secretary shall not insure any mortgage under
this section unless he has received, from the State
agency designated in accordance with section 604(a)(1)
or section 1521 of the Public Health Service Act for the
State in which is located the hospital covered by the
mortgage, a certification that (A) there is a need for
such hospital, and (B) there are in force in such State
or the political subdivision of the State in which the
proposed hospital would be located reasonable minimum standards of licensure and methods of operation
for hospitals. No such mortgage shall be insured under
this section unless the Secretary has received such assurance as he may deem satisfactory from the State
agency that such standards will be applied and enforced
with respect to any hospital located in the State for
which mortgage insurance is provided under this section. If no such State agency exists, or if the State
agency exists but is not empowered to provide a certification that there is a need for the hospital as set forth
in clause (A) of the first sentence, the Secretary shall
not insure any mortgage under this section unless (A)
the State in which the hospital is located has conducted or commissioned and paid for the preparation of
an independent study of market need and feasibility
that (i) is prepared in accordance with the principles
established by the American Institute of Certified Public Accountants; (ii) assesses, on a marketwide basis,
the impact of the proposed hospital on, and its relationship to, other health care facilities and services,
the percentage of excess beds, demographic projections,
alternative health care delivery systems, and the reimbursement structure of the hospital; (iii) is addressed
to and is acceptable to the Secretary in form and substance; and (iv) in the event the State does not prepare
the study, is prepared by a financial consultant selected by the State and approved by the Secretary; and
(B) the State complies with the other provisions of this
paragraph that would otherwise be required to be met
by a State agency designated in accordance with section 604(a)(1) or section 1521 of the Public Health Service Act. The proposed mortgagor may reimburse the
State for the cost of the independent feasibility study
required in the preceding sentence.’’
Subsec. (i). Pub. L. 108–91, § 3(a)(2), added subsec. (i).
1988—Subsec. (a). Pub. L. 100–242, § 412(a), inserted at
end ‘‘Such assistance shall be provided regardless of the
amount of public financial or other support a hospital
may receive, and the Secretary shall neither require
additional security or collateral to guarantee such support, nor impose more stringent eligibility or other requirements on publicly owned or supported hospitals.’’
Subsec. (d)(2). Pub. L. 100–242, § 412(b), substituted
‘‘The mortgage shall involve a principal obligation in
the amount requested by the mortgagor if such amount
does not exceed 90 percent of the estimated replacement cost of the property or project including’’ for
‘‘The mortgage shall involve a principal obligation in
an amount not to exceed 90 per centum of the estimated replacement cost of the property or project including’’.
Subsec. (d)(4). Pub. L. 100–242, § 411(a), inserted provisions at end relating to authority of Secretary to in-

Page 680

sure a mortgage under this section covering new or rehabilitated hospitals, including equipment, in cases
where no State agency exists, or where such agency
does exist but is not empowered to provide a certification for the need of such hospital as required under
this section.
Subsec. (d)(6). Pub. L. 100–242, § 412(c), added par. (6).
Subsec. (f). Pub. L. 100–242, § 412(d), inserted at end
‘‘The Secretary shall begin immediately to process applications of public facilities for mortgage insurance
under this section in accordance with regulations,
guidelines, and procedures applicable to facilities of
private nonprofit corporations and associations.’’
1984—Subsec. (c). Pub. L. 98–479, § 201(a)(1), substituted ‘‘Health and Human Services’’ for ‘‘Health,
Education, and Welfare’’.
Subsec. (d)(3)(A). Pub. L. 98–479, § 204(a)(13), substituted a semicolon for the comma at end.
1983—Subsec. (b)(1)(C). Pub. L. 98–181, § 436(1), inserted
‘‘public facility,’’ after ‘‘which is a’’.
Subsec. (d)(3)(B). Pub. L. 98–181, § 404(b)(15), substituted provision that the interest rate be such a rate
as agreed upon by the mortgagor and the mortgagee for
provision that the interest rate, exclusive of premium
charges for insurance and service charges, not exceed
such per centum per annum, not in excess of 6 per centum, on the amount of the principal obligation outstanding at any time, as the Secretary finds necessary
to meet the mortgage market.
Subsec. (f). Pub. L. 98–181, § 436(2), inserted ‘‘, and in
the case of public hospitals, to encourage programs
that are undertaken to provide essential health care
services to all residents of a community regardless of
ability to pay’’ after ‘‘defined population’’.
1981—Subsec. (d)(5). Pub. L. 97–35 inserted provisions
respecting limitation on authority of the Secretary to
approve mortgage increases on eligible mortgages.
1980—Subsec. (d)(2). Pub. L. 96–399 revised existing
provisions into introductory paragraph and subpar. (A)
and added subpar. (B).
1979—Subsec. (d)(5). Pub. L. 96–153 added par. (5).
1977—Subsec. (c). Pub. L. 95–128, § 308(b), prohibited
charging any mortgage insurance premium with respect to the amount of principal and interest guaranteed by the Department of Health, Education, and Welfare under title VII of the Public Health Service Act.
Subsec. (d)(4). Pub. L. 95–128, § 308(a), inserted reference to section 1521.
1974—Subsec. (d)(2). Pub. L. 93–383 struck out ‘‘not to
exceed $50,000,000, and’’ after ‘‘an amount’’.
1970—Subsec. (b)(1)(C). Pub. L. 91–609, § 110(a), substituted as definition of ‘‘hospital’’ a facility ‘‘which is
a proprietary facility, or facility of a private nonprofit
corporation or association, licensed or regulated by the
State (or, if there is no State law providing for such licensing or regulation by the State, by the municipality
or other political subdivision in which the facility is located)’’ for ‘‘prior definition as a facility which is
owned and operated by one or more nonprofit corporations or associations no part of the net earnings of
which inures, or may lawfully inure, to the benefit of
any private shareholder or individual’’.
Subsec. (d)(2). Pub. L. 91–609, § 109, increased limitation on amount of mortgage from $25,000,000 to
$50,000,000.
EFFECTIVE DATE OF 2003 AMENDMENT
Pub. L. 108–91, § 2(b), Oct. 3, 2003, 117 Stat. 1158, provided that:
‘‘(1) IN GENERAL.—The amendment made by subsection (a) [amending this section] shall take effect and
apply as of the date of the enactment of this Act [Oct.
3, 2003].
‘‘(2) EFFECT OF REGULATORY AUTHORITY.—Any authority of the Secretary of Housing and Urban Development
to issue regulations to carry out the amendment made
by subsection (a) may not be construed to affect the effectiveness or applicability of such amendment under
paragraph (1) of this subsection.’’

Page 681

TITLE 12—BANKS AND BANKING

EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
CHANGE OF NAME
‘‘Department of Health and Human Services’’ substituted for ‘‘Department of Health, Education, and
Welfare’’ in subsec. (d)(5)(A), (B) pursuant to section
509(b) of Pub. L. 96–88, which is classified to section
3508(b) of Title 20, Education.
REGULATIONS
Pub. L. 100–242, title IV, § 411(b), Feb. 5, 1988, 101 Stat.
1905, directed Secretary of Housing and Urban Development to issue regulations to carry out amendment of
this section by not later than expiration of 90-day period following Feb. 5, 1988.
Secretary of Housing and Urban Development directed to issue regulations implementing amendments
to this section by section 436 of Pub. L. 98–181, not later
than Oct. 31, 1984, see section 104(f) of Pub. L. 98–479, set
out as a note under section 1715b of this title.

§ 1715z–8. Mortgage assistance payments for middle-income families
(a) Determination by Secretary of necessity; interest subsidy payments; effective date
Whenever he determines such action to be necessary in furtherance of the purposes set forth in
section 501 of the Emergency Home Finance Act
of 1970, the Secretary is authorized to make, and
to contract to make, periodic assistance payments on behalf of families of middle income.
The assistance shall be accomplished through
interest subsidy payments to the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation (hereinafter
referred to as ‘‘the investor’’) with respect to
mortgages meeting the special requirements
specified in this section and made after July 24,
1970.
(b) Qualifications of mortgagor for assistance
payments
To qualify for assistance payments a middleincome family shall be a mortgagor under a
mortgage which is (1) insured under subsection
(j) of this section, (2) guaranteed under chapter
37 of title 38, or (3) a conventional mortgage
meeting the requirements of subsection (j)(3) of
this section. In addition to the foregoing requirement, the Secretary may require that the
mortgagor have an income, at the time of acquisition of the property, of not more than the median income for the area in which the property
is located, as determined by the Secretary, with
appropriate adjustments for smaller and larger
families.
(c) Termination of interest subsidy payments
The interest subsidy payments authorized by
this section shall cease when (1) the mortgagor
no longer occupies the property which secures
the mortgage, (2) the mortgages are no longer
held by the investor, or (3) the rate of interest
paid by the mortgagor reaches the rate of interest specified on the mortgage.

§ 1715z–8

(d) Monthly mortgage payments as determining
eligibility for interest subsidy payments;
mortgage assistance payments for middle-income cooperative members; interest subsidy
payments; applicability of provisions to cooperative mortgagors
(1) Interest subsidy payments shall be on
mortgages on which the mortgagor makes
monthly payments towards principal and interest equal to an amount which would be required
if the mortgage bore an effective interest rate of
7 per centum per annum including any discounts
or charges in the nature of points or otherwise
(but not including premiums, if any, for mortgage insurance) or such higher rate (not to exceed the rate specified in the mortgage), which
the mortgagor could pay by applying at least 20
per centum of his income towards homeownership expenses. As used in this subsection, the
term ‘‘monthly homeownership expense’’ includes the monthly payment for principal, interest, mortgage insurance premium, insurance,
and taxes due under the mortgage.
(2) In addition to the mortgages eligible for assistance under paragraph (1) of this subsection,
the Secretary is authorized to make periodic assistance payments on behalf of cooperative
members of middle income. Such assistance payments shall be accomplished through interest
subsidy payments to the investor with respect
to mortgages insured (subsequent to July 24,
1970) under section 1715e of this title which are
executed by cooperatives, the membership in
which is limited to middle-income families. For
purposes of this paragraph—
(A) the term ‘‘mortgagor’’, when used in subsection (b) in the case of a mortgage covering
a cooperative housing project, means a member of the cooperative;
(B) the term ‘‘acquisition of the property’’,
when used in subsection (b), means the family’s application for a dwelling unit; and
(C) in the case of a cooperative mortgagor,
subsection (c) shall not apply and the interest
subsidy payments shall cease when the mortgage is no longer held by the investor or the
cooperative fails to limit membership to families whose incomes at the time of their application for a dwelling unit meets such requirements as are laid down by the Secretary pursuant to subsection (b).
(e) Amount of interest subsidy payments
The interest subsidy payments shall be in an
amount equal to the difference, as determined
by the Secretary, between the total amount of
interest per calendar quarter received by the investor on mortgages assisted under this section
and purchased by it and the total amount of interest which the investor would have received if
the yield on such mortgages was equal to the
sum of (1) the average costs (expressed as an annual percentage rate) to it of all borrowed funds
outstanding in the immediately preceding calendar quarter, and (2) such per centum per
annum as will provide for administrative and
other expenses of the investor and a reasonable
economic return, as determined by the Secretary to be necessary and appropriate taking
into account the purpose of this section to provide additional mortgage credit at reasonable
rates of interest to middle-income families.

§ 1715z–8

TITLE 12—BANKS AND BANKING

(f) Adoption of procedures for recertifications of
mortgagor’s income
Procedures shall be adopted by the Secretary
for recertifications of the mortgagor’s income at
intervals of two years (or at shorter intervals
where the Secretary deems it desirable) for the
purpose of adjusting the amount of the mortgagor’s payments pursuant to subsection (d).
(g) Regulations to assure that sales price or
other consideration paid is not increased
above appraised value
The Secretary shall prescribe such regulations
as he deems necessary to assure that the sales
price of, or other consideration paid in connection with, the purchase by a homeowner of the
property with respect to which assistance payments are to be made is not increased above the
appraised value on which the maximum mortgage which the Secretary will insure is computed.
(h) Authorization of appropriations; aggregate
amount of assistance payment contracts; termination date
(1) There are authorized to be appropriated
such sums as may be necessary to enable the
Secretary to make interest subsidy payments
under contracts entered into under this section.
The aggregate amount of contracts to make
such payments shall not exceed amounts approved in appropriation Acts, and payments pursuant to such contracts shall not exceed
$105,000,000 during the first year of such contracts prior to July 1, 1971, which amount shall
be increased by an additional $105,000,000 during
the first year of an additional number of such
contracts on July 1 of each of the years 1971 and
1972.
(2) No interest subsidy payments under this
section shall be made after June 30, 1973, except
pursuant to contracts entered into on or before
such date.
(i) Determination of family income; exclusion of
income of minors
In determining the income of any family for
the purposes of this section, income from all
sources of each member of the family in the
household shall be included, except that the Secretary shall exclude income earned by any
minor person.
(j) Insurance of mortgages executed by mortgagors meeting eligibility requirements for assistance payments; issuance of commitment;
eligibility requirements for insurance
(1) The Secretary is authorized, upon application by the mortgagee, to insure a mortgage executed by a mortgagor who meets the eligibility
requirements for assistance payments prescribed
by the Secretary under subsection (b). Commitments for the insurance of such mortgages may
be issued by the Secretary prior to the date of
their execution or disbursement thereon, upon
such terms and conditions as the Secretary may
prescribe.
(2) To be eligible for insurance under this subsection, a mortgage shall meet the requirements
of section 1715l(d)(2) or 1715y(c) of this title, except as such requirements are modified by this
subsection: Provided, however, That in the dis-

Page 682

cretion of the Secretary 25 per centum of the authority conferred by this section and subject to
all the terms thereof may be used for mortgages
on existing housing.
(3) A mortgage to be insured under this section
shall—
(i) involve a single-family dwelling which
has been approved by the Secretary prior to
the beginning of construction, or a one-family
unit in a condominium project (together with
an undivided interest in the common areas
and facilities serving the project) which is released from a multifamily project, the construction of which has been completed within
two years prior to the filing of the application
for assistance payments with respect to such
family unit and the unit shall have had no previous occupant other than the mortgagor;
(ii) involve a single-family dwelling whose
appraised value, as determined by the Secretary, is not in excess of $20,000 (which
amount may be increased by not more than 50
per centum in any geographical area where
the Secretary authorizes an increase on the
basis of a finding that the cost level so requires); and
(iii) be executed by a mortgagor who shall
have paid in cash or its equivalent on account
of the property (A) 3 per centum of the first
$15,000 of the appraised value of the property,
(B) 10 per centum of such value in excess of
$15,000 but not in excess of $25,000, and (C) 20
per centum of such value in excess of $25,000.
(June 27, 1934, ch. 847, title II, § 243, as added
Pub. L. 91–351, title V, § 502, July 24, 1970, 84 Stat.
458; amended Pub. L. 98–479, title II, § 204(a)(14),
(15), Oct. 17, 1984, 98 Stat. 2232.)
REFERENCES IN TEXT
Section 501 of the Emergency Home Finance Act of
1970, referred to in subsec. (a), is section 501 of Pub. L.
91–351, which is set out as a note below.
AMENDMENTS
1984—Subsec. (d)(2). Pub. L. 98–479, § 204(a)(14), redesignated subpars. (1), (2), and (3) as subpars. (A), (B), and
(C), respectively.
Subsec. (j)(3)(ii). Pub. L. 98–479, § 204(a)(15), substituted ‘‘; and’’ for period at end.
CONGRESSIONAL FINDINGS AND DECLARATION OF
PURPOSE
Pub. L. 91–351, title V, § 501, July 24, 1970, 84 Stat. 458,
provided that: ‘‘The Congress finds that—
‘‘(1) periodic episodes of monetary stringency and
high interest rates make it extremely difficult for
families of middle income to obtain mortgage credit
at rates which they can afford to pay;
‘‘(2) periods of monetary stringency and high interest rates are directly related to the Government’s
monetary and fiscal policies;
‘‘(3) a disproportionate share of the burden of sustaining these anti-inflationary policies of the Government falls on families of middle income who are
buyers or prospective buyers of homes; and
‘‘(4) the Government has a responsibility to lessen
the disproportionate burden which such families bear
as a result of such policies.
It is the purpose of this title [enacting this section, and
amending sections 1715z–3 and 1719 of this title] to provide, during periods of high mortgage interest rates, a
source of mortgage credit for such families which is
within their financial means.’’

Page 683

TITLE 12—BANKS AND BANKING

§ 1715z–9

§ 1715z–9. Co-insurance of eligible mortgage, advance, or loan

(c) Repealed. Pub. L. 100–242, title IV, § 414(a),
Feb. 5, 1988, 101 Stat. 1907

(a) Authority of Secretary; request of mortgagee;
premium charges; provisions of contract of
co-insurance; non-applicability of state insurance laws

(d) Repealed. Pub. L. 100–242, title IV, § 401(a)(3),
Feb. 5, 1988, 101 Stat. 1898

In addition to providing insurance as otherwise authorized under this chapter, and notwithstanding any other provision of this chapter inconsistent with this section, the Secretary, upon
request of any mortgagee and for such mortgage
insurance premium as he may prescribe (which
premium, or other charges to be paid by the
mortgagor, shall not exceed the premium, or
other charges, that would otherwise be applicable), may insure and make a commitment to insure under any provision of this subchapter any
mortgage, advance, or loan otherwise eligible
under such provision, pursuant to a co-insurance
contract providing that the mortgagee will—
(1) assume a percentage of any loss on the
insured mortgage, advance, or loan in direct
proportion to the amount of the co-insurance,
which co-insurance shall not be less than 10
per centum, subject to any reasonable limit or
limits on the liability of the mortgagee that
may be specified in the event of unusual or
catastrophic losses that may be incurred by
any one mortgagee; and
(2) carry out (under a delegation or otherwise and with or without compensation but
subject to audit, exception, or review requirements) such credit approval, appraisal, inspection, commitment, property disposition, or
other functions as the Secretary, pursuant to
regulations, shall approve as consistent with
the purposes of this chapter.
Any contract of co-insurance under this section
shall contain such provisions relating to the
sharing of premiums on a sound actuarial basis,
establishment of mortgage reserves, manner of
calculating insurance benefits, conditions with
respect to foreclosure, handling and disposition
of property prior to claim or settlement, rights
of assignees (which may elect not to be subject
to the loss sharing provisions), and other similar
matters as the Secretary may prescribe pursuant to regulations. A mortgagee which enters
into a contract of co-insurance under this section shall not by reason of such contract, or its
adherence to such contract or applicable regulations of the Secretary, including provisions relating to the retention of risks in the event of
sale or assignment of a mortgage, be made subject to any State law regulating the business of
insurance.
(b) Inspection of construction of dwellings or
projects as prerequisite; minimum standards
or criteria applicable
No insurance shall be granted pursuant to this
section with respect to dwellings or projects approved for insurance prior to the beginning of
construction unless the inspection of such construction is conducted in accordance with at
least the minimum standards and criteria used
with respect to dwellings or projects approved
for mortgage insurance pursuant to other provisions of this subchapter.

(e) Availability unaffecting insurance otherwise
authorized; criteria for exercise of authority
by Secretary
The Secretary shall not withdraw, deny, or
delay insurance otherwise authorized under any
other provision of this chapter by reason of the
availability of insurance pursuant to this section. The Secretary shall exercise his authority
under this section only to the extent that he
finds that the continued exercise of such authority will not adversely affect the flow of mortgage credit to older and declining neighborhoods
and to the purchasers of older and lower cost
housing.
(f) Multifamily housing project; contract provisions; aggregate principal amount of all
mortgages insured; loans on defaulted mortgages; insurance for state assisted projects
and projects under construction; definitions;
amount of reserves
(1) Where the mortgage covers a multifamily
housing project, the co-insurance contract may
provide that the mortgagee assume (i) the full
amount of any loss on the insured mortgage up
to an amount equal to a fixed percentage of the
outstanding principal balance of the mortgage
at the time of claim for insurance benefits, or
(ii) the full amount of any losses on insured
mortgages in a portfolio of mortgages approved
by the Secretary up to an amount equal to a
fixed percentage of the outstanding principal
balance of all mortgages in such portfolio at the
time of claim for insurance benefits on a mortgage in the portfolio, plus a share of any loss in
excess of the amount under clause (i) or (ii),
whichever is applicable.
(2) The Secretary may make loans, from the
applicable insurance fund, to public housing
agencies in connection with mortgages which
have been insured pursuant to this subsection
and which are in default.
(3) The Secretary may insure and make a commitment to insure in connection with a co-insurance contract pursuant to this subsection (A)
a mortgage on a project assisted under the second proviso in the first sentence of section
1715z–1(b) of this title, and (B) a mortgage or advance on a mortgage made to a public housing
agency on a project under construction which is
not approved for insurance prior to construction.
(4) As used in this subsection, the term ‘‘public
housing agency’’ has the meaning given such
term in section 1437a(b)(6) of title 42.
(5) Notwithstanding any other provision of
this chapter, the Secretary may include in the
determination of replacement cost of a project
to be covered by a mortgage made to a public
housing agency and insured pursuant to this
subsection, such reserves and development
costs, not to exceed 5 per centum of the amount
otherwise allowable, as may be established or
authorized by the public housing agency consistent with such agency’s procedures and underwriting standards.

§ 1715z–9

TITLE 12—BANKS AND BANKING

(g) Redesignated (f)
(h) Acceptable co-insurance provisions for rental
rehabilitation; termination date
Notwithstanding any other provision of this
section, in the case of a mortgage insured under
section 1715n(f) of this title secured by property
which is to be rehabilitated or developed under
section 1437o 1 of title 42, such co-insurance may
include provisions that—
(1) insurance benefits shall equal the sum of
(A) 90 per centum of the mortgage on the date
of institution of foreclosure proceedings (or on
the date of acquisition of the property otherwise after default), and (B) 90 per centum of
interest arrears on the date benefits are paid;
(2) the mortgagee shall remit to the Secretary, for credit to the General Insurance
Fund, 90 per centum of any proceeds of the
property, including sale proceeds, net of the
mortgagee’s actual and reasonable costs related to the property and the enforcement of security;
(3) payment of such benefits shall be made in
cash unless the mortgagee submits a written
request for debenture payment; and
(4) the underwriter of co-insurance may reinsure 10 per centum of the mortgage amount
with a private mortgage insurance company or
with a State mortgage insurance agency.
(i) 2 Authority of mortgagee to assign its interest
in any note or mortgage subject to a contract
of co-insurance; terms and conditions respecting retention of co-insurance risk of
such note or mortgage
Any mortgagee which enters into a contract of
co-insurance under this section shall have the
authority to assign its interest in any note or
mortgage subject to a contract of co-insurance
to a warehouse bank or other financial institution which provides interim funding for a loan
co-insured under this section, and to retain the
co-insurance risk of such note or mortgage,
upon such terms and conditions as the Secretary
shall prescribe.
(i) 2 Annual review of, and assessment of compliance with, requirements; report; adjustment
of requirements
The Secretary shall, by January 15 and July 15
of each year (1) review the adequacy of capital
and other requirements for mortgagees under
this section, (2) assess the compliance by mortgagees with such requirements, and (3) make
such adjustment to such requirements as the
Secretary, after providing opportunity for hearing, determines to be appropriate to improve the
long-term financial soundness of the Federal
Housing Administration funds. Such requirements shall include the minimum capital or net
worth of mortgagees; the ratio that mortgagees
shall maintain between the mortgagee’s capital
and the volume of mortgages co-insured by such
mortgagee; and such other requirements as the
Secretary determines to be appropriate to ensure the long-term financial soundness of the
Federal Housing Administration funds. The Secretary shall submit to the Committee on Bank1 See
2 So

References in Text note below.
in original. Two subsecs. (i) have been enacted.

Page 684

ing, Housing, and Urban Affairs of the Senate
and the Committee on Banking, Finance and
Urban Affairs of the House of Representatives a
report on the review and assessment under the
previous sentence, and an explanation of the
Secretary’s reasons for making any adjustment
in requirements authorized under this section.
(June 27, 1934, ch. 847, title II, § 244, as added
Pub. L. 93–383, title III, § 307, Aug. 22, 1974, 88
Stat. 679; amended Pub. L. 94–375, § 6, Aug. 3,
1976, 90 Stat. 1070; Pub. L. 95–60, § 1(d), June 30,
1977, 91 Stat. 257; Pub. L. 95–80, § 1(d), July 31,
1977, 91 Stat. 339; Pub. L. 95–128, title III, § 301(f),
Oct. 12, 1977, 91 Stat. 1131; Pub. L. 95–406, § 1(f),
Sept. 30, 1978, 92 Stat. 879; Pub. L. 95–557, title
III, § 301(f), Oct. 31, 1978, 92 Stat. 2096; Pub. L.
96–71, § 1(f), Sept. 28, 1979, 93 Stat. 501; Pub. L.
96–105, § 1(f), Nov. 8, 1979, 93 Stat. 794; Pub. L.
96–153, title III, § 301(f), Dec. 21, 1979, 93 Stat.
1111; Pub. L. 96–372, § 1(f), Oct. 3, 1980, 94 Stat.
1363; Pub. L. 96–399, title III, § 301(f), Oct. 8, 1980,
94 Stat. 1638; Pub. L. 96–470, title I, § 107(a), Oct.
19, 1980, 94 Stat. 2238; Pub. L. 97–35, title III,
§ 331(f), Aug. 13, 1981, 95 Stat. 413; Pub. L. 97–289,
§ 1(f), Oct. 6, 1982, 96 Stat. 1230; Pub. L. 98–35,
§ 1(f), May 26, 1983, 97 Stat. 197; Pub. L. 98–109,
§ 1(f), Oct. 1, 1983, 97 Stat. 745; Pub. L. 98–181,
title I [title III, § 303(a), title IV, §§ 401(e), 434],
Nov. 30, 1983, 97 Stat. 1206, 1207, 1222; Pub. L.
98–479, title I, § 104(a)(5), Oct. 17, 1984, 98 Stat.
2225; Pub. L. 99–120, § 1(e), Oct. 8, 1985, 99 Stat.
502; Pub. L. 99–156, § 1(e), Nov. 15, 1985, 99 Stat.
815; Pub. L. 99–219, § 1(e), Dec. 26, 1985, 99 Stat.
1730; Pub. L. 99–267, § 1(e), Mar. 27, 1986, 100 Stat.
73; Pub. L. 99–272, title III, § 3007(e), Apr. 7, 1986,
100 Stat. 105; Pub. L. 99–289, § 1(b), May 2, 1986,
100 Stat. 412; Pub. L. 99–345, § 1, June 24, 1986, 100
Stat. 673; Pub. L. 99–430, Sept. 30, 1986, 100 Stat.
986; Pub. L. 100–122, § 1, Sept. 30, 1987, 101 Stat.
793; Pub. L. 100–154, Nov. 5, 1987, 101 Stat. 890;
Pub. L. 100–170, Nov. 17, 1987, 101 Stat. 914; Pub.
L. 100–179, Dec. 3, 1987, 101 Stat. 1018; Pub. L.
100–200, Dec. 21, 1987, 101 Stat. 1327; Pub. L.
100–242, title IV, §§ 401(a)(3), 414, 429(g), Feb. 5,
1988, 101 Stat. 1898, 1907, 1919; Pub. L. 101–235,
title I, § 139(a), Dec. 15, 1989, 103 Stat. 2029.)
REFERENCES IN TEXT
This chapter, referred to in subsecs. (a), (e), and (f)(5),
was in the original ‘‘this Act’’, meaning act June 27,
1934, ch. 847, 48 Stat. 1246, as amended, which is classified principally to this chapter (§ 1701 et seq.). For complete classification of this Act to the Code, see Tables.
Section 1437o of title 42, referred to in subsec. (h), was
repealed by Pub. L. 101–625, title II, § 289(b), Nov. 28,
1990, 104 Stat. 4128.
AMENDMENTS
1989—Subsec. (i). Pub. L. 101–235 added subsec. (i) relating to annual review of, and assessment of compliance with, requirements.
1988—Subsec. (c). Pub. L. 100–242, § 414(a), struck out
subsec. (c) which read as follows: ‘‘No insurance shall
be granted pursuant to this section unless the Secretary has, after due consultation with the mortgage
lending industry, determined that the demonstration
program of co-insurance authorized by this section will
not disrupt the mortgage market or reduce the availability of mortgage credit to borrowers who depend
upon mortgage insurance provided under this chapter.’’
Subsec. (d). Pub. L. 100–242, § 401(a)(3), struck out subsec. (d) which read as follows: ‘‘No mortgage, advance,
or loan shall be insured pursuant to this section after

Page 685

§ 1715z–9

TITLE 12—BANKS AND BANKING

March 15, 1988, except pursuant to a commitment to insure made before that date.’’
Subsec. (f). Pub. L. 100–242, § 429(g)(1), which directed
that subsec. (g) be amended by striking out par. (2)
which read: ‘‘The second sentence of subsection (d) of
this section shall not apply to mortgages made to public housing agencies, but for purposes of such second
sentence such mortgages shall not be counted in the
aggregate principal amount of all mortgages insured
under this subchapter.’’, and by redesignating former
pars. (3) to (6) as (2) to (5), was executed to subsec. (f)
to reflect the probable intent of Congress, because of
the prior redesignation of subsec. (g) as (f) by Pub. L.
96–470, § 107(a).
Subsec. (h). Pub. L. 100–242, §§ 414(b)(1), 429(g)(2), made
identical amendments, substituting ‘‘co-insurance’’ for
‘‘coinsurance’’ in introductory provision and par. (4).
Pub. L. 100–242, § 401(a)(3), struck out at end ‘‘No commitment for insurance pursuant to this subsection may
be issued after March 15, 1988.’’
Subsec. (i). Pub. L. 100–242, § 414(b)(2), added subsec.
(i).
1987—Subsecs. (d), (h). Pub. L. 100–200 substituted
‘‘March 15, 1988’’ for ‘‘December 16, 1987’’.
Pub. L. 100–179 substituted ‘‘December 16, 1987’’ for
‘‘December 2, 1987’’.
Pub. L. 100–170 substituted ‘‘December 2, 1987’’ for
‘‘November 15, 1987’’.
Pub. L. 100–154 substituted ‘‘November 15, 1987’’ for
‘‘October 31, 1987’’.
Pub. L. 100–122 substituted ‘‘October 31, 1987’’ for
‘‘September 30, 1987’’.
1986—Subsecs. (d), (h). Pub. L. 99–430 substituted
‘‘September 30, 1987’’ for ‘‘September 30, 1986’’.
Pub. L. 99–345 substituted ‘‘September 30, 1986’’ for
‘‘June 6, 1986’’.
Pub. L. 99–289 substituted ‘‘June 6, 1986’’ for ‘‘April 30,
1986’’.
Pub. L. 99–272 made amendment identical to Pub. L.
99–219. See 1985 Amendment note below.
Pub. L. 99–267 substituted ‘‘April 30, 1986’’ for ‘‘March
17, 1986’’.
1985—Subsec. (d). Pub. L. 99–219, § 1(e)(1), substituted
‘‘March 17, 1986’’ for ‘‘December 15, 1985’’.
Pub. L. 99–156, § 1(e)(1), substituted ‘‘December 15,
1985’’ for ‘‘November 14, 1985’’.
Pub. L. 99–120, § 1(e)(1), substituted ‘‘November 14,
1985’’ for ‘‘September 30, 1985’’.
Subsec. (h). Pub. L. 99–219, § 1(e)(2), substituted ‘‘after
March 17, 1986’’ for ‘‘on or after December 16, 1985’’.
Pub. L. 99–156, § 1(e)(2), substituted ‘‘December 16,
1985’’ for ‘‘November 15, 1985’’.
Pub. L. 99–120, § 1(e)(2), substituted ‘‘November 15,
1985’’ for ‘‘October 1, 1985’’.
1984—Subsec. (d). Pub. L. 98–479 amended subsec. (d)
generally, thereby striking out last sentence which
provided: ‘‘The aggregate principal amount of mortgages and loans insured pursuant to this section in any
fiscal year beginning on or after July 1, 1974, and ending prior to October 1, 1985, shall not exceed 20 per centum of the aggregate principal amount of all mortgages
and loans insured under this subchapter during such
fiscal year.’’
1983—Subsec. (d). Pub. L. 98–181, § 401(e)(3), which directed that last two sentences of subsec. (d) be struck
out was executed by striking out last sentence which
provided that the overall percentage limitation specified in the preceding sentence also apply separately
within each of the categories of mortgages and loans
covering one- to four-family dwellings and mortgages
and loans covering projects with five or more dwelling
units, as the probable intent of Congress, in view of the
amendment to the next to last sentence by section
401(e)(2) of Pub. L. 98–181.
Pub. L. 98–181, § 401(e)(1), (2), substituted ‘‘September
30, 1985’’ for ‘‘November 30, 1983’’ and ‘‘October 1, 1985’’
for ‘‘December 1, 1983’’.
Pub. L. 98–109 substituted ‘‘November 30, 1983’’ for
‘‘September 30, 1983’’ and ‘‘December 1, 1983’’ for ‘‘October 1, 1983’’.

Pub. L. 98–35 substituted ‘‘September 30, 1983’’ for
‘‘May 20, 1983’’ and ‘‘October 1, 1983’’ for ‘‘May 21, 1983’’.
Subsec. (f)(1). Pub. L. 98–181, § 434(1), struck out ‘‘the
mortgagee is a public housing agency or an insured depository institution and’’ after ‘‘Where’’. Notwithstanding the directory language that amendment be
made to subsec. (g)(1), the amendment was executed to
subsec. (f)(1) to reflect the probable intent of Congress
and the intervening redesignation of subsec. (g) as (f)
by Pub. L. 96–470.
Subsec. (f)(5). Pub. L. 98–181, § 434(2), substituted reference to section 1437a(b)(6) of title 42 for reference to
section 1437a(6) of title 42 and struck out provision
which defined the term ‘‘insured depository institution’’ as any savings bank, savings and loan association, commercial bank or other such depository institution whose deposits are insured by the Federal Deposit Insurance Corporation, by the Federal Savings
and Loan Insurance Corporation, or by an agency or instrumentality of a State. Notwithstanding the directory language that amendment be made to subsec.
(g)(5), the amendment was executed to subsec. (f)(5) to
reflect the probable intent of Congress and the intervening redesignation of subsec. (g) as (f) by Pub. L.
96–470.
Subsec. (h). Pub. L. 98–181, § 303(a), added subsec. (h).
1982—Subsec. (d). Pub. L. 97–289 substituted ‘‘May 20,
1983’’ and ‘‘May 21, 1983’’ for ‘‘September 30, 1982’’ and
‘‘October 1, 1982’’, respectively.
1981—Subsec. (d). Pub. L. 97–35 substituted ‘‘1982’’ for
‘‘1981’’ in two places.
1980—Subsec. (d). Pub. L. 96–399 substituted ‘‘September 30, 1981’’ and ‘‘October 1, 1981’’ for ‘‘October 15, 1980’’
and ‘‘October 16, 1980’’, respectively.
Pub. L. 96–372 substituted ‘‘October 15, 1980’’ and ‘‘October 16, 1980’’ for ‘‘September 30, 1980’’ and ‘‘October 1,
1980’’, respectively.
Subsecs. (f), (g). Pub. L. 96–470 struck out subsec. (f)
and redesignated subsec. (g) as (f).
1979—Subsec. (d). Pub. L. 96–153 substituted ‘‘September 30, 1980’’ for ‘‘November 30, 1979’’ and ‘‘October 1,
1980’’ for ‘‘December 1, 1979’’.
Pub. L. 96–105 substituted ‘‘November 30, 1979’’ and
‘‘December 1, 1979’’ for ‘‘October 31, 1979’’ and ‘‘November 1, 1979’’, respectively.
Pub. L. 96–71 substituted ‘‘October 31, 1979’’ and ‘‘November 1, 1979’’ for ‘‘September 30, 1979’’ and ‘‘October
1, 1979’’, respectively.
1978—Subsec. (d). Pub. L. 95–557 substituted ‘‘September 30, 1979’’ for ‘‘October 31, 1978’’ and ‘‘October 1, 1979’’
for ‘‘November 1, 1978’’.
Pub. L. 95–406 substituted ‘‘October 31, 1978’’ for ‘‘September 30, 1978’’ and ‘‘November 1, 1978’’ for ‘‘October 1,
1978’’.
1977—Subsec. (d). Pub. L. 95–128 substituted ‘‘September 30, 1978’’ for ‘‘September 30, 1977’’ and ‘‘October 1,
1978’’ for ‘‘October 1, 1977’’.
Pub. L. 95–80 substituted ‘‘September 30, 1977’’ for
‘‘July 31, 1977’’.
Pub. L. 95–60 substituted ‘‘July 31, 1977’’ for ‘‘June 30,
1977’’.
1976—Subsec. (a). Pub. L. 94–375, § 6(b), inserted, in
text following par. (2), a provision excluding a mortgagee which enters into a contract under this section
from regulation by state insurance laws.
Subsec. (g). Pub. L. 94–375, § 6(a), added subsec. (g).
CHANGE OF NAME
Committee on Banking, Finance and Urban Affairs of
House of Representatives treated as referring to Committee on Banking and Financial Services of House of
Representatives by section 1(a) of Pub. L. 104–14, set
out as a note preceding section 21 of Title 2, The Congress. Committee on Banking and Financial Services of
House of Representatives abolished and replaced by
Committee on Financial Services of House of Representatives, and jurisdiction over matters relating to
securities and exchanges and insurance generally transferred from Committee on Energy and Commerce of
House of Representatives by House Resolution No. 5,
One Hundred Seventh Congress, Jan. 3, 2001.

§ 1715z–10

TITLE 12—BANKS AND BANKING

EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.

§ 1715z–10. Repealed. Pub. L. 110–289, div. B, title
I, § 2120(a)(7), July 30, 2008, 122 Stat. 2835
Section, act June 27, 1934, ch. 847, title II, § 245, as
added Pub. L. 93–383, title III, § 308, Aug. 22, 1974, 88
Stat. 680; amended Pub. L. 94–375, § 7, Aug. 3, 1976, 90
Stat. 1071; Pub. L. 95–128, title III, §§ 301(g), 310, Oct. 12,
1977, 91 Stat. 1131, 1136; Pub. L. 95–406, § 1(g), Sept. 30,
1978, 92 Stat. 879; Pub. L. 95–557, title III, § 301(g), Oct.
31, 1978, 92 Stat. 2096; Pub. L. 95–630, title XV, § 1503,
Nov. 10, 1978, 92 Stat. 3713; Pub. L. 96–71, § 1(g), Sept. 28,
1979, 93 Stat. 501; Pub. L. 96–105, § 1(g), Nov. 8, 1979, 93
Stat. 794; Pub. L. 96–153, title III, §§ 301(g), 311(b), Dec.
21, 1979, 93 Stat. 1112, 1115; Pub. L. 96–372, § 1(g), Oct. 3,
1980, 94 Stat. 1363; Pub. L. 96–399, title III, § 301(g), Oct.
8, 1980, 94 Stat. 1638; Pub. L. 97–35, title III, § 331(g) Aug.
13, 1981, 95 Stat. 413; Pub. L. 97–289, § 1(g), Oct. 6, 1982,
96 Stat. 1230; Pub. L. 98–35, § 1(g), May 26, 1983, 97 Stat.
197; Pub. L. 98–109, § 1(g), Oct. 1, 1983, 97 Stat. 745; Pub.
L. 98–181, title I [title IV, §§ 401(f), 441, 442], Nov. 30, 1983,
97 Stat. 1208, 1223, 1224; Pub. L. 99–120, § 1(f), Oct. 8, 1985,
99 Stat. 502; Pub. L. 99–156, § 1(f), Nov. 15, 1985, 99 Stat.
815; Pub. L. 99–219, § 1(f), Dec. 26, 1985, 99 Stat. 1730; Pub.
L. 99–267, § 1(f), Mar. 27, 1986, 100 Stat. 73; Pub. L. 99–272,
title III, § 3007(f), Apr. 7, 1986, 100 Stat. 105; Pub. L.
99–289, § 1(b), May 2, 1986, 100 Stat. 412; Pub. L. 99–345, § 1,
June 24, 1986, 100 Stat. 673; Pub. L. 99–430, Sept. 30, 1986,
100 Stat. 986; Pub. L. 100–122, § 1, Sept. 30, 1987, 101 Stat.
793; Pub. L. 100–154, Nov. 5, 1987, 101 Stat. 890; Pub. L.
100–170, Nov. 17, 1987, 101 Stat. 914; Pub. L. 100–179, Dec.
3, 1987, 101 Stat. 1018; Pub. L. 100–200, Dec. 21, 1987, 101
Stat. 1327; Pub. L. 100–242, title IV, §§ 401(a)(4), 408(b),
415(b)(1), Feb. 5, 1988, 101 Stat. 1898, 1903, 1907; Pub. L.
107–326, § 3, Dec. 4, 2002, 116 Stat. 2793, related to graduated payment and indexed mortgages.

§ 1715z–11. Sale to cooperatives of multifamily
housing projects acquired by Secretary; acceptance of purchase money mortgage for
sale or insurance of mortgage; principal
amount of mortgage; expenditures for repairs, etc., prior to sale
In any case which the Secretary sells a multifamily housing project acquired as the result of
a default on a mortgage which was insured
under this chapter to a cooperative which will
operate it on a nonprofit basis and restrict permanent occupancy of its dwellings to members,
or to a nonprofit corporation which operates as
a consumer cooperative as defined by the Secretary, the Secretary may accept a purchase
money mortgage, 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, in a
principal amount equal to 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 provisions for payment
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.

Page 686

(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) 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 development 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

Page 687

TITLE 12—BANKS AND BANKING

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
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

§ 1715z–11a

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,
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

§ 1715z–11a

TITLE 12—BANKS AND BANKING

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;
(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

Page 688

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
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).

Page 689

§ 1715z–12

TITLE 12—BANKS AND BANKING

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), 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.
(c) Insurance of mortgage as obligation of General Insurance Fund
Notwithstanding any other provision of this
chapter, the insurance of a mortgage using the
authority contained in this section shall be the
obligation of the Mutual Mortgage Insurance
Fund. The mortgagee shall be eligible to receive
the benefits of insurance as provided in section

1710 of this title with respect to mortgages insured pursuant to this section, except that all
references in section 1710 of this title to section
1709 of this title shall be construed to refer to
the section under which the mortgage is insured.
(d) ‘‘Native Hawaiian’’ and ‘‘Hawaiian home
lands’’ defined
For purposes of this section:
(1) Native Hawaiian
The term ‘‘native Hawaiian’’ means any descendant of not less than one-half part of the
blood of the races inhabiting the Hawaiian Islands before January 1, 1778, or, in the case of
an individual who is awarded an interest in a
lease of Hawaiian home lands through transfer
or succession, such lower percentage as may
be established for such transfer or succession
under section 208 or 209 of the Hawaiian Homes
Commission Act of 1920 (42 Stat. 111), 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) Hawaiian home lands
The term ‘‘Hawaiian home lands’’ means all
lands given the status of Hawaiian home lands
under section 204 of the Hawaiian Homes Commission Act of 1920 (42 Stat. 110), 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).
(e) Certification of eligibility for existing lessees
Possession of a lease of Hawaiian home lands
issued under section 207(a) of the Hawaiian
Homes Commission Act of 1920 (42 Stat. 110),
shall be sufficient to certify eligibility to receive a mortgage under this section.
(June 27, 1934, ch. 847, title II, § 247, as added
Pub. L. 98–181, title I [title IV, § 421], Nov. 30,
1983, 97 Stat. 1213; amended Pub. L. 100–202,
§ 101(f) [title I, § 101], Dec. 22, 1987, 101 Stat.
1329–187, 1329–191; Pub. L. 100–242, title IV,
§§ 413(a), (b), 429(h), Feb. 5, 1988, 101 Stat. 1906,
1919; Pub. L. 100–628, title X, § 1065, Nov. 7, 1988,
102 Stat. 3275; Pub. L. 107–73, title II, § 215, Nov.
26, 2001, 115 Stat. 677; Pub. L. 110–289, div. B, title
I, § 2119(a), July 30, 2008, 122 Stat. 2835.)
REFERENCES IN TEXT
The Hawaiian Homes Commission Act, 1920, referred
to in subsec. (a)(1), is act July 9, 1921, ch. 42, 42 Stat.
108, as amended. The Hawaiian Homes Commission Act
of 1920, referred to in subsecs. (d) and (e), probably
means the Hawaiian Homes Commission Act, 1920. Sections 204, 207, 208, and 209 of that Act were classified to
sections 698, 701, 702, and 703 of Title 48, Territories and
Insular Possessions, and were omitted from the Code.
Section 4 of the Act entitled ‘‘An Act to provide for
the admission of the State of Hawaii into the Union’’,
approved Mar. 18, 1959 (73 Stat. 5), referred to in subsecs. (a)(1) and (d), is section 4 of Pub. L. 86–3, Mar. 18,
1959, 73 Stat. 5, which is set out as a note preceding section 491 of Title 48.
AMENDMENTS
2008—Subsec. (c). Pub. L. 110–289 substituted ‘‘Mutual
Mortgage Insurance Fund’’ for ‘‘General Insurance

§ 1715z–13

TITLE 12—BANKS AND BANKING

Fund established in section 1735c of this title’’ and
struck out ‘‘(1) all references in section 1710 of this title
to the Mutual Mortgage Insurance Fund or the Fund
shall be construed to refer to the General Insurance
Fund; and (2)’’ after ‘‘except that’’.
2001—Subsec. (d)(1), (2). Pub. L. 107–73, § 215(1), added
pars. (1) and (2) and struck out former pars. (1) and (2)
which read as follows:
‘‘(1) The term ‘native Hawaiian’ means any descendant of not less than one-half part of the blood of the
races inhabiting the Hawaiian Islands before January 1,
1778 (or, in the case of an individual who succeeds a
spouse or parent in an interest in a lease of Hawaiian
home lands, such lower percentage as may be established for such succession under section 209 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 term ‘Hawaiian home lands’ means all lands
given the status of Hawaiian home lands under section
204 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).’’
Subsec. (e). Pub. L. 107–73, § 215(2), added subsec. (e).
1988—Subsec. (a)(2). Pub. L. 100–242, § 429(h), substituted ‘‘mortgagor’’ for ‘‘Mortgagor’’.
Subsecs. (c), (d). Pub. L. 100–628 clarified amendment
by Pub. L. 100–242, § 413(a), (b).
Pub. L. 100–242, § 413(a), (b), made amendment identical to Pub. L. 100–202. See 1987 Amendment note
below.
1987—Subsec. (c). Pub. L. 100–202 added subsec. (c).
Former subsec. (c) redesignated (d).
Subsec. (d). Pub. L. 100–202 extended subsec. (c)(1)
term ‘‘native Hawaiian’’ to include in the case of succession in an interest in a lease of Hawaiian homelands
any descendant of a percentage less than one-half of
the blood of the races inhabiting the Hawaiian Islands
before Jan. 1, 1778, as may be established under statute
or constitution for succession; and redesignated subsec.
(c), including such par. (1), as subsec. (d).

§ 1715z–13. Single family mortgage insurance on
Indian reservations
(a) One- to four-family residence; eligibility
The Secretary, subject to such special 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 Indian reservations if the mortgage
(1) is executed by an Indian tribe and the property is located on trust or otherwise restricted
land; or (2) is executed by a member of an Indian
tribe who will use the property as a principal
residence and the property is on trust or otherwise restricted land.
(b) Construction advances; percentage limitation
on amount of principal obligation; pledge of
income from tribal resources or assets
Notwithstanding any other provision of this
chapter, with respect to mortgages covering a
property upon which there is located a one- to
four-family residence—
(1) the Secretary may insure and make commitments to insure under this subchapter pur-

Page 690

suant to this section advances made during
construction where the Secretary determines
that the proposed construction is otherwise
acceptable and meets an applicable tribal or
national model building code, and that no feasible financing alternative is available;
(2) the applicable percentage limitation on
the amount of the principal obligation of a
mortgage based on the appraised value or replacement cost, as appropriate, of a one- to
four-family owner-occupied residence contained in this subchapter shall apply in the
case of all mortgages insured pursuant to this
section without regard to whether the residences are owner-occupied where the residences are owned by the tribe; and
(3)(A) the Secretary may require an Indian
tribe, only as a condition of insurance made
under this subchapter pursuant to this section, to pledge income from tribal resources or
income from tribal assets not subject to a restriction by the Secretary of the Interior or
pledge grants under title I of the Housing and
Community Development Act of 1974 [42 U.S.C.
5301 et seq.] or any other Federal grant program administered by the Secretary of Housing and Urban Development to be used to reimburse the Secretary for any mortgage insurance claims paid in connection with residences
insured pursuant to this section; or
(B) in the case of an individual Indian mortgagor, the Secretary may require a pledge of
his or her share of distributed income from
tribal resources or income from tribal assets,
excluding any Federal grants received by the
tribe.
(c) Lack of tribal or trust fund income
The Secretary may not refuse to insure a
mortgage under this section to an individual
home purchaser because there is no distributed
tribal or trust fund income attributable to that
purchaser.
(d) Availability of tribal eviction procedures
Before making any commitment to insure a
mortgage under this section with respect to
property located on trust or otherwise restricted
land, the Secretary shall require a showing by
the tribe that it has adopted eviction procedures
to be used in the event of a default.
(e) Assumption of mortgage
A mortgage insured under this section may be
assumed, subject to credit approval by the lender and the consent of the tribe to an assumption
of the existing lease or the grant of a new lease,
without an adjustment of the interest rate. Any
other sale of a property subject to a mortgage
insured under this section may be made only if
a new lease is granted, except that a sale following a foreclosure may be accompanied by an assumption of the lease with the consent of the
tribe.
(f) Insurance of mortgage as obligation of General Insurance Fund
Notwithstanding any other provision of this
chapter, the insurance of a mortgage using the
authority contained in this section shall be the
obligation of the Mutual Mortgage Insurance
Fund. The mortgagee shall be eligible to receive

Page 691

§ 1715z–13

TITLE 12—BANKS AND BANKING

the benefits of insurance as provided in section
1710 of this title with respect to mortgages insured pursuant to this section, except that all
references in section 1710 of this title to section
1709 of this title shall be construed to refer to
the section under which the mortgage is insured.
(g) Availability of status and payment history of
loans; entitlement to benefit of insurance; reinstatement of loan upon cure of default; garnishment proceedings; foreclosure proceedings
(1) The Secretary shall make information regarding the status and payment history of loans
insured under this section available to local
credit bureaus and prospective creditors. Prior
to accepting assignment of a mortgage, the Secretary shall require mortgagees to submit documentation that mortgagors have been counseled
in a face-to-face interview, informed of the provisions of this subsection or other available assistance, and provided with the names and addresses of officials of the Department of Housing
and Urban Development to whom further communications shall be addressed.
(2) Notwithstanding the requirement for conveyance of title under section 1710 of this title,
a mortgagee under this section shall be entitled
to receive the benefit of insurance under this
section in the case of a mortgage which is more
than 90 days in default upon conveyance of the
lease agreement and the mortgage documents.
(3) In the event that any default is cured, the
Secretary shall seek to reinstate the loan with
the mortgagee or another mortgagee. For purposes of this paragraph, the Secretary may provide appropriate financial incentives to reinstate the loan commensurate with sound management of the General Insurance Fund.
(4) If the Secretary determines that a mortgagor is not making a good-faith effort to cure a
default, and that trust fund or tribal income is
available under subsection (b)(3)(B), the Secretary shall commence proceedings for the garnishment of the mortgagor’s distributed share of
tribal or trust fund income in order to collect
loan payments that are past due. Proceedings
under this paragraph may be instituted in a
tribal court, court of competent jurisdiction
designated by the tribe, or Federal district
court.
(5) If the Secretary determines such action is
necessary to protect the General Insurance Fund
from undue loss, the Secretary may initiate
foreclosure proceedings with respect to any
mortgage acquired under this subsection. Such
proceeding may take place in a tribal court, a
court of competent jurisdiction, or Federal district court. Any such court shall have jurisdiction to convey to the Secretary the remaining
life of a lease on the real property and to order
eviction of the delinquent mortgagor.
(h) Premium charge for insurance; report to
Congress
In the administration of this section, the Secretary shall establish a premium charge for insurance that will be sufficient to cover the full
costs of the mortgage insurance program under
this section, except that such charge may not
exceed 3 percent per annum of the principal
amount of the mortgage outstanding at any

time. Not later than September 30, 1984, the Secretary shall determine and report to the Congress on the feasibility of eliminating any excess amount of the premium under this section
over the premium under section 1709 of this
title. In the event such premiums are not sufficient to cover the full costs of the mortgage insurance program under this section, the Secretary shall make recommendations to the Congress about changes to the program.
(i) ‘‘Indian tribe’’ and ‘‘trust or otherwise restricted land’’ defined
For purposes of this section:
(1) The term ‘‘Indian tribe’’ means any Indian or Alaska native tribe, band, nation, or
other organized group or community of Indians or Alaska natives recognized as eligible
for the services provided to Indians or Alaska
natives by the Secretary of the Interior because of its status as such an entity, or that
was an eligible recipient under chapter 67 of
title 31, prior to the repeal of such chapter.
(2) The term ‘‘trust or otherwise restricted
land’’ means (A) that area of land, as defined
by the Secretary of the Interior, over which an
Indian tribe is recognized by the United States
as having governmental jurisdiction; (B) land
held in trust for the benefit of any Indian tribe
or individual or held by any Indian tribe or individual subject to a restriction by the United
States against alienation; or (C) land acquired
by Alaska natives under the Alaska Native
Claims Settlement Act [43 U.S.C. 1601 et seq.]
or any other land acquired by Alaska natives
pursuant to statute by virtue of their unique
status as Alaska natives.
(June 27, 1934, ch. 847, title II, § 248, as added
Pub. L. 98–181, title I [title IV, § 422], Nov. 30,
1983, 97 Stat. 1214; amended Pub. L. 99–272, title
XIV, § 14001(b)(7), Apr. 7, 1986, 100 Stat. 329; Pub.
L. 100–242, title IV, §§ 413(c), 429(i), Feb. 5, 1988,
101 Stat. 1906, 1919; Pub. L. 110–289, div. B, title
I, § 2119(b), July 30, 2008, 122 Stat. 2835.)
REFERENCES IN TEXT
The Housing and Community Development Act of
1974, referred to in subsec. (b)(3)(A), is Pub. L. 93–383,
Aug. 22, 1974, 88 Stat. 633, as amended. Title I of the
Housing and Community Development Act of 1974 is
classified principally to chapter 69 (§ 5301 et seq.) of
Title 42, The Public Health and Welfare. For complete
classification of this Act to the Code, see Short Title
note set out under section 5301 of Title 42 and Tables.
Chapter 67 of title 31, referred to in subsec. (i)(1), was
repealed by Pub. L. 99–272, title XIV, § 14001(a)(1), Apr.
7, 1986, 100 Stat. 327. A new chapter 67 of Title 31, Money
and Finance, was added by Pub. L. 103–322, title III,
§ 31001(a), Sept. 13, 1994, 108 Stat. 1859.
The Alaska Native Claims Settlement Act, referred
to in subsec. (i)(2), is Pub. L. 92–203, Dec. 18, 1971, 85
Stat. 688, as amended, which is classified generally to
chapter 33 (§ 1601 et seq.) of Title 43, Public Lands. For
complete classification of this Act to the Code, see
Short Title note set out under section 1601 of Title 43
and Tables.
AMENDMENTS
2008—Subsec. (f). Pub. L. 110–289 substituted ‘‘Mutual
Mortgage Insurance Fund’’ for ‘‘General Insurance
Fund established in section 1735c of this title’’ and
struck out ‘‘(1) all references in section 1710 of this title
to the Mutual Mortgage Insurance Fund or the Fund
shall be construed to refer to the General Insurance
Fund; and (2)’’ after ‘‘except that’’.

§ 1715z–13a

TITLE 12—BANKS AND BANKING

1988—Subsec. (a)(1). Pub. L. 100–242, § 429(i)(1), substituted ‘‘land’’ for ‘‘lands’’.
Subsec. (a)(2). Pub. L. 100–242, § 429(i)(2), substituted
‘‘on trust or otherwise restricted land’’ for ‘‘on trust
lands or otherwise restricted land’’.
Subsec. (d). Pub. L. 100–242, § 429(i)(3), substituted
‘‘trust or otherwise restricted land’’ for ‘‘tribal or trust
land’’.
Subsec. (f). Pub. L. 100–242, § 413(c)(3), added subsec.
(f). Former subsec. (f) redesignated (g).
Subsec. (g). Pub. L. 100–242, § 413(c)(1), (2), redesignated former subsec. (f) as (g) and substituted ‘‘General
Insurance Fund’’ for ‘‘insurance fund’’ in pars. (3) and
(5). Former subsec. (g) redesignated (h).
Subsecs. (h), (i). Pub. L. 100–242, § 413(c)(2), redesignated former subsecs. (g) and (h) as (h) and (i), respectively.
1986—Subsec. (h)(1). Pub. L. 99–272 substituted ‘‘was
an eligible recipient under chapter 67 of title 31, prior
to the repeal of such chapter’’ for ‘‘is an eligible recipient under chapter 67 of title 31’’.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99–272 effective Oct. 18, 1986,
see section 14001(e) of Pub. L. 99–272.

§ 1715z–13a. Loan guarantees for Indian housing
(a) Authority
To provide access to sources of private financing to Indian families, Indian housing authorities, and Indian tribes, who otherwise could not
acquire housing financing because of the unique
legal status of Indian lands, the Secretary may
guarantee not to exceed 100 percent of the unpaid principal and interest due on any loan eligible under subsection (b) made to an Indian family, Indian housing authority, or Indian tribe.
(b) Eligible loans
Loans guaranteed pursuant to this section
shall meet the following requirements:
(1) Eligible borrowers
The loans shall be made only to borrowers
who are Indian families, Indian housing authorities, or Indian tribes.
(2) Eligible housing
The loan shall be used to construct, acquire,
refinance, or rehabilitate 1- to 4-family dwellings that are standard housing and are located
on trust land or land located in an Indian or
Alaska Native area.
(3) Security
The loan may be secured by any collateral
authorized under existing Federal law or applicable State or tribal law.
(4) Lenders
The loan shall be made only by a lender approved by and meeting qualifications established by the Secretary, except that loans
otherwise insured or guaranteed by an agency
of the Federal Government or made by an organization of Indians from amounts borrowed
from the United States shall not be eligible for
guarantee under this section. The following
lenders are deemed to be approved under this
paragraph:
(A) Any mortgagee approved by the Secretary of Housing and Urban Development
for participation in the single family mortgage insurance program under title II of the
National Housing Act [12 U.S.C. 1707 et seq.].

Page 692

(B) Any lender whose housing loans under
chapter 37 of title 38 are automatically guaranteed pursuant to section 1802(d) 1 of such
title.
(C) Any lender approved by the Secretary
of Agriculture to make guaranteed loans for
single family housing under the Housing Act
of 1949 [42 U.S.C. 1441 et seq.].
(D) Any other lender that is supervised,
approved, regulated, or insured by any agency of the Federal Government.
(5) Terms
The loan shall—
(A) be made for a term not exceeding 30
years;
(B) bear interest (exclusive of the guarantee fee under section 404 2 and service
charges, if any) at a rate agreed upon by the
borrower and the lender and determined by
the Secretary to be reasonable, which may
not exceed the rate generally charged in the
area (as determined by the Secretary) for
home mortgage loans not guaranteed or insured by any agency or instrumentality of
the Federal Government;
(C) involve a principal obligation not exceeding—
(i) 97.75 percent of the appraised value of
the property as of the date the loan is accepted for guarantee (or 98.75 percent if the
value of the property is $50,000 or less); and
(ii) the amount approved by the Secretary under this section; and
(D) involve a payment on account of the
property (i) in cash or its equivalent, or (ii)
through the value of any improvements to
the property made through the skilled or unskilled labor of the borrower, as the Secretary shall provide.
(c) Certificate of guarantee
(1) Approval process
Before the Secretary approves any loan for
guarantee under this section, the lender shall
submit the application for the loan to the Secretary for examination. If the Secretary approves the loan for guarantee, the Secretary
shall issue a certificate under this paragraph
as evidence of the guarantee.
(2) Standard for approval
The Secretary may approve a loan for guarantee under this section and issue a certificate
under this paragraph only if the Secretary determines there is a reasonable prospect of repayment of the loan.
(3) Effect
A certificate of guarantee issued under this
paragraph by the Secretary shall be conclusive
evidence of the eligibility of the loan for guarantee under the provisions of this section and
the amount of such guarantee. Such evidence
shall be incontestable in the hands of the bearer and the full faith and credit of the United
States is pledged to the payment of all
amounts agreed to be paid by the Secretary as
security for such obligations.
1 So
2 So

in original. Probably should be section ‘‘3702(d)’’.
in original. Probably should be ‘‘subsection (d)’’.

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TITLE 12—BANKS AND BANKING

(4) Fraud and misrepresentation
This subsection may not be construed to preclude the Secretary from establishing defenses
against the original lender based on fraud or
material misrepresentation or to bar the Secretary from establishing by regulations in effect on the date of issuance or disbursement,
whichever is earlier, partial defenses to the
amount payable on the guarantee.
(d) Guarantee fee
The Secretary shall establish and collect, at
the time of issuance of the guarantee, a fee for
the guarantee of loans under this section, in an
amount not exceeding 3 percent of the principal
obligation of the loan. The Secretary may also
establish and collect annual premium payments
in an amount not exceeding 1 percent of the remaining guaranteed balance (excluding the portion of the remaining balance attributable to
the fee collected at the time of issuance of the
guarantee). The Secretary shall establish the
amount of the fees and premiums by publishing
a notice in the Federal Register. The Secretary
shall deposit any fees and premiums collected
under this subsection in the Indian Housing
Loan Guarantee Fund established under subsection (i).
(e) Liability under guarantee
The liability under a guarantee provided under
this section shall decrease or increase on a pro
rata basis according to any decrease or increase
in the amount of the unpaid obligation under
the provisions of the loan agreement.
(f) Transfer and assumption
Notwithstanding any other provision of law,
any loan guaranteed under this section, including the security given for the loan, may be sold
or assigned by the lender to any financial institution subject to examination and supervision
by an agency of the Federal Government or of
any State or the District of Columbia.
(g) Disqualification of lenders and civil money
penalties
(1) In general
If the Secretary determines that any lender
or holder of a guarantee certificate under subsection (c) has failed to maintain adequate accounting records, to adequately service loans
guaranteed under this section, to exercise
proper credit or underwriting judgment, or has
engaged in practices otherwise detrimental to
the interest of a borrower or the United
States, the Secretary may—
(A) refuse, either temporarily or permanently, to guarantee any further loans made
by such lender or holder;
(B) bar such lender or holder from acquiring additional loans guaranteed under this
section; and
(C) require that such lender or holder assume not less than 10 percent of any loss on
further loans made or held by the lender or
holder that are guaranteed under this section.
(2) Civil money penalties for intentional violations
If the Secretary determines that any lender
or holder of a guarantee certificate under sub-

§ 1715z–13a

section (c) has intentionally failed to maintain adequate accounting records, to adequately service loans guaranteed under this
section, or to exercise proper credit or underwriting judgment, the Secretary may impose a
civil money penalty on such lender or holder
in the manner and amount provided under section 536 of the National Housing Act [12 U.S.C.
1735f–14] with respect to mortgagees and lenders under such Act.
(3) Payment on loans made in good faith
Notwithstanding paragraphs (1) and (2), the
Secretary may not refuse to pay pursuant to a
valid guarantee on loans of a lender or holder
barred under this subsection if the loans were
previously made in good faith.
(h) Payment under guarantee
(1) Lender options
(A) In general
In the event of default by the borrower on
a loan guaranteed under this section, the
holder of the guarantee certificate shall provide written notice of the default to the Secretary. Upon providing such notice, the holder of the guarantee certificate shall be entitled to payment under the guarantee (subject to the provisions of this section) and
may proceed to obtain payment in one of the
following manners:
(i) Foreclosure
The holder of the certificate may initiate foreclosure proceedings (after providing written notice of such action to the
Secretary) and upon a final order by the
court authorizing foreclosure and submission to the Secretary of a claim for payment under the guarantee, the Secretary
shall pay to the holder of the certificate
the pro rata portion of the amount guaranteed (as determined pursuant to subsection
(e)) plus reasonable fees and expenses as
approved by the Secretary. The Secretary
shall be subrogated to the rights of the
holder of the guarantee and the lender
holder shall assign the obligation and security to the Secretary.
(ii) No foreclosure
Without seeking foreclosure (or in any
case in which a foreclosure proceeding initiated under clause (i) continues for a period in excess of 1 year), the holder of the
guarantee may submit to the Secretary a
request to assign the obligation and security interest to the Secretary in return for
payment of the claim under the guarantee.
The Secretary may accept assignment of
the loan if the Secretary determines that
the assignment is in the best interests of
the United States. Upon assignment, the
Secretary shall pay to the holder of the
guarantee the pro rata portion of the
amount guaranteed (as determined under
subsection (e)). The Secretary shall be subrogated to the rights of the holder of the
guarantee and the holder shall assign the
obligation and security to the Secretary.
(B) Requirements
Before any payment under a guarantee is
made under subparagraph (A), the holder of

§ 1715z–13a

TITLE 12—BANKS AND BANKING

the guarantee shall exhaust all reasonable
possibilities of collection. Exhausting all
reasonable possibilities of collection by the
holder of the guarantee shall include a good
faith consideration of loan modification as
well as meeting standards for servicing loans
in default, as determined by the Secretary.
Upon payment, in whole or in part, to the
holder, the note or judgment evidencing the
debt shall be assigned to the United States
and the holder shall have no further claim
against the borrower or the United States.
The Secretary shall then take such action to
collect as the Secretary determines appropriate.
(2) Limitations on liquidation
In the event of a default by the borrower on
a loan guaranteed under this section involving
a security interest in restricted Indian land,
the mortgagee or the Secretary shall only pursue liquidation after offering to transfer the
account to an eligible tribal member, the
tribe, or the Indian housing authority serving
the tribe or tribes. If the mortgagee or the
Secretary subsequently proceeds to liquidate
the account, the mortgagee or the Secretary
shall not sell, transfer, or otherwise dispose of
or alienate the property except to one of the
entities described in the preceding sentence.
(i) Indian Housing Loan Guarantee Fund
(1) Establishment
There is established in the Treasury of the
United States the Indian Housing Loan Guarantee Fund for the purpose of providing loan
guarantees under this section.
(2) Credits
The Guarantee Fund shall be credited with—
(A) any amounts, claims, notes, mortgages, contracts, and property acquired by
the Secretary under this section, and any
collections and proceeds therefrom;
(B) any amounts appropriated under paragraph (7);
(C) any guarantee fees collected under subsection (d); and
(D) any interest or earnings on amounts
invested under paragraph (4).
(3) Use
Amounts in the Guarantee Fund shall be
available, to the extent provided in appropriation Acts, for—
(A) fulfilling any obligations of the Secretary with respect to loans guaranteed
under this section, including the costs (as
such term is defined in section 661a of title
2) of such loans;
(B) paying taxes, insurance, prior liens, expenses necessary to make fiscal adjustment
in connection with the application and
transmittal of collections, and other expenses and advances to protect the Secretary for loans which are guaranteed under
this section or held by the Secretary;
(C) acquiring such security property at
foreclosure sales or otherwise;
(D) paying administrative expenses in connection with this section; and
(E) reasonable and necessary costs of rehabilitation and repair to properties that the

Page 694

Secretary holds or owns pursuant to this
section.
(4) Investment
Any amounts in the Guarantee Fund determined by the Secretary to be in excess of
amounts currently required to carry out this
section may be invested in obligations of the
United States.
(5) Limitation on commitments to guarantee
loans and mortgages
(A) Requirement of appropriations
The authority of the Secretary to enter
into commitments to guarantee loans under
this section shall be effective for any fiscal
year to the extent or in such amounts as are
or have been provided in appropriations
Acts, without regard to the fiscal year for
which such amounts were appropriated.
(B) Limitations on costs of guarantees
The authority of the Secretary to enter
into commitments to guarantee loans under
this section shall be effective for any fiscal
year only to the extent that amounts in the
Guarantee Fund are or have been made
available in appropriation Acts to cover the
costs (as such term is defined in section 661a
of title 2) of such loan guarantees for such
fiscal year. Any amounts appropriated pursuant to this subparagraph shall remain
available until expended.
(C) Limitation on outstanding aggregate
principal amount
Subject to the limitations in subparagraphs (A) and (B), the Secretary may enter
into commitments to guarantee loans under
this section in each of fiscal years 2008
through 2012 with an aggregate outstanding
principal amount not exceeding such
amount as may be provided in appropriation
Acts for such fiscal year.
(6) Liabilities
All liabilities and obligations of the assets
credited to the Guarantee Fund under paragraph (2)(A) shall be liabilities and obligations
of the Guarantee Fund.
(7) Authorization of appropriations
There are authorized to be appropriated to
the Guarantee Fund to carry out this section
such sums as may be necessary for each of fiscal years 2008 through 2012.
(j) Requirements for standard housing
The Secretary shall, by regulation, establish
housing safety and quality standards for use
under this section. Such standards shall provide
sufficient flexibility to permit the use of various
designs and materials in housing acquired with
loans guaranteed under this section. The standards shall require each dwelling unit in any
housing so acquired to—
(1) be decent, safe, sanitary, and modest in
size and design;
(2) conform with applicable general construction standards for the region;
(3) contain a heating system that—
(A) has the capacity to maintain a minimum temperature in the dwelling of 65 de-

Page 695

TITLE 12—BANKS AND BANKING

grees Fahrenheit during the coldest weather
in the area;
(B) is safe to operate and maintain;
(C) delivers a uniform distribution of heat;
and
(D) conforms to any applicable tribal heating code or, if there is no applicable tribal
code, an appropriate county, State, or National code;
(4) contain a plumbing system that—
(A) uses a properly installed system of piping;
(B) includes a kitchen sink and a partitional bathroom with lavatory, toilet, and
bath or shower; and
(C) uses water supply, plumbing, and sewage disposal systems that conform to any
applicable tribal code or, if there is no applicable tribal code, the minimum standards
established by the applicable county or
State;
(5) contain an electrical system using wiring
and equipment properly installed to safely
supply electrical energy for adequate lighting
and for operation of appliances that conforms
to any applicable tribal code or, if there is no
applicable tribal code, an appropriate county,
State, or National code;
(6) be not less than—
(A)(i) 570 square feet in size, if designed for
a family of not more than 4 persons;
(ii) 850 square feet in size, if designed for a
family of not less than 5 and not more than
7 persons; and
(iii) 1020 square feet in size, if designed for
a family of not less than 8 persons, or
(B) the size provided under the applicable
locally adopted standards for size of dwelling
units;
except that the Secretary, upon the request of
a tribe or Indian housing authority, may
waive the size requirements under this paragraph; and
(7) conform with the energy performance requirements for new construction established
by the Secretary under section 526(a) of the
National Housing Act [12 U.S.C. 1735f–4(a)].
(k) Environmental review
For purposes of environmental,3 review, decisionmaking, and action under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et
seq.) and any other law that furthers the purposes of that Act, a loan guarantee under this
section shall—
(1) be treated as a grant under the Native
American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101 et seq.);
and
(2) be subject to the regulations promulgated
by the Secretary to carry out section 105 of
the Native American Housing Assistance and
Self-Determination Act of 1996 (25 U.S.C. 4115).
(l) Definitions
For purposes of this section:
(1) The term ‘‘family’’ means 1 or more persons maintaining a household, as the Secretary shall by regulation provide.
3 So

in original. The comma probably should not appear.

§ 1715z–13a

(2) The term ‘‘Guarantee Fund’’ means the
Indian Housing Loan Guarantee Fund established under subsection (i).
(3) The term ‘‘Indian’’ means person recognized as being Indian or Alaska Native by an
Indian tribe, the Federal Government, or any
State.
(4) The term ‘‘Indian area’’ means the area
within which an Indian housing authority or
Indian tribe is authorized to provide housing.
(5) The term ‘‘Indian housing authority’’
means any entity that—
(A) is authorized to engage in or assist in
the development or operation of—
(i) low-income housing for Indians; or
(ii) housing subject to the provisions of
this section; and
(B) is established—
(i) by exercise of the power of self-government of an Indian tribe independent of
State law; or
(ii) by operation of State law providing
specifically for housing authorities for Indians, including regional housing authorities in the State of Alaska.
The term includes tribally designated housing
entities under the Native American Housing
Assistance and Self-Determination Act of 1996
[25 U.S.C. 4101 et seq.].
(6) The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.
(7) The term ‘‘standard housing’’ means a
dwelling unit or housing that complies with
the requirements established under subsection
(j).
(8) TRIBE; INDIAN TRIBE.—The term ‘‘tribe’’ or
‘‘Indian tribe’’ means any Indian tribe, band,
nation, or other organized group or community of Indians, including any Alaska Native
village or regional or village corporation as
defined in or established pursuant to the Alaska Native Claims Settlement Act [43 U.S.C.
1601 et seq.], that is recognized as eligible for
the special programs and services provided by
the United States to Indians because of their
status as Indians pursuant to the Indian SelfDetermination and Education Assistance Act
of 1975 [25 U.S.C. 5301 et seq.].
(9) The term ‘‘trust land’’ means land title
to which is held by the United States for the
benefit of an Indian or Indian tribe or title to
which is held by an Indian tribe subject to a
restriction against alienation imposed by the
United States.
(Pub. L. 102–550, title I, § 184, Oct. 28, 1992, 106
Stat. 3739; Pub. L. 104–330, title VII, § 701(a)–(j),
Oct. 26, 1996, 110 Stat. 4048–4050; Pub. L. 105–276,
title V, § 595(e)(11)–(13), Oct. 21, 1998, 112 Stat.
2658; Pub. L. 106–377, § 1(a)(1) [title II, § 227], Oct.
27, 2000, 114 Stat. 1441, 1441A–30; Pub. L. 106–568,
title X, § 1002, Dec. 27, 2000, 114 Stat. 2925; Pub. L.
106–569, title V, § 502, Dec. 27, 2000, 114 Stat. 2961;
Pub. L. 107–292, § 2(d), Nov. 13, 2002, 116 Stat. 2053;
Pub. L. 110–37, § 2, June 18, 2007, 121 Stat. 229;
Pub. L. 113–6, div. F, title VIII, § 1806, Mar. 26,
2013, 127 Stat. 433; Pub. L. 113–235, div. K, title II,
§ 241, Dec. 16, 2014, 128 Stat. 2759.)
REFERENCES IN TEXT
The National Housing Act, referred to in subsec.
(b)(4)(A), is act June 27, 1934, ch. 847, 48 Stat. 1246, as

§ 1715z–13a

TITLE 12—BANKS AND BANKING

amended. Title II of the Act is classified generally to
subchapter II (§ 1707 et seq.) of this chapter. For complete classification of this Act to the Code, see section
1701 of this title and Tables.
The Housing Act of 1949, referred to in subsec.
(b)(4)(C), is act July 15, 1949, ch. 338, 63 Stat. 413, as
amended, which is classified principally to chapter 8A
(§ 1441 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the
Code, see Short Title note set out under section 1441 of
Title 42 and Tables.
The National Environmental Policy Act of 1969, referred to in subsec. (k), is Pub. L. 91–190, Jan. 1, 1970, 83
Stat. 852, as amended, which is classified generally to
chapter 55 (§ 4321 et seq.) of Title 42, The Public Health
and Welfare. For complete classification of this Act to
the Code, see Short Title note set out under section
4321 of Title 42 and Tables.
The Native American Housing Assistance and SelfDetermination Act of 1996, referred to in subsecs. (k)(1)
and (l)(5), is Pub. L. 104–330, Oct. 26, 1996, 110 Stat. 4016,
as amended, which is classified principally to chapter
43 (§ 4101 et seq.) of Title 25, Indians. For complete classification of this Act to the Code, see Short Title note
set out under section 4101 of Title 25 and Tables.
The Alaska Native Claims Settlement Act, referred
to in subsec. (l)(8), is Pub. L. 92–203, Dec. 18, 1971, 85
Stat. 688, as amended, which is classified generally to
chapter 33 (§ 1601 et seq.) of Title 43, Public Lands. For
complete classification of this Act to the Code, see
Short Title note set out under section 1601 of Title 43
and Tables.
The Indian Self-Determination and Education Assistance Act, referred to in subsec. (l)(8), is Pub. L. 93–638,
Jan. 4, 1975, 88 Stat. 2203, which is classified principally
to chapter 46 (§ 5301 et seq.) of Title 25, Indians. For
complete classification of this Act to the Code, see
Short Title note set out under section 5301 of Title 25
and Tables.
CODIFICATION
Section was enacted as part of the Housing and Community Development Act of 1992, and not as part of the
National Housing Act which comprises this chapter.
AMENDMENTS
2014—Subsec. (h)(1)(B). Pub. L. 113–235 inserted after
first sentence ‘‘Exhausting all reasonable possibilities
of collection by the holder of the guarantee shall include a good faith consideration of loan modification as
well as meeting standards for servicing loans in default, as determined by the Secretary.’’
2013—Subsec. (d). Pub. L. 113–6 amended subsec. (d)
generally. Prior to amendment, text read as follows:
‘‘The Secretary shall fix and collect a guarantee fee for
the guarantee of loans under this section, which may
not exceed the amount equal to 1 percent of the principal obligation of the loan. The fee shall be paid by the
lender at time of issuance of the guarantee and shall be
adequate, in the determination of the Secretary, to
cover expenses and probable losses. The Secretary shall
deposit any fees collected under this subsection in the
Indian Housing Loan Guarantee Fund established under
subsection (i) of this section.’’
2007—Subsec. (i)(5)(C),(7). Pub. L. 110–37 substituted
‘‘fiscal years 2008 through 2012’’ for ‘‘fiscal years 1997
through 2007’’.
2002—Subsec. (i)(5)(C), (7). Pub. L. 107–292 substituted
‘‘each of fiscal years 1997 through 2007’’ for ‘‘each fiscal
year’’.
2000—Subsec. (a). Pub. L. 106–377, § 1(a)(1) [title II,
§ 227(1)], struck out ‘‘or as a result of a lack of access
to private financial markets’’ after ‘‘legal status of Indian lands’’.
Subsec. (b)(2). Pub. L. 106–377, § 1(a)(1) [title II,
§ 227(2)], inserted ‘‘refinance,’’ after ‘‘acquire,’’.
Subsec. (i)(5)(C). Pub. L. 106–568, § 1002(1), and Pub. L.
106–569, § 502(1), amended par. (5) identically, adding
subpar. (C) and striking out heading and text of former

Page 696

subpar. (C). Text read as follows: ‘‘Subject to the limitations in subparagraphs (A) and (B), the Secretary
may enter into commitments to guarantee loans under
this section in each of fiscal years 1997, 1998, 1999, 2000,
and 2001 with an aggregate outstanding principal
amount not exceeding $400,000,000 for each such fiscal
year.’’
Subsec. (i)(7). Pub. L. 106–568, § 1002(2), and Pub. L.
106–569, § 502(2), amended par. (7) identically, substituting ‘‘each fiscal year’’ for ‘‘each of fiscal years 1997,
1998, 1999, 2000, and 2001’’.
1998—Subsec. (b)(2). Pub. L. 105–276, § 595(e)(11), struck
out before period at end ‘‘that is under the jurisdiction
of an Indian tribe for which an Indian housing plan has
been submitted and approved pursuant to sections 102
and 103 of the Native American Housing Assistance and
Self-Determination Act of 1996 that provides for the use
of loan guarantees under this section to provide affordable homeownership housing in such areas.’’
Subsec. (i)(5)(C). Pub. L. 105–276, § 595(e)(12), substituted ‘‘not’’ for ‘‘note’’.
Subsecs. (k), (l). Pub. L. 105–276, § 595(e)(13), added subsec. (k) and redesignated former subsec. (k) as (l).
1996—Subsec. (a). Pub. L. 104–330, § 701(a)(1), (b), substituted ‘‘, Indian housing authorities, and Indian
tribes,’’ for ‘‘and Indian housing authorities’’, ‘‘lands or
as a result of a lack of access to private financial markets’’ for ‘‘trust land’’, and ‘‘, Indian housing authority, or Indian tribe’’ for ‘‘or Indian housing authority’’.
Subsec. (b)(1). Pub. L. 104–330, § 701(a)(2), substituted
‘‘, Indian housing authorities, or Indian tribes’’ for ‘‘or
Indian housing authorities’’.
Subsec. (b)(2). Pub. L. 104–330, § 701(c), inserted before
period at end ‘‘that is under the jurisdiction of an Indian tribe for which an Indian housing plan has been
submitted and approved pursuant to sections 102 and
103 of the Native American Housing Assistance and
Self-Determination Act of 1996 that provides for the use
of loan guarantees under this section to provide affordable homeownership housing in such areas’’.
Subsec. (b)(5)(C)(i). Pub. L. 104–330, § 701(i), added cl.
(i) and struck out former cl. (i) which read as follows:
‘‘an amount equal to the sum of (I) 97 percent of $25,000
of the appraised value of the property, as of the date
the loan is accepted for guarantee, and (II) 95 percent
of such value in excess of $25,000; and’’.
Subsec. (h)(1)(A)(i). Pub. L. 104–330, § 701(d)(1)(A),
struck out ‘‘in a court of competent jurisdiction’’ after
‘‘foreclosure proceedings’’ in first sentence.
Subsec. (h)(1)(A)(ii). Pub. L. 104–330, § 701(d)(1)(B),
added cl. (ii) and struck out heading and text of former
cl. (ii). Text read as follows: ‘‘Without seeking a judicial foreclosure (or in any case in which a foreclosure
proceeding initiated under clause (i) continues for a period in excess of 1 year), the holder of the guarantee
may submit to the Secretary a claim for payment
under the guarantee and the Secretary shall only pay
to such holder for a loss on any single loan an amount
equal to 90 percent of the pro rata portion of the
amount guaranteed (as determined under subsection (e)
of this section). The Secretary shall be subrogated to
the rights of the holder of the guarantee and the holder
shall assign the obligation and security to the Secretary.’’
Subsec. (h)(2), (3). Pub. L. 104–330, § 701(d)(2), (3), (e),
redesignated par. (3) as (2), in first sentence substituted
‘‘restricted Indian land, the mortgagee or’’ for ‘‘tribal
allotted or trust land,’’, in second sentence substituted
‘‘mortgagee or the Secretary’’ for ‘‘Secretary’’ in two
places, and struck out heading and text of former par.
(2). Text read as follows: ‘‘Notwithstanding paragraph
(1), upon receiving notice of default on a loan guaranteed under this section from the holder of the guarantee, the Secretary may accept assignment of the loan
if the Secretary determines that the assignment is in
the best interests of the United States. Upon assignment the Secretary shall pay to the holder of the guarantee the pro rata portion of the amount guaranteed
(as determined under subsection (e) of this section).
The Secretary shall be subrogated to the rights of the

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TITLE 12—BANKS AND BANKING

holder of the guarantee and the holder shall assign the
obligation and security to the Secretary.’’
Subsec. (i)(5)(A). Pub. L. 104–330, § 701(j)(1), added subpar. (A) and struck out heading and text of former subpar. (A). Text read as follows: ‘‘The authority of the
Secretary to enter into commitments to guarantee
loans under this section shall be effective for any fiscal
year only to the extent or in such amounts as are or
have been provided in appropriations Acts for such fiscal year.’’
Subsec. (i)(5)(B). Pub. L. 104–330, § 701(j)(2), inserted at
end ‘‘Any amounts appropriated pursuant to this subparagraph shall remain available until expended.’’
Subsec. (i)(5)(C). Pub. L. 104–330, § 701(f), substituted
‘‘1997, 1998, 1999, 2000, and 2001 with an aggregate outstanding principal amount note exceeding $400,000,000
for each such fiscal year’’ for ‘‘1993 and 1994 with an aggregate outstanding principal amount not exceeding
such amount as may be provided in appropriation Acts
for each such year’’.
Subsec. (i)(7). Pub. L. 104–330, § 701(g), substituted
‘‘such sums as may be necessary for each of fiscal years
1997, 1998, 1999, 2000, and 2001’’ for ‘‘such sums as may be
necessary for fiscal year 1993 and $50,000,000 for fiscal
year 1994’’.
Subsec. (k)(4). Pub. L. 104–330, § 701(h)(1), inserted ‘‘or
Indian tribe’’ after ‘‘authority’’.
Subsec. (k)(5). Pub. L. 104–330, § 701(h)(2), inserted concluding provisions, added subpar. (A), and struck out
former subpar. (A) which read as follows: ‘‘is authorized
to engage in or assist in the development or operation
of low-income housing for Indians; and’’.
Subsec. (k)(8). Pub. L. 104–330, § 701(h)(3), added par.
(8) and struck out former par. (8) which read as follows:
‘‘The term ‘tribe’ means any tribe, band, pueblo, group,
community, or nation of Indians or Alaska Natives.’’
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105–276, title V, § 595(f), Oct. 21, 1998, 112 Stat.
2659, provided that: ‘‘The amendments made by this
section [enacting section 4168 of Title 25, Indians,
amending this section, sections 4103, 4111 to 4113, 4131,
4135 to 4139 of Title 25, and sections 1437e and 12899h–1
of Title 42, The Public Health and Welfare, and repealing provisions set out as a note under section 1437 of
Title 42] are made and shall apply beginning upon the
date of the enactment of this Act [Oct. 21, 1998].’’

§ 1715z–13b. Loan guarantees for Native Hawaiian housing
(a) Definitions
In this section:
(1) Department of Hawaiian Home Lands
The term ‘‘Department of Hawaiian Home
Lands’’ means the agency or department of
the government of the State of Hawaii that is
responsible for the administration of the Hawaiian Homes Commission Act, 1920 (42 Stat.
108 et seq.).
(2) Eligible entity
The term ‘‘eligible entity’’ means a Native
Hawaiian family, the Department of Hawaiian
Home Lands, the Office of Hawaiian Affairs,
and private nonprofit or private for-profit organizations experienced in the planning and
development of affordable housing for Native
Hawaiians.
(3) Family
The term ‘‘family’’ means one or more persons maintaining a household, as the Secretary shall by regulation provide.
(4) Guarantee Fund
The term ‘‘Guarantee Fund’’ means the Native Hawaiian Housing Loan Guarantee Fund
established under subsection (j).

§ 1715z–13b

(5) Hawaiian Home Lands
The term ‘‘Hawaiian Home Lands’’ means
lands that—
(A) have the status of Hawaiian Home
Lands under section 204 of the Hawaiian
Homes Commission Act (42 Stat. 110); or
(B) are acquired pursuant to that Act.
(6) Native Hawaiian
The term ‘‘Native Hawaiian’’ means any individual who is—
(A) a citizen of the United States; and
(B) a descendant of the aboriginal people,
who, prior to 1778, occupied and exercised
sovereignty in the area that currently constitutes the State of Hawaii, as evidenced
by—
(i) genealogical records;
(ii) verification by kupuna (elders) or
kama’aina (long-term community residents); or
(iii) birth records of the State of Hawaii.
(7) Office of Hawaiian Affairs
The term ‘‘Office of Hawaiian Affairs’’
means the entity of that name established
under the constitution of the State of Hawaii.
(b) Authority
To provide access to sources of private financing to Native Hawaiian families who otherwise
could not acquire housing financing because of
the unique legal status of the Hawaiian Home
Lands or as a result of a lack of access to private financial markets, the Secretary may guarantee an amount not to exceed 100 percent of the
unpaid principal and interest that is due on an
eligible loan under subsection (c).
(c) Eligible loans
Under this section, a loan is an eligible loan if
that loan meets the following requirements:
(1) Eligible borrowers
The loan is made only to a borrower who is—
(A) a Native Hawaiian family;
(B) the Department of Hawaiian Home
Lands;
(C) the Office of Hawaiian Affairs; or
(D) a private nonprofit organization experienced in the planning and development of
affordable housing for Native Hawaiians.
(2) Eligible housing
(A) In general
The loan will be used to construct, acquire, or rehabilitate not more than 4-family
dwellings that are standard housing and are
located on Hawaiian Home Lands for which
a housing plan described in subparagraph (B)
applies.
(B) Housing plan
A housing plan described in this subparagraph is a housing plan that—
(i) has been submitted and approved by
the Secretary under section 4223 of title 25;
and
(ii) provides for the use of loan guarantees under this section to provide affordable homeownership housing on Hawaiian
Home Lands.

§ 1715z–13b

TITLE 12—BANKS AND BANKING

(3) Security
The loan may be secured by any collateral
authorized under applicable Federal or State
law.
(4) Lenders
(A) In general
The loan shall be made only by a lender
approved by, and meeting qualifications established by, the Secretary, including any
lender described in subparagraph (B), except
that a loan otherwise insured or guaranteed
by an agency of the Federal Government or
made by the Department of Hawaiian Home
Lands from amounts borrowed from the
United States shall not be eligible for a
guarantee under this section.
(B) Approval
The following lenders shall be considered
to be lenders that have been approved by the
Secretary:
(i) Any mortgagee approved by the Secretary for participation in the single family mortgage insurance program under
title II of the National Housing Act [12
U.S.C. 1707 et seq.].
(ii) Any lender that makes housing loans
under chapter 37 of title 38 that are automatically guaranteed under section 3702(d)
of title 38.
(iii) Any lender approved by the Secretary of Agriculture to make guaranteed
loans for single family housing under the
Housing Act of 1949 [42 U.S.C. 1441 et seq.].
(iv) Any other lender that is supervised,
approved, regulated, or insured by any
agency of the Federal Government.
(5) Terms
The loan shall—
(A) be made for a term not exceeding 30
years;
(B) bear interest (exclusive of the guarantee fee under subsection (e) and service
charges, if any) at a rate agreed upon by the
borrower and the lender and determined by
the Secretary to be reasonable, but not to
exceed the rate generally charged in the
area (as determined by the Secretary) for
home mortgage loans not guaranteed or insured by any agency or instrumentality of
the Federal Government;
(C) involve a principal obligation not exceeding—
(i) 97.75 percent of the appraised value of
the property as of the date the loan is accepted for guarantee (or 98.75 percent if the
value of the property is $50,000 or less); or
(ii) the amount approved by the Secretary under this section; and
(D) involve a payment on account of the
property—
(i) in cash or its equivalent; or
(ii) through the value of any improvements to the property made through the
skilled or unskilled labor of the borrower,
as the Secretary shall provide.

Page 698

(d) Certificate of guarantee
(1) Approval process
(A) In general
Before the Secretary approves any loan for
guarantee under this section, the lender
shall submit the application for the loan to
the Secretary for examination.
(B) Approval
If the Secretary approves the application
submitted under subparagraph (A), the Secretary shall issue a certificate under this
subsection as evidence of the loan guarantee
approved.
(2) Standard for approval
The Secretary may approve a loan for guarantee under this section and issue a certificate
under this subsection only if the Secretary determines that there is a reasonable prospect of
repayment of the loan.
(3) Effect
(A) In general
A certificate of guarantee issued under
this subsection by the Secretary shall be
conclusive evidence of the eligibility of the
loan for guarantee under this section and
the amount of that guarantee.
(B) Evidence
The evidence referred to in subparagraph
(A) shall be incontestable in the hands of the
bearer.
(C) Full faith and credit
The full faith and credit of the United
States is pledged to the payment of all
amounts agreed to be paid by the Secretary
as security for the obligations made by the
Secretary under this section.
(4) Fraud and misrepresentation
This subsection may not be construed—
(A) to preclude the Secretary from establishing defenses against the original lender
based on fraud or material misrepresentation; or
(B) to bar the Secretary from establishing
by regulations that are on the date of issuance or disbursement, whichever is earlier,
partial defenses to the amount payable on
the guarantee.
(e) Guarantee fee
(1) In general
The Secretary shall fix and collect a guarantee fee for the guarantee of a loan under this
section, which may not exceed the amount
equal to 1 percent of the principal obligation
of the loan.
(2) Payment
The fee under this subsection shall—
(A) be paid by the lender at time of issuance of the guarantee; and
(B) be adequate, in the determination of
the Secretary, to cover expenses and probable losses.
(3) Deposit
The Secretary shall deposit any fees collected under this subsection in the Native Ha-

Page 699

TITLE 12—BANKS AND BANKING

waiian Housing Loan Guarantee Fund established under subsection (j).
(f) Liability under guarantee
The liability under a guarantee provided under
this section shall decrease or increase on a pro
rata basis according to any decrease or increase
in the amount of the unpaid obligation under
the provisions of the loan agreement involved.
(g) Transfer and assumption
Notwithstanding any other provision of law,
any loan guaranteed under this section, including the security given for the loan, may be sold
or assigned by the lender to any financial institution subject to examination and supervision
by an agency of the Federal Government or of
any State or the District of Columbia.
(h) Disqualification of lenders and civil money
penalties
(1) In general
(A) Grounds for action
The Secretary may take action under subparagraph (B) if the Secretary determines
that any lender or holder of a guarantee certificate under subsection (d)—
(i) has failed—
(I) to maintain adequate accounting
records;
(II) to service adequately loans guaranteed under this section; or
(III) to exercise proper credit or underwriting judgment; or
(ii) has engaged in practices otherwise
detrimental to the interest of a borrower
or the United States.
(B) Actions
Upon a determination by the Secretary
that a holder of a guarantee certificate
under subsection (d) has failed to carry out
an activity described in subparagraph (A)(i)
or has engaged in practices described in subparagraph (A)(ii), the Secretary may—
(i) refuse, either temporarily or permanently, to guarantee any further loans
made by such lender or holder;
(ii) bar such lender or holder from acquiring additional loans guaranteed under
this section; and
(iii) require that such lender or holder
assume not less than 10 percent of any loss
on further loans made or held by the lender or holder that are guaranteed under this
section.
(2) Civil money penalties for intentional violations
(A) In general
The Secretary may impose a civil monetary penalty on a lender or holder of a guarantee certificate under subsection (d) if the
Secretary determines that the holder or
lender has intentionally failed—
(i) to maintain adequate accounting
records;
(ii) to adequately service loans guaranteed under this section; or
(iii) to exercise proper credit or underwriting judgment.

§ 1715z–13b

(B) Penalties
A civil monetary penalty imposed under
this paragraph shall be imposed in the manner and be in an amount provided under section 536 of the National Housing Act [12
U.S.C. 1735f–14] with respect to mortgagees
and lenders under that Act.
(3) Payment on loans made in good faith
Notwithstanding paragraphs (1) and (2), if a
loan was made in good faith, the Secretary
may not refuse to pay a lender or holder of a
valid guarantee on that loan, without regard
to whether the lender or holder is barred under
this subsection.
(i) Payment under guarantee
(1) Lender options
(A) In general
(i) Notification
If a borrower on a loan guaranteed under
this section defaults on the loan, the holder of the guarantee certificate shall provide written notice of the default to the
Secretary.
(ii) Payment
Upon providing the notice required under
clause (i), the holder of the guarantee certificate shall be entitled to payment under
the guarantee (subject to the provisions of
this section) and may proceed to obtain
payment in one of the following manners:
(I) Foreclosure
(aa) In general
The holder of the certificate may initiate foreclosure proceedings (after
providing written notice of that action
to the Secretary).
(bb) Payment
Upon a final order by the court authorizing foreclosure and submission
to the Secretary of a claim for payment under the guarantee, the Secretary shall pay to the holder of the
certificate the pro rata portion of the
amount guaranteed (as determined
pursuant to subsection (f)) plus reasonable fees and expenses as approved by
the Secretary.
(cc) Subrogation
The rights of the Secretary shall be
subrogated to the rights of the holder
of the guarantee. The holder shall assign the obligation and security to the
Secretary.
(II) No foreclosure
(aa) In general
Without seeking foreclosure (or in
any case in which a foreclosure proceeding initiated under clause (i) continues for a period in excess of 1 year),
the holder of the guarantee may submit to the Secretary a request to assign the obligation and security interest to the Secretary in return for payment of the claim under the guarantee.

§ 1715z–13b

TITLE 12—BANKS AND BANKING

The Secretary may accept assignment
of the loan if the Secretary determines
that the assignment is in the best interest of the United States.
(bb) Payment
Upon assignment, the Secretary
shall pay to the holder of the guarantee the pro rata portion of the amount
guaranteed (as determined under subsection (f)).
(cc) Subrogation
The rights of the Secretary shall be
subrogated to the rights of the holder
of the guarantee. The holder shall assign the obligation and security to the
Secretary.
(B) Requirements
Before any payment under a guarantee is
made under subparagraph (A), the holder of
the guarantee shall exhaust all reasonable
possibilities of collection. Upon payment, in
whole or in part, to the holder, the note or
judgment evidencing the debt shall be assigned to the United States and the holder
shall have no further claim against the borrower or the United States. The Secretary
shall then take such action to collect as the
Secretary determines to be appropriate.
(2) Limitations on liquidation
(A) In general
If a borrower defaults on a loan guaranteed
under this section that involves a security
interest in restricted Hawaiian Home Land
property, the mortgagee or the Secretary
shall only pursue liquidation after offering
to transfer the account to another eligible
Hawaiian family or the Department of Hawaiian Home Lands.
(B) Limitation
If, after action is taken under subparagraph (A), the mortgagee or the Secretary
subsequently proceeds to liquidate the account, the mortgagee or the Secretary shall
not sell, transfer, or otherwise dispose of or
alienate the property described in subparagraph (A) except to another eligible Hawaiian family or to the Department of Hawaiian
Home Lands.
(j) Hawaiian Housing Loan Guarantee Fund
(1) Establishment
There is established in the Treasury of the
United States the Hawaiian Housing Loan
Guarantee Fund for the purpose of providing
loan guarantees under this section.
(2) Credits
The Guarantee Fund shall be credited with—
(A) any amount, claims, notes, mortgages,
contracts, and property acquired by the Secretary under this section, and any collections and proceeds therefrom;
(B) any amounts appropriated pursuant to
paragraph (7);
(C) any guarantee fees collected under subsection (e); and
(D) any interest or earnings on amounts
invested under paragraph (4).

Page 700

(3) Use
Amounts in the Guarantee Fund shall be
available, to the extent provided in appropriations Acts, for—
(A) fulfilling any obligations of the Secretary with respect to loans guaranteed
under this section, including the costs (as
that term is defined in section 661a of title 2)
of such loans;
(B) paying taxes, insurance, prior liens, expenses necessary to make fiscal adjustment
in connection with the application and
transmittal of collections, and other expenses and advances to protect the Secretary for loans which are guaranteed under
this section or held by the Secretary;
(C) acquiring such security property at
foreclosure sales or otherwise;
(D) paying administrative expenses in connection with this section; and
(E) reasonable and necessary costs of rehabilitation and repair to properties that the
Secretary holds or owns pursuant to this
section.
(4) Investment
Any amounts in the Guarantee Fund determined by the Secretary to be in excess of
amounts currently required at the time of the
determination to carry out this section may
be invested in obligations of the United
States.
(5) Limitation on commitments to guarantee
loans and mortgages
(A) Requirement of appropriations
The authority of the Secretary to enter
into commitments to guarantee loans under
this section shall be effective for any fiscal
year to the extent, or in such amounts as
are, or have been, provided in appropriations
Acts, without regard to the fiscal year for
which such amounts were appropriated.
(B) Limitations on costs of guarantees
The authority of the Secretary to enter
into commitments to guarantee loans under
this section shall be effective for any fiscal
year only to the extent that amounts in the
Guarantee Fund are or have been made
available in appropriations Acts to cover the
costs (as that term is defined in section 661a
of title 2) of such loan guarantees for such
fiscal year. Any amounts appropriated pursuant to this subparagraph shall remain
available until expended.
(C) Limitation on outstanding aggregate
principal amount
Subject to the limitations in subparagraphs (A) and (B), the Secretary may enter
into commitments to guarantee loans under
this section for each of fiscal years 2001, 2002,
2003, 2004, and 2005 with an aggregate outstanding principal amount not exceeding
$100,000,000 for each such fiscal year.
(6) Liabilities
All liabilities and obligations of the assets
credited to the Guarantee Fund under paragraph (2)(A) shall be liabilities and obligations
of the Guarantee Fund.

Page 701

§ 1715z–14

TITLE 12—BANKS AND BANKING

(7) Authorization of appropriations
There are authorized to be appropriated to
the Guarantee Fund to carry out this section
such sums as may be necessary for each of fiscal years 2001, 2002, 2003, 2004, and 2005.
(k) Requirements for standard housing
(1) In general
The Secretary shall, by regulation, establish
housing safety and quality standards to be applied for use under this section.
(2) Standards
The standards referred to in paragraph (1)
shall—
(A) provide sufficient flexibility to permit
the use of various designs and materials in
housing acquired with loans guaranteed
under this section; and
(B) require each dwelling unit in any housing acquired in the manner described in subparagraph (A) to—
(i) be decent, safe, sanitary, and modest
in size and design;
(ii) conform with applicable general construction standards for the region in which
the housing is located;
(iii) contain a plumbing system that—
(I) uses a properly installed system of
piping;
(II) includes a kitchen sink and a partitional bathroom with lavatory, toilet,
and bath or shower; and
(III) uses water supply, plumbing, and
sewage disposal systems that conform to
any minimum standards established by
the applicable county or State;
(iv) contain an electrical system using
wiring and equipment properly installed to
safely supply electrical energy for adequate lighting and for operation of appliances that conforms to any appropriate
county, State, or national code;
(v) be not less than the size provided
under the applicable locally adopted standards for size of dwelling units, except that
the Secretary, upon request of the Department of Hawaiian Home Lands may waive
the size requirements under this paragraph; and
(vi) conform with the energy performance requirements for new construction
established by the Secretary under section
526(a) of the National Housing Act [12
U.S.C. 1735f–4(a)], unless the Secretary determines that the requirements are not applicable.
(l) Applicability of civil rights statutes
To the extent that the requirements of title VI
of the Civil Rights Act of 1964 (42 U.S.C. 2000d et
seq.) or of the Fair Housing Act [42 U.S.C. 3601
et seq.] apply to a guarantee provided under this
subsection, nothing in the requirements concerning discrimination on the basis of race shall
be construed to prevent the provision of the
guarantee to an eligible entity on the basis that
the entity serves Native Hawaiian families or is
a Native Hawaiian family.
(Pub. L. 102–550, title I, § 184A, as added Pub. L.
106–568, title II, § 204, Dec. 27, 2000, 114 Stat. 2895,

and Pub. L. 106–569, title V, § 514, Dec. 27, 2000,
114 Stat. 2989.)
REFERENCES IN TEXT
The Hawaiian Homes Commission Act, 1920, referred
to in subsec. (a)(1), (5), is act July 9, 1921, ch. 42, 42 Stat.
108, as amended, which was classified generally to sections 691 to 718 of Title 48, Territories and Insular Possessions, and was omitted from the Code. Section 204 of
the Act was classified to section 698 of Title 48.
The National Housing Act, referred to in subsecs.
(c)(4)(B)(i) and (h)(2)(B), is act June 27, 1934, ch. 847, 48
Stat. 1246, as amended, which is classified principally
to this chapter (§ 1701 et seq.). Title II of the Act is classified generally to this subchapter (§ 1707 et seq.). For
complete classification of this Act to the Code, see section 1701 of this title and Tables.
The Housing Act of 1949, referred to in subsec.
(c)(4)(B)(iii), is act July 15, 1949, ch. 338, 63 Stat. 413, as
amended, which is classified principally to chapter 8A
(§ 1441 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the
Code, see Short Title note set out under section 1441 of
Title 42 and Tables.
The Civil Rights Act of 1964, referred to in subsec. (l),
is Pub. L. 88–352, July 2, 1964, 78 Stat. 241, as amended.
Title VI of the Act is classified generally to subchapter
V (§ 2000d et seq.) of chapter 21 of Title 42, The Public
Health and Welfare. For complete classification of this
Act to the Code, see Short Title note set out under section 2000a of Title 42 and Tables.
The Fair Housing Act, referred to in subsec. (l), is
title VIII of Pub. L. 90–284, Apr. 11, 1968, 82 Stat. 81, as
amended, which is classified principally to subchapter
I (§ 3601 et seq.) of chapter 45 of Title 42, The Public
Health and Welfare. For complete classification of this
Act to the Code, see Short Title note set out under section 3601 of Title 42 and Tables.
CODIFICATION
Section was enacted as part of the Housing and Community Development Act of 1992, and not as part of the
National Housing Act which comprises this chapter.
Pub. L. 106–568, § 204, and Pub. L. 106–569, § 514, enacted
substantially identical sections 184A to Pub. L. 102–550.
This section is based on the text of section 184A of Pub.
L. 102–550, as added by Pub. L. 106–569.

§ 1715z–14. Risk-sharing demonstration
(a) Demonstration mortgage risk-sharing program; areas; number of mortgages
The purpose of this section is to authorize a
demonstration mortgage risk-sharing program
designed to test the feasibility of entering into
risk-sharing contracts with private mortgage insurers and with insured community development financial institutions in order to reduce
Government risk and administrative costs, and
to speed mortgage processing. The Secretary
shall limit the demonstration under this section
to not more than four administrative regions of
the Department of Housing and Urban Development, and shall assure that the program is in
the financial interest of the Government and
will not result in loss of employment by any employees of the Department of Housing and Urban
Development before the expiration of the 5-year
period beginning on December 21, 2000. The aggregate number of mortgages for which risk of
nonpayment is shared under this section in any
administrative region of the Department of
Housing and Urban Development in any fiscal
year may not exceed 20 percent of the aggregate
number of mortgages and loans insured by the
Secretary under this subchapter in such region
during the preceding fiscal year.

§ 1715z–14

TITLE 12—BANKS AND BANKING

(b) One- to four-family dwellings; requirements
for private mortgage insurance companies
Notwithstanding any other provision of this
chapter inconsistent with this section, the Secretary is authorized, in providing mortgage insurance with respect to one- to four-family
dwellings under sections 1709(b), 1715y, and
1715z–10 1 of this title, to enter into risk-sharing
contracts with private mortgage insurance companies which have been determined to be qualified insurers under section 1717(b)(2)(C) of this
title and with insured community development
financial institutions. Such contracts shall require private mortgage insurance companies and
insured community development financial institutions to—
(1) assume a secondary percentage of loss on
any mortgage insured pursuant to section
1709(b), 1715y, or 1715z–10 of this title covering
a one- to four-family dwelling, which percentage of loss shall be set forth in the risk-sharing contract, with the first percentage of loss
to be borne by the Secretary; 2
(2) perform or delegate underwriting, credit
approval, appraisal, inspection, commitment,
claims processing, property disposition, or
other functions as the Secretary shall approve
as consistent with the purposes of this section
and shall set forth in the risk-sharing contract.
(c) Required contract provisions
Any contract for risk-sharing under this section shall contain such provisions relating to
the sharing of premiums received by the Secretary with a private mortgage insurer or insured community development financial institution on a sound actuarial basis, establishment of
loss reserves, manner of calculating claims on
such risk-sharing contract, conditions with respect to foreclosure, handling and disposition of
property prior to claim or settlement, rights of
assignees, and other similar matters as the Secretary may prescribe pursuant to regulations.
Pursuant to a contract under this section, a private mortgage insurance company or insured
community development financial institution
shall endorse loans for risk-sharing and take
such other actions on behalf of the Secretary
and in the Secretary’s name as the Secretary
may authorize.
(d) Mortgages offered for inclusion by Secretary
The Secretary shall require any private mortgage insurance company or insured community
development financial institution participating
in the program under this section to provide
risk-sharing for those mortgages offered by the
Secretary for inclusion in the program.
(e) Insured community development financial institution
For purposes of this section, the term ‘‘insured
community development financial institution’’
means a community development financial institution, as such term is defined in section 4702
of this title that is an insured depository institution (as such term is defined in section 1813 of
this title) or an insured credit union (as such
term is defined in section 1752 of this title).
1 See
2 So

References in Text note below.
in original. Probably should be followed by ‘‘and’’.

Page 702

(June 27, 1934, ch. 847, title II, § 249, as added
Pub. L. 98–181, title I [title IV, § 428(a)], Nov. 30,
1983, 97 Stat. 1219; amended Pub. L. 99–120, § 1(g),
Oct. 8, 1985, 99 Stat. 502; Pub. L. 99–156, § 1(g),
Nov. 15, 1985, 99 Stat. 815; Pub. L. 99–219, § 1(g),
Dec. 26, 1985, 99 Stat. 1730; Pub. L. 99–267, § 1(g),
Mar. 27, 1986, 100 Stat. 73; Pub. L. 99–272, title III,
§ 3007(g), Apr. 7, 1986, 100 Stat. 105; Pub. L. 99–289,
§ 1(b), May 2, 1986, 100 Stat. 412; Pub. L. 99–345,
§ 1, June 24, 1986, 100 Stat. 673; Pub. L. 99–430,
Sept. 30, 1986, 100 Stat. 986; Pub. L. 100–122, § 1,
Sept. 30, 1987, 101 Stat. 793; Pub. L. 100–154, Nov.
5, 1987, 101 Stat. 890; Pub. L. 100–170, Nov. 17, 1987,
101 Stat. 914; Pub. L. 100–179, Dec. 3, 1987, 101
Stat. 1018; Pub. L. 100–200, Dec. 21, 1987, 101 Stat.
1327; Pub. L. 106–554, § 1(a)(7) [title I, § 143], Dec.
21, 2000, 114 Stat. 2763, 2763A–618.)
REFERENCES IN TEXT
Section 1715z–10 of this title, referred to in subsec.
(b), was repealed by Pub. L. 110–289, div. B, title I,
§ 2120(a)(7), July 30, 2008, 122 Stat. 2835.
AMENDMENTS
2000—Pub. L. 106–554, § 1(a)(7) [title I, § 143(1)], substituted ‘‘Risk-sharing demonstration’’ for ‘‘Reinsurance contracts’’ in section catchline.
Subsec. (a). Pub. L. 106–554, § 1(a)(7) [title I, § 143(2),
(3)], in heading and first sentence substituted ‘‘risksharing’’ for ‘‘reinsurance’’ wherever appearing, in first
sentence inserted ‘‘and with insured community development financial institutions’’ after ‘‘private mortgage
insurers’’, in second sentence substituted ‘‘four administrative regions’’ for ‘‘two administrative regions’’ and
‘‘the expiration of the 5-year period beginning on December 21, 2000’’ for ‘‘March 15, 1988’’, and in last sentence substituted ‘‘mortgages for which risk of nonpayment is shared’’ for ‘‘mortgages insured’’ and ‘‘20
percent’’ for ‘‘10 percent’’.
Subsec. (b). Pub. L. 106–554, § 1(a)(7) [title I, § 143(2),
(4)(A), (B)], in first sentence of introductory provisions,
substituted ‘‘, in providing’’ for ‘‘to provide’’, ‘‘, to
enter into’’ for ‘‘through’’ and ‘‘risk-sharing’’ for ‘‘reinsurance’’ and inserted ‘‘and with insured community
development financial institutions’’ before period at
end and, in second sentence of introductory provisions,
inserted ‘‘and insured community development financial institutions’’ after ‘‘private mortgage insurance
companies’’.
Subsec. (b)(1). Pub. L. 106–554, § 1(a)(7) [title I,
§ 143(4)(C)], added par. (1) and struck out former par. (1)
which read as follows: ‘‘assume a percentage of loss on
any mortgage insured pursuant to section 1709(b), 1715y,
or 1715z–10 of this title covering a one- to four-family
dwelling, which percentage of loss shall be set forth in
the risk-sharing contract; and’’.
Pub. L. 106–554, § 1(a)(7) [title I, § 143(2)], substituted
‘‘risk-sharing’’ for ‘‘reinsurance’’.
Subsec. (b)(2). Pub. L. 106–554, § 1(a)(7) [title I,
§ 143(4)(D)], substituted ‘‘perform or delegate underwriting,’’ for ‘‘carry out (under appropriate delegation)
such’’ and ‘‘functions as the Secretary’’ for ‘‘function
as the Secretary pursuant to regulations,’’ and inserted
before period at end ‘‘and shall set forth in the risksharing contract’’.
Subsec. (c). Pub. L. 106–554, § 1(a)(7) [title I, § 143(2),
(5)], in first sentence, substituted ‘‘contract for’’ for
‘‘contract of’’ and ‘‘risk-sharing’’ for ‘‘reinsurance’’, inserted ‘‘received by the Secretary with a private mortgage insurer or insured community development financial institution’’ after ‘‘sharing of premiums’’, substituted ‘‘loss reserves’’ for ‘‘insurance reserves’’, ‘‘such
risk-sharing contract’’ for ‘‘such insurance’’, and
‘‘rights of assignees’’ for ‘‘right of assignees’’ and, in
second sentence, inserted ‘‘or insured community development financial institution’’ after ‘‘private mortgage insurance company’’ and substituted ‘‘loans for
risk-sharing’’ for ‘‘loans for insurance’’.

Page 703

§ 1715z–16

TITLE 12—BANKS AND BANKING

Subsec. (d). Pub. L. 106–554, § 1(a)(7) [title I, § 143(2),
(6)], inserted ‘‘or insured community development financial institution’’ after ‘‘private mortgage insurance
company’’ and substituted ‘‘risk-sharing’’ for ‘‘reinsurance’’.
Subsec. (e). Pub. L. 106–554, § 1(a)(7) [title I, § 143(7)],
added subsec. (e).
1987—Subsec. (a). Pub. L. 100–200 substituted ‘‘March
15, 1988’’ for ‘‘December 16, 1987’’.
Pub. L. 100–179 substituted ‘‘December 16, 1987’’ for
‘‘December 2, 1987’’.
Pub. L. 100–170 substituted ‘‘December 2, 1987’’ for
‘‘November 15, 1987’’.
Pub. L. 100–154 substituted ‘‘November 15, 1987’’ for
‘‘October 31, 1987’’.
Pub. L. 100–122 substituted ‘‘October 31, 1987’’ for
‘‘September 30, 1987’’.
1986—Subsec. (a). Pub. L. 99–430 substituted ‘‘September 30, 1987’’ for ‘‘September 30, 1986’’.
Pub. L. 99–345 substituted ‘‘September 30, 1986’’ for
‘‘June 6, 1986’’.
Pub. L. 99–289 substituted ‘‘June 6, 1986’’ for ‘‘April 30,
1986’’.
Pub. L. 99–272 made amendment identical to Pub. L.
99–219. See 1985 Amendment note below.
Pub. L. 99–267 substituted ‘‘April 30, 1986’’ for ‘‘March
17, 1986’’.
1985—Subsec. (a). Pub. L. 99–219 substituted ‘‘March
17, 1986’’ for ‘‘December 15, 1985’’.
Pub. L. 99–156 substituted ‘‘December 15, 1985’’ for
‘‘November 14, 1985’’.
Pub. L. 99–120 substituted ‘‘November 14, 1985’’ for
‘‘September 30, 1985’’.
EVALUATION OF REINSURANCE PROGRAM; REPORT TO
CONGRESS
Pub. L. 98–181, title I [title IV, § 428(b)], Nov. 30, 1983,
97 Stat. 1219, provided that: ‘‘The Secretary of Housing
and Urban Development shall evaluate the reinsurance
program under section 249 of the National Housing Act
[this section] and, not later than March 1, 1985, submit
to the Congress a report setting forth the results of
such evaluation. Such report shall include an evaluation of the possible effect of a reinsurance program on
the characteristics of the pool of mortgages remaining
wholly under the applicable insurance funds and the actuarial soundness of such funds under such conditions.’’

§ 1715z–15. Limitation on prepayment of mortgages on multifamily rental housing
(a) Acceptance of offer to prepay; qualifications
During any period in which an owner of a
multifamily rental housing project is required
to obtain the approval of the Secretary for prepayment of the mortgage, the Secretary shall
not accept an offer to prepay the mortgage on
such project or permit a termination of an insurance contract pursuant to section 1715t of
this title unless—
(1) the Secretary has determined that such
project is no longer meeting a need for rental
housing for lower income families in the area;
(2) the Secretary (A) has determined that
the tenants have been notified of the owner’s
request for approval of a prepayment; (B) has
provided the tenants with an opportunity to
comment on the owner’s request; and (C) has
taken such comments into consideration; and
(3) the Secretary has ensured that there is a
plan for providing relocation assistance for
adequate, comparable housing for any lower
income tenant who will be displaced as a result of the prepayment and withdrawal of the
project from the program.
(b) Approval prior to foreclosure
A mortgagee may foreclose the mortgage on,
or acquire by deed in lieu of foreclosure, any eli-

gible low-income housing project (as such term
is defined in section 4119 of this title) only if the
mortgagee also conveys title to the project to
the Secretary in connection with a claim for insurance benefits.
(c) ‘‘Lower income families’’ defined
For purposes of this section, the term ‘‘lower
income families’’ has the meaning given such
term in section 1437a(b)(2) of title 42.
(June 27, 1934, ch. 847, title II, § 250, as added
Pub. L. 98–181, title I [title IV, § 433], Nov. 30,
1983, 97 Stat. 1221; amended Pub. L. 100–242, title
II, § 261, Feb. 5, 1988, 101 Stat. 1890; Pub. L.
101–235, title II, § 202(d)(1), Dec. 15, 1989, 103 Stat.
2037; Pub. L. 101–625, title VI, § 602(b), (c), Nov. 28,
1990, 104 Stat. 4277.)
AMENDMENTS
1990—Subsec. (b). Pub. L. 101–625, § 602(b), amended
subsec. (b) generally. Prior to amendment, subsec. (b)
read as follows: ‘‘In the case of a project assisted under
section 1715z–1 of this title or the proviso to section
1715l(d)(5) of this title, section 101 of the Housing and
Urban Development Act of 1965, or section 1701q of this
title where the owner has the right to prepay the mortgage covering the assisted project without the Secretary’s approval, the Secretary shall give a priority
for additional assistance under section 1437f of title 42
and section 201 of the Housing and Community Development Amendments of 1978 to tenants and applicants
to become tenants of the project, if—
‘‘(1) funds to provide such additional assistance are
available; and
‘‘(2) the Secretary determines that making such additional assistance available to the project is necessary to prevent the owner from prepaying the mortgage.’’
Subsecs. (c), (d). Pub. L. 101–625, § 602(c), redesignated
subsec. (d) as (c) and struck out former subsec. (c)
which read as follows: ‘‘Any owner of a multifamily
rental housing project referred to in subsection (b) of
this section who receives additional assistance under
section 1437f of title 42 under the priority established in
subsection (b) of this section shall—
‘‘(1) fully utilize the assistance which is available;
‘‘(2) grant a priority to applicants to become tenants who have the lowest incomes; and
‘‘(3) maintain the low-income character of the
project for a period at least equal to the remaining
term of the project mortgage to the extent that assistance is provided.’’
1989—Subsec. (a). Pub. L. 101–235 inserted ‘‘or permit
a termination of an insurance contract pursuant to section 1715t of this title’’ after second reference to
‘‘project’’.
1988—Subsec. (a)(1). Pub. L. 100–242 struck out ‘‘or
that the needs of lower income families in such project
can more efficiently and effectively be met through
other Federal housing assistance taking into account
the remaining time the project could meet such needs’’
after ‘‘families in the area’’.

§ 1715z–16. Adjustable rate single family mortgages
(a) One- to four-family dwellings; maximum term
of mortgage; adjustments in effective rate of
interest
The Secretary may insure under any provision
of this subchapter a mortgage involving property upon which there is located a dwelling designed principally for occupancy by one to four
families, where the mortgage provides for periodic adjustments by the mortgagee in the effective rate of interest charged. Such interest rate

§ 1715z–17

TITLE 12—BANKS AND BANKING

adjustments may be accomplished through adjustments in the monthly payment amount, the
outstanding principal balance, or the mortgage
term, or a combination of these factors, except
that in no case may any extension of a mortgage
term result in a total term in excess of 40 years.
Adjustments in the effective rate of interest
shall correspond to a specified national interest
rate index approved in regulations by the Secretary, information on which is readily accessible to mortgagors from generally available
published sources. Adjustments in the effective
rate of interest shall (1) be made on an annual
basis; (2) be limited, with respect to any single
interest rate increase, to no more than 1 percent
on the outstanding loan balance; and (3) be limited to a maximum increase of 5 percentage
points above the initial contract interest rate
over the term of the mortgage.
(b) Written explanation of mortgage features
The Secretary shall require that the mortgagee make available to the mortgagor, at the
time of loan application, a written explanation
of the features of an adjustable rate mortgage
consistent with the disclosure requirements applicable to variable rate mortgages secured by a
principal dwelling under the Truth in Lending
Act [15 U.S.C. 1601 et seq.].
(c) Number of mortgages and loans
The aggregate number of mortgages and loans
insured under this section in any fiscal year
may not exceed 30 percent of the aggregate number of mortgages and loans insured by the Secretary under this subchapter during the preceding fiscal year.
(d) Adjustable rate mortgage with initial fixed
rate of interest
(1) The Secretary may insure under this subsection a mortgage that meets the requirements
of subsection (a), except that the effective rate
of interest—
(A) shall be fixed for a period of not less
than the first 3 years of the mortgage term;
(B) shall be adjusted by the mortgagee initially upon the expiration of such period and
annually thereafter; and
(C) in the case of the initial interest rate adjustment, is subject to the 1 percent limitation only if the interest rate remained fixed
for 3 or fewer years.
(2) The disclosure required under subsection
(b) shall be required for a mortgage insured
under this subsection.
(June 27, 1934, ch. 847, title II, § 251, as added
Pub. L. 98–181, title I [title IV, § 443], Nov. 30,
1983, 97 Stat. 1225; amended Pub. L. 100–242, title
IV, § 415(a), Feb. 5, 1988, 101 Stat. 1907; Pub. L.
107–73, title II, § 206, Nov. 26, 2001, 115 Stat. 674;
Pub. L. 108–186, title III, § 301(a), Dec. 16, 2003, 117
Stat. 2692.)
REFERENCES IN TEXT
The Truth in Lending Act, referred to in subsec. (b),
is title I of Pub. L. 90–321, May 29, 1968, 82 Stat. 146, as
amended, which is classified generally to subchapter I
(§ 1601 et seq.) of chapter 41 of Title 15, Commerce and
Trade. For complete classification of this Act to the
Code, see Short Title note set out under section 1601 of
Title 15 and Tables.

Page 704
AMENDMENTS

2003—Subsec. (d)(1)(C). Pub. L. 108–186 substituted ‘‘3’’
for ‘‘five’’
2001—Subsec. (b). Pub. L. 107–73, § 206(1), substituted
‘‘require that the mortgagee make available to the
mortgagor, at the time of loan application, a written
explanation of the features of an adjustable rate mortgage consistent with the disclosure requirements applicable to variable rate mortgages secured by a principal
dwelling under the Truth in Lending Act’’ for ‘‘issue
regulations requiring that the mortgagee make available to the mortgagor, at the time of loan application,
a written explanation of the features of the adjustable
rate mortgage, including a hypothetical payment
schedule that displays the maximum potential increases in monthly payments to the mortgagor over
the first 5 years of the mortgage term’’.
Subsec. (d). Pub. L. 107–73, § 206(2), added subsec. (d).
1988—Subsec. (c). Pub. L. 100–242 amended subsec. (c)
generally. Prior to amendment, subsec. (c) read as follows: ‘‘The aggregate number of mortgages and loans
insured under this section, section 1715z–10(c) of this
title, and section 1715z–17 of this title in any fiscal year
may not exceed 10 percent of the aggregate number of
mortgages and loans insured by the Secretary under
this subchapter during the preceding fiscal year.’’
EFFECTIVE DATE OF 2003 AMENDMENT
Pub. L. 108–186, title III, § 301(b), Dec. 16, 2003, 117
Stat. 2692, provided that: ‘‘The amendment made by
subsection (a) [amending this section] shall apply to
mortgages executed on or after the date of the enactment of this title [Dec. 16, 2003].’’

§ 1715z–17. Shared appreciation mortgages for
single family housing
(a) One- to four-family dwellings; requirements
Notwithstanding any provision of this subchapter that is inconsistent with this section,
the Secretary may insure, under any provision
of this subchapter providing for insurance of
mortgages on properties upon which there is located a dwelling designed principally for occupancy by one to four families, a mortgage secured by a first lien on such a property or on the
stock allocated to a dwelling unit in a residential cooperative housing corporation, which—
(1) provides for the mortgagee to share in a
predetermined percentage of the property’s or
stock’s net appreciated value;
(2) bears interest at a rate which meets criteria prescribed by the Secretary;
(3) provides for amortization over a period of
not to exceed 30 years, but the actual term of
the mortgage (excluding any refinancing) may
be not less than 10 nor more than 30 years, and
contains such provisions relating to refinancing of the principal balance of the mortgage
and any contingent deferred interest as the
Secretary may provide; and
(4) meets such other conditions as the Secretary may require by regulation.
(b) Payment of mortgagee’s share of net appreciated value; ‘‘net appreciated value’’ defined
The mortgagee’s share of a property’s or
stock’s net appreciated value shall be payable
upon sale or transfer (as defined by the Secretary) of the property or stock or payment in
full of the mortgage, whichever occurs first. For
purposes of this section, the term ‘‘net appreciated value’’ means the amount by which the
sales price of the property or stock (less the
mortgagor’s selling costs) exceeds the value of

Page 705

the property or stock at the time the commitment to insure is issued (with adjustments for
capital improvements stipulated in the loan
contract). If there has been no sale or transfer at
the time the mortgagee’s share of net appreciated value becomes payable, the sales price for
purposes of this section shall be determined by
means of an appraisal conducted in accordance
with procedures approved by the Secretary and
provided for in the mortgage.
(c) Entitlement of mortgagee upon default
In the event of a default, the mortgagee shall
be entitled to receive the benefits of insurance
in accordance with section 1710(a) of this title,
but such insurance benefits shall not include the
mortgagee’s share of net appreciated value. The
term ‘‘original principal obligation of the mortgage’’ as used in section 1710 of this title shall
not include the mortgagee’s share of net appreciated value.
(d) Inapplicability of State constitution, statute,
etc., limiting or prohibiting increases in outstanding loan balance
Mortgages insured pursuant to this section
which contain provisions for sharing appreciation or which otherwise require or permit increases in the outstanding loan balance which
are authorized under this section or under applicable regulations shall not be subject to any
State constitution, statute, court decree, common law, rule, or public policy limiting or prohibiting increases in the outstanding loan balance after execution of the mortgage.
(e) Encouraged use of insurance by low and moderate income families
In carrying out the provisions of this section,
the Secretary shall encourage the use of insurance under this section by low and moderate income tenants who would otherwise be displaced
by the conversion of their rental housing to condominium or cooperative ownership.
(f) Consumer protections and disclosure requirements
The Secretary shall prescribe adequate consumer protections and disclosure requirements
with respect to mortgages insured under this
section, and may prescribe such other terms and
conditions as may be appropriate to carry out
the provisions of this section.
(g) Number of mortgages and loans
The aggregate number of mortgages and loans
insured under this section and section
1715z–10(c) 1 of this title in any fiscal year may
not exceed 10 percent of the aggregate number of
mortgages and loans insured by the Secretary
under this subchapter during the preceding fiscal year.
(June 27, 1934, ch. 847, title II, § 252, as added
Pub. L. 98–181, title I [title IV, § 444], Nov. 30,
1983, 97 Stat. 1225; amended Pub. L. 100–242, title
IV, § 415(b)(2), Feb. 5, 1988, 101 Stat. 1907.)
REFERENCES IN TEXT
Section 1715z–10(c) of this title, referred to in subsec.
(g), was repealed by Pub. L. 110–289, div. B, title I,
§ 2120(a)(7), July 30, 2008, 122 Stat. 2835.
1 See

§ 1715z–18

TITLE 12—BANKS AND BANKING

References in Text note below.

AMENDMENTS
1988—Subsec. (g). Pub. L. 100–242 struck out reference
to section 1715z–16 of this title.

§ 1715z–18. Shared appreciation mortgages for
multifamily housing
(a) Five or more family units; requirements
Notwithstanding any provision of this subchapter that is inconsistent with this section,
the Secretary may insure, under any provision
of this subchapter providing for insurance of
mortgages on properties including 5 or more
family units, a mortgage secured by a first lien
on the property that (1) provides for the mortgagee to share in a predetermined percentage of
the property’s net appreciated value; and (2)
meets such other conditions, including limitations on the rate of interest which may be
charged, as the Secretary may require by regulation.
(b) Payment of mortgagee’s share of net appreciated value; term of mortgage; repayment;
‘‘net appreciated value’’ defined
The mortgagee’s share of a property’s net appreciated value shall be payable upon maturity
or upon payment in full of the loan or sale or
transfer (as defined by the Secretary) of the
property, whichever occurs first. The term of
the mortgage shall not be less than 15 years, and
shall be repayable in equal monthly installments of principal and fixed interest during the
mortgage term in an amount which would be
sufficient to retire a debt with the same principal and fixed interest rate over a period not
exceeding 30 years. In the case of a mortgage
which will not be completely amortized during
the mortgage term, the principal obligation of
the mortgage may not exceed 85 percent of the
estimated value of the property or project. For
purposes of this section, the term ‘‘net appreciated value’’ means the amount by which the
sales price of the property (less the mortgagor’s
selling costs) exceeds the actual project cost
after completion, as approved by the Secretary.
If there has been no sale or transfer at the time
the mortgagee’s share of net appreciated value
becomes payable, the sales price for purposes of
this section shall be determined by means of an
appraisal conducted in accordance with procedures approved by the Secretary and provided
for in the mortgage.
(c) Entitlement of mortgagee upon default
In the event of a default, the mortgagee shall
be entitled to receive the benefits of insurance
in accordance with section 1713 of this title, but
such insurance benefits shall not include the
mortgagee’s share of net appreciated value. The
term ‘‘original principal face amount of the
mortgage’’ as used in section 1713 of this title
shall not include the mortgagee’s share of net
appreciated value.
(d) Maximum percentage of net appreciated
value; disclosure requirements
The Secretary shall establish by regulation
the maximum percentage of net appreciated
value which may be payable to a mortgagee as
the mortgagee’s share. The Secretary shall also
establish disclosure requirements applicable to

§ 1715z–19

TITLE 12—BANKS AND BANKING

mortgagees making mortgage loans pursuant to
this section, to assure that mortgagors are informed of the characteristics of such mortgages.
(e) Inapplicability of State constitution, statute,
etc., limiting or prohibiting increases in outstanding loan balance
Mortgages insured pursuant to this section
which contain provisions for sharing appreciation or which otherwise require or permit increases in the outstanding loan balance which
are authorized under this section or under applicable regulations shall not be subject to any
State constitution, statute, court decree, common law, rule, or public policy limiting or prohibiting increases in the outstanding loan balance after execution of the mortgage.
(f) Number of dwelling units
The number of dwelling units included in properties covered by mortgages insured pursuant to
this section in any fiscal year may not exceed
5,000.
(June 27, 1934, ch. 847, title II, § 253, as added
Pub. L. 98–181, title I [title IV, § 445], Nov. 30,
1983, 97 Stat. 1226; amended Pub. L. 100–242, title
IV, § 429(j), Feb. 5, 1988, 101 Stat. 1919.)
AMENDMENTS
1988—Subsec. (b). Pub. L. 100–242, § 429(j)(1), substituted ‘‘For purposes of this section, the term ‘net appreciated value’ means the amount by which the sales
price of the property (less the mortgagor’s selling
costs) exceeds the actual project cost after completion,
as approved by the Secretary’’ for ‘‘For purposes of this
section, the term ‘net appreciated value’ means the
amount by which the sales price of the property (less
the mortgagor’s selling costs) exceeds the value (or replacement cost, as appropriate) of the property at the
time the commitment to insure is issued (with adjustments for capital improvements stipulated in the loan
contract)’’.
Subsec. (c). Pub. L. 100–242, § 429(j)(2), (3), substituted
‘‘in accordance with section 1713 of this title’’ for ‘‘in
accordance with section 1710 of this title’’ and ‘‘The
term ‘original principal face amount of the mortgage’
as used in section 1713 of this title shall not include the
mortgagee’s share of net appreciated value’’ for ‘‘The
term ‘original principal obligation of the mortgage’ as
used in section 1710(a) of this title shall not include the
mortgagee’s share of net appreciated value’’.

§ 1715z–19. Equity skimming penalty
(a) In general
Whoever, as an owner, agent, or manager, or
who is otherwise in custody, control, or possession of a multifamily project or a 1- to 4-family
residence that is security for a mortgage note
that is described in subsection (b), willfully uses
or authorizes the use of any part of the rents,
assets, proceeds, income, or other funds derived
from property covered by that mortgage note
for any purpose other than to meet reasonable
and necessary expenses that include expenses
approved by the Secretary if such approval is required, in a period during which the mortgage
note is in default or the project is in a nonsurplus cash position, as defined by the regulatory
agreement covering the property, or the mortgagor has failed to comply with the provisions of
such other form of regulatory control imposed
by the Secretary, shall be fined not more than
$500,000, imprisoned not more than 5 years, or
both.

Page 706

(b) Mortgage notes described
For purposes of subsection (a), a mortgage
note is described in this subsection if it—
(1) is insured, acquired, or held by the Secretary pursuant to this chapter;
(2) is made pursuant to section 1701q of this
title (including property still subject to section 1701q program requirements that existed
before November 28, 1990); or
(3) is insured or held pursuant to section
1715z–22 of this title, but is not reinsured under
section 1715z–22 of this title.
(June 27, 1934, ch. 847, title II, § 254, as added
Pub. L. 100–242, title IV, § 416(b), Feb. 5, 1988, 101
Stat. 1908; amended Pub. L. 105–65, title V, § 552,
Oct. 27, 1997, 111 Stat. 1412.)
AMENDMENTS
1997—Pub. L. 105–65 amended section generally. Prior
to amendment, section read as follows: ‘‘Whoever, as an
owner, agent, or manager, or who is otherwise in custody, control, or possession of property that is security
for a mortgage note that is insured, acquired, or held
by the Secretary pursuant to section 1709, 1713, 1715e,
1715k, 1715l(d)(3), 1715l(d)(4), 1715n(f), 1715v, 1715w, 1715y,
1715z–1, 1715z–3(c), 1715z–6, 1715z–7, 1715z–9, 1743, or
1748h–2 of this title, or subchapter IX–B of this chapter,
or is made pursuant to section 1701q of this title, willfully uses or authorizes the use of any part of the rents,
assets, proceeds, income or other funds derived from
property covered by such mortgage note during a period when the mortgage note is in default or the project
is in a nonsurplus cash position as defined by the regulatory agreement covering such property, for any purpose other than to meet actual or necessary expenses
that include expenses approved by the Secretary if such
approval is required under the terms of the regulatory
agreement, shall be fined not more than $250,000 or imprisoned not more than 5 years, or both.’’

§ 1715z–20. Insurance of home equity conversion
mortgages for elderly homeowners
(a) Purpose
The purpose of this section is to authorize the
Secretary to carry out a program of mortgage
insurance designed—
(1) to meet the special needs of elderly
homeowners by reducing the effect of the economic hardship caused by the increasing costs
of meeting health, housing, and subsistence
needs at a time of reduced income, through
the insurance of home equity conversion mortgages to permit the conversion of a portion of
accumulated home equity into liquid assets;
and
(2) to encourage and increase the involvement of mortgagees and participants in the
mortgage markets in the making and servicing of home equity conversion mortgages for
elderly homeowners.
(b) Definitions
For purposes of this section:
(1) The terms ‘‘elderly homeowner’’ and
‘‘homeowner’’ mean any homeowner who is, or
whose spouse is, at least 62 years of age or
such higher age as the Secretary may prescribe.
(2) The terms ‘‘mortgagee’’, ‘‘mortgagor’’,
‘‘real estate,’’ 1 and ‘‘State’’ have the meanings
given such terms in section 1707 of this title.
1 So in original. The comma probably should follow the closed
quotes.

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TITLE 12—BANKS AND BANKING

(3) The term ‘‘home equity conversion mortgage’’ means a first mortgage which provides
for future payments to the homeowner based
on accumulated equity and which a housing
creditor (as defined in section 3802(2) of this
title) is authorized to make (A) under any law
of the United States (other than section 3803 of
this title) or applicable agency regulations
thereunder; (B) in accordance with section 3803
of this title, notwithstanding any State constitution, law, or regulation; or (C) under any
State constitution, law, or regulation.
(4) MORTGAGE.—The term ‘‘mortgage’’ means
a first mortgage or first lien on real estate, in
fee simple, a first or subordinate mortgage or
lien on all stock allocated to a dwelling unit
in a residential cooperative housing corporation, or a first mortgage or first lien on a
leasehold—
(A) under a lease for not less than 99 years
that is renewable; or
(B) under a lease that has a term that ends
no earlier than the minimum number of
years, as specified by the Secretary, beyond
the actuarial life expectancy of the mortgagor or comortgagor, whichever is the later
date.
(5) FIRST MORTGAGE.—The term ‘‘first mortgage’’ means such classes of first liens as are
commonly given to secure advances on, or the
unpaid purchase price of, real estate or a first
or subordinate lien on all stock allocated to a
dwelling unit in a residential cooperative
housing corporation, under the laws of the
State in which the real estate or dwelling unit
is located, together with the credit instruments, if any, secured thereby.
(c) Insurance authority
The Secretary may, upon application by a
mortgagee, insure any home equity conversion
mortgage eligible for insurance under this section and, upon such terms and conditions as the
Secretary may prescribe, make commitments
for the insurance of such mortgages prior to the
date of their execution or disbursement to the
extent that the Secretary determines such
mortgages—
(1) have promise for improving the financial
situation or otherwise meeting the special
needs of elderly homeowners;
(2) will include appropriate safeguards for
mortgagors to offset the special risks of such
mortgages; and
(3) have a potential for acceptance in the
mortgage market.
(d) Eligibility requirements
To be eligible for insurance under this section,
a mortgage shall—
(1) have been originated by a mortgagee approved by the Secretary;
(2) have been executed by a mortgagor who—
(A) qualifies as an elderly homeowner;
(B) has received adequate counseling, as
provided in subsection (f), by an independent
third party that is not, either directly or indirectly, associated with or compensated by
a party involved in—
(i) originating or servicing the mortgage;
(ii) funding the loan underlying the
mortgage; or

§ 1715z–20

(iii) the sale of annuities, investments,
long-term care insurance, or any other
type of financial or insurance product;
(C) has received full disclosure, as prescribed by the Secretary, of all costs charged
to the mortgagor, including costs of estate
planning, financial advice, and other services that are related to the mortgage but are
not required to obtain the mortgage, which
disclosure shall clearly state which charges
are required to obtain the mortgage and
which are not required to obtain the mortgage; and
(D) meets any additional requirements
prescribed by the Secretary;
(3) be secured by a dwelling that is designed
principally for a 1- to 4-family residence in
which the mortgagor occupies 1 of the units;
(4) provide that prepayment, in whole or in
part, may be made without penalty at any
time during the period of the mortgage;
(5) provide for a fixed or variable interest
rate or future sharing between the mortgagor
and the mortgagee of the appreciation in the
value of the property, as agreed upon by the
mortgagor and the mortgagee;
(6) contain provisions for satisfaction of the
obligation satisfactory to the Secretary;
(7) provide that the homeowner shall not be
liable for any difference between the net
amount of the remaining indebtedness of the
homeowner under the mortgage and the
amount recovered by the mortgagee from—
(A) the net sales proceeds from the dwelling that are subject to the mortgage (based
upon the amount of the accumulated equity
selected by the mortgagor to be subject to
the mortgage, as agreed upon by the mortgagor and mortgagee); or
(B) the insurance benefits paid pursuant to
subsection (i)(1)(C);
(8) contain such terms and provisions with
respect to insurance, repairs, alterations, payment of taxes, default reserve, delinquency
charges, foreclosure proceedings, anticipation
of maturity, additional and secondary liens,
and other matters as the Secretary may prescribe;
(9) provide for future payments to the mortgagor based on accumulated equity (minus
any applicable fees and charges), according to
the method that the mortgagor shall select
from among the methods under this paragraph, by payment of the amount—
(A) based upon a line of credit;
(B) on a monthly basis over a term specified by the mortgagor;
(C) on a monthly basis over a term specified by the mortgagor and based upon a line
of credit;
(D) on a monthly basis over the tenure of
the mortgagor;
(E) on a monthly basis over the tenure of
the mortgagor and based upon a line of credit; or
(F) on any other basis that the Secretary
considers appropriate;
(10) provide that the mortgagor may convert
the method of payment under paragraph (9) to

§ 1715z–20

TITLE 12—BANKS AND BANKING

any other method during the term of the
mortgage, except that in the case of a fixed
rate mortgage, the Secretary may, by regulation, limit such convertibility; and
(11) have been made with such restrictions as
the Secretary determines to be appropriate to
ensure that the mortgagor does not fund any
unnecessary or excessive costs for obtaining
the mortgage, including any costs of estate
planning, financial advice, or other related
services.
(e) Disclosures by mortgagee
The Secretary shall require each mortgagee of
a mortgage insured under this section to make
available to the homeowner—
(1) at the time of the loan application, a
written list of the names and addresses of
third-party information sources who are approved by the Secretary as responsible and
able to provide the information required by
subsection (f);
(2) at least 10 days prior to loan closing, a
statement informing the homeowner that the
liability of the homeowner under the mortgage is limited and explaining the homeowner’s rights, obligations, and remedies with
respect to temporary absences from the home,
late payments, and payment default by the
lender, all conditions requiring satisfaction of
the loan obligation, and any other information
that the Secretary may require;
(3) on an annual basis (but not later than
January 31 of each year), a statement summarizing the total principal amount paid to the
homeowner under the loan secured by the
mortgage, the total amount of deferred interest added to the principal, and the outstanding
loan balance at the end of the preceding year;
and
(4) prior to loan closing, a statement of the
projected total cost of the mortgage to the
homeowner based on the projected total future
loan balance (such cost expressed as a single
average annual interest rate for at least 2 different appreciation rates for the term of the
mortgage) for not less than 2 projected loan
terms, as the Secretary shall determine, which
shall include—
(A) the cost for a short-term mortgage;
and
(B) the cost for a loan term equaling the
actuarial life expectancy of the mortgagor.
(f) Counseling services and information for mortgagors
The Secretary shall provide or cause to be provided adequate counseling for the mortgagor, as
described in subsection (d)(2)(B). Such counseling shall be provided by counselors that meet
qualification standards and follow uniform
counseling protocols. The qualification standards and counseling protocols shall be established by the Secretary within 12 months of July
30, 2008. The protocols shall require a qualified
counselor to discuss with each mortgagor information which shall include—
(1) options other than a home equity conversion mortgage that are available to the homeowner, including other housing, social service,
health, and financial options;
(2) other home equity conversion options
that are or may become available to the home-

Page 708

owner, such as sale-leaseback financing, deferred payment loans, and property tax deferral;
(3) the financial implications of entering
into a home equity conversion mortgage;
(4) a disclosure that a home equity conversion mortgage may have tax consequences, affect eligibility for assistance under Federal
and State programs, and have an impact on
the estate and heirs of the homeowner; and
(5) any other information that the Secretary
may require.
The Secretary shall consult with consumer
groups, industry representatives, representatives of counseling organizations, and other interested parties to identify alternative approaches to providing consumer information required by this subsection that may be feasible
and desirable for home equity conversion mortgages insured under this section and other types
of reverse mortgages. The Secretary may, in
lieu of providing the consumer education required by this subsection, adopt alternative approaches to consumer education that may be developed as a result of such consultations, but
only if the alternative approaches provide all of
the information specified in this subsection.
(g) Limitation on insurance authority
The aggregate number of mortgages insured
under this section may not exceed 275,000. In no
case may the benefits of insurance under this
section exceed the maximum dollar amount limitation established under section 1454(a)(2) of
this title for a 1-family residence.
(h) Administrative authority
The Secretary may—
(1) enter into such contracts and agreements
with Federal, State, and local agencies, public
and private entities, and such other persons as
the Secretary determines to be necessary or
desirable to carry out the purposes of this section;
(2) make such investigations and studies of
data, and publish and distribute such reports,
as the Secretary determines to be appropriate;
and
(3) establish, by notice or mortgagee letter,
any additional or alternative requirements
that the Secretary, in the Secretary’s discretion, determines are necessary to improve the
fiscal safety and soundness of the program authorized by this section, which requirements
shall take effect upon issuance.
(i) Protection of homeowner and lender
(1) Notwithstanding any other provision of
law, and in order to further the purposes of the
program authorized in this section, the Secretary shall take any action necessary—
(A) to provide any mortgagor under this section with funds to which the mortgagor is entitled under the insured mortgage or ancillary
contracts but that the mortgagor has not received because of the default of the party responsible for payment;
(B) to obtain repayment of disbursements
provided under subparagraph (A) from any
source; and
(C) to provide any mortgagee under this section with funds not to exceed the limitations

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TITLE 12—BANKS AND BANKING

in subsection (g) to which the mortgagee is entitled under the terms of the insured mortgage
or ancillary contracts authorized in this section.
(2) Actions under paragraph (1) may include—
(A) disbursing funds to the mortgagor or
mortgagee from the Mutual Mortgage Insurance Fund;
(B) accepting an assignment of the insured
mortgage notwithstanding that the mortgagor
is not in default under its terms, and calculating the amount and making the payment of
the insurance claim on such assigned mortgage;
(C) requiring a subordinate mortgage from
the mortgagor at any time in order to secure
repayments of any funds advanced or to be advanced to the mortgagor;
(D) requiring a subrogation to the Secretary
of the rights of any parties to the transaction
against any defaulting parties; and
(E) imposing premium charges.
(j) Safeguard to prevent displacement of homeowner
The Secretary may not insure a home equity
conversion mortgage under this section unless
such mortgage provides that the homeowner’s
obligation to satisfy the loan obligation is deferred until the homeowner’s death, the sale of
the home, or the occurrence of other events
specified in regulations of the Secretary. For
purposes of this subsection, the term ‘‘homeowner’’ includes the spouse of a homeowner.
Section 1647(b) of title 15 and any implementing
regulations issued by the Board of Governors of
the Federal Reserve System shall not apply to a
mortgage insured under this section.
(k) Insurance authority for refinancings
(1) In general
The Secretary may, upon application by a
mortgagee, insure under this subsection any
mortgage given to refinance an existing home
equity conversion mortgage insured under this
section.
(2) Anti-churning disclosure
The Secretary shall, by regulation, require
that the mortgagee of a mortgage insured
under this subsection, provide to the mortgagor, within an appropriate time period and in
a manner established in such regulations, a
good faith estimate of: (A) the total cost of
the refinancing; and (B) the increase in the
mortgagor’s principal limit as measured by
the estimated initial principal limit on the
mortgage to be insured under this subsection
less the current principal limit on the home
equity conversion mortgage that is being refinanced and insured under this subsection.
(3) Waiver of counseling requirement
The mortgagor under a mortgage insured
under this subsection may waive the applicability, with respect to such mortgage, of the
requirements under subsection (d)(2)(B) (relating to third party counseling), but only if—
(A) the mortgagor has received the disclosure required under paragraph (2);
(B) the increase in the principal limit described in paragraph (2) exceeds the amount

§ 1715z–20

of the total cost of refinancing (as described
in such paragraph) by an amount to be determined by the Secretary; and
(C) the time between the closing of the
original home equity conversion mortgage
that is refinanced through the mortgage insured under this subsection and the application for a refinancing mortgage insured
under this subsection does not exceed 5
years.
(4) Credit for premiums paid
Notwithstanding section 1709(c)(2)(A) of this
title, the Secretary may reduce the amount of
the single premium payment otherwise collected under such section at the time of the
insurance of a mortgage refinanced and insured under this subsection. The amount of
the single premium for mortgages refinanced
under this subsection shall be determined by
the Secretary based on the actuarial study required under paragraph (5).
(5) Actuarial study
Not later than 180 days after December 27,
2000, the Secretary shall conduct an actuarial
analysis to determine the adequacy of the insurance premiums collected under the program under this subsection with respect to—
(A) a reduction in the single premium payment collected at the time of the insurance
of a mortgage refinanced and insured under
this subsection;
(B) the establishment of a single national
limit on the benefits of insurance under subsection (g) (relating to limitation on insurance authority); and
(C) the combined effect of reduced insurance premiums and a single national limitation on insurance authority.
(6) Fees
The Secretary may establish a limit on the
origination fee that may be charged to a mortgagor under a mortgage insured under this
subsection, except that such limitation shall
provide that the origination fee may be fully
financed with the mortgage and shall include
any fees paid to correspondent mortgagees approved by the Secretary.
(l) Funding for counseling
The Secretary may use a portion of the mortgage insurance premiums collected under the
program under this section to adequately fund
the counseling and disclosure activities required
under subsection (f), including counseling for
those homeowners who elect not to take out a
home equity conversion mortgage, provided that
the use of such funds is based upon accepted actuarial principles.
(m) Authority to insure home purchase mortgage
(1) In general
Notwithstanding any other provision of this
section, the Secretary may insure, upon application by a mortgagee, a home equity conversion mortgage upon such terms and conditions
as the Secretary may prescribe, when the
home equity conversion mortgage will be used
to purchase a 1- to 4-family dwelling unit, one
unit of which the mortgagor will occupy as a

§ 1715z–20

TITLE 12—BANKS AND BANKING

primary residence, and to provide for any future payments to the mortgagor, based on
available equity, as authorized under subsection (d)(9).
(2) Limitation on principal obligation
A home equity conversion mortgage insured
pursuant to paragraph (1) shall involve a principal obligation that does not exceed the dollar amount limitation determined under section 1454(a)(2) of this title for a 1-family residence.
(n) Requirements on mortgage originators
(1) In general
The mortgagee and any other party that
participates in the origination of a mortgage
to be insured under this section shall—
(A) not participate in, be associated with,
or employ any party that participates in or
is associated with any other financial or insurance activity; or
(B) demonstrate to the Secretary that the
mortgagee or other party maintains, or will
maintain, firewalls and other safeguards designed to ensure that—
(i) individuals participating in the origination of the mortgage shall have no involvement with, or incentive to provide
the mortgagor with, any other financial or
insurance product; and
(ii) the mortgagor shall not be required,
directly or indirectly, as a condition of obtaining a mortgage under this section, to
purchase any other financial or insurance
product.
(2) Approval of other parties
All parties that participate in the origination of a mortgage to be insured under this
section shall be approved by the Secretary.
(o) Prohibition against requirements to purchase
additional products
The mortgagor or any other party shall not be
required by the mortgagee or any other party to
purchase an insurance, annuity, or other similar
product as a requirement or condition of eligibility for insurance under subsection (c), except
for title insurance, hazard, flood, or other peril
insurance, or other such products that are customary and normal under subsection (c), as determined by the Secretary.
(p) Study to determine consumer protections and
underwriting standards
The Secretary shall conduct a study to examine and determine appropriate consumer protections and underwriting standards to ensure that
the purchase of products referred to in subsection (o) is appropriate for the consumer. In
conducting such study, the Secretary shall consult with consumer advocates (including recognized experts in consumer protection), industry
representatives, representatives of counseling
organizations, and other interested parties.
(r) 2 Limitation on origination fees
The Secretary shall establish limits on the
origination fee that may be charged to a mortgagor under a mortgage insured under this section, which limitations shall—
2 So

in original. No subsec. (q) has been enacted.

Page 710

(1) be equal to 2.0 percent of the maximum
claim amount of the mortgage, up to a maximum claim amount of $200,000 plus 1 percent
of any portion of the maximum claim amount
that is greater than $200,000, unless adjusted
thereafter on the basis of an analysis of—
(A) the costs to mortgagors; and
(B) the impact on the reverse mortgage
market;
(2) be subject to a minimum allowable
amount;
(3) provide that the origination fee may be
fully financed with the mortgage;
(4) include any fees paid to correspondent
mortgagees approved by the Secretary;
(5) have the same effective date as subsection (m)(2) regarding the limitation on
principal obligation; and
(6) be subject to a maximum origination fee
of $6,000, except that such maximum limit
shall be adjusted in accordance with the annual percentage increase in the Consumer
Price Index of the Bureau of Labor Statistics
of the Department of Labor in increments of
$500 only when the percentage increase in such
index, when applied to the maximum origination fee, produces dollar increases that exceed
$500.
(June 27, 1934, ch. 847, title II, § 255, as added
Pub. L. 100–242, title IV, § 417(a), Feb. 5, 1988, 101
Stat. 1908; amended Pub. L. 100–628, title X,
§ 1066, Nov. 7, 1988, 102 Stat. 3275; Pub. L. 101–508,
title II, § 2106, Nov. 5, 1990, 104 Stat. 1388–20; Pub.
L. 101–625, title III, § 334(b)–(d), Nov. 28, 1990, 104
Stat. 4141, 4142; Pub. L. 102–389, title II, Oct. 6,
1992, 106 Stat. 1592; Pub. L. 102–550, title V,
§§ 503(c)(2), 520, Oct. 28, 1992, 106 Stat. 3779, 3793;
Pub. L. 104–99, title IV, § 406, Jan. 26, 1996, 110
Stat. 45; Pub. L. 104–120, § 6, Mar. 28, 1996, 110
Stat. 835; Pub. L. 105–276, title V, § 593(a)–(e)(1),
Oct. 21, 1998, 112 Stat. 2654, 2655; Pub. L. 106–569,
title II, § 201(a)(1), (b), (c)(1), Dec. 27, 2000, 114
Stat. 2948, 2950; Pub. L. 109–13, div. A, title VI,
§ 6074, May 11, 2005, 119 Stat. 300; Pub. L. 109–289,
div. B, § 131, Sept. 29, 2006, 120 Stat. 1316; Pub. L.
110–289, div. B, title I, §§ 2118(b)(2), 2122(a)–(c),
July 30, 2008, 122 Stat. 2835–2838; Pub. L. 111–22,
div. A, title II, § 206, May 20, 2009, 123 Stat. 1654;
Pub. L. 113–29, § 2, Aug. 9, 2013, 127 Stat. 509.)
AMENDMENTS
2013—Subsec. (h)(3). Pub. L. 113–29 added par. (3).
2009—Subsec. (b)(4)(B). Pub. L. 111–22 added subpar.
(B) and struck out former subpar. (B), which read as
follows: ‘‘under a lease having a period of not less than
10 years to run beyond the maturity date of the mortgage.’’
2008—Subsec. (b)(2). Pub. L. 110–289, § 2122(a)(1), inserted ‘‘ ‘real estate,’ ’’ after ‘‘ ‘mortgagor’, ’’.
Subsec. (b)(4). Pub. L. 110–289, § 2122(b)(1), in introductory provisions, inserted ‘‘a first or subordinate mortgage or lien’’ before ‘‘on all stock’’, ‘‘unit’’ before ‘‘in
a residential’’, and ‘‘a first mortgage or first lien’’ before ‘‘on a leasehold’’.
Subsec. (b)(5). Pub. L. 110–289, § 2122(b)(2), inserted ‘‘a
first or subordinate lien on’’ before ‘‘all stock’’.
Subsec. (d)(1). Pub. L. 110–289, § 2122(a)(2), amended
par. (1) generally. Prior to amendment, par. (1) read as
follows: ‘‘have been made to a mortgagee approved by
the Secretary as responsible and able to service the
mortgage properly;’’.
Subsec. (d)(2)(B). Pub. L. 110–289, § 2122(a)(3), amended
subpar. (B) generally. Prior to amendment, subpar. (B)

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TITLE 12—BANKS AND BANKING

read as follows: ‘‘has received adequate counseling by a
third party (other than the lender) as provided in subsection (f) of this section;’’.
Subsec. (f). Pub. L. 110–289, § 2122(a)(4), substituted
‘‘Counseling services and information for mortgagors’’
for ‘‘Information services for mortgagors’’ in heading
and amended introductory provisions generally. Prior
to amendment, introductory provisions read as follows:
‘‘The Secretary shall provide or cause to be provided by
entities other than the lender the information required
in subsection (d)(2)(B) of this section. Such information
shall be discussed with the mortgagor and shall include—’’.
Subsec. (g). Pub. L. 110–289, § 2122(a)(5), substituted
‘‘limitation established under section 1454(a)(2) of this
title for a 1-family residence’’ for ‘‘established under
section 1709(b)(2) of this title for 1-family residences in
the area in which the dwelling subject to the mortgage
under this section is located’’.
Subsec. (i)(2)(A). Pub. L. 110–289, § 2118(b)(2), substituted ‘‘Mutual Mortgage Insurance Fund’’ for ‘‘General Insurance Fund’’.
Subsec. (l). Pub. L. 110–289, § 2122(a)(8), amended subsec. (l) generally. Prior to amendment, subsec. (l) related to funding for counseling and consumer education
and outreach.
Pub. L. 110–289, § 2122(a)(6), (7), redesignated subsec.
(m) as (l) and struck out former subsec. (l) which related to waiver of up-front premiums for mortgages to
fund long-term care insurance.
Subsecs. (m) to (p). Pub. L. 110–289, § 2122(a)(9), added
subsecs. (m) to (p). Former subsec. (m) redesignated (l).
Subsec. (r). Pub. L. 110–289, § 2122(c), added subsec. (r).
2006—Subsec. (g). Pub. L. 109–289 substituted ‘‘275,000’’
for ‘‘250,000’’.
2005—Subsec. (g). Pub. L. 109–13 substituted ‘‘250,000’’
for ‘‘150,000’’.
2000—Subsec. (b)(2). Pub. L. 106–569, § 201(b)(1), struck
out ‘‘ ‘mortgage’,’’ before ‘‘ ‘mortgagee’,’’.
Subsec. (b)(4), (5). Pub. L. 106–569, § 201(b)(2), added
pars. (4) and (5).
Subsecs. (k) to (m). Pub. L. 106–569, § 201(a)(1), (c)(1),
added subsecs. (k) and (l) and redesignated former subsec. (k) as (m).
1998—Pub. L. 105–276, § 593(d)(1), struck out ‘‘Demonstration program of’’ before ‘‘Insurance’’ in section
catchline.
Subsec. (a). Pub. L. 105–276, § 593(d)(2), (3), struck out
‘‘demonstration’’ before ‘‘program’’ in introductory
provisions, inserted ‘‘and’’ at end of par. (1), substituted a period for ‘‘; and’’ at end of par. (2), and
struck out par. (3) which read as follows: ‘‘to require
the evaluation of data to determine—
‘‘(A) the extent of the need and demand among elderly homeowners for insured and uninsured home equity conversion mortgages;
‘‘(B) the types of home equity conversion mortgages that best serve the needs and interests of elderly homeowners, the Federal Government, and lenders;
and
‘‘(C) the appropriate scope and nature of participation by the Secretary in connection with home equity
conversion mortgages for elderly homeowners.’’
Subsec. (d)(2)(C), (D). Pub. L. 105–276, § 593(e)(1)(A),
added subpar. (C) and redesignated former subpar. (C)
as (D).
Subsec. (d)(11). Pub. L. 105–276, § 593(e)(1)(B)–(D),
added par. (11).
Subsec. (f). Pub. L. 105–276, § 593(b), inserted concluding provisions.
Subsec. (g). Pub. L. 105–276, § 593(a), substituted ‘‘The
aggregate number of mortgages insured under this section may not exceed 150,000.’’ for ‘‘No mortgage may be
insured under this section after September 30, 2000, except pursuant to a commitment to insure issued on or
before such date. The total number of mortgages insured under this section may not exceed 50,000.’’
Subsec. (i)(1). Pub. L. 105–276, § 593(d)(2), struck out
‘‘demonstration’’ before ‘‘program’’ in introductory
provisions.

§ 1715z–20

Subsec. (k). Pub. L. 105–276, § 593(d)(4), (5), redesignated subsec. (l) as (k) and struck out heading and text
of former subsec. (k), which had required interim report
not later than Sept. 30, 1989, on design and implementation of demonstration program of insurance of home
equity conversion mortgages for elderly homeowners,
preliminary evaluation of program incorporating comments and recommendations not later than Mar. 30,
1992, and updated report and evaluation biennially
thereafter, including analysis of repayment of home equity conversion mortgages during report period.
Subsec. (l). Pub. L. 105–276, § 593(d)(5), redesignated
subsec. (l) as (k).
Pub. L. 105–276, § 593(c), added subsec. (l).
1996—Subsec. (d)(3). Pub. L. 104–120, § 6(c), amended
par. (3) generally. Prior to amendment, par. (3) read as
follows: ‘‘be secured by a dwelling that is designed principally for a 1-family residence and is occupied by the
mortgagor;’’.
Subsec. (g). Pub. L. 104–120, § 6(a), (b), substituted
‘‘2000’’ for ‘‘1996’’ and ‘‘50,000’’ for ‘‘30,000’’.
Pub. L. 104–99 substituted ‘‘1996’’ for ‘‘1995’’ and
‘‘30,000’’ for ‘‘25,000’’.
1992—Subsec. (g). Pub. L. 102–389 and Pub. L. 102–550,
§ 503(c)(2), amended subsec. (g) identically, substituting
‘‘for 1-family residences in the area in which the dwelling subject to the mortgage under this section is located’’ for ‘‘for a 1-family residence’’.
Subsec. (j). Pub. L. 102–550, § 520, inserted at end ‘‘Section 1647(b) of title 15 and any implementing regulations issued by the Board of Governors of the Federal
Reserve System shall not apply to a mortgage insured
under this section.’’
1990—Subsec. (d)(7)(A). Pub. L. 101–625, § 334(c), added
subpar. (A) and struck out former subpar. (A) which
read as follows: ‘‘the foreclosure sale; or’’.
Subsec. (d)(9), (10). Pub. L. 101–625, § 334(b), added pars.
(9) and (10).
Subsec. (e)(2). Pub. L. 101–625, § 334(d)(1), substituted
‘‘statement informing the homeowner that the liability
of the homeowner under the mortgage is limited and’’
for ‘‘statement’’ and struck out ‘‘and’’ at end.
Subsec. (e)(4). Pub. L. 101–625, § 334(d)(2), (3), added
par. (4).
Subsec. (g). Pub. L. 101–508, § 2106, substituted ‘‘September 30, 1995’’ for ‘‘September 30, 1991’’ and ‘‘may not
exceed 25,000’’ for ‘‘may not exceed 2,500’’.
1988—Subsec. (b)(3). Pub. L. 100–628, § 1066(a), made
technical amendment to reference to section 3802(2) of
this title to correct reference to corresponding provision of original act.
Subsec. (d)(3). Pub. L. 100–628, § 1066(b), struck out
‘‘and that has a value not to exceed the maximum dollar amount established by the Secretary under section
1709(b)(2) of this title for a 1-family residence’’ after
‘‘by the mortgagor’’.
EFFECTIVE DATE OF 2000 AMENDMENT
Pub. L. 106–569, title II, § 201(c)(2), Dec. 27, 2000, 114
Stat. 2951, provided that: ‘‘The provisions of section
255(l) of the National Housing Act [former 12 U.S.C.
1715z–20(l)] (as added by paragraph (1) of this subsection) shall apply only to mortgages closed on or
after April 1, 2001.’’
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105–276, title V, § 593(f), Oct. 21, 1998, 112 Stat.
2655, provided that: ‘‘This section [amending this section and enacting provisions set out as a note below]
shall take effect on, and the amendments made by this
section are made on, and shall apply beginning upon,
the date of the enactment of this Act [Oct. 21, 1998].’’
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104–120 to be construed to
have become effective Oct. 1, 1995, see section 13(a) of
Pub. L. 104–120, set out as an Effective and Termination
Dates of 1996 Amendments note under section 1437d of
Title 42, The Public Health and Welfare.

§ 1715z–21

TITLE 12—BANKS AND BANKING
REGULATIONS

Pub. L. 106–569, title II, § 201(a)(2), Dec. 27, 2000, 114
Stat. 2949, provided that: ‘‘The Secretary shall issue
any final regulations necessary to implement the
amendments made by paragraph (1) of this subsection
[amending this section], which shall take effect not
later than the expiration of the 180-day period beginning on the date of the enactment of this Act [Dec. 27,
2000]. The regulations shall be issued after notice and
opportunity for public comment in accordance with the
procedure under section 553 of title 5, United States
Code, applicable to substantive rules (notwithstanding
subsections (a)(2), (b)(B), and (d)(3) of such section).’’
Pub. L. 100–242, title IV, § 417(b), Feb. 5, 1988, 101 Stat.
1912, directed Secretary of Housing and Urban Development, not later than 6 months after Feb. 5, 1988, to consult with lenders, insurers, and organizations and individuals with expertise in home equity conversion in developing proposed regulations implementing this section and not later than 9 months after Feb. 5, 1988, to
issue proposed regulations implementing this section.
IMPLEMENTATION OF 1998 AMENDMENT
Pub. L. 105–276, title V, § 593(e)(2), Oct. 21, 1998, 112
Stat. 2655, provided that:
‘‘(A) NOTICE.—The Secretary of Housing and Urban
Development shall, by interim notice, implement the
amendments made by paragraph (1) [amending this section] in an expeditious manner, as determined by the
Secretary. Such notice shall not be effective after the
date of the effectiveness of the final regulations issued
under subparagraph (B) of this paragraph.
‘‘(B) REGULATIONS.—The Secretary shall, not later
than the expiration of the 90-day period beginning on
the date of the enactment of this Act [Oct. 21, 1998],
issue final regulations to implement the amendments
made by paragraph (1). Such regulations shall be issued
only after notice and opportunity for public comment
pursuant to the provisions of section 553 of title 5,
United States Code (notwithstanding subsections (a)(2)
and (b)(3)(B) of such section).’’

§ 1715z–21. Delegation of insuring authority to direct endorsement mortgagees
(a) Authority
The Secretary may delegate, to one or more
mortgagees approved by the Secretary under the
direct endorsement program, the authority of
the Secretary under this chapter to insure mortgages involving property upon which there is located a dwelling designed principally for occupancy by 1 to 4 families.
(b) Considerations
In determining whether to delegate authority
to a mortgagee under this section, the Secretary
shall consider the experience and performance of
the mortgagee compared to the default rate of
all insured mortgages in comparable markets,
and such other factors as the Secretary determines appropriate to minimize risk of loss to
the insurance funds under this chapter.
(c) Enforcement of insurance requirements
(1) In general
If the Secretary determines that a mortgage
insured by a mortgagee pursuant to delegation
of authority under this section was not originated in accordance with the requirements established by the Secretary, and the Secretary
pays an insurance claim with respect to the
mortgage within a reasonable period specified
by the Secretary, the Secretary may require
the mortgagee approved under this section to
indemnify the Secretary for the loss.

Page 712

(2) Fraud or misrepresentation
If fraud or misrepresentation was involved
in connection with the origination, the Secretary may require the mortgagee approved
under this section to indemnify the Secretary
for the loss regardless of when an insurance
claim is paid.
(d) Termination of mortgagee’s authority
If a mortgagee to which the Secretary has
made a delegation under this section violates
the requirements and procedures established by
the Secretary or the Secretary determines that
other good cause exists, the Secretary may cancel a delegation of authority under this section
to the mortgagee by giving notice to the mortgagee. Such a cancellation shall be effective
upon receipt of the notice by the mortgagee or
at a later date specified by the Secretary. A decision by the Secretary to cancel a delegation
shall be final and conclusive and shall not be
subject to judicial review.
(e) Requirements and procedures
Before approving a delegation under this section, the Secretary shall issue regulations establishing appropriate requirements and procedures, including requirements and procedures
governing the indemnification of the Secretary
by the mortgagee.
(June 27, 1934, ch. 847, title II, § 256, as added
Pub. L. 104–204, title IV, § 427, Sept. 26, 1996, 110
Stat. 2928.)
§ 1715z–22.
grams

Multifamily

mortgage

credit

pro-

(a) In general
The Secretary of Housing and Urban Development (hereinafter referred to as the ‘‘Secretary’’) shall carry out programs through the
Federal Housing Administration to provide new
forms of Federal credit enhancement for multifamily loans. In carrying out the programs, the
Secretary shall include an evaluation of the effectiveness of entering into partnerships or
other contractual arrangements including reinsurance and risk-sharing agreements with State
or local housing finance agencies, the Federal
Housing Finance Board, the Federal National
Mortgage Association, the Federal Home Loan
Mortgage Corporation, qualified financial institutions, and other State or local mortgage insurance companies or bank lending consortia.
(b) Risk-sharing program
(1) In general
The Secretary shall carry out a program in
conjunction with qualified participating entities to provide Federal credit enhancement for
loans for affordable multifamily housing
through a system of risk-sharing agreements
with such entities.
(2) Program requirements
(A) In general
In carrying out the program under this
subsection, the Secretary shall enter into
risk-sharing agreements with qualified participating entities.
(B) Mortgage insurance and reinsurance
Agreements under subparagraph (A) may
provide for (i) mortgage insurance through

Page 713

TITLE 12—BANKS AND BANKING

the Federal Housing Administration of loans
for affordable multifamily housing originated by or through, or purchased by, qualified participating entities, and (ii) reinsurance, including reinsurance of pools of loans,
on affordable multifamily housing. In entering into risk-sharing agreements under this
subsection covering mortgages, the Secretary may give preference to mortgages
that are not already in the portfolios of
qualified participating entities.
(C) Risk apportionment
Agreements entered into under this subsection between the Secretary and a qualified participating entity shall specify the
percentage of loss that each of the parties to
the agreement will assume in the event of
default of the insured or reinsured multifamily mortgage. Such agreements shall specify
that the qualified participating entity and
the Secretary shall share any loss in accordance with the risk-sharing agreement.
(D) Reimbursement capacity
Agreements entered into under this subsection between the Secretary and a qualified participating entity shall provide evidence acceptable to the Secretary of the capacity of such entity to fulfill any reimbursement obligations made pursuant to this
subsection. Evidence of such capacity which
may be considered by the Secretary may include—
(i) a pledge of the full faith and credit of
a qualified participating entity to fulfill
any obligations entered into by the entity;
(ii) reserves pledged or otherwise restricted by the qualified participating entity in an amount equal to an agreed upon
percentage of the loss assumed by the entity under subparagraph (C);
(iii) funds pledged through a State or
local guarantee fund; or
(iv) any other form of evidence mutually
agreed upon by the Secretary and the
qualified participating entity.
(E) Underwriting standards
The Secretary shall allow any qualified
participating entity to use its own underwriting standards and loan terms and conditions for purposes of underwriting loans to
be insured under this subsection, except as
provided in this section, without further review by the Secretary, except that the Secretary may impose additional underwriting
criteria and loan terms and conditions for
contractual agreements where the Secretary
retains more than 50 percent of the risk of
loss. Any financing permitted on property
insured under this subsection other than the
first mortgage shall be expressly subordinate to the insured mortgage.
(F) Authority of Secretary
The Secretary, upon request of a qualified
participating entity, may insure or reinsure
and make commitments to insure or reinsure under this section any mortgage, advance, loan, or pool of mortgages otherwise
eligible under this section, pursuant to a

§ 1715z–22

risk-sharing agreement providing that the
qualified participating entity will carry out
(under a delegation or otherwise, and with or
without compensation, but subject to audit,
exception, or review requirements) such
credit approval, appraisal, inspection, issuance of commitments, approval of insurance
of advances, cost certification, servicing,
property disposition, or other functions as
the Secretary shall approve as consistent
with the purpose of this section. All appraisals of property for mortgage insurance under
this section shall be completed by a Certified General Appraiser in accordance with
the Uniform Standards of Professional Appraisal Practice.
(G) Disclosure of records
Qualified participating entities shall make
available to the Secretary or the Secretary’s
designee, at the Secretary’s request, such financial and other records as the Secretary
deems necessary for purposes of review and
monitoring for the program under this section.
(3) Development of alternatives
The Secretary shall develop and assess a variety of risk-sharing alternatives, including
arrangements under which the Secretary assumes an appropriate share of the risk related
to long-term mortgage loans on newly constructed or acquired multifamily rental housing, mortgage refinancings, bridge financing
for construction, and other forms of multifamily housing mortgage lending that the Secretary deems appropriate to carry out the purposes of this subsection. Such alternatives
shall be designed—
(A) to ensure that other parties bear a
share of the risk, in percentage amount and
in position of exposure, that is sufficient to
create strong, market-oriented incentives
for other participating parties to maintain
sound underwriting and loan management
practices;
(B) to develop credit mechanisms, including sound underwriting criteria, processing
methods, and credit enhancements, through
which resources of the Federal Housing Administration can assist in increasing multifamily housing lending as needed to meet
the expected need in the United States;
(C) to provide a more adequate supply of
mortgage credit for sound multifamily rental housing projects in underserved urban and
rural markets;
(D) to encourage major financial institutions to expand their participation in mortgage lending for sound multifamily housing,
through means such as mitigating uncertainties regarding actions of the Federal
Government (including the possible failure
to renew short-term subsidy contracts);
(E) to increase the efficiency, and lower
the costs to the Federal Government, of
processing and servicing multifamily housing mortgage loans insured by the Federal
Housing Administration; and
(F) to improve the quality and expertise of
Federal Housing Administration staff and
other resources, as required for sound man-

§ 1715z–22

TITLE 12—BANKS AND BANKING

agement of reinsurance and other marketoriented forms of credit enhancement.
(4) Eligibility standards
The Secretary shall establish and enforce
standards for eligibility under this subsection
of qualified participating entities under this
subsection, as the Secretary determines to be
appropriate.
(5) Insurance authority
Using any authority provided in appropriation Acts to insure mortgages under the National Housing Act [12 U.S.C. 1701 et seq.], the
Secretary may enter into commitments under
this subsection for risk-sharing units.
(6) Fees
The Secretary shall establish and collect
premiums and fees under this subsection as
the Secretary determines appropriate to (A)
achieve the purpose of this subsection, and (B)
compensate the Federal Housing Administration for the risks assumed and related administrative costs.
(7) Non-Federal participation
The Secretary shall carry out this subsection, to the maximum extent practicable,
with the participation of well-established residential mortgage originators, financial institutions that invest in multifamily housing
mortgages, multifamily housing sponsors, and
such other private sector experts in multifamily housing finance as the Secretary determines to be appropriate.
(8) Prohibition on Ginnie Mae securitization
The Government National Mortgage Association shall not securitize any multifamily
loans insured or reinsured under this subsection.
(9) Qualification as affordable housing
Multifamily housing securing loans insured
or reinsured under this subsection shall qualify as affordable only if the housing is occupied by families and bears rents not greater
than the gross rent for rent-restricted residential units as determined under section 42(g) of
title 26.
(10) Certification of subsidy layering compliance
The requirements of section 3545(d) of title
42 may be satisfied in connection with a commitment to insure a mortgage under this subsection by a certification by a housing credit
agency (including an entity established by a
State that provides mortgage insurance) to
the Secretary that the combination of assistance within the jurisdiction of the Secretary
and other government assistance provided in
connection with a property for which a mortgage is to be insured shall not be any greater
than is necessary to provide affordable housing.
(11) Implementation
The Secretary shall take any administrative
actions necessary to initiate the program
under this subsection.

Page 714

(c) Housing finance agency program
(1) In general
The Secretary shall carry out a specific program in conjunction with qualified housing finance agencies (including entities established
by States that provide mortgage insurance) to
provide Federal credit enhancement for loans
for affordable multifamily housing through a
system of risk-sharing agreements with such
agencies.
(2) Program requirements
(A) In general
In carrying out the program authorized
under this subsection, the Secretary shall
enter into risk-sharing agreements with
qualified housing finance agencies.
(B) Mortgage insurance
Agreements under subparagraph (A) shall
provide for full mortgage insurance through
the Federal Housing Administration of the
loans for affordable multifamily housing
originated by or through qualified housing
finance agencies and for reimbursement to
the Secretary by such agencies for either all
or a portion of the losses incurred on the
loans insured.
(C) Risk apportionment
Agreements entered into under this subsection between the Secretary and a qualified housing finance agency shall specify the
percentage of loss that each of the parties to
the agreement will assume in the event of
default of the insured multifamily mortgage.
Such agreements shall specify that the
qualified housing finance agency and the
Secretary shall share any loss in accordance
with the risk-sharing agreement.
(D) Reimbursement capacity
Agreements entered into under this subsection between the Secretary and a qualified housing finance agency shall provide
evidence of the capacity of such agency to
fulfill any reimbursement obligations made
pursuant to this subsection. Evidence of
such capacity may include—
(i) a pledge of the full faith and credit of
a qualified State or local agency to fulfill
any obligations entered into by the qualified housing finance agency;
(ii) reserves pledged or otherwise restricted by the qualified housing finance
agency in an amount equal to an agreed
upon percentage of the loss assumed by the
housing finance agency under subparagraph (C);
(iii) funds pledged through a State or
local guarantee fund; or
(iv) any other form of evidence mutually
agreed upon by the Secretary and the
qualified housing finance agency.
(E) Underwriting standards
The Secretary shall allow any qualified
housing finance agency to use its own underwriting standards and loan terms and conditions for purposes of underwriting loans to
be insured under this subsection without further review by the Secretary, except that

Page 715

TITLE 12—BANKS AND BANKING

the Secretary may impose additional underwriting criteria and loan terms and conditions for contractual agreements where the
Secretary retains more than 50 percent of
the risk of loss.
(F) Disclosure of records
Qualified housing finance agencies shall
make available to the Secretary such financial and other records as the Secretary
deems necessary for program review and
monitoring purposes.
(3) Mortgage insurance premiums
The Secretary shall establish a schedule of
insurance premium payments for mortgages
insured under this subsection based on the percentage of loss the Secretary may assume.
Such schedule shall reflect lower or nominal
premiums for qualified housing finance agencies that assume a greater share of the risk
apportioned according to paragraph (2)(C).
(4) Insurance authority
Using any authority provided in appropriation Acts to insure mortgages under the National Housing Act [12 U.S.C. 1701 et seq.], the
Secretary may enter into commitments under
this subsection for risk-sharing units.
(5) Identity of interest
Notwithstanding any other provision of law,
the Secretary shall not apply identity of interest provisions to agreements entered into with
qualified State housing finance agencies under
this subsection.
(6) Prohibition on Ginnie Mae securitization
The Government National Mortgage Association shall not securitize any multifamily
loans insured under this subsection.
(7) Qualification as affordable housing
Multifamily housing securing loans insured
under this subsection shall qualify as affordable only if the housing is occupied by families
and bears rents not greater than the gross rent
for rent-restricted residential units as determined under section 42(g) of title 26.
(8) Regulations
Not later than 90 days after October 28, 1992,
the Secretary shall issue such regulations as
may be necessary to carry out this subsection.
(9) Environmental and other reviews
(A) Environmental reviews
(i) In general
(I) In order to assure that the policies of
the National Environmental Policy Act of
1969 [42 U.S.C. 4321 et seq.] and other provisions of law which further the purposes of
such Act (as specified in regulations issued
by the Secretary) are most effectively implemented in connection with the insurance of mortgages under subsection (c)(2),
and to assure to the public undiminished
protection of the environment, the Secretary may, under such regulations, in lieu
of the environmental protection procedures otherwise applicable, provide for
agreements to endorse for insurance mortgages under subsection (c)(2) upon the re-

§ 1715z–22

quest of qualified housing finance agencies
under this subsection, if the State or unit
of general local government, as designated
by the Secretary in accordance with regulations, assumes all of the responsibilities
for environmental review, decisionmaking,
and action pursuant to such Act, and such
other provisions of law as the regulations
of the Secretary may specify, that would
otherwise apply to the Secretary with respect to the insurance of mortgages on
particular properties.
(II) The Secretary shall issue regulations
to carry out this subparagraph only after
consultation with the Council on Environmental Quality. Such regulations shall,
among other matters, provide—
(aa) for the monitoring of the performance of environmental reviews under
this subparagraph;
(bb) subject to the discretion of the
Secretary, for the provision or facilitation of training for such performance;
and
(cc) subject to the discretion of the
Secretary, for the suspension or termination by the Secretary of the qualified
housing finance agency’s responsibilities
under subclause (I).
(III) The Secretary’s duty under subclause (II) shall not be construed to limit
any responsibility assumed by a State or
unit of general local government with respect to any particular property under
subclause (I).
(ii) Procedure
The Secretary shall approve a mortgage
for the provision of mortgage insurance
subject to the procedures authorized by
this paragraph only if, not less than 15
days prior to such approval, prior to any
approval, commitment, or endorsement of
mortgage insurance on the property on behalf of the Secretary, and prior to any
commitment by the qualified housing finance agency to provide financing under
the risk-sharing agreement with respect to
the property, the qualified housing finance
agency submits to the Secretary a request
for such approval, accompanied by a certification of the State or unit of general
local government that meets the requirements of clause (iii). The Secretary’s approval of any such certification shall be
deemed to satisfy the Secretary’s responsibilities under the National Environmental Policy Act of 1969 [42 U.S.C. 4321 et
seq.] and such other provisions of law as
the regulations of the Secretary specify insofar as those responsibilities relate to the
provision of mortgage insurance on the
property that is covered by such certification.
(iii) Certification
A certification under the procedures authorized by this paragraph shall—
(I) be in a form acceptable to the Secretary;
(II) be executed by the chief executive
officer or other officer of the State or

§ 1715z–22

TITLE 12—BANKS AND BANKING

unit of general local government who
qualifies under regulations of the Secretary;
(III) specify that the State or unit of
general local government under this section has fully carried out its responsibilities as described under clause (i); and
(IV) specify that the certifying officer
consents to assume the status of a responsible Federal official under the National Environmental Policy Act of 1969
[42 U.S.C. 4321 et seq.] and under each
provision of law specified in regulations
issued by the Secretary insofar as the
provisions of such Act or such other provisions of law apply pursuant to clause
(i), and is authorized and consents on behalf of the State or unit of general local
government and himself or herself to accept the jurisdiction of the Federal
courts for the purpose of enforcement of
the responsibilities as such an official.
(iv) Approval by States
In cases in which a unit of general local
government carries out the responsibilities described in clause (i), the Secretary
may permit the State to perform those actions of the Secretary described in clause
(ii) and the performance of such actions by
the State, where permitted by the Secretary, shall be deemed to satisfy the Secretary’s responsibilities referred to in the
second sentence of clause (ii).
(B) Lead-based paint poisoning prevention
In carrying out the requirements of section 302 of the Lead-Based Paint Poisoning
Prevention Act [42 U.S.C. 4822], the Secretary may provide by regulation for the assumption of all or part of the Secretary’s duties under such Act [42 U.S.C. 4801 et seq.] by
qualified housing finance agencies, for purposes of this section.
(C) Certification of subsidy layering compliance
The requirements of section 3545(d) of title
42 may be satisfied in connection with a
commitment to insure a mortgage under
this subsection by a certification by a housing credit agency (including an entity established by a State that provides mortgage insurance) to the Secretary that the combination of assistance within the jurisdiction of
the Secretary and other government assistance provided in connection with a property
for which a mortgage is to be insured shall
not be any greater than is necessary to provide affordable housing.
(10) Definitions
For purposes of this subsection, the following definitions shall apply:
(A) Mortgage
The term ‘‘mortgage’’ means a first mortgage on real estate that is—
(i) owned in fee simple; or
(ii) subject to a leasehold interest that—
(I) has a term of not less than 99 years
and is renewable; or
(II) has a remaining term that extends
beyond the maturity of the mortgage for
a period of not less than 10 years.

Page 716

(B) First mortgage
The term ‘‘first mortgage’’ means a single
first lien given to secure advances on, or the
unpaid purchase price of, real estate, under
the laws of the State in which the real estate is located, together with the credit instrument, if any, secured thereby. Any other
financing permitted on property insured
under this section must be expressly subordinate to the insured mortgage.
(C) Unit of general local government; State
The terms ‘‘unit of general local government’’ and ‘‘State’’ have the same meanings
as in section 5302(a) of title 42.
(Pub. L. 102–550, title V, § 542, Oct. 28, 1992, 106
Stat. 3794; Pub. L. 103–233, title III, § 307(a), (b),
Apr. 11, 1994, 108 Stat. 373, 376; Pub. L. 104–120, § 8,
Mar. 28, 1996, 110 Stat. 836; Pub. L. 104–134, title
I, § 101(e) [title II, § 205], Apr. 26, 1996, 110 Stat.
1321–257, 1321–284; renumbered title I, Pub. L.
104–140, § 1(a), May 2, 1996, 110 Stat. 1327; Pub. L.
105–18, title II, § 10003, June 12, 1997, 111 Stat. 201;
Pub. L. 105–276, title II, § 211, Oct. 21, 1998, 112
Stat. 2486; Pub. L. 106–74, title II, § 226, as added
Pub. L. 106–113, div. A, title I, § 175(d), Nov. 29,
1999, 113 Stat. 1534; Pub. L. 106–377, § 1(a)(1) [title
II, § 235], Oct. 27, 2000, 114 Stat. 1441, 1441A–35.)
REFERENCES IN TEXT
The National Housing Act, referred to in subsecs.
(b)(5) and (c)(4), is act June 27, 1934, ch. 847, 48 Stat.
1246, as amended, which is classified principally to this
chapter (§ 1701 et seq.). For complete classification of
this Act to the Code, see section 1701 of this title and
Tables.
The National Environmental Policy Act of 1969, referred to in subsec. (c)(9)(A)(i)(I), (ii), (iii)(IV), is Pub.
L. 91–190, Jan. 1, 1970, 83 Stat. 852, as amended, which is
classified generally to chapter 55 (§ 4321 et seq.) of Title
42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note
set out under section 4321 of Title 42 and Tables.
The Lead-Based Paint Poisoning Prevention Act, referred to in subsec. (c)(9)(B), is Pub. L. 91–695, Jan. 13,
1971, 84 Stat. 2078, as amended, which is classified generally to chapter 63 (§ 4801 et seq.) of Title 42, The Public Health and Welfare. For complete classification of
this Act to the Code, see Short Title note set out under
section 4801 of Title 42 and Tables.
CODIFICATION
Section was formerly set out as a note under section
1707 of this title.
Section was enacted as part of the Multifamily Housing Finance Improvement Act and also as part of the
Housing and Community Development Act of 1992, and
not as part of the National Housing Act which comprises this chapter.
AMENDMENTS
2000—Pub. L. 106–377, § 1(a)(1) [title II, § 235(6)], substituted ‘‘programs’’ for ‘‘demonstrations’’ in section
catchline.
Subsec. (a). Pub. L. 106–377, § 1(a)(1) [title II, § 235(1)],
substituted ‘‘provide’’ for ‘‘demonstrate the effectiveness of providing’’ in first sentence and ‘‘the programs’’
for ‘‘demonstration programs’’ in second sentence.
Subsec. (b). Pub. L. 106–377, § 1(a)(1) [title II, § 235(5)],
struck out ‘‘pilot’’ after ‘‘Risk-sharing’’ in heading.
Subsec. (b)(1). Pub. L. 106–377, § 1(a)(1) [title II,
§ 235(2)(A)], substituted ‘‘provide’’ for ‘‘determine the
effectiveness of’’.
Subsec. (b)(2)(A). Pub. L. 106–377, § 1(a)(1) [title II,
§ 235(5)], struck out ‘‘pilot’’ before ‘‘program’’.

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TITLE 12—BANKS AND BANKING

Subsec. (b)(5). Pub. L. 106–377, § 1(a)(1) [title II,
§ 235(2)(B)], added par. (5) and struck out heading and
text of former par. (5). Text read as follows: ‘‘Using any
authority provided in appropriation Acts to insure
loans under the National Housing Act, the Secretary
may enter into commitments under this subsection for
risk sharing with respect to mortgages on not more
than 7,500 units during fiscal year 1996. The demonstration authorized under this subsection shall not be expanded until the reports required under subsection (d)
are submitted to Congress, and not more than an additional 25,000 units in each of the fiscal years 1999 and
2000.’’
Subsec. (c). Pub. L. 106–377, § 1(a)(1) [title II, § 235(5)],
struck out ‘‘pilot’’ after ‘‘finance agency’’ in heading.
Subsec. (c)(1). Pub. L. 106–377, § 1(a)(1) [title II,
§ 235(3)(A), (5)], struck out ‘‘pilot’’ before ‘‘program’’
and substituted ‘‘provide Federal credit enhancement’’
for ‘‘test the effectiveness of Federal credit enhancement’’.
Subsec. (c)(2). Pub. L. 106–377, § 1(a)(1) [title II,
§ 235(5)], struck out ‘‘pilot’’ after ‘‘Program requirements’’ in heading.
Subsec. (c)(2)(A). Pub. L. 106–377, § 1(a)(1) [title II,
§ 235(5)], struck out ‘‘pilot’’ before ‘‘program’’.
Subsec. (c)(4). Pub. L. 106–377, § 1(a)(1) [title II,
§ 235(3)(B)], added par. (4) and struck out heading and
text of former par. (4). Text read as follows: ‘‘Using any
authority provided by appropriations Acts to insure
mortgages under the National Housing Act, the Secretary may enter into commitments under this subsection with respect to mortgages on not more than
12,000 units during fiscal year 1996, not more than an
additional 7,500 units during fiscal year 1997 and not
more than an additional 25,000 units in each of fiscal
years 1999 and 2000. The demonstration authorized
under this subsection shall not be expanded until the
reports required under subsection (d) of this section are
submitted to the Congress.’’
Subsec (d). Pub. L. 106–377, § 1(a)(1) [title II, § 235(4)],
struck out heading and text of subsec. (d) which related
to independent studies and reports.
1999—Subsec. (b)(5). Pub. L. 106–74, § 226(1), as added
by 106–113, § 175(d), substituted ‘‘in each of the fiscal
years 1999 and 2000’’ for ‘‘during fiscal year 1999’’.
Subsec. (c)(4). Pub. L. 106–74, § 226(2), as added by Pub.
L. 106–113, § 175(d), substituted ‘‘in each of fiscal years
1999 and 2000’’ for ‘‘during fiscal year 1999’’.
1998—Subsec. (b)(5). Pub. L. 105–276, § 211(1), inserted
before period at end ‘‘, and not more than an additional
25,000 units during fiscal year 1999’’.
Subsec. (c)(4). Pub. L. 105–276, § 211(2), substituted
‘‘1996,’’ for ‘‘1996 and’’ and inserted ‘‘and not more than
an additional 25,000 units during fiscal year 1999’’ after
‘‘fiscal year 1997’’.
1997—Subsec. (c)(4). Pub. L. 105–18 substituted ‘‘on not
more than 12,000 units during fiscal year 1996 and not
more than an additional 7,500 units during fiscal year
1997’’ for ‘‘on not more than 12,000 units during fiscal
year 1996’’.
1996—Subsec. (b)(5). Pub. L. 104–120, § 8(a), and Pub. L.
104–134, § 101(e) [title II, § 205(a)], amended par. (5) identically, substituting ‘‘on not more than 7,500 units during fiscal year 1996’’ for ‘‘on not more than 15,000 units
over fiscal years 1993 and 1994’’.
Subsec. (c)(4). Pub. L. 104–120, § 8(b), and Pub. L.
104–134, § 101(e) [title II, § 205(b)], amended par. (4) identically, substituting ‘‘on not more than 12,000 units
during fiscal year 1996’’ for ‘‘on not to exceed 30,000
units over fiscal years 1993, 1994, and 1995’’.
1994—Subsec. (b)(1), (2). Pub. L. 103–233, § 307(a)(1),
added pars. (1) and (2) and struck out headings and text
of former pars. (1) and (2) relating to authority of Secretary for carrying out risk-sharing pilot program and
authority of Secretary for reinsurance agreements, respectively.
Subsec. (b)(4). Pub. L. 103–233, § 307(a)(2), substituted
‘‘eligibility under this subsection of qualified participating entities’’ for ‘‘financial institutions and entities
to be eligible to enter into reinsurance agreements’’.

§ 1715z–22a

Subsec. (b)(8). Pub. L. 103–233, § 307(a)(3), (4), added
par. (8) and struck out heading and text of former par.
(8). Text read as follows: ‘‘The Secretary shall take any
administrative actions necessary to initiate the pilot
program under this subsection not later than the expiration of the 8-month period beginning on October 28,
1992.’’
Subsec. (b)(9), (10). Pub. L. 103–233, § 307(a)(4), added
pars. (9) and (10).
Subsec. (b)(11). Pub. L. 103–233, § 307(a)(3), added par.
(11).
Subsec. (c)(1). Pub. L. 103–233, § 307(b)(1), inserted ‘‘(including entities established by States that provide
mortgage insurance)’’ after ‘‘qualified housing finance
agencies’’.
Subsec. (c)(2)(C). Pub. L. 103–233, § 307(b)(2)(A), substituted ‘‘Such agreements shall specify that the qualified housing finance agency and the Secretary shall
share any loss in accordance with the risk-sharing
agreement.’’ for ‘‘Such agreements shall specify that
the qualified housing finance agency and the Secretary
shall share equally the full amount of any loss on the
insured mortgage.’’
Subsec. (c)(2)(F). Pub. L. 103–233, § 307(b)(2)(B), added
subpar. (F).
Subsec. (c)(7). Pub. L. 103–233, § 307(b)(3), struck out
‘‘very low-income’’ before ‘‘families’’ and ‘‘(2)’’ after
‘‘section 42(g)’’.
Subsec. (c)(9), (10). Pub. L. 103–233, § 307(b)(4), added
pars. (9) and (10).
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104–120 to be construed to
have become effective Oct. 1, 1995, see section 13(a) of
Pub. L. 104–120, set out as a note under section 1437d of
Title 42, The Public Health and Welfare.

§ 1715z–22a. Definitions
For purposes of this subtitle:
(1) The term ‘‘multifamily housing’’ means
housing accommodations on the mortgaged
property that are designed principally for residential use, conform to standards satisfactory
to the Secretary, and consist of not less than
5 rental units on 1 site. These units may be detached, semidetached, row house, or multifamily structures.
(2) The term ‘‘qualified housing finance
agency’’ means any State or local housing finance agency that—
(A) carries the designation of ‘‘top tier’’ or
its equivalent, as evaluated by Standard and
Poors or any other nationally recognized
rating agency;
(B) receives a rating of ‘‘A’’ for its general
obligation bonds from a nationally recognized rating agency; or
(C) otherwise demonstrates its capacity as
a sound and experienced agency based on,
but not limited to, its experience in financing multifamily housing, fund balances, administrative capabilities, investment policy,
internal controls and financial management,
portfolio quality, and State or local support.
(3) The term ‘‘reinsurance agreement’’
means a contractual obligation under which
the Secretary, in exchange for appropriate
compensation, agrees to assume a specified
portion of the risk of loss that a lender or
other party has previously assumed with respect to a mortgage on a multifamily housing
property.
(4) The term ‘‘Secretary’’ means the Secretary of Housing and Urban Development.

§ 1715z–23

TITLE 12—BANKS AND BANKING

(5) The term ‘‘qualified participating entity’’
means an entity approved by the Secretary for
participation in the pilot program under this
subsection, which may include—
(A) the Federal National Mortgage Association;
(B) the Federal Home Loan Mortgage Corporation;
(C) State housing finance and mortgage insurance agencies; and
(D) the Federal Housing Finance Board.
(Pub. L. 102–550, title V, § 544, Oct. 28, 1992, 106
Stat. 3801; Pub. L. 103–233, title III, § 307(c), Apr.
11, 1994, 108 Stat. 378.)
REFERENCES IN TEXT
This subtitle, referred to in text, means subtitle C
(§§ 541–544) of Pub. L. 102–550, title V, Oct. 28, 1992, 106
Stat. 3794, as amended, known as the Multifamily Housing Finance Improvement Act, which enacted this section and section 1715z–22 of this title and provisions set
out as a note under section 1701 of this title. For complete classification of this Act to the Code, see Short
Title of 1992 Amendment note set out under section 1701
of this title and Tables.
CODIFICATION
Section was formerly set out as a note under section
1707 of this title.
Section was enacted as part of the Multifamily Housing Finance Improvement Act and also as part of the
Housing and Community Development Act of 1992, and
not as part of the National Housing Act which comprises this chapter.
AMENDMENTS
1994—Par. (1). Pub. L. 103–233, § 307(c)(1), added par. (1)
and struck out heading and text of former par. (1). Text
read as follows: ‘‘The term ‘multifamily housing’
means a property consisting of more than 4 dwelling
units.’’
Par. (5). Pub. L. 103–233, § 307(c)(2), added par. (5).

§ 1715z–23. HOPE for Homeowners Program
(a) Establishment
There is established in the Federal Housing
Administration a HOPE for Homeowners Program.
(b) Purpose
The purpose of the HOPE for Homeowners Program is—
(1) to create an FHA program, participation
in which is voluntary on the part of homeowners and existing loan holders to insure refinanced loans for distressed borrowers to support long-term, sustainable homeownership;
(2) to allow homeowners to avoid foreclosure
by reducing the principle 1 balance outstanding, and interest rate charged, on their mortgages;
(3) to help stabilize and provide confidence
in mortgage markets by bringing transparency to the value of assets based on mortgage assets;
(4) to target mortgage assistance under this
section to homeowners for their principal residence;
(5) to enhance the administrative capacity of
the FHA to carry out its expanded role under
the HOPE for Homeowners Program;
1 So

in original. Probably should be ‘‘principal’’.

Page 718

(6) to ensure the HOPE for Homeowners Program remains in effect only for as long as is
necessary to provide stability to the housing
market; and
(7) to provide servicers of delinquent mortgages with additional methods and approaches
to avoid foreclosure.
(c) Establishment and implementation of program requirements
(1) Duties of Secretary
In order to carry out the purposes of the
HOPE for Homeowners Program, the Secretary, after consultation with the Board,
shall—
(A) establish requirements and standards
for the program consistent with section
1709(b) of this title to the maximum extent
possible; and
(B) prescribe such regulations and provide
such guidance as may be necessary or appropriate to implement such requirements and
standards.
(2) Duties of the Secretary
In carrying out any of the program requirements or standards established under paragraph (1), the Secretary may issue such interim guidance and mortgagee letters as the
Secretary determines necessary or appropriate.
(3) Duties of Board
The Board shall advise the Secretary regarding the establishment and implementation of
the HOPE for Homeowners Program.
(d) Insurance of mortgages
The Secretary is authorized upon application
of a mortgagee to make commitments to insure
or to insure any eligible mortgage that has been
refinanced in a manner meeting the requirements under subsection (e).
(e) Requirements of insured mortgages
To be eligible for insurance under this section,
a refinanced eligible mortgage shall comply
with all of the following requirements:
(1) Borrower certification
(A) No intentional default or false information
The mortgagor shall provide a certification to the Secretary that the mortgagor
has not intentionally defaulted on the existing mortgage or mortgages or any other substantial debt within the last 5 years and has
not knowingly, or willfully and with actual
knowledge, furnished material information
known to be false for the purpose of obtaining the eligible mortgage to be insured and
has not been convicted under Federal or
State law for fraud during the 10-year period
ending upon the insurance of the mortgage
under this section.
(B) Liability for repayment
The mortgagor shall agree in writing that
the mortgagor shall be liable to repay to the
Secretary any direct financial benefit
achieved from the reduction of indebtedness
on the existing mortgage or mortgages on
the residence refinanced under this section

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TITLE 12—BANKS AND BANKING

derived from misrepresentations made by
the mortgagor in the certifications and documentation required under this paragraph,
subject to the discretion of the Secretary.
(C) Current borrower debt-to-income ratio
As of the date of application for a commitment to insure or insurance under this section, the mortgagor shall have had, or thereafter is likely to have, due to the terms of
the mortgage being reset, a ratio of mortgage debt to income, taking into consideration all existing mortgages of that mortgagor at such time, greater than 31 percent (or
such higher amount as the Secretary determines appropriate).
(2) Determination of principal obligation
amount
The principal obligation amount of the refinanced eligible mortgage to be insured shall—
(A) be determined by the reasonable ability of the mortgagor to make his or her
mortgage payments, as such ability is determined by the Secretary pursuant to section
1709(b)(4) of this title or by any other underwriting standards established by the Secretary; and
(B) not exceed 90 percent of the appraised
value of the property to which such mortgage relates (or such higher percentage as
the Secretary determines, in the discretion
of the Secretary).
(3) Required waiver of prepayment penalties
and fees
All penalties for prepayment or refinancing
of the eligible mortgage, and all fees and penalties related to default or delinquency on the
eligible mortgage, shall be waived or forgiven.
(4) Extinguishment of subordinate liens
(A) Required agreement
All holders of outstanding mortgage liens
on the property to which the eligible mortgage relates shall agree to accept the proceeds of the insured loan and any payments
made under this paragraph, as payment in
full of all indebtedness under the eligible
mortgage, and all encumbrances related to
such eligible mortgage shall be removed.
The Secretary may take such actions as may
be necessary and appropriate to facilitate
coordination and agreement between the
holders of the existing senior mortgage and
any existing subordinate mortgages, taking
into consideration the subordinate lien
status of such subordinate mortgages. Such
actions may include making payments,
which shall be accepted as payment in full of
all indebtedness under the eligible mortgage,
to any holder of an existing subordinate
mortgage, in lieu of any future appreciation
payments authorized under subparagraph
(B).
(B) Shared appreciation
(i) In general
The Secretary may establish standards
and policies that will allow for the payment to the holder of any existing subordinate mortgage of a portion of any future

§ 1715z–23

appreciation in the property secured by
such eligible mortgage that is owed to the
Secretary pursuant to subsection (k).
(ii) Factors
In establishing the standards and policies required under clause (i), the Secretary shall take into consideration—
(I) the status of any subordinate mortgage;
(II) the outstanding principal balance
of and accrued interest on the existing
senior mortgage and any outstanding
subordinate mortgages;
(III) the extent to which the current
appraised value of the property securing
a subordinate mortgage is less than the
outstanding principal balance and accrued interest on any other liens that
are senior to such subordinate mortgage;
and
(IV) such other factors as the Secretary determines to be appropriate.
(C) Voluntary program
This paragraph may not be construed to
require any holder of any existing mortgage
to participate in the program under this section generally, or with respect to any particular loan.
(5) Term of mortgage
The refinanced eligible mortgage to be insured shall—
(A) bear interest at a single rate that is
fixed for the entire term of the mortgage;
and
(B) have a maturity of not less than 30
years from the date of the beginning of amortization of such refinanced eligible mortgage.
(6) Maximum loan amount
The principal obligation amount of the eligible mortgage to be insured shall not exceed 132
percent of the dollar amount limitation in effect for 2007 under section 1454(a)(2) of this
title for a property of the applicable size.
(7) Prohibition on second liens
A mortgagor may not grant a new second
lien on the mortgaged property during the
first 5 years of the term of the mortgage insured under this section, except as the Secretary determines to be necessary to ensure
the maintenance of property standards.
(8) Appraisals
Any appraisal conducted in connection with
a mortgage insured under this section shall—
(A) be based on the current value of the
property;
(B) be conducted in accordance with title
XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3331 et seq.);
(C) be completed by an appraiser who
meets the competency requirements of the
Uniform Standards of Professional Appraisal
Practice;
(D) be wholly consistent with the appraisal
standards, practices, and procedures under

§ 1715z–23

TITLE 12—BANKS AND BANKING

section 1708(e) 2 of this title that apply to all
loans insured under this chapter; and
(E) comply with the requirements of subsection (g) of this section (relating to appraisal independence).
(9) Documentation and verification of income
In complying with the FHA underwriting requirements under the HOPE for Homeowners
Program under this section, the mortgagee
shall document and verify the income of the
mortgagor or non-filing status in accordance
with procedures and standards that the Secretary shall establish (provided that such procedures and standards are consistent with section 1709(b) of this title to the maximum extent possible) which may include requiring the
mortgagee to procure a copy of the income tax
returns from the Internal Revenue Service, for
the two most recent years for which the filing
deadline for such years has passed.
(10) Mortgage fraud
(A) Prohibition
The mortgagor shall not have been convicted under Federal or State law for fraud
during the 10-year period ending upon the insurance of the mortgage under this section.
(B) Duty of mortgagee
The duty of the mortgagee to ensure that
the mortgagor is in compliance with the prohibition under subparagraph (A) shall be satisfied if the mortgagee makes a good faith
effort to determine that the mortgagor has
not been convicted under Federal or State
law for fraud during the period described in
subparagraph (A).
(11) Primary residence
The mortgagor shall provide documentation
satisfactory in the determination of the Secretary to prove that the residence covered by
the mortgage to be insured under this section
is occupied by the mortgagor as the primary
residence of the mortgagor, and that such residence is the only residence in which the mortgagor has any present ownership interest, except that the Secretary may provide exceptions to such latter requirement (relating to
present ownership interest) for any mortgagor
who has inherited a property.
(12) Ban on millionaires
The mortgagor shall not have a net worth,
as of the date the mortgagor first applies for
a mortgage to be insured under the Program
under this section, that exceeds $1,000,000.
(f) Study of auction or bulk refinance program
(1) Study
The Board shall conduct a study of the need
for and efficacy of an auction or bulk refinancing mechanism to facilitate refinancing of existing residential mortgages that are at risk
for foreclosure into mortgages insured under
this section. The study shall identify and examine various options for mechanisms under
which lenders and servicers of such mortgages
may make bids for forward commitments for
such insurance in an expedited manner.
2 See

References in Text note below.

Page 720

(2) Content
(A) Analysis
The study required under paragraph (1)
shall analyze—
(i) the feasibility of establishing a mechanism that would facilitate the more rapid
refinancing of borrowers at risk of foreclosure into performing mortgages insured
under this section;
(ii) whether such a mechanism would
provide an effective and efficient mechanism to reduce foreclosures on qualified
existing mortgages;
(iii) whether the use of an auction or
bulk refinance program is necessary to
stabilize the housing market and reduce
the impact of turmoil in that market on
the economy of the United States;
(iv) whether there are other mechanisms
or authority that would be useful to reduce foreclosure; and
(v) and any other factors that the Board
considers relevant.
(B) Determinations
To the extent that the Board finds that a
facility of the type described in subparagraph (A) is feasible and useful, the study
shall—
(i) determine and identify any additional
authority or resources needed to establish
and operate such a mechanism;
(ii) determine whether there is a need for
additional authority with respect to the
loan underwriting criteria established in
this section or with respect to eligibility
of participating borrowers, lenders, or
holders of liens;
(iii) determine whether such underwriting criteria should be established on the
basis of individual loans, in the aggregate,
or otherwise to facilitate the goal of refinancing borrowers at risk of foreclosure
into viable loans insured under this section.
(3) Report
Not later than the expiration of the 60-day
period beginning on July 30, 2008, the Board
shall submit a report regarding the results of
the study conducted under this subsection to
the Committee on Financial Services of the
House of Representatives and the Committee
on Banking, Housing, and Urban Affairs of the
Senate. The report shall include a detailed description of the analysis required under paragraph (2)(A) and of the determinations made
pursuant to paragraph (2)(B), and shall include
any other findings and recommendations of
the Board pursuant to the study, including
identifying various options for mechanisms
described in paragraph (1).
(g) Appraisal independence
(1) Prohibitions on interested parties in a real
estate transaction
No mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal
management company, employee of an appraisal management company, nor any other
person with an interest in a real estate trans-

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TITLE 12—BANKS AND BANKING

action involving an appraisal in connection
with a mortgage insured under this section
shall improperly influence, or attempt to improperly influence, through coercion, extortion, collusion, compensation, instruction, inducement, intimidation, nonpayment for services rendered, or bribery, the development, reporting, result, or review of a real estate appraisal sought in connection with the mortgage.
(2) Civil monetary penalties
The Secretary may impose a civil money
penalty for any knowing and material violation of paragraph (1) under the same terms and
conditions as are authorized in section
1735f–14(a) of this title.
(h) Standards to protect against adverse selection
(1) In general
The Secretary shall, by rule or order, establish standards and policies to require the underwriter of the insured loan to provide such
representations and warranties as the Secretary considers necessary or appropriate to
enforce compliance with all underwriting and
appraisal standards of the HOPE for Homeowners Program.
(2) Exclusion for violations
The Secretary shall not pay insurance benefits to a mortgagee who violates the representations and warranties, as established under
paragraph (1), or in any case in which a mortgagor fails to make the first payment on a refinanced eligible mortgage.
(3) Other authority
The Secretary may establish such other
standards or policies as necessary to protect
against adverse selection, including requiring
loans identified by the Secretary as higher
risk loans to demonstrate payment performance for a reasonable period of time prior to
being insured under the program.
(i) Premiums
(1) Premiums
For each refinanced eligible mortgage insured under this section, the Secretary shall
establish and collect—
(A) at the time of insurance, a single premium payment in an amount not more than
3 percent of the amount of the original insured principal obligation of the refinanced
eligible mortgage, which shall be paid from
the proceeds of the mortgage being insured
under this section, through the reduction of
the amount of indebtedness that existed on
the eligible mortgage prior to refinancing;
and
(B) in addition to the premium required
under paragraph (1), an annual premium in
an amount not more than 1.5 percent of the
amount of the remaining insured principal
balance of the mortgage.
(2) Considerations
In setting the premium under this subsection, the Secretary shall consider—
(A) the financial integrity of the HOPE for
Homeowners Program; and

§ 1715z–23

(B) the purposes of the HOPE for Homeowners Program described in subsection (b).
(j) Origination fees and interest rate
The Secretary shall establish—
(1) a reasonable limitation on origination
fees for refinanced eligible mortgages insured
under this section; and
(2) procedures to ensure that interest rates
on such mortgages shall be commensurate
with market rate interest rates on such types
of loans.
(k) Exit fee
(1) Five-year phase-in for equity as a result of
sale or refinancing
For each eligible mortgage insured under
this section, the Secretary and the mortgagor
of such mortgage shall, upon any sale or disposition of the property to which such mortgage relates, or upon the subsequent refinancing of such mortgage, be entitled to the following with respect to any equity created as a
direct result of the mortgage being insured
under this section:
(A) If such sale or refinancing occurs during the period that begins on the date that
such mortgage is insured and ends 1 year
after such date of insurance, the Secretary
shall be entitled to 100 percent of such equity.
(B) If such sale or refinancing occurs during the period that begins 1 year after such
date of insurance and ends 2 years after such
date of insurance, the Secretary shall be entitled to 90 percent of such equity and the
mortgagor shall be entitled to 10 percent of
such equity.
(C) If such sale or refinancing occurs during the period that begins 2 years after such
date of insurance and ends 3 years after such
date of insurance, the Secretary shall be entitled to 80 percent of such equity and the
mortgagor shall be entitled to 20 percent of
such equity.
(D) If such sale or refinancing occurs during the period that begins 3 years after such
date of insurance and ends 4 years after such
date of insurance, the Secretary shall be entitled to 70 percent of such equity and the
mortgagor shall be entitled to 30 percent of
such equity.
(E) If such sale or refinancing occurs during the period that begins 4 years after such
date of insurance and ends 5 years after such
date of insurance, the Secretary shall be entitled to 60 percent of such equity and the
mortgagor shall be entitled to 40 percent of
such equity.
(F) If such sale or refinancing occurs during any period that begins 5 years after such
date of insurance, the Secretary shall be entitled to 50 percent of such equity and the
mortgagor shall be entitled to 50 percent of
such equity.
(2) Appreciation in value
For each eligible mortgage insured under
this section, the Secretary may, upon any sale
or disposition of the property to which the
mortgage relates, be entitled to up to 50 percent of appreciation, up to the appraised value

§ 1715z–23

TITLE 12—BANKS AND BANKING

of the home at the time when the mortgage
being refinanced under this section was originally made. The Secretary may share any
amounts received under this paragraph with or
assign the rights of any amounts due to the
Secretary to the holder of the existing senior
mortgage on the eligible mortgage, the holder
of any existing subordinate mortgage on the
eligible mortgage, or both.
(l) Establishment of HOPE Fund
(1) In general
There is established in the Federal Housing
Administration a revolving fund to be known
as the Home Ownership Preservation Entity
Fund, which shall be used by the Secretary for
carrying out the mortgage insurance obligations under this section.
(2) Management of Fund
The HOPE Fund shall be administered and
managed by the Secretary, who shall establish
reasonable and prudent criteria for the management and operation of any amounts in the
HOPE Fund.
(m) Limitation on aggregate insurance authority
The aggregate original principal obligation of
all mortgages insured under this section may
not exceed $300,000,000,000.
(n) Reports by the Secretary
The Secretary shall submit monthly reports
to the Congress identifying the progress of the
HOPE for Homeowners Program, which shall
contain the following information for each
month:
(1) The number of new mortgages insured
under this section, including the location of
the properties subject to such mortgages by
census tract.
(2) The aggregate principal obligation of new
mortgages insured under this section.
(3) The average amount by which the principle 1 balance outstanding on mortgages insured this section was reduced.
(4) The amount of premiums collected for insurance of mortgages under this section.
(5) The claim and loss rates for mortgages
insured under this section.
(6) Any other information that the Secretary
considers appropriate.
(o) Required outreach efforts
The Secretary shall carry out outreach efforts
to ensure that homeowners, lenders, and the
general public are aware of the opportunities for
assistance available under this section.
(p) Enhancement of FHA capacity
The Secretary shall take such actions as may
be necessary to—
(1) contract for the establishment of underwriting criteria, automated underwriting systems, pricing standards, and other factors relating to eligibility for mortgages insured
under this section;
(2) contract for independent quality reviews
of underwriting, including appraisal reviews
and fraud detection, of mortgages insured
under this section or pools of such mortgages;
and
(3) increase personnel of the Department as
necessary to process or monitor the processing
of mortgages insured under this section.

Page 722

(q) GNMA commitment authority
(1) Guarantees
The Secretary shall take such actions as
may be necessary to ensure that securities
based on and backed by a trust or pool composed of mortgages insured under this section
are available to be guaranteed by the Government National Mortgage Association as to the
timely payment of principal and interest.
(2) Guarantee authority
To carry out the purposes of section 1721 of
this title, the Government National Mortgage
Association may enter into new commitments
to issue guarantees of securities based on or
backed by mortgages insured under this section, not exceeding $300,000,000,000. The
amount of authority provided under the preceding sentence to enter into new commitments to issue guarantees is in addition to any
amount of authority to make new commitments to issue guarantees that is provided to
the Association under any other provision of
law.
(r) Sunset
The Secretary may not enter into any new
commitment to insure any refinanced eligible
mortgage, or newly insure any refinanced eligible mortgage pursuant to this section before October 1, 2008 or after September 30, 2011.
(s) Definitions
For purposes of this section, the following
definitions shall apply:
(1) Approved financial institution or mortgagee
The term ‘‘approved financial institution or
mortgagee’’ means a financial institution or
mortgagee approved by the Secretary under
section 1709 of this title as responsible and
able to service mortgages responsibly.
(2) Board
The term ‘‘Board’’ means the Advisory
Board for the HOPE for Homeowners Program.
The Board shall be composed of the Secretary,
the Secretary of the Treasury, the Chairperson
of the Board of Governors of the Federal Reserve System, and the Chairperson of the
Board of Directors of the Federal Deposit Insurance Corporation, or their designees.
(3) Eligible mortgage
The term ‘‘eligible mortgage’’ means a mortgage—
(A) the mortgagor of which—
(i) occupies such property as his or her
principal residence; and
(ii) cannot, subject to such standards established by the Secretary, afford his or
her mortgage payments; and
(B) originated on or before January 1, 2008.
(4) Existing senior mortgage
The term ‘‘existing senior mortgage’’ means,
with respect to a mortgage insured under this
section, the existing mortgage that has superior priority.
(5) Existing subordinate mortgage
The term ‘‘existing subordinate mortgage’’
means, with respect to a mortgage insured

Page 723

TITLE 12—BANKS AND BANKING

under this section, an existing mortgage that
has subordinate priority to the existing senior
mortgage.
(6) HOPE for Homeowners Program
The term ‘‘HOPE for Homeowners Program’’
means the program established under this section.
(7) Secretary
The term ‘‘Secretary’’ means the Secretary
of Housing and Urban Development, except
where specifically provided otherwise.
(t) Requirements related to the Board
(1) Compensation, actual, necessary, and transportation expenses
(A) Federal employees
A member of the Board who is an officer or
employee of the Federal Government shall
serve without additional pay (or benefits in
the nature of compensation) for service as a
member of the Board.
(B) Travel expenses
Members of the Board shall be entitled to
receive travel expenses, including per diem
in lieu of subsistence, equivalent to those
set forth in subchapter I of chapter 57 of
title 5.
(2) Bylaws
The Board may prescribe, amend, and repeal
such bylaws as may be necessary for carrying
out the functions of the Board.
(3) Quorum
A majority of the Board shall constitute a
quorum.
(4) Staff; experts and consultants
(A) Detail of Government employees
Upon request of the Board, any Federal
Government employee may be detailed to
the Board without reimbursement, and such
detail shall be without interruption or loss
of civil service status or privilege.
(B) Experts and consultants
The Board shall procure the services of experts and consultants as the Board considers
appropriate.
(u) Rule of construction related to voluntary nature of the program
This section shall not be construed to require
that any approved financial institution or mortgagee participate in any activity authorized
under this section, including any activity related to the refinancing of an eligible mortgage.
(v) Rule of construction related to insurance of
mortgages
Except as otherwise provided for in this section or by action of the Secretary, the provisions and requirements of section 1709(b) of this
title shall apply with respect to the insurance of
any eligible mortgage under this section. The
Secretary shall conform documents, forms, and
procedures for mortgages insured under this section to those in place for mortgages insured
under section 1709(b) of this title to the maximum extent possible consistent with the requirements of this section.

§ 1715z–23

(w) HOPE Bonds
(1) Issuance and repayment of bonds
Notwithstanding section 504(b) of the Federal Credit Reform Act of 1990 [2 U.S.C.
661c(b)], the Secretary of the Treasury shall—
(A) subject to such terms and conditions as
the Secretary of the Treasury deems necessary, issue Federal credit instruments, to
be known as ‘‘HOPE Bonds’’, that are callable at the discretion of the Secretary of the
Treasury and do not, in the aggregate, exceed the amount specified in subsection (m);
(B) provide the subsidy amounts necessary
for loan guarantees under the HOPE for
Homeowners Program, not to exceed the
amount specified in subsection (m), in accordance with the provisions of the Federal
Credit Reform Act of 1990 (2 U.S.C. 661 et
seq.), except as provided in this paragraph;
and
(C) use the proceeds from HOPE Bonds
only to pay for the net costs to the Federal
Government of the HOPE for Homeowners
Program, including administrative costs and
payments pursuant to subsection (e)(4)(A).
(2) Reimbursements to Treasury
Funds received pursuant to section 4568(b) of
this title shall be used to reimburse the Secretary of the Treasury for amounts borrowed
under paragraph (1).
(3) Use of reserve fund
If the net cost to the Federal Government
for the HOPE for Homeowners Program exceeds the amount of funds received under
paragraph (2), remaining debts of the HOPE
for Homeowners Program shall be paid from
amounts deposited into the fund established
by the Secretary under section 4567(e) of this
title, remaining amounts in such fund to be
used to reduce the National debt.
(4) Reduction of National debt
Amounts collected under the HOPE for
Homeowners Program in accordance with subsections (i) and (k) in excess of the net cost to
the Federal Government for such Program
shall be used to reduce the National debt.
(x) Payments to servicers and originators
The Secretary may establish a payment to
the—
(1) servicer of the existing senior mortgage
or existing subordinate mortgage for every
loan insured under the HOPE for Homeowners
Program; and
(2) originator of each new loan insured under
the HOPE for Homeowners Program.
(y) Auctions
The Secretary, with the concurrence of the
Board, shall, if feasible, establish a structure
and organize procedures for an auction to refinance eligible mortgages on a wholesale or bulk
basis.
(June 27, 1934, ch. 847, title II, § 257, as added
Pub. L. 110–289, div. A, title IV, § 1402(a), July 30,
2008, 122 Stat. 2800; amended Pub. L. 110–343, div.
A, title I, § 124, Oct. 3, 2008, 122 Stat. 3791; Pub.
L. 111–22, div. A, title II, § 202(a), May 20, 2009, 123
Stat. 1640.)

§ 1715z–23

TITLE 12—BANKS AND BANKING
REFERENCES IN TEXT

The Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, referred to in subsec. (e)(8)(B),
is Pub. L. 101–73, Aug. 9, 1989, 103 Stat. 183. Title XI of
the Act is classified principally to chapter 34A (§ 3331 et
seq.) of this title. For complete classification of this
Act to the Code, see Short Title of 1989 Amendment
note set out under section 1811 of this title and Tables.
Section 1708(e) of this title, referred to in subsec.
(e)(8)(D), was redesignated section 1708(f) and then
1708(g) of this title by Pub. L. 110–289, div. B, title I,
§ 2116(1)(B), July 30, 2008, 122 Stat. 2832, and Pub. L.
111–22, div. A, title II, § 203(b)(1), May 20, 2009, 123 Stat.
1643.
The Federal Credit Reform Act of 1990, referred to in
subsec. (w)(1)(B), is title V of Pub. L. 93–344, as added by
Pub. L. 101–508, title XIII, § 13201(a), Nov. 5, 1990, 104
Stat. 1388–609, which is classified generally to subchapter III (§ 661 et seq.) of chapter 17A of Title 2, The
Congress. For complete classification of this Act to the
Code, see Short Title note set out under section 621 of
Title 2 and Tables.
Section 4568(b) of this title, referred to in subsec.
(w)(2), was in the original ‘‘section 1338(b) of the Federal Housing Enterprises Regulatory Reform Act of
1992’’, and was translated as meaning section 1338(b) of
the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992, which is classified to section
4568(b) of this title, to reflect the probable intent of
Congress.
CODIFICATION
Pub. L. 111–22, § 202(a)(2), which directed amendment
of subsecs. (e), (h)(1), (h)(3), (j), (l), (n), (s)(3), and (v) by
substituting ‘‘Secretary’’ for ‘‘Board’’ each place such
term appeared, was not executed to subsec. (e)(4)(A),
(9), or the heading for subsec. (n), to reflect the probable intent of Congress and the amendments by Pub. L.
111–22, § 202(a)(3)(B)(i), (D)(ii), (7). See 2009 Amendment
notes below.
Another section 257 of act June 27, 1934, was renumbered section 258 and is classified to section 1715z–24 of
this title.
AMENDMENTS
2009—Subsec. (c)(1). Pub. L. 111–22, § 202(a)(1)(A), (B),
substituted ‘‘Secretary’’ for ‘‘the Board’’ in heading
and ‘‘Secretary, after consultation with the Board,’’ for
‘‘Board’’ in introductory provisions.
Subsec. (c)(1)(A). Pub. L. 111–22, § 202(a)(1)(C), inserted
‘‘consistent with section 1709(b) of this title to the
maximum extent possible’’ before semicolon.
Subsec. (c)(3). Pub. L. 111–22, § 202(a)(1)(D), added par.
(3).
Subsec. (e)(1). Pub. L. 111–22, § 202(a)(3)(A), added par.
(1) and struck out former par. (1) which related to lack
of capacity to pay existing mortgage.
Subsec. (e)(2). Pub. L. 111–22, § 202(a)(2), substituted
‘‘established by the Secretary’’ for ‘‘established by the
Board’’ in subpar. (A) and ‘‘Secretary’’ for ‘‘Board’’ in
two places in subpar. (B).
Subsec. (e)(4)(A). Pub. L. 111–22, § 202(a)(3)(B)(i),
struck out ‘‘, subject to standards established by the
Board under subparagraph (B),’’ after ‘‘may take such
actions’’. See Codification note above.
Subsec. (e)(4)(B)(i). Pub. L. 111–22, § 202(a)(3)(B)(ii),
substituted ‘‘may’’ for ‘‘shall’’.
Pub. L. 111–22, § 202(a)(2), substituted ‘‘The Secretary’’
for ‘‘The Board’’.
Subsec. (e)(4)(B)(ii). Pub. L. 111–22, § 202(a)(2), substituted ‘‘Secretary’’ for ‘‘Board’’ in introductory provisions and in subcl. (IV).
Subsec. (e)(7). Pub. L. 111–22, § 202(a)(3)(C), struck out
‘‘; and provided that such new outstanding liens (A) do
not reduce the value of the Government’s equity in the
borrower’s home; and (B) when combined with the
mortgagor’s existing mortgage indebtedness, do not exceed 95 percent of the home’s appraised value at the
time of the new second lien’’ after ‘‘property standards’’.

Page 724

Pub. L. 111–22, § 202(a)(2), substituted ‘‘Secretary’’ for
‘‘Board’’.
Subsec. (e)(9). Pub. L. 111–22, § 202(a)(3)(D), substituted
‘‘in accordance with procedures and standards that the
Secretary shall establish (provided that such procedures and standards are consistent with section 1709(b)
of this title to the maximum extent possible) which
may include requiring the mortgagee to procure’’ for
‘‘by procuring (A) an income tax return transcript of
the income tax returns of the mortgagor, or (B)’’ and
struck out ‘‘and by any other method, in accordance
with procedures and standards that the Board shall establish’’ before period at end. See Codification note
above.
Subsec. (e)(10). Pub. L. 111–22, § 202(a)(3)(E), designated existing provisions as subpar. (A), inserted subpar. (A) heading, and added subpar. (B).
Subsec. (e)(11). Pub. L. 111–22, § 202(a)(3)(F), inserted
‘‘, except that the Secretary may provide exceptions to
such latter requirement (relating to present ownership
interest) for any mortgagor who has inherited a property’’ before period at end.
Subsec. (e)(12). Pub. L. 111–22, § 202(a)(3)(G), added par.
(12).
Subsec. (h)(1). Pub. L. 111–22, § 202(a)(2), substituted
‘‘Secretary’’ for ‘‘Board’’ in two places.
Subsec. (h)(2). Pub. L. 111–22, § 202(a)(4), substituted
‘‘The Secretary shall not pay’’ for ‘‘The Board shall
prohibit the Secretary from paying’’.
Subsec. (h)(3). Pub. L. 111–22, § 202(a)(2), substituted
‘‘The Secretary’’ for ‘‘The Board’’.
Subsec. (i). Pub. L. 111–22, § 202(a)(5), designated existing provisions as par. (1) and inserted heading, redesignated former pars. (1) and (2) as subpars. (A) and (B) of
par. (1), respectively, and adjusted margins, substituted
‘‘not more than 3 percent’’ for ‘‘equal to 3 percent’’ in
par. (1)(A) and ‘‘not more than 1.5 percent’’ for ‘‘equal
to 1.5 percent’’ in par. (1)(B), and added par. (2).
Subsec. (j). Pub. L. 111–22, § 202(a)(2), substituted
‘‘Secretary’’ for ‘‘Board’’ in introductory provisions.
Subsec. (k). Pub. L. 111–22, § 202(a)(6)(A), substituted
‘‘Exit fee’’ for ‘‘Equity and appreciation’’ in heading.
Subsec. (k)(1). Pub. L. 111–22, § 202(a)(6)(B), substituted ‘‘the mortgage being insured under this section’’ for ‘‘such sale or refinancing’’ in introductory
provisions.
Subsec. (k)(2). Pub. L. 111–22, § 202(a)(6)(C), substituted ‘‘may, upon any sale or disposition of the property to which the mortgage relates, be entitled to up to
50 percent of appreciation, up to the appraised value of
the home at the time when the mortgage being refinanced under this section was originally made. The
Secretary may share any amounts received under this
paragraph with or assign the rights of any amounts due
to the Secretary to the holder of the existing senior
mortgage on the eligible mortgage, the holder of any
existing subordinate mortgage on the eligible mortgage, or both.’’ for ‘‘and the mortgagor of such mortgage shall, upon any sale or disposition of the property
to which such mortgage relates, each be entitled to 50
percent of any appreciation in value of the appraised
value of such property that has occurred since the date
that such mortgage was insured under this section.’’
Subsec. (l)(1). Pub. L. 111–22, § 202(a)(2), substituted
‘‘Secretary’’ for ‘‘Board’’.
Subsec. (n). Pub. L. 111–22, § 202(a)(2), (7), substituted
‘‘Secretary’’ for ‘‘the Board’’ in heading and ‘‘Secretary’’ for ‘‘Board’’ in introductory provisions and in
par. (6). See Codification note above.
Subsec. (p). Pub. L. 111–22, § 202(a)(8), substituted
‘‘The’’ for ‘‘Under the direction of the Board, the’’ in
introductory provisions.
Subsec. (s)(2). Pub. L. 111–22, § 202(a)(9)(A), substituted
‘‘Advisory Board for’’ for ‘‘Board of Directors of’’.
Subsec. (s)(3)(A)(ii). Pub. L. 111–22, § 202(a)(9)(B), substituted ‘‘such’’ for ‘‘subsection (e)(1)(B) and such
other’’.
Pub. L. 111–22, § 202(a)(2), substituted ‘‘Secretary’’ for
‘‘Board’’.
Subsec. (v). Pub. L. 111–22, § 202(a)(2), (10), substituted
‘‘action of the Secretary’’ for ‘‘action of the Board’’ and

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TITLE 12—BANKS AND BANKING

inserted at end ‘‘The Secretary shall conform documents, forms, and procedures for mortgages insured
under this section to those in place for mortgages insured under section 1709(b) of this title to the maximum extent possible consistent with the requirements
of this section.’’
Subsecs. (x), (y). Pub. L. 111–22, § 202(a)(11), added subsecs. (x) and (y).
2008—Subsec. (e)(1)(B). Pub. L. 110–343, § 124(1)(A), inserted ‘‘, or thereafter is likely to have, due to the
terms of the mortgage being reset,’’ before ‘‘a ratio’’.
Subsec. (e)(2)(B). Pub. L. 110–343, § 124(1)(B), inserted
‘‘(or such higher percentage as the Board determines,
in the discretion of the Board)’’ before period at end.
Subsec. (e)(4)(A). Pub. L. 110–343, § 124(1)(C), inserted
‘‘and any payments made under this paragraph,’’ after
‘‘insured loan’’ and inserted ‘‘Such actions may include
making payments, which shall be accepted as payment
in full of all indebtedness under the eligible mortgage,
to any holder of an existing subordinate mortgage, in
lieu of any future appreciation payments authorized
under subparagraph (B).’’ at end.
Subsec. (w)(1)(C). Pub. L. 110–343, § 124(2), inserted
‘‘and payments pursuant to subsection (e)(4)(A)’’ before
period at end.

§ 1715z–24. Pilot program for automated process
for borrowers without sufficient credit history
(a) Establishment
The Secretary shall carry out a pilot program
to establish, and make available to mortgagees,
an automated process for providing alternative
credit rating information for mortgagors and
prospective mortgagors under mortgages on 1to 4-family residences to be insured under this
subchapter who have insufficient credit histories for determining their creditworthiness.
Such alternative credit rating information may
include rent, utilities, and insurance payment
histories, and such other information as the
Secretary considers appropriate.
(b) Scope
The Secretary may carry out the pilot program under this section on a limited basis or
scope, and may consider limiting the program to
first-time homebuyers.
(c) Limitation
In any fiscal year, the aggregate number of
mortgages insured pursuant to the automated
process established under this section may not
exceed 5 percent of the aggregate number of
mortgages for 1- to 4-family residences insured
by the Secretary under this subchapter during
the preceding fiscal year.
(d) Sunset
After the expiration of the 5-year period beginning on July 30, 2008, the Secretary may not
enter into any new commitment to insure any
mortgage, or newly insure any mortgage, pursuant to the automated process established under
this section.
(June 27, 1934, ch. 847, title II, § 258, formerly
§ 257, as added Pub. L. 110–289, div. B, title I,
§ 2124(a), July 30, 2008, 122 Stat. 2839; renumbered
§ 258, Pub. L. 111–22, div. A, title II, § 202(c), May
20, 2009, 123 Stat. 1643.)

§ 1715z–25

§ 1715z–25. Mortgage modification data collecting
and reporting
(a) Reporting requirements
Not later than 120 days after May 20, 2009, and
quarterly thereafter, the Comptroller of the
Currency and the Director of the Office of Thrift
Supervision,1 shall jointly submit a report to
the Committee on Banking, Housing, and Urban
Affairs of the Senate,2 the Committee on Financial Services of the House of Representatives on
the volume of mortgage modifications reported
to the Office of the Comptroller of the Currency
and the Office of Thrift Supervision, under the
mortgage metrics program of each such Office,
during the previous quarter, including the following:
(1) A copy of the data collection instrument
currently used by the Office of the Comptroller of the Currency and the Office of Thrift Supervision to collect data on loan modifications.
(2) The total number of mortgage modifications in each State that result in each of the
following:
(A) Additions of delinquent payments and
fees to loan balances.
(B) Interest rate reductions and freezes.
(C) Term extensions.
(D) Reductions of principal.
(E) Deferrals of principal.
(F) Combinations of modifications described in subparagraph (A), (B), (C), (D), or
(E).
(3) The total number of mortgage modifications in each State for which the total monthly principal and interest payment resulted in
the following:
(A) An increase.
(B) Remained the same.
(C) Decreased less than 10 percent.
(D) Decreased between 10 percent and 20
percent.
(E) Decreased 20 percent or more.
(4) The total number of loans in each State
that have been modified and then entered into
default, where the loan modification resulted
in—
(A) higher monthly payments by the
homeowner;
(B) equivalent monthly payments by the
homeowner;
(C) lower monthly payments by the homeowner of up to 10 percent;
(D) lower monthly payments by the homeowner of between 10 percent to 20 percent; or
(E) lower monthly payments by the homeowner of more than 20 percent.
(b) Data collection
(1) Required
(A) In general
Not later than 60 days after May 20, 2009,
the Comptroller of the Currency and the Director of the Office of Thrift Supervision,1
shall issue mortgage modification data col1 So

in original. The comma probably should not appear.
in original. The word ‘‘and’’ probably should appear instead of the comma.
2 So

§ 1716

TITLE 12—BANKS AND BANKING

lection and reporting requirements to institutions covered under the reporting requirement of the mortgage metrics program of
the Comptroller or the Director. Not later
than 60 days after the date of the enactment
of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, the Comptroller
of the Currency and the Director of the Office of Thrift Supervision shall update such
requirements to reflect amendments made
to this section by such Act.
(B) Inclusiveness of collections
The requirements under subparagraph (A)
shall provide for the collection of all mortgage modification data needed by the Comptroller of the Currency and the Director of
the Office of Thrift Supervision to fulfill the
reporting requirements under subsection (a).
(2) Report
The Comptroller of the Currency shall report all requirements established under paragraph (1) to each committee receiving the report required under subsection (a).
(Pub. L. 111–22, div. A, title I, § 104, May 20, 2009,
123 Stat. 1636; Pub. L. 111–203, title XIV, § 1493,
July 21, 2010, 124 Stat. 2206.)
REFERENCES IN TEXT
The Dodd-Frank Wall Street Reform and Consumer
Protection Act, referred to in subsec. (b)(1)(A), is Pub.
L. 111–203, July 21, 2010, 124 Stat. 1376, which enacted
chapter 53 (§ 5301 et seq.) of this title and chapters 108
(§ 8201 et seq.) and 109 (§ 8301 et seq.) of Title 15, Commerce and Trade, and enacted, amended, and repealed
numerous other sections and notes in the Code. For
complete classification of this Act to the Code, see
Short Title note set out under section 5301 of this title
and Tables.
CODIFICATION
Section was enacted as part of the Helping Families
Save Their Homes Act of 2009, and not as part of the
National Housing Act which comprises this chapter.
AMENDMENTS
2010—Subsec. (a)(2). Pub. L. 111–203, § 1493(a)(1), substituted ‘‘in each State that result’’ for ‘‘resulting’’ in
introductory provisions.
Subsec. (a)(3). Pub. L. 111–203, § 1493(a)(2), inserted
‘‘each State for’’ after ‘‘modifications in’’ in introductory provisions.
Subsec. (a)(4). Pub. L. 111–203, § 1493(a)(3), inserted ‘‘in
each State’’ after ‘‘total number of loans’’ in introductory provisions.
Subsec. (b)(1)(A). Pub. L. 111–203, § 1493(b), inserted at
end ‘‘Not later than 60 days after the date of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Comptroller of the Currency
and the Director of the Office of Thrift Supervision
shall update such requirements to reflect amendments
made to this section by such Act.’’
EFFECTIVE DATE OF 2010 AMENDMENT
Amendment by Pub. L. 111–203 effective on the date
on which final regulations implementing that amendment take effect, or on the date that is 18 months after
the designated transfer date if such regulations have
not been issued by that date, see section 1400(c) of Pub.
L. 111–203, set out as a note under section 1601 of Title
15, Commerce and Trade.

Page 726

SUBCHAPTER III—NATIONAL MORTGAGE
ASSOCIATIONS
§ 1716. Declaration of purposes of subchapter
The Congress declares that the purposes of
this subchapter are to establish secondary market facilities for residential mortgages, to provide that the operations thereof shall be financed by private capital to the maximum extent feasible, and to authorize such facilities
to—
(1) provide stability in the secondary market
for residential mortgages;
(2) respond appropriately to the private capital market;
(3) provide ongoing assistance to the secondary market for residential mortgages (including activities relating to mortgages on housing for low- and moderate-income families involving a reasonable economic return that
may be less than the return earned on other
activities) by increasing the liquidity of mortgage investments and improving the distribution of investment capital available for residential mortgage financing;
(4) promote access to mortgage credit
throughout the Nation (including central cities, rural areas, and underserved areas) by increasing the liquidity of mortgage investments and improving the distribution of investment capital available for residential
mortgage financing; and
(5) manage and liquidate federally owned
mortgage portfolios in an orderly manner,
with a minimum of adverse effect upon the
residential mortgage market and minimum
loss to the Federal Government.
(June 27, 1934, ch. 847, title III, § 301, 48 Stat. 1252;
May 28, 1935, ch. 150, § 30, 49 Stat. 300; Feb. 3,
1938, ch. 13, §§ 4, 5, 52 Stat. 23; June 3, 1939, ch.
175, §§ 15, 16, 53 Stat. 808; Mar. 28, 1941, ch. 31, § 5,
55 Stat. 62; July 1, 1948, ch. 784, § 1, 62 Stat. 1206;
Aug. 10, 1948, ch. 832, title II, §§ 201, 202, 62 Stat.
1275; Aug. 8, 1949, ch. 403, § 4, 63 Stat. 576; Oct. 25,
1949, ch. 729, § 7, 63 Stat. 906; Apr. 20, 1950, ch. 94,
title I, §§ 116, 122, 64 Stat. 57, 59; Sept. 1, 1951, ch.
378, title II, § 205, title VI, § 608(b), 65 Stat. 303,
315; Apr. 9, 1952, ch. 173, 66 Stat. 51; July 14, 1952,
ch. 723, §§ 3(a), 10(a)(2), 66 Stat. 602, 603; June 30,
1953, ch. 170, §§ 12, 13(a), 67 Stat. 125; June 29,
1954, ch. 410, § 1(1), 68 Stat. 320; Aug. 2, 1954, ch.
649, title II, § 201, 68 Stat. 612; Pub. L. 90–448, title
VIII, § 802(b), Aug. 1, 1968, 82 Stat. 536; Pub. L.
101–73, title VII, § 731(m)(1), Aug. 9, 1989, 103 Stat.
435; Pub. L. 102–550, title XIII, § 1381(a), Oct. 28,
1992, 106 Stat. 3994.)
AMENDMENTS
1992—Pub. L. 102–550, § 1381(a)(1), substituted ‘‘residential’’ for ‘‘home’’ in introductory provisions.
Par. (1). Pub. L. 102–550, § 1381(a)(1), substituted ‘‘residential’’ for ‘‘home’’.
Par. (3). Pub. L. 102–550, § 1381(a)(1), (2), substituted
‘‘residential’’ for ‘‘home’’ in two places, substituted
‘‘(including activities relating to mortgages on housing
for low- and moderate-income families involving a reasonable economic return that may be less than the return earned on other activities)’’ for ‘‘(including mortgages securing housing for low- and moderate-income
families involving a reasonable economic return)’’, and
struck out ‘‘and’’ at end.
Par. (4). Pub. L. 102–550, § 1381(a)(3), (4), added par. (4)
and redesignated former par. (4) as (5).

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TITLE 12—BANKS AND BANKING

Par. (5). Pub. L. 102–550, § 1381(a)(1), (3), redesignated
par. (4) as (5) and substituted ‘‘residential’’ for ‘‘home’’.
1989—Pub. L. 101–73 added pars. (1) to (3), struck out
subsecs. (a) and (b), and redesignated subsec. (c) as par.
(4). Prior to amendment, subsecs. (a) and (b) related to
supplementary assistance to the secondary market and
to provision of special assistance, respectively.
1968—Pub. L. 90–448 struck out provisions which established in the Federal Government a secondary market facility for home mortgages in view of section 1716b
of this title which created two separate and distinct
corporations.
1954—Act Aug. 2, 1954, amended section generally,
substituting entirely new provisions for provisions now
covered by section 1717 of this title and other sections
in this subchapter.
Subsec. (a)(1)(G). Act June 29, 1954, substituted in
first sentence ‘‘August 1, 1954’’ for ‘‘July 1, 1954’’.
1953—Subsec. (a)(1)(E). Act June 30, 1953, § 12, in cl.
(2), substituted ‘‘principal amount to be paid therefor’’
for ‘‘unpaid principal balance thereof’’, and ‘‘aggregate
principal amount’’ for ‘‘aggregate amount’’; and substituted three provisos for former proviso which made
such cl. (2) and any terms therein inapplicable to any
defense or disaster mortgages as defined in subpar. (G)
of par. (1).
Subsec. (a)(1)(G). Act June 30, 1953, § 13(a), substituted
in first sentence ‘‘July 1, 1954’’ for ‘‘July 1, 1953’’.
1952—Subsec. (a)(1). Act July 14, 1952, § 3(a)(1), authorized the FNMA to purchase Government-insured or
guaranteed home mortgages other than defense or disaster mortgages if they are insured after Feb. 29, 1952.
Subsec. (a)(1)(E). Act July 14, 1952, § 3(a)(2), (3),
changed the base date from Apr. 30, 1948 to Feb. 29, 1952,
and exempted defense or disaster mortgages from the
limitation of this subparagraph.
Subsec. (a)(1)(G). Act July 14, 1952, § 3(a)(4), increased
the FNMA commitment powers from $252,000,000 to
$1,152,000,000 outstanding at any one time if the commitments relate to defense or disaster mortgages.
S.J. Res. Apr. 9, 1952, increased the $200,000,000 authorization to $252,000,000 and struck out Dec. 31, 1951,
deadline, (1) with respect to programed defense housing
for which applications were received prior to Dec. 28,
1951, and (2) with respect to subchapter VIII military
housing if the commitment to insure the mortgage was
issued after Dec. 27 and before Dec. 31, 1951.
Subsec. (c)(4). Act July 14, 1952, inserted ‘‘Guam,’’
after ‘‘District of Columbia’’.
1951—Subsec. (a)(1). Act Sept. 1, 1951, § 205, inserted
reference to subchapter X of this chapter.
Subsec. (a)(1)(G). Act Sept. 1, 1951, § 608(b), inserted
proviso.
1950—Act Apr. 20, 1950, § 122, substituted ‘‘Commissioner’’ for ‘‘Administrator’’ wherever appearing.
Subsec. (a)(1). Act Apr. 20, 1950, § 116(1), (2), inserted
‘‘or section 1706c of this title’’ and first proviso.
Subsec. (a)(1)(E). Act Apr. 20, 1950, § 116(3), substituted
new proviso for former proviso.
Subsec. (a)(1)(F). Act Apr. 20, 1950, § 116(4), substituted
provision that no loan made to finance the purchase
price or construction cost of a dwelling was to be purchased by the Federal National Mortgage Association
unless the Administrator of Veterans’ Affairs certifies
that such dwelling conforms with minimum construction requirements prescribed by the Administrator for
former provision that such certification was to be given
by the mortgagee and that minimum construction
standards were to be determined by the provisions
within the National Housing Act.
Subsec. (a)(1)(G). Act Apr. 20, 1950, § 116(5), added par.
(1)(G).
1949—Subsec. (a). Act Aug. 8, 1949, inserted reference
to subchapter VIII in par. (1), and inserted proviso at
end of par. (1)(E).
Subsec. (a)(1)(E). Joint Res. Oct. 25, 1949, struck out
proviso and inserted new proviso.
1948—Act July 1, 1948, amended section generally to
create a Federal National Mortgage Association with
power to purchase, service, or sell insured or guaran-

§§ 1716–1, 1716a

teed mortgage, provide for the powers and succession of
the Association, and to eliminate the former national
mortgage association.
Subsec. (a)(1). Act Aug. 10, 1948, §§ 201, 202, substituted
‘‘subchapter II or VI of this chapter’’ for ‘‘section 1709
or 1738 of this title’’, inserted ‘‘after April 30, 1948’’,
after ‘‘or guaranteed’’, and substituted ‘‘50’’ for ‘‘25’’ in
cl. (2) of par. (1) (E).
1941—Subsec. (a)(2). Act Mar. 28, 1941, substituted
‘‘subchapters II and VI’’ for ‘‘subchapter II’’.
1939—Subsec. (b). Act June 3, 1939, amended last sentence.
Subsec. (c)(4). Act June 3, 1939, inserted ‘‘Alaska, Hawaii or Puerto Rico’’.
1938—Subsec. (a). Act Feb. 3, 1938, amended provisions
generally, and among other changes, substituted ‘‘60
per centum’’ in subsec. (a)(3), for ‘‘80 per centum’’.
Subsec. (d). Act Feb. 3, 1938, substituted ‘‘$2,000,000’’
for ‘‘$5,000,000,’’ and ‘‘that at least 25 per centum thereof has been paid in cash,’’ for ‘‘paid in full in cash’’, and
inserted ‘‘or in first mortgages or such other first liens
as are described in section 301 (a) hereof, which mortgages or liens shall be taken at such value as the Administrator may determine, not exceeding (except as to
mortgages insured under title II of this Act) 60 per centum of the appraised value of the property as of the
date of subscription, and that the remainder of the subscription to such capital stock is payable in the same
manner and at such time as may be determined by the
Administrator: Provided, That no association shall
issue notes, bonds, debentures, or other such obligations until such time as such subscriptions are paid in
full in cash or Government securities at their par value
or in mortgages or other liens as hereinbefore set
forth’’.
1935—Subsec. (d). Act May 28, 1935, substituted
‘‘$5,000,000’’ for ‘‘$2,000,000’’.
EFFECTIVE DATE OF 1968 AMENDMENT
For effective date of amendment by title VIII of Pub.
L. 90–448, see section 808 of Pub. L. 90–448, set out as an
Effective Date note under section 1716b of this title.
EFFECTIVE DATE OF 1949 AMENDMENT
Joint Res. Oct. 25, 1949, ch. 729, § 7, 63 Stat. 906, provided in part: ‘‘That the amendment made by this section 7 with respect to mortgages guaranteed under section 501 of the Servicemen’s Readjustment Act of 1944,
as amended [this section], shall apply only to such
mortgages guaranteed after the date of enactment of
this Act [Oct. 25, 1949].’’
DELEGATION OF FUNCTIONS
Functions of President under this section delegated
to Secretary of Housing and Urban Development, see
Ex. Ord. No. 11732, July 30, 1973, 38 F.R. 20429, set out as
a note under section 301 of Title 3, The President.
SERVICE OR SALE OF MORTGAGES PURCHASED PRIOR TO
JULY 1, 1948; FULFILLMENT OF PRIOR COMMITMENTS
Act July 1, 1948, ch. 784, § 2, 62 Stat. 1209, provided
that: ‘‘Nothing in the amendment made by the first
section of this Act [amending sections 1716, 1717 to 1721
of this title] shall limit the authority of the Federal
National Mortgage Association to service or sell any
mortgage purchased prior to the date of the enactment
of this Act [July 1, 1948], or to purchase, service, or sell
any mortgage with respect to which a commitment to
purchase was made prior to the date of the enactment
of this Act [July 1, 1948].’’

§§ 1716–1, 1716a. Repealed. Aug. 2, 1954, ch. 649,
title II, § 206, 68 Stat. 622
Section 1716–1, acts Oct. 30, 1951, ch. 642, 65 Stat. 599;
June 30, 1953, ch. 170, § 14, 67 Stat. 125, related to special
authority of the Federal National Mortgage Association to make advance commitments, under certain conditions, with respect to insured cooperative-housing
mortgages under section 1715e of this title.

§ 1716b

TITLE 12—BANKS AND BANKING

Section 1716a, act Sept. 1, 1951, ch. 378, title VI,
§ 608(a), 65 Stat. 315, required that one of the persons
constituting the Board of Directors of the Federal National Mortgage Association be appointed by the Administrator of Veterans’ Affairs from among personnel
of the Veterans’ Administration.

§ 1716b. Partition of Federal National Mortgage
Association into Federal National Mortgage
Association and Government National Mortgage Association; assets and liabilities; operations
The purposes of this title include the partition
of the Federal National Mortgage Association as
heretofore existing into two separate and distinct corporations, each of which shall have continuity and corporate succession as a separated
portion of the previously existing corporation.
One of such corporations, to be known as Federal National Mortgage Association, will be a
Government-sponsored private corporation, will
retain the assets and liabilities of the previously
existing corporation accounted for under section
1719 of this title, and will continue to operate
the secondary market operations authorized by
such section 1719. The other, to be known as
Government National Mortgage Association,
will remain in the Government, will retain the
assets and liabilities of the previously existing
corporation accounted for under sections 1720 1
and 1721 of this title, and will continue to operate the special assistance functions and management and liquidating functions authorized by
such sections 1720 1 and 1721.
(Pub. L. 90–448, title VIII, § 801, Aug. 1, 1968, 82
Stat. 536.)
REFERENCES IN TEXT
This title, referred to in text, means title VIII of Pub.
L. 90–448, which enacted this section, amended sections
24, 378, 1431, 1436, 1464, 1716, 1717 to 1723a, 1723c and 1757
of this title, section 709 of Title 18, Crimes and Criminal Procedure, section 846 of former Title 31, Money
and Finance, section 1820 [now 3720] of Title 38, Veterans’ Benefits, section 612 of former Title 40, Public
Buildings, Property, and Works, and sections 1452b, 3534
and 3535 of Title 42, The Public Health and Welfare, and
enacted provisions set out as notes under this section
and section 1721 of this title.
Section 1720 of this title, referred to in text, was repealed by Pub. L. 98–181, title I [title IV, § 483(a)], Nov.
30, 1983, 97 Stat. 1240.
CODIFICATION
Section was enacted as part of the Housing and Urban
Development Act of 1968, and not as part of the National Housing Act which comprises this chapter or the
Federal National Mortgage Association Charter Act
which comprises this subchapter.
EFFECTIVE DATE
Pub. L. 90–448, title VIII, § 808, Aug. 1, 1968, 82 Stat.
545, provided that: ‘‘The amendments made by this title
[enacting this section and amending sections 24, 378,
1431, 1436, 1464, 1716, 1717 to 1723a, 1723c and 1757 of this
title, section 709 of Title 18, Crimes and Criminal Procedure, section 846 of former Title 31, Money and Finance, section 1820 [now 3720] of Title 38, Veterans’ Benefits, section 612 of former Title 40, Public Buildings,
Property, and Works, sections 1452b, 3534 and 3535 of
Title 42, The Public Health and Welfare, and notes
under this section and section 1721 of this title] shall be
1 See

References in Text note below.

Page 728

effective from and after a date, no more than one hundred and twenty days following the date of enactment
of this Act [Aug. 1, 1968], as established by the Secretary of Housing and Urban Development. Notice of
the establishment of such effective date shall be published in the Federal Register at least thirty days prior
thereto.’’
SAVINGS PROVISION
Pub. L. 90–448, title VIII, § 809, Aug. 1, 1968, 82 Stat.
545, provided that:
‘‘(a) No cause of action by or against the Federal National Mortgage Association existing prior to the effective date established pursuant to section 808 [set out
above] shall abate by reason of the enactment of this
title. Any such cause of action may thereafter be asserted by or against the appropriate corporate body
named in section 302(a)(2) of the National Housing Act
[section 1717(a)(2) of this title].
‘‘(b) No suit, action, or other proceeding commenced
by or against the Federal National Mortgage Association, or any officer thereof in his official capacity,
prior to the effective date established pursuant to section 808 shall abate by reason of the enactment of this
title. A court may at any time thereafter during the
pendency of any such litigation, on its own motion or
that of any party, order that the litigation may be
maintained by or against the appropriate corporate
body named in section 302(a)(2) of the National Housing
Act [section 1717(a)(2) of this title] or the appropriate
corresponding officer thereof.’’
TRANSITIONAL PROVISIONS
Pub. L. 90–448, title VIII, § 810, Aug. 1, 1968, 82 Stat.
545, as amended by Pub. L. 91–609, title IX, § 901(e), Dec.
31, 1970, 84 Stat. 1807; Pub. L. 93–383, title VIII, § 806(l),
Aug. 22, 1974, 88 Stat. 728; Pub. L. 99–514, § 2, Oct. 22,
1986, 100 Stat. 2095, provided that:
‘‘(a) On the effective date established pursuant to section 808 of this Act [set out above], each share of outstanding nonvoting common stock, with a par value of
$100 per share, of the Federal National Mortgage Association shall be changed into and shall become one
share of voting common stock, without par value, of
such corporation. For the purposes of the Internal Revenue Code of 1986 [formerly I.R.C. 1954, Title 26], no
gain or loss is recognized by the holders of such stock
on such change, and the basis and holding period of
such stock in the hands of the stockholders immediately after such change are the same as the basis and
holding period of such stock in their hands immediately prior to such change.
‘‘(b), (c). [Repealed. Pub. L. 93–383, title VIII, § 806(l),
Aug. 22, 1974, 88 Stat. 728].
‘‘(d) Those persons who are the officers and employees of the Federal National Mortgage Association immediately prior to the effective date established pursuant to section 808 [set out as a note above] shall become
the officers and employees of the Government National
Mortgage Association on such date. The Federal National Mortgage Association and the Government National Mortgage Association shall provide by contract
for the conditions and methods under which and by
which the Federal National Mortgage Association during the transitional period may employ those individuals who are employees of the Government National
Mortgage Association on such effective date; and may
provide by contract for the operation by either of such
corporations of any of the functions of the other. The
Secretary of Housing and Urban Development shall
make every reasonable effort to place in other comparable Federal positions any individuals who are career or career-conditional employees of the Government National Mortgage Association on such effective
date and who are subsequently during the transitional
period neither employed by the Federal National Mortgage Association nor retained by the Government National Mortgage Association.’’

Page 729

TITLE 12—BANKS AND BANKING

§ 1717. Federal National Mortgage Association
and Government National Mortgage Association
(a) Creation; succession; principal and other offices
(1) There is created a body corporate to be
known as the ‘‘Federal National Mortgage Association’’, which shall be in the Department of
Housing and Urban Development. The Association shall have succession until dissolved by Act
of Congress. It shall maintain its principal office
in the District of Columbia and shall be deemed,
for purposes of venue in civil actions, to be a
resident thereof. Agencies or offices may be established by the Association in such other place
or places as it may deem necessary or appropriate in the conduct of its business.
(2) On September 1, 1968, the body corporate
described in the foregoing paragraph shall cease
to exist in that form and is hereby partitioned
into two separate and distinct bodies corporate,
each of which shall have continuity and corporate succession as a separated portion of the
previously existing body corporate, as follows:
(A) One of such separated portions shall be a
body corporate without capital stock to be
known as Government National Mortgage Association (hereinafter referred to as the ‘‘Association’’), which shall be in the Department of
Housing and Urban Development and which
shall retain the assets and liabilities acquired
and incurred under sections 1720 1 and 1721 of
this title prior to such date, including any and
all liabilities incurred pursuant to subsection
(c). The Association shall have succession
until dissolved by Act of Congress. It shall
maintain its principal office in the District of
Columbia and shall be deemed, for purposes of
venue in civil actions, to be a resident thereof.
Agencies or offices may be established by the
Association in such other place or places as it
may deem necessary or appropriate in the conduct of its business.
(B) The other such separated portion shall be
a body corporate to be known as Federal National Mortgage Association (hereinafter referred to as the ‘‘corporation’’), which shall retain the assets and liabilities acquired and incurred under sections 1718 and 1719 of this title
prior to such date. The corporation shall have
succession until dissolved by Act of Congress.
It shall maintain its principal office in the
District of Columbia or the metropolitan area
thereof and shall be deemed, for purposes of
jurisdiction and venue in civil actions, to be a
District of Columbia corporation.
(3) The partition transaction effected pursuant
to the foregoing paragraph constitutes a reorganization within the meaning of section
368(a)(1)(E) of title 26; and for the purposes of
such title 26, no gain or loss is recognized by the
previously existing body corporate by reason of
the partition, and the basis and holding period
of the assets of the corporation immediately following such partition are the same as the basis
and holding period of such assets immediately
prior to such partition.
1 See

References in Text note below.

§ 1717

(b) Purchase and sale of insured and conventional mortgages; transactions in loans and
advances of credit
(1) For the purposes set forth in section 1716 of
this title and subject to the limitations and restrictions of this subchapter, each of the bodies
corporate named in subsection (a)(2) is authorized pursuant to commitments or otherwise, to
purchase, service, sell, or otherwise deal in any
mortgages which are insured under this chapter
or title V of the Housing Act of 1949 [42 U.S.C.
1471 et seq.], or which are insured or guaranteed
under the Servicemen’s Readjustment Act of
1944 or chapter 37 of title 38; and to purchase,
service, sell, or otherwise deal in any loans
made or guaranteed under part B of title VI of
the Public Health Service Act [42 U.S.C. 291j–1 et
seq.]; and the corporation is authorized to lend
on the security of any such mortgages and to
purchase, sell, or otherwise deal in any securities guaranteed by the Association under section 1721(g) of this title: Provided, That (1) the
Association may not purchase any mortgage at
a price exceeding 100 per centum of the unpaid
principal amount thereof at the time of purchase, with adjustments for interest and any
comparable items; (2) the Association may not
purchase any mortgage, except a mortgage insured under title V of the Housing Act of 1949 [42
U.S.C. 1471 et seq.], if it is offered by, or covers
property held by, a State, territorial, or municipal instrumentality; and (3) the Association
may not purchase any mortgage under section
1720 1 of this title, except a mortgage insured
under section 1715k of this title or subchapter
VIII or section 1709(k) of this title, or under subchapter IX–A 1 with respect to a new community
approved under section 1749cc–1 1 of this title, or
insured under section 1715e of this title and covering property located in an urban renewal area,
or a mortgage covering property located in Alaska, Guam, or Hawaii, if the original principal
obligation thereof exceeds or exceeded $55,000 in
the case of property upon which is located a
dwelling designed principally for a one-family
residence; or $60,000 in the case of a two- or
three-family residence; or $68,750 in the case of
a four-family residence; or, in the case of a property containing more than four dwelling units,
$38,000 per dwelling unit (or such higher amount
not in excess of $45,000 per dwelling unit as the
Secretary may by regulation specify in any geographical area where the Secretary finds that
cost levels so require) for that part of the property attributable to dwelling use. Notwithstanding the provisions of clause (3) of the preceding
sentence, the Association may purchase a mortgage under section 1720 1 of this title with an
original principal obligation which exceeds the
otherwise applicable maximum amount per
dwelling unit if the mortgage is insured under
section 1713(c)(3), 1715e(b)(2), 1715k(d)(3)(B)(iii),
1715l(d)(3)(ii),
1715l(d)(4)(ii),
1715v(c)(2),
1715y(e)(3), or 1715z–1 of this title. For the purposes of this subchapter, the terms ‘‘mortgages’’
and ‘‘home mortgages’’ shall be inclusive of any
mortgages or other loans insured under any of
the provisions of this chapter or title V of the
Housing Act of 1949 [42 U.S.C. 1471 et seq.].
(2) For the purposes set forth in section 1716(a)
of this title, the corporation is authorized, pur-

§ 1717

TITLE 12—BANKS AND BANKING

suant to commitments or otherwise, to purchase, service, sell, lend on the security of, or
otherwise deal in mortgages which are not insured or guaranteed as provided in paragraph (1)
(such mortgages referred to hereinafter as ‘‘conventional mortgages’’). No such purchase of a
conventional mortgage secured by a property
comprising one- to four-family dwelling units
shall be made if the outstanding principal balance of the mortgage at the time of purchase exceeds 80 per centum of the value of the property
securing the mortgage, unless (A) the seller retains a participation of not less than 10 per centum in the mortgage; (B) for such period and
under such circumstances as the corporation
may require, the seller agrees to repurchase or
replace the mortgage upon demand of the corporation in the event that the mortgage is in default; or (C) that portion of the unpaid principal
balance of the mortgage which is in excess of
such 80 per centum is guaranteed or insured by
a qualified insurer as determined by the corporation. The corporation shall not issue a commitment to purchase a conventional mortgage
prior to the date the mortgage is originated, if
such mortgage is eligible for purchase under the
preceding sentence only by reason of compliance
with the requirements of clause (A) of such sentence. The corporation may purchase a conventional mortgage which was originated more
than one year prior to the purchase date only if
the seller is the Federal Deposit Insurance Corporation, the Resolution Trust Corporation, the
National Credit Union Administration, or any
other seller currently engaged in mortgage lending or investing activities. For the purpose of
this section, the term ‘‘conventional mortgages’’ shall include a mortgage, lien, or other
security interest on the stock or membership
certificate issued to a tenant-stockholder or
resident-member of a cooperative housing corporation, as defined in section 216 of title 26, and
on the proprietary lease, occupancy agreement,
or right of tenancy in the dwelling unit of the
tenant-stockholder or resident-member in such
cooperative housing corporation. The corporation shall establish limitations governing the
maximum original principal obligation of conventional mortgages that are purchased by it; in
any case in which the corporation purchases a
participation interest in such a mortgage, the
limitation shall be calculated with respect to
the total original principal obligation of the
mortgage and not merely with respect to the interest purchased by the corporation. Such limitations shall not exceed $417,000 for a mortgage
secured by a single-family residence, $533,850 for
a mortgage secured by a 2-family residence,
$645,300 for a mortgage secured by a 3-family residence, and $801,950 for a mortgage secured by a
4-family residence, except that such maximum
limitations shall be adjusted effective January 1
of each year beginning after the effective date of
the Federal Housing Finance Regulatory Reform
Act of 2008, subject to the limitations in this
paragraph. Each adjustment shall be made by
adding to each such amount (as it may have
been previously adjusted) a percentage thereof
equal to the percentage increase, during the
most recent 12-month or 4-quarter period ending
before the time of determining such annual ad-

Page 730

justment, in the housing price index maintained
by the Director of the Federal Housing Finance
Agency (pursuant to section 4542 of this title). If
the change in such house price index during the
most recent 12-month or 4-quarter period ending
before the time of determining such annual adjustment is a decrease, then no adjustment shall
be made for the next year, and the next adjustment shall take into account prior declines in
the house price index, so that any adjustment
shall reflect the net change in the house price
index since the last adjustment. Declines in the
house price index shall be accumulated and then
reduce increases until subsequent increases exceed prior declines. The foregoing limitations
may be increased by not to exceed 50 per centum
with respect to properties located in Alaska,
Guam, Hawaii, and the Virgin Islands. Such
foregoing limitations shall also be increased,
with respect to properties of a particular size located in any area for which 115 percent of the
median house price for such size residence exceeds the foregoing limitation for such size residence, to the lesser of 150 percent of such limitation for such size residence or the amount that
is equal to 115 percent of the median house price
in such area for such size residence.
(3) The corporation is authorized to purchase,
service, sell, lend on the security of, and otherwise deal in loans or advances of credit for the
purchase and installation of home improvements, including energy conserving improvements or solar energy systems described in the
last paragraph of section 1703(a) of this title and
residential energy conservation measures as described in section 210(11) of the National Energy
Conservation Policy Act [42 U.S.C. 8211(11)] 1 and
financed by a public utility in accordance with
the requirements of title II of such Act [42
U.S.C. 8211 et seq.]. To be eligible for purchase,
any such loan or advance of credit (other than a
loan or advance made with respect to energy
conserving improvements or solar energy systems or residential energy conservation measures) not insured under subchapter I of this
chapter shall be secured by a lien against the
property to be improved.
(4) The corporation is authorized to purchase,
service, sell, lend on the security of, and otherwise deal in loans or advances of credit secured
by mortgages or other liens against manufactured homes.
(5)(A) The corporation is authorized to purchase, service, sell, lend on the security of, and
otherwise deal in (i) conventional mortgages
that are secured by a subordinate lien against a
one- to four-family residence that is the principal residence of the mortgagor; and (ii) conventional mortgages that are secured by a subordinate lien against a property comprising five
or more family dwelling units. If the corporation, pursuant to paragraphs (1) through (4),
shall have purchased, serviced, sold, or otherwise dealt with any other outstanding mortgage
secured by the same residence, the aggregate
original amount of such other mortgage and the
mortgage authorized to be purchased, serviced,
sold, or otherwise dealt with under this paragraph shall not exceed the applicable limitation
determined under paragraph (2).
(B) The corporation shall establish limitations
governing the maximum original principal obli-

Page 731

TITLE 12—BANKS AND BANKING

gation of conventional mortgages described in
subparagraph (A). In any case in which the corporation purchases a participation interest in
such a mortgage, the limitation shall be calculated with respect to the total original principal obligation of such mortgage described in
subparagraph (A) and not merely with respect to
the interest purchased by the corporation. Such
limitations shall not exceed (i) with respect to
mortgages described in subparagraph (A)(i), 50
per centum of the single-family residence mortgage limitation determined under paragraph (2);
and (ii) with respect to mortgages described in
subparagraph (A)(ii), the applicable limitation
determined under paragraph (2).
(C) No subordinate mortgage against a one- to
four-family residence shall be purchased by the
corporation if the total outstanding indebtedness secured by the property as a result of such
mortgage exceeds 80 per centum of the value of
such property unless (i) that portion of such
total outstanding indebtedness that exceeds
such 80 per centum is guaranteed or insured by
a qualified insurer as determined by the corporation; (ii) the seller retains a participation of
not less than 10 per centum in the mortgage; or
(iii) for such period and under such circumstances as the corporation may require, the seller agrees to repurchase or replace the mortgage
upon demand of the corporation in the event
that the mortgage is in default. The corporation
shall not issue a commitment to purchase a subordinate mortgage prior to the date the mortgage is originated, if such mortgage is eligible
for purchase under the preceding sentence only
by reason of compliance with the requirements
of clause (ii) of such sentence.
(6) The corporation may not implement any
new program (as such term is defined in section
4502 of this title) before obtaining the approval
of the Secretary under section 4542 1 of this title.
(7)(A) DEFINITIONS.—In this paragraph—
(i) the term ‘‘credit score’’ means a numerical value or a categorization created by a
third party derived from a statistical tool or
modeling system used by a person who makes
or arranges a loan to predict the likelihood of
certain credit behaviors, including default;
and
(ii) the term ‘‘residential mortgage’’ has the
meaning given the term in section 1451 of this
title.

§ 1717

under which the corporation may not validate
and approve a credit score model unless the
credit score model—
(i) satisfies minimum requirements of integrity, reliability, and accuracy;
(ii) has a historical record of measuring and
predicting default rates and other credit behaviors;
(iii) is consistent with the safe and sound operation of the corporation;
(iv) complies with any standards and criteria
established by the Director of the Federal
Housing Finance Agency under section 4548(1)
of this title; and
(v) satisfies any other requirements, as determined by the corporation.
(D) REPLACEMENT OF CREDIT SCORE MODEL.—If
the corporation has validated and approved 1 or
more credit score models under subparagraph
(C) and the corporation validates and approves
an additional credit score model, the corporation may determine that—
(i) the additional credit score model has replaced the credit score model or credit score
models previously validated and approved; and
(ii) the credit score model or credit score
models previously validated and approved
shall no longer be considered validated and approved for the purposes of subparagraph (B).

(B) USE OF CREDIT SCORES.—The corporation
shall condition purchase of a residential mortgage by the corporation under this subsection on
the provision of a credit score for the borrower
only if—
(i) the credit score is derived from any credit
scoring model that has been validated and approved by the corporation under this paragraph; and
(ii) the corporation provides for the use of
the credit score by all of the automated underwriting systems of the corporation and any
other procedures and systems used by the corporation to purchase residential mortgages
that use a credit score.

(E) PUBLIC DISCLOSURE.—Upon establishing
the validation and approval process required
under subparagraph (C), the corporation shall
make publicly available a description of the validation and approval process.
(F) APPLICATION.—Not later than 30 days after
the effective date of this paragraph, the corporation shall solicit applications from developers of
credit scoring models for the validation and approval of those models under the process required under subparagraph (C).
(G) TIMEFRAME FOR DETERMINATION; NOTICE.—
(i) IN GENERAL.—The corporation shall make
a determination with respect to any application submitted under subparagraph (F), and
provide notice of that determination to the
applicant, before a date established by the corporation that is not later than 180 days after
the date on which an application is submitted
to the corporation.
(ii) EXTENSIONS.—The Director of the Federal Housing Finance Agency may authorize
not more than 2 extensions of the date established under clause (i), each of which shall not
exceed 30 days, upon a written request and a
showing of good cause by the corporation.
(iii) STATUS NOTICE.—The corporation shall
provide notice to an applicant regarding the
status of an application submitted under subparagraph (F) not later than 60 days after the
date on which the application was submitted
to the corporation.
(iv) REASONS FOR DISAPPROVAL.—If an application submitted under subparagraph (F) is
disapproved, the corporation shall provide to
the applicant the reasons for the disapproval
not later than 30 days after a determination is
made under this subparagraph.

(C) VALIDATION AND APPROVAL PROCESS.—The
corporation shall establish a validation and approval process for the use of credit score models,

(H) AUTHORITY OF DIRECTOR.—If the corporation elects to use a credit score model under this
paragraph, the Director of the Federal Housing

§ 1717

TITLE 12—BANKS AND BANKING

Finance Agency shall require the corporation to
periodically review the validation and approval
process required under subparagraph (C) as the
Director determines necessary to ensure that
the process remains appropriate and adequate
and complies with any standards and criteria established pursuant to section 4548(1) of this title.
(I) EXTENSION.—If, as of the effective date of
this paragraph, a credit score model has not
been approved under subparagraph (C), the corporation may use a credit score model that was
in use before the effective date of this paragraph, if necessary to prevent substantial market disruptions, until the earlier of—
(i) the date on which a credit score model is
validated and approved under subparagraph
(C); or
(ii) the date that is 2 years after the effective date of this paragraph.
(c) Administration of trusts; obligations of departments and agencies of the United States;
exemption of interest income from taxation;
authorization of appropriations for differential reimbursements
(1) Notwithstanding any other provision of
this chapter or of any other law, the Association
is authorized under section 1721 of this title to
create, accept, execute, and otherwise administer in all respects such trusts, receiverships,
conservatorships, liquidating or other agencies,
or other fiduciary and representative undertakings and activities, hereinafter in this subsection called ‘‘trusts’’, as might be appropriate
for financing purposes; and in relation thereto
the Association may acquire, hold and manage,
dispose of, and otherwise deal in any mortgages
or other types of obligations in which any department or agency of the United States listed
in paragraph (2) of this subsection may have a
financial interest. The Association may join in
any such undertakings and activities, hereinafter in this subsection called ‘‘trusts’’; notwithstanding that it is also serving in a fiduciary or
representative capacity; and is authorized to
guarantee any participations or other instruments, whether evidence of property rights or
debt, issued for such financing purposes. Participations or other instruments issued by the Association pursuant to this subsection shall to the
same extent as securities which are direct obligations of or obligations guaranteed as to principal or interest by the United States be deemed
to be exempt securities within the meaning of
laws administered by the Securities and Exchange Commission. The amounts of any mortgages and their obligations acquired by the Association under section 1721 of this title, pursuant to this subsection, shall not be included in
the total amounts set forth in section 1721(c) of
this title.
(2) Subject to the limitations provided in paragraph (4) of this subsection, one or more trusts
may be established as provided in this subsection by each of the following departments or
agencies:
(A) The Farmers Home Administration of
the Department of Agriculture, but only with
respect to operating loans, direct farm ownership loans, direct housing loans, and direct
soil and water loans. Such trusts may not be

Page 732

established with respect to loans for housing
for the elderly under sections 502 and 515(a) of
the Housing Act of 1949 [42 U.S.C. 1472 and
1485(a)], nor with respect to loans for nonfarm
recreational development.
(B) The Department of Education, but only
with respect to loans made by the Secretary of
Education for construction of academic facilities, and loans to help finance student loan
programs.
(C) The Department of Housing and Urban
Development.
(D) The Department of Veterans Affairs.
(E) The Export-Import Bank.
(F) The Small Business Administration.
The head of each such department or agency,
hereinafter in this subsection called the
‘‘trustor,’’ is authorized to set aside a part or all
of any obligations held by the trustor and subject them to a trust or trusts and, incident
thereto, shall guarantee to the trustee timely
payment thereof. The trust instrument may provide for the issuance and sale of beneficial interests or participations, by the trustee, in such obligations or in the right to receive interest and
principal collections therefrom; and may provide for the substitution or withdrawal of such
obligations, or for the substitution of cash for
obligations. The trust or trusts shall be exempt
from all taxation. The trust instrument may
also contain other appropriate provisions in
keeping with the purposes of this subsection.
The Association shall be named and shall act as
trustee of any such trusts and, for the purposes
thereof, the title to such obligations shall be
deemed to have passed to the Association in
trust. The trust instrument shall provide that
custody, control, and administration of the obligations shall remain in the trustor subjecting
the obligations to the trust, subject to transfer
to the trustee in event of default or probable default, as determined by the trustee, in the payment of principal and interest of the beneficial
interests or participations. Collections from obligations subject to the trust shall be dealt with
as provided in the instrument creating the trust.
The trust instrument shall provide that the
trustee will promptly pay to the trustor the full
net proceeds of any sale of beneficial interests
or participations to the extent they are based
upon such obligations or collections. Such proceeds shall be dealt with as otherwise provided
by law for sales or repayment of such obligations. The effect of both past and future sales of
any issue of beneficial interests or participations shall be the same, to the extent of the
principal of such issue, as the direct sale with
recourse of the obligations subject to the trust.
Any trustor creating a trust or trusts hereunder
is authorized to purchase, through the facilities
of the trustee, outstanding beneficial interests
or participations to the extent of the amount of
the trustor’s responsibility to the trustee on
beneficial interests or participations outstanding, and to pay the trustor’s proper share of the
costs and expenses incurred by the Association
as trustee pursuant to the trust instrument.
(3) When any trustor guarantees to the trustee
the timely payment of obligations the trustor
subjects to a trust pursuant to this subsection,
and it becomes necessary for such trustor to

Page 733

TITLE 12—BANKS AND BANKING

meet his responsibilities under such guaranty,
the trustor is authorized to fulfill such guaranty.
(4) Beneficial interests or participations shall
not be issued for the account of any trustor in
an aggregate principal amount greater than is
authorized with respect to such trustor in an appropriation Act. Any such authorization shall
remain available only for the fiscal year for
which it is granted and for the succeeding fiscal
year.
(5) The Association, as trustee, is authorized
to issue and sell beneficial interests or participations under this subsection, notwithstanding
that there may be an insufficiency in aggregate
receipts from obligations subject to the related
trust to provide for the payment by the trustee
(on a timely basis out of current receipts or
otherwise) of all interest or principal on such interests or participations (after provision for all
costs and expenses incurred by the trustee, fairly prorated among trustors). There are authorized to be appropriated without fiscal year limitation such sums as may be necessary to enable
any trustor to pay the trustee such insufficiency
as the trustee may require on account of outstanding beneficial interests or participations
authorized to be issued pursuant to paragraph
(4) of this subsection. Such trustor shall make
timely payments to the trustee from such appropriations, subject to and in accord with the
trust instrument. In the event that the insufficiency required by the trustee is on account of
principal maturities of outstanding beneficial
interests or participations authorized to be issued pursuant to paragraph (4) of this subsection, or pursuant hereto, the trustee is authorized to elect to issue additional beneficial
interests or participations for refinancing purposes in lieu of requiring any trustor or trustors
to make payments to the trustee from appropriated funds or other sources. Each such issue
of beneficial interests or participations shall be
in an amount determined by the trustee but not
in excess of the aggregate amount which the
trustee would otherwise require the trustor or
trustors to pay from appropriated funds or other
sources, and may be issued without regard to
the provisions of paragraph (4) of this subsection. All refinancing issues of beneficial interests or participations shall be deemed to have
been issued pursuant to the authority contained
in the appropriation Act or Acts under which
the beneficial interests or participations were
originally issued.
(June 27, 1934, ch. 847, title III, § 302, 48 Stat. 1254;
May 28, 1935, ch. 150, § 31, 49 Stat. 300; Feb. 3,
1938, ch. 13, § 6, 52 Stat. 24; Mar. 28, 1941, ch. 31,
§ 6, 55 Stat. 62; July 1, 1948, ch. 784, § 1, 62 Stat.
1208; July 19, 1949, ch. 351, § 1, 63 Stat. 446; Oct. 25,
1949, ch. 729, § 1(3), 63 Stat. 905; Apr. 20, 1950, ch.
94, title I, § 117, 64 Stat. 57; July 14, 1952, ch. 723,
§ 3(b), 66 Stat. 602; June 30, 1953, ch. 170, § 13(b), 67
Stat. 125; Aug. 2, 1954, ch. 649, title II, § 201, 68
Stat. 613; Aug. 7, 1956, ch. 1029, title II, § 201, 70
Stat. 1096; Pub. L. 85–857, § 13(g), Sept. 2, 1958, 72
Stat. 1265; Pub. L. 86–372, title III, § 301, Sept. 23,
1959, 73 Stat. 669; Pub. L. 87–70, title I, § 102(c),
title VI, §§ 602, 603(a), June 30, 1961, 75 Stat. 158,
176; Pub. L. 88–560, title VII, §§ 701(a), 702, Sept.
2, 1964, 78 Stat. 800, 802; Pub. L. 89–117, title I,

§ 1717

§ 102(d), title II, § 201(b)(1), title VIII, §§ 802(a),
803, 804, title X, § 1004(a), Aug. 10, 1965, 79 Stat.
454, 465, 493, 494, 501; Pub. L. 89–429, § 2, May 24,
1966, 80 Stat. 164; Pub. L. 89–751, § 7, Nov. 3, 1966,
80 Stat. 1236; Pub. L. 89–754, title IV, § 405, Nov.
3, 1966, 80 Stat. 1273; Pub. L. 90–19, § 1(a)(2), (3),
(j)(1), May 25, 1967, 81 Stat. 17, 18; Pub. L. 90–448,
title VIII, §§ 802(c)–(g), 803, Aug. 1, 1968, 82 Stat.
536, 537, 542; Pub. L. 91–152, title I, § 114, Dec. 24,
1969, 83 Stat. 385; Pub. L. 91–296, title II, § 202,
June 30, 1970, 84 Stat. 350; Pub. L. 91–351, title II,
§ 201(a), title IV, § 402, July 24, 1970, 84 Stat. 450,
458; Pub. L. 91–609, title IX, § 901(d), Dec. 31, 1970,
84 Stat. 1807; Pub. L. 93–383, title VIII,
§§ 806(a)–(f), 807, Aug. 22, 1974, 88 Stat. 727, 728;
Pub. L. 93–541, § 2, Dec. 26, 1974, 88 Stat. 1739;
Pub. L. 95–128, title IV, § 408(a), Oct. 12, 1977, 91
Stat. 1138; Pub. L. 95–557, title I, § 101(c)(3), title
III, § 318(a), Oct. 31, 1978, 92 Stat. 2083, 2100; Pub.
L. 95–619, title II, § 246, Nov. 9, 1978, 92 Stat. 3233;
Pub. L. 96–153, title III, § 317, Dec. 21, 1979, 93
Stat. 1119; Pub. L. 96–294, title V, § 534(b), June
30, 1980, 94 Stat. 741; Pub. L. 96–399, title III,
§§ 309, 313(a), 339(a)(1), (b)(1), Oct. 8, 1980, 94 Stat.
1641, 1644, 1657; Pub. L. 97–110, title II, § 202(c),
Dec. 26, 1981, 95 Stat. 1514; Pub. L. 98–440, title II,
§§ 201(a), 203(a), 205(a), 206(a), Oct. 3, 1984, 98 Stat.
1692, 1693, 1695; Pub. L. 98–479, title II, §§ 201(b),
204(a)(16), Oct. 17, 1984, 98 Stat. 2227, 2232; Pub. L.
99–514, § 2, Oct. 22, 1986, 100 Stat. 2095; Pub. L.
100–122, § 2(b)(1), Sept. 30, 1987, 101 Stat. 793; Pub.
L. 100–154, Nov. 5, 1987, 101 Stat. 890; Pub. L.
100–170, Nov. 17, 1987, 101 Stat. 914; Pub. L.
100–179, Dec. 3, 1987, 101 Stat. 1018; Pub. L.
100–200, Dec. 21, 1987, 101 Stat. 1327; Pub. L.
100–242, title IV, § 443(a), Feb. 5, 1988, 101 Stat.
1922; Pub. L. 100–628, title X, § 1068(a), Nov. 7,
1988, 102 Stat. 3276; Pub. L. 101–73, title VII,
§ 731(f)(1), Aug. 9, 1989, 103 Stat. 433; Pub. L.
102–54, § 13(d)(2)(A), June 13, 1991, 105 Stat. 274;
Pub. L. 102–550, title XIII, § 1381(b), (c), (s)(1),
Oct. 28, 1992, 106 Stat. 3995, 4001; Pub. L. 105–276,
title V, § 582(a)(14), Oct. 21, 1998, 112 Stat. 2644;
Pub. L. 110–289, div. A, title I, § 1124(a)(1), (2),
July 30, 2008, 122 Stat. 2691, 2692; Pub. L. 115–174,
title III, § 310(a), May 24, 2018, 132 Stat. 1351.)
REFERENCES IN TEXT
Section 1720 of this title, referred to in subsecs.
(a)(2)(A) and (b)(1), was repealed by Pub. L. 98–181, title
I [title IV, § 483(a)], Nov. 30, 1983, 97 Stat. 1240.
The Housing Act of 1949, referred to in subsec. (b)(1),
is act July 15, 1949, ch. 338, 63 Stat. 413, as amended.
Title V of the Housing Act of 1949 is classified generally
to subchapter III (§ 1471 et seq.) of chapter 8A of Title
42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note
set out under section 1441 of Title 42 and Tables.
The Servicemen’s Readjustment Act of 1944, referred
to in subsec. (b)(1), is act June 22, 1944, ch. 268, 58 Stat.
284, as amended, which was classified generally to chapter 11C (§§ 693 to 697g) of former Title 38, Pensions, Bonuses, and Veterans’ Relief, and which was repealed by
section 14(87) of Pub. L. 85–857, Sept. 2, 1958, 72 Stat.
1273, the first section of which enacted Title 38, Veterans’ Benefits. For distribution of sections 693 to 697g of
former Title 38 to Title 38, Veterans’ Benefits, see
Table preceding section 101 of Title 38, Veterans’ Benefits.
The Public Health Service Act, referred to in subsec.
(b)(1), is act July 1, 1944, ch. 373, 58 Stat. 682, as amended. Part B of title VI of the Public Health Service Act
is classified generally to part B (§ 291j–1 et seq.) of subchapter IV of chapter 6A of Title 42, The Public Health

§ 1717

TITLE 12—BANKS AND BANKING

and Welfare. For complete classification of this Act to
the Code, see Short Title note set out under section 201
of Title 42 and Tables.
Subchapter IX–A of this chapter and section 1749cc–1
of this title, referred to in subsec. (b)(1), were repealed
by Pub. L. 101–235, title I, § 133(a), Dec. 15, 1989, 103 Stat.
2027.
The effective date of the Federal Housing Finance
Regulatory Reform Act of 2008, referred to in subsec.
(b)(2), probably means the date of enactment of div. A
of Pub. L. 110–289, which was approved July 30, 2008.
The National Energy Conservation Policy Act, referred to in subsec. (b)(3), is Pub. L. 95–619, Nov. 9, 1978,
92 Stat. 3208, as amended. Title II of the National Energy Conservation Policy Act is classified principally
to subchapter II (§ 8211 et seq.) of chapter 91 of Title 42,
The Public Health and Welfare. Section 210 of the Act
[42 U.S.C. 8211] was omitted from the Code pursuant to
section 8229 of Title 42 which terminated authority
under that section on June 30, 1989. For complete classification of this Act to the Code, see Short Title note
set out under section 8201 of Title 42 and Tables.
Section 4542 of this title, referred to in subsec. (b)(6),
was repealed and a new section 4542 was added by Pub.
L. 110–289, div. A, title I, §§ 1122, 1124(d), July 30, 2008, 122
Stat. 2693. The new section 4542 does not relate to obtaining the approval of the Secretary.
The effective date of this paragraph, referred to in
subsec. (b)(7)(F), (I), is 180 days after May 24, 2018, see
section 310(d) of Pub. L. 115–174, set out as an Effective
Date of 2018 Amendment note under section 1454 of this
title.
AMENDMENTS
2018—Subsec. (b)(7). Pub. L. 115–174 added par. (7).
2008—Subsec. (b)(2). Pub. L. 110–289 inserted last sentence and substituted seventh through ninth sentences
for former seventh and eighth sentences which read as
follows: ‘‘Such limitations shall not exceed $93,750 for a
mortgage secured by a single-family residence, $120,000
for a mortgage secured by a two-family residence,
$145,000 for a mortgage secured by a three-family residence, and $180,000 for a mortgage secured by a fourfamily residence, except that such maximum limitations shall be adjusted effective January 1 of each year
beginning with 1981. Each such adjustment shall be
made by adding to each such amount (as it may have
been previously adjusted) a percentage thereof equal to
the percentage increase during the twelve-month period ending with the previous October in the national
average one-family house price in the monthly survey
of all major lenders conducted by the Federal Housing
Finance Board.’’
1998—Subsec. (b)(2). Pub. L. 105–276 struck out penultimate sentence which read as follows: ‘‘With respect to
mortgages secured by property comprising five or more
family dwelling units, such limitations shall not exceed
125 per centum of the dollar amounts set forth in section 1713(c)(3) of this title, except that such limitations
may be increased by the corporation (taking into account construction costs) to not to exceed 240 per centum of such dollar amounts in any geographical area
for which the Secretary of Housing and Urban Development determines under such section that cost levels require any increase in the dollar amount limitations
under such section.’’
1992—Subsec. (b)(2). Pub. L. 102–550, § 1381(b), (c)(1), in
first sentence, struck out ‘‘and with the approval of the
Secretary of Housing and Urban Development,’’ before
‘‘the corporation’’ and in last sentence, substituted
‘‘Hawaii, and the Virgin Islands’’ for ‘‘and Hawaii’’.
Subsec. (b)(3), (4). Pub. L. 102–550, § 1381(c)(2), (3),
struck out ‘‘, with the approval of the Secretary of
Housing and Urban Development,’’ after ‘‘corporation
is authorized’’.
Subsec. (b)(6). Pub. L. 102–550, § 1381(c)(4), added par.
(6).
Subsec. (c)(2). Pub. L. 102–550, § 1381(s)(1)(A), in first
sentence of concluding provisions, substituted ‘‘the
trustor’’ for ‘‘him’’ after ‘‘obligations held by’’ and in

Page 734

last sentence, substituted ‘‘the trustor’s’’ for ‘‘his’’ in
two places.
Subsec. (c)(3). Pub. L. 102–550, § 1381(s)(1)(B), substituted ‘‘the trustor’’ for ‘‘he’’ after ‘‘obligations’’ and
‘‘guaranty,’’.
1991—Subsec. (c)(2)(D). Pub. L. 102–54 substituted ‘‘Department of Veterans Affairs’’ for ‘‘Veterans’ Administration’’.
1989—Subsec. (b)(2). Pub. L. 101–73 substituted ‘‘Resolution Trust Corporation’’ for ‘‘Federal Savings and
Loan Insurance Corporation’’ and ‘‘Federal Housing Finance Board’’ for ‘‘Federal Home Loan Bank Board’’.
1988—Subsec. (b)(5)(A)(i). Pub. L. 100–242 struck out
‘‘through March 15, 1988,’’ before ‘‘conventional mortgages’’.
Subsec. (b)(5)(A)(ii). Pub. L. 100–628 struck out ‘‘until
October 1, 1985,’’ before ‘‘conventional mortgages’’.
1987—Subsec. (b)(5)(A)(i). Pub. L. 100–200 substituted
‘‘March 15, 1988’’ for ‘‘December 16, 1987’’.
Pub. L. 100–179 substituted ‘‘December 16, 1987’’ for
‘‘December 2, 1987’’.
Pub. L. 100–170 substituted ‘‘December 2, 1987’’ for
‘‘November 15, 1987’’.
Pub. L. 100–154 substituted ‘‘November 15, 1987’’ for
‘‘October 31, 1987’’.
Pub. L. 100–122 substituted ‘‘through October 31, 1987’’
for ‘‘until October 1, 1987’’.
1986—Subsecs. (a)(3), (b)(2). Pub. L. 99–514 substituted
‘‘Internal Revenue Code of 1986’’ for ‘‘Internal Revenue
Code of 1954’’, which for purposes of codification was
translated as ‘‘title 26’’ thus requiring no change in
text.
1984—Subsec. (b)(2). Pub. L. 98–479, § 204(a)(16), substituted ‘‘corporation’’ for ‘‘Corporation’’ in fourth sentence after ‘‘The’’.
Subsec. (b)(2). Pub. L. 98–440, §§ 201(a), 205(a), 206(a), in
second sentence substituted ‘‘No such purchase of a
conventional mortgage secured by a property comprising one- to four-family dwelling units’’ for ‘‘No such
purchase of a conventional mortgage’’, in sixth sentence substituted ‘‘The corporation shall establish limitations governing the maximum original principal obligation of conventional mortgages that are purchased
by it; in any case in which the corporation purchases a
participation interest in such a mortgage, the limitation shall be calculated with respect to the total original principal obligation of the mortgage and not merely with respect to the interest purchased by the corporation’’ for ‘‘The corporation shall establish limitations governing the maximum principal obligation of
conventional mortgages purchased by it’’, and in penultimate sentence inserted provision that the limitations
set forth in section 1713(c)(3) of this title may be increased by the corporation (taking into account construction costs) to not to exceed 240 per centum of such
dollar amounts in any geographical area for which the
Secretary of Housing and Urban Development determines under such section that cost levels require any
increase in the dollar amount limitations under such
section.
Subsec. (b)(5). Pub. L. 98–440, § 203(a), added par. (5).
Subsec. (c)(2)(B). Pub. L. 98–479, § 201(b), substituted
‘‘Department of Education’’ for ‘‘Department of Health,
Education, and Welfare’’ and ‘‘Secretary of Education’’
for ‘‘Commissioner of Education’’.
1981—Subsec. (b)(2). Pub. L. 97–110 substituted provisions empowering the Corporation to purchase a conventional mortgage which was originated more than
one year prior to the purchase date only if the seller is
the Federal Deposit Insurance Corporation, the Federal
Savings and Loan Insurance Corporation, the National
Credit Union Administration, or any other seller currently engaged in mortgage lending or investing activities for provisions which had empowered the Corporation to purchase a conventional mortgage which was
originated more than one year prior to the purchase
date only if the seller was currently engaged in mortgage lending or investing activities and if, as a result
thereof, the cumulative aggregate of the principal balances of all conventional mortgages purchased by the

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TITLE 12—BANKS AND BANKING

Corporation which were originated more than one year
prior to the date of purchase did not exceed 20 per centum of the cumulative aggregate of the principal balances of all conventional mortgages purchased by the
Corporation.
1980—Subsec. (b)(1). Pub. L. 96–399, § 309, struck out
‘‘(1)’’ before ‘‘the mortgage’’ and cl. (2) relating to requirement respecting assistance under contracts authorized by section 1437f of title 42 for at least 20 per
centum of covered units.
Subsec. (b)(2). Pub. L. 96–399, § 313(a), substituted provisions defining term ‘‘conventional mortgages’’, and
limitations respecting amounts, adjustments, etc., for
such mortgages, for provisions establishing limitations
for the maximum principal obligation of conventional
mortgages purchased by the corporation and maximum
amount of such limitations.
Subsec. (b)(3). Pub. L. 96–399, § 339(a)(1), substituted
provisions relating to authority, with the approval of
the Secretary of Housing and Urban Development, to
deal in loans or advances of credit for the purchase and
installation of home improvements, and provisions respecting eligibility for purchases of loans or advances
of credit, for provisions relating to authority to deal in
loans or advances of credit made for energy conserving
improvements and solar energy systems, etc., and provisions respecting eligibility for purchases of loans.
Pub. L. 96–294 inserted provisions relating to loans or
advances of credit by public utilities for purpose of financing residential energy conservation measures in a
residential building.
Subsec. (b)(4). Pub. L. 96–399, § 339(b)(1), added par. (4).
1979—Subsec. (b)(1). Pub. L. 96–153 substituted ‘‘(1) if
the mortgage is insured under section 1713(c)(3),
1715e(b)(2),
1715k(d)(3)(B)(iii),
1715l(d)(3)(ii),
1715l(d)(4)(ii), 1715v(c)(2), 1715y(e)(3), or 1715z–1 of this
title, and (2) at least 20 per centum of the units covered
by such mortgage are assisted under contracts authorized by section 1437f of title 42’’ for ‘‘if the mortgage (1)
is insured under section 1715z–1 of this title or is a
below-market interest rate mortgage insured under
section 1715l(d)(3) of this title, and (2) covers property
which has the benefit of local tax abatement in an
amount determined by the Secretary of Housing and
Urban Development to be sufficient to make possible
rentals not in excess of those that could be approved by
the Secretary if the mortgage amount did not exceed
the otherwise applicable maximum amount per dwelling unit and if local tax abatement were not provided’’.
1978—Subsec. (b)(3). Pub. L. 95–619 added par. (3).
Subsec. (b)(1). Pub. L. 95–557 substituted ‘‘or subchapter VIII or section 1709(k) of this title’’ for ‘‘or subchapter VIII’’ and ‘‘if the original principal obligation
thereof exceeds or exceeded $55,000 in the case of property upon which is located a dwelling designed principally for a one-family residence; or $60,000 in the case
of a two- or three-family residence; or $68,750 in the
case of a four-family residence; or, in the case of a
property containing more than four dwelling units,
$38,000 per dwelling unit (or such higher amount not in
excess of $45,000 per dwelling unit as the Secretary may
by regulation specify in any geographical area where
the Secretary finds that cost levels so require) for that
part of the property attributable to dwelling use’’ for
‘‘if the original principal obligation thereof exceeds or
exceeded $33,000 (or such higher amount not in excess of
$38,000 as the Secretary may by regulation specify in
any geographical area where he finds that cost levels so
require), for each family residence or dwelling unit covered by the mortgage (plus an additional $2,500 for each
such family residence or dwelling unit which has four
or more bedrooms)’’.
1977—Subsec. (b)(2). Pub. L. 95–128 inserted ‘‘by more
than 25 per centum’’ after ‘‘exceed’’ in last sentence.
1974—Subsec. (a)(2). Pub. L. 93–383, § 806(a)(1), substituted ‘‘September 1, 1968’’ for ‘‘the effective date established pursuant to section 808 of the Housing and
Urban Development Act of 1968’’.
Subsec. (a)(2)(A). Pub. L. 93–383, § 806(a)(2), struck out
‘‘effective’’ before ‘‘date’’.

§ 1717

Subsec. (a)(2)(B). Pub. L. 93–383, § 806(a)(2), (b), struck
out ‘‘effective’’ before ‘‘date’’, inserted ‘‘or metropolitan area thereof’’ before ‘‘and shall’’ and ‘‘jurisdiction’’
before ‘‘venue’’, and substituted ‘‘District of Columbia
corporation’’ for ‘‘resident thereof’’.
Subsec. (b)(1). Pub. L. 93–541 substituted ‘‘or guaranteed under part B of title VI of the Public Health Service Act’’ for ‘‘to a public agency under part B of title
VI of the Public Health Service Act’’.
Pub. L. 93–383, § 807, substituted ‘‘$33,000 (or such
higher amount not in excess of $38,000 as the Secretary
may by regulation specify in any geographical area
where he finds that cost levels so require)’’ for
‘‘$22,000’’.
Subsec. (b)(2). Pub. L. 93–383, § 806(c)–(f), substituted
‘‘80’’ for ‘‘75’’ and ‘‘exceed 20’’ for ‘‘exceed 10’’, struck
out ‘‘private’’ before ‘‘insurer’’ in cl. (C), and substituted provisions relating to limitations contained in
first proviso of first sentence of section 1464(c) of this
title, for provisions relating to limitations applicable
to mortgages insured under sections 1709(b) or 1713 of
this title.
1970—Subsec. (a)(3). Pub. L. 91–609 added par. (3).
Subsec. (b). Pub. L. 91–351, §§ 201(a), 402, designated existing provisions as par. (1), inserted ‘‘is insured under
section 1715z–1 of this title or’’ before ‘‘is a below-market interest rate mortgage insured under section
1715l(d)(3) of this title’’, and added par. (2).
Pub. L. 91–296 inserted provisions authorizing the purchase, service, sale, or other dealing in loans made to
a public agency under part B of title VI of the Public
Health Service Act.
1969—Subsec. (b). Pub. L. 91–152 substituted ‘‘$22,000’’
or ‘‘the otherwise applicable maximum amount’’ for
‘‘$17,500’’ wherever appearing.
1968—Subsec. (a)(1). Pub. L. 90–448, § 802(c)(1), (2), designated existing provisions as par. (1), and struck out
‘‘(hereinafter referred to as the ‘Association’)’’.
Subsec. (a)(2). Pub. L. 90–448, § 802(c)(3), added par. (2).
Subsec. (b). Pub. L. 90–448, § 802(d), substituted ‘‘each
of the bodies corporate named in subsection (a) (2) of
this section is authorized’’ for ‘‘the Association is authorized’’, and inserted provisions empowering the corporation to purchase, sell, or otherwise deal in any securities guaranteed by the Association under section
1721(g) of this title.
Subsec. (c)(1). Pub. L. 90–448, § 802(e), struck out
‘‘, consistent with section 1722 of this title,’’ before ‘‘to
guarantee any participations’’.
Subsec. (c)(2). Pub. L. 90–448, § 802(f), (g), struck out
provisions from par. (C) which prohibited the Department of Housing and Urban Development from exercising the authority with respect to secondary market operations of the Federal National Mortgage Association,
and in last sentence substituted ‘‘incurred by the Association’’ for ‘‘incurred by the Federal National Mortgage Association’’.
Subsec. (c)(5). Pub. L. 90–448, § 803, inserted provisions
authorizing the trustee, in the event that the insufficiency required by the trustee is on account of principal maturities of outstanding beneficial interests or
participations to be issued pursuant to paragraph (4) of
this subsection, or pursuant hereto, to elect to issue
additional beneficial interests or participations for refinancing purposes in lieu of requiring any trustor or
trustors to make payments to the trustee from appropriated funds or other sources, limiting each such issue
of beneficial interests or participations, and directing
that all refinancing issues be deemed to have been issued pursuant to the authority contained in the appropriation Act or Acts under which the beneficial interests or participations were originally issued.
1967—Subsec. (a). Pub. L. 90–19, § 1(j)(1), substituted
‘‘in the Department of Housing and Urban Development’’ for ‘‘a constituent agency of the Housing and
Home Finance Agency’’.
Subsec. (b). Pub. L. 90–19, § 1(a)(2), (3), substituted
‘‘Secretary of Housing and Urban Development’’ and
‘‘Secretary’’ for ‘‘Federal Housing Commissioner’’ and
‘‘Commissioner’’, respectively.

§ 1717

TITLE 12—BANKS AND BANKING

1966—Subsec. (b). Pub. L. 89–754 inserted ‘‘or under
subchapter IX–A with respect to a new community approved under section 1749cc–1 of this title’’.
Subsec. (c). Pub. L. 89–429 designated existing provisions as par. (1), gave the name ‘‘trusts’’, for the purpose of the entire subsection, to trusts, receiverships,
conservatorships, liquidating or other agencies, or
other fiduciary and representative undertakings which
the Association is authorized to administer, expanded
the types of securities in which the Association is authorized to deal so as to include an expanded array of
obligations in which any department or agency of the
United States listed in par. (2) of the subsection might
have a financial interest, exempted participation certificates or other instruments issued pursuant to this
subsection from all regulation by the Securities and
Exchange Commission, repealed existing authority for
issuance of participations based on below-market interest rate mortgages insured under section 1715l(d)(3) of
this title, and added pars. (2) to (5).
Subsec. (c)(2)(B). Pub. L. 89–751 substituted ‘‘The Department of Health, Education, and Welfare, but only
with respect to loans made by the Commissioner of
Education for construction of academic facilities, and
loans to help finance student loan programs’’ for ‘‘The
Office of Education of the Department of Health, Education, and Welfare, but only with respect to loans for
construction of academic facilities’’.
1965—Subsec. (b). Pub. L. 89–117, §§ 201(b)(1), 802(a)(1),
803, 804, and 1004(a), defined ‘‘home mortgages’’, removed mortgages offered by or covering property held
by a federal instrumentality from the list of prohibited
purchases, inserted parenthetical material which, in
the case of family dwelling units having four or more
bedrooms, placed an additional amount of $2,500 to the
$17,500 per unit limit on purchasable mortgages, inserted provision excepting below-market mortgages
from the $17,500 per unit limit on purchasable mortgages if local tax abatement were granted sufficient to
keep rentals at the level where they would be if the
mortgage amount did not exceed $17,500 per dwelling
unit, and authorized the Association to purchase loans
insured under subchapter III of chapter 8A of Title 42 in
its secondary market operations.
Subsec. (c). Pub. L. 89–117, §§ 102(d), 802(a)(2), (3), authorized appropriations to reimburse the Association
for differential amounts resulting when mortgages
bearing a below-market interest rate and insured under
section 1715l(d)(3) of this title after August 10, 1965, are
included within one or more of the trusts or other
agencies created under this section authorized the Association to deal, in addition to first mortgages, in obligations offered to it by the Housing and Home Finance Agency or its Administrator, or by such Agency’s constituent units or agencies or the heads thereof,
and inserted ‘‘and other obligations’’ after ‘‘mortgages’’ in last sentence.
1964—Subsec. (b). Pub. L. 88–560, § 702, substituted
‘‘any mortgage under section 1720 of this title’’ for
‘‘any mortgage’’ and deleted proviso reading ‘‘Provided,
That with respect to mortgages purchased under section 1719 of this title the principal obligation shall not
exceed $20,000’’.
Subsec. (c). Pub. L. 88–560, § 701(a), added subsec. (c).
1961—Subsec. (b). Pub. L. 87–70 substituted ‘‘authorized, pursuant to commitments or otherwise, to purchase, lend (under section 1719 of this title) on the security of, service, sell, or otherwise deal in any mortgages
which are insured’’ for ‘‘authorized to make commitments to purchase and to purchase, service, or sell, any
residential or home mortgages (or participations therein) which are insured’’, and ‘‘section 1715k of this title
or subchapter VIII’’ for ‘‘section 1715k or 1748b of this
title’’, permitted the purchase of mortgages insured
under section 1715e of this title and covering property
located in an urban renewal area, and defined term
‘‘mortgage’’.
1959—Subsec. (b). Pub. L. 86–372 included within cl. (3)
mortgages insured under section 1715k of this title, increased the limitation on the original principal obliga-

Page 736

tion from $15,000 to $17,500, and established a limitation
of not more than $20,000 with respect to mortgages purchased under section 1719 of this title.
1958—Subsec. (b). Pub. L. 85–857 inserted ‘‘, chapter 37
of title 38’’ after ‘‘Servicemen’s Readjustment Act of
1944, as amended’’.
1956—Subsec. (b). Act Aug. 7, 1956, substituted ‘‘(2)’’
for ‘‘and (2)’’, ‘‘if’’ for ‘‘if (i)’’; and ‘‘(3) the Association
may not purchase any mortgage, except a mortgage insured under section 1748b of this title or a mortgage
covering property located in Alaska, Guam, or Hawaii,
if’’ for ‘‘or (ii)’’.
1954—Act Aug. 2, 1954, amended section generally to
recharter the Association, substituting provisions formerly covered in section 1716 of this title for provisions
now covered by sections 1719 to 1721 of this title.
1953—Act June 30, 1953, struck out proviso at end of
first sentence, which limited purchase of mortgages
other than defense or disaster mortgages to
$2,750,000,000.
1952—Act July 14, 1952, increased purchasing power of
the Association from $2,750,000,000 to $3,650,000,000 but
limited purchases of mortgages other than defense or
disaster mortgages to $2,750,000,000.
1950—Act Apr. 20, 1950, substituted ‘‘$2,750,000,000’’ for
‘‘$2,500,000,000’’.
1949—Joint
Res.
Oct.
25,
1949,
substituted
‘‘$2,500,000,000’’ for ‘‘$1,500,000,000’’ in first sentence.
Act July 19, 1949, increased authorization to
$1,500,000,000 which would be based on the outstanding
amount of mortgage purchases and commitments in
place of the former complicated formula.
1948—Act July 1, 1948, amended section generally to
make it applicable to the Association instead of to the
former national mortgage associations, and increased
the borrowing capacity from twenty times to forty
times the capital and surplus.
1941—Act Mar. 28, 1941, inserted ‘‘and VI’’ in cl. (2).
1938—Act Feb. 3, 1938, among other changes, substituted ‘‘twenty times the amount of its paid-up capital and surplus’’ for ‘‘twelve times the aggregate par
value of its outstanding capital stock’’, and inserted
last sentence and proviso.
1935—Act May 28, 1935, substituted ‘‘twelve times’’ for
‘‘ten times’’ in cl. (1).
EFFECTIVE DATE OF 2018 AMENDMENT
Amendment by Pub. L. 115–174 effective 180 days after
May 24, 2018, see section 310(d) of Pub. L. 115–174, set
out as a note under section 1454 of this title.
EFFECTIVE DATE OF 2008 AMENDMENT
Pub. L. 110–289, div. A, title I, § 1124(a)(3), July 30,
2008, 122 Stat. 2692, provided that: ‘‘The amendments
made by paragraphs (1) and (2) of this subsection
[amending this section] shall take effect upon the expiration of the date described in section 201(a) of the Economic Stimulus Act of 2008 (Public Law 110–185) [122
Stat. 619; probably means Dec. 31, 2008].’’
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by title V of Pub. L. 105–276 effective and
applicable beginning upon Oct. 1, 1999, except as otherwise provided, with provision that Secretary may implement amendment before such date, except to extent
that such amendment provides otherwise, and with savings provision, see section 503 of Pub. L. 105–276, set out
as a note under section 1437 of Title 42, The Public
Health and Welfare.
EFFECTIVE DATE OF 1978 AMENDMENT
Amendment by section 101(c)(3) of Pub. L. 95–557 effective Oct. 1, 1978, see section 104 of Pub. L. 95–557, set
out as a note under section 1709 of this title.
EFFECTIVE DATE OF 1968 AMENDMENT
For effective date of amendment by title VIII of Pub.
L. 90–448, see section 808 of Pub. L. 90–448, set out as an
Effective Date note under section 1716b of this title.

Page 737

TITLE 12—BANKS AND BANKING

EFFECTIVE DATE OF 1958 AMENDMENT
For effective date of amendment by Pub. L. 85–857,
see section 2 of Pub. L. 85–857, set out as an Effective
Date note preceding Part I of Title 38, Veterans’ Benefits.
TRANSFER OF FUNCTIONS
For retransfer of functions described in section 2 of
Reorg. Plan No. 22 of 1950, set out below, from Housing
and Home Finance Administrator to Federal National
Mortgage Association, see section 1723d of this title.
PROPOSAL BY FEDERAL NATIONAL MORTGAGE ASSOCIATION RESPECTING AUTHORITY TO IMPLEMENT SECTION
339(a)(1), (b)(1) OF PUB. L. 96–399; APPROVAL, ETC.
Pub. L. 96–399, title III, § 339(a)(2), (b)(2), Oct. 8, 1980,
94 Stat. 1657, provided that when Federal National
Mortgage Association submits its proposal to Secretary
of Housing and Urban Development to implement authority granted by amendment of this section, Secretary of Housing and Urban Development shall, within
75 days, approve such proposal or transmit to Congress
a report explaining why such proposal has not been approved.
WAIVER OF CERTAIN LIMITATIONS APPLICABLE TO THE
PURCHASE OF MORTGAGES BY THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION UNTIL OCTOBER 1,
1974
Pub. L. 92–213, § 3, Dec. 22, 1971, 85 Stat. 775, as amended by Pub. L. 92–335, § 6, July 1, 1972, 86 Stat. 405; Pub.
L. 92–503, § 2, Oct. 18, 1972, 86 Stat. 906; Pub. L. 93–85, § 3,
Aug. 10, 1973, 87 Stat. 221; Pub. L. 93–117, § 4, Oct. 2, 1973,
87 Stat. 422, provided that when the Secretary of Housing and Urban Development determined that such action was necessary to avoid excessive discounts on federally insured or guaranteed mortgages, the Government National Mortgage Association could, until Oct.
1, 1974, issue commitments to purchase mortgages with
original principal obligations not more than 50 per centum in excess of the limitations imposed by clause (3)
of the proviso to the first sentence of section 302(b)(1)
of the National Housing Act [subsec. (b)(1) of this section], and it could purchase the mortgages so committed to be purchased.
EXCEPTION TO LIMITATION ON PRINCIPAL AMOUNT OF
PARTICIPATIONS IN GOVERNMENT MORTGAGE LIQUIDATION TRUST AND SMALL BUSINESS ADMINISTRATION
TRUST SOLD DURING FISCAL 1966
Pub. L. 89–429, § 9, May 24, 1966, 80 Stat. 168, authorized Federal National Mortgage Association during fiscal year 1966 to sell (1) additional participations in Government Mortgage Liquidation Trust, and (2) participations in a trust to be established by Small Business Administration, each without regard to the provisions of
subsec. (c)(4) of this section.
TRUST AGREEMENTS WITH ADMINISTRATOR OF
VETERANS’ AFFAIRS
Pub. L. 89–429, § 6(a), May 24, 1966, 80 Stat. 167, provided that: ‘‘Nothing in this Act [enacting section 1717a
of this title and section 745 of Title 20, Education,
amending this section and sections 1720, 1749, and 1757
of this title, section 1988 of Title 7, Agriculture, and
section 743 of Title 20, and enacting material set out as
notes under this section] shall be construed to repeal or
modify the provisions of section 1820(e) [now 3720(e)] of
title 38, United States Code, respecting the authority of
the Administrator of Veterans’ Affairs [now Secretary
of Veterans Affairs].’’
ADMISSION OF ALASKA AND HAWAII TO STATEHOOD
Alaska was admitted into the Union on Jan. 3, 1959,
on issuance of Proc. No. 3269, Jan. 3, 1959, 24 F.R. 81, 73
Stat. c16, and Hawaii was admitted into the Union on
Aug. 21, 1959, on issuance of Proc. No. 3309, Aug. 21, 1959,
24 F.R. 6868, 73 Stat. c74. For Alaska Statehood Law,

§ 1717

see Pub. L. 85–508, July 7, 1958, 72 Stat. 339, set out as
a note preceding section 21 of Title 48, Territories and
Insular Possessions. For Hawaii Statehood Law, see
Pub. L. 86–3, Mar. 18, 1959, 73 Stat. 4, set out as a note
preceding section 491 of Title 48.
REORGANIZATION PLAN NO. 22 OF 1950
Eff. July 9, 1950, 15 F.R. 4365, 64 Stat. 1277
Prepared by the President and transmitted to the Senate and the House of Representatives in Congress assembled, May 9, 1950, pursuant to the provisions of
the Reorganization Act of 1949, approved June 20, 1949
[see 5 U.S.C. 901 et seq.].
FEDERAL NATIONAL MORTGAGE ASSOCIATION
SECTION 1. TRANSFER OF ASSOCIATION AND ITS
FUNCTIONS
The Federal National Mortgage Association, together
with its functions, is hereby transferred from the Reconstruction Finance Corporation to the Housing and
Home Finance Agency and shall be administered subject to the direction and control of the Housing and
Home Finance Administrator.
SEC. 2. TRANSFERS TO THE HOUSING ADMINISTRATOR
There are hereby transferred from the Reconstruction Finance Corporation to the Housing and Home Finance Administrator—
(1) the notes of the Federal National Mortgage Association payable to the Reconstruction Finance Corporation;
(2) the capital stock of the Federal National Mortgage Association;
(3) the function of the Reconstruction Finance Corporation of making payments on its notes issued to the
Secretary of the Treasury in an amount equal to (a) the
unpaid principal of, and accrued interest on, the notes
of the Federal National Mortgage Association transferred under (1) above, (b) any funds of the Reconstruction Finance Corporation transferred under the provisions of section 5 hereof, (c) the book value of any office furniture and equipment of the Reconstruction Finance Corporation transferred under the provisions of
section 5 hereof, and (d) the par value of the capital
stock of the Federal National Mortgage Association
plus the amount of its surplus paid in by the Reconstruction Finance Corporation;
(4) the function of issuing notes or other obligations
to the Secretary of the Treasury, which may be purchased by the Secretary, under section 7 of the Reconstruction Finance Corporation Act, as amended [15
U.S.C. 606], in an amount not in excess of that necessary to finance at any one time the outstanding balances of the investments, loans, and purchases held by
the Federal National Mortgage Association, taking
into consideration other balance-sheet items;
(5) except as otherwise provided in this reorganization plan, all other functions of the Reconstruction Finance Corporation (including functions of the Board of
Directors of such Corporation and functions of the
Chairman of the Board of Directors of such Corporation) with respect to the Federal National Mortgage
Association; and
(6) all functions of the Federal Housing Commissioner
with respect to the Federal National Mortgage Association.
SEC. 3. BOARD OF DIRECTORS AND OFFICERS
Functions with respect to serving, including eligibility to serve, as members of the Board of Directors of
the Federal National Mortgage Association and as officers of such Association are hereby transferred from
the members of the Board of Directors of, and from the
officers and employees of, the Reconstruction Finance
Corporation to the officers and employees of the Housing and Home Finance Agency (including those of the
constituent agencies of the Housing and Home Finance
Agency.)

§ 1717a

TITLE 12—BANKS AND BANKING

Page 738

SEC. 4. PERFORMANCE OF FUNCTIONS OF
ADMINISTRATOR

operations carried on by the Federal National Mortgage Association’’.

The Housing and Home Finance Administrator may
from time to time make such provisions as he shall
deem appropriate authorizing the performance by any
other officer, or by any agency or employee, of the
Housing and Home Finance Agency of any function
transferred to such Administrator by the provisions of
this reorganization plan.

For effective date of amendment by Pub. L. 90–448,
see section 808 of Pub. L. 90–448, set out as an Effective
Date note under section 1716b of this title.

SEC. 5. TRANSFER OF RECORDS, PROPERTY, PERSONNEL,
AND FUNDS
There are hereby transferred with the functions
transferred by this reorganization plan, respectively,
all of the assets, liabilities, contracts, property,
records, and unexpended balances of authorizations, allocations and other funds, available or to be made
available, of the Federal National Mortgage Association, and so much of the assets, liabilities, contracts,
property, records, personnel, and unexpended balances
of authorizations, allocations, and other funds, available or to be made available, of the Reconstruction Finance Corporation and relating to functions transferred
by the provisions of this reorganization plan, as the Director of the Bureau of the Budget shall determine to
be necessary for the administration of such functions,
excluding, however, (1) the members of the Board of Directors of the Federal National Mortgage Association
in office immediately prior to the taking effect of the
provisions of this reorganization plan, and (2) the officers of the Association then in office. Such further
measures and dispositions as the Director of the Bureau of the Budget shall determine to be necessary in
order to effectuate the transfers provided for in this
section shall be carried out in such manner as the Director shall direct and by such agencies as he shall designate.
SEC. 6. EFFECTIVE DATE
The provisions of this reorganization plan shall take
effect 60 days after they would take effect under section 6(a) of the Reorganization Act of 1949 in the absence of this section [Eff. date July 9, 1950, in operation
Sept. 7, 1950].
[Housing and Home Finance Agency lapsed and functions were transferred to Secretary of Housing and
Urban Development, see section 9(c) of Pub. L. 89–174,
Sept. 9, 1965, 79 Stat. 670, set out as a note under 42
U.S.C. 3531.]

§ 1717a. Prohibition against sale of obligations by
Federal departments and agencies after June
30, 1966, without compliance with requirements of section 1717(c) of this title or without approval by Secretary of the Treasury;
exemption
After June 30, 1966, no department or agency
listed in section 1717(c)(2) of this title may sell
any obligation held by it except as provided in
section 1717(c) of this title, or as approved by
the Secretary of the Treasury, except that this
prohibition shall not apply to the Government
National Mortgage Association.
(Pub. L. 89–429, § 6(b), May 24, 1966, 80 Stat. 167;
Pub. L. 90–448, title VIII, § 807(g), Aug. 1, 1968, 82
Stat. 545.)
CODIFICATION
Section was enacted as a part of the Participation
Sales Act of 1966, and not as a part of the National
Housing Act, which comprises this chapter or the Federal National Mortgage Association Charter Act which
comprises this subchapter.
AMENDMENTS
1968—Pub. L. 90–448 substituted ‘‘the Government National Mortgage Association’’ for ‘‘secondary market

EFFECTIVE DATE OF 1968 AMENDMENT

§ 1718. Capitalization of Federal National Mortgage Association
(a) Common stock; preferred stock; transferability of shares
The corporation shall have common stock,
without par value, which shall be vested with all
voting rights, each share being entitled to one
vote with rights of cumulative voting at all
elections of directors. The corporation may
eliminate such rights of cumulative voting by a
resolution adopted by its board of directors and
approved by the holders of a majority of the
shares of common stock voting in person or by
proxy at the annual meeting, or other special
meeting, at which such resolution is considered.
The corporation may have preferred stock on
such terms and conditions as the board of directors shall prescribe. The free transferability of
the stock at all times to any person, firm, corporation, or other entity shall not be restricted
except that, as to the corporation, it shall be
transferable only on the books of the corporation. The corporation may issue shares of common stock in return for appropriate payments
into capital or capital and surplus.
(b) Fees and charges; annual transfer of earnings
to general surplus account
(1) The corporation may impose charges or
fees, which may be regarded as elements of pricing, with the objective that all costs and expenses of the operations of the corporation
should be within its income derived from such
operations and that such operations should be
fully self-supporting.
(2) All earnings from the operations of the corporation shall annually be transferred to the
general surplus account of the corporation. At
any time, funds of the general surplus account
may, in the discretion of the board of directors,
be transferred to reserves.
(c) Capital distributions from general surplus account; minimum capitalization levels
(1) Except as provided in paragraph (2), the
corporation may make such capital distributions (as such term is defined in section 4502 of
this title) as may be declared by the board of directors. All capital distributions shall be
charged against the general surplus account of
the corporation.
(2) The corporation may not make any capital
distribution that would decrease the total capital of the corporation (as such term is defined
in section 4502 of this title) to an amount less
than the risk-based capital level for the corporation established under section 4611 of this title
or that would decrease the core capital of the
corporation (as such term is defined in section
4502 of this title) to an amount less than the
minimum capital level for the corporation established under section 4612 of this title, without prior written approval of the distribution by
the Director of the Federal Housing Finance
Agency.

Page 739

TITLE 12—BANKS AND BANKING

(d) Institutions eligible to purchase stock
Notwithstanding any other provision of law,
any institution, including a national bank or
State member bank of the Federal Reserve System or any member of the Federal Deposit Insurance Corporation, trust company, or other
banking organization, organized under any law
of the United States, including the laws relating
to the District of Columbia, shall be authorized
to purchase shares of common stock of the corporation and to hold or dispose of such stock,
subject to the provisions of this subchapter.
(June 27, 1934, ch. 847, title III, § 303, 48 Stat. 1254;
Feb. 3, 1938, ch. 13, § 7, 52 Stat. 24; July 1, 1948,
ch. 784, § 1, 62 Stat. 1206; Aug. 2, 1954, ch. 649, title
II, § 201, 68 Stat. 613; Aug. 7, 1956, ch. 1029, title
II, § 202, 70 Stat. 1096; Pub. L. 85–10, § 1(a), (b),
Mar. 27, 1957, 71 Stat. 7; Pub. L. 85–104, title II,
§§ 201, 202, July 12, 1957, 71 Stat. 298; Pub. L.
87–70, title VI, § 603(b), (c), June 30, 1961, 75 Stat.
176; Pub. L. 89–117, title X, § 1004(b), Aug. 10, 1965,
79 Stat. 501; Pub. L. 89–566, § 2, Sept. 10, 1966, 80
Stat. 738; Pub. L. 90–19, § 1(j)(2), (l), May 25, 1967,
81 Stat. 18; Pub. L. 90–448, title VIII, § 802 (i)–(n),
(s), Aug. 1, 1968, 82 Stat. 537, 538; Pub. L. 91–609,
title IX, § 902, Dec. 31, 1970, 84 Stat. 1808; Pub. L.
93–383, title VIII, § 806(g)–(i), Aug. 22, 1974, 88
Stat. 727, 728; Pub. L. 97–320, title VII, § 707(a),
Oct. 15, 1982, 96 Stat. 1540; Pub. L. 100–242, title
IV, § 442, Feb. 5, 1988, 101 Stat. 1921; Pub. L.
102–550, title XIII, § 1381(d), Oct. 28, 1992, 106 Stat.
3995; Pub. L. 110–289, div. A, title I, § 1161(b)(1),
July 30, 2008, 122 Stat. 2779.)
AMENDMENTS
2008—Subsec. (c)(2). Pub. L. 110–289 substituted ‘‘Director of the Federal Housing Finance Agency’’ for ‘‘Director of the Office of Federal Housing Enterprise Oversight of the Department of Housing and Urban Development’’.
1992—Subsec. (a). Pub. L. 102–550, § 1381(d)(1), inserted
at end ‘‘The corporation may issue shares of common
stock in return for appropriate payments into capital
or capital and surplus.’’
Subsecs. (b), (c). Pub. L. 102–550, § 1381(d)(2), added
subsecs. (b) and (c) and struck out former subsec. (b)
which related to accumulation of surplus, fees and
charges, and transfer of surplus funds to reserves and
former subsec. (c) which related to issuance of common
stock for capital contributions and payment of dividends.
Subsecs. (d), (f). Pub. L. 102–550, § 1381(d)(3), (4), redesignated subsec. (f) as (d), struck out ‘‘to make payments to the corporation of the nonrefundable capital
contributions referred to in subsection (b) of this section, to receive stock of the corporation evidencing
such capital contributions,’’ after ‘‘shall be authorized’’, and substituted ‘‘shares of common stock of the
corporation’’ for ‘‘additional shares of such stock,’’.
1988—Subsec. (a). Pub. L. 100–242 inserted after first
sentence ‘‘The corporation may eliminate such rights
of cumulative voting by a resolution adopted by its
board of directors and approved by the holders of a majority of the shares of common stock voting in person
or by proxy at the annual meeting, or other special
meeting, at which such resolution is considered.’’
1982—Subsec. (a). Pub. L. 97–320, § 707(a)(1), inserted
provision that the corporation may have preferred
stock on such terms and conditions as the board of directors shall prescribe.
Pub. L. 97–320, § 707(a)(2), struck out ‘‘common’’ before ‘‘stock at all times’’.
1974—Subsec. (a). Pub. L. 93–383, § 806(g), struck out
provisions relating to issuance, par value, retirement,
etc., of nonvoting preferred stock.

§ 1718

Subsec. (c). Pub. L. 93–383, § 806(h), substituted provisions relating to purchases subsequent to Sept. 1, 1968,
for provisions relating to purchases subsequent to the
effective date established under section 808 of the Housing and Urban Development Act of 1968, and struck out
provisions relating to retirement of all outstanding
preferred stock.
Subsec. (d). Pub. L. 93–383, § 806(i), struck out subsec.
(d) authorizing issuance of preferred stock to Secretary
of the Treasury.
Subsec. (e). Pub. L. 93–383, § 806(i), struck out subsec.
(e) relating to exchange of preferred stock delivered to
Secretary of the Treasury pursuant to subsec. (d) of
this section.
1970—Subsec. (b). Pub. L. 91–609 substituted ‘‘may accumulate’’ and ‘‘private sources’’ for ‘‘shall accumulate’’ and ‘‘private and other sources’’, respectively,
struck out ‘‘nor less than 1 per centum’’ after ‘‘2 per
centum’’, and inserted ‘‘with the approval of the Secretary of Housing and Urban Development’’ after ‘‘as
determined from time to time by the corporation’’.
1968—Subsec. (a). Pub. L. 90–448, § 802(i), (s)(1),
changed common stock of the Association from nonvoting common stock with a par value of $100 to common stock, without par value, vested with all voting
rights and each share entitled to one vote with rights
of cumulative voting at all elections of directors, provided that the free transferability of the common stock
shall not be restricted except that, as to the corporation, it shall be transferable only on the books of the
corporation, struck out provisions which permitted retirement of the preferred stock only out of funds of the
capital surplus and the general surplus accounts of the
Association, and which prohibited retirements of common stock if, as a consequence, the amount thereof remaining outstanding would be less than $100,000,000,
and substituted provisions requiring retirement of preferred stock to be made as rapidly as possible subsequent to the effective date of section 808 of the Housing
and Urban Development Act of 1968, for provisions
which required retirement as rapidly as the Association
shall deem feasible, and ‘‘corporation’’ for ‘‘Association’’ in six places.
Subsec. (b). Pub. L. 90–448, § 802(j), (s)(1), substituted
‘‘corporation’’ for ‘‘Association’’ in six places, and
‘‘fees, which may be regarded as elements of pricing,
with’’ for ‘‘fees for its services with’’, and struck out
sentence which stated this subsection shall be subject
to the exceptions set forth in section 1722 of this title.
Subsec. (c). Pub. L. 90–448, § 802(k), (s)(1), substituted
‘‘corporation’’ for ‘‘Association’’ in five places, and
‘‘the aggregate amount of cash dividends paid on account of any share of such stock shall not exceed any
rate which may be determined from time to time by
the Secretary of Housing and Urban Development to be
a fair rate of return after consideration of the current
earnings and capital condition of the corporation’’ for
‘‘the general surplus account of the Association shall
not be reduced through the payment of dividends applicable to such common stock which exceed in the aggregate 5 per centum of the par value of the outstanding
common stock of the Association’’, inserted provisions
authorizing the corporation to issue additional shares
in return for appropriate payments into capital or capital and surplus, directing the corporation to require
each services of its mortgages to own a minimum
amount of common stock of the corporation, and prescribing the minimum amount, and struck out provisions which related to issuance of common stock only
in denominations of $100 or multiples thereof.
Subsec. (d). Pub. L. 90–448, § 802(l), (s), substituted
‘‘corporation’’ for ‘‘Association’’ in six places, and
‘‘corporation’s’’ for ‘‘Association’s’’, and inserted provisions prohibiting issuance of preferred stock subsequent to the effective date established pursuant to section 808 of the Housing and Urban Development Act of
1968.
Subsec. (e). Pub. L. 90–448, § 802(s), substituted ‘‘corporation’’ for ‘‘Association’’ in four places, and ‘‘corporation’s’’ for ‘‘Association’s’’.

§ 1719

TITLE 12—BANKS AND BANKING

Subsec. (f). Pub. L. 90–448, § 802(m), (s)(1), substituted
‘‘corporation’’ for ‘‘Association’’ in two places and inserted provisions authorizing purchase of additional
shares of stock of the corporation.
Subsec. (g). Pub. L. 90–448, § 802(n), repealed subsec.
(g) which directed Secretary of Housing and Urban Development to transmit recommendations for eventual
transfer of operations to private shareholders.
1967—Subsec. (a). Pub. L. 90–19, § 1(j)(2), substituted
‘‘Secretary of the Treasury’s’’ for ‘‘Secretary’s’’ in last
sentence.
Subsec. (g). Pub. L. 90–19, § 1(l), substituted ‘‘Secretary of Housing and Urban Development’’ for ‘‘Housing and Home Finance Administrator’’.
1966—Subsec. (d). Pub. L. 89–566, § 2(a), raised from
$115,000,000 to $225,000,000 the amount of the par value of
the preferred stock of the Association which the Secretary of the Treasury is authorized and directed to accept in addition to the original $21,000,000.
Subsec. (e). Pub. L. 89–566, § 2(b), substituted
‘‘$225,000,000’’ for ‘‘$115,000,000’’ in second sentence.
1965—Subsec. (b). Pub. L. 89–117 inserted ‘‘other’’
sources to private sources as the areas from which the
Association shall accumulate funds for its capital surplus account.
1961—Subsec. (b). Pub. L. 87–70, § 603(b), directed the
Association to require each borrower to make payments, equal to not more than one-half of one per centum of the amount lent to the borrower under section
1719 of this title.
Subsec. (c). Pub. L. 87–70, § 603(c), required issuance of
stock to borrowers and inserted ‘‘(adjusted by reason of
any payments into surplus required by the Association)’’.
1957—Subsec. (b). Pub. L. 85–104, § 201, substituted provisions which fixed capital contributions payments at
maximum of 2 percent and minimum of 1 percent of unpaid principal amounts of mortgages purchased or to be
purchased under section 1719 of this title, for former
provisions which provided for capital contributions
payments equal to 2 percent of the unpaid principal
amounts of mortgages purchased by the Association or
equal to such greater or lesser percentage but not less
than 1 percent, as the Association might determine.
Subsec. (d). Pub. L. 85–104, § 202(a), substituted
‘‘$115,000,000’’ for ‘‘$50,000,000’’ in second sentence.
Pub. L. 85–10, § 1(a), inserted sentence directing Secretary of the Treasury to accept additional $50,000,000
of preferred stock issued by Association.
Subsec. (e). Pub. L. 85–104, § 202(b), substituted
‘‘$115,000,000’’ for ‘‘$50,000,000’’ in second sentence.
Pub. L. 85–10, § 1(b), inserted ‘‘the first sentence of’’
before ‘‘subsection (d)’’ in first sentence, and inserted
sentence providing that Association stock delivered to
Treasury pursuant to second sentence of subsec. (d) of
this section be in exchange for Association notes of
$50,000,000.
1956—Subsec. (b). Act Aug. 7, 1956, substituted provisions which required mortgage sellers to make contributions equal to not more than 2 percent of the unpaid principal amount of mortgages or greater or lesser
percentage as the Association may determine, but not
less than 1 percent, for former provisions that contributions equal 3 percent of the unpaid amount of the mortgages or such greater percentage as from time to time
the Association may determine.
1954—Act Aug. 2, 1954, amended section generally to
substitute provisions relating to capitalization (formerly covered in section 1716 of this title) and to general financial arrangements and operations for provisions relating merely to use and investment of moneys
not invested in mortgages or in operating facilities
(such provisions now being covered by section 1723b of
this title), and the maintenance of necessary reserves.
1948—Act July 1, 1948, made section applicable to the
Association instead of to any of the national mortgage
associations.
1938—Act Feb. 3, 1938, inserted ‘‘or in bonds or other
obligations’’ and inserted ‘‘and may purchase in the
open market notes, bonds, debentures, or such other
obligations issued under section 1717 of this title’’.

Page 740

EFFECTIVE DATE OF 1968 AMENDMENT
For effective date of amendment by title VIII of Pub.
L. 90–448, see section 808 of Pub. L. 90–448, set out as an
Effective Date note under section 1716b of this title.
SPECIAL ASSISTANCE FUNDS OF ASSOCIATION FOR
FINANCING LOW-COST HOMES
Pub. L. 89–754, title X, § 1006, Nov. 3, 1966, 80 Stat. 1285,
provided that the Congress found that the sharp decline
in new home construction over the past year threatened to undercut the present high level of prosperity
and employment as such declines had in the past; that
the substantial reduction which had taken place had its
greatest impact on families of modest income who were
seeking to achieve the goal of homeownership; that
this decline in homebuilding was due primarily to the
shortage of mortgage financing on terms which moderate income families could afford; and that national
policy objectives in the field of housing and community
development were thereby being thwarted. The Congress therefore expressed its intent that the special assistance funds made available to the Federal National
Mortgage Association for the financing of new low-cost
homes by the Act of September 10, 1966 (Public Law
89–556) [amending sections 1718, 1719, and 1720 of this
title], should be released immediately to halt the continuing decline in the construction of new homes for
families of moderate incomes.

§ 1719. Secondary market operations
(a) Purchase and sale of mortgages; secondary
market operations; advance of funds or origination of loans; settlement or extinguishment
of borrower’s rights
(1) To carry out the purposes set forth in paragraph (a) 1 of section 1716 of this title, the operations of the corporation under this section
shall be confined, so far as practicable, to mortgages which are deemed by the corporation to be
of such quality, type, and class as to meet, generally, the purchase standards imposed by private institutional mortgage investors. In the interest of assuring sound operation, the prices to
be paid by the corporation for mortgages purchased in its secondary market operations under
this section, should be established, from time to
time, within the range of market prices for the
particular class of mortgages involved, as determined by the corporation. The volume of the
corporation’s purchases and sales, and the establishment of the purchase prices, sale prices, and
charges or fees, in its secondary market operations under this section, should be determined
by the corporation from time to time, and such
determinations should be consistent with the
objectives that such purchases and sales should
be effected only at such prices and on such
terms as will reasonably prevent excessive use
of the corporation’s facilities, and that the operations of the corporation under this section
should be within its income derived from such
operations and that such operations should be
fully self-supporting. Nothing in this subchapter
shall prohibit the corporation from purchasing,
and making commitments to purchase, any
mortgage with respect to which the Secretary of
Housing and Urban Development has entered
into a contract with the corporation to make interest subsidy payments under section 1715z–8 of
this title.
(2) The volume of the corporation’s lending activities and the establishment of its loan ratios,
1 See

References in Text note below.

Page 741

TITLE 12—BANKS AND BANKING

interest rates, maturities, and charges or fees,
in its secondary market operations under this
section, should be determined by the corporation from time to time; and such determinations, in conjunction with determinations made
under paragraph (1), should be consistent with
the objectives that the lending activities should
be conducted on such terms as will reasonably
prevent excessive use of the corporation’s facilities, and that the operations of the corporation
under this section should be within its income
derived from such operations and that such operations should be fully self-supporting. The corporation shall not be permitted to use its lending authority (A) to advance funds to a mortgage seller on an interim basis, using mortgage
loans as collateral, pending the sale of the mortgages in the secondary market; or (B) to originate mortgage loans. Notwithstanding any Federal, State, or other law to the contrary, the
corporation is empowered, in connection with
any loan under this section, whether before or
after any default, to provide by contract with
the borrower for the settlement or extinguishment, upon default, of any redemption, equitable, legal, or other right, title, or interest of
the borrower in any mortgage or mortgages that
constitute the security for the loan; and with respect to any such loan, in the event of default
and pursuant otherwise to the terms of the contract, the mortgages that constitute such security shall become the absolute property of the
corporation.
(b) Obligations of the Corporation
For the purposes of this section, the corporation is authorized to issue, upon the approval of
the Secretary of the Treasury, and have outstanding at any one time obligations having
such maturities and bearing such rate or rates
of interest as may be determined by the corporation with the approval of the Secretary of the
Treasury, to be redeemable at the option of the
corporation before maturity in such manner as
may be stipulated in such obligations. The corporation shall insert appropriate language in all
of its obligations issued under this subsection
clearly indicating that such obligations, together with the interest thereon, are not guaranteed by the United States and do not constitute a debt or obligation of the United States
or any agency or instrumentality thereof other
than the corporation. The corporation is authorized to purchase in the open market any of its
obligations outstanding under this subsection at
any time and at any price.
(c) Purchase of obligations by Treasury; conditions and restrictions
The Secretary of the Treasury is authorized in
the Secretary’s discretion to purchase any obligations issued pursuant to subsection (b) of this
section, as now or hereafter in force, and for
such purpose the Secretary of the Treasury is
authorized to use as a public debt transaction
the proceeds of the sale of any securities hereafter issued under chapter 31 of title 31, and the
purposes for which securities may be issued
under chapter 31 of title 31 are extended to include such purchases. The Secretary of the
Treasury shall not at any time purchase any obligations under this subsection if such purchase

§ 1719

would increase the aggregate principal amount
of the Secretary’s then outstanding holdings of
such obligations under this subsection to an
amount greater than $2,250,000,000. Each purchase of obligations by the Secretary of the
Treasury under this subsection shall be upon
such terms and conditions as to yield a return at
a rate determined by the Secretary of the Treasury, taking into consideration the current average rate on outstanding marketable obligations
of the United States as of the last day of the
month preceding the making of such purchase.
The Secretary of the Treasury may, at any time,
sell, upon such terms and conditions and at such
price or prices as the Secretary shall determine,
any of the obligations acquired by the Secretary
under this subsection. All redemptions, purchases, and sales by the Secretary of the Treasury of such obligations under this subsection
shall be treated as public debt transactions of
the United States.
(d) Mortgage-backed securities; issuance; maturities; rates of interest; exempt securities;
adequacy of mortgages to permit principal
and interest payments; statement in securities
To provide a greater degree of liquidity to the
mortgage investment market and an additional
means of financing its operations under this section, the corporation is authorized to set aside
any mortgages held by it under this section,
and, upon approval of the Secretary of the
Treasury, to issue and sell securities based upon
the mortgages so set aside. Securities issued
under this subsection may be in the form of debt
obligations or trust certificates of beneficial interest, or both. Securities issued under this subsection shall have such maturities and bear such
rate or rates of interest as may be determined
by the corporation with the approval of the Secretary of the Treasury. Securities issued by the
corporation under this subsection shall, to the
same extent as securities which are direct obligations of or obligations guaranteed as to principal and interest by the United States, be
deemed to be exempt securities within the
meaning of laws administered by the Securities
and Exchange Commission. Mortgages set aside
pursuant to this subsection shall at all times be
adequate to enable the corporation to make
timely principal and interest payments on the
securities issued and sold pursuant to this subsection. The corporation shall insert appropriate
language in all of the securities issued under
this subsection clearly indicating that such securities, together with the interest thereon, are
not guaranteed by the United States and do not
constitute a debt or obligation of the United
States or any agency or instrumentality thereof
other than the corporation.
(e) Subordinated or convertible obligations; issuance; maturities; rate of interest; redemption; exempt securities; debt or obligation of
United States; purchases in open market
For the purposes of this section, the corporation is authorized to issue, upon the approval of
the Secretary of the Treasury, obligations which
are subordinated to any or all other obligations
of the corporation, including subsequent obligations. The obligations issued under this sub-

§ 1719

TITLE 12—BANKS AND BANKING

section shall have such maturities and bear such
rate or rates of interest as may be determined
by the corporation with the approval of the Secretary of the Treasury and may be made redeemable at the option of the corporation before
maturity in such manner as may be stipulated
in such obligations. Any of such obligations may
be made convertible into shares of common
stock in such manner, at such price or prices,
and at such time or times as may be stipulated
therein. Obligations issued by the corporation
under this subsection shall, to the same extent
as securities which are direct obligations of or
obligations guaranteed as to principal or interest by the United States, be deemed to be exempt securities within the meaning of laws administered by the Securities and Exchange Commission. The corporation shall insert appropriate language in all of its obligations issued
under this subsection clearly indicating that
such obligations, together with the interest
thereon, are not guaranteed by the United
States and do not constitute a debt or obligation
of the United States or of any agency or instrumentality thereof other than the corporation.
The corporation is authorized to purchase in the
open market any of its obligations outstanding
under this subsection at any time and at any
price.
(f) Prohibition on assessment or collection of fee
or charge by United States
Except for fees paid pursuant to section
1723a(g) of this title and assessments pursuant
to section 4516 of this title, no fee or charge may
be assessed or collected by the United States
(including any executive department, agency, or
independent establishment of the United States)
on or with regard to the purchase, acquisition,
sale, pledge, issuance, guarantee, or redemption
of any mortgage, asset, obligation, trust certificate of beneficial interest, or other security by
the corporation. No provision of this subsection
shall affect the purchase of any obligation by
the Secretary of the Treasury pursuant to subsection (c).
(g) Temporary authority of Treasury to purchase
obligations and securities; conditions
(1) Authority to purchase
(A) General authority
In addition to the authority under subsection (c) of this section, the Secretary of
the Treasury is authorized to purchase any
obligations and other securities issued by
the corporation under any section of this
chapter, on such terms and conditions as the
Secretary may determine and in such
amounts as the Secretary may determine.
Nothing in this subsection requires the corporation to issue obligations or securities to
the Secretary without mutual agreement between the Secretary and the corporation.
Nothing in this subsection permits or authorizes the Secretary, without the agreement of the corporation, to engage in open
market purchases of the common securities
of the corporation.
(B) Emergency determination required
In connection with any use of this authority, the Secretary must determine that such
actions are necessary to—

Page 742

(i) provide stability to the financial markets;
(ii) prevent disruptions in the availability of mortgage finance; and
(iii) protect the taxpayer.
(C) Considerations
To protect the taxpayers, the Secretary of
the Treasury shall take into consideration
the following in connection with exercising
the authority contained in this paragraph:
(i) The need for preferences or priorities
regarding payments to the Government.
(ii) Limits on maturity or disposition of
obligations or securities to be purchased.
(iii) The corporation’s plan for the orderly resumption of private market funding or capital market access.
(iv) The probability of the corporation
fulfilling the terms of any such obligation
or other security, including repayment.
(v) The need to maintain the corporation’s status as a private shareholderowned company.
(vi) Restrictions on the use of corporation resources, including limitations on
the payment of dividends and executive
compensation and any such other terms
and conditions as appropriate for those
purposes.
(D) Reports to Congress
Upon exercise of this authority, the Secretary shall report to the Committees on the
Budget, Financial Services, and Ways and
Means of the House of Representatives and
the Committees on the Budget, Finance, and
Banking, Housing, and Urban Affairs of the
Senate as to the necessity for the purchase
and the determinations made by the Secretary under subparagraph (B) and with respect to the considerations required under
subparagraph (C), and the size, terms, and
probability of repayment or fulfillment of
other terms of such purchase.
(2) Rights; sale of obligations and securities
(A) Exercise of rights
The Secretary of the Treasury may, at any
time, exercise any rights received in connection with such purchases.
(B) Sale of obligation and securities
The Secretary of the Treasury may, at any
time, subject to the terms of the security or
otherwise upon terms and conditions and at
prices determined by the Secretary, sell any
obligation or security acquired by the Secretary under this subsection.
(C) Deficit reduction
The Secretary of the Treasury shall deposit in the General Fund of the Treasury
any amounts received by the Secretary from
the sale of any obligation acquired by the
Secretary under this subsection, where such
amounts shall be—
(i) dedicated for the sole purpose of deficit reduction; and
(ii) prohibited from use as an offset for
other spending increases or revenue reductions.

Page 743

TITLE 12—BANKS AND BANKING

(D) Application of sunset to purchased obligations or securities
The authority of the Secretary of the
Treasury to hold, exercise any rights received in connection with, or sell, any obligations or securities purchased is not subject to the provisions of paragraph (4).
(3) Funding
For the purpose of the authorities granted in
this subsection, the Secretary of the Treasury
may use the proceeds of the sale of any securities issued under chapter 31 of Title 31, and the
purposes for which securities may be issued
under chapter 31 of Title 31 are extended to include such purchases and the exercise of any
rights in connection with such purchases. Any
funds expended for the purchase of, or modifications to, obligations and securities, or the
exercise of any rights received in connection
with such purchases under this subsection
shall be deemed appropriated at the time of
such purchase, modification, or exercise.
(4) Termination of authority
The authority under this subsection (g),
with the exception of paragraphs (2) and (3) of
this subsection, shall expire December 31, 2009.
(5) Authority of the Director with respect to
executive compensation
The Director shall have the power to approve, disapprove, or modify the executive
compensation of the corporation, as defined
under Regulation S-K, 17 C.F.R. 229.
(June 27, 1934, ch. 847, title III, § 304, 48 Stat. 1254;
July 1, 1948, ch. 784, § 1, 62 Stat. 1206; Aug. 2, 1954,
ch. 649, title II, § 201, 68 Stat. 615; Aug. 7, 1956, ch.
1029, title II, §§ 203, 204, 70 Stat. 1096; Pub. L.
85–10, § 1(c), Mar. 27, 1957, 71 Stat. 7; Pub. L.
85–104, title II, § 203, July 12, 1957, 71 Stat. 298;
Pub. L. 86–372, title III, §§ 302, 305(a), Sept. 23,
1959, 73 Stat. 669, 670; Pub. L. 87–70, title VI,
§ 603(d), (e), June 30, 1961, 75 Stat. 176, 177; Pub.
L. 88–560, title VII, §§ 701(b)(2), 703, 704, Sept. 2,
1964, 78 Stat. 800, 802; Pub. L. 89–566, § 1, Sept. 10,
1966, 80 Stat. 738; Pub. L. 89–754, title X, § 1007,
Nov. 3, 1966, 80 Stat. 1285; Pub. L. 90–448, title
VIII, §§ 802(p)–(s), 804(a), 805, Aug. 1, 1968, 82 Stat.
538, 542, 543; Pub. L. 91–351, title V, § 504, July 24,
1970, 84 Stat. 461; Pub. L. 93–383, title VIII,
§ 806(j), Aug. 22, 1974, 88 Stat. 728; Pub. L. 97–320,
title VII, § 707(b), Oct. 15, 1982, 96 Stat. 1540; Pub.
L. 98–479, title II, § 203(a)(1), Oct. 17, 1984, 98 Stat.
2229; Pub. L. 100–242, title IV, § 441(a), Feb. 5,
1988, 101 Stat. 1921; Pub. L. 101–73, title VII,
§ 731(m)(2), Aug. 9, 1989, 103 Stat. 436; Pub. L.
102–550, title XIII, § 1381(e)–(g), (s)(2), Oct. 28,
1992, 106 Stat. 3996, 4001; Pub. L. 110–289, div. A,
title I, § 1117(a), July 30, 2008, 122 Stat. 2683; Pub.
L. 111–203, title XIII, § 1304(a), July 21, 2010, 124
Stat. 2134.)
REFERENCES IN TEXT
Paragraph (a) of section 1716 of this title, referred to
in subsec. (a)(1), was repealed by Pub. L. 101–73, title
VII, § 731(m)(1)(A), Aug. 9, 1989, 103 Stat. 435. See section
1716(3) of this title.
AMENDMENTS
2010—Subsec. (g)(2)(C), (D). Pub. L. 111–203 added subpar. (C) and redesignated former subpar. (C) as (D).

§ 1719

2008—Subsec. (g). Pub. L. 110–289 added subsec. (g).
1992—Subsec. (b). Pub. L. 102–550, § 1381(e)(1), substituted a period for ‘‘; but the aggregate amount of obligations of the corporation under this subsection outstanding at any one time shall not exceed fifteen times
the sum of its capital, capital surplus, general surplus,
reserves, and undistributed earnings unless a greater
ratio shall be fixed at any time or from time to time
by the Secretary of Housing and Urban Development.
In no event shall any such obligations be issued if, at
the time of such proposed issuance, and as a consequence thereof, the resulting aggregate amount of its
outstanding obligations under this subsection would
exceed the amount of the corporation’s ownership pursuant to this section, free from any liens or encumbrances, of cash, mortgages or other security holdings,
and obligations of the United States or guaranteed
thereby, or obligations, participations, or other instruments which are lawful investments for fiduciary,
trust, or public funds.’’ after ‘‘in such obligations’’.
Subsec. (c). Pub. L. 102–550, § 1381(s)(2), substituted
‘‘the Secretary’s’’ for ‘‘his’’ in two places, ‘‘the Secretary’’ for ‘‘he’’ after ‘‘such price or prices as’’, and
‘‘the Secretary’’ for ‘‘him’’ after ‘‘the obligations acquired by’’.
Subsec. (d). Pub. L. 102–550, § 1381(f), inserted at end
‘‘The corporation shall insert appropriate language in
all of the securities issued under this subsection clearly
indicating that such securities, together with the interest thereon, are not guaranteed by the United States
and do not constitute a debt or obligation of the United
States or any agency or instrumentality thereof other
than the corporation.’’
Subsec. (e). Pub. L. 102–550, § 1381(e)(2), struck out
after third sentence ‘‘The outstanding total principal
amount of such obligations, which are entirely subordinated to the obligations of the corporation issued or to
be issued under subsection (b) of this section, shall be
deemed to be capital of the corporation for the purpose
of determining the aggregate amount of obligations issued under subsection (b) of this section which may be
outstanding at any one time.’’
Subsec. (f). Pub. L. 102–550, § 1381(g), inserted ‘‘of this
title and assessments pursuant to section 4516 of this
title’’ in first sentence.
1989—Subsec. (a)(2). Pub. L. 101–73 inserted after third
sentence ‘‘The corporation shall not be permitted to
use its lending authority (A) to advance funds to a
mortgage seller on an interim basis, using mortgage
loans as collateral, pending the sale of the mortgages
in the secondary market; or (B) to originate mortgage
loans.’’ and struck out first two sentences which read
as follows: ‘‘In the further interest of assuring sound
operation, any loan made by the corporation in its secondary market operations under this section, and any
extension or renewal thereof, shall not exceed 90 per
centum of the unpaid principal balances of the mortgages securing the loan, and shall bear interest at a
rate consistent with general loan policies established
from time to time by the corporation’s board of directors. Any such loan shall mature in not more than
twelve months and the term of any extension or renewal shall not exceed twelve months.’’
1988—Subsec. (f). Pub. L. 100–242 added subsec. (f).
1984—Subsec. (c). Pub. L. 98–479 substituted ‘‘chapter
31 of title 31’’ for ‘‘the Second Liberty Bond Act, as now
or hereafter in force’’ in two places.
1982—Subsec. (e). Pub. L. 97–320 struck out provision
that the total principal amount of subordinated obligations which could be outstanding at any one time could
not exceed two times the sum of (1) the capital of the
corporation represented by its outstanding common
stock and (2) its surplus and undistributed earnings at
such time.
1974—Subsec. (a)(1). Pub. L. 93–383 substituted ‘‘section 243 of the National Housing Act’’, classified to section 1715z–8 of this title, for ‘‘section 502 of the Emergency Home Finance Act of 1970’’, which enacted such
section 1715z–8. For purposes of amendment of subsec.
(a)(1) of this section no change in text was required.

§ 1720

TITLE 12—BANKS AND BANKING

1970—Subsec. (a)(1). Pub. L. 91–351 inserted provision
that nothing in this subchapter shall prohibit the corporation from purchasing, and making commitments to
purchase, any mortgage with respect to which the Secretary of Housing and Urban Development has entered
into a contract with the corporation to make interest
subsidy payments pursuant to section 1715z–8 of this
title.
1968—Subsec. (a)(1). Pub. L. 90–448, § 802(p), (s), substituted ‘‘corporation’’ for ‘‘Association’’ in six places,
and ‘‘corporation’s’’ for ‘‘Association’s’’ in two places,
and struck out provisions which prohibited the Association from purchasing any mortgage insured or guaranteed prior to Aug. 2, 1954.
Subsec. (a)(2). Pub. L. 90–448, § 802(s), substituted
‘‘corporation’’ for ‘‘Association’’ in five places, and
‘‘corporation’s’’ for ‘‘Association’s’’, in three places.
Subsec. (b). Pub. L. 90–448, § 802(q), (s), substituted
‘‘corporation’’ for ‘‘Association’’ in seven places, and
‘‘corporation’s’’ for ‘‘Association’s’’, and inserted provisions permitting the Secretary to establish a greater
ratio than fifteen times for the aggregate amount of
obligations outstanding.
Subsec. (c). Pub. L. 90–448, § 802(r), struck out provisions which prohibited the Secretary of the Treasury
from purchasing obligations under this subsection if all
of the preferred stock of the Association held by him
has been retired.
Subsec. (d). Pub. L. 90–448, § 804(a), added subsec. (d).
A prior subsec. (d) was repealed by Pub. L. 88–560.
Subsec. (e). Pub. L. 90–448, § 805, added subsec. (e).
1966—Subsec. (a)(1). Pub. L. 89–754 struck out requirement that Association’s advance commitments to purchase mortgages in its secondary market operations be
issued at prices which are sufficient to facilitate home
financing, but which are sufficiently below the price
then offered by the Association for immediate purchase
to prevent excessive sales to the Association pursuant
to such commitments.
Subsec. (b). Pub. L. 89–566 raised limit on maximum
amount of obligations outstanding under the subsection from ten times the sum of capital, capital surplus, general surplus, reserves, and undistributed earnings to fifteen times that sum.
1964—Subsec. (a)(2). Pub. L. 88–560, § 703, substituted
‘‘90 per centum’’ for ‘‘80 per centum’’.
Subsec. (b). Pub. L. 88–560, § 701(b)(2), substituted ‘‘or
obligations, participations, or other instruments which
are lawful investments’’ for ‘‘or obligations which are
lawful investments’’.
Subsec. (d). Pub. L. 88–560, § 704, repealed provisions
which prohibited the Association from purchasing participations in its operations under this section.
1961—Subsec. (a). Pub. L. 87–70, § 603(d), designated existing provisions as par. (1) and added par. (2).
Subsec. (b). Pub. L. 87–70, § 603(e), inserted ‘‘or other
security holdings’’ after ‘‘mortgages’’.
1959—Subsec. (a). Pub. L. 86–372, § 302, substituted
‘‘home financing’’ for ‘‘advance planning of home construction’’ after ‘‘sufficient to facilitate’’.
Subsec. (b). Pub. L. 86–372, § 305(a), substituted ‘‘and
obligations of the United States or guaranteed thereby,
or obligations which are lawful investments for fiduciary, trust, or public funds’’ for ‘‘and bonds or other
obligations of, or bonds or other obligations guaranteed
as to principal and interest by, the United States’’.
1957—Subsec. (c). Pub. L. 85–104 substituted
‘‘$2,250,000,000’’ for ‘‘$1,350,000,000’’.
Pub. L. 85–10 substituted ‘‘$1,350,000,000’’ for
‘‘$500,000,000 plus an amount equal to the total of such
reductions in the maximum dollar amount prescribed
by section 1721(c) of this title as have theretofore been
effected pursuant to that section: Provided, That such
aggregate principal amount under this subsection shall
in no event exceed $1,000,000,000’’.
1956—Subsec. (a). Act Aug. 7, 1956, §§ 203, 204(a), substituted in second sentence ‘‘within the range of market prices’’ for ‘‘at the market prices’’; and inserted
sentence that advance commitments to purchase mortgages in secondary market operations shall be issued

Page 744

only at prices which are sufficient to facilitate advance
planning of home construction but sufficiently below
price then offered by Association for immediate purchase to prevent excessive sales to the Association pursuant to such commitments.
Subsec. (d). Act Aug. 7, 1956, § 204(b), struck out provisions prohibiting Association from making advance
contracts or commitments to purchase mortgages but
allowed Association to issue a purchase contract in an
amount not exceeding the amount of the sale of mortgages purchased from the Association, entitling the
holder to sell to the Association mortgages in the
amount of the contract, upon terms prescribed by the
Association.
1954—Act Aug. 2, 1954, amended section generally to
substitute new provisions (formerly covered in sections
1716 and 1717 of this title) for provisions which related
to exemption from taxation. See section 1723a(c) of this
title.
1948—Act July 1, 1948, amended section generally to
provide for exemption from taxation for the Association.
EFFECTIVE DATE OF 2010 AMENDMENT
Amendment by Pub. L. 111–203 effective 1 day after
July 21, 2010, except as otherwise provided, see section
4 of Pub. L. 111–203, set out as an Effective Date note
under section 5301 of this title.
EFFECTIVE DATE OF 1968 AMENDMENT
For effective date of amendment by title VIII of Pub.
L. 90–448, see section 808 of Pub. L. 90–448, set out as an
Effective Date note under section 1716b of this title.

§ 1720. Repealed. Pub. L. 98–181, title I [title IV,
§ 483(a)], Nov. 30, 1983, 97 Stat. 1240
Section, acts June 27, 1934, ch. 847, title III, § 305, 48
Stat. 1254; July 1, 1948, ch. 784, § 1, 62 Stat. 1206; Apr. 20,
1950, ch. 94, title I, § 118, 64 Stat. 57; Aug. 2, 1954, ch. 649,
title II, § 201, 68 Stat. 616; Aug. 11, 1955, ch. 783, title I,
§ 103, title IV, § 402, 69 Stat. 636, 651; Aug. 7, 1956, ch.
1029, title II, §§ 205–208, 70 Stat. 1096; Pub. L. 85–10, § 2,
Mar. 27, 1957, 71 Stat. 8; Pub. L. 85–104, title II, §§ 204–207,
July 12, 1957, 71 Stat. 298; Pub. L. 85–364, §§ 2, 3(a), 4,
Apr. 1, 1958, 72 Stat. 73, 74; Pub. L. 86–372, title III,
§§ 303(a), 304, Sept. 23, 1959, 73 Stat. 669; Pub. L. 87–70,
title I, § 101(c), title VI, § 601(a), (b), June 30, 1961, 75
Stat. 153, 175, 176; Pub. L. 88–560, title I, § 109(b), Sept.
2, 1964, 78 Stat. 777; Pub. L. 89–117, title VIII, § 801, Aug.
10, 1965, 79 Stat. 493; Pub. L. 89–429, § 3(a), May 24, 1966,
80 Stat. 166; Pub. L. 89–566, § 3, Sept. 10, 1966, 80 Stat.
738; Pub. L. 89–754, title III, § 310(d), title X, §§ 1005,
1020(c), Nov. 3, 1966, 80 Stat. 1270, 1285, 1296; Pub. L.
90–19, § 1(a)(2), May 25, 1967, 81 Stat. 17; Pub. L. 90–448,
title II, § 201(g), title VIII, § 806, Aug. 1, 1968, 82 Stat. 503,
544; Pub. L. 91–152, § 2, title I, § 115, Dec. 24, 1969, 83 Stat.
379, 385; Pub. L. 91–351, title IV, § 401, July 24, 1970, 84
Stat. 458; Pub. L. 95–557, title III, § 318(b), Oct. 31, 1978,
92 Stat. 2101; Pub. L. 96–399, title III, § 338, Oct. 8, 1980,
94 Stat. 1657; Pub. L. 97–35, title III, § 333(a)(1), (2), Aug.
13, 1981, 95 Stat. 413, related to the special assistance
functions of the Government National Mortgage Association.
SAVINGS PROVISION
Pub. L. 98–181, title I [title IV, § 483(b)], Nov. 30, 1983,
97 Stat. 1240, provided that: ‘‘Any purchase or commitment to purchase any mortgage pursuant to section 305
or 313 of the Federal National Mortgage Association
Charter Act [former sections 1720 and 1723e of this title]
made before the date of the enactment of this Act [Nov.
30, 1983], and the servicing and disposition of any such
mortgage, shall continue to be governed by the provisions of such sections as they existed immediately before the effective date of this section [Nov. 30, 1983].’’

Page 745

TITLE 12—BANKS AND BANKING

§ 1721. Management and liquidation functions of
Government National Mortgage Association
(a) Separate accountability of assets and liabilities
To carry out the purposes set forth in paragraph (c) 1 of section 1716 of this title, the Association is authorized and directed, as of the
close of the cutoff date determined by the Association pursuant to section 1718(d) 1 of this title,
to establish separate accountability for all of its
assets and liabilities (exclusive of capital, surplus, surplus reserves, and undistributed earnings to be evidenced by preferred stock as provided in section 1718(d) 1 of this title, but inclusive of all rights and obligations under any outstanding contracts), and to maintain such separate accountability for the management and orderly liquidation of such assets and liabilities as
provided in this section.
(b) Issuance of obligations to expedite substitution of private financing
For the purposes of this section and to assure
that, to the maximum extent, and as rapidly as
possible, private financing will be substituted
for Treasury borrowings otherwise required to
carry mortgages held under the aforesaid separate accountability, the Association is authorized to issue, upon the approval of the Secretary
of the Treasury, and have outstanding at any
one time obligations having such maturities and
bearing such rate or rates of interest as may be
determined by the Association with the approval of the Secretary of the Treasury, to be
redeemable at the option of the Association before maturity in such manner as may be stipulated in such obligations; but in no event shall
any such obligations be issued if, at the time of
such proposed issuance, and as a consequence
thereof, the resulting aggregate amount of its
outstanding obligations under this subsection
would exceed the amount of the Association’s
ownership under the aforesaid separate accountability, free from any liens or encumbrances, of
cash, mortgages, and obligations of the United
States or guaranteed thereby, or obligations,
participations, or other instruments which are
lawful investments for fiduciary, trust or public
funds. The proceeds of any private financing effected under this subsection shall be paid to the
Secretary of the Treasury in reduction of the indebtedness of the Association to the Secretary
of the Treasury under the aforesaid separate accountability. The Association shall insert appropriate language in all of its obligations issued
under this subsection clearly indicating that
such obligations, together with the interest
thereon, are not guaranteed by the United
States and do not constitute a debt or obligation
of the United States or of any agency or instrumentality thereof other than the Association.
The Association is authorized to purchase in the
open market any of its obligations outstanding
under this subsection at any time and at any
price.
(c) Cutoff date as controlling purchases; total
amount of mortgages and commitments
No mortgage shall be purchased by the Association in its operations under this section ex1 See

References in Text note below.

§ 1721

cept pursuant to and in accordance with the
terms of a contract or commitment to purchase
the same made prior to the cutoff date provided
for in section 1718(d) 1 of this title, which contract or commitment became a part of the aforesaid separate accountability, and the total
amount of mortgages and commitments held by
the Association under this section shall not, in
any event, exceed $3,350,000,000: Provided, That
such maximum amount shall be progressively
reduced by the amount of cash realizations on
account of principal of mortgages held under the
aforesaid separate accountability and by cancellation of any commitments to purchase mortgages thereunder, as reflected by the books of
the Association, with the objective that the entire aforesaid maximum amount shall be eliminated with the orderly liquidation of all mortgages held under the aforesaid separate accountability: And provided further, That nothing in
this subsection shall preclude the Association
from granting such usual and customary increases in the amounts of outstanding commitments (resulting from increased costs or otherwise) as have theretofore been covered by like
increases in commitments granted by the agencies of the Federal Government insuring or
guaranteeing the mortgages. There shall be excluded from the total amounts set forth in this
subsection the amounts of any mortgages which,
subsequent to May 31, 1954, are transferred by
law to the Association and held under the aforesaid separate accountability.
(d) Issuance of obligations sufficient to carry out
functions; character; purchase
The Association may issue to the Secretary of
the Treasury its obligations in an amount outstanding at any one time sufficient to enable
the Association to carry out its functions under
this section, such obligations to mature not
more than five years from their respective dates
of issue, to be redeemable at the option of the
Association before maturity in such manner as
may be stipulated in such obligations. Each
such obligation shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the current average rate
on outstanding marketable obligations of the
United States as of the last day of the month
preceding the issuance of the obligation of the
Association. The Secretary of the Treasury is
authorized to purchase any obligations of the
Association to be issued under this section, and
for such purpose the Secretary of the Treasury
is authorized to use as a public debt transaction
the proceeds from the sale of any securities issued under chapter 31 of title 31, and the purposes for which securities may be issued under
chapter 31 of title 31 are extended to include any
purchases of the Association’s obligations hereunder.
(e) Acquisition of mortgages offered by Secretary
of Housing and Urban Development
Notwithstanding any other provision of law,
the Association is authorized, under the aforesaid separate accountability, to make commitments to purchase, and to purchase, service, or
sell any obligations offered to it by the Secretary of Housing and Urban Development, or
any mortgages covering residential property of-

§ 1721

TITLE 12—BANKS AND BANKING

fered to it by any Federal instrumentality, or
the head thereof. These shall be excluded from
the total amounts set forth in subsection (c) the
amounts of any obligations or mortgages purchased by the Association pursuant to this subsection.
(f) Transfer of funds
Notwithstanding any of the provisions of this
chapter or of any other law, an amount equal to
the net decrease for the preceding fiscal year in
the aggregate principal amount of all mortgages
owned by the Association under this section
shall, as of July 1 of each of the years 1961
through 1964, be transferred to and merged with
the authority provided under section 1720(a) 1 of
this title, and the amount of such authority as
specified in section 1720(c) 1 of this title shall be
increased by any amounts so transferred.
(g) Guarantee of principal and interest on trust
certificates and other securities; fees and
charges; subrogation; contract for extinguishment of right, title, or interest in mortgages; protection of interests; full faith and
credit; commitments limited; limitation on
fees or charges
(1) The Association is authorized, upon such
terms and conditions as it may deem appropriate, to guarantee the timely payment of principal of and interest on such trust certificates or
other securities as shall (i) be issued by the corporation under section 1719(d) of this title, or by
any other issuer approved for the purposes of
this subsection by the Association, and (ii) be
based on and backed by a trust or pool composed
of mortgages which are insured under this chapter, or which are insured or guaranteed under
the Servicemen’s Readjustment Act of 1944, title
V of the Housing Act of 1949 [42 U.S.C. 1471 et
seq.], or chapter 37 of title 38, or which are guaranteed under title XIII of the Public Health
Service Act [42 U.S.C. 300e et seq.]; 2 or guaranteed under section 1715z–13a of this title. The Association may not guarantee the timely payment of principal and interest on a security that
is backed by a mortgage insured or guaranteed
under chapter 37 of title 38 and that was refinanced until the later of the date that is 210
days after the date on which the first monthly
payment is made on the mortgage being refinanced and the date on which 6 full monthly
payments have been made on the mortgage
being refinanced. The Association shall collect
from the issuer a reasonable fee for any guaranty under this subsection and shall make such
charges as it may determine to be reasonable for
the analysis of any trust or other security arrangement proposed by the issuer. In the event
the issuer is unable to make any payment of
principal of or interest on any security guaranteed under this subsection, the Association shall
make such payment as and when due in cash,
and thereupon shall be subrogated fully to the
rights satisfied by such payment. In any case in
which (I) Federal law requires the reduction of
the interest rate on any mortgage backing a security guaranteed under this subsection, (II) the
mortgagor under the mortgage is a person in the
military service, and (III) the issuer of such se2 So

in original. The semicolon probably should be a comma.

Page 746

curity fails to receive from the mortgagor the
full amount of interest payment due, the Association may make payments of interest on the
security in amounts not exceeding the difference
between the amount payable under the interest
rate on the mortgage and the amount of interest
actually paid by the mortgagor. The Association
is hereby empowered, in connection with any
guaranty under this subsection, whether before
or after any default, to provide by contract with
the issuer for the extinguishment, upon default
by the issuer, of any redemption, equitable,
legal, or other right, title, or interest of the issuer in any mortgage or mortgages constituting
the trust or pool against which the guaranteed
securities are issued; and with respect to any
issue of guaranteed securities, in the event of
default and pursuant otherwise to the terms of
the contract, the mortgages that constitute
such trust or pool shall become the absolute
property of the Association subject only to the
unsatisfied rights of the holders of the securities
based on and backed by such trust or pool. No
State or local law, and no Federal law (except
Federal law enacted expressly in limitation of
this subsection after October 8, 1980), shall preclude or limit the exercise by the Association of
(A) its power to contract with the issuer on the
terms stated in the preceding sentence, (B) its
rights to enforce any such contract with the issuer, or (C) its ownership rights, as provided in
the preceding sentence, in the mortgages constituting the trust or pool against which the
guaranteed securities are issued. The full faith
and credit of the United States is pledged to the
payment of all amounts which may be required
to be paid under any guaranty under this subsection. There shall be excluded from the total
amounts set forth in subsection (c) the amounts
of any mortgages acquired by the Association as
a result of its operations under this subsection.
(2) Notwithstanding any other provision of law
and subject only to the absence of qualified requests for guarantees, to the authority provided
in this subsection, and to the extent of or in
such amounts as any funding limitation approved in appropriation Acts, the Association
shall enter into commitments to issue guarantees under this subsection in an aggregate
amount of $110,000,000,000 during fiscal year 1996.
There are authorized to be appropriated to cover
the costs (as such term is defined in section 661a
of title 2) of guarantees issued under this chapter by the Association such sums as may be necessary for fiscal year 1996.
(3)(A) No fee or charge in excess of 6 basis
points may be assessed or collected by the
United States (including any executive department, agency, or independent establishment of
the United States) on or with regard to any
guaranty of the timely payment of principal or
interest on securities or notes based on or
backed by mortgages that are secured by 1- to 4family dwellings and (i) insured by the Federal
Housing Administration under subchapter II of
this chapter; or (ii) insured or guaranteed under
the Serviceman’s Readjustment Act of 1944,
chapter 37 of title 38, or title V of the Housing
Act of 1949 [42 U.S.C. 1471 et seq.].
(B) The fees charged for the guaranty of securities or on notes based on or backed by mort-

Page 747

§ 1721

TITLE 12—BANKS AND BANKING

gages not referred to in subparagraph (A), as authorized by other provisions of law, shall be set
by the Association at a level not more than necessary to create reserves sufficient to meet anticipated claims based upon actuarial analysis,
and for no other purpose.
(C) Fees or charges for the issuance of commitments or miscellaneous administrative fees
of the Association shall not be on a competitive
auction basis and shall remain at the level set
for such fees or charges as of September 1, 1985,
except that such fees or charges may be increased if reasonably related to the cost of administering the program, and for no other purpose.
(D) Not less than 90 days before increasing any
fee or charge under subparagraph (B) or (C), the
Secretary shall submit to the Congress a certification that such increase is solely for the purpose specified in such subparagraph.
(E)(i) Notwithstanding subparagraphs (A)
through (D), fees charged for the guarantee of,
or commitment to guarantee, multiclass securities backed by a trust or pool of securities or
notes guaranteed by the Association under this
subsection, and other related fees shall be
charged by the Association in an amount the Association deems appropriate. The Association
shall take such action as may be necessary to
reasonably assure that such portion of the benefit, resulting from the Association’s multiclass
securities program, as the Association determines is appropriate accrues to mortgagors who
execute eligible mortgages after August 10, 1993.
(ii) The Association shall provide for the initial implementation of the program for which
fees are charged under the first sentence of
clause (i) by notice published in the Federal
Register. The notice shall be effective upon publication and shall provide an opportunity for
public comment. Not later than 12 months after
publication of the notice, the Association shall
issue regulations for such program based on the
notice, comments received, and the experience
of the Association in carrying out the program
during such period.
(iii) The Association shall consult with persons or entities in such manner as the Association deems appropriate to ensure the efficient
commencement and operation of the multiclass
securities program.
(iv) No State or local law, and no Federal law
(except Federal law enacted expressly in limitation of this clause after August 10, 1993) shall
preclude or limit the exercise by the Association
of its power to contract with persons or entities,
and its rights to enforce such contracts, for the
purpose of ensuring the efficient commencement
and continued operation of the multiclass securities program.
(June 27, 1934, ch. 847, title III, § 306, 48 Stat. 1255;
July 1, 1948, ch. 784, § 1, 62 Stat. 1209; Apr. 20,
1950, ch. 94, title I, § 122, 64 Stat. 59; Aug. 2, 1954,
ch. 649, title II, § 201, 68 Stat. 618; Aug. 7, 1956, ch.
1029, title II, § 209, 70 Stat. 1097; Pub. L. 86–372,
title III, §§ 305(a), 306(a), Sept. 23, 1959, 73 Stat.
670; Pub. L. 87–70, title VI, § 601(c), June 30, 1961,
75 Stat. 176; Pub. L. 88–560, title VII, § 701(b)(2),
Sept. 2, 1964, 78 Stat. 800; Pub. L. 89–117, title
VIII, § 802(b), Aug. 10, 1965, 79 Stat. 494; Pub. L.
90–19, § 1(k), May 25, 1967, 81 Stat. 18; Pub. L.

90–448, title VIII, § 804(b), Aug. 1, 1968, 82 Stat.
542; Pub. L. 93–222, § 7(c), Dec. 29, 1973, 87 Stat.
936; Pub. L. 96–399, title III, § 335, Oct. 8, 1980, 94
Stat. 1654; Pub. L. 97–35, title III, § 333(a)(3), Aug.
13, 1981, 95 Stat. 413; Pub. L. 98–181, title I [title
IV, § 481], Nov. 30, 1983, 97 Stat. 1239; Pub. L.
98–479, title II, § 203(a)(2), Oct. 17, 1984, 98 Stat.
2229; Pub. L. 100–14, Mar. 24, 1987, 101 Stat. 128;
Pub. L. 100–242, title IV, § 446, Feb. 5, 1988, 101
Stat. 1922; Pub. L. 101–625, title III, § 339, Nov. 28,
1990, 104 Stat. 4147; Pub. L. 102–550, title V, §§ 531,
532, Oct. 28, 1992, 106 Stat. 3793; Pub. L. 103–66,
title III, § 3004, Aug. 10, 1993, 107 Stat. 339; Pub.
L. 103–120, § 10, Oct. 27, 1993, 107 Stat. 1151; Pub.
L. 104–120, § 7, Mar. 28, 1996, 110 Stat. 836; Pub. L.
104–330, title VII, § 701(k), Oct. 26, 1996, 110 Stat.
4050; Pub. L. 105–244, title IX, § 972(a), Oct. 7, 1998,
112 Stat. 1837; Pub. L. 107–326, § 4, Dec. 4, 2002, 116
Stat. 2793; Pub. L. 108–199, div. A, title VII, § 774,
Jan. 23, 2004, 118 Stat. 40; Pub. L. 115–174, title
III, § 309(b), May 24, 2018, 132 Stat. 1350.)
REFERENCES IN TEXT
Paragraph (c) of section 1716 of this title, referred to
in subsec. (a), was redesignated par. (4) of section 1716
by Pub. L. 101–73, title VII, § 731(m)(1)(B), Aug. 9, 1989,
103 Stat. 435. Par. (4) of section 1716 was redesignated
par. (5) by Pub. L. 102–550, title XIII, § 1381(a)(3), Oct. 28,
1992, 106 Stat. 3994.
Section 1718(d) of this title, referred to in subsecs. (a)
and (c), authorizing the issuance of preferred stock to
the Secretary of the Treasury, was repealed by Pub. L.
93–383, title VIII, § 806(i), Aug. 22, 1974, 88 Stat. 728.
Section 1720 of this title, referred to in subsec. (f),
was repealed by Pub. L. 98–181, title I [title IV, § 483(a)],
Nov. 30, 1983, 97 Stat. 1240.
The Housing Act of 1949, referred to in subsec. (g)(1),
(3)(A), is act July 15, 1949, ch. 338, 63 Stat. 413, as
amended. Title V of the Housing Act of 1949 is classified
generally to subchapter III (§ 1471 et seq.) of chapter 8A
of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short
Title note set out under section 1441 of Title 42 and
Tables.
The Servicemen’s Readjustment Act of 1944, referred
to in subsec. (g)(1), (3)(A), is act June 22, 1944, ch. 268,
58 Stat. 284, as amended, which was classified generally
to chapter 11C (§§ 693 to 697g) of former Title 38, Pensions, Bonuses, and Veterans’ Relief, and which was repealed by section 14(87) of Pub. L. 85–857, Sept. 2, 1958,
72 Stat. 1273, the first section of which enacted Title 38,
Veterans’ Benefits. For distribution of sections 693 to
697g of former Title 38 to Title 38, Veterans’ Benefits,
see Table preceding section 101 of Title 38.
The Public Health Service Act, referred to in subsec.
(g)(1), is act July 1, 1944, ch. 373, 58 Stat. 682, as amended. Title XIII of the Public Health Service Act, is title
XIII of act July 1, 1944, ch. 373, as added by act Dec. 29,
1973, Pub. L. 93–222, § 2, 87 Stat. 914, which is classified
generally to subchapter XI (§ 300e et seq.) of chapter 6A
of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short
Title note set out under section 201 of Title 42 and
Tables.
AMENDMENTS
2018—Subsec. (g)(1). Pub. L. 115–174 inserted ‘‘The Association may not guarantee the timely payment of
principal and interest on a security that is backed by
a mortgage insured or guaranteed under chapter 37 of
title 38 and that was refinanced until the later of the
date that is 210 days after the date on which the first
monthly payment is made on the mortgage being refinanced and the date on which 6 full monthly payments
have been made on the mortgage being refinanced.’’
after ‘‘guaranteed under section 1715z–13a of this title.’’
2004—Subsec. (g)(1). Pub. L. 108–199, in first sentence,
struck out ‘‘or title V of the Housing Act of 1949’’ after

§ 1721

TITLE 12—BANKS AND BANKING

‘‘mortgages which are insured under this chapter’’ and
inserted ‘‘, title V of the Housing Act of 1949,’’ after
‘‘1944’’.
2002—Subsec. (g)(3)(A). Pub. L. 107–326 repealed Pub.
L. 105–244, § 972(a). See 1998 Amendment note below.
1998—Subsec. (g)(3)(A). Pub. L. 105–244, § 972(a), which
directed amendment of subpar. (A), effective Oct. 1,
2004, by substituting ‘‘The Association shall assess and
collect a fee in an amount equal to nine basis points’’
for ‘‘No fee or charge in excess of 6 basis points may be
assessed or collected by the United States (including
any executive department, agency, or independent establishment of the United States)’’, was repealed by
Pub. L. 107–326. See 2002 Amendment note above and Effective Date of 1998 Amendment note below.
1996—Subsec. (g)(1). Pub. L. 104–330 inserted before period at end of first sentence ‘‘; or guaranteed under section 1715z–13a of this title’’.
Subsec. (g)(2). Pub. L. 104–120 amended par. (2) generally. Prior to amendment, par. (2) read as follows:
‘‘Notwithstanding any other provision of law and subject only to the absence of qualified requests for guarantees, to the authority provided in this subsection,
and to the extent of or in such amounts as any funding
limitation approved in appropriation Acts, the Association shall enter into commitments to issue guarantees
under this subsection in an aggregate amount of
$107,700,000,000 during fiscal year 1993 and $91,696,000,000
during fiscal year 1994. There is authorized to be appropriated such sums as may be necessary to cover the
costs (as such term is defined in section 661a of title 2)
of guarantees issued under this chapter by the Association.’’
1993—Subsec. (g)(2). Pub. L. 103–120 substituted
‘‘$107,700,000,000’’ for ‘‘$88,000,000,000’’.
Subsec. (g)(3)(E). Pub. L. 103–66 added subpar. (E).
1992—Subsec. (g)(1). Pub. L. 102–550, § 532, inserted
after third sentence ‘‘In any case in which (I) Federal
law requires the reduction of the interest rate on any
mortgage backing a security guaranteed under this
subsection, (II) the mortgagor under the mortgage is a
person in the military service, and (III) the issuer of
such security fails to receive from the mortgagor the
full amount of interest payment due, the Association
may make payments of interest on the security in
amounts not exceeding the difference between the
amount payable under the interest rate on the mortgage and the amount of interest actually paid by the
mortgagor.’’
Subsec. (g)(2). Pub. L. 102–550, § 531, amended par. (2)
generally. Prior to amendment, par. (2) read as follows:
‘‘Notwithstanding any other provision of law and subject only to the absence of qualified requests for guarantees, to the authority provided in this subsection,
and to the extent of or in such amounts as any funding
limitation approved in appropriation Acts, the Association shall enter into commitments to issue guarantees
under this subsection in an aggregate amount of
$84,982,000,000 during fiscal year 1991 and $88,296,000,000
during fiscal year 1992.’’
1990—Subsec. (g)(2). Pub. L. 101–625 amended par. (2)
generally. Prior to amendment, par. (2) read as follows:
‘‘Notwithstanding any other provision of law and subject only to the absence of qualified requests for guarantees, to the authority provided in this subsection,
and to any funding limitation approved in appropriation Acts, the Association shall enter into commitments to issue guarantees under this subsection in an
aggregate amount of $150,000,000,000 for fiscal year 1988,
and $156,000,000,000 for fiscal year 1989.’’
1988—Subsec. (g)(2). Pub. L. 100–242 amended par. (2)
generally. Prior to amendment, par. (2) read as follows:
‘‘Notwithstanding any other provision of law and subject only to the absence of qualified requests for guarantees, to the authority provided in this subsection,
and to any funding limitation approved in appropriation Acts, the Association shall enter into commitments for each of the fiscal years 1984 and 1985 to issue
guarantees under this subsection for each such fiscal
year in an aggregate amount of $68,250,000,000.’’

Page 748

1987—Subsec. (g)(3). Pub. L. 100–14 added par. (3).
1984—Subsec. (d). Pub. L. 98–479 substituted ‘‘chapter
31 of title 31’’ for ‘‘the Second Liberty Bond Act, as now
or hereafter in force’’ in two places.
1983—Subsec. (g)(2). Pub. L. 98–181 substituted ‘‘Notwithstanding any other provision of law and subject
only to the absence of qualified requests for guarantees, to the authority provided in this subsection, and
to any funding limitation approved in appropriation
Acts, the Association shall enter into commitments for
each of the fiscal years 1984 and 1985 to issue guarantees under this subsection for each such fiscal year in
an aggregate amount of $68,250,000,000’’ for ‘‘During fiscal year 1982, the Association may not enter into commitments to issue guarantees under this subsection in
an aggregate amount in excess of $69,542,000,000’’.
1981—Subsec. (g). Pub. L. 97–35 redesignated existing
provisions as par. (1), substituted ‘‘(i)’’ for ‘‘(1)’’ and
‘‘(ii)’’ for ‘‘(2)’’, and added par. (2).
1980—Subsec. (g). Pub. L. 96–399 inserted provisions
relating to Federal, State, or local law, and substituted
‘‘The Association is hereby’’ for ‘‘Any Federal, State,
or other law to the contrary notwithstanding, the Association is hereby’’.
1973—Subsec. (g). Pub. L. 93–222 included mortgages
which are guaranteed under title XIII of the Public
Health Service Act.
1968—Subsec. (g). Pub. L. 90–448 added subsec. (g).
1967—Subsec. (e). Pub. L. 90–19 substituted ‘‘Secretary
of Housing and Urban Development’’ for ‘‘Housing and
Home Finance Agency or its Administrator, or by such
Agency’s constituent units or agencies or the heads
thereof’’.
1965—Subsec. (e). Pub. L. 89–117 authorized Association to deal in any obligations offered to it by Housing
and Home Finance Agency or its Administrator or by
such Agency’s units or agencies or by heads thereof as
well as residential mortgages offered to it by any Federal instrumentality, or head thereof.
1964—Subsec. (b). Pub. L. 88–560 substituted ‘‘or obligations, participations, or other instruments which are
lawful investments’’ for ‘‘or obligations which are lawful investments’’.
1961—Subsec. (f). Pub. L. 87–70 added subsec. (f).
1959—Subsec. (b). Pub. L. 86–372, § 305(a), substituted
‘‘and obligations of the United States or guaranteed
thereby, or obligations which are lawful investments
for fiduciary, trust, or public funds’’ for ‘‘and bonds or
other obligations of, or bonds or other obligations guaranteed as to principal and interest by, the United
States’’.
Subsec. (e). Pub. L. 86–372, § 306(a), added subsec. (e).
1956—Subsec. (c). Act Aug. 7, 1956, § 209(a), struck out
‘‘and subsection (e) of this section’’ after ‘‘set forth in
this subsection’’ in last sentence.
Subsec. (e). Act Aug. 7, 1956, § 209(b), repealed provisions which related to applicability of prior authorized
total amount of investments, etc., to functions under
this section and section 1720 of this title.
1954—Act Aug. 2, 1954, amended section generally by
substituting new provisions and subdividing section
into subsecs. (a) to (e).
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.
1948—Act July 1, 1948, amended section generally to
provide for liquidation of Association.
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105–244, title IX, § 972(b), Oct. 7, 1998, 112 Stat.
1837, which provided that the amendment made by section 972 was effective Oct. 1, 2004, was repealed by Pub.
L. 107–326, § 4, Dec. 4, 2002, 116 Stat. 2793.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104–120 to be construed to
have become effective Oct. 1, 1995, see section 13(a) of
Pub. L. 104–120, set out as an Effective and Termination
Dates of 1996 Amendments note under section 1437d of
Title 42, The Public Health and Welfare.

Page 749

TITLE 12—BANKS AND BANKING

EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
EFFECTIVE DATE OF 1968 AMENDMENT
For effective date of amendment by title VIII of Pub.
L. 90–448, see section 808 of Pub. L. 90–448, set out as an
Effective Date note under section 1716b of this title.
AUTHORIZATION TO ENTER INTO ADDITIONAL COMMITMENTS TO INSURE LOANS AND GUARANTEE MORTGAGE-BACKED SECURITIES DURING SPECIFIC FISCAL
YEARS; TEMPORARY EXTENSION OF CERTAIN PROGRAMS RELATING TO HOUSING AND COMMUNITY DEVELOPMENT

Fiscal year 1988—Pub. L. 100–200, Dec. 21, 1987, 101
Stat. 1327, provided: ‘‘That each provision of law
amended by Public Law 100–179 [set out below] is
amended by striking ‘December 16, 1987’ each place it
appears and inserting ‘March 15, 1988’.’’
Pub. L. 100–179, Dec. 3, 1987, 101 Stat. 1018, provided:
‘‘That each provision of law amended by Public Law
100–170 [set out below] is amended by striking ‘December 2, 1987’ each place it appears and inserting ‘December 16, 1987’.’’
Pub. L. 100–170, Nov. 17, 1987, 100 Stat. 914, provided:
‘‘That each provision of law amended by Public Law
100–154 [set out below] is amended by striking ‘November 15, 1987’ and inserting ‘December 2, 1987’.’’
Pub. L. 100–154, Nov. 5, 1987, 101 Stat. 890, provided:
‘‘That each provision of law amended by Public Law
100–122 [set out below], including those provisions
amended by section 2 of such Public Law, is amended
by striking out ‘October 31, 1987’ wherever it appears
and inserting in lieu thereof ‘November 15, 1987’.’’
Pub. L. 100–122, § 1, Sept. 30, 1987, 101 Stat. 793, provided that: ‘‘Each provision of law amended by Public
Law 99–430 [set out below] is amended by striking out
‘September 30, 1987’ wherever it appears and inserting
in lieu thereof ‘October 31, 1987’.’’
Fiscal year 1987—Pub. L. 99–430, Sept. 30, 1986, 100
Stat. 986, provided: ‘‘That each provision of law amended by Public Law 99–345 [set out below] is amended by
striking out ‘September 30, 1986’ wherever it appears
and inserting in lieu thereof ‘September 30, 1987’.’’
Fiscal year 1986—Pub. L. 99–349, title I, July 2, 1986,
100 Stat. 728, provided that: ‘‘The applicable limitation
on additional commitments to insure mortgages and
loans to carry out the purposes of the National Housing
Act [12 U.S.C. 1701 et seq.] during fiscal year 1986 is increased by an additional $57,580,000,000 of mortgage and
loan principal.’’ and
‘‘The applicable limitation on new commitments to
issue guarantees to carry out the purposes of section
306 of the National Housing Act [12 U.S.C. 1721] during
fiscal year 1986 is increased by an additional
$49,000,000,000 of principal.’’
Pub. L. 99–345, June 24, 1986, 100 Stat. 673, provided
that:
‘‘SECTION 1. Each provision of law amended by Public
Law 99–289 [set out below], is amended by striking out
‘June 6, 1986’ wherever it appears and inserting in lieu
thereof ‘September 30, 1986’.
‘‘SEC. 2. The applicable limitation on additional commitments to insure mortgages and loans to carry out
the purposes of the National Housing Act [12 U.S.C. 1701
et seq.] during fiscal year 1986 is increased by an additional $9,500,000,000 of mortgage and loan principal.’’
Pub. L. 99–289, May 2, 1986, 100 Stat. 412, provided
that:
‘‘SECTION 1. FEDERAL HOUSING ADMINISTRATION
FUND.
‘‘(a) The applicable limitation on additional commitments to insure mortgages and loans to carry out the
purposes of the National Housing Act [12 U.S.C. 1701 et
seq.] during fiscal year 1986 is increased by an additional $17,000,000,000 of mortgage and loan principal.

§ 1721

‘‘(b) Each provision of law amended by Public Law
99–267 [amending sections 1703, 1715h, 1715l, 1715z,
1715z–9, 1715z–10, 1715z–14, 1748h–1, 1748h–2, 1749bb,
1749aaa, 1749bbb, and 2811 of this title and sections
1452b, 1485, 1490, 1490c, 4026, 4056, 4101, and 5302 of Title
42, The Public Health and Welfare, and provisions set
out as a note under section 1701q of this title] is amended by striking out ‘April 30, 1986’ wherever it appears
and inserting in lieu thereof ‘June 6, 1986’.
‘‘SEC. 2. GOVERNMENT NATIONAL MORTGAGE ASSOCIATION GUARANTEES OF MORTGAGEBACKED SECURITIES.
‘‘The applicable limitation on new commitments to
issue guarantees to carry out the purposes of section
306 of the National Housing Act [12 U.S.C. 1721] during
fiscal year 1986 is increased by an additional
$60,684,750,000 of principal.
‘‘SEC. 3. ADMINISTRATIVE PROVISION.
‘‘(a) The Secretary of Housing and Urban Development (hereinafter referred to as the ‘Secretary’) shall
estimate the rates at which the authority to make
commitments to insure mortgages and loans under the
National Housing Act [12 U.S.C. 1701 et seq.], and the
authority to make commitments to issue guarantees
under section 306(g) of that Act [12 U.S.C. 1721(g)], are
likely to be used for the remainder of any fiscal year.
The Secretary shall make these estimates at such
times as the Secretary deems appropriate, but not less
frequently than monthly.
‘‘(b) If an estimate under subsection (a) indicates that
either limitation on authority to make commitments
for a fiscal year referred to in subsection (a) will be
reached before the end of that fiscal year, or in any
event whenever 75 per centum of either authority to
make commitments has been utilized, the Secretary
shall promptly so notify the Committee on Appropriations and the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Appropriations and the Committee on Banking, Finance
and Urban Affairs [now Committee on Financial Services] of the House of Representatives.’’
SPECIAL ASSISTANCE FUNCTIONS FUND; TRANSFER OF
FUNDS
Pub. L. 98–371, title I, July 18, 1984, 98 Stat. 1218, directed Secretary to transfer all assets acquired and liabilities incurred pursuant to section 1720 of this title
to management and liquidating functions fund established pursuant to this section, and that on Oct. 1, 1984,
each outstanding obligation issued by Secretary of
Housing and Urban Development to Secretary of the
Treasury pursuant to section 1720(d) of this title, together with any promise to repay principal and unpaid
interest which had accrued on each obligation, and any
other term or condition specified by each such obligation, was canceled.
EMERGENCY MORTGAGE PURCHASE ASSISTANCE;
TRANSFER OF FUNDS
For transfer of all assets acquired and liabilities incurred pursuant to section 1723e of this title to management and liquidating functions fund established by
this section, with provision for cancellation of obligations, see title I [part] of Pub. L. 98–371, set out as a
note under section 1723e of this title.
ADMINISTRATIVE EXPENSES IN CONNECTION WITH THE
SALE OF CERTAIN MORTGAGES TO THE FEDERAL NATIONAL MORTGAGE ASSOCIATION
Pub. L. 86–372, title III, § 306(b), Sept. 23, 1959, 73 Stat.
670, as amended by Pub. L. 90–19, § 16(b), May 25, 1967, 81
Stat. 25; Pub. L. 90–448, title VIII, § 807(a), Aug. 1, 1968,
82 Stat. 544, provided that: ‘‘In connection with the sale
of any mortgages to the Government National Mortgage Association pursuant to section 306(e) of the Federal National Mortgage Association Charter Act [subsection (e) of this section], the Secretary of Housing
and Urban Development is authorized, and any other

§ 1722

TITLE 12—BANKS AND BANKING

official, unit, or agency selling such mortgages thereunder is directed, to transfer to the Association from
time to time, from authorizations, limitations, and
funds available for administrative expenses of such official, unit, or agency in connection with the same mortgages, such amounts thereof as said Secretary determines to be required for administrative expenses of the
Association in connection with the purchase, servicing,
and sale of such mortgages: Provided, That no such
transfer shall be made after a budget estimate of the
Association with respect to the same mortgages has
been submitted to and finally acted upon by the Congress.’’

§ 1722. Benefits and burdens incident to administration of functions and operations under
sections 1720 and 1721
All of the benefits and burdens incident to the
administration of the functions and operations
of the Association under sections 1720 and 1721,
respectively, of this title, after allowance for related obligations of the Association, its prorated
expenses, and the like, including amounts required for the establishment of such reserves as
the Secretary of Housing and Urban Development shall deem appropriate, shall inure solely
to the Secretary of the Treasury, and such related earnings or other amounts as become available shall be paid annually by the Association to
the Secretary of the Treasury for covering into
miscellaneous receipts.
(June 27, 1934, ch. 847, title III, § 307, as added
Aug. 2, 1954, ch. 649, title II, § 201, 68 Stat. 619;
amended Pub. L. 90–448, title VIII, § 802(v), (w),
Aug. 1, 1968, 82 Stat. 539.)
REFERENCES IN TEXT
Section 1720 of this title, referred to in text, was repealed by Pub. L. 98–181, title I [title IV, § 483(a)], Nov.
30, 1983, 97 Stat. 1240.
PRIOR PROVISIONS
A prior section 307 of act June 27, 1934, ch. 847, title
III, 48 Stat. 1255; amended Feb. 3, 1938, ch. 13, § 8, 52
Stat. 24, related to exemption from taxation, prior to
the general amendment of this subchapter by act July
1, 1948, ch. 784, § 1, 62 Stat. 1206, and was subsequently
covered by section 1719 of this title until the general
amendment of this subchapter by act Aug. 2, 1954. See
section 1723a(c) of this title.
AMENDMENTS
1968—Pub. L. 90–448 repealed subsecs. (a) and (b)
which related to separate accountability and to functions of the Association under sections 1720 and 1721 of
this title, redesignated subsec. (c) as the entire section,
and substituted ‘‘Secretary of Housing and Urban Development’’ for ‘‘board of directors of the Association’’.
EFFECTIVE DATE OF 1968 AMENDMENT
For effective date of amendment by title VIII of Pub.
L. 90–448, see section 808 of Pub. L. 90–448, set out as an
Effective Date note under section 1716b of this title.

§ 1723. Management
(a) Government National Mortgage Association
All the powers and duties of the Government
National Mortgage Association shall be vested
in the Secretary of Housing and Urban Development and the Association shall be administered
under the direction of the Secretary. Within the
limitations of law, the Secretary shall determine the general policies which shall govern the

Page 750

operations of the Association, and shall have
power to adopt, amend, and repeal bylaws governing the performance of the powers and duties
granted to or imposed upon it by law. There is
hereby established in the Department of Housing and Urban Development the position of
President, Government National Mortgage Association, who shall be appointed by the President, by and with the advice and consent of the
Senate. The Secretary shall select and effect the
appointment of qualified persons to fill the offices of vice president, and such other offices as
may be provided for in the bylaws. Persons appointed under the preceding sentence shall perform such executive functions, powers, and duties as may be prescribed by the bylaws or by
the Secretary, and such persons shall be executive officers of the Association and shall discharge all such executive functions, powers, and
duties.
(b) Federal National Mortgage Association
The Federal National Mortgage Association
shall have a board of directors, which shall consist of 13 persons, or such other number that the
Director determines appropriate, who shall be
elected annually by the common stockholders.
Except to the extent that action under section
4636a of this title temporarily results in a lesser
number, the board shall at all times have as
members at least one person from the homebuilding industry, at least one person from the
mortgage lending industry, at least one person
from the real estate industry, and at least one
person from an organization that has represented consumer or community interests for
not less than 2 years or one person who has demonstrated a career commitment to the provision
of housing for low-income households. Each
member of the board of directors shall be elected
for a term ending on the date of the next annual
meeting of the stockholders. Any seat on the
board which becomes vacant after the annual
election of the directors shall be filled by the
board, but only for the unexpired portion of the
term. Within the limitations of law and regulation, the board shall determine the general policies which shall govern the operations of the
corporation, and shall have power to adopt,
amend, and repeal bylaws governing the performance of the powers and duties granted to or
imposed upon it by law. The board of directors
shall select and effect the appointment of qualified persons to fill the offices of president and
vice president, and such other offices as may be
provided for in the bylaws. Any member of the
board who is a full-time officer or employee of
the Federal Government shall not, as such member, receive compensation for his services.
(June 27, 1934, ch. 847, title III, § 308, as added
Aug. 2, 1954, ch. 649, title II, § 201, 68 Stat. 620;
amended Pub. L. 89–174, § 5(b), Sept. 9, 1965, 79
Stat. 669; Pub. L. 89–754, title X, § 1020(d), Nov. 3,
1966, 80 Stat. 1296; Pub. L. 90–19, § 1(l), (m), May
25, 1967, 81 Stat. 18, 19; Pub. L. 90–448, title VIII,
§ 802(y), Aug. 1, 1968, 82 Stat. 539; Pub. L. 94–375,
§ 17(a), Aug. 3, 1976, 90 Stat. 1076; Pub. L. 98–440,
title II, § 207, Oct. 3, 1984, 98 Stat. 1696; Pub. L.
102–550, title XIII, § 1381(h)(1), (i), Oct. 28, 1992,
106 Stat. 3996; Pub. L. 110–289, div. A, title I,
§§ 1153(b)(2), 1162(a)(1), July 30, 2008, 122 Stat.
2775, 2781.)

Page 751

TITLE 12—BANKS AND BANKING
PRIOR PROVISIONS

A prior section 308 of act June 27, 1934, ch. 847, title
III, 48 Stat. 1255, related to depositories of public moneys, prior to the general amendment of this subchapter
by act July 1, 1948, ch. 784, § 1, 62 Stat. 1206.
Prior provisions on the subject of this section were
contained in section 1716 of this title.
AMENDMENTS
2008—Subsec. (b). Pub. L. 110–289, § 1162(a)(1), in first
sentence, substituted ‘‘13 persons, or such other number
that the Director determines appropriate, who’’ for
‘‘eighteen persons, five of whom shall be appointed annually by the President of the United States, and the
remainder of whom’’, in second sentence, struck out
‘‘appointed by the President’’ after ‘‘as members’’, in
third sentence, struck out ‘‘appointed or’’ after ‘‘directors shall be’’ and ‘‘, except that any such appointed
member may be removed from office by the President
for good cause’’ after ‘‘the stockholders’’, in fourth sentence, struck out ‘‘elective’’ after ‘‘Any’’, and struck
out fifth sentence which read as follows: ‘‘Any appointive seat which becomes vacant shall be filled by appointment of the President, but only for the unexpired
portion of the term.’’
Pub. L. 110–289, § 1153(b)(2), in second sentence, substituted ‘‘Except to the extent that action under section 4636a of this title temporarily results in a lesser
number, the’’ for ‘‘The’’.
1992—Subsec. (b). Pub. L. 102–550, in second sentence,
struck out ‘‘and’’ after ‘‘mortgage lending industry,’’
and inserted ‘‘, and at least one person from an organization that has represented consumer or community interests for not less than 2 years or one person who has
demonstrated a career commitment to the provision of
housing for low-income households’’ and in third sentence, substituted ‘‘any such appointed member’’ for
‘‘any such member’’.
1984—Subsec. (b). Pub. L. 98–440 substituted ‘‘, which
shall consist of eighteen persons, five of whom’’ for
‘‘which shall consist of fifteen persons, one-third of
whom’’.
1976—Subsec. (a). Pub. L. 94–375 substituted provision
establishing, in the Department of Housing and Urban
Development, the position of president of the Government National Mortgage Association, to be filled by
the President, by and with the consent of the Senate,
for provision that the Secretary appoint the president
of the Association.
1968—Subsec. (a). Pub. L. 90–448, § 802(y)(1)–(6), designated existing provisions as subsec. (a), inserted provisions directing that the powers and duties of the Government National Mortgage Association shall be vested
in the Secretary of Housing and Urban Development
and that the Association shall be administered under
the direction of the Secretary, and empowering the
Secretary to adopt, amend, and repeal bylaws, and
struck out provisions which related to the Board of Directors of the Federal National Mortgage Association.
Subsec. (b). Pub. L. 90–448, § 802(y)(7), added subsec.
(b).
1967—Pub. L. 90–19 substituted ‘‘Secretary of Housing
and Urban Development’’ for ‘‘Housing and Home Finance Administrator’’, and ‘‘the Secretary’’ for ‘‘said
Administrator’’, wherever appearing.
1966—Pub. L. 89–754 struck out subsec. (a) designation.
1965—Pub. L. 89–174 struck out next to last sentence
which provided that the basic rate of compensation of
the position of president of the Association shall be the
same as the basic rate of compensation established for
the heads of the constituent agencies of the Housing
and Home Finance Agency.
EFFECTIVE DATE OF 1992 AMENDMENT
Pub. L. 102–550, title XIII, § 1381(h)(2), Oct. 28, 1992, 106
Stat. 3996, provided that: ‘‘The amendments made by
paragraph (1) [amending this section] shall apply to the
first annual appointment by the President of members

§ 1723a

to the board of directors of the Federal National Mortgage Association that occurs after the date of the enactment of this Act [Oct. 28, 1992].’’
EFFECTIVE DATE OF 1968 AMENDMENT
For effective date of amendment by title VIII of Pub.
L. 90–448, see section 808 of Pub. L. 90–448, set out as an
Effective Date note under section 1716b of this title.
EFFECTIVE DATE OF 1965 AMENDMENT
For effective date of amendment by Pub. L. 89–174,
see section 11(a) of Pub. L. 89–174, set out as an Effective Date note under section 3531 of Title 42, The Public
Health and Welfare.
TRANSITIONAL PROVISION
Pub. L. 110–289, div. A , title I, § 1162(a)(2), July 30,
2008, 122 Stat. 2781, provided that: ‘‘The amendments
made by paragraph (1) [amending this section] shall not
apply to any appointed position of the board of directors of the Federal National Mortgage Association
until the expiration of the annual term for such position during which the effective date under section 1163
[set out as an Effective Date of 2008 Amendment note
under section 3132 of Title 5, Government Organization
and Employees] occurs.’’
POWERS AND DUTIES OF POSITION OF GNMA PRESIDENT
TO REMAIN IN EFFECT UNTIL POSITION FILLED
Pub. L. 94–375, § 17(e), Aug. 3, 1976, 90 Stat. 1077, provided that notwithstanding the amendment of subsec.
(a) of this section, rights, powers, and duties of position
of President, Government National Mortgage Association, as in effect on Aug. 2, 1976, remain in effect until
the newly established position has been filled in accordance with the terms of this Act.

§ 1723a. General powers of Government National
Mortgage Association and Federal National
Mortgage Association
(a) Seal, and other matters incident to operation
Each of the bodies corporate named in section
1717(a)(2) of this title shall have power to adopt,
alter, and use a corporate seal, which shall be
judicially noticed; to enter into and perform
contracts, leases, cooperative agreements, or
other transactions, on such terms as it may
deem appropriate, with any agency or instrumentality of the United States, or with any
State, Territory, or possession, or the Commonwealth of Puerto Rico, or with any political subdivision thereof, or with any person, firm, association, or corporation; to execute, in accordance with its bylaws, all instruments necessary
or appropriate in the exercise of any of its powers; in its corporate name, to sue and to be sued,
and to complain and to defend, in any court of
competent jurisdiction, State or Federal, but no
attachment, injunction, or other similar process, mesne or final, shall be issued against the
property of the Association or against the Association with respect to its property; to conduct
its business without regard to any qualification
or similar statute in any State of the United
States, including the District of Columbia, the
Commonwealth of Puerto Rico, and the Territories and possessions of the United States; to
lease, purchase, or acquire any property, real,
personal, or mixed, or any interest therein, to
hold, rent, maintain, modernize, renovate, improve, use, and operate such property, and to
sell, for cash or credit, lease, or otherwise dispose of the same, at such time and in such man-

§ 1723a

TITLE 12—BANKS AND BANKING

ner as and to the extent that it may deem necessary or appropriate; to prescribe, repeal, and
amend or modify, rules, regulations, or requirements governing the manner in which its general business may be conducted; to accept gifts
or donations of services, or of property, real,
personal, or mixed, tangible, or intangible, in
aid of any of its purposes; and to do all things as
are necessary or incidental to the proper management of its affairs and the proper conduct of
its business.
(b) Determination with respect to obligations
and expenditures
Except as may be otherwise provided in this
subchapter, in chapter 91 of title 31, or in other
laws specifically applicable to Government corporations, the Association shall determine the
necessity for and the character and amount of
its obligations and expenditures and the manner
in which they shall be incurred, allowed, paid,
and accounted for.
(c) Exemption from taxation
(1) The Association, including its franchise,
capital, reserves, surplus, mortgages or other security holdings, and income shall be exempt
from all taxation now or hereafter imposed by
the United States, by any territory, dependency,
or possession thereof, or by any State, county,
municipality, or local taxing authority, except
that any real property of the Association shall
be subject to State, territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed.
(2) The corporation, including its franchise,
capital, reserves, surplus, mortgages or other security holdings, and income, shall be exempt
from all taxation now or hereafter imposed by
any State, territory, possession, Commonwealth, or dependency of the United States, or
by the District of Columbia, or by any county,
municipality, or local taxing authority, except
that any real property of the corporation shall
be subject to State, territorial, county, municipal, or local taxation to the same extent as
other real property is taxed.
(d) Appointment and compensation of personnel;
use of services of other agencies
(1) Subject to the provisions of section 1723(a)
of this title, the Secretary of Housing and Urban
Development shall have power to select and appoint or employ such officers, attorneys, employees, and agents of the Association, to vest
them with such powers and duties, and to fix
and to cause the Association to pay such compensation to them for their services, as he may
determine, subject to the civil service and classification laws. With the consent of any Government corporation or Federal Reserve bank, or of
any board, commission, independent establishment, or executive department of the Government, the Association may avail itself on a
reimbursable basis of the use of information,
services, facilities, officers, and employees
thereof, including any field service thereof, in
carrying out the provisions of the subchapter.
(2) The board of directors of the corporation
shall have the power to select and appoint or
employ such officers, attorneys, employees, and
agents, to vest them with such powers and du-

Page 752

ties, and to fix and to cause the corporation to
pay such compensation to them for their services, as the board of directors determines reasonable and comparable with compensation for
employment in other similar businesses (including other publicly held financial institutions or
major financial services companies) involving
similar duties and responsibilities, except that a
significant portion of potential compensation of
all executive officers (as such term is defined in
paragraph (3)(C)) of the corporation shall be
based on the performance of the corporation;
and any such action shall be without regard to
the Federal civil service and classification laws.
Appointments, promotions, and separations so
made shall be based on merit and efficiency, and
no political tests or qualifications shall be permitted or given consideration. Each officer and
employee of the corporation who is employed by
the corporation prior to January 31, 1972, and
who on the day previous to the beginning of
such employment will have been subject to the
civil service retirement law (subch. III of ch. 83
of title 5) shall, so long as the employment of
such officer or employee by the corporation continues without a break in continuity of service,
continue to be subject to such law; and for the
purpose of such law the employment of such officer or employee by the corporation without a
break in continuity of service shall be deemed to
be employment by the Government of the
United States. The corporation shall contribute
to the Civil Service Retirement and Disability
Fund a sum as provided by section 8334(a) of
title 5, except that such sum shall be determined
by applying to the total basic pay (as defined in
section 8331(3) of title 5 and except as hereinafter provided) paid to the employees of the corporation who are covered by the civil service retirement law, the per centum rate determined
annually by the Director of the Office of Personnel Management to be the excess of the total
normal cost per centum rate of the civil service
retirement system over the employee deduction
rate specified in section 8334(a) of title 5. The
corporation shall also pay into the Civil Service
Retirement and Disability Fund such portion of
the cost of administration of the fund as is determined by the Director of the Office of Personnel Management to be attributable to its employees. Notwithstanding the foregoing provisions, there shall not be considered for the purposes of the civil service retirement law that
portion of the basic pay in any one year of any
officer or employee of the corporation which exceeds the basic pay provided for positions listed
in section 5312 of title 5 on the last day of such
year: Provided, That with respect to any person
whose employment is made subject to the civil
service retirement law by section 806 of the
Housing and Community Development Act of
1974, there shall not be considered for the purposes of such law that portion of the basic pay
of such person in any one year which exceeds the
basic pay provided for positions listed in section
5316 of such title 5 on the last day of such year.
Except as provided in this subsection, the corporation shall not be subject to the provisions of
title 5.
(3)(A) Not later than June 30, 1993, and annually thereafter, the corporation shall submit a

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TITLE 12—BANKS AND BANKING

report to the Committee on Banking, Finance
and Urban Affairs of the House of Representatives and the Committee on Banking, Housing,
and Urban Affairs of the Senate on (i) the comparability of the compensation policies of the
corporation with the compensation policies of
other similar businesses, (ii) in the aggregate,
the percentage of total cash compensation and
payments under employee benefit plans (which
shall be defined in a manner consistent with the
corporation’s proxy statement for the annual
meeting of shareholders for the preceding year)
earned by executive officers of the corporation
during the preceding year that was based on the
corporation’s performance, and (iii) the comparability of the corporation’s financial performance with the performance of other similar
businesses. The report shall include a copy of
the corporation’s proxy statement for the annual meeting of shareholders for the preceding
year.
(B) Notwithstanding the first sentence of paragraph (2), after October 28, 1992, the corporation
may not enter into any agreement or contract
to provide any payment of money or other thing
of current or potential value in connection with
the termination of employment of any executive
officer of the corporation, unless such agreement or contract is approved in advance by the
Director of the Federal Housing Finance Agency. The Director may not approve any such
agreement or contract unless the Director determines that the benefits provided under the
agreement or contract are comparable to benefits under such agreements for officers of other
public and private entities involved in financial
services and housing interests who have comparable duties and responsibilities. For purposes
of this subparagraph, any renegotiation, amendment, or change after October 28, 1992, to any
such agreement or contract entered into on or
before October 28, 1992, shall be considered entering into an agreement or contract.
(C) For purposes of this paragraph, the term
‘‘executive officer’’ has the meaning given the
term in section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of
1992 [12 U.S.C. 4502].
(4) Notwithstanding any other provision of
this section, the corporation shall not transfer,
disburse, or pay compensation to any executive
officer, or enter into an agreement with such executive officer, without the approval of the Director, for matters being reviewed under section
1318 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C.
4518).
(e) Prohibition against use of names; injunction;
damages
No individual, association, partnership, or corporation, except the bodies corporate named in
section 1717(a)(2) of this title, shall hereafter use
the words ‘‘Federal National Mortgage Association,’’ ‘‘Government National Mortgage Association,’’ or any combination of such words, as the
name or a part thereof under which the individual, association, partnership, or corporation
shall do business. Violations of the foregoing
sentence may be enjoined by any court of general jurisdiction at the suit of the proper body

§ 1723a

corporate. In any such suit, the plaintiff may recover any actual damages flowing from such violation, and, in addition, shall be entitled to
punitive damages (regardless of the existence or
nonexistence of actual damages) of not exceeding $100 for each day during which such violation is committed or repeated.
(f) Preparation of forms of obligations and certificates
In order that the Association may be supplied
with such forms of obligations or certificates as
it may need for issuance under this subchapter,
the Secretary of the Treasury is authorized,
upon request of the Association, to prepare such
forms as shall be suitable and approved by the
Association, to be held in the Treasury subject
to delivery, upon order of the Association. The
engraved plates, dies, bed pieces, and other material executed in connection therewith shall remain in the custody of the Secretary of the
Treasury. The Association shall reimburse the
Secretary of the Treasury for any expenses incurred in the preparation, custody, and delivery
of such forms.
(g) Depositaries, custodians, and fiscal agents
The Federal Reserve banks are authorized and
directed to act as depositaries, custodians, and
fiscal agents for each of the bodies corporate
named in section 1717(a)(2) of this title, for its
own account or as fiduciary, and such banks
shall be reimbursed for such services in such
manner as may be agreed upon; and each of such
bodies corporate may itself act in such capacities, for its own account or as fiduciary, and for
the account of others.
(h), (i) Repealed. Pub. L. 102–550, title XIII,
§ 1381(k), Oct. 28, 1992, 106 Stat. 3997
(j) Audit; access to books, etc.; report of audit
(1) The programs, activities, receipts, expenditures, and financial transactions of the corporation shall be subject to audit by the Comptroller
General of the United States under such rules
and regulations as may be prescribed by the
Comptroller General. The representatives of the
Government Accountability Office shall have access to such books, accounts, financial records,
reports, files, and such other papers, things, or
property belonging to or in use by the corporation and necessary to facilitate the audit, and
they shall be afforded full facilities for verifying
transactions with the balances or securities held
by depositories, fiscal agents, and custodians. A
report on each such audit shall be made by the
Comptroller General to the Congress. The corporation shall reimburse the Government Accountability Office for the full cost of any such
audit as billed therefor by the Comptroller General.
(2) To carry out this subsection, the representatives of the Government Accountability Office
shall have access, upon request to the corporation or any auditor for an audit of the corporation under subsection (l), to any books, accounts, financial records, reports, files, or other
papers, things, or property belonging to or in
use by the corporation and used in any such
audit and to any papers, records, files, and reports of the auditor used in such an audit.

§ 1723a

TITLE 12—BANKS AND BANKING

Page 754

(k) Financial reports; submission to Director;
contents
(1) The corporation shall submit to the Director of the Federal Housing Finance Agency annual and quarterly reports of the financial condition and operations of the corporation which
shall be in such form, contain such information,
and be submitted on such dates as the Director
shall require.
(2) Each such annual report shall include—
(A) financial statements prepared in accordance with generally accepted accounting principles;
(B) any supplemental information or alternative presentation that the Director may require; and
(C) an assessment (as of the end of the corporation’s most recent fiscal year), signed by
the chief executive officer and chief accounting or financial officer of the corporation, of—
(i) the effectiveness of the internal control
structure and procedures of the corporation;
and
(ii) the compliance of the corporation with
designated safety and soundness laws.

(2) The corporation shall collect, maintain,
and provide to the Director of the Federal Housing Finance Agency, in a form determined by
the Director, data relating to its mortgages on
housing consisting of more than 4 dwelling
units. Such data shall include—
(A) census tract location of the housing;
(B) income levels and characteristics of tenants of the housing (to the extent practicable);
(C) rent levels for units in the housing;
(D) mortgage characteristics (such as the
number of units financed per mortgage and
the amount of loans);
(E) mortgagor characteristics (such as nonprofit, for-profit, limited equity cooperatives);
(F) use of funds (such as new construction,
rehabilitation, refinancing);
(G) type of originating institution; and
(H) any other information that the Secretary considers appropriate, to the extent
practicable.

(3) The corporation shall also submit to the
Director any other reports required by the Director pursuant to section 1314 of the Federal
Housing Enterprises Financial Safety and
Soundness Act of 1992 [12 U.S.C. 4514].
(4) Each report of financial condition shall
contain a declaration by the president, vice
president, treasurer, or any other officer designated by the board of directors of the corporation to make such declaration, that the report is
true and correct to the best of such officer’s
knowledge and belief.
(l) Independent audits of financial statements
(1) The corporation shall have an annual independent audit made of its financial statements
by an independent public accountant in accordance with generally accepted auditing standards.
(2) In conducting an audit under this subsection, the independent public accountant shall
determine and report on whether the financial
statements of the corporation (A) are presented
fairly in accordance with generally accepted accounting principles, and (B) to the extent determined necessary by the Director, comply with
any disclosure requirements imposed under subsection (k)(2)(B).
(m) Mortgage data collection and reporting requirements
(1) The corporation shall collect, maintain,
and provide to the Director of the Federal Housing Finance Agency, in a form determined by
the Director, data relating to its mortgages on
housing consisting of 1 to 4 dwelling units. Such
data shall include—
(A) the income, census tract location, race,
and gender of mortgagors under such mortgages;
(B) the loan-to-value ratios of purchased
mortgages at the time of origination;
(C) whether a particular mortgage purchased
is newly originated or seasoned;
(D) the number of units in the housing subject to the mortgage and whether the units are
owner-occupied; and

(3)(A) Except as provided in subparagraph (B),
this subsection shall apply only to mortgages
purchased by the corporation after December 31,
1992.
(B) This subsection shall apply to any mortgage purchased by the corporation after the date
determined under subparagraph (A) if the mortgage was originated before such date, but only
to the extent that the data referred in paragraph
(1) or (2), as applicable, is available to the corporation.
(n) Report on housing activities; contents; public
disclosure
(1) The corporation shall submit to the Committee on Banking, Finance and Urban Affairs
of the House of Representatives, the Committee
on Banking, Housing, and Urban Affairs of the
Senate, and the Director of the Federal Housing
Finance Agency a report on its activities under
subpart B of part 2 of subtitle A of the Federal
Housing Enterprises Financial Safety and
Soundness Act of 1992 [12 U.S.C. 4561 et seq.].
(2) The report under this subsection shall—
(A) include, in aggregate form and by appropriate category, statements of the dollar volume and number of mortgages on owner-occupied and rental properties purchased which relate to each of the annual housing goals established under such subpart;
(B) include, in aggregate form and by appropriate category, statements of the number of
families served by the corporation, the income
class, race, and gender of homebuyers served,
the income class of tenants of rental housing
(to the extent such information is available),
the characteristics of the census tracts, and
the geographic distribution of the housing financed;
(C) include a statement of the extent to
which the mortgages purchased by the corporation have been used in conjunction with
public subsidy programs under Federal law;
(D) include statements of the proportion of
mortgages on housing consisting of 1 to 4
dwelling units purchased by the corporation

(E) any other characteristics that the Secretary considers appropriate, to the extent
practicable.

Page 755

§ 1723a

TITLE 12—BANKS AND BANKING

that have been made to first-time homebuyers, as soon as providing such data is practicable, and identifying any special programs
(or revisions to conventional practices) facilitating homeownership opportunities for firsttime homebuyers;
(E) include, in aggregate form and by appropriate category, the data provided to the Director of the Federal Housing Finance Agency
under subsection (m)(1)(B);
(F) compare the level of securitization versus portfolio activity;
(G) assess underwriting standards, business
practices, repurchase requirements, pricing,
fees, and procedures, that affect the purchase
of mortgages for low- and moderate-income
families, or that may yield disparate results
based on the race of the borrower, including
revisions thereto to promote affordable housing or fair lending;
(H) describe trends in both the primary and
secondary multifamily housing mortgage markets, including a description of the progress
made, and any factors impeding progress toward standardization and securitization of
mortgage products for multifamily housing;
(I) describe trends in the delinquency and default rates of mortgages secured by housing
for low- and moderate-income families that
have been purchased by the corporation, including a comparison of such trends with delinquency and default information for mortgage products serving households with incomes above the median level that have been
purchased by the corporation, and evaluate
the impact of such trends on the standards and
levels of risk of mortgage products serving
low- and moderate-income families;
(J) describe in the aggregate the seller and
servicer network of the corporation, including
the volume of mortgages purchased from minority-owned, women-owned, and communityoriented lenders, and any efforts to facilitate
relationships with such lenders;
(K) describe the activities undertaken by the
corporation with nonprofit and for-profit organizations and with State and local governments and housing finance agencies, including
how the corporation’s activities support the
objectives of comprehensive housing affordability strategies under section 12705 of title
42; and
(L) include any other information that the
Director of the Federal Housing Finance Agency considers appropriate.
(3)(A) The corporation shall make each report
under this subsection available to the public at
the principal and regional offices of the corporation.
(B) Before making a report under this subsection available to the public, the corporation
may exclude from the report information that
the Director of the Federal Housing Finance
Agency has determined is proprietary information under section 1326 of the Federal Housing
Enterprises Financial Safety and Soundness Act
of 1992 [12 U.S.C. 4546].
(o) Affordable Housing Advisory Council
(1) Not later than 4 months after October 28,
1992, the corporation shall appoint an Affordable

Housing Advisory Council to advise the corporation regarding possible methods for promoting
affordable housing for low- and moderate-income families.
(2) The Affordable Housing Advisory Council
shall consist of 15 individuals, who shall include
representatives of community-based and other
nonprofit and for-profit organizations and State
and local government agencies actively engaged
in the promotion, development, or financing of
housing for low- and moderate-income families.
(June 27, 1934, ch. 847, title III, § 309, as added
Aug. 2, 1954, ch. 649, title II, § 201, 68 Stat. 620;
amended Pub. L. 87–70, title VI, § 603(e), June 30,
1961, 75 Stat. 177; Pub. L. 90–448, title VIII,
§ 802(z)–(ee), Aug. 1, 1968, 82 Stat. 540, 541; Pub. L.
92–310, title II, § 223(c), June 6, 1972, 86 Stat. 206;
Pub. L. 93–383, title VIII, § 806(k), Aug. 22, 1974, 88
Stat. 728; Pub. L. 94–375, § 17(b), Aug. 3, 1976, 90
Stat. 1076; Pub. L. 95–128, title IV, § 408(c), Oct.
12, 1977, 91 Stat. 1138; 1978 Reorg. Plan No. 2,
§ 102, eff. Jan. 1, 1979, 43 F.R. 36037, 92 Stat. 3783;
Pub. L. 98–440, title II, §§ 208, 209, 213(a), Oct. 3,
1984, 98 Stat. 1696, 1698; Pub. L. 98–479, title II,
§ 203(a)(3), Oct. 17, 1984, 98 Stat. 2229; Pub. L.
100–242, title IV, § 444, Feb. 5, 1988, 101 Stat. 1922;
Pub. L. 101–73, title VII, § 731(m)(3), Aug. 9, 1989,
103 Stat. 436; Pub. L. 102–550, title XIII,
§ 1381(j)–(q), (s)(3), Oct. 28, 1992, 106 Stat.
3996–4001; Pub. L. 108–271, § 8(b), July 7, 2004, 118
Stat. 814; Pub. L. 110–289, div. A, title I,
§§ 1113(b)(1), 1161(b), July 30, 2008, 122 Stat. 2678,
2779.)
REFERENCES IN TEXT
Section 806 of the Housing and Community Development Act of 1974, referred to in subsec. (d)(2), is section
806 of Pub. L. 93–383, title VIII, Aug. 22, 1974, 88 Stat.
727. Subsection (k) of section 806 amended this subsec.
(d)(2) relative to employment subject to the civil service retirement law. For complete classification of section 806 to the Code, see Tables.
The Federal Housing Enterprises Financial Safety
and Soundness Act of 1992, referred to in subsec. (n)(1),
(2)(A), is title XIII of Pub. L. 102–550, Oct. 28, 1992, 106
Stat. 3941. Subpart B of part 2 of subtitle A of the Act
is classified generally to subpart 2 (§ 4561 et seq.) of part
B of subchapter I of chapter 46 of this title. For complete classification of this Act to the Code, see Short
Title note under section 4501 of this title and Tables.
CODIFICATION
Pub. L. 110–289, § 1161(b)(2)(C), which directed amendment of par. (3)(B) of this section, was executed to par.
(3)(B) of subsec. (n) of this section, to reflect the probable intent of Congress. See 2008 Amendment note
below.
PRIOR PROVISIONS
Prior provisions on the subject of subsecs. (a) and (c)
to (e) of this section were contained in sections 1716,
1719, and 1721 of this title.
AMENDMENTS
2008—Subsec. (d)(3)(B). Pub. L. 110–289, § 1161(b)(1),
substituted ‘‘Director of the Federal Housing Finance
Agency’’ for ‘‘Director of the Office of Federal Housing
Enterprise Oversight of the Department of Housing and
Urban Development’’.
Subsec. (d)(4). Pub. L. 110–289, § 1113(b)(1), added par.
(4).
Subsec. (k)(1). Pub. L. 110–289, § 1161(b)(1), substituted
‘‘Director of the Federal Housing Finance Agency’’ for
‘‘Director of the Office of Federal Housing Enterprise

§ 1723a

TITLE 12—BANKS AND BANKING

Oversight of the Department of Housing and Urban Development’’.
Subsec. (m)(1), (2). Pub. L. 110–289, § 1161(b)(2)(A), substituted ‘‘to the Director of the Federal Housing Finance Agency, in a form determined by the Director’’
for ‘‘to the Secretary, in a form determined by the Secretary’’ in introductory provisions.
Subsec. (n)(1). Pub. L. 110–289, § 1161(b)(2)(B)(i), substituted ‘‘and the Director of the Federal Housing Finance Agency’’ for ‘‘and the Secretary’’.
Subsec.
(n)(2)(E),
(L).
Pub.
L.
110–289,
§ 1161(b)(2)(B)(ii), substituted ‘‘Director of the Federal
Housing Finance Agency’’ for ‘‘Secretary’’.
Subsec. (n)(3)(B). Pub. L. 110–289, § 1161(b)(2)(C), substituted ‘‘Director of the Federal Housing Finance
Agency’’ for ‘‘Secretary’’. See Codification note above.
2004—Subsec. (j). Pub. L. 108–271 substituted ‘‘Government Accountability Office’’ for ‘‘General Accounting
Office’’ wherever appearing.
1992—Subsec. (d)(2). Pub. L. 102–550, § 1381(s)(3)(A)(ii),
which directed the substitution, in last sentence, of
‘‘the basic pay of such persons’’ for ‘‘his basic pay’’, was
executed by making the substitution in penultimate
sentence to reflect the probable intent of Congress, because the words ‘‘his basic pay’’ do not appear in last
sentence.
Pub. L. 102–550, § 1381(j)(1), (s)(3)(A)(i), in first sentence, substituted ‘‘as the board of directors determines reasonable and comparable with compensation
for employment in other similar businesses (including
other publicly held financial institutions or major financial services companies) involving similar duties
and responsibilities, except that a significant portion
of potential compensation of all executive officers (as
such term is defined in paragraph (3)(C)) of the corporation shall be based on the performance of the corporation’’ for ‘‘as it may determine’’ and in third sentence
‘‘the employment of such officer or employee’’ for ‘‘his
employment’’ in two places.
Subsec. (d)(3). Pub. L. 102–550, § 1381(j)(2), added par.
(3).
Subsec. (e). Pub. L. 102–550, § 1381(s)(3)(B), substituted
‘‘the individual, association, partnership, or corporation’’ for ‘‘he or it’’.
Subsecs. (h), (i). Pub. L. 102–550, § 1381(k), struck out
subsec. (h) which related to regulatory power over Federal National Mortgage Association, approval for issuance of stock and other instruments, relation of mortgage purchases to national goal, audits, and a report to
Congress and subsec. (i) which related to requests for
approval submitted by Federal National Mortgage Association to Secretary, report to Congress, extension of
approval period, and effect of inaction by Secretary.
Subsec. (j). Pub. L. 102–550, § 1381(l), designated existing provisions as par. (1), inserted first sentence and
struck out former first sentence which read as follows:
‘‘The mortgage transactions of the corporation may be
subject to audit by the Comptroller General of the
United States in accordance with the principles and
procedures applicable to commercial corporation transactions under such rules and regulations as may be prescribed by the Comptroller General.’’, and added par.
(2).
Subsecs. (k) to (o). Pub. L. 102–550, § 1381(m)–(q), added
subsecs. (k) to (o), respectively.
1989—Subsec. (j). Pub. L. 101–73 added subsec. (j).
1988—Subsec. (i). Pub. L. 100–242 inserted at end of
second sentence ‘‘, but such 45-day period may not be
extended for any other reason or for any period in addition to or other than such 15-day period’’.
1984—Subsec. (b). Pub. L. 98–479 substituted ‘‘chapter
91 of title 31’’ for ‘‘the Government Corporation Control
Act’’.
Subsec. (h). Pub. L. 98–440, §§ 208, 213(a), substituted
‘‘issued by the corporation before October 1, 1985,’’ for
‘‘issued by the Corporation’’ and substituted ‘‘shall, not
later than June 30 of each year, report to the Congress
on the activities of the corporation under this subchapter’’ for ‘‘shall conduct a review of the financial
operations of the corporation and undertake a study of

Page 756

the extent to which the activities of the corporation
meet the purposes of this subchapter. Such review and
study shall be completed and transmitted to the Congress on or before July 1, 1978.’’
Subsec. (i). Pub. L. 98–440, § 209, added subsec. (i).
1977—Subsec. (h). Pub. L. 95–128 inserted provision for
review of the financial operations of the corporation
and a study respecting how the activities of the corporation meet the purposes of this subchapter and
transmittal of the review and study to the Congress.
1976—Subsec. (d)(1). Pub. L. 94–375 substituted ‘‘Subject to the provisions of section 1723(a) of this title, the
Secretary’’ for ‘‘The Secretary’’.
1974—Subsec. (d)(2). Pub. L. 93–383 inserted ‘‘positions
listed’’ before ‘‘in section 5312’’ and proviso relating to
persons whose employment is subject to the civil service law by section 806 of the Housing and Community
Development Act of 1974, and substituted reference to
Jan. 31, 1972, for reference to termination of transitional period referred to in section 810(b) of the Housing
and Urban Development Act of 1968.
1972—Subsec. (d)(1). Pub. L. 92–310 struck out provisions which related to bonds of officers, attorneys, employees, and agents of the Association and which permitted the Association to pay the premiums therefor.
1968—Subsec. (a). Pub. L. 90–448, § 802(z), among other
changes, expanded scope to include both the Government National Mortgage Association and the Federal
National Mortgage Association, substituted ‘‘conduct
its business without regard to any qualification or
similar statute’’ for ‘‘conduct its business’’, and struck
out provisions which empowered the Federal National
Mortgage Association, by its board of directors, to
adopt, amend, and repeal bylaws.
Subsec. (c). Pub. L. 90–448, § 802(aa), designated existing provisions as par. (1), and struck out provisions
which required the Association, with respect to its secondary market operations under section 1719 of this
title, to pay annually to the Secretary of the Treasury
an amount equivalent to the amount of Federal income
taxes for which it would be subject if it were not exempt from such taxes with respect to such secondary
market operations, and added par. (2).
Subsec. (d). Pub. L. 90–448, § 802(bb), designated existing provisions as par. (1), substituted ‘‘Secretary of
Housing and Urban Development’’ for ‘‘Chairman of the
Board’’, and ‘‘agents of the Association’’ for ‘‘agents’’,
and added par. (2).
Subsec. (e). Pub. L. 90–448, § 802(cc), prohibited the use
of the name Government National Mortgage Association, authorized injunctions, and permitted recovery of
actual damages and punitive damages, and eliminated
provisions which made violations of this subsection a
misdemeanor punishable by a fine of not more than $100
or imprisonment for not more than 30 days, or both, for
each day during which the violation is committed or
repeated.
Subsec. (g). Pub. L. 90–448, § 802(dd), authorized and
directed the Federal Reserve Banks to act for the Government National Mortgage Association, and empowered each of the bodies corporate to act as depositary,
custodian, and fiscal agent, for its own account or as fiduciary, and for the account of others.
Subsec. (h). Pub. L. 90–448, § 802(ee), added subsec. (h).
1961—Subsec. (c). Pub. L. 87–70 inserted ‘‘or other security holdings’’ after ‘‘mortgages’’.
CHANGE OF NAME
Committee on Banking, Finance and Urban Affairs of
House of Representatives treated as referring to Committee on Banking and Financial Services of House of
Representatives by section 1(a) of Pub. L. 104–14, set
out as a note preceding section 21 of Title 2, The Congress. Committee on Banking and Financial Services of
House of Representatives abolished and replaced by
Committee on Financial Services of House of Representatives, and jurisdiction over matters relating to
securities and exchanges and insurance generally transferred from Committee on Energy and Commerce of
House of Representatives by House Resolution No. 5,
One Hundred Seventh Congress, Jan. 3, 2001.

Page 757

§ 1723d

TITLE 12—BANKS AND BANKING

EFFECTIVE DATE OF 1974 AMENDMENT

AMENDMENTS

Pub. L. 93–383, title VIII, § 806(k), Aug. 22, 1974, 88
Stat. 728, provided that the amendment made by that
section does not apply with respect to any person receiving an annuity on the date of the enactment of
Pub. L. 93–383, which was approved Aug. 22, 1974.

1964—Pub. L. 88–560 authorized investment of funds in
participations and other instruments which are lawful
investments.
1961—Pub. L. 87–70 inserted ‘‘or other security holdings’’ after ‘‘mortgages’’.
1959—Pub. L. 86–372 substituted ‘‘in obligations of the
United States or guaranteed thereby, or in obligations
which are lawful investments for fiduciary, trust, or
public funds’’ for ‘‘in bonds or other obligations of, or
in bonds or other obligations guaranteed as to principal
and interest by, the United States’’.

EFFECTIVE DATE OF 1968 AMENDMENT
For effective date of amendment by title VIII of Pub.
L. 90–448, see section 808 of Pub. L. 90–448, set out as an
Effective Date note under section 1716b of this title.
TRANSFER OF FUNCTIONS
‘‘Director of the Office of Personnel Management’’
substituted for ‘‘United States Civil Service Commission’’ pursuant to Reorg. Plan No. 2 of 1978, § 102, 43 F.R.
36037, 92 Stat. 3783, set out under section 1101 of Title
5, Government Organization and Employees, which
transferred functions vested by statute in United
States Civil Service Commission to Director of Office
of Personnel Management (except as otherwise specified), effective Jan. 1, 1979, as provided by section 1–102
of Ex. Ord. No. 12107, Dec. 28, 1978, 44 F.R. 1055, set out
under section 1101 of Title 5.
TERMINATION OF ADVISORY COUNCILS
Advisory councils established after Jan. 5, 1973, to
terminate not later than the expiration of the 2-year
period beginning on the date of their establishment,
unless, in the case of a council established by the President or an officer of the Federal Government, such
council is renewed by appropriate action prior to the
expiration of such 2-year period, or in the case of a
council established by Congress, its duration is otherwise provided by law. See sections 3(2) and 14 of Pub. L.
92–463, Oct. 6, 1972, 86 Stat. 770, 776, set out in the Appendix to Title 5, Government Organization and Employees.
PROPOSAL BY FEDERAL NATIONAL MORTGAGE ASSOCIATION
RESPECTING MORTGAGE-BACKED SECURITIES
PROGRAM; APPROVAL, ETC.
Pub. L. 96–399, title III, § 330, Oct. 8, 1980, 94 Stat. 1652,
provided that: ‘‘If the Federal National Mortgage Association submits to the Secretary of Housing and Urban
Development or the Secretary of the Treasury, after
the date of enactment of this section [Oct. 8, 1980], a
proposal with respect to undertaking a mortgagebacked securities program, the Secretary of Housing
and Urban Development or the Secretary of the Treasury, as the case may be, shall, within 90 days after submission of such proposal, approve the proposal or transmit to the Congress a report explaining why the proposal has not been approved.’’

§ 1723b. Investment of funds
Moneys of the Association not invested in
mortgages or other security holdings or in operating facilities shall be kept in cash on hand or
on deposit, or invested in obligations of the
United States or guaranteed thereby, or in obligations, participations, or other instruments
which are lawful investments for fiduciary,
trust, or public funds.
(June 27, 1934, ch. 847, title III, § 310, as added
Aug. 2, 1954, ch. 649, title II, § 201, 68 Stat. 621;
amended Pub. L. 86–372, title III, § 305(b), Sept.
23, 1959, 73 Stat. 670; Pub. L. 87–70, title VI,
§ 603(e), June 30, 1961, 75 Stat. 177; Pub. L. 88–560,
title VII, § 701(b)(3), Sept. 2, 1964, 78 Stat. 800.)
PRIOR PROVISIONS
Prior provisions on the subject of this section were
formerly contained in section 1718 of this title.

§ 1723c. Obligations, participations, or other instruments as lawful investments; acceptance
as security; exempt securities
All obligations, participations, or other instruments issued by either of the bodies corporate named in section 1717(a)(2) of this title
shall be lawful investments, and may be accepted as security for all fiduciary, trust, and public
funds, the investment or deposit of which shall
be under the authority and control of the United
States or any officer or officers thereof. All
stock, obligations, securities, participations, or
other instruments issued pursuant to this subchapter shall, to the same extent as securities
which are direct obligations of or obligations
guaranteed as to principal or interest by the
United States, be deemed to be exempt securities within the meaning of laws administered by
the Securities and Exchange Commission.
(June 27, 1934, ch. 847, title III, § 311, as added
Aug. 2, 1954, ch. 649, title II, § 201, 68 Stat. 622;
amended Pub. L. 88–560, title VII, § 701(b)(1),
Sept. 2, 1964, 78 Stat. 800; Pub. L. 90–448, title
VIII, § 802(ff), Aug. 1, 1968, 82 Stat. 542; Pub. L.
98–440, title II, § 213(b), Oct. 3, 1984, 98 Stat. 1698;
Pub. L. 102–550, title XIII, § 1381(r), Oct. 28, 1992,
106 Stat. 4001.)
AMENDMENTS
1992—Pub. L. 102–550 struck out before period at end
‘‘; but all such issuances by the Association and all
issuances of stock, and debt obligations convertible
into stock, by the corporation shall be made only with
the approval of the Secretary of Housing and Urban Development’’.
1984—Pub. L. 98–440 inserted ‘‘by the Association and
all issuances of stock, and debt obligations convertible
into stock, by the corporation’’.
1968—Pub. L. 90–448 substituted ‘‘either of the bodies
corporate named in section 1717(a)(2) of this title’’ for
‘‘the Association,’’ and inserted provisions directing
that all stock, obligations, securities, participations,
or other instruments issued pursuant to this subchapter be deemed to be exempt securities, and requiring approval of the Secretary for all issuances.
1964—Pub. L. 88–560 inserted ‘‘, participations, or
other instruments’’ after ‘‘obligations’’.
EFFECTIVE DATE OF 1968 AMENDMENT
For effective date of amendment by title VIII of Pub.
L. 90–448, see section 808 of Pub. L. 90–448, set out as an
Effective Date note under section 1716b of this title.

§ 1723d. Transfer of certain functions to Association
The functions of the Housing and Home Finance Administrator (including the function of
making payments to the Secretary of the Treasury) under section 2 of Reorganization Plan
Numbered 22 of 1950, together with the notes and

§ 1723e

TITLE 12—BANKS AND BANKING

capital stock of the Federal National Mortgage
Association held by said Administrator thereunder, are transferred to the Federal National
Mortgage Association.
(Aug. 2, 1954, ch. 649, title II, § 207, 68 Stat. 622.)
REFERENCES IN TEXT
Reorganization Plan Numbered 22 of 1950, referred to
in text, is set out as a note under section 1717 of this
title.
CODIFICATION
Section was enacted as part of the Housing Act of
1954, and not as part of the National Housing Act which
comprises this chapter or of the Federal National Mortgage Charter Association Act which comprises this subchapter.

§ 1723e. Repealed. Pub. L. 98–181, title I [title IV,
§ 483(a)], Nov. 30, 1983, 97 Stat. 1240
Section, act June 27, 1934, ch. 847, title III, § 313, as
added Oct. 18, 1974, Pub. L. 93–449, § 3(a), 88 Stat. 1364;
amended July 2, 1975, Pub. L. 94–50, title II §§ 201–206, 89
Stat. 254, 255; Aug. 3, 1976, Pub. L. 94–375, § 13(e)(1), 90
Stat. 1075; Oct. 12, 1977, Pub. L. 95–128, title IV,
§ 407(a)–(d), 91 Stat. 1137, 1138; Oct. 8, 1980, Pub. L. 96–399,
title III, § 337(b), 94 Stat. 1655, related to the interim
mortgage and security purchasing authority of the Association.
SAVINGS PROVISION
For continued application of former sections 1720 and
1723e of this title to any purchase or commitment to
purchase any mortgage made pursuant to those sections before Nov. 30, 1983, and the servicing and disposition of any such mortgage, see section 483(b) of Pub. L.
98–181, set out as a note under section 1720 of this title.
EFFECTIVE DATE
Pub. L. 93–449, § 3(b), Oct. 18, 1974, 88 Stat. 1366, as
amended by Pub. L. 94–50, title II, § 207, July 2, 1975, 89
Stat. 256; Pub. L. 94–375, § 13(d), Aug. 3, 1976, 90 Stat.
1075; Pub. L. 95–128, title IV, § 407(e), Oct. 12, 1977, 91
Stat. 1138; Pub. L. 95–406, § 3, Sept. 30, 1978, 92 Stat. 880;
Pub. L. 95–557, title III, § 303, Oct. 31, 1978, 92 Stat. 2096;
Pub. L. 96–71, § 3, Sept. 28, 1979, 93 Stat. 502; Pub. L.
96–105, § 3, Nov. 8, 1979, 93 Stat. 795; Pub. L. 96–153, title
III, § 303, Dec. 21, 1979, 93 Stat. 1112; Pub. L. 96–372, § 4,
Oct. 3, 1980, 94 Stat. 1364; Pub. L. 96–399, title III,
§ 337(a), Oct. 8, 1980, 94 Stat. 1655, which related to the
effective date of former section 1723e of this title, was
repealed by Pub. L. 98–181, title I [title IV, § 483(a)],
Nov. 30, 1983, 97 Stat. 1240.
EMERGENCY MORTGAGE PURCHASE ASSISTANCE;
TRANSFER OF FUNDS
Pub. L. 98–371, title I, July 18, 1984, 98 Stat. 1218, in
part directed Secretary to transfer all assets acquired
and liabilities incurred pursuant to this section to
management and liquidating functions fund established
pursuant to section 1721 of this title, and that on Oct.
1, 1984, each outstanding obligation issued by Secretary
of Housing and Urban Development to Secretary of the
Treasury pursuant to subsec. (c) of this section, together with any promise to repay principal and unpaid
interest which had accrued on each obligation, and any
other term or condition specified by each such obligation, was canceled.

§ 1723f. Repealed. Pub. L. 96–294, title V, § 533,
June 30, 1980, 94 Stat. 740
Section, act June 27, 1934, ch. 847, title III, § 314, as
added Nov. 9, 1978, Pub. L. 95–619, title II, § 242, 92 Stat.
3228, related to the purchase of energy conserving home
improvement loans and advances of credit by the Association under the direction of the Secretary.

Page 758

§§ 1723g, 1723h. Repealed. Pub. L. 102–550, title
IX, § 912(i)(2), Oct. 28, 1992, 106 Stat. 3876
Section 1723g, act June 27, 1934, ch. 847, title III, § 315,
as added Nov. 9, 1978, Pub. L. 95–619, title II, § 243, 92
Stat. 3230; amended June 30, 1980, Pub. L. 96–294, title V,
§ 531, 94 Stat. 737; Oct. 17, 1984, Pub. L. 98–479, title II,
§ 203(a)(4), 98 Stat. 2229, set out authority of Solar Energy and Energy Conservation Bank to purchase loans
and advances of credit for energy conservation improvements or solar energy systems.
Section 1723h, act June 27, 1934, ch. 847, title III, § 316,
as added Nov. 9, 1978, Pub. L. 95–619, title II, § 244, 92
Stat. 3231; amended June 30, 1980, Pub. L. 96–294, title V,
§ 532, 94 Stat. 739; Oct. 17, 1984, Pub. L. 98–479, title II,
§ 203(a)(5), 98 Stat. 2229, set out authority of Solar Energy and Energy Conservation Bank to purchase mortgages secured by newly constructed homes with solar
energy systems.

§ 1723i. Civil money penalties against issuers
(a) In general
(1) Authority
Whenever an issuer or custodian approved
under section 1721(g) of this title knowingly
and materially violates any provisions of subsection (b), the Secretary of Housing and
Urban Development may impose a civil money
penalty on the issuer or the custodian in accordance with the provisions of this section.
The penalty shall be in addition to any other
available civil remedy or any available criminal penalty and may be imposed whether or
not the Secretary imposes other administrative sanctions.
(2) Amount of penalty
The amount of the penalty, as determined by
the Secretary, may not exceed $5,000 for each
violation, except that the maximum penalty
for all violations by a particular issuer or custodian during any one-year period shall not
exceed $1,000,000. Each violation of a provision
of subsection (b)(1) shall constitute a separate
violation with respect to each pool of mortgages. In the case of a continuing violation, as
determined by the Secretary, each day shall
constitute a separate violation.
(b) Violations for which penalty may be imposed
(1) Violations
The violations by an issuer or a custodian
for which the Secretary may impose a civil
money penalty under subsection (a) are the
following:
(A) Failure to make timely payments of
principal and interest to holders of securities guaranteed under section 1721(g) of this
title.
(B) Failure to segregate cash flow from
pooled mortgages or to deposit either principal and interest funds or escrow funds into
special accounts with a depository institution whose accounts are insured by the National Credit Union Administration or by
the Federal Deposit Insurance Corporation
through the Deposit Insurance Fund.
(C) Use of escrow funds for any purpose
other than that for which they were received.
(D) Transfer of servicing for a pool of
mortgages to an issuer not approved under

Page 759

TITLE 12—BANKS AND BANKING

this subchapter, unless expressly permitted
by statute, regulation, or contract approved
by the Secretary.
(E) Failure to maintain a minimum net
worth in accordance with requirements prescribed by the Association;
(F) Failure to promptly notify the Association in writing of any changes that materially affect the business status of an issuer.
(G) Submission to the Association of false
information in connection with any securities guaranteed, or mortgages pooled, under
section 1721(g) of this title.
(H) Hiring, or retaining in employment, an
officer, director, principal, or employee
whose duties involve, directly or indirectly,
programs administered by the Association
while such person was under suspension or
debarment by the Secretary.
(I) Submission to the Association of a false
certification either on its own behalf or on
behalf of another person or entity.
(J) Failure to comply with an agreement,
certification, or condition of approval set
forth on, or applicable to, the application for
approval as an issuer of securities under section 1721(g) of this title.
(K) Violation of any provisions of this subchapter or any implementing regulation,
handbook, or participant letter issued under
authority of this subchapter.
(2) Notification to Attorney General
Before taking action to impose a civil
money penalty for a violation under paragraph
(1)(G) or paragraph (1)(I), the Secretary shall
inform the Attorney General of the United
States.
(c) Agency procedures
(1) Establishment
The Secretary shall establish standards and
procedures governing the imposition of civil
money penalties under subsection (a). The
standards and procedures—
(A) shall provide for the Secretary to
make the determination to impose the penalty;
(B) shall provide for the imposition of a
penalty only after an issuer or a custodian
has been given notice of, and opportunity
for, a hearing on the record; and
(C) may provide for review by the Secretary of any determination or order, or interlocutory ruling, arising from a hearing.
(2) Final orders
If no hearing is requested within 15 days of
receipt of a notice of opportunity for hearing,
the imposition of a penalty shall constitute a
final and unappealable determination. If the
Secretary reviews the determination or order,
the Secretary may affirm, modify, or reverse
that determination or order. If the Secretary
does not review the determination or order
within 90 days of the issuance of the determination or order, the determination or order
shall be final.
(3) Factors in determining amount of penalty
In determining the amount of a penalty
under subsection (a), consideration shall be

§ 1723i

given to such factors as the gravity of the offense, any history of prior offenses (including
offenses occurring before December 15, 1989),
ability to pay the penalty, injury to the public, benefits received, deterrence of future violations, and such other factors as the Secretary may determine by regulations.
(4) Reviewability of imposition of penalty
The Secretary’s determination or order imposing a penalty under subsection (a) shall not
be subject to review, except as provided in subsection (d).
(d) Judicial review of agency determination
(1) In general
After exhausting all administrative remedies established by the Secretary under subsection (c)(1), an issuer or a custodian against
which the Secretary has imposed a civil
money penalty under subsection (a) may obtain a review of the penalty and such ancillary
issues as may be addressed in the notice provided under subsection (c)(1)(A) in the appropriate court of appeals of the United States,
by filing in such court, within 20 days after
the entry of such order or determination, a
written petition praying that the Secretary’s
order or determination be modified or be set
aside in whole or in part.
(2) Objections not raised in hearing
A court shall not consider any objection
that was not raised in the hearing conducted
pursuant to subsection (c)(1) unless a demonstration is made of extraordinary circumstances causing the failure to raise the objection. If any party demonstrates to the satisfaction of the court that additional evidence,
which was not presented at such hearing, is
material and that there were reasonable
grounds for the failure to present such evidence at the hearing, the court shall remand
the matter to the Secretary for consideration
of such additional evidence.
(3) Scope of review
The decisions, findings, and determinations
of the Secretary shall be reviewed pursuant to
section 706 of title 5.
(4) Order to pay penalty
Notwithstanding any other provision of law,
the court shall have the power in any such review to order payment of the penalty imposed
by the Secretary.
(e) Action to collect penalty
If any issuer or custodian fails to comply with
the Secretary’s determination or order imposing
a civil money penalty under subsection (a), after
the determination or order is no longer subject
to review as provided by subsections (c)(1) and
(d), the Secretary may request the Attorney
General of the United States to bring an action
in an appropriate United States district court to
obtain a monetary judgment against the issuer
or custodian and such other relief as may be
available. The monetary judgment may, in the
discretion of the court, include any attorneys
fees and other expenses incurred by the United
States in connection with the action. In an action under this subsection, the validity and ap-

§§ 1724 to 1730d

TITLE 12—BANKS AND BANKING

propriateness of the Secretary’s determination
or order imposing the penalty shall not be subject to review.
(f) Settlement by Secretary
The Secretary may compromise, modify, or
remit any civil money penalty which may be, or
has been, imposed under this section.
(g) ‘‘Knowingly’’ defined
The term ‘‘knowingly’’ means having actual
knowledge of or acting with deliberate ignorance of or reckless disregard for the prohibitions under this section.
(h) Regulations
The Secretary shall issue such regulations as
the Secretary deems appropriate to implement
this section.
(i) Deposit of penalties
The Secretary shall deposit all civil money
penalties collected under this section into moneys of the Association pursuant to section 1722
of this title.
(June 27, 1934, ch. 847, title III, § 317, as added
Pub. L. 101–235, title I, § 110(a), Dec. 15, 1989, 103
Stat. 2011; amended Pub. L. 104–208, div. A, title
II, § 2704(d)(13)(A), Sept. 30, 1996, 110 Stat.
3009–490; Pub. L. 109–171, title II, § 2102(b), Feb. 8,
2006, 120 Stat. 9; Pub. L. 109–173, § 9(f)(1), Feb. 15,
2006, 119 Stat. 3618.)
AMENDMENTS
2006—Subsec. (b)(1)(B). Pub. L. 109–173 substituted
‘‘Deposit Insurance Fund’’ for ‘‘Bank Insurance Fund
for banks or through the Savings Association Insurance
Fund for savings associations’’.
Pub.
L.
109–171
repealed
Pub.
L.
104–208,
§ 2704(d)(13)(A). See 1996 Amendment note below.
1996—Subsec. (b)(1)(B). Pub. L. 104–208, § 2704(d)(13)(A),
which directed substitution of ‘‘Deposit Insurance
Fund’’ for ‘‘Bank Insurance Fund for banks or through
the Savings Association Insurance Fund for savings associations’’, was repealed by Pub. L. 109–171. See Effective Date of 1996 Amendment note below and 2006
Amendment note above.
EFFECTIVE DATE OF 2006 AMENDMENT
Amendment by Pub. L. 109–173 effective Mar. 31, 2006,
see section 9(j) of Pub. L. 109–173, set out as a note
under section 24 of this title.
Amendment by Pub. L. 109–171 effective no later than
the first day of the first calendar quarter that begins
after the end of the 90-day period beginning Feb. 8, 2006,
see section 2102(c) of Pub. L. 109–171, set out as a Merger
of BIF and SAIF note under section 1821 of this title.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104–208 effective Jan. 1, 1999,
if no insured depository institution is a savings association on that date, see section 2704(c) of Pub. L.
104–208, formerly set out as a note under section 1821 of
this title.
EFFECTIVE DATE
Pub. L. 101–235, title I, § 110(b), Dec. 15, 1989, 103 Stat.
2014, provided that: ‘‘The amendment made by subsection (a) [enacting this section] shall apply only with
respect to—
‘‘(1) violations referred to in the amendment that
occur on or after the effective date of this section
[Dec. 15, 1989]; and
‘‘(2) in the case of a continuing violation (as determined by the Secretary of Housing and Urban Development), any portion of a violation referred to in the
amendment that occurs on or after such date.’’

Page 760

SUBCHAPTER IV—INSURANCE OF SAVINGS
AND LOAN ACCOUNTS
§§ 1724 to 1730d. Repealed. Pub. L. 101–73, title
IV, § 407, Aug. 9, 1989, 103 Stat. 363
Section 1724, acts June 27, 1934, ch. 847, title IV, § 401,
48 Stat. 1255; July 16, 1952, ch. 883, 66 Stat. 727; July 28,
1959, Pub. L. 86–112, 73 Stat. 262; Oct. 16, 1966, Pub. L.
89–695, title III, § 302(a), 80 Stat. 1055; Dec. 23, 1969, Pub.
L. 91–151, title I, § 8(a)(1), 83 Stat. 375; Oct. 28, 1974, Pub.
L. 93–495, title I, §§ 101(b)(1), 103(a)(1), 88 Stat. 1501, 1503;
Mar. 31, 1980, Pub. L. 96–221, title III, § 308(b)(1)(A), 94
Stat. 147, defined terms used in this subchapter.
Section 1725, acts June 27, 1934, ch. 847, title IV, § 402,
48 Stat. 1256; May 28, 1935, ch. 150, § 22, 49 Stat. 298; 1947
Reorg. Plan No. 3, eff. July 29, 1947, 12 F.R. 4981, 61 Stat.
954; July 3, 1948, ch. 825, § 2, 62 Stat. 1240; June 27, 1950,
ch. 369, §§ 5, 6, 64 Stat. 258; Aug. 2, 1954, ch. 649, title V,
§ 501(1), title VIII, § 802(b), 68 Stat. 633, 642; June 11, 1960,
Pub. L. 86–507, § 1(12), 74 Stat. 200; Aug. 16, 1973, Pub. L.
93–100, § 4, 87 Stat. 343; Oct. 28, 1974, Pub. L. 93–495, title
I, § 105(d), 88 Stat. 1504; Oct. 28, 1977, Pub. L. 95–147,
§ 2(b), 91 Stat. 1227; Oct. 15, 1982, Pub. L. 97–320, title I,
§ 125(a), (b), title III, § 314, 96 Stat. 1485, 1499; Aug. 10,
1987, Pub. L. 100–86, title III, §§ 304, 306(b), (i), 101 Stat.
597, 601, 603, related to creation of Federal Savings and
Loan Insurance Corporation.
Section 1726, acts June 27, 1934, ch. 847, title IV, § 403,
48 Stat. 1257; May 28, 1935, ch. 150, §§ 23, 24, 49 Stat. 298;
July 14, 1952, ch. 723, § 10(a)(5), 66 Stat. 604; Aug. 11, 1955,
ch. 783, title I, § 111, 69 Stat. 641; Sept. 2, 1964, Pub. L.
88–560, title IX, § 901(b), 78 Stat. 804; July 24, 1970, Pub.
L. 91–351, title VII, § 707, 84 Stat. 463; Oct. 28, 1974, Pub.
L. 93–495, title I, § 105(a), 88 Stat. 1503; Nov. 10, 1978, Pub.
L. 95–630, title XII, § 1203, 92 Stat. 3711; Mar. 31, 1980,
Pub. L. 96–221 title IV, §§ 407(b), 409, 94 Stat. 160; Oct. 15,
1982, Pub. L. 97–320, title I, § 115(a), title II, § 202(c), (d),
96 Stat. 1475, 1492; Aug. 10, 1987, Pub. L. 100–86, title V,
§ 504(a), 101 Stat. 632, related to insurance of accounts
and eligibility provisions.
Section 1727, acts June 27, 1934, ch. 847, title IV, § 404,
48 Stat. 1258; May 28, 1935, ch. 150, § 25, 49 Stat. 298; June
27, 1950, ch. 369, §§ 7, 8, 64 Stat. 259; Sept. 8, 1961, Pub. L.
87–210, §§ 3–6, 75 Stat. 483; Aug. 10, 1965, Pub. L. 89–117,
title XI, § 1110(d), 79 Stat. 508; Sept. 21, 1968, Pub. L.
90–505, § 6(a), 82 Stat. 858; Dec. 23, 1969, Pub. L. 91–151,
title I, § 6(a), 83 Stat. 375; Dec. 24, 1969, Pub. L. 91–152,
title IV, § 416(c)(1), 83 Stat. 401; Dec. 22, 1971, Pub. L.
92–213, § 5, 85 Stat. 776; Aug. 16, 1973, Pub. L. 93–100, § 6,
87 Stat. 344; Oct. 28, 1974, Pub. L. 93–495, title I, § 115, 88
Stat. 1507; Oct. 15, 1982, Pub. L. 97–320, title I, § 126, 96
Stat. 1485; Aug. 10, 1987, Pub. L. 100–86, title III, §§ 305,
306(c), (f), (g), 307, title V, § 505(c), 101 Stat. 600–603, 633,
related to primary and secondary services.
Section 1728, acts June 27, 1934, ch. 847, title IV, § 405,
48 Stat. 1259; June 27, 1950, ch. 369, § 9, 64 Stat. 259; Sept.
21, 1950, ch. 967, § 5, 64 Stat. 894; Aug. 2, 1954, ch. 649,
title V, § 501(2), 68 Stat. 633; Oct. 16, 1966, Pub. L. 89–695,
title III, §§ 302(b), 303(b), 80 Stat. 1055, 1056; Dec. 23, 1969,
Pub. L. 91–151, title I, § 8(a)(2), 83 Stat. 375; Oct. 28, 1974,
Pub. L. 93–495, title I, §§ 101(b)(2), (3), 103(a)(2), 88 Stat.
1501, 1503; Dec. 26, 1974, Pub. L. 93–541, § 1, 88 Stat. 1739;
Nov. 10, 1978, Pub. L. 95–630, title XIV, § 1401(b), 92 Stat.
3712; Dec. 21, 1979, Pub. L. 96–153, title III, § 323(b), 93
Stat. 1120; Mar. 31, 1980, Pub. L. 96–221, title III,
§ 308(b)(1)(B), 94 Stat. 147; Oct. 15, 1982, Pub. L. 97–320,
title I, § 128, 96 Stat. 1486; Oct. 22, 1986, Pub. L. 99–514,
§ 2, 100 Stat. 2095, related to payment of insurance, statute of limitations with respect to claims, and insurance
of public funds.
Section 1729, acts June 27, 1934, ch. 847, title IV, § 406,
48 Stat. 1259; May 28, 1935, ch. 150, §§ 26, 27, 49 Stat. 299;
1947 Reorg. Plan No. 3, eff. July 27, 1947, 12 F.R. 4981, 61
Stat. 954; Aug. 2, 1954, ch. 649, title VIII, § 802(c)(2), 68
Stat. 643; Aug. 11, 1955, ch. 783, title I, § 109(a)(3), (b), 69
Stat. 640, 641; July 7, 1968, Pub. L. 90–389, § 6, 82 Stat.
295; Nov. 10, 1978, Pub. L. 95–630, title I, § 105(b)(2), 92
Stat. 3647; Oct. 15, 1982, Pub. L. 97–320, title I, §§ 122,
141(a)(6), title II, §§ 202(a), 206, 96 Stat. 1480, 1489, 1496;

Page 761

TITLE 12—BANKS AND BANKING

Jan. 12, 1983, Pub. L. 97–457, §§ 5, 9(a), (b)(1), 96 Stat. 2507,
2508; Aug. 10, 1987, Pub. L. 100–86, title IV, § 405, title V,
§ 509(a), 101 Stat. 613, 635, related to liquidation of insured institutions.
Section 1730, acts June 27, 1934, ch. 847, title IV, § 407,
48 Stat. 1260; June 27, 1950, ch. 369, § 11, 64 Stat. 259; Aug.
2, 1954, ch. 649, title V, § 501(3), 68 Stat. 633; Aug. 11, 1955,
ch. 783, title I, § 109(a)(3), 69 Stat. 640; Oct. 16, 1966, Pub.
L. 89–695, title I, § 102(a), 80 Stat. 1036; Oct. 28, 1974, Pub.
L. 93–495, title I, § 105(c), 88 Stat. 1504; Nov. 10, 1978, Pub.
L. 95–630, title I, §§ 107(a)(2), (c)(2), (d)(2), (e)(2), 111(b),
title II, § 208(c), title VII, §§ 702, 703, 92 Stat. 3650, 3654,
3658, 3661, 3667, 3675, 3687; Oct. 15, 1982, Pub. L. 97–320,
title I, § 115(c)–(e), title IV, §§ 424(b), (d)(7), (e), 425(a),
427(b), 96 Stat. 1476, 1522, 1523, 1525; Oct. 27, 1986, Pub. L.
99–570, title I, §§ 1359(c), 1361, 100 Stat. 3207–28, 3207–31;
Aug. 10, 1987, Pub. L. 100–86, title I, § 111(b), title III,
§ 306(e), title IV, §§ 406(b), 413(b), 101 Stat. 581, 602, 615,
621, related to termination of insurance and enforcement provisions.
Section 1730a, act June 27, 1934, ch. 847, title IV, § 408,
as added Sept. 23, 1959, Pub. L. 86–374, 73 Stat. 691;
amended Sept. 13, 1960, Pub. L. 86–746, 74 Stat. 883; Oct.
16, 1966, Pub. L. 89–695, title I, § 103, 80 Stat. 1046; Feb.
14, 1968, Pub. L. 90–255, § 2, 82 Stat. 5; Oct. 21, 1968, Pub.
L. 90–608, ch. IV, § 403, 82 Stat. 1194; July 24, 1970, Pub.
L. 91–351, title VII, § 705, 84 Stat. 462; Dec. 31, 1970, Pub.
L. 91–609, title IX, § 920, 84 Stat. 1816; Nov. 10, 1978, Pub.
L. 95–630, title I, §§ 105(b)(1), 106(c), 92 Stat. 3646, 3649;
Oct. 15, 1982, Pub. L. 97–320, title I, §§ 115(b), 123,
141(a)(7), title III, § 335, title IV, § 424(b), (d)(5), 96 Stat.
1475, 1483, 1489, 1505, 1522, 1523; Jan. 12, 1983, Pub. L.
97–457, §§ 6, 7, 96 Stat. 2507; Oct. 22, 1986, Pub. L. 99–514,
§ 2, 100 Stat. 2095; Aug. 10, 1987, Pub. L. 100–86, title I,
§§ 104(a)–(c)(1), (d)–(h), 106(a), 107(a), 110, 111(a), title IV,
§§ 410(b), 414, title V, § 509(a), 101 Stat. 567–571, 573–577,
579, 580, 620, 621, 635, related to regulation of holding
companies.
Section 1730b, act June 27, 1934, ch. 847, title IV, § 409,
as added Sept. 2, 1964, Pub. L. 88–560, title IX, § 909, 78
Stat. 805, related to investment of certain funds in accounts of insured institutions.
Section 1730c, act June 27, 1934, ch. 847, title IV, § 410,
as added Dec. 15, 1967, Pub. L. 90–203, § 4, 81 Stat. 611, related to participation by insured institutions in lotteries and related activities.
Section 1730d, act June 27, 1934, ch. 847, title IV, § 411,
as added Oct. 26, 1970, Pub. L. 91–508, title I, § 102, 84
Stat. 1116; amended Nov. 18, 1988, Pub. L. 100–690, title
VI, § 6185(d)(2), 102 Stat. 4356, related to retention of
records by insured institutions.
TRANSFER OF FUNCTIONS
For provisions relating to abolition of Federal Savings and Loan Insurance Corporation and transfer of
functions, personnel and property, see sections 401 to
406 of Pub. L. 101–73, set out as a note under section 1437
of this title.

§ 1730e. Repealed. Pub. L. 96–221, title V, § 529,
Mar. 31, 1980, 94 Stat. 168
Section, act June 27, 1934, ch. 847, title IV, § 412, as
added Dec. 28, 1979, Pub. L. 96–161, title II, § 203, 93 Stat.
1236, provided that if the applicable rate prescribed in
this section exceeded the rate an insured institution
would be permitted to charge in the absence of this section, then such institution could, for a business or agricultural loan of $25,000 or more, notwithstanding State
law, take or charge on any evidence of debt, interest of
not more than 5 per centum in excess of the discount
rate in effect at the Federal Reserve bank in the district in which the institution was located, that the taking or charging of interest at a greater rate than that
prescribed by this section, if knowingly done, would be
deemed a forfeit of the entire interest on that particular evidence of debt, and that if such greater rate of interest had already been paid, the payor could recover
twice the amount of such payment in a civil action
commenced within two years of such payment. See section 1730g of this title.

§ 1731

A prior section 1730e, act June 27, 1934, ch. 847, § 412,
as added Nov. 5, 1979, Pub. L. 96–104, title I, § 103, 93
Stat. 790, identical to this section as added by Pub. L.
96–161, was repealed by section 212 of Pub. L. 96–161, effective at the close of Dec. 27, 1979, except that its provisions would continue to apply to any loan made in
any State on or after Nov. 5, 1979, but prior to such repeal.
A prior section 1730e, act June 27, 1934, ch. 847, § 412,
as added Oct. 29, 1974, Pub. L. 93–501, title II, § 203, 88
Stat. 1559, identical to this section as added by Pub. L.
96–104, was repealed by section 1 of Pub. L. 96–104 except
that its provisions shall continue to apply to any loan
made in any State during the period specified in section 206 of Pub. L. 93–501.
EFFECTIVE DATE OF REPEAL
Pub. L. 96–221, title V, § 529, Mar. 31, 1980, 94 Stat. 168,
provided that the repeal of this section is effective at
close of Mar. 31, 1980.
SAVINGS PROVISION
Pub. L. 96–221, title V, § 529, Mar. 31, 1980, 94 Stat. 168,
provided that, notwithstanding the repeal of Pub. L.
96–104 and title II of Pub. L. 96–161, this section [which
had been enacted by those laws] shall continue to apply
to any loan made, any deposit made, or any obligation
issued in any State during any period when this section
was in effect in such State.

§§ 1730f to 1730i. Repealed. Pub. L. 101–73, title
IV, § 407, Aug. 9, 1989, 103 Stat. 363
Section 1730f, act June 27, 1934, ch. 847, title IV, § 413,
as added Dec. 22, 1974, Pub. L. 93–533, § 11(b), 88 Stat.
1729, related to disclosures with respect to certain federally related mortgage loans, identity of beneficiary
interest as condition for loan, and report to Board.
Section 1730g, act June 27, 1934, ch. 847, title IV, § 414,
as added Mar. 31, 1980, Pub. L. 96–221, title V, § 522, 94
Stat. 165; amended Jan. 12, 1983, Pub. L. 97–457, § 33, 96
Stat. 2511, related to insured savings and loan associations.
Section 1730h, act June 27, 1934, ch. 847, title IV, § 415,
as added Aug. 10, 1987, Pub. L. 100–86, title IV, § 402(b),
101 Stat. 606, related to accounting principles and other
standards and requirements.
Section 1730i, act June 27, 1934, ch. 847, title IV, § 416,
as added Aug. 10, 1987, Pub. L. 100–86, title IV, § 404(b),
101 Stat. 611, related to thrift industry recovery regulations.
SAVINGS PROVISION
Any plan approved by the Federal Savings and Loan
Insurance Corporation under former section 1730i of
this title for any State savings association to continue
in effect as long as such association adheres to the plan
and continues to submit to the Federal Deposit Insurance Corporation regular and complete reports on the
progress in meeting the association’s goals under the
plan, notwithstanding the repeal of that section, see
section 302 of Pub. L. 101–73, set out as a Savings Provision note under section 1467a of this title.
TRANSFER OF FUNCTIONS
For provisions relating to abolition of Federal Savings and Loan Insurance Corporation and Federal Home
Loan Bank Board and transfer of functions, personnel,
and property of such agencies, see sections 401 to 406 of
Pub. L. 101–73, set out as a note under section 1437 of
this title.

SUBCHAPTER V—MISCELLANEOUS
§ 1731. Repealed. June 25, 1948, ch. 645, § 21, 62
Stat. 862, eff. Sept. 1, 1948
Section, acts June 27, 1934, ch. 847, title V, § 512, 48
Stat. 1265; Feb. 3, 1938, ch. 13, §§ 9, 10, 52 Stat. 24, 25;

§ 1731a

TITLE 12—BANKS AND BANKING

June 28, 1941, ch. 261, § 10, 55 Stat. 365, related to penalties. See sections 493, 657, 709, 1006, and 1008 to 1010 of
Title 18, Crimes and Criminal Procedure.

§ 1731a. Penalties
Notwithstanding any other provision of law,
the Secretary is authorized to refuse the benefits of participation (either directly as an insured lender or as a borrower, or indirectly as a
builder, contractor, or dealer, or salesman or
sales agent for a builder, contractor or dealer)
under subchapter I, II, VI, VII, VIII, IX–B, or X
of this chapter to any person or firm (including
but not limited to any individual, partnership,
association, trust, or corporation) if the Secretary has determined that such person or firm
(1) has knowingly or willfully violated any provision of this chapter or of title III of the Servicemen’s Readjustment Act of 1944, as amended,
or of chapter 37 of title 38, or of any regulation
issued by the Secretary under this chapter or by
the Secretary of Veterans Affairs under said
title III, or chapter 37, or (2) has, in connection
with any construction, alteration, repair or improvement work financed with assistance under
this chapter or under said title III, or chapter 37,
or in connection with contracts or financing relating to such work, violated any Federal or
State penal statute, or (3) has failed materially
to properly carry out contractual obligations
with respect to the completion of construction,
alteration, repair, or improvement work financed with assistance under this chapter or
under title III of the Servicemen’s Readjustment
Act of 1944, as amended, or of chapter 37 of title
38. Before any such determination is made any
person or firm with respect to whom such a determination is proposed shall be notified in writing by the Secretary and shall be entitled, upon
making a written request to the Secretary, to a
written notice specifying charges in reasonable
detail and an opportunity to be heard and to be
represented by counsel. Determinations made by
the Secretary under this section shall be based
on the preponderance of the evidence. For the
purposes of compliance with this section the
Secretary’s notice of a proposed determination
under this section shall be considered to have
been received by the interested person or firm if
the notice is properly mailed to the last known
address of such person or firm.
(June 27, 1934, ch. 847, title V, § 512, as added Aug.
2, 1954, ch. 649, title I, § 132, 68 Stat. 610; amended
Pub. L. 85–857, § 13(h), Sept. 2, 1958, 72 Stat. 1265;
Pub. L. 86–372, title I, § 119, Sept. 23, 1959, 73 Stat.
665; Pub. L. 89–754, title X, § 1020(e), Nov. 3, 1966,
80 Stat. 1296; Pub. L. 90–19, § 1(a)(3), (4), May 25,
1967, 81 Stat. 17; Pub. L. 98–479, title II,
§ 204(a)(17), Oct. 17, 1984, 98 Stat. 2232; Pub. L.
101–235, title I, § 133(d)(3), Dec. 15, 1989, 103 Stat.
2027; Pub. L. 102–54, § 13(d)(2)(B), June 13, 1991, 105
Stat. 274.)
REFERENCES IN TEXT
The Servicemen’s Readjustment Act of 1944, as
amended, referred to in text, is act June 22, 1944, ch.
268, 58 Stat. 284, as amended. Title III of the Servicemen’s Readjustment Act of 1944 was classified generally
to subchapter II (§ 694 et seq.) of chapter 11C of former
Title 38, Pensions, Bonuses, and Veterans’ Relief, and
was repealed by section 14(87) of Pub. L. 85–857, Sept. 2,

Page 762

1958, 72 Stat. 1273, the first section of which reenacted
title III of such Act as chapter 37 (§ 1801 [now 3701] et
seq.) of Title 38, Veterans’ Benefits.
PRIOR PROVISIONS
A prior section 512 of act of June 27, 1934, related to
offenses and penalties, and was classified to section 1731
of this title, prior to repeal by act June 25, 1948, ch. 645,
§ 21, 62 Stat. 862, eff. Sept. 1, 1948. See note under section 1731.
AMENDMENTS
1991—Pub. L. 102–54 substituted ‘‘Secretary of Veterans Affairs’’ for ‘‘Administrator of Veterans’ Affairs’’.
1989—Pub. L. 101–235 struck out reference to subchapter IX–A after reference to subchapter VIII.
1984—Pub. L. 98–479 substituted ‘‘Penalties’’ for ‘‘Denial of benefits in cases of abuses; determination by
Secretary; notice and hearing’’ in section catchline.
1967—Pub. L. 90–16 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing, and ‘‘Secretary’s’’ for
‘‘Commissioner’s’’.
1966—Pub. L. 89–754 inserted references to subchapters
IX–A and IX–B of this chapter.
1959—Pub. L. 86–372 provided that for purposes of
compliance with this section the Commissioner’s notice of a proposed determination under this section
shall be considered to have been received by the interested person or firm if the notice is properly mailed to
the last known address of such person or firm.
1958—Pub. L. 85–857 inserted references to chapter 37
of title 38.
EFFECTIVE DATE OF 1958 AMENDMENT
Amendment by Pub. L. 85–857 effective Jan. 1, 1959,
see section 2 of Pub. L. 85–857, set out as an Effective
Date note preceding part I of Title 38, Veterans’ Benefits.

§ 1731b. Prohibition against transient housing
(a) Intent of Congress
The Congress declares that it has been its intent since the enactment of this chapter that
housing built with the aid of mortgages insured
under this chapter is to be used principally for
residential use; and that this intent excludes the
use of such housing for transient or hotel purposes while such insurance on the mortgage remains outstanding.
(b) Exceptions to prohibition
Notwithstanding any other provisions of this
chapter, no new, existing, or rehabilitated
multifamily housing with respect to which a
mortgage is insured under this chapter shall be
operated for transient or hotel purposes unless
(1) on or before May 28, 1954, the Secretary has
agreed in writing to the rental of all or a portion
of the accommodations in the project for transient or hotel purposes (in which case no accommodations in excess of the number so agreed to
by the Secretary shall be rented on such basis),
or (2) the project covered by the insured mortgage is located in an area which the Secretary
determines to be a resort area, and the Secretary finds that prior to May 28, 1954, a portion
of the accommodations in the project had been
made available for rent for transient or hotel
purposes (in which case no accommodations in
excess of the number which had been made
available for such use shall be rented on such
basis).

Page 763

TITLE 12—BANKS AND BANKING

(c) Certification as to use as requisite for insurance; exceptions to prohibition against insuring
Notwithstanding any other provisions of this
chapter, no mortgage with respect to multifamily housing shall be insured under this chapter
(except pursuant to a commitment to insure issued prior to August 2, 1954), and (except as to
housing coming within the provisions of clause
(1) or clause (2) of subsection (b)) no mortgage
with respect to multifamily housing shall be insured for an additional term, unless (1) the
mortgagor certifies under oath that while such
insurance remains outstanding he will not rent,
or permit the rental of, such housing or any part
thereof for transient or hotel purposes, and (2)
the Secretary has entered into such contract
with, or purchased such stock of, the mortgagor
as the Secretary deems necessary to enable him
to prevent or terminate any use of such property
or project for transient or hotel purposes while
the mortgage insurance remains outstanding.
(d) Enforcement by Secretary
The Secretary is authorized and directed to
enforce the provisions of this section by all appropriate means at his disposal, as to all existing multifamily housing with respect to which a
mortgage was insured under this chapter prior
to August 2, 1954, as well as to all multifamily
housing with respect to which a mortgage is
hereafter insured under this chapter: Provided,
That no criminal penalty shall, by reason of enactment of this section, be applicable to the
rental or operation of any such existing multifamily housing in violation of any provision of
subsection (b) of this section at any time prior
to August 2, 1954.
(e) Definitions
As used in this section, (1) the term ‘‘rental
for transient or hotel purposes’’ shall have such
meaning as prescribed by the Secretary but
rental for any period less than thirty days shall
in any event constitute rental for such purposes,
and (2) the term ‘‘multifamily housing’’ shall
mean (i) a property held by a mortgagor upon
which there are located five or more single family dwellings, or upon which there is located a
two-, three-, or four-family dwelling, or (ii) a
property or project covered by mortgage insured
or to be insured under section 1713 of this title,
under section 1715e of this title with respect to
any property or project of a corporation or trust
of the character described in paragraph (1) of
subsection (a) thereof, under section 1715k of
this title if the mortgage is within the provisions of paragraph (3) (B) of subsection (d) thereof, under section 1715l of this title if the mortgage is within the provisions of paragraph (3) of
subsection (d) thereof, under section 1743, 1748b,
or 1750g of this title, or (iii) a project with respect to which an insurance contract pursuant
to subchapter VII is outstanding.
(f) Investigation after notice of violation; cease
order
Promptly after receipt of written notice that
any portion of any building is being rented or
operated in violation of any provision of this
section or of any rule or regulation lawfully issued thereunder, the Secretary shall investigate

§ 1731b

the existence of the facts alleged in the written
notice and shall order such violation, if found to
exist, to cease forthwith.
(g) Prosecution by Attorney General for continued violation
If such violation does not cease in accordance
with such order, the Secretary shall forward the
complaint to the Attorney General of the United
States for prosecution of such civil or criminal
action, if any, which the Attorney General may
find to be involved in such violation.
(h) Judicial procedure for injunction or other
order
Whenever he finds a violation of any provision
of this section has occurred or is about to occur,
the Attorney General shall petition the district
court of the United States or the district court
of any Territory or other place subject to United
States jurisdiction within whose jurisdictional
limits the person doing or committing the acts
or practices constituting the alleged violation of
this section shall be found, for an order enjoining such acts or practices, and upon a showing
by the Attorney General that such acts or practices constituting such violation have been engaged in or are about to be engaged in, a permanent or temporary injunction, restraining order,
or other order, with or without such injunction
or restraining order, shall be granted without
bond.
(i) Injunctive relief for hotel owners
Any person owning or operating a hotel within
a radius of fifty miles of a place where a violation of any provision of this section has occurred or is about to occur, or any group or association of hotel owners or operators within
said fifty-mile radius, at his or their sole charge
or cost, may petition any district court of the
United States or the district court or any Territory or other place subject to United States jurisdiction within whose jurisdictional limits the
person doing or committing the acts or practices constituting the alleged violation of this
section shall be found, for an order enjoining
such acts or practices, and, upon a showing that
such acts or practices constituting such violation have been engaged in or are about to be engaged in, a permanent or temporary injunction,
restraining order, or other order, with or without such injunction or restraining order, shall
be granted.
(j) Jurisdiction of district courts
The several district courts of the United
States and the several district courts of the Territories of the United States or other place subject to United States jurisdiction, within whose
jurisdictional limits the person doing or committing the acts or practices constituting the
alleged violation shall be found, shall, wheresoever such acts or practices may have been
done or committed, have full power and jurisdiction to hear, try, and determine such matter
under subsections (h) and (i) of this section.
(June 27, 1934, ch. 847, title V, § 513, as added Aug.
2, 1954, ch. 649, title I, § 132, 68 Stat. 610; amended
Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17;
Pub. L. 98–479, title II, § 204(a)(18), Oct. 17, 1984,
98 Stat. 2232.)

§ 1732

TITLE 12—BANKS AND BANKING
PRIOR PROVISIONS

A prior section 513 of act June 27, 1934, was renumbered section 513A of act June 27, 1934, and is classified
to section 1732 of this title.
AMENDMENTS
1984—Pub. L. 98–479 substituted ‘‘Prohibition against
transient housing’’ for ‘‘Prohibition against use of insured multifamily housing for transient or hotel purposes’’ in section catchline.
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing in subsecs. (b) to (d),
(e)(1), (f), and (g).

§ 1732. Separability
If any provision of this chapter, or the application thereof to any person or circumstances, is
held invalid, the remainder of the chapter, and
the application of such provision to other persons or circumstances, shall not be affected
thereby.
(June 27, 1934, ch. 847, title V, § 513A, formerly
§ 513, 48 Stat. 1265; renumbered Pub. L. 98–479,
title II, § 204(a)(19), Oct. 17, 1984, 98 Stat. 2232.)
REFERENCES IN OTHER LAWS
Pub. L. 98–479, title II, § 204(a)(19), Oct. 17, 1984, 98
Stat. 2232, provided in part that: ‘‘Any reference in any
law, regulation, order, document, record, or other paper
of the United States to the section redesignated in this
paragraph [this section] hereby is deemed to refer to
section 513A of the National Housing Act [this section].’’

§ 1733. Application of other laws
The provisions of section 1430(a)(1) 1 and 1430b
of this title; the seventh paragraph of section 24
of this title; section 371 of this title; subsection
(n) of section 77B of the Bankruptcy Act, as
amended (49 Stat. 664); section 606i of title 15,
continuing and extending the functions of the
Reconstruction Finance Corporation; and all
other provisions of law establishing rights under
mortgages insured in accordance with the provisions of this chapter, shall be held to apply to
such chapter, as amended.
(June 27, 1934, ch. 847, title V, § 514, as added Feb.
3, 1938, ch. 13, § 11, 52 Stat. 26.)
REFERENCES IN TEXT
Section 1430(a) of this title, referred to in text, was
amended by Pub. L. 106–102, title VI, § 604(a), Nov. 12,
1999, 113 Stat. 1451, and, as so amended, the provisions
formerly appearing in section 1430(a)(1) now appear in
section 1430(a)(3)(A).
Section 77B of the Bankruptcy Act, referred to in
text, was classified to section 207 of former Title 11,
Bankruptcy. The Bankruptcy Act (act July 1, 1898, ch.
541, 30 Stat. 544, as amended), which was classified generally to former Title 11, was repealed effective Oct. 1,
1979, by Pub. L. 95–598, §§ 401(a), 402(a), Nov. 6, 1978, 92
Stat. 2682, section 101 of which enacted Revised Title 11.
See table preceding section 101 of Revised Title 11.
Section 606i of title 15, referred to in text, was omitted from the Code. See note under section 606i of Title
15, Commerce and Trade.
ABOLITION OF RECONSTRUCTION FINANCE CORPORATION
See section 6(a) of Reorg. Plan No. 1 of 1957, effective
June 30, 1957, 22 F.R. 4633, 71 Stat. 647, set out in the
Appendix to Title 5, Government Organization and Employees.
1 See

References in Text note below.

Page 764

§ 1734. Amendment, extension, or increase of
commitment amounts
At any time prior to final endorsement for insurance, the Secretary, in his discretion, may
amend, extend, or increase the amount of any
commitment, provided the mortgage, as finally
endorsed for insurance is eligible for insurance
under the provisions of this chapter and the
rules and regulations thereunder, in effect at
the time the original commitment to insure was
issued.
(June 27, 1934, ch. 847, title V, § 515 as added Oct.
25, 1949, ch. 729, § 3, 63 Stat. 906; amended Pub. L.
90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17; Pub. L.
98–479, title II, § 204(a)(20), Oct. 17, 1984, 98 Stat.
2232.)
AMENDMENTS
1984—Pub. L. 98–479 struck out ‘‘; mortgage conditions’’ after ‘‘amounts’’ in section catchline.
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’.

§ 1735. Payment of certain funds to Treasury
The following funds shall be deemed an indebtedness to the United States of the particular insurance fund involved, and the Secretary is authorized and directed to pay the amount of such
indebtedness to the Secretary of the Treasury,
with simple interest thereon from the date the
funds were advanced to the date of final payment at a rate determined by the Secretary of
the Treasury, taking into consideration the average rate on outstanding marketable obligations of the United States from the date the
funds were advanced until the date of final payment—
(1) funds made available to the Secretary
pursuant to the provisions of sections 1705 and
1708 of this title, exclusive of amounts heretofore refunded, (a) for carrying out this subchapter and section 484d of title 48 with respect to mortgages insured under section 1709
of this title where such funds were credited to
the general reinsurance account in the Mutual
Mortgage Insurance Fund, and (b) for the payment of salaries and expenses with respect to
mortgage insurance under sections 1713 and
1715a of this title where such funds were credited to the Housing Insurance Fund;
(2) funds made available to the Secretary
pursuant to sections 1737 and 1748a 1 of this
title; and
(3) funds made available to the Secretary by
the Secretary of the Treasury pursuant to section 1747i 1 of this title.
Payments to the Secretary of the Treasury
under this section shall be made in such
amounts and at such times as the Secretary determines, after consultations with the Secretary
of the Treasury, that funds are available for
that purpose, taking into consideration the continued solvency of the funds involved. All payments made pursuant to this section shall be
covered into the Treasury as miscellaneous receipts.
(June 27, 1934, ch. 847, title V, § 516, as added
June 30, 1953, ch. 170, § 9, 67 Stat. 123; amended
1 See

References in Text note below.

Page 765

TITLE 12—BANKS AND BANKING

Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17;
Pub. L. 98–479, title II, § 204(a)(21), Oct. 17, 1984,
98 Stat. 2232.)
REFERENCES IN TEXT
Section 1715a of this title, referred to in par. (1), in
the original was a reference to section 210 of the National Housing Act (June 27, 1934, ch. 847, § 210, as added
Feb. 3, 1938, ch. 13, § 3, 52 Stat. 22), which was repealed
by act June 3, 1939, ch. 175, § 13, 53 Stat. 807. See note
set out under section 1715a.
Section 484d of title 48, referred to in text, which authorized the Federal Housing Commissioner to prescribe a higher maximum for the principal obligation of
mortgages, was omitted from the Code.
Sections 1737, 1747i, and 1748a of this title, referred to
in text, were repealed by Pub. L. 89–117, title II,
§ 1108(aa), Aug. 10, 1965, 79 Stat. 507.
AMENDMENTS
1984—Pub. L. 98–479 inserted ‘‘Payment of certain
funds to Treasury’’ as section catchline.
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.

§ 1735a. Prepayment of mortgages by nonprofit
educational institutions; refunds
(a) Notwithstanding any other provision of
this chapter, no adjusted premium charge shall
be collected in connection with the payment in
full, prior to maturity, of any mortgage insured
under this chapter, if the mortgagor certifies to
the Secretary that the loan was paid in full by
or on behalf of a nonprofit educational institution which intends to use the property for educational purposes.
(b) The Secretary shall refund any adjusted
premium charge collected subsequent to July 1,
1962, and prior to September 2, 1964, in connection with the payment in full, prior to maturity,
of any mortgage insured under this chapter, if
the mortgagor under such mortgage makes the
certification prescribed by subsection (a).
(June 27, 1934, ch. 847, title V, § 517, as added Pub.
L. 88–560, title I, § 120, Sept. 2, 1964, 78 Stat. 782;
amended Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81
Stat. 17.)
AMENDMENTS
1967—Subsecs. (a), (b). Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.

§ 1735b. Expenditures to correct or reimburse for
structural or other major defects in mortgaged homes
(a) Prior to beginning of construction
(1) The Secretary is authorized to make expenditures under this subsection with respect to
any property that—
(A) is a condominium unit (including common areas) or is improved by a one-to-four
family dwelling;
(B) was approved, before the beginning of
construction, for mortgage insurance under
this chapter or for guaranty, insurance, or direct loan under chapter 37 of title 38 or was
less than a year old at the time of insurance
of the mortgage and was covered by a consumer protection or warranty plan acceptable
to the Secretary; and
(C) the Secretary finds to have structural
defects.

§ 1735b

(2) Expenditures under this subsection may be
made for (A) correcting such defects, (B) paying
the claims of the owner of the property arising
from such defects, or (C) acquiring title to the
property: Provided, That such authority of the
Secretary shall exist only (A) if the owner has
requested assistance from the Secretary not
later than four years (or such shorter time as
the Secretary may prescribe) after insurance of
the mortgage, and (B) if the property is encumbered by a mortgage which is insured under this
chapter after September 2, 1964.
(b) Mortgages insured on or after August 1, 1968,
but prior to January 1, 1973; requirements;
reimbursement from seller; insurance fund
chargeable
The Secretary is authorized to make expenditures to correct, or to reimburse the owner for
the correction of, structural or other major defects which so seriously affect use and livability
as to create a serious danger to the life or safety
of inhabitants of any one, two, three, or four
family dwelling which is covered by a mortgage
insured under section 1715z of this title or which
is located in an older, declining urban area and
is covered by a mortgage insured under section
1709 or 1715l of this title on or after August 1,
1968, but prior to January 1, 1973, and which is
more than one year old on the date of the issuance of the insurance commitment, if (1) the
owner requests assistance from the Secretary
not later than one year after the insurance of
the mortgage, or, in the case of a dwelling covered by a mortgage insured under section 1709 or
1715l of this title the insurance commitment for
which was issued on or after August 1, 1968, but
prior to January 1, 1973, not more than four
months after August 3, 1976, and (2) the defect is
one that existed on the date of the issuance of
the insurance commitment and is one that a
proper inspection could reasonably be expected
to disclose. The Secretary may require from the
seller of any such dwelling an agreement to reimburse him for any payments made pursuant to
this subsection with respect to such dwelling.
Expenditures pursuant to this subsection shall
be made from the insurance fund chargeable for
insurance benefits on the mortgage covering the
structure to which the expenditures relate.
There are hereby authorized to be appropriated
such sums as may be necessary to cover the
costs of such expenditures not otherwise provided for.
(c) Regulations; finality of decision
The Secretary shall by regulations prescribe
the terms and conditions under which expenditures and payments may be made under the provisions of this section, and his decisions regarding such expenditures or payments, and the
terms and conditions under which the same are
approved or disapproved, shall be final and conclusive and shall not be subject to judicial review.
(d) Mortgages insured on or after January 1,
1973, but prior to August 1, 1976; requirements; reimbursement from seller; insurance
fund chargeable
The Secretary is authorized to make expenditures to correct or to reimburse the owner for

§ 1735c

TITLE 12—BANKS AND BANKING

the correction of structural or other major defects which so seriously affect use and liveability as to create a serious danger to the life or
safety of inhabitants of any one-, two-, three-, or
four-family dwelling which is more than one
year old on the date of issuance of the insurance
commitment, is located in an older, declining
urban area, and is covered by a mortgage insured under section 1709 or 1715l of this title on
or after January 1, 1973, but prior to August 3,
1976, if (1) the owner requests assistance from
the Secretary not more than one year after August 3, 1976, and (2) the defect is one that existed
on the date of the issuance of the insurance
commitment and is one that a proper inspection
could reasonably have been expected to have disclosed. The Secretary may require from the seller of any such dwelling an agreement to reimburse him for any payments made pursuant to
this subsection with respect to such dwelling.
Expenditures pursuant to this subsection shall
be made from the insurance fund chargeable for
insurance benefits on the mortgage covering the
structure to which the expenditures relate.
There are hereby authorized to be appropriated
such sums as may be necessary to cover the
costs of such expenditures not otherwise provided for.
(e) Report to Congress on effective program for
protecting home buyers
The Secretary of Housing and Urban Development is authorized and directed to conduct a
full and complete investigation and study and
report to Congress, with recommendations, not
later than March 1, 1977, with respect to an effective program for protecting home buyers
from hidden or undisclosed defects seriously affecting the use and livability of the home, which
would be applicable to existing homes financed
with mortgages insured under this chapter. In
the study and report the Secretary shall particularly investigate the need for, cost and feasible structure of, a national home inspection
and warranty program, with respect to such
homes, to be operated by the Federal Government out of fees assessed on the home buyer and
amortized over a period of two years. The Secretary’s report shall also present an analysis of
alternative Federal programs to meet these
needs, and the cost and means of financing such
programs. In the report the Secretary shall also
outline administrative steps which can be taken
to provide disclosure to purchasers of existing
homes financed with mortgages insured under
this chapter of the actual condition of the home
and the types of repairs or replacements likely
to be needed within a period of two years, such
as repairs or replacement of furnace, roof or
major appliances, based on age and useful life
expectancy of such appurtenances.
(June 27, 1934, ch. 847, title V, § 518, as added Pub.
L. 88–560, title I, § 121, Sept. 2, 1964, 78 Stat. 783;
amended Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81
Stat. 17; Pub. L. 91–609, title I, § 104, Dec. 31, 1970,
84 Stat. 1771; Pub. L. 93–383, title III, § 306, Aug.
22, 1974, 88 Stat. 678; Pub. L. 94–50, title III, § 302,
July 2, 1975, 89 Stat. 256; Pub. L. 94–375, § 9, Aug.
3, 1976, 90 Stat. 1072; Pub. L. 98–181, title I [title
IV, § 427], Nov. 30, 1983, 97 Stat. 1218; Pub. L.
102–550, title V, § 515, Oct. 28, 1992, 106 Stat. 3789.)

Page 766
AMENDMENTS

1992—Subsec. (a). Pub. L. 102–550 substituted par. (1)
and ‘‘(2) Expenditures under this subsection may be
made for’’ for ‘‘The Secretary is authorized, with respect to any property improved by a one- to four-family
dwelling that, before the beginning of construction,
was approved for mortgage insurance under this chapter or for guaranty, insurance, or a direct loan under
chapter 37 of title 38 and that the Secretary finds to
have structural defects, to make expenditures for’’ and
redesignated former cls. (1) to (3) appearing before proviso as cls. (A) to (C), respectively, of par. (2).
1983—Subsec. (a). Pub. L. 98–181 substituted ‘‘that, before the beginning of construction, was approved for
mortgage insurance under this chapter or for guaranty,
insurance, or a direct loan under chapter 37 of title 38
and that the Secretary finds’’ for ‘‘approved for mortgage insurance prior to the beginning of construction
which he finds’’.
1976—Subsec. (b). Pub. L. 94–375, § 9(a), substituted
‘‘not more than four months after August 3, 1976’’ for
‘‘not more than 19 months after August 22, 1974’’, and
provision requiring expenditures be made from the insurance fund chargeable for insurance benefits on the
mortgage covering the structure and appropriating
sums for expenditures not otherwise covered for provision requiring expenditures be made from the Special
Risk Insurance Fund.
Subsecs. (d), (e). Pub. L. 94–375, § 9(b), added subsecs.
(d) and (e).
1975—Subsec. (b). Pub. L. 94–50 substituted ‘‘one, two,
three, or four’’ for ‘‘one or two’’, and ‘‘not more than
19 months’’ for ‘‘not more than one year’’.
1974—Subsec. (b). Pub. L. 93–383 substituted provisions relating to authorization of the Secretary to
make expenditures to correct, or to reimburse the
owner for the correction of structural or other major
defects of covered one or two family dwellings, for provisions relating to the authorization of the Secretary
to make expenditures to correct, or to compensate the
owner for, structural or other defects of covered singlefamily dwellings.
1970—Subsecs. (b), (c). Pub. L. 91–609 added subsec. (b)
and redesignated former subsec. (b) as (c).
1967—Subsecs. (a), (b). Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.

§ 1735c. General Insurance Fund
(a) Establishment; purpose; mortgages or loans
insurable; transfers to
There is hereby created a General Insurance
Fund which shall be used by the Secretary, on
and after August 10, 1965, as a revolving fund for
carrying out all the insurance provisions of this
chapter with the exception of those specified in
subsection (e). All mortgages or loans insured
under this chapter pursuant to commitments issued on or after August 10, 1965, except those
specified in subsection (e), and all loans reported
for insurance under section 1703 of this title on
or after August 10, 1965, shall be insured under
the General Insurance Fund. The Secretary
shall transfer to the General Insurance Fund—
(1) the assets and liabilities of all insurance
accounts and funds, except the Mutual Mortgage Insurance Fund, existing under this chapter immediately prior to August 10, 1965;
(2) all outstanding commitments for insurance issued prior to August 10, 1965, except
those specified in subsection (e);
(3) the insurance on all mortgages and loans
insured prior to August 10, 1965, except insurance specified in subsection (e); and
(4) the insurance of all loans made by approved financial institutions pursuant to section 1703 of this title prior to August 10, 1965.

Page 767

(b) Expenses chargeable to Fund
The general expenses of the operations of the
Department of Housing and Urban Development
relating to mortgages and loans which are the
obligation of the General Insurance Fund may
be charged to the General Insurance Fund.
(c) Deposit or investment of moneys; purchase of
debentures
Moneys in the General Insurance Fund not
needed for the current operations of the Department of Housing and Urban Development with
respect to mortgages and loans which are the
obligation of the General Insurance Fund shall
be deposited with the Treasurer of the United
States to the credit of such Fund, or invested in
bonds or other obligations of, or in bonds or
other obligations guaranteed as to principal and
interest by, the United States or any agency of
the United States: Provided, That such moneys
shall to the maximum extent feasible be invested in such bonds or other obligations the
proceeds of which will be used to directly support the residential mortgage market. The Secretary may, with the approval of the Secretary
of the Treasury, purchase in the open market
debentures issued as obligations of the General
Insurance Fund or issued prior to August 10,
1965, under other provisions of this chapter, except debentures issued under the Mutual Mortgage Insurance Fund. Such purchases shall be
made at a price which will provide an investment yield of not less than the yield obtainable
from other investments authorized by this section. Debentures so purchased shall be canceled
and not reissued.
(d) Credits and charges to Fund
Premium charges, adjusted premium charges,
and appraisal and other fees received on account
of the insurance of any mortgage or loan which
is the obligation of the General Insurance Fund,
the receipts derived from the property covered
by such mortgages and loans and from the
claims, debts, contracts, property, and security
assigned to the Secretary in connection therewith, and all earnings on the assets of the Fund
shall be credited to the General Insurance Fund.
The principal of, and interest paid and to be paid
on, debentures which are the obligation of such
Fund, cash insurance payments and adjustments, and expenses incurred in the handling,
management, renovation, and disposal of properties acquired, in connection with mortgages
and loans which are the obligation of such Fund,
shall be charged to such Fund.
(e) Restrictions on use of Fund
The General Insurance Fund shall not be used
for carrying out the provisions of section 1709 of
this title, except as determined by the Secretary, or the provisions of section 1715e of this
title to the extent that they involve mortgages
the insurance for which is the obligation of the
Cooperative Management Housing Insurance
Fund created by section 1715e(k) of this title, or
the provisions of sections 1715n(e), 1715x(a)(2),
1715z, 1715z–1 and 1715z–2 1 of this title; and nothing in this section shall apply to or affect any
1 See

References in Text note below.

§ 1735c

TITLE 12—BANKS AND BANKING

mortgages, loans, commitments, or insurance
under such provisions.
(f) Risk assessment
The Secretary shall undertake an annual assessment of the risks associated with each of the
insurance programs comprising the General Insurance Fund, and shall present findings from
such review to the Congress in the FHA Annual
Management Report.
(June 27, 1934, ch. 847, title V, § 519, as added Pub.
L. 89–117, title II, § 214, Aug. 10, 1965, 79 Stat. 471;
amended Pub. L. 90–19, § 1(a)(1), (3), May 25, 1967,
81 Stat. 17; Pub. L. 90–448, title I, § 104(c), Aug. 1,
1968, 82 Stat. 488; Pub. L. 91–609, title I, § 117(e),
Dec. 31, 1970, 84 Stat. 1775; Pub. L. 94–375, § 10,
Aug. 3, 1976, 90 Stat. 1073; Pub. L. 95–24, title I,
§ 102, Apr. 30, 1977, 91 Stat. 55; Pub. L. 95–557,
title III, § 310, Oct. 31, 1978, 92 Stat. 2098; Pub. L.
96–153, title III, § 305, Dec. 21, 1979, 93 Stat. 1112;
Pub. L. 96–399, title III, § 305, Oct. 8, 1980, 94 Stat.
1639; Pub. L. 97–35, title III, § 334, Aug. 13, 1981, 95
Stat. 414; Pub. L. 98–181, title I [title IV, § 403],
Nov. 30, 1983, 97 Stat. 1208; Pub. L. 102–550, title
I, § 185(c)(2), Oct. 28, 1992, 106 Stat. 3748; Pub. L.
103–233, title I, §§ 103(g)(2), 105(b), Apr. 11, 1994,
108 Stat. 362, 363; Pub. L. 110–289, div. B, title I,
§ 2118(c)(2), July 30, 2008, 122 Stat. 2835.)
REFERENCES IN TEXT
Section 1715z–2 of this title, referred to in subsec. (e),
was repealed by Pub. L. 110–289, div. B, title I,
§ 2120(a)(6), July 30, 2008, 122 Stat. 2835.
AMENDMENTS
2008—Subsec. (e). Pub. L. 110–289 substituted ‘‘1709 of
this title, except as determined by the Secretary’’ for
‘‘1709(b) (except as provided in section 1709(v)), (h), and
(i) of this title’’.
1994—Subsec. (f). Pub. L. 103–233, § 105(b), redesignated
subsec. (g) as (f) and struck out former subsec. (f) which
read as follows: ‘‘There are authorized to be appropriated such sums as may be necessary to cover losses
sustained by the General Insurance Fund.’’
Subsec. (g). Pub. L. 103–233, § 105(b)(2), redesignated
subsec. (g) as (f).
Pub. L. 103–233, § 103(g)(2), added subsec. (g).
1992—Subsec. (e). Pub. L. 102–550 inserted ‘‘(except as
provided in section 1709(v))’’ after ‘‘1709(b)’’.
1983—Subsec. (f). Pub. L. 98–181 inserted ‘‘such sums
as may be necessary’’ after ‘‘appropriated’’, and struck
out ‘‘not to exceed $1,738,000,000, which amount shall be
increased by $126,673,000 on October 1, 1981’’ after ‘‘Insurance Fund’’.
1981—Subsec. (f). Pub. L. 97–35 inserted provision increasing authorization on Oct. 1, 1981.
1980—Subsec.
(f).
Pub.
L.
96–399
substituted
‘‘$1,738,000,000’’ for ‘‘$1,341,000,000, which amount shall
be increased by $165,000,000 on October 1, 1978, which
shall be increased by not to exceed $93,000,000 on October 1, 1979’’.
1979—Subsec. (f). Pub. L. 96–153 provided for an increase of $93,000,000 on October 1, 1979.
1978—Subsec. (f). Pub. L. 95–557 inserted ‘‘which
amount shall be increased by $165,000,000 on October 1,
1978’’.
1977—Subsec.
(f).
Pub.
L.
95–24
substituted
‘‘$1,341,000,000’’ for ‘‘$500,000,000’’.
1976—Subsec. (f). Pub. L. 94–375 added subsec. (f).
1970—Subsec. (c). Pub. L. 91–609 provided for guarantee as to principal and interest by any agency of the
United States and for investment of moneys in bonds or
other obligations the proceeds of which will be used to
directly support the residential mortgage market.
1968—Subsec. (e). Pub. L. 90–448 prohibited use of
Fund for carrying out provisions of sections 1715n(e),
1715x(a)(2), 1715z, 1715z–1 and 1715z–2 of this title.

§ 1735d

TITLE 12—BANKS AND BANKING

1967—Pub. L. 90–19 substituted ‘‘Department of Housing and Urban Development’’ for ‘‘Federal Housing Administration’’ wherever appearing in subsecs. (b) and
(c) of this section and ‘‘Secretary’’ for ‘‘Commissioner’’
in subsecs. (a), (c), and (d) of this section, respectively.

Page 768

EFFECTIVE DATE OF 1981 AMENDMENT

1968—Subsec. (b). Pub. L. 90–448 empowered the Secretary to borrow to make payments for reinsured losses
under subchapter IX–C of this chapter, and limited such
borrowing to $250,000,000 or such further sum as Congress may determine.
1967—Subsecs. (a), (b). Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.

Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.

§ 1735e. Acceptance of materials or products used
in structures

§ 1735d. Payment of insurance benefits in cash or
debentures; borrowing money from Treasury
to make payments
(a) Notwithstanding any other provisions of
this chapter with respect to the payment of insurance benefits, the Secretary is authorized, in
his discretion, to pay in cash or in debentures
any insurance claim or part thereof which is
paid on or after August 10, 1965, on a mortgage
or a loan which was insured under any section of
this chapter either before or after such date. If
payment is made in cash, it shall be in an
amount equivalent to the face amount of the debentures that would otherwise be issued plus an
amount equivalent to the interest which the debentures would have earned, computed to a date
to be established pursuant to regulations issued
by the Secretary.
(b) The Secretary is authorized to borrow from
the Treasury from time to time such amounts as
the Secretary shall determine are necessary (1)
to make payments in cash (in lieu of issuing debentures guaranteed by the United States, as
provided in this chapter) pursuant to the provisions of this section, and (2) to make payments
for reinsured and directly insured losses under
subchapter IX–C 1 of this chapter: Provided, however, That borrowings to make payments for reinsured and directly insured losses under subchapter IX–C 1 shall be limited to $250,000,000 or
such further sum as the Congress, by joint resolution, may from time to time determine. Notes
or other obligations issued by the Secretary in
borrowing under this subsection shall be subject
to such terms and conditions as the secretary of
the Treasury may prescribe. Each sum borrowed
pursuant to this subsection shall bear interest
at a rate determined by the Secretary of the
Treasury, taking into consideration the average
market yield on outstanding marketable obligations of the United States of comparable maturities during the month preceding the issuance
of such notes or other obligations.
(June 27, 1934, ch. 847, title V, § 520, as added Pub.
L. 89–117, title II, § 215, Aug. 10, 1965, 79 Stat. 472;
amended Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81
Stat. 17; Pub. L. 90–448, title XI, § 1104, Aug. 1,
1968, 82 Stat. 566; Pub. L. 91–609, title VI, § 604,
Dec. 31, 1970, 84 Stat. 1791.)
REFERENCES IN TEXT
Subchapter IX–C of this chapter, referred to in subsec. (b), was classified to section 1749bbb et seq. of this
title and was omitted from the Code.
AMENDMENTS
1970—Subsec. (b)(2). Pub. L. 91–609 provided for making payments for directly insured losses and made limitation provision applicable to such payments.
1 See

References in Text note below.

The Secretary shall adopt a uniform procedure
for the acceptance of materials and products to
be used in structures approved for mortgages or
loans insured under this chapter. Under such
procedure any material or product which the
Secretary finds is technically suitable for the
use proposed shall be accepted. Acceptance of a
material or product as technically suitable shall
not be deemed to restrict the discretion of the
Secretary to determine that a structure, with
respect to which a mortgage is executed, is economically sound or an acceptable risk.
(June 27, 1934, ch. 847, title V, § 521, as added Pub.
L. 89–117, title II, § 216, Aug. 10, 1965, 79 Stat. 473;
amended Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81
Stat. 17.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.

§ 1735e–1. Use of American materials and products
In the administration of housing assistance
programs, the Secretary of Housing and Urban
Development shall encourage the use of materials and products mined and produced in the
United States.
(Pub. L. 100–242, title V, § 571, Feb. 5, 1988, 101
Stat. 1950.)
CODIFICATION
Section was enacted as part of the Housing and Community Development Act of 1987, and not as part of the
National Housing Act which comprises this chapter.

§ 1735f. Water and sewerage facilities
Notwithstanding any other provision of this
chapter, no mortgage which covers new construction shall be approved for insurance under
this chapter (except pursuant to a commitment
made prior to August 10, 1965) if the mortgaged
property includes housing which is not served by
a public or adequate community water and sewerage system: Provided, That this limitation
shall be applicable only to property which is not
served by a system approved by the Secretary
pursuant to subchapter IX–A of this chapter, as
such subchapter existed immediately before December 15, 1989, and which is situated in an area
certified by appropriate local officials to be an
area where the establishment of public or adequate community water and sewerage systems is
economically feasible: Provided further, That for
purposes of this section the economic feasibility
of establishing such public or adequate community water and sewerage systems shall be determined without regard to whether such establishment is authorized by law or is subject to approval by one or more local governments or public bodies.

Page 769

§ 1735f–4

TITLE 12—BANKS AND BANKING

(June 27, 1934, ch. 847, title V, § 522, as added Pub.
L. 89–117, title II, § 217(a), Aug. 10, 1965, 79 Stat.
473; amended Pub. L. 90–19, § 1(a)(3), May 25, 1967,
81 Stat. 17; Pub. L. 101–235, title I, § 133(d)(4),
Dec. 15, 1989, 103 Stat. 2027.)
REFERENCES IN TEXT
Subchapter IX–A of this chapter, referred to in text,
was repealed by Pub. L. 101–235, title I, § 133(a), Dec. 15,
1989, 103 Stat. 2027.
AMENDMENTS
1989—Pub. L. 101–235 inserted ‘‘, as such subchapter
existed immediately before December 15, 1989,’’ after
‘‘subchapter IX–A of this chapter’’.
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’.

§ 1735f–1. Waiver of deduction on assignment of
property to Secretary in lieu of foreclosure
Notwithstanding any other provision of this
chapter, from and after November 3, 1966, the
Secretary, under such terms and conditions as
he may approve, may waive all or a part of the
1 per centum deduction otherwise made from insurance benefits with respect to multifamily
housing or land development mortgages assigned to him, where the assignment is made at
his request in lieu of foreclosure of the mortgage.
(June 27, 1934, ch. 847, title V, § 523, as added Pub.
L. 89–754, title III, § 312, Nov. 3, 1966, 80 Stat.
1271.)
§ 1735f–2. Uniform rehabilitation standards for
housing within and without urban renewal
areas
In determining whether properties should be
approved by the Secretary prior to rehabilitation and covered by mortgages insured under
subchapter II of this chapter, the Secretary
shall apply uniform property standards as between properties located outside urban renewal
areas and those located within urban renewal
areas.
(June 27, 1934, ch. 847, title V, § 524, as added Pub.
L. 91–609, title I, § 116, Dec. 31, 1970, 84 Stat. 1774.)
§ 1735f–3. Insurance of mortgage proceeds advanced during construction or rehabilitation
or prior to final endorsement of project
mortgage
The Secretary is authorized to insure mortgage proceeds advanced during construction or
rehabilitation or otherwise prior to final endorsement of a project mortgage for the purpose
of (1) financing improvements to the property
and the purchase of materials and building components delivered to the property, and (2) providing funds to cover the cost of building components where such components have been assembled and specifically identified for incorporation
into the property but are located at a site other
than the mortgaged property, with such security
as the Secretary may require.
(June 27, 1934, ch. 847, title V, § 525, as added Pub.
L. 93–383, title III, § 301, Aug. 22, 1974, 88 Stat.
676.)

§ 1735f–4. Minimum property standards
(a) To the maximum extent feasible, the Secretary of Housing and Urban Development shall
promote the use of energy saving techniques
through minimum property standards established by him for newly constructed residential
housing, other than manufactured homes, subject to mortgages insured under this chapter.
Such standards shall establish energy performance requirements that will achieve a significant increase in the energy efficiency of new
construction. Such requirements shall be implemented as soon as practicable after November 9,
1978. Following November 30, 1983, the energy
performance requirements developed and established by the Secretary under this subsection for
newly constructed residential housing, other
than manufactured homes, shall be at least as
effective in performance as the energy performance requirements incorporated in the minimum
property standards that were in effect under this
subsection on September 30, 1982.
(b) The Secretary may require that each property, other than a manufactured home, subject
to a mortgage insured under this chapter shall,
with respect to health and safety, comply with
one of the nationally recognized model building
codes, or with a State or local building code
based on one of the nationally recognized model
building codes or their equivalent. The Secretary shall be responsible for determining the
comparability of the State and local codes to
such model codes and for selecting for compliance purposes an appropriate nationally recognized model building code where no such model
code has been duly adopted or where the Secretary determines the adopted code is not comparable.
(c) The Secretary may establish an exception
to any minimum property standard established
under this section in order to address alternative water systems, including cisterns, which
meet requirements of State and local building
codes that ensure health and safety standards.
(June 27, 1934, ch. 847, title V, § 526, as added Pub.
L. 93–383, title III, § 305, Aug. 22, 1974, 88 Stat. 678;
amended Pub. L. 95–619, title II, § 252(a), Nov. 9,
1978, 92 Stat. 3236; Pub. L. 96–399, title III,
§ 326(e), Oct. 8, 1980, 94 Stat. 1650; Pub. L. 98–181,
title I [title IV, § 405], Nov. 30, 1983, 97 Stat. 1210;
Pub. L. 98–479, title I, § 104(a)(6), Oct. 17, 1984, 98
Stat. 2225; Pub. L. 114–113, div. L, title II, § 238,
Dec. 18, 2015, 129 Stat. 2897.)
AMENDMENTS
2015—Subsec. (c). Pub. L. 114–113 added subsec. (c).
1984—Pub. L. 98–479 substituted ‘‘Minimum property
standards’’ for ‘‘Promotion of energy saving techniques
by Secretary of Housing and Urban Development of insured housing’’ in section catchline.
1983—Subsec. (a). Pub. L. 98–181 designated existing
provision as subsec. (a), inserted ‘‘, other than manufactured homes,’’ after ‘‘housing’’, inserted provision
that the energy performance requirements developed
for newly constructed residential housing, other than
manufactured homes, be at least as effective in performance as the energy performance requirements incorporated in the minimum property standards in effect Sept. 30, 1982, and added subsec. (b).
1980—Pub. L. 96–399 struck out ‘‘, until such time as
the energy conservation performance standards required under the Energy Conservation Standards for

§ 1735f–5

TITLE 12—BANKS AND BANKING

New Buildings Act of 1976 become effective’’ in second
sentence.
1978—Pub. L. 95–619 inserted provision requiring that
the minimum property standards established by the
Secretary under this section were to contain energy
performance requirements to achieve a significant increase in the energy efficiency of new construction.

§ 1735f–5. Prohibition against discrimination on
account of sex in extension of mortgage assistance; consideration of combined income
of husband and wife for purpose of extending mortgage credit; definitions
(a) No federally related mortgage loan, or Federal insurance, guaranty, or other assistance in
connection therewith (under this chapter or any
other Act), shall be denied to any person on account of sex; and every person engaged in making mortgage loans secured by residential real
property shall consider without prejudice the
combined income of both husband and wife for
the purpose of extending mortgage credit in the
form of a federally related mortgage loan to a
married couple or either member thereof.
(b) For purposes of subsection (a), the term
‘‘federally related mortgage loan’’ means any
loan which—
(1) is secured by residential real property designed principally for the occupancy of from
one to four families; and
(2)(A) is made in whole or in part by any
lender the deposits or accounts of which are
insured by any agency of the Federal Government, or is made in whole or in part by any
lender which is itself regulated by any agency
of the Federal Government; or
(B) is made in whole or in part, or insured,
guaranteed, supplemented, or assisted in any
way, by the Secretary of Housing and Urban
Development or any other officer or agency of
the Federal Government or under or in connection with a housing or urban development
program administered by the Secretary of
Housing and Urban Development or a housing
or related program administered by any other
such officer or agency; or
(C) is eligible for purchase by the Federal
National Mortgage Association, the Government National Mortgage Association, or the
Federal Home Loan Mortgage Corporation, or
from any financial institution from which it
could be purchased by the Federal Home Loan
Mortgage Corporation; or
(D) is made in whole or in part by any ‘‘creditor’’, as defined in section 1602(f) 1 of title 15,
who makes or invests in residential real estate
loans aggregating more than $1,000,000 per
year.
(June 27, 1934, ch. 847, title V, § 527, as added Pub.
L. 93–383, title VIII, § 808(a), Aug. 22, 1974, 88
Stat. 728; amended Pub. L. 98–479, title II,
§ 204(a)(22), Oct. 17, 1984, 98 Stat. 2233.)
REFERENCES IN TEXT
Section 1602(f) of title 15, referred to in subsec.
(b)(2)(D), was redesignated section 1602(g) of title 15 by
Pub. L. 111–203, title X, § 1100A(1)(A), July 21, 2010, 124
Stat. 2107.
1 See

References in Text note below.

Page 770
AMENDMENTS

1984—Subsec. (a). Pub. L. 98–479 designated first par.
as subsec. (a).

§ 1735f–6. Secondary mortgages held by State or
local governmental agency on insured properties
In carrying out the provisions of subchapter II
of this chapter with respect to insuring mortgages secured by a one- to four-family dwelling
unit, the Secretary may not deny such insurance for any such mortgage solely because the
dwelling unit which secures such mortgage will
be subject to a secondary mortgage or loan
made or insured, or other secondary lien held,
by any State or local governmental agency or
instrumentality under terms and conditions approved by the Secretary.
(June 27, 1934, ch. 847, title V, § 528, as added Pub.
L. 95–557, title III, § 323, Oct. 31, 1978, 92 Stat.
2102.)
§ 1735f–7. Exemption from State usury laws; applicability
(a) The provisions of the constitution of any
State expressly limiting the rate or amount of
interest, discount points, or other charges which
may be charged, taken, received, or reserved by
lenders and the provisions of any State law expressly limiting the rate or amount of interest,
discount points, or other charges which may be
charged, taken, received, or reserved shall not
apply to any loan, mortgage, or advance which
is insured under subchapter I or II of this chapter.
(b) The provisions of subsection (a) shall apply
to loans, mortgages, or advances made or executed in any State until the effective date (after
December 21, 1979) of a provision of law of that
State limiting the rate or amount of interest,
discount points, or other charges on any such
loan, mortgage, or advance.
(June 27, 1934, ch. 847, title V, § 529, as added Pub.
L. 96–153, title III, § 308, Dec. 21, 1979, 93 Stat.
1113.)
CHOICE OF HIGHEST APPLICABLE INTEREST RATE
In any case in which one or more provisions of, or
amendments made by, title V of Pub. L. 96–221 [enacting sections 86a, 1730g, 1735f–7a, 1785(g), and 1831d of this
title and section 687(i) of Title 15, Commerce and Trade,
and enacting provisions set out as notes under sections
86a, 1730g, and 1735f–7 of this title], this section, or any
other provisions of law, including section 85 of this
title, apply with respect to the same loan, mortgage,
credit sale, or advance, such loan, mortgage, credit
sale, or advance may be made at the highest applicable
rate, see section 528 of Pub. L. 96–221, set out as a note
under section 1735f–7a of this title.
STATE CONSTITUTIONS OR LAWS LIMITING INTEREST,
DISCOUNT POINTS, OR OTHER CHARGES; EXEMPTION
UNTIL CLOSE OF MARCH 31, 1980
Pub. L. 96–161, title I, § 105, Dec. 28, 1979, 93 Stat. 1234,
as amended by Pub. L. 96–221, title V, § 529, Mar. 31,
1980, 94 Stat. 168, provided that (a)(1) the provisions of
the constitution or law of any State expressly limiting
the rate or amount of interest, discount points, or
other charges which could be charged, taken, received,
or reserved were not to apply to any loan, mortgage, or
advance which was secured by a first lien on residential
real property or by a first lien on stock in a residential

Page 771

TITLE 12—BANKS AND BANKING

cooperative housing corporation where the loan, mortgage, or advance was used to finance the acquisition of
such stock; made after Dec. 28, 1979; and described in
section 1735f–5(b) of this title, except that the limitation described in section 1735f–5(b)(1) of this title that
the property must be designed principally for the occupancy of from one to four families was not to apply, the
requirement contained in section 1735f(5)(b)(1) of this
title that the loan be secured by residential real property was not to apply to a loan secured by stock in a
residential cooperative housing corporation, and for
the purpose of this section, the term ‘‘lender’’ in section 1735f–5(b)(2)(A) of this title was also to be deemed
to include any lender approved by the Secretary of
Housing and Urban Development for participation in
any mortgage insurance program under this chapter;
(2) [Repealed by Pub. L. 96–221, title V, § 529, Mar. 31,
1980, 94 Stat. 168, eff. at the close of Mar. 31, 1980.]; that
(b) the provisions of subsection (a)(1) were to apply to
loans, mortgages, and advances made in any State unless and until the State adopted a provision of law
(prior to the close of March 31, 1980) limiting the rate
or amount of interest, discount points, or other charges
on any such loan, mortgage, or advance, except that at
any time after Dec. 28, 1979, any State could adopt a
provision of law placing limitations on discount points
or such other charges on any such loan, mortgage, or
advance; that (c) the Federal Home Loan Bank Board
was authorized to issue rules and regulations and to
publish interpretations governing the implementation
of this section; that (d) the provisions of subsection
(a)(1) expired at the close of March 31, 1980, except that
such provisions were to continue to apply to any loan,
mortgage, or advance described in subsection (a)(1) for
the duration of such loan, mortgage, or advance if
made prior to such expiration or if made during the
two-year period beginning on Dec. 28, 1979, pursuant to
a commitment issued prior to such expiration, and that
(e) for the purpose of this Act [Pub. L. 96–161] and any
amendment made by this Act [see Tables for classification of Pub. L. 96–161], the term ‘‘State’’ included the
several States, Puerto Rico, the District of Columbia,
Guam, the Trust Territories of the Pacific Islands, and
the Virgin Islands.

§ 1735f–7a. State constitution or laws limiting
mortgage interest, discount points, and finance or other charges; exemption for obligations made after March 31, 1980
(a) Applicability to loan, mortgage, credit sale, or
advance; applicability to deposit, account, or
obligation
(1) The provisions of the constitution or the
laws of any State expressly limiting the rate or
amount of interest, discount points, finance
charges, or other charges which may be charged,
taken, received, or reserved shall not apply to
any loan, mortgage, credit sale, or advance
which is—
(A) secured by a first lien on residential real
property, by a first lien on all stock allocated
to a dwelling unit in a residential cooperative
housing corporation, or by a first lien on a residential manufactured home;
(B) made after March 31, 1980; and
(C) described in section 527(b) of the National Housing Act (12 U.S.C. 1735f–5(b)), except that for the purpose of this section—
(i) the limitation described in section
527(b)(1) of such Act that the property must
be designed principally for the occupancy of
from one to four families shall not apply;
(ii) the requirement contained in section
527(b)(1) of such Act that the loan be secured
by residential real property shall not apply

§ 1735f–7a

to a loan secured by stock in a residential
cooperative housing corporation or to a loan
or credit sale secured by a first lien on a residential manufactured home;
(iii) the term ‘‘federally related mortgage
loan’’ in section 527(b) of such Act shall include a credit sale which is secured by a first
lien on a residential manufactured home and
which otherwise meets the definitional requirements of section 527(b) of such Act, as
those requirements are modified by this section;
(iv) the term ‘‘residential loans’’ in section
527(b)(2)(D) of such Act shall also include
loans or credit sales secured by a first lien
on a residential manufactured home;
(v) the requirement contained in section
527(b)(2)(D) of such Act that a creditor make
or invest in loans aggregating more than
$1,000,000 per year shall not apply to a creditor selling residential manufactured homes
financed by loans or credit sales secured by
first liens on residential manufactured
homes if the creditor has an arrangement to
sell such loans or credit sales in whole or in
part, or if such loans or credit sales are sold
in whole or in part to a lender, institution,
or creditor described in section 527(b) of such
Act or in this section or a creditor, as defined in section 103(f) 1 of the Truth in Lending Act, as such section was in effect on the
day preceding March 31, 1980, if such creditor
makes or invests in residential real estate
loans or loans or credit sales secured by first
liens on residential manufactured homes aggregating more than $1,000,000 per year; and
(vi) the term ‘‘lender’’ in section
527(b)(2)(A) of such Act shall also be deemed
to include any lender approved by the Secretary of Housing and Urban Development
for participation in any mortgage insurance
program under the National Housing Act [12
U.S.C. 1701 et seq.], and any individual who
finances the sale or exchange of residential
real property or a residential manufactured
home which such individual owns and which
such individual occupies or has occupied as
his principal residence.
(2) The provisions of the constitution or law of
any State expressly limiting the rate or amount
of interest which may be charged, taken, received, or reserved shall not apply to any deposit or account held by, or other obligation of
a depository institution. For purposes of this
paragraph, the term ‘‘depository institution’’
means—
(i) any insured bank as defined in section 3
of the Federal Deposit Insurance Act (12 U.S.C.
1813);
(ii) any mutual savings bank as defined in
section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813);
(iii) any savings bank as defined in section 3
of the Federal Deposit Insurance Act (12 U.S.C.
1813);
(iv) any insured credit union as defined in
section 101 of the Federal Credit Union Act (12
U.S.C. 1752);
1 See

References in Text note below.

§ 1735f–7a

TITLE 12—BANKS AND BANKING

(v) any member as defined in section 2 of the
Federal Home Loan Bank Act (12 U.S.C. 1422);
and
(vi) any insured institution as defined in section 408 1 of the National Housing Act (12
U.S.C. 1730a).
(b) Applicability to loan, mortgage, credit sale, or
advance made in any State after April 1, 1980
(1) Except as provided in paragraphs (2) and
(3), the provisions of subsection (a)(1) shall apply
to any loan, mortgage, credit sale, or advance
made in any State on or after April 1, 1980.
(2) Except as provided in paragraph (3), the
provisions of subsection (a)(1) shall not apply to
any loan, mortgage, credit sale, or advance
made in any State after the date (on or after
April 1, 1980, and before April 1, 1983) on which
such State adopts a law or certifies that the voters of such State have voted in favor of any provision, constitutional or otherwise, which states
explicitly and by its terms that such State does
not want the provisions of subsection (a)(1) to
apply with respect to loans, mortgages, credit
sales, and advances made in such State.
(3) In any case in which a State takes an action described in paragraph (2), the provisions of
subsection (a)(1) shall continue to apply to—
(A) any loan, mortgage, credit sale, or advance which is made after the date such action
was taken pursuant to a commitment therefor
which was entered during the period beginning
on April 1, 1980, and ending on the date on
which such State takes such action; and
(B) any loan, mortgage, or advance which is
a rollover of a loan, mortgage, or advance, as
described in regulations of the Federal Home
Loan Bank Board, which was made or committed to be made during the period beginning on
April 1, 1980, and ending on the date on which
such State takes any action described in paragraph (2).
(4) At any time after March 31, 1980, any State
may adopt a provision of law placing limitations
on discount points or such other charges on any
loan, mortgage, credit sale, or advance described
in subsection (a)(1).
(c) Applicability to loan, mortgage, credit sale, or
advance secured by first lien on residential
manufactured home
The provisions of subsection (a)(1) shall not
apply to a loan, mortgage, credit sale, or advance which is secured by a first lien on a residential manufactured home unless the terms
and conditions relating to such loan, mortgage,
credit sale, or advance comply with consumer
protection provisions specified in regulations
prescribed by the Federal Home Loan Bank
Board. Such regulations shall—
(1) include consumer protection provisions
with respect to balloon payments, prepayment
penalties, late charges, and deferral fees;
(2) require a 30-day notice prior to instituting any action leading to repossession or foreclosure (except in the case of abandonment or
other extreme circumstances);
(3) require that upon prepayment in full, the
debtor shall be entitled to a refund of the unearned portion of the precomputed finance
charge in an amount not less than the amount

Page 772

which would be calculated by the actuarial
method, except that the debtor shall not be
entitled to a refund which is less than $1; and
(4) include such other provisions as the Federal Home Loan Bank Board may prescribe
after a finding that additional protections are
required.
(d) Implementation of provisions applicable to
residential manufactured home
The provisions of subsection (c) shall not
apply to a loan, mortgage, credit sale, or advance secured by a first lien on a residential
manufactured home until regulations required
to be issued pursuant to paragraphs (1), (2), and
(3) of subsection (c) take effect, except that the
provisions of subsection (c) shall apply in the
case of such a loan, mortgage, credit sale, or advance made prior to the date on which such regulations take effect if the loan, mortgage, credit
sale, or advance includes a precomputed finance
charge and does not provide that, upon prepayment in full, the refund of the unearned portion
of the precomputed finance charge is in an
amount not less the amount which would be calculated by the actuarial method, except that the
debtor shall not be entitled to a refund which is
less than $1. The Federal Home Loan Bank
Board shall issue regulations pursuant to the
provisions of paragraphs (1), (2), and (3) of subsection (c) that shall take effect prospectively
not less than 30 days after publication in the
Federal Register and not later than 120 days
from March 31, 1980.
(e) Definitions
For the purpose of this section—
(1) a ‘‘prepayment’’ occurs upon—
(A) the refinancing or consolidation of the
indebtedness;
(B) the actual prepayment of the indebtedness by the consumer whether voluntarily or
following acceleration of the payment obligation by the creditor; or
(C) the entry of a judgment for the indebtedness in favor of the creditor;
(2) the term ‘‘actuarial method’’ means the
method of allocating payments made on a debt
between the outstanding balance of the obligation and the precomputed finance charge pursuant to which a payment is applied first to
the accrued precomputed finance charge and
any remainder is subtracted from, or any deficiency is added to, the outstanding balance of
the obligation;
(3) the term ‘‘precomputed finance charge’’
means interest or a time price differential
within the meaning of sections 106(a)(1) and (2)
of the Truth in Lending Act (15 U.S.C.
1605(a)(1) and (2)) as computed by an add-on or
discount method; and
(4) the term ‘‘residential manufactured
home’’ means a manufactured home as defined
in section 603(6) of the National Mobile Home
Construction and Safety Standards Act of 1974
[42 U.S.C. 5402(6)] which is used as a residence.
(f) Rules, regulations, and interpretations
The Federal Home Loan Bank Board is authorized to issue rules and regulations and to publish
interpretations governing the implementation
of this section.

Page 773

§ 1735f–8

TITLE 12—BANKS AND BANKING

(g) Effective date
This section takes effect on April 1, 1980.
(Pub. L. 96–221, title II, § 207(b)(11), title V, § 501,
Mar. 31, 1980, 94 Stat. 144, 161; Pub. L. 96–399,
title III, §§ 308(c)(6), 324(a), (e), Oct. 8, 1980, 94
Stat. 1641, 1647, 1648; Pub. L. 97–35, title III, § 384,
Aug. 13, 1981, 95 Stat. 432.)
REFERENCES IN TEXT
The National Housing Act, referred to in subsec. (a),
is act June 27, 1934, ch. 847, 48 Stat. 1246, which is classified principally to this chapter (§ 1701 et seq.). Section
408 of the National Housing Act, which was classified to
section 1730a of this title, was repealed by Pub. L.
101–73, title IV, § 407, Aug. 9, 1989, 103 Stat. 363. For complete classification of this Act to the Code, see section
1701 of this title and Tables.
Section 103(f) of the Truth in Lending Act, referred to
in subsec. (a)(1)(C)(v), was redesignated section 103(g) of
the Truth in Lending Act by Pub. L. 111–203, title X,
§ 1100A(1)(A), July 21, 2010, 124 Stat. 2107, and is classified to section 1602(g) of Title 15, Commerce and Trade.
CODIFICATION
Section was enacted as part of the Depository Institutions Deregulation and Monetary Control Act of 1980,
and not as part of the National Housing Act which comprises this chapter.
AMENDMENTS
1981—Subsec. (a)(1)(C)(vi). Pub. L. 97–35 inserted reference to a residential manufactured home.
1980—Subsec. (a)(1)(A). Pub. L. 96–399, § 324(a), substituted ‘‘all stock allocated to a dwelling unit’’ for
first reference to ‘‘stock’’ and struck out ‘‘where the
loan, mortgage, or advance is used to finance the acquisition of such stock’’ after ‘‘housing corporation’’.
Subsec. (a)(1)(C)(vi). Pub. L. 96–399, § 324(e), inserted
reference to any person who finances the sale or exchange of residential real property which such individual owns and which such individual occupies or has occupied as his principal residence.
Subsec. (a)(2). Pub. L. 96–221, § 207(b)(11), struck out
‘‘(A)’’ after ‘‘(2)’’ and struck out subpar. (B) which provided that this paragraph shall not apply to any such
deposit, account, or obligation which is payable only at
an office of an insured bank, as defined in section 3 of
the Federal Deposit Insurance Act, located in the Commonwealth of Puerto Rico.
Subsec. (e)(4). Pub. L. 96–399, § 308(c)(6), substituted
‘‘manufactured’’ for ‘‘mobile’’.
EFFECTIVE DATE OF 1980 AMENDMENT
Pub. L. 96–221, title II, § 207(b), Mar. 31, 1980, 94 Stat.
144, provided in part that the amendment made by that
section is effective 6 years after Mar. 31, 1980.
SEVERABILITY
Pub. L. 96–221, title V, § 526, Mar. 31, 1980, 94 Stat. 167,
provided that: ‘‘If any provision of this Act [for classification of Act to the Code, see Short Title of 1980
Amendment note set out under section 226 of this title
and Tables] or the application of such provision to any
person or circumstance shall be held invalid, the remainder of this Act and the application of such provision to any person or circumstance other than that as
to which it is held invalid shall not be affected thereby.’’
TRANSFER OF FUNCTIONS
Federal Home Loan Bank Board abolished and functions transferred, see sections 401 to 406 of Pub. L.
101–73, set out as a note under section 1437 of this title.
CHOICE OF HIGHEST APPLICABLE INTEREST RATE
Pub. L. 96–221, title V, § 528, Mar. 31, 1980, 94 Stat. 168,
provided that: ‘‘In any case in which one or more provi-

sions of, or amendments made by, this title [enacting
sections 86a, 1730g, 1735f–7a, and 1831d of this title,
amending section 1785 of this title and section 687 of
Title 15, Commerce and Trade, and enacting provisions
set out as notes under sections 86a, 1730g, and 1735f–7 of
this title], section 529 of the National Housing Act [section 1735f–7 of this title], or any other provision of law,
including section 5197 of the Revised Statutes (12 U.S.C.
85), apply with respect to the same loan, mortgage,
credit sale, or advance, such loan, mortgage, credit
sale, or advance may be made at the highest applicable
rate.’’
DEFINITION OF ‘‘STATE’’
Pub. L. 96–221, title V, § 527, Mar. 31, 1980, 94 Stat. 168,
as amended by Pub. L. 96–221, title II, § 207(b)(12), Mar.
31, 1980, 94 Stat. 144, provided that: ‘‘For purposes of
this title [enacting sections 86a, 1730g, 1735f–7a, and
1831d of this title, amending section 1785 of this title
and section 687 of Title 15, Commerce and Trade, and
enacting provisions set out as notes under sections 86a,
1730g, 1735f–7, and 1735f–7a of this title] the term ‘State’
includes the several States, the Commonwealth of
Puerto Rico, the District of Columbia, Guam, the Trust
Territories of the Pacific Islands, the Northern Mariana Islands, and the Virgin Islands.’’
[Pub. L. 96–221, title II, § 207(b), Mar. 31, 1980, 94 Stat.
144, provided that the amendment of above note made
by that section is effective 6 years after Mar. 31, 1980.]
[For termination of Trust Territory of the Pacific Islands, see note set out preceding section 1681 of Title
48, Territories and Insular Possessions.]

§ 1735f–8. Time of payment of premium charges
In carrying out the provisions of subchapters
I, II, IV,1 VII, VIII, IX–B, and X pertaining to
the payment of loan or mortgage insurance premium charges by a financial institution, other
mortgagees, or agent thereof to the Federal
Government in connection with a loan or mortgage insurance program established pursuant to
any of these subchapters, the Secretary shall require that payment of such premiums be made
(1) in the case of loans or mortgages respecting
one- to four-family residences, promptly upon
their receipt from the borrower, and (2) in any
other case, promptly when due to the Secretary;
except that the Secretary may approve payment
of such premiums within twenty-four months of
such receipt or due date, as appropriate, if the
financial institution, mortgagee, or agent thereof pays interest, at a rate specified by the Secretary, to the insurance fund for the period beginning twenty days after receipt from the borrower or after the due date, as appropriate, and
ending upon payment of the premiums to the
Federal Government.
(June 27, 1934, ch. 847, title V, § 530, as added Pub.
L. 96–399, title III, § 320, Oct. 8, 1980, 94 Stat. 1646;
amended Pub. L. 98–181, title I [title IV, § 406],
Nov. 30, 1983, 97 Stat. 1210; Pub. L. 101–235, title
I, § 133(d)(5), Dec. 15, 1989, 103 Stat. 2027.)
REFERENCES IN TEXT
Subchapter IV of this chapter, referred to in text, was
repealed by Pub. L. 101–73, title IV, § 407, Aug. 9, 1989,
103 Stat. 363.
AMENDMENTS
1989—Pub. L. 101–235 struck out reference to subchapter IX–A after reference to subchapter VIII.
1983—Pub. L. 98–181 substituted ‘‘(1) in the case of
loans or mortgages respecting one- to four-family resi1 See

References in Text note below.

§ 1735f–9

TITLE 12—BANKS AND BANKING

dences, promptly upon their receipt from the borrower,
and (2) in any other case, promptly when due to the
Secretary’’ for ‘‘promptly upon their receipt from the
borrower’’, inserted ‘‘or due date, as appropriate,’’ after
‘‘such receipt’’, and inserted ‘‘or after the due date, as
appropriate,’’ before ‘‘and ending’’.

§ 1735f–9. Limitation on commitments to insure
loans and mortgages
(a) The authority of the Secretary to enter
into commitments to insure loans and mortgages under this chapter shall be effective for
any fiscal year only to such extent or in such
amounts as are or have been provided in appropriation Acts for such fiscal year.
(b) Notwithstanding any other provision of law
and subject only to the absence of qualified requests for insurance, to the authority provided
in this chapter, and to the limitation in subsection (a), the Secretary shall enter into commitments to insure mortgages under this chapter with an aggregate principal amount of
$110,165,000,000 during fiscal year 1993 and
$68,673,868,600 during fiscal year 1994.
(June 27, 1934, ch. 847, title V, § 531, as added Pub.
L. 97–35, title III, § 335, Aug. 13, 1981, 95 Stat. 414;
amended Pub. L. 98–181, title I [title IV, § 402],
Nov. 30, 1983, 97 Stat. 1208; Pub. L. 98–479, title I,
§ 104(a)(7), Oct. 17, 1984, 98 Stat. 2225; Pub. L.
99–267, § 1(h), Mar. 27, 1986, 100 Stat. 73; Pub. L.
100–122, § 2(c), Sept. 30, 1987, 101 Stat. 793; Pub. L.
100–242, title IV, § 402, Feb. 5, 1988, 101 Stat. 1899;
Pub. L. 101–625, title III, § 321, Nov. 28, 1990, 104
Stat. 4134; Pub. L. 102–550, title V, § 501, Oct. 28,
1992, 106 Stat. 3778; Pub. L. 103–120, § 9, Oct. 27,
1993, 107 Stat. 1151.)
AMENDMENTS
1993—Subsec. (b). Pub. L. 103–120 substituted
‘‘$110,165,000,000’’ for ‘‘$65,905,824,960’’.
1992—Subsec. (b). Pub. L. 102–550 amended subsec. (b)
generally. Prior to amendment, subsec. (b) read as follows: ‘‘Notwithstanding any other provision of law and
subject only to the absence of qualified requests for insurance, to the authority provided in this chapter, and
to the limitation in subsection (a) of this section, the
Secretary shall enter into commitments to insure
mortgages under this chapter with an aggregate principal amount of $76,791,000,000 during fiscal year 1991
and $79,818,000,000 during fiscal year 1992.’’
1990—Subsec. (b). Pub. L. 101–625 amended subsec. (b)
generally. Prior to amendment, subsec. (b) read as follows: ‘‘Notwithstanding any other provision of law and
subject only to the absence of qualified requests for insurance, to the authority provided in this chapter, and
to the limitation in subsection (a) of this section, the
Secretary shall enter into commitments to insure
mortgages under this chapter with an aggregate principal amount of $100,000,000,000 during fiscal year 1988,
and $104,000,000,000 during fiscal year 1989.’’
1988—Pub. L. 100–242 designated existing provisions as
subsec. (a) and added subsec. (b).
1987—Pub. L. 100–122 substituted ‘‘for any fiscal year’’
for ‘‘for fiscal year 1986’’.
1986—Pub. L. 99–267 amended section generally. Prior
to amendment, section read as follows: ‘‘Notwithstanding any other provision of law and subject only to the
absence of qualified requests for insurance, to the authority provided in this chapter, and to any funding
limitation approved in appropriation Acts, the Secretary shall enter into commitments during each of the
fiscal years 1984 and 1985 to insure mortgages under this
chapter with an aggregate principal amount of
$50,900,000,000.’’
1984—Pub. L. 98–479 substituted ‘‘this chapter’’ for
‘‘subchapter II of this chapter’’ in two places.

Page 774

1983—Pub. L. 98–181 substituted provision authorizing
the Secretary, subject to certain qualifications, to
enter into commitments during fiscal years 1984 and
1985 to insure mortgages under subchapter II of this
chapter with an aggregate principal amount of
$50,900,000,000 for provision which directed the Secretary, during fiscal year 1982, not to enter into commitments under this chapter to insure loans and mortgages with an aggregate principal amount in excess of
$41,000,000,000.
EFFECTIVE DATE
Section effective Oct. 1, 1981, see section 371 of Pub.
L. 97–35, set out as a note under section 3701 of this
title.
AUTHORIZATION TO ENTER INTO ADDITIONAL COMMITMENTS TO INSURE LOANS AND MORTGAGES DURING
FISCAL YEAR 1986
For increase in the applicable limitation on additional commitments to insure mortgages and loans to
carry out this chapter during fiscal year 1986, see Pub.
L. 99–349, title I, July 2, 1986, 100 Stat. 728; Pub. L.
99–345, § 2, June 24, 1986, 100 Stat. 673; and Pub. L. 99–289,
May 2, 1986, 100 Stat. 412, set out as notes under section
1721 of this title.

§ 1735f–10. Change of mortgagee status
(a) Notification
Upon the occurrence of any action described in
subsection (b), an approved mortgagee shall immediately submit to the Secretary, in writing,
notification of such occurrence.
(b) Actions
The actions described in this subsection are as
follows:
(1) The debarment, suspension or a Limited
Denial of Participation (LDP), or application
of other sanctions, other exclusions, fines, or
penalties applied to the mortgagee or to any
officer, partner, director, principal, manager,
supervisor, loan processor, loan underwriter,
or loan originator of the mortgagee pursuant
to applicable provisions of State or Federal
law.
(2) The revocation of a State-issued mortgage loan originator license issued pursuant to
the S.A.F.E. Mortgage Licensing Act of 2008
(12 U.S.C. 5101 et seq.) or any other similar
declaration of ineligibility pursuant to State
law.
(June 27, 1934, ch. 847, title V, § 532, as added Pub.
L. 111–22, div. A, title II, § 203(e), May 20, 2009, 123
Stat. 1647.)
REFERENCES IN TEXT
The S.A.F.E. Mortgage Licensing Act of 2008, referred
to in subsec. (b)(2), is title V of div. A of Pub. L. 110–289,
July 30, 2008, 122 Stat. 2810, also known as the Secure
and Fair Enforcement for Mortgage Licensing Act of
2008, which is classified generally to chapter 51 (§ 5101 et
seq.) of this title. For complete classification of this
Act to the Code, see Short Title note set out under section 5101 of this title and Tables.
PRIOR PROVISIONS
A prior section 1735f–10, act June 27, 1934, ch. 847, title
V, § 532, as added Pub. L. 97–35, title III, § 339G, Aug. 13,
1981, 95 Stat. 418, which related to purchaser-broker arrangement payments for insurance purposes, was repealed by section 203(e) of Pub. L. 111–22.

Page 775

§ 1735f–13

TITLE 12—BANKS AND BANKING

§ 1735f–11. Review of mortgagee performance
and authority to terminate
(a) Periodic review of mortgagee performance
To reduce losses in connection with single
family mortgage insurance programs under this
chapter, at least once a year the Secretary shall
review the rate of early defaults and claims for
insured single family mortgages originated or
underwritten by each mortgagee.
(b) Comparison with other mortgagees
For each mortgagee, the Secretary shall compare the rate of early defaults and claims for insured single family mortgage loans originated or
underwritten by the mortgagee in an area with
the rate of early defaults and claims for other
mortgagees originating or underwriting insured
single family mortgage loans in the area. For
purposes of this section, the term ‘‘area’’ means
each geographic area in which the mortgagee is
authorized by the Secretary to originate insured
single family mortgages.
(c) Termination of mortgagee origination approval
(1) Notwithstanding section 1708(c) of this
title, the Secretary may terminate the approval
of a mortgagee to originate or underwrite single
family mortgages if the Secretary determines
that the mortgage loans originated or underwritten by the mortgagee present an unacceptable risk to the insurance funds. The determination shall be based on the comparison required
under subsection (b) and shall be made in accordance with regulations of the Secretary. The
Secretary may rely on existing regulations published before this section takes effect.
(2) The Secretary shall give a mortgagee at
least 60 days prior written notice of any termination under this subsection. The termination
shall take effect at the end of the notice period,
unless the Secretary withdraws the termination
notice or extends the notice period. If requested
in writing by the mortgagee within 30 days of
the date of the notice, the mortgagee shall be
entitled to an informal conference with the official authorized to issue termination notices on
behalf of the Secretary (or a designee of that official). At the informal conference, the mortgagee may present for consideration specific factors that it believes were beyond its control and
that caused the excessive default and claim rate.
(June 27, 1934, ch. 847, title V, § 533, as added Pub.
L. 100–242, title IV, § 407(b), Feb. 5, 1988, 101 Stat.
1902; amended Pub. L. 107–73, title II, § 209, Nov.
26, 2001, 115 Stat. 675.)
AMENDMENTS
2001—Pub. L. 107–73 amended section catchline and
text generally. Prior to amendment, text read as follows:
‘‘(a) To reduce losses in connection with mortgage insurance programs under this chapter, the Secretary
shall review, at least once a year, the rate of early serious defaults and claims involving mortgagees approved
under this chapter. On the basis of this review, the Secretary shall notify each mortgagee which, as determined by the Secretary, had a rate of early serious defaults and claims during the preceding year which was
higher than the normal rate for the geographic area or
areas in which that mortgagee does business. In the notification, the Secretary shall require each mortgagee

to submit a report, within a time determined by the
Secretary, containing the mortgagee’s (1) explanation
for the above normal rate of early serious defaults and
claims; (2) plan for corrective action, if applicable, both
with regard to (A) mortgages in default; and (B) its
mortgage-processing system in general; and (3) a timeframe within which this corrective action will be begun
and completed. If the Secretary does not agree with
this timeframe or plan, a mutually agreeable timeframe and plan will be determined.
‘‘(b) Failure of the mortgagee to submit a report required under subsection (a) of this section within the
time determined by the Secretary or to commence or
complete the plan for corrective action within the
timeframe agreed upon by the Secretary may be cause
for suspension of the mortgagee from participation in
programs under this chapter.’’

§ 1735f–12. Assurance of adequate processing of
applications for loan and mortgage insurance
(a) State offices
In order to ensure the adequate processing of
applications for insurance of loans and mortgages under this chapter, the Secretary shall
maintain not less than one office in each State
to carry out the provisions of this chapter.
(b) Expedited procedure for RTC properties
To assist the Resolution Trust Corporation in
disposing of the property to which it acquires
title and to ensure the timely processing of applications for insurance of loans and mortgages
under this chapter that will be used to purchase
multifamily residential property from the Resolution Trust Corporation, the Secretary shall establish an expedited procedure for considering
such applications.
(June 27, 1934, ch. 847, title V, § 534, as added Pub.
L. 100–242, title IV, § 418, Feb. 5, 1988, 101 Stat.
1912; amended Pub. L. 102–550, title V, § 512(a),
Oct. 28, 1992, 106 Stat. 3786.)
AMENDMENTS
1992—Pub. L. 102–550 designated existing provisions as
subsec. (a), inserted heading, and added subsec. (b).
REGULATIONS
Pub. L. 102–550, title V, § 512(b), Oct. 28, 1992, 106 Stat.
3786, provided that: ‘‘The procedure referred to in the
amendment made by subsection (a) [amending this section] shall be established through interim and final regulations issued by the Secretary. The Secretary shall
issue interim regulations implementing the procedure
not later than the expiration of the 90-day period beginning on the date of the enactment of this Act [Oct. 28,
1992], which shall be effective upon issuance. The Secretary shall issue final regulations after notice and opportunity for public comment pursuant to the provisions of section 553 of title 5, United States Code (notwithstanding subsections (a)(2), (b)(B), and (d)(3) of
such section).’’

§ 1735f–13. Prohibition of requirement of minimum principal loan amount
A mortgagee or lender may not require, as a
condition of providing a loan insured under this
chapter or secured by a mortgage insured under
this chapter, that the principal amount of the
loan exceed a minimum amount established by
the mortgagee or lender.
(June 27, 1934, ch. 847, title V, § 535, as added Pub.
L. 100–242, title IV, § 419(a), Feb. 5, 1988, 101 Stat.
1913.)

§ 1735f–14

TITLE 12—BANKS AND BANKING

§ 1735f–14. Civil money penalties against mortgagees, lenders, and other participants in FHA
programs
(a) In general
(1) Authority
If a mortgagee approved under the 1 chapter,
a lender holding a contract of insurance under
subchapter I, or a principal, officer, or employee of such mortgagee or lender, or other
person or entity participating in either an insured mortgage or subchapter I loan transaction under this chapter or providing assistance to the borrower in connection with any
such loan, including sellers of the real estate
involved, borrowers, closing agents, title companies, real estate agents, mortgage brokers,
appraisers, loan correspondents and dealers,
knowingly and materially violates any applicable provision of subsection (b), the Secretary may impose a civil money penalty on
the mortgagee or lender, or such other person
or entity, in accordance with this section. The
penalty under this paragraph shall be in addition to any other available civil remedy or
any available criminal penalty, and may be
imposed whether or not the Secretary imposes
other administrative sanctions. The penalty
shall be in addition to any other available
civil remedy or any available criminal penalty, and may be imposed whether or not the
Secretary imposes other administrative sanctions.
(2) Amount of penalty
The amount of the penalty, as determined by
the Secretary, may not exceed $5,000 for each
violation, except that the maximum penalty
for all violations by any particular mortgagee
or lender or such other person or entity during
any 1-year period shall not exceed $1,000,000.
Each violation of a 2 the provisions of subsection (b)(1) shall constitute a separate violation with respect to each mortgage or loan application. In the case of a continuing violation, as determined by the Secretary, each day
shall constitute a separate violation.
In the case of the mortgagee’s failure to engage in loss mitigation activities, as provided
in subsection (b)(1)(I), the penalty shall be in
the amount of three times the amount of any
insurance benefits claimed by the mortgagee
with respect to any mortgage for which the
mortgagee failed to engage in such loss mitigation actions.
(b) Violations for which a penalty may be imposed
(1) Violations
The Secretary may impose a civil money
penalty under subsection (a) for any knowing
and material violation by a mortgagee or lender or any of its owners, officers, or directors,
as follows:
(A) Except where expressly permitted by
statute, regulation, or contract approved by
the Secretary, transfer of a mortgage insured under this chapter to a mortgagee not
1 So
2 So

in original. Probably should be ‘‘this’’.
in original. The word ‘‘a’’ probably should not appear.

Page 776

approved by the Secretary, or transfer of a
loan to a transferee that is not holding a
contract of insurance under subchapter I of
this chapter.
(B) Failure of a nonsupervised mortgagee,
as defined by the Secretary—
(i) to segregate all escrow funds received
from a mortgagor for ground rents, taxes,
assessments, and insurance premiums; or
(ii) to deposit these funds in a special account with a depository institution whose
accounts are insured by the Federal Deposit Insurance Corporation through the
Deposit Insurance Fund, or by the National Credit Union Administration.
(C) Use of escrow funds for any purpose
other than that for which they were received.
(D) Submission to the Secretary of information that was false, in connection with
any mortgage insured under this chapter, or
any loan that is covered by a contract of insurance under subchapter I of this chapter.
(E) With respect to an officer, director,
principal, or employee—
(i) hiring such an individual whose duties will involve, directly or indirectly,
programs administered by the Secretary,
while that person was under suspension or
withdrawal by the Secretary; or
(ii) retaining in employment such an individual who continues to be involved, directly or indirectly, in programs administered by the Secretary, while that person
was under suspension or withdrawal by the
Secretary.
(F) Falsely certifying to the Secretary or
submitting to the Secretary a false certification by another person or entity.
(G) Failure to comply with an agreement,
certification, or condition of approval set
forth on, or applicable to—
(i) the application of a mortgagee or
lender for approval by the Secretary; or
(ii) the notification by a mortgagee or
lender to the Secretary concerning establishment of a branch office.
(H) Violation of any provisions of subchapter I or II of this chapter, or any implementing regulation, handbook, or mortgagee
letter that is issued under this chapter.
(I) Failure to engage in loss mitigation actions as provided in section 1715u(a) of this
title.
(J) Failure to perform a required physical
inspection of the mortgaged property.
(K) Violation of section 1708(d) of this
title.
(L) Use of ‘‘Federal Housing Administration’’, ‘‘Department of Housing and Urban
Development’’, ‘‘Government National Mortgage Association’’, ‘‘Ginnie Mae’’, the acronyms ‘‘HUD’’, ‘‘FHA’’, or ‘‘GNMA’’, or any
official seal or logo of the Department of
Housing and Urban Development, except as
authorized by the Secretary.
(2) Additional violations
The Secretary may impose a civil money
penalty under subsection (a) for any knowing

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TITLE 12—BANKS AND BANKING

and material violation by a principal, officer,
or employee of a mortgagee or lender, or other
participants in either an insured mortgage or
subchapter I loan transaction under this chapter or provision of assistance to the borrower
in connection with any such loan, including
sellers of the real estate involved, borrowers,
closing agents, title companies, real estate
agents, mortgage brokers, appraisers, loan
correspondents, and dealers for—
(A) submission to the Secretary of information that was false, in connection with
any mortgage insured under this chapter, or
any loan that is covered by a contract of insurance under subchapter I of this chapter;
(B) falsely certifying to the Secretary or
submitting to the Secretary a false certification by another person or entity;
(C) failure by a loan correspondent or dealer to submit to the Secretary information
which is required by regulations or directives in connection with any loan that is
covered by a contract of insurance under
subchapter I; or
(D) causing or participating in any of the
violations set forth in paragraph (1) of this
subsection.
(3) Prohibition against misleading use of Federal entity designation
The Secretary may impose a civil money
penalty, as adjusted from time to time, under
subsection (a) for any use of ‘‘Federal Housing
Administration’’, ‘‘Department of Housing and
Urban Development’’, ‘‘Government National
Mortgage Association’’, ‘‘Ginnie Mae’’, the
acronyms ‘‘HUD’’, ‘‘FHA’’, or ‘‘GNMA’’, or any
official seal or logo of the Department of
Housing and Urban Development, by any person, party, company, firm, partnership, or
business, including sellers of real estate, closing agents, title companies, real estate agents,
mortgage brokers, appraisers, loan correspondents, and dealers, except as authorized
by the Secretary.
(c) Agency procedures
(1) Establishment
The Secretary shall establish standards and
procedures governing the imposition of civil
money penalties under subsection (a). These
standards and procedures—
(A) shall provide for the Secretary to
make the determination to impose the penalty or to use an administrative entity (such
as the Mortgagee Review Board, established
pursuant to section 1708(c) of this title) to
make the determination;
(B) shall provide for the imposition of a
penalty only after the mortgagee or lender
or such other person or entity has been
given an opportunity for a hearing on the
record; and
(C) may provide for review by the Secretary of any determination or order, or interlocutory ruling, arising from a hearing.
(2) Final orders
If no hearing is requested within 15 days of
receipt of the notice of opportunity for hearing, the imposition of the penalty shall constitute a final and unappealable determina-

§ 1735f–14

tion. If the Secretary reviews the determination or order, the Secretary may affirm, modify, or reverse that determination or order. If
the Secretary does not review the determination or order within 90 days of the issuance of
the determination or order, the determination
or order shall be final.
(3) Factors in determining amount of penalty
In determining the amount of a penalty
under subsection (a), consideration shall be
given to such factors as the gravity of the offense, any history of prior offenses (including
those before December 15, 1989), ability to pay
the penalty, injury to the public, benefits received, deterrence of future violations, and
such other factors as the Secretary may determine in regulations to be appropriate.
(4) Reviewability of imposition of penalty
The Secretary’s determination or order imposing a penalty under subsection (a) shall not
be subject to review, except as provided in subsection (d).
(d) Judicial review of agency determination
(1) In general
After exhausting all administrative remedies established by the Secretary under subsection (c)(1), a mortgagee or lender or such
other person or entity against whom the Secretary has imposed a civil money penalty
under subsection (a) may obtain a review of
the penalty and such ancillary issues (such as
any administrative sanctions under 24 C.F.R.
parts 24 and 25) as may be addressed in the notice of determination to impose a penalty
under subsection (c)(1)(A) in the appropriate
court of appeals of the United States, by filing
in such court, within 20 days after the entry of
such order or determination, a written petition praying that the Secretary’s determination or order be modified or be set aside in
whole or in part.
(2) Objections not raised in hearing
The court shall not consider any objection
that was not raised in the hearing conducted
pursuant to subsection (c)(1) unless a demonstration is made of extraordinary circumstances causing the failure to raise the objection. If any party demonstrates to the satisfaction of the court that additional evidence
not presented at the hearing is material and
that there were reasonable grounds for the
failure to present such evidence at the hearing, the court shall remand the matter to the
Secretary for consideration of the additional
evidence.
(3) Scope of review
The decisions, findings, and determinations
of the Secretary shall be reviewed pursuant to
section 706 of title 5.
(4) Order to pay penalty
Notwithstanding any other provision of law,
in any such review, the court shall have the
power to order payment of the penalty imposed by the Secretary.
(e) Action to collect penalty
If any mortgagee or lender or such other person or entity fails to comply with the Sec-

§ 1735f–14

TITLE 12—BANKS AND BANKING

retary’s determination or order imposing a civil
money penalty under subsection (a), after the
determination or order is no longer subject to
review as provided by subsections (c)(1) and (d),
the Secretary may request the Attorney General
of the United States to bring an action in an appropriate United States district court to obtain
a monetary judgment against the mortgagee or
lender or such other person or entity and such
other relief as may be available. The monetary
judgment may, in the court’s discretion, include
the attorneys fees and other expenses incurred
by the United States in connection with the action. In an action under this subsection, the validity and appropriateness of the Secretary’s determination or order imposing the penalty shall
not be subject to review.
(f) Settlement by Secretary
The Secretary may compromise, modify, or
remit any civil money penalty which may be, or
has been, imposed under this section.
(g) ‘‘Knowingly’’ defined
For purposes of this section, a person acts
knowingly when a person has actual knowledge
of acts or should have known of the acts.
(h) Regulations
The Secretary shall issue such regulations as
the Secretary deems appropriate to implement
this section.
(i) Deposit of penalties in insurance funds
Notwithstanding any other provision of law,
all civil money penalties collected under this
section shall be deposited in the appropriate insurance fund or funds established under this
chapter, as determined by the Secretary.
(June 27, 1934, ch. 847, title V, § 536, as added Pub.
L. 101–235, title I, § 107(a), Dec. 15, 1989, 103 Stat.
2000; amended Pub. L. 104–208, div. A, title II,
§ 2704(d)(13)(B), Sept. 30, 1996, 110 Stat. 3009–490;
Pub. L. 105–65, title V, § 553, Oct. 27, 1997, 111
Stat. 1413; Pub. L. 105–276, title VI, § 601(g), (h),
Oct. 21, 1998, 112 Stat. 2674; Pub. L. 108–447, div.
I, title II, § 219(a), Dec. 8, 2004, 118 Stat. 3319; Pub.
L. 109–171, title II, § 2102(b), Feb. 8, 2006, 120 Stat.
9; Pub. L. 109–173, § 9(f)(2), Feb. 15, 2006, 119 Stat.
3618; Pub. L. 111–22, div. A, title II, § 203(f), May
20, 2009, 123 Stat. 1647.)
AMENDMENTS
2009—Subsec. (b)(1). Pub. L. 111–22, § 203(f)(1)(A)(i), inserted ‘‘or any of its owners, officers, or directors’’
after ‘‘mortgagee or lender’’ in introductory provisions.
Subsec. (b)(1)(H). Pub. L. 111–22, § 203(f)(1)(A)(ii), substituted ‘‘subchapter I or II of this chapter, or any implementing regulation, handbook, or mortgagee letter
that is issued under this chapter.’’ for ‘‘subchapter I, II,
or IX–A (as such subchapter existed immediately before
December 15, 1989) of this chapter or any implementing
regulation or handbook that is issued under this chapter.’’
Subsec. (b)(1)(K), (L). Pub. L. 111–22, § 203(f)(1)(A)(iii),
added subpars. (K) and (L).
Subsec. (b)(2)(D). Pub. L. 111–22, § 203(f)(1)(B), added
subpar. (D).
Subsec. (b)(3). Pub. L. 111–22, § 203(f)(1)(C), amended
par. (3) generally. Prior to amendment, text read as follows: ‘‘Before taking action to impose a civil money
penalty for a violation under paragraph (1)(D) or (F), or
paragraph (2)(A), (B), or (C), the Secretary shall inform
the Attorney General of the United States.’’

Page 778

Subsec. (g). Pub. L. 111–22, § 203(f)(2), substituted ‘‘For
purposes of this section, a person acts knowingly when
a person has actual knowledge of acts or should have
known of the acts.’’ for ‘‘The term ‘knowingly’ means
having actual knowledge of or acting with deliberate
ignorance of or reckless disregard for the prohibitions
under this section.’’
2006—Subsec. (b)(1)(B)(ii). Pub. L. 109–173 substituted
‘‘Deposit Insurance Fund’’ for ‘‘Bank Insurance Fund
for banks and through the Savings Association Insurance Fund for savings associations’’.
Pub.
L.
109–171
repealed
Pub.
L.
104–208,
§ 2704(d)(13)(B). See 1996 Amendment note below.
2004—Subsec. (b)(1)(J). Pub. L. 108–447 added subpar.
(J).
1998—Subsec. (a)(2). Pub. L. 105–276, § 601(g), inserted
second paragraph.
Subsec. (b)(1)(I). Pub. L. 105–276, § 601(h), which directed the addition of subpar. (I) after subpar. ‘‘(h)’’,
was executed by adding subpar. (I) after subpar. (H), to
reflect the probable intent of Congress.
1997—Pub. L. 105–65, § 553(a), amended section catchline generally, substituting ‘‘mortgagees, lenders, and
other participants in FHA programs’’ for ‘‘mortgagees
and lenders’’.
Subsec. (a)(1). Pub. L. 105–65, § 553(b)(1), substituted
‘‘If a mortgagee approved under the chapter, a lender
holding a contract of insurance under subchapter I, or
a principal, officer, or employee of such mortgagee or
lender, or other person or entity participating in either
an insured mortgage or subchapter I loan transaction
under this chapter or providing assistance to the borrower in connection with any such loan, including sellers of the real estate involved, borrowers, closing
agents, title companies, real estate agents, mortgage
brokers, appraisers, loan correspondents and dealers,
knowingly and materially violates any applicable provision of subsection (b), the Secretary may impose a
civil money penalty on the mortgagee or lender, or
such other person or entity, in accordance with this
section. The penalty under this paragraph shall be in
addition to any other available civil remedy or any
available criminal penalty, and may be imposed whether or not the Secretary imposes other administrative
sanctions.’’ for ‘‘Whenever a mortgagee approved under
this chapter, or a lender holding a contract of insurance under subchapter I of this chapter, knowingly and
materially violates any of the provisions of subsection
(b), the Secretary may impose a civil money penalty on
the mortgagee or lender in accordance with the provisions of this section.’’
Subsec. (a)(2). Pub. L. 105–65, § 553(b)(2), inserted ‘‘or
such other person or entity’’ after ‘‘lender’’ in first sentence and substituted ‘‘the provisions of subsection
(b)(1)’’ for ‘‘provision of subsection (b)(1)’’ in second
sentence.
Subsec. (b)(2). Pub. L. 105–65, § 553(c)(1), (2), added par.
(2) and redesignated former par. (2) as (3).
Subsec. (b)(3). Pub. L. 105–65, § 553(c)(1), (3), redesignated par. (2) as (3) and substituted ‘‘or (F), or paragraph (2)(A), (B), or (C)’’ for ‘‘or paragraph (1)(F)’’.
Subsec. (c)(1)(B). Pub. L. 105–65, § 553(d)(1), inserted
‘‘or such other person or entity’’ after ‘‘lender’’.
Subsec. (d)(1). Pub. L. 105–65, § 553(d)(2), inserted ‘‘or
such other person or entity’’ after ‘‘lender’’ and substituted ‘‘parts 24 and 25’’ for ‘‘part 25’’.
Subsec. (e). Pub. L. 105–65, § 553(d)(3), inserted ‘‘or
such other person or entity’’ after ‘‘lender’’ in two
places.
1996—Subsec.
(b)(1)(B)(ii).
Pub.
L.
104–208,
§ 2704(d)(13)(B), which directed the amendment of section 526(b)(1)(B)(ii) of the National Housing Act by substituting ‘‘Deposit Insurance Fund’’ for ‘‘Bank Insurance Fund for banks and through the Savings Association Insurance Fund for savings associations’’ and
which substitution was probably intended by Congress
to be made in subsec. (b)(1)(B)(ii) of this section, section 536 of the National Housing Act, was repealed by
Pub. L. 109–171. See Effective Date of 1996 Amendment
note below and 2006 Amendment note above.

Page 779

TITLE 12—BANKS AND BANKING

EFFECTIVE DATE OF 2006 AMENDMENT
Amendment by Pub. L. 109–173 effective Mar. 31, 2006,
see section 9(j) of Pub. L. 109–173, set out as a note
under section 24 of this title.
Amendment by Pub. L. 109–171 effective no later than
the first day of the first calendar quarter that begins
after the end of the 90-day period beginning Feb. 8, 2006,
see section 2102(c) of Pub. L. 109–171, set out as a Merger
of BIF and SAIF note under section 1821 of this title.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104–208 effective Jan. 1, 1999,
if no insured depository institution is a savings association on that date, see section 2704(c) of Pub. L.
104–208, formerly set out as a note under section 1821 of
this title.
EFFECTIVE DATE
Pub. L. 101–235, title I, § 107(b), Dec. 15, 1989, 103 Stat.
2003, provided that: ‘‘The amendment made by subsection (a) [enacting this section] shall apply only with
respect to—
‘‘(1) violations referred to in the amendment that
occur on or after the effective date of this section
[Dec. 15, 1989]; and
‘‘(2) in the case of a continuing violation (as determined by the Secretary of Housing and Urban Development), any portion of a violation referred to in the
amendment that occurs on or after such date.’’
REGULATIONS
Pub. L. 105–65, title V, § 541, Oct. 27, 1997, 111 Stat.
1412, provided that:
‘‘(a) ISSUANCE OF NECESSARY REGULATIONS.—Notwithstanding section 7(o) of the Department of Housing and
Urban Development Act [42 U.S.C. 3535(o)] or part 10 of
title 24, Code of Federal Regulations (as in existence on
the date of enactment of this Act [Oct. 27, 1997]), the
Secretary shall issue such regulations as the Secretary
determines to be necessary to implement this subtitle
[subtitle C (§§ 541–564) of title V of Pub. L. 105–65, enacting section 1437z–1 of Title 42, The Public Health and
Welfare, amending this section, sections 1708, 1715z–4a,
1715z–19, and 1735f–15 of this title, section 1516 of Title
18, Crimes and Criminal Procedure, section 6103 of Title
26, Internal Revenue Code, and sections 503 and 1437z of
Title 42, and enacting provisions set out as notes under
section 1735f–15 of this title and sections 503 and 1437z–1
of Title 42] and the amendments made by this subtitle
in accordance with section 552 or 553 of title 5, United
States Code, as determined by the Secretary.
‘‘(b) USE OF EXISTING REGULATIONS.—In implementing
any provision of this subtitle, the Secretary may, in
the discretion of the Secretary, provide for the use of
existing regulations to the extent appropriate, without
rulemaking.’’

§ 1735f–15. Civil money penalties against multifamily mortgagors
(a) In general
The penalties set forth in this section shall be
in addition to any other available civil remedy
or any available criminal penalty, and may be
imposed whether or not the Secretary imposes
other administrative sanctions. The Secretary
may not impose penalties under this section for
violations a material cause of which are the failure of the Department, an agent of the Department, or a public housing agency to comply
with existing agreements.

§ 1735f–15

(b) Penalty for violation of agreement as condition of transfer of physical assets, flexible
subsidy loan, capital improvement loan,
modification of mortgage terms, or workout
agreement
(1) Authority
Whenever a mortgagor of property that includes 5 or more living units and that has a
mortgage insured, co-insured, or held pursuant
to this chapter, who has agreed in writing, as
a condition of a transfer of physical assets, a
flexible subsidy loan, a capital improvement
loan, a modification of the mortgage terms, or
a workout agreement, to use nonproject income to make cash contributions for payments due under the note and mortgage, for
payments to the reserve for replacements, to
restore the project to good physical condition,
or to pay other project liabilities, knowingly
and materially fails to comply with any of
these commitments, the Secretary may impose a civil money penalty on that mortgagor,
on a general partner of a partnership mortgagor, or on any officer or director of a corporate mortgagor in accordance with the provisions of this section.
(2) Amount of penalty
The amount of the penalty, as determined by
the Secretary, for a violation of this subsection may not exceed the amount of the loss
the Secretary would experience at a foreclosure sale, or a sale after foreclosure, of the
property involved.
(c) Other violations
(1)(A) Liable parties
The Secretary may also impose a civil
money penalty under this section on—
(i) any mortgagor of a property that includes 5 or more living units and that has a
mortgage insured, coinsured, or held pursuant to this chapter;
(ii) any general partner of a partnership
mortgagor of such property;
(iii) any officer or director of a corporate
mortgagor;
(iv) any agent employed to manage the
property that has an identity of interest
with the mortgagor, with the general partner of a partnership mortgagor, or with any
officer or director of a corporate mortgagor
of such property; or
(v) any member of a limited liability company that is the mortgagor of such property
or is the general partner of a limited partnership mortgagor or is a partner of a general partnership mortgagor.
(B) Violations
A penalty may be imposed under this section
upon any liable party under subparagraph (A)
that knowingly and materially takes any of
the following actions:
(i) Conveyance, transfer, or encumbrance
of any of the mortgaged property, or permitting the conveyance, transfer, or encumbrance of such property, without the prior
written approval of the Secretary.
(ii) Assignment, transfer, disposition, or
encumbrance of any personal property of the

§ 1735f–15

TITLE 12—BANKS AND BANKING

project, including rents, other revenues, or
contract rights, or paying out any funds, except for reasonable operating expenses and
necessary repairs, without the prior written
approval of the Secretary.
(iii) Conveyance, assignment, or transfer
of any beneficial interest in any trust holding title to the property, or the interest of
any general partner in a partnership owning
the property, or any right to manage or receive the rents and profits from the mortgaged property, without the prior written
approval of the Secretary.
(iv) Remodeling, adding to, reconstructing,
or demolishing any part of the mortgaged
property or subtracting from any real or personal property of the project, without the
prior written approval of the Secretary.
(v) Requiring, as a condition of the occupancy or leasing of any unit in the project,
any consideration or deposit other than the
prepayment of the first month’s rent, plus a
security deposit in an amount not in excess
of 1 month’s rent, to guarantee the performance of the covenants of the lease.
(vi) Not holding any funds collected as security deposits separate and apart from all
other funds of the project in a trust account,
the amount of which at all times equals or
exceeds the aggregate of all outstanding obligations under the account.
(vii) Payment for services, supplies, or materials which exceeds $500 and substantially
exceeds the amount ordinarily paid for such
services, supplies, or materials in the area
where the services are rendered or the supplies or materials furnished.
(viii) Failure to maintain at any time the
mortgaged property, equipment, buildings,
plans, offices, apparatus, devices, books,
contracts, records, documents, and other related papers (including failure to keep copies
of all written contracts or other instruments
which affect the mortgaged property) in reasonable condition for proper audit and for
examination and inspection at any reasonable time by the Secretary or any duly authorized agents of the Secretary.
(ix) Failure to maintain the books and accounts of the operations of the mortgaged
property and of the project in accordance
with requirements prescribed by the Secretary.
(x) Failure to furnish the Secretary, by the
expiration of the 90-day period beginning on
the first day after the completion of each
fiscal year (unless the Secretary has approved an extension of the 90-day period in
writing), with a complete annual financial
report, in accordance with requirements prescribed by the Secretary, including requirements that the report be—
(I) based upon an examination of the
books and records of the mortgagor;
(II) prepared and certified to by an independent public accountant or a certified
public accountant (unless the Secretary
has waived this requirement in writing);
and
(III) certified to by the mortgagor or an
authorized representative of the mortgagor.

Page 780

The Secretary shall approve an extension
where the mortgagor demonstrates that failure to comply with this clause is due to
events beyond the control of the mortgagor.
(xi) At the request of the Secretary, the
agents of the Secretary, the employees of
the Secretary, or the attorneys of the Secretary, failure to furnish monthly occupancy
reports or failure to provide specific answers
to questions upon which information is
sought relative to income, assets, liabilities,
contracts, the operation and condition of the
property, or the status of the mortgage.
(xii) Failure to make promptly all payments due under the note and mortgage, including mortgage insurance premiums, tax
and insurance escrow payments, and payments to the reserve for replacements when
there is adequate project income available
to make such payments.
(xiii) Failure to maintain the premises, accommodations, any living unit in the
project, and the grounds and equipment appurtenant thereto in good repair and condition in accordance with regulations and requirements of the Secretary, except that
nothing in this clause shall have the effect
of altering the provisions of an existing regulatory agreement or federally insured
mortgage on the property.
(xiv) Failure, by a mortgagor, a general
partner of a partnership mortgagor, or an officer or director of a corporate mortgagor, to
provide management for the project that is
acceptable to the Secretary pursuant to regulations and requirements of the Secretary.
(xv) Failure to provide access to the books,
records, and accounts related to the operations of the mortgaged property and of the
project.
The pay out of surplus cash, as defined by and
provided for in the regulatory agreement,
shall not constitute a violation of this subsection.
(2) Amount of penalty
A penalty imposed for a violation under this
subsection, as determined by the Secretary,
may not exceed $25,000.
(d) Agency procedures
(1) Establishment
The Secretary shall establish standards and
procedures governing the imposition of civil
money penalties under subsections (b) and (c).
These standards and procedures—
(A) shall provide for the Secretary or other
department official (such as the Assistant
Secretary for Housing) to make the determination to impose a penalty;
(B) shall provide for the imposition of a
penalty only after the mortgagor, general
partner of a partnership mortgagor, officer
or director of a corporate mortgagor, or
identity of interest agent employed to manage the property has been given an opportunity for a hearing on the record; and
(C) may provide for review by the Secretary of any determination or order, or interlocutory ruling, arising from a hearing.

Page 781

TITLE 12—BANKS AND BANKING

(2) Final orders
If no hearing is requested within 15 days of
receipt of the notice of opportunity for hearing, the imposition of the penalty shall constitute a final and unappealable determination. If the Secretary reviews the determination or order, the Secretary may affirm, modify, or reverse that determination or order. If
the Secretary does not review the determination or order within 90 days of the issuance of
the determination or order, the determination
or order shall be final.
(3) Factors in determining amount of penalty
In determining the amount of a penalty
under subsection (b) or (c), consideration shall
be given to such factors as the gravity of the
offense, any history of prior offenses (including offenses occurring before December 15,
1989), ability to pay the penalty, injury to the
tenants, injury to the public, benefits received, deterrence of future violations, and
such other factors as the Secretary may determine in regulations to be appropriate.
(4) Reviewability of imposition of penalty
The Secretary’s determination or order imposing a penalty under subsection (b) or (c)
shall not be subject to review, except as provided in subsection (e).
(5) Payment of penalty
No payment of a civil money penalty levied
under this section shall be payable out of
project income.
(e) Judicial review of agency determination
(1) In general
After exhausting all administrative remedies established by the Secretary under subsection (d)(1), an entity or person against
whom the Secretary has imposed a civil
money penalty under subsection (b) or (c) may
obtain a review of the penalty and such ancillary issues as may be addressed in the notice
of determination to impose a penalty under
subsection (d)(1)(A) in the appropriate court of
appeals of the United States, by filing in such
court, within 20 days after the entry of such
order or determination, a written petition
praying that the Secretary’s order or determination be modified or be set aside in whole
or in part.
(2) Objections not raised in hearing
The court shall not consider any objection
that was not raised in the hearing conducted
pursuant to subsection (d)(1) unless a demonstration is made of extraordinary circumstances causing the failure to raise the objection. If any party demonstrates to the satisfaction of the court that additional evidence
not presented at such hearing is material and
that there were reasonable grounds for the
failure to present such evidence at the hearing, the court shall remand the matter to the
Secretary for consideration of such additional
evidence.
(3) Scope of review
The decisions, findings, and determinations
of the Secretary shall be reviewed pursuant to
section 706 of title 5.

§ 1735f–15

(4) Order to pay penalty
Notwithstanding any other provision of law,
in any such review, the court shall have the
power to order payment of the penalty imposed by the Secretary.
(f) Civil money penalties against multifamily
mortgagors, general partners of partnership
mortgagors, officers and directors of corporate mortgagors, and certain managing
agents
If a mortgagor, general partner of a partnership mortgagor, officer or director of a corporate mortgagor, or identity of interest agent
employed to manage the property fails to comply with the Secretary’s determination or order
imposing a civil money penalty under subsection (b) or (c), after the determination or
order is no longer subject to review as provided
by subsections (d)(1) and (e), the Secretary may
request the Attorney General of the United
States to bring an action in an appropriate
United States district court to obtain a monetary judgment against the mortgagor, general
partner of a partnership mortgagor, officer or
director of a corporate mortgagor, or identity of
interest agent employed to manage the property
and such other relief as may be available. The
monetary judgment may, in the court’s discretion, include the attorneys fees and other expenses incurred by the United States in connection with the action. In an action under this
subsection, the validity and appropriateness of
the Secretary’s determination or order imposing
the penalty shall not be subject to review.
(g) Settlement by Secretary
The Secretary may compromise, modify, or
remit any civil money penalty which may be, or
has been, imposed under this section.
(h) ‘‘Knowingly’’ defined
The term ‘‘knowingly’’ means having actual
knowledge of or acting with deliberate ignorance of or reckless disregard for the prohibitions under this section.
(i) Regulations
The Secretary shall issue such regulations as
the Secretary deems appropriate to implement
this section.
(j) Deposit of penalties in insurance funds
Notwithstanding any other provision of law,
all civil money penalties collected under this
section shall be deposited in the fund established under section 1715z–1a(j) of this title.
(k) Identity of interest managing agent
In this section, the terms ‘‘agent employed to
manage the property that has an identity of interest’’ and ‘‘identity of interest agent’’ mean
an entity—
(1) that has management responsibility for a
project;
(2) in which the ownership entity, including
its general partner or partners (if applicable)
and its officers or directors (if applicable), has
an ownership interest; and
(3) over which the ownership entity exerts
effective control.
(June 27, 1934, ch. 847, title V, § 537, as added Pub.
L. 101–235, title I, § 108(a), Dec. 15, 1989, 103 Stat.

§ 1735f–16

TITLE 12—BANKS AND BANKING

2003; amended Pub. L. 105–65, title V, § 561(a),
Oct. 27, 1997, 111 Stat. 1414; Pub. L. 108–447, div.
I, title II, § 219(b), (c), Dec. 8, 2004, 118 Stat. 3319.)

‘‘(2) in the case of a continuing violation (as determined by the Secretary of Housing and Urban Development), any portion of a violation that occurs on or
after that date.’’

AMENDMENTS
2004—Subsec. (c)(1)(B)(ii). Pub. L. 108–447, § 219(b), inserted ‘‘other revenues, or contract rights,’’ after
‘‘rents,’’.
Subsec. (c)(1)(B)(x). Pub. L. 108–447, § 219(c), amended
cl. (x) generally. Prior to amendment, cl. (x) read as
follows: ‘‘Failure to furnish the Secretary, by the expiration of the 60-day period beginning on the 1st day
after the completion of each fiscal year, with a complete annual financial report based upon an examination of the books and records of the mortgagor prepared and certified to by an independent public accountant or a certified public accountant and certified
to by an officer of the mortgagor, unless the Secretary
has approved an extension of the 60-day period in writing. The Secretary shall approve an extension where
the mortgagor demonstrates that failure to comply
with this subparagraph is due to events beyond the control of the mortgagor.’’
1997—Subsec. (b)(1). Pub. L. 105–65, § 561(a)(1), substituted ‘‘on that mortgagor, on a general partner of a
partnership mortgagor, or on any officer or director of
a corporate mortgagor’’ for ‘‘on that mortgagor’’.
Subsec. (c). Pub. L. 105–65, § 561(a)(2)(A), substituted
‘‘Other violations’’ for ‘‘Violations of regulatory agreement for which penalty may be imposed’’ in heading.
Subsec. (c)(1). Pub. L. 105–65, § 561(a)(2)(B)(i), (iv), substituted ‘‘violation of this subsection’’ for ‘‘violation of
such agreement’’ before period at end of closing provisions and struck out heading and introductory provisions. Introductory provisions read as follows: ‘‘The
Secretary may also impose a civil money penalty under
this section on any mortgagor of property that includes
5 or more living units and that has a mortgage insured,
co-insured, or held pursuant to this chapter for any
knowing and material violation of the regulatory
agreement executed by the mortgagor, as follows:’’.
Subsec. (c)(1)(A). Pub. L. 105–65, § 561(a)(2)(B)(i), (ii),
added subpar. (A) and redesignated former subpar. (A)
as cl. (i) of subpar. (B).
Subsec.
(c)(1)(B)
to
(L).
Pub.
L.
105–65,
§ 561(a)(2)(B)(i)–(iii), inserted heading and introductory
provisions of subpar. (B), redesignated former subpars.
(A) to (L) as cls. (i) to (xii) of subpar. (B), respectively,
and added cls. (xiii) to (xv).
Subsec. (d)(1)(B). Pub. L. 105–65, § 561(a)(3)(A), inserted
‘‘, general partner of a partnership mortgagor, officer
or director of a corporate mortgagor, or identity of interest agent employed to manage the property’’ after
‘‘mortgagor’’.
Subsec. (d)(5). Pub. L. 105–65, § 561(a)(3)(B), added par.
(5).
Subsec. (e)(1). Pub. L. 105–65, § 561(a)(4), substituted
‘‘an entity or person’’ for ‘‘a mortgagor’’.
Subsec. (f). Pub. L. 105–65, § 561(a)(5), (6), substituted
‘‘Civil money penalties against multifamily mortgagors, general partners of partnership mortgagors, officers and directors of corporate mortgagors, and certain
managing agents’’ for ‘‘Action to collect penalty’’ in
heading and inserted ‘‘, general partner of a partnership mortgagor, officer or director of a corporate mortgagor, or identity of interest agent employed to manage the property’’ after ‘‘mortgagor’’ in two places in
text.
Subsec. (k). Pub. L. 105–65, § 561(a)(7), added subsec.
(k).
EFFECTIVE DATE OF 1997 AMENDMENT
Pub. L. 105–65, title V, § 561(c), Oct. 27, 1997, 111 Stat.
1416, provided that: ‘‘The amendments made by subsection (a) [amending this section] shall apply only
with respect to—
‘‘(1) violations that occur on or after the effective
date of the final regulations implementing the
amendments made by this section; and

Page 782

EFFECTIVE DATE
Pub. L. 101–235, title I, § 108(b), Dec. 15, 1989, 103 Stat.
2007, provided that: ‘‘The amendment made by subsection (a) [enacting this section] shall apply only with
respect to violations referred to in the amendment that
occur on or after the effective date of this section [Dec.
15, 1989].’’
IMPLEMENTATION
Pub. L. 105–65, title V, § 561(b), Oct. 27, 1997, 111 Stat.
1416, provided that:
‘‘(1) PUBLIC COMMENT.—The Secretary shall implement the amendments made by this section [amending
this section and enacting provisions set out as a note
under this section] by regulation issued after notice
and opportunity for public comment. The notice shall
seek comments primarily as to the definitions of the
terms ‘ownership interest in’ and ‘effective control’, as
those terms are used in the definition of the terms
‘agent employed to manage the property that has an
identity of interest’ and ‘identity of interest agent’.
‘‘(2) TIMING.—A proposed rule implementing the
amendments made by this section shall be published
not later than 1 year after the date of enactment of
this Act [Oct. 27, 1997].’’

§ 1735f–16. Annual audited financial statements
With respect to fiscal year 1989 and for every
fiscal year thereafter, the Secretary shall make
available to the public a financial statement of
the insurance funds established under this chapter that will present their financial condition on
a cash and accrual basis, consistent with generally accepted accounting principles. Each financial statement shall be audited by an independent accounting firm selected by the Secretary
and the results of such audit shall be made
available to the public.
(June 27, 1934, ch. 847, title V, § 538, as added Pub.
L. 101–235, title I, § 131, Dec. 15, 1989, 103 Stat.
2026.)
§ 1735f–17. Examinations and sanctions for certain violations
(a) Examinations and sanctions
(1) In connection with any examination of a
mortgagee approved by the Secretary pursuant
to this chapter, the Secretary shall assess the
performance of the mortgagee in meeting the requirements of sections 1709(t),1 1715n(a)(7)(B),1
and 1735f–13 of this title. Where the Secretary
determines that a mortgagee is not in compliance with these requirements, the Secretary
shall refer the matter to the Mortgagee Review
Board for investigation and appropriate action.
(2) Not later than 180 days after November 28,
1990, the Secretary shall by notice establish a
procedure under which (A) any person may file a
request that the Secretary determine whether a
mortgagee is in compliance with sections
1709(t),1 1715n(a)(7)(B),1 and 1735f–13 of this title,
(B) the Secretary shall inform the person of the
disposition of the request, and (C) the Secretary
shall publish in the Federal Register the disposition of any case referred by the Secretary to the
1 See

References in Text note below.

Page 783

TITLE 12—BANKS AND BANKING

Mortgagee Review Board. Such procedures shall
be established by regulation under section 553 of
title 5. The Secretary shall issue regulations
based on the initial notice before the expiration
of the 8-month period beginning on the date of
the notice.
(3) Omitted.
(b) Monitoring and review
The Secretary shall continually monitor and
undertake a thorough review of the implementation of this section to assess the impact of the
section on the lending practices of mortgagees
and the availability of mortgages insured under
this chapter. The Secretary shall monitor the
availability of credit, the number and type of
lenders participating in the program, whether
there is any change in the composition or practices of such lenders and any other factors the
Secretary considers appropriate. The Secretary
shall submit to the Congress findings detailing
the results of such monitoring and review not
later than 18 months after November 28, 1990.
(June 27, 1934, ch. 847, title V, § 539, as added Pub.
L. 101–625, title III, § 330(b), Nov. 28, 1990, 104
Stat. 4139.)
REFERENCES IN TEXT
Section 1709(t) of this title, referred to in subsec.
(a)(1), (2), was redesignated section 1709(u) of this title
by Pub. L. 106–377, § 1(a)(1) [title II, § 209(a)(1)], Oct. 27,
2000, 114 Stat. 1441, 1441A–25.
Section 1715n(a)(7)(B) of this title, referred to in subsec.
(a)(1),
(2),
was
redesignated
section
1715n(a)(7)(A)(ii) of this title by Pub. L. 107–116, title VI,
§ 615(3), Jan. 10, 2002, 115 Stat. 2225.
CODIFICATION
Paragraph (3) of subsection (a), which required the
Secretary to submit to Congress, not less than annually, a report on actions taken to carry out this section, terminated, effective May 15, 2000, pursuant to
section 3003 of Pub. L. 104–66, as amended, set out as a
note under section 1113 of Title 31, Money and Finance.
See, also, page 103 of House Document No. 103–7.

§ 1735f–18. Information regarding early defaults
and foreclosures on insured mortgages
(a) In general
The Secretary of Housing and Urban Development shall collect and maintain information regarding early defaults on mortgages as provided
under this section. The Secretary shall make
such information available for public inspection
upon request. Information shall be collected
quarterly with respect to each applicable collection period (as such term is defined in subsection (c)) and shall be available for inspection
not more than 30 days after the conclusion of
the calendar quarter relating to each such period. Information shall first be made available
under this section for the applicable collection
period relating to the first calendar quarter ending more than 180 days after November 28, 1990.
(b) Contents
(1) Mortgage lender analysis
Information collected under this section
shall include, for each lender originating
mortgages during the applicable collection period that are insured pursuant to section 1709
of this title and secured by property in a des-

§ 1735f–18

ignated census tract, the following information with respect to such mortgages:
(A) The name of the lender and the number
of each designated census tract in which the
lender originated 1 or more such mortgages
during the applicable collection period.
(B) The total number of such mortgages
originated by such lender during the applicable collection period in each designated census tract and the number of mortgages originated each year in each designated census
tract.
(C) The total number of defaults and foreclosures on such mortgages during the applicable collection period in each designated
census tract and the number of defaults and
foreclosures in each designated census tract
in each year of the period.
(D) For each designated census tract, the
percentage of such lender’s total insured
mortgages originated during each year of
the applicable collection period (with respect to properties within such census tract)
on which defaults or foreclosures have occurred during the applicable collection period.
(E) The total of all such originations, defaults, and foreclosures on insured mortgages originated by such lender during the
applicable collection period for all designated census tracts and the percentage of
the total number of such lender’s insured
mortgage originations on which defaults or
foreclosures have occurred during the applicable collection period.
(2) Other information
Information collected under this section
shall also include the following:
(A) For each lender referred to under paragraph (1), the total number of insured mortgages originated by the lender secured by
properties not located in a designated census
tract, the total number of defaults and foreclosures on such mortgages, and the percentage of such mortgages originated on which
defaults or foreclosures occurred during the
applicable collection period.
(B) For each designated census tract, the
total number of mortgages originated during
the applicable collection period that are insured pursuant to section 1709 of this title,
the number of defaults and foreclosures occurring on such mortgages during such period, and the percentage of the total insured
mortgage originations during the period on
which defaults or foreclosures occurred.
(c) Annual reports
The Secretary shall submit to the Congress
annually a report containing the information
collected and maintained under subsection (b)
for the relevant year.
(d) Definitions
For purposes of this section:
(1) Applicable collection period
The term ‘‘applicable collection period’’
means the 5-year period ending on the last day
of the calendar quarter for which information
under this section is collected.

§ 1735f–19

TITLE 12—BANKS AND BANKING

(2) Designated census tract
The term ‘‘designated census tract’’ means a
census tract located within a metropolitan
statistical area, as defined pursuant to regulations issued by the Secretary of Commerce.
(June 27, 1934, ch. 847, title V, § 540, as added Pub.
L. 101–625, title III, § 335(a), Nov. 28, 1990, 104
Stat. 4142.)
AVAILABILITY OF INFORMATION REGARDING DEFAULT/
CLAIM RATES DURING TRANSITION
Pub. L. 101–625, title III, § 335(b), Nov. 28, 1990, 104
Stat. 4144, provided that: ‘‘During the period beginning
on the date of the enactment of this Act [Nov. 28, 1990]
and ending on the date of the initial availability of information under section 540 of the National Housing
Act [12 U.S.C. 1735f–18] (as added by subsection (a)), the
Secretary of Housing and Urban Development shall
make publicly available all reports regarding Default/
Claim Rates per Regional Office for Fiscal Year 1990
Endorsements that are produced by the Department of
Housing and Urban Development during such period.’’

§ 1735f–19. Partial payment of claims on defaulted mortgages and in connection with
mortgage restructuring
(a) Defaulted mortgages
Notwithstanding any other provision of law, if
the Secretary is requested to accept assignment
of a mortgage insured by the Secretary that
covers a multifamily housing project (as such
term is defined in section 1701z–11(b) of this
title) or a health care facility (including a nursing home, intermediate care facility, or board
and care home (as those terms are defined in
section 1715w of this title), a hospital (as that
term is defined in section 1715z–7 of this title),
or a group practice facility (as that term is defined in section 1749aaa–5 of this title)) and the
Secretary determines that partial payment
would be less costly to the Federal Government
than other reasonable alternatives for maintaining the low-income character of the project, or
for keeping the health care facility operational
to serve community needs, the Secretary may
request the mortgagee, in lieu of assignment,
to—
(1) accept partial payment of the claim
under the mortgage insurance contract; and
(2) recast the mortgage, under such terms
and conditions as the Secretary may determine.
(b) Existing mortgages
Notwithstanding any other provision of law,
the Secretary, in connection with a mortgage
restructuring under section 514 of the Multifamily Assisted Housing Reform and Affordability
Act of 1997, may make a one time, nondefault
partial or full payment of claim under one or
more mortgage insurance contracts, which shall
include a determination by the Secretary or the
participating administrative entity, in accordance with the Multifamily Assisted Housing Reform and Affordability Act of 1997, of the market value of the project and a restructuring of
the mortgage, under such terms and conditions
as are permitted by section 517(a) of such Act.
(c) Repayment
As a condition to a partial claim payment
under this section, the mortgagor shall agree to

Page 784

repay to the Secretary the amount of such payment and such obligation shall be secured by a
second mortgage on the property on such terms
and conditions as the Secretary may determine.
(June 27, 1934, ch. 847, title V, § 541, as added Pub.
L. 103–233, title I, § 101(e), Apr. 11, 1994, 108 Stat.
357; amended Pub. L. 105–65, title II, § 210, title V,
§ 523(b), Oct. 27, 1997, 111 Stat. 1366, 1406; Pub. L.
106–74, title II, § 213(a), Oct. 20, 1999, 113 Stat.
1073.)
REFERENCES IN TEXT
The Multifamily Assisted Housing Reform and Affordability Act of 1997, referred to in subsec. (b), is title
V of Pub. L. 105–65, Oct. 27, 1997, 111 Stat. 1384. Sections
514 and 517(a) of the Act are set out as a note under section 1437f of Title 42, The Public Health and Welfare.
For complete classification of this Act to the Code, see
Short Title of 1997 Amendment note set out under section 1701 of this title and Tables.
AMENDMENTS
1999—Pub. L. 106–74, § 213(a)(1), substituted ‘‘defaulted
mortgages and in connection with mortgage restructuring’’ for ‘‘multifamily housing projects and health care
facilities’’ in section catchline.
Subsec. (b). Pub. L. 106–74, § 213(a)(2), substituted
‘‘partial or full payment of claim under one or more
mortgage insurance contracts’’ for ‘‘partial payment of
the claim under the mortgage insurance contract’’.
1997—Pub. L. 105–65, § 210(1), inserted ‘‘and health care
facilities’’ after ‘‘housing projects’’ in section catchline.
Subsec. (a). Pub. L. 105–65, § 523(b)(1), substituted ‘‘Defaulted mortgages’’ for ‘‘Authority’’ in heading.
Pub. L. 105–65, § 210(2)(B), inserted ‘‘or for keeping the
health care facility operational to serve community
needs,’’ after ‘‘character of the project,’’ in introductory provisions.
Pub. L. 105–65, § 210(2)(A), which directed the insertion, in introductory provisions, of ‘‘or a health care facility (including a nursing home, intermediate care facility, or board and care home (as those terms are defined in section 1715w of this title), a hospital (as that
term is defined in section 1715z–7 of this title), or a
group practice facility (as that term is defined in section 1749aaa–5 of this title))’’ after ‘‘section 1701z–11(b)
of this title’’, was executed by inserting the language
after ‘‘section 1701z–11(b) of this title)’’ to reflect the
probable intent of Congress.
Subsecs. (b), (c). Pub. L. 105–65, § 523(b)(2), (3), added
subsec. (b) and redesignated former subsec. (b) as (c).

§ 1735f–20. Authorization of appropriations for
General and Special Risk Insurance Funds
There are authorized to be appropriated such
sums as may be necessary for each of fiscal
years 1994 and 1995, to be allocated in any manner that the Secretary determines appropriate,
for the following costs incurred in conjunction
with programs authorized under the General Insurance Fund, as provided by section 1735c of
this title, and the Special Risk Insurance Fund,
as provided by section 1715z–3 of this title:
(1) The cost to the Government, as defined in
section 661a 1 of title 2, of new insurance commitments.
(2) The cost to the Government, as defined in
section 661a 1 of title 2, of modifications to existing loans, loan guarantees, or insurance
commitments.
(3) The cost to the Government, as defined in
section 661a 1 of title 2, of loans provided under
section 1701z–11(f) of this title.
1 See

References in Text note below.

Page 785

TITLE 12—BANKS AND BANKING

(4) The costs of the rehabilitation of multifamily housing projects (as defined in section
1701z–11(b) of this title) upon disposition by
the Secretary.
(June 27, 1934, ch. 847, title V, § 542, as added Pub.
L. 103–233, title I, § 105(c), Apr. 11, 1994, 108 Stat.
363.)
REFERENCES IN TEXT
Section 661a of title 2, referred to in pars. (1) to (3),
was in the original ‘‘section 502 of the Congressional
Budget Act’’, which was translated as meaning ‘‘section 502 of the Congressional Budget Act of 1974’’ to reflect the probable intent of Congress.

§ 1735g. Mortgage relief for homeowners who are
unemployed as result of closing of Federal
installation
(a) Definitions
For the purposes of this section—
(1) The term ‘‘mortgage’’ means a mortgage
which (A) is insured under the National Housing Act [12 U.S.C. 1701 et seq.], or (B) secures
a home loan guaranteed or insured under the
Servicemen’s Readjustment Act of 1944 or
chapter 37 of title 38.
(2) The term ‘‘Federal mortgage agency’’
means—
(A) The Secretary of Housing and Urban
Development when used in connection with
mortgages insured under the National Housing Act, and
(B) the Secretary of Veterans Affairs when
used in connection with mortgages securing
home loans guaranteed or insured under the
Servicemen’s Readjustment Act of 1944 or
chapter 37 of title 38.
(3) The term ‘‘distressed mortgagor’’ means
an individual who—
(A) was employed by the Federal Government at, or was assigned as a serviceman to,
a military base or other Federal installation
and whose employment or service at such
base or installation was terminated subsequent to November 1, 1964, as the result of
the closing (in whole or in part) of such base
or installation; and
(B) is the owner-occupant of a dwelling situated at or near such base or installation
and upon which there is a mortgage securing
a loan which is in default because of the inability of such individual to make payments
due under such mortgage.
(b) Application for, issuance and expiration of
certificate of moratorium
(1) Any distressed mortgagor, for the purpose
of avoiding foreclosure of his mortgage, may
apply to the appropriate Federal mortgage agency for a determination that suspension of his obligation to make payments due under such
mortgage during a temporary period is necessary in order to avoid such foreclosure.
(2) Upon receipt of an application made under
this subsection by a distressed mortgagor, the
Federal mortgage agency shall issue to such
mortgagor a certificate of moratorium if it determines, after consultation with the interested
mortgagee, that such action is necessary to
avoid foreclosure.

§ 1735g

(3) Prior to the issuance to any distressed
mortgagor of a certificate of moratorium under
paragraph (2), the Federal mortgage agency, the
mortgagor, and the mortgagee shall enter into a
binding agreement under which—
(A) the mortgagor will be required to make
payments to such agency, after the expiration
of such certificate, in an aggregate amount
equal to the amount paid by such agency on
behalf of such mortgagor as provided in subsection (c), together with interest thereon at a
rate not to exceed the rate provided in the
mortgage; the manner and time in which such
payments shall be made to be determined by
the Federal mortgage agency having due regard for the purposes sought to be achieved by
this section; and
(B) the Federal mortgage agency will be subrogated to the rights of the mortgagee to the
extent of payments made pursuant to such
certificate, which rights, however, shall be
subject to the prior right of the mortgagee to
receive the full amount payable under the
mortgage.
(4) Any certificate of moratorium issued under
this subsection shall expire on whichever of the
following dates is the earliest—
(A) two years from the date on which such
certificate was issued;
(B) thirty days after the date on which the
mortgagor gives notice in writing to the Federal mortgage agency that he is able to resume his obligation to make payments due
under his mortgage; or
(C) thirty days after the date on which the
Federal mortgage agency determines that the
mortgagor to whom such certificate was issued has ceased to be a distressed mortgagor
as defined in subsection (a)(3).
(c) Notice to mortgagee of assumption of mortgagor’s obligation by agency; amount of payments; suspension of payments by mortgagor; prohibition against further action to enforce or collect payments; liability of mortgagor upon expiration of certificate; notice of
expiration of certificate
(1) Whenever a Federal mortgage agency issues a certificate of moratorium to any distressed mortgagor with respect to any mortgage, it shall transmit to the mortgagee a copy
of such certificate, together with a notice stating that, while such certificate is in effect, such
agency will assume the obligation of such mortgagor to make payments due under the mortgage.
(2) Payments made by any Federal mortgage
agency pursuant to a certificate of moratorium
issued under this section with respect to the
mortgage of any distressed mortgagor may include, in addition to the payments referred to in
paragraph (1), an amount equal to the unpaid
payments under such mortgage prior to the issuance of such certificate, plus a reasonable allowance for foreclosure costs actually paid by the
mortgagee if a foreclosure action was dismissed
as a result of the issuance of a moratorium certificate. Payments by the Federal mortgage
agency may also include payments of taxes and
insurance premiums on the mortgaged property
as deemed necessary when these items are not

§ 1735g

TITLE 12—BANKS AND BANKING

provided for through payments to a tax and insurance account held by the interested mortgagee.
(3) While any certificate of moratorium issued
under this section is in effect with respect to the
mortgage of any distressed mortgagor, no further payments due under the mortgage shall be
required of such mortgagor, and no action (legal
or otherwise) shall be taken or maintained by
the mortgagee to enforce or collect such payments. Upon the expiration of such certificate,
the mortgagor shall again be liable for the payment of all amounts due under the mortgage in
accordance with its terms.
(4) Each Federal mortgage agency shall give
prompt notice in writing to the interested mortgagor and mortgagee of the expiration of any
certificate of moratorium issued by it under this
section.
(d) Regulations
The Federal mortgage agencies are authorized
to issue such individual and joint regulations as
may be necessary to carry out this section and
to insure the uniform administration thereof.
(e) Fund for extending financial assistance to
distressed mortgagors
There shall be in the Treasury (1) a fund which
shall be available to the Secretary of Housing
and Urban Development for the purpose of extending financial assistance in behalf of distressed mortgagors as provided in subsection (c)
and for paying administrative expenses incurred
in connection with such assistance, and (2) a
fund which shall be available to the Secretary of
Veterans Affairs for the same purpose, except
administrative expenses. The capital of each
such fund shall consist of such sums as may,
from time to time, be appropriated thereto, and
any sums so appropriated shall remain available
until expended. Receipts arising from the programs of assistance under subsection (c) shall be
credited to the funds from which such assistance
was extended. Moneys in either of such funds
not needed for current operations, as determined
by the Secretary of Housing and Urban Development, or the Secretary of Veterans Affairs, as
the case may be, shall be invested in bonds or
other obligations of the United States, or paid
into the Treasury as miscellaneous receipts.
(Pub. L. 89–117, title I, § 107(a)–(e), Aug. 10, 1965,
79 Stat. 458, 459; Pub. L. 89–754, title X, § 1012,
Nov. 3, 1966, 80 Stat. 1288; Pub. L. 102–54,
§ 13(d)(3), June 13, 1991, 105 Stat. 275.)
REFERENCES IN TEXT
The National Housing Act, referred to in subsec. (a),
is act June 27, 1934, ch. 847, 48 Stat. 1246, as amended,
which is classified principally to this chapter (§ 1701 et
seq.). For complete classification of this Act to the
Code, see section 1701 of this title and Tables.
The Servicemen’s Readjustment Act of 1944, referred
to in subsec. (a), is act June 22, 1944, ch. 268, 58 Stat.
284, as amended, which was classified generally to chapter 11C (§ 693 to 697g) of former Title 38, Pensions, Bonuses, and Veterans’ Relief, and was repealed by section 14(87) of Pub. L. 85–857, Sept. 2, 1958, 72 Stat. 1273,
the first section of which enacted Title 38, Veterans’
Benefits. For distribution of sections 693 to 697g of
former Title 38 to Title 38, Veterans’ Benefits, see
Table preceding section 101 of Title 38, Veterans’ Benefits.

Page 786
CODIFICATION

Section was enacted as part of the Housing and Urban
Development Act of 1965, and not as part of the National Housing Act which comprises this chapter.
AMENDMENTS
1991—Subsecs. (a)(2)(B), (e). Pub. L. 102–54 substituted
‘‘Secretary of Veterans Affairs’’ for ‘‘Administrator of
Veterans’ Affairs’’ wherever appearing.
1966—Subsec. (a)(2)(A). Pub. L. 89–754 substituted
‘‘Secretary of Housing and Urban Development’’ for
‘‘Federal Housing Commissioner’’.
Subsec. (a)(3). Pub. L. 89–754 redefined as distressed
mortgagor, describing in subpar. (A) such a person as
an individual whose employment or military service at
a military base or other Federal installation was terminated subsequent to Nov. 1, 1964, as the result of
closing of such base or installation, formerly defined as
an individual who was unemployed, although willing to
work, as the result of the closing of a Federal installation, and providing in subpar. (B) for dwelling situated
at or near the base or installation and substituting
‘‘payments due under such mortgage’’ for ‘‘payments of
principal and/or interest under such mortgage’’.
Subsec. (b)(1). Pub. L. 89–754 substituted ‘‘payments
due under such mortgage’’ for ‘‘payments of principal
and/or interest under such mortgage’’.
Subsec. (b)(2). Pub. L. 89–754 struck out subpar. (A)
providing for determination that mortgagor is not in
default with respect to any condition or covenant of
the mortgage other than requiring the payment of installments of principal and/or interest under the mortgage and incorporated without subpar. designation provision for determination that such action is necessary
to avoid foreclosure, formerly providing in subpar. (B)
that such action was the only available means of avoiding foreclosure of such mortgage.
Subsec. (b)(3). Pub. L. 89–754 substituted in introductory text ‘‘the Federal mortgage agency, the mortgagor, and the mortgagee shall enter into a binding
agreement’’ for ‘‘the Federal mortgage agency shall require such mortgagor to enter into a binding agreement’’, designated existing provisions as subpar. (A),
provided for payment of interest at rate not to exceed
the rate provided in the mortgage, and added subpar.
(B).
Subsec. (b)(4). Pub. L. 89–754 increased the period
from one to two years in subpar. (A), substituted subpar. (B) provision for expiration date as thirty days
after date on which mortgagor gives notice in writing
to Federal mortgage agency of ability to resume obligation to make payments due under his mortgage for
former provision as the date thirty days after date on
which mortgagor to whom certificate was issued ceased
to be a distressed mortgagor, now incorporated in subpar. (C), redesignated former subpar. (B) as (C), providing for a determination by the Federal mortgage agency, and struck out former subpar. (C) provision for date
on which mortgagor becomes in default with respect to
any condition or covenant in his mortgage other than
that requiring the payment by him of installments of
principal and/or interest under the mortgage.
Subsec. (c)(1). Pub. L. 89–754 substituted ‘‘payments
due under the mortgage’’ for ‘‘payments of principal,
and, if so specified in the certificate, of interest, under
the mortgage’’.
Subsec. (c)(2). Pub. L. 89–754 substituted ‘‘may include’’ for ‘‘shall include’’ and ‘‘unpaid payments under
such mortgage’’ for ‘‘unpaid principal and interest
charges which had accrued and subsequent to the date
on which such mortgagor became a distressed mortgagor as defined in subsection (a) of this section’’, and authorized payments of reasonable allowance for foreclosure costs actually paid by the mortgagee if a foreclosure action was dismissed as result of issuance of
moratorium certificate and taxes and insurance premiums on mortgaged property as deemed necessary
when not provided for through payments to a tax and
insurance account held by the interested mortgagee.

Page 787

§ 1738

TITLE 12—BANKS AND BANKING

Subsec. (c)(3). Pub. L. 89–754 substituted ‘‘payments
due under the mortgage’’ for ‘‘payments of principal,
and, if so specified in the certificate, of interest, under
the mortgage’’.
Subsec. (d). Pub. L. 89–754 reenacted subsec. (d) without change.
Subsec. (e). Pub. L. 89–754 substituted ‘‘Secretary of
Housing and Urban Development’’ for ‘‘Federal Housing
Commissioner’’ in two places and made fund available
for payment of administrative expenses incurred in
connection with assistance to distressed mortgagors
and unavailable for payment of administrative expenses of the Administrator of Veterans’ Affairs.

Act Mar. 28, 1941, ch. 31, § 9, 55 Stat. 62, provided that:
‘‘If any provision of this Act [enacting sections 1736 to
1742 of this title, and section 609k of Title 15, Commerce
and Trade, and amending sections 371, 1430, 1702, 1706,
1707, 1713, and 1715, 1716, 1717 of this title] or the application thereof to any person or circumstances, is held
invalid, the remainder of the Act, and the application
of such provision to other persons or circumstances,
shall not be affected thereby.’’

§ 1735h. Repealed. Pub. L. 89–754,
§ 1013(j), Nov. 3, 1966, 80 Stat. 1292

§ 1737. Repealed. Pub. L. 89–117, title
§ 1108(aa), Aug. 10, 1965, 79 Stat. 507

title

X,

Section, Pub. L. 89–117, title I, § 108(a)–(d), (f), Aug. 10,
1965, 79 Stat. 460, 461, provided for acquisition of property at or near military bases which have been ordered
to be closed. See section 3374 of Title 42, The Public
Health and Welfare.

SUBCHAPTER VI—WAR HOUSING
INSURANCE
AMENDMENTS
1942—Act May 26, 1942, ch. 319, § 14(a), 56 Stat. 305,
amended subchapter heading, substituting ‘‘WAR’’ for
‘‘DEFENSE’’.

§ 1736. Definitions
As used in this subchapter—
(a) The term ‘‘mortgage’’ means a first mortgage on real estate, in fee simple, or on a leasehold (1) under a lease for not less than ninetynine years which is renewable; or (2) under a
lease having a period of not less than fifty years
to run from the date the mortgage was executed;
and the term ‘‘first mortgage’’ means such
classes of first liens as are commonly given to
secure advances on, or the unpaid purchase price
of, real estate, under the laws of the State in
which the real estate is located, together with
the credit instruments, if any, secured thereby.
(b) The term ‘‘mortgagee’’ includes the original lender under a mortgage, and his successors
and assigns approved by the Secretary; and the
term ‘‘mortgagor’’ includes the original borrower under a mortgage and his successors and
assigns.
(c) The term ‘‘maturity date’’ means the date
on which the mortgage indebtedness would be
extinguished if paid in accordance with periodic
payments provided for in the mortgage.
(d) The term ‘‘State’’ includes the several
States, and Puerto Rico, the District of Columbia, Guam, and the Virgin Islands.
(June 27, 1934, ch. 847, title VI, § 601, as added
Mar. 28, 1941, ch. 31, § 1, 55 Stat. 55; amended Apr.
20, 1950, ch. 94, title I, § 122, 64 Stat. 59; July 14,
1952, ch. 723, § 10(a)(2), 66 Stat. 603; Pub. L. 86–70,
§ 10(a), June 25, 1959, 73 Stat. 142; Pub. L. 86–624,
§ 6, July 12, 1960, 74 Stat. 411; Pub. L. 90–19,
§ 1(a)(3), May 25, 1967, 81 Stat. 17.)
AMENDMENTS
1967—Subsec. (b). Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’.
1960—Subsec. (d). Pub. L. 88–624 struck out ‘‘Hawaii,’’
before ‘‘Puerto Rico’’.
1959—Subsec. (d). Pub. L. 86–70 struck out ‘‘Alaska,’’
before ‘‘Hawaii’’.
1952—Subsec. (d). Act July 14, 1952, inserted ‘‘Guam,’’
after ‘‘District of Columbia,’’.

1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.
SEPARABILITY

XI,

Section, act June 27, 1934, ch. 847, title VI, § 602, as
added Mar. 28, 1941, ch. 31, § 1, 55 Stat. 55; amended May
26, 1942, ch. 319, § 14(b) 56 Stat. 305; June 30, 1947, ch. 166,
title II, § 206(l), 61 Stat. 208; 1947 Reorg. Plan No. 3, § 3,
eff. July 27, 1947, 12 F.R. 4981, 61 Stat. 954; Apr. 20, 1950,
ch. 94, title I, § 122, 64 Stat. 59, created the War Housing
Insurance Fund.
For establishment of the General Insurance Fund, see
section 1735c of this title.

§ 1738. Insurance of mortgages
(a) Relief of housing shortage; eligibility; limitations on time and amount
In order to assist in relieving the acute shortage of housing which now exists and to increase
the supply of housing accommodations available
to veterans of World War II at prices within
their reasonable ability to pay, the Secretary is
authorized, upon application by the mortgagee,
to insure as hereinafter provided any mortgage
which is eligible for insurance as hereinafter
provided, and, upon such terms as the Secretary
may prescribe, to make commitments for the insuring of such mortgages prior to the date of
their execution or disbursement thereon: Provided, That the aggregate amount of principal
obligations of all mortgages insured under this
subchapter shall not exceed $6,150,000,000 except
that with the approval of the President such aggregate amount may be increased to not to exceed $6,650,000,000: Provided further, That no
mortgage shall be insured under this section
after April 30, 1948, except (A) pursuant to a
commitment to insure issued on or before April
30, 1948, or (B) a mortgage given to refinance an
existing mortgage insured under this section
and which does not exceed the original principal
amount and unexpired term of such existing
mortgage, and no mortgage shall be insured
under section 1743 of this title after March 1,
1950, except (i) pursuant to a commitment to insure issued on or before March 1, 1950, or (ii) a
mortgage given to refinance an existing mortgage insured under section 1743 of this title and
which does not exceed the original principal
amount and unexpired term of such existing
mortgage: Provided further, That no mortgage
shall be insured under section 1743 of this title
unless the mortgagor certifies under oath that
in selecting tenants for the property covered by
the mortgage he will not discriminate against
any family by reason of the fact that there are
children in the family, and that he will not sell
the property while the insurance is in effect unless the purchaser so certifies, such certifications to be filed with the Secretary; and viola-

§ 1738

TITLE 12—BANKS AND BANKING

tion of any such certification shall be a misdemeanor punishable by a fine of not to exceed
$500: And provided further, That the Secretary
shall, in his discretion, have power to require
the availability for rental purposes of properties
covered by mortgages insured under this subchapter, in such instances and for such periods
of time as he may prescribe.
Notwithstanding the first proviso of this subsection, mortgages may be insured under sections 1744 and 1746 of this title if the aggregate
amounts of principal obligations of mortgages
insured under said sections plus the aggregate
amount of principal obligations of mortgages insured under section 1745 of this title do not exceed the limitation contained in said section
1745 upon the aggregate amount of principal obligations of mortgages insured pursuant to said
section.
Notwithstanding the second proviso of this
subsection, mortgages otherwise eligible for insurance under section 1743 of this title may be
hereafter insured thereunder if the application
for such insurance was received by the Department of Housing and Urban Development on or
before March 1, 1950, and for such purpose the
aggregate amount of principal obligations authorized to be insured under section 1743 of this
title is increased by not to exceed $500,000,000.
(b) Eligibility requirements
To be eligible for insurance under this section
a mortgage shall—
(1) have been made to, and be held by, a
mortgagee approved by the Secretary as responsible and able to service the mortgage
properly;
(2) involve a principal obligation (including
such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve) in an amount not to exceed 90 per centum of the Secretary’s estimate of the value
(as of the date the mortgage is accepted for insurance), except that as to applications received by the Secretary on or before March 31,
1948, the mortgage may involve a principal obligation in an amount not to exceed 90 per centum of the Secretary’s estimate of the necessary current cost (including the land and
such initial service charges and such appraisal, inspection, and other fees as the Secretary shall approve); of a property, urban,
suburban, or rural, upon which there is located
a dwelling designed principally for residential
use for not more than four families in the aggregate, which is approved for mortgage insurance prior to the beginning of construction.
The principal obligation of such mortgage
shall in no event, however, exceed—
(A) $5,400 if such dwelling is designed for a
single-family residence, or
(B) $7,500 if such dwelling is designed for a
two-family residence, or
(C) $9,500 if such dwelling is designed for a
three-family residence, or
(D) $12,000 if such dwelling is designed for
a four-family residence:
Provided, That the Secretary may, if he finds
that at any time or in any particular geographical area it is not feasible, within such
limitations of maximum mortgage amounts,

Page 788

to construct dwellings without sacrifice of
sound standards of construction, design, or livability, prescribe by regulation or otherwise
higher maximum mortgage amounts not to exceed—
(A) $8,100 if such dwelling is designed for a
single-family residence, or
(B) $12,500 if such dwelling is designed for
a two-family residence, or
(C) $15,750 if such dwelling is designed for
a three-family residence, or
(D) $18,000 if such dwelling is designed for
a four-family residence.
(3) have a maturity satisfactory to the Secretary but not to exceed twenty-five years
from the date of the insurance of the mortgage;
(4) contain complete amortization provisions
satisfactory to the Secretary;
(5) bear interest (exclusive of premium
charges for insurance) at not to exceed 4 per
centum per annum on the amount of the principal obligation outstanding at any time;
(6) provide, in a manner satisfactory to the
Secretary, for the application of the mortgagor’s periodic payments (exclusive of the
amount allocated to interest and to the premium charge which is required for mortgage
insurance as herein provided) to amortization
of the principal of the mortgage; and
(7) contain such terms and provisions with
respect to insurance, repairs, alterations, payment of taxes, default reserves, delinquency
charges, foreclosure proceedings, anticipation
of maturity, additional and secondary liens,
and other matters as the Secretary may in his
discretion prescribe.
(c) Premium charges; payments; acceptance for
insurance; preferences; adjustments and refunds
The Secretary is authorized to fix a premium
charge for the insurance of mortgages under this
subchapter but in the case of any mortgage such
charge shall not be less than an amount equivalent to one-half of 1 per centum per annum nor
more than an amount equivalent to 11⁄2 per centum per annum of the amount of the principal
obligation of the mortgage outstanding at any
time, without taking into account delinquent
payments or prepayments. Such premium
charges shall be payable by the mortgagee, either in cash, or in debentures issued by the Secretary under this subchapter at par plus accrued
interest, in such manner as may be prescribed
by the Secretary: Provided, That the Secretary
may require the payment of one or more such
premium charges at the time the mortgage is insured, at such discount rate as he may prescribe
not in excess of the interest rate specified in the
mortgage. If the Secretary finds, upon the presentation of a mortgage for insurance and the
tender of the initial premium charge and such
other charges as the Secretary may require,
that the mortgage complies with the provisions
of this subchapter, such mortgage may be accepted for insurance by endorsement or otherwise as the Secretary may prescribe; but no
mortgage shall be accepted for insurance under
this subchapter unless the Secretary finds that
the project with respect to which the mortgage

Page 789

TITLE 12—BANKS AND BANKING

is executed is an acceptable risk in view of the
shortage of housing referred to in this section.
In the event that the principal obligation of any
mortgage accepted for insurance under this subchapter is paid in full prior to the maturity
date, the Secretary is further authorized in his
discretion to require the payment by the mortgagee of an adjusted premium charge in such
amount as the Secretary determines to be equitable, but not in excess of the aggregate amount
of the premium charges that the mortgagee
would otherwise have been required to pay if the
mortgage had continued to be insured under this
subchapter until such maturity date; and in the
event that the principal obligation is paid in full
as herein set forth, the Secretary is authorized
to refund to the mortgagee for the account of
the mortgagor all, or such portion as he shall
determine to be equitable, of the current unearned premium charges theretofore paid. The
Secretary shall prescribe such procedures as in
his judgment are necessary to secure to veterans
of World War II, and their immediate families,
and to hardship cases as defined by the Secretary, preference or priority of opportunity to
purchase or rent properties covered by mortgages insured under this subchapter.
(d) Conclusiveness of insurance contract as to
eligibility
Any contract of insurance heretofore or hereafter executed by the Secretary under this subchapter shall be conclusive evidence of the eligibility of the mortgage for insurance, and the validity of any contract of insurance so executed
shall be incontestable in the hands of an approved mortgagee from the date of the execution
of such contract, except for fraud or misrepresentation on the part of such approved mortgagee.
(June 27, 1934, ch. 847, title VI, § 603, as added
Mar. 28, 1941, ch. 31, § 1, 55 Stat. 56; amended
Sept. 2, 1941, ch. 410, 55, Stat. 686; May 26, 1942,
ch. 319, §§ 1–4, 14(b), 56 Stat. 301, 305; Mar. 23, 1943,
ch. 21, § 1, 57 Stat. 42; Oct. 15, 1943, ch. 259, § 1, 57
Stat. 571; June 30, 1944, ch. 334, 58 Stat. 648; Mar.
31, 1945, ch. 48, § 1, 59 Stat. 47; May 22, 1946, ch.
268, § 10(a)–(d), 60 Stat. 212, 213; June 30, 1947, ch.
163, title I, § 2, 61 Stat. 193; Aug. 5, 1947, ch. 495,
§ 1, 61 Stat. 777; Dec. 27, 1947, ch. 525, § 1, 61 Stat.
945; Mar. 31, 1948, ch. 165, § 1(a)–(c), 62 Stat. 101;
Aug. 10, 1948, ch. 832, title I, § 101(a), (k)(2), 62
Stat. 1268, 1273; Mar. 30, 1949, ch. 42, title III,
§ 304, 63 Stat. 29; July 15, 1949, ch. 338, title II,
§ 201(3), 63 Stat. 421; Aug. 30, 1949, ch. 524, 63 Stat.
681; Oct. 25, 1949, ch. 729, § 1(4), 63 Stat. 905; Apr.
20, 1950, ch. 94, title I, §§ 119, 122, 64 Stat. 57, 59;
Pub. L. 90–19, § 1(a)(1), (3), (4), (n), May 25, 1967,
81 Stat. 17, 19.)
AMENDMENTS
1967—Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’
for ‘‘Commissioner’’ wherever appearing in subsecs. (a),
(b)(1), (2), (b)(2)(D), (b)(3), (4), (6), (7), (c), and (d).
Subsec. (a). Pub. L. 90–19, § 1(a)(1), (n), substituted
‘‘Department of Housing and Urban Development’’ for
‘‘Federal Housing Administration’’ and ‘‘by’’ for ‘‘in
any field office of’’ after ‘‘received’’, in third par., respectively.
Subsec. (b)(2). Pub. L. 90–19, § 1(a)(4), substituted
‘‘Secretary’s’’ for ‘‘Commissioner’s’’ wherever appearing.

§ 1738

1950—Act Apr. 20, 1950, § 122, substituted ‘‘Commissioner’’ for ‘‘Administrator’’ wherever appearing.
Subsec. (a). Act Apr. 20, 1950, § 119, added last two
pars.
1949—Subsec. (a). Joint Res. Oct. 25, 1949, substituted
‘‘$6,150,000,000’’ for ‘‘$5,750,000,000’’ and ‘‘$6,650,000,000’’
for ‘‘$6,150,000,000’’ in first proviso, and extended section to ‘‘March 1, 1950’’ by substituting the same for
‘‘October 31, 1949’’ in second proviso.
Act Aug. 30, 1949, extended section from ‘‘August 31,
1949’’ to ‘‘October 31, 1949’’.
Act July 15, 1949, extended section from ‘‘June 30,
1949’’ to ‘‘August 31, 1949’’.
Act Mar. 30, 1949, extended section from ‘‘March 30,
1949’’ to ‘‘June 30, 1949’’.
1948—Subsec. (a). Act Aug. 10, 1948, struck out
‘‘$5,350,000,000’’
and
inserted
in
lieu
thereof
‘‘$5,750,000,000 except that with the approval of the
President such aggregate amount may be increased to
not to exceed $6,150,000,000’’, and struck out the second
proviso and inserted in lieu thereof the present second
proviso.
Act Mar. 31, 1948, increased the insurance authorization from $4,950,000,000 to $5,350,000,000, and provided for
an extension from Mar. 31, 1948, to Apr. 30, 1948.
Subsec. (b)(2). Act Mar. 31, 1948, changed the emergency necessary current-cost formula to the appraisedvalue formula.
Subsec. (c). Act Aug. 10, 1948, struck out of next to
last sentence ‘‘and a mortgage on the same property is
accepted for insurance at the time of such payment’’.
1947—Subsec. (a). Act Dec. 27, 1947, increased the
mortgage obligation from $4,000,000,000 to $4,450,000,000,
and increased the amount of obligation from
$4,200,000,000 to $4,950,000,000 with the President’s approval.
Act Aug. 5, 1947, increased mortgage obligation from
$2,800,000,000 to $4,000,000,000 and the amount of obligation from $3,800,000,000 to $4,200,000,000 with the President’s approval.
Act June 30, 1947, extended limitation dates in second
proviso from June 30, 1947, to Mar. 31, 1948.
1946—Subsec. (a). Act May 22, 1946, amended provisions generally, and among other changes, increased
the mortgage obligation from $1,800,000,000 to
$2,800,000,000, and extended the limitation date from
July 1, 1946, to June 30, 1947.
Subsec. (b)(2). Act May 22, 1946, amended provisions
generally, and among other changes, inserted proviso.
Subsec. (b)(5). Act May 22, 1946, lowered interest rate
from 5 to 4 per centum and struck out provision allowing Administrator to increase the rate in certain cases.
Subsec. (c). Act May 22, 1946, substituted ‘‘shortage of
housing’’ for ‘‘emergency’’ in third sentence and
amended last sentence.
1945—Subsec. (a). Act Mar. 31, 1945, increased the
limit of obligations from $1,700,000,000 to $1,800,000,000
and extended the limitation date from 1945 to 1946.
1944—Subsec. (a). Act June 30, 1944, substituted
‘‘$1,700,000,000’’ for ‘‘$1,600,000,000’’ and inserted the provision contained in cl. (B).
1943—Subsec. (a). Act Oct. 15, 1943, substituted
‘‘$1,600,000,000’’ for ‘‘$1,200,000,000’’ and ‘‘July 1, 1945’’ for
‘‘July 1, 1944’’.
Act Mar. 23, 1943, substituted ‘‘$1,200,000,000’’ for
‘‘$800,000,000’’ and ‘‘July 1, 1944’’ for ‘‘July 1, 1943’’.
1942—Act May 21, 1942, § 14(b), substituted ‘‘War’’ and
‘‘war’’ for ‘‘Defense’’ and ‘‘defense’’ wherever occurring.
Subsec. (a). Act May 26, 1942, § 1, substituted
‘‘$800,000,000’’ for ‘‘$300,000,000’’, among other changes.
Subsec. (b)(2). Act May 26, 1942, § 2, increased limitations on amount of obligations.
Subsec. (b)(3). Act May 26, 1942, § 3, substituted ‘‘twenty-five’’ for ‘‘twenty’’.
Subsec. (c). Act May 26, 1942, § 4, amended subsec. (c).
1941—Subsec. (a). Act Sept. 2, 1941, substituted
‘‘$300,000,000’’ for ‘‘$100,000,000’’.
EFFECTIVE DATE OF 1949 AMENDMENT
Amendment by act July 15, 1949, effective June 30,
1949, see section 202 of that act, set out as a note under
section 1703 of this title.

§ 1739

TITLE 12—BANKS AND BANKING
INFLATION SAFEGUARDS

Act Dec. 27, 1947, ch. 525, § 2, 61 Stat. 945, provided:
‘‘Title VI of the National Housing Act, as amended
[this subchapter], shall be employed to assist in maintaining a high volume of new residential construction
without supporting unnecessary or artificial costs. In
estimating necessary current cost for the purposes of
said title, the Federal Housing Commissioner shall
therefore use every feasible means to assure that such
estimates will approximate as closely as possible the
actual costs of efficient building operations.’’

§ 1739. Mortgage insurance benefits
(a) Conveyance and assignment by mortgagee
after foreclosure; debentures and certificates
of claim; cost of foreclosure
In any case in which the mortgagee under a
mortgage insured under section 1738 of this title
shall have foreclosed and taken possession of the
mortgaged property, in accordance with regulations of, and within a period to be determined
by, the Secretary, or shall, with the consent of
the Secretary, have otherwise acquired such
property from the mortgagor after default, the
mortgagee shall be entitled to receive the benefit of the insurance as hereinafter provided,
upon (1) the prompt conveyance to the Secretary of title to the property which meets the
requirements of rules and regulations of the
Secretary 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 as may have
been released with the consent of the Secretary.
Upon such conveyance and assignment the obligation of the mortgagee to pay the premium
charges for insurance shall cease and the Secretary shall, subject to the cash adjustment
hereinafter provided, issue to the mortgagee debentures having a total face value equal to the
value of the mortgage and a certificate of claim,
as hereinafter provided. For the purposes of this
subsection, the value of the mortgage shall be
determined, in accordance with rules and regulations prescribed by the Secretary, by adding
to the amount of the original principal obligation of the mortgage which was unpaid on the
date of the institution of foreclosure proceedings, or on the date of the acquisition of the
property after default other than by foreclosure,
the amount of all payments which have been
made by the mortgagee for taxes, ground rents,
and water rates, which are liens prior to the
mortgage, special assessments which are noted
on the application for insurance or which become liens after the insurance of the mortgage,
insurance of the mortgaged property, and any
mortgage insurance premiums and by deducting
from such total amount any amount received on
account of the mortgage after either of such
dates, and any amount received as rent or other
income from the property, less reasonable expenses incurred in handling the property, after
either of such dates: Provided, That with respect
to mortgages which are foreclosed before there
shall have been paid on account of the principal
obligation of the mortgage a sum equal to 10 per
centum of the appraised value of the property as

Page 790

of the date the mortgage was accepted for insurance, there may be included in the debentures
issued by the Secretary, on account of the cost
of foreclosure (or of acquiring the property by
other means) actually paid by the mortgagee
and approved by the Secretary an amount—
(1) not in excess of 2 per centum of the unpaid principal of the mortgage as of the date
of the institution of foreclosure proceedings
and not in excess of $75; or
(2) not in excess of two-thirds of such cost,
whichever is the greater: Provided further,
That with respect to any debentures issued on
or after September 2, 1964, the Secretary may,
with the consent of the mortgagee (in lieu of
issuing a certificate of claim as provided in
subsection (e)), include in debentures, in addition to amounts otherwise allowed for such
costs, an amount not to exceed one-third of
the total foreclosure, acquisition, and conveyance costs actually paid by the mortgagee and
approved by the Secretary, but in no event
may the total allowance for such costs exceed
the amount actually paid by the mortgagee:
And provided further, That with respect to
mortgages to which the provisions of sections
302 and 306 of the Soldiers’ and Sailors’ Civil
Relief Act of 1940,1 as now or hereafter amended, apply and which are insured under section
1738 of this title and subject to such regulations and conditions as the Secretary may prescribe, there shall be included in the debentures an amount which the Secretary finds to
be sufficient to compensate the mortgagee for
any loss which it may have sustained on account of interest on debentures and the payment of insurance premiums by reason of its
having postponed the institution of foreclosure proceedings or the acquisition of the
property by other means during any part or all
of the period of such military service and
three months thereafter.
(b) Consent to release of mortgagee or property
The Secretary may at any time, under such
terms and conditions as he may prescribe, consent to the release of the mortgagor from his liability under the mortgage or the credit instrument secured thereby, or consent to the release
of parts of the mortgaged property from the lien
of the mortgage: Provided, That the mortgagor
shall not be released from such liability in any
case until the Secretary is satisfied that the
mortgaged property has been sold to a purchaser
satisfactory to the Secretary, and that such purchaser has paid on account of the purchase
price, in cash or its equivalent, at least 10 per
centum of the Secretary’s estimate of the value
as of the date the mortgage is accepted for insurance.
(c) Debentures; form and denomination
Debentures issued under this subchapter 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
Secretary with the approval of the Secretary of
the Treasury, and may be in coupon or registered form. Any difference between the value
1 See

References in Text note below.

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TITLE 12—BANKS AND BANKING

of the mortgage determined as herein provided
and the aggregate face value of the debentures
issued, not to exceed $350, shall be adjusted by
the payment of cash by the Secretary to the
mortgagee from the General Insurance Fund.
(d) Debentures; execution; negotiability; terms;
tax exemptions
The debenture issued under this section to any
mortgagee shall be executed in the name of the
General Insurance Fund as obligor, shall be
signed by the Secretary by either his written or
engraved signature, and shall be negotiable. All
such debentures shall be dated as of the date
foreclosure proceedings were instituted, or the
property was otherwise acquired by the mortgagee after default, except that debentures issued
pursuant to claims for insurance filed on or
after September 2, 1964, shall be dated as of the
date of default or as of such later date as the
Secretary, in his discretion, may establish by
regulation. The debentures shall bear interest
from such date at a rate determined by the Secretary, 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 1st day
of January and the 1st day of July of each year.
Such debentures as are issued in exchange for
property covered by mortgages accepted for insurance under this section on or after May 26,
1942, shall mature ten years after the date thereof. Such debentures as are issued in exchange for
property covered by mortgages accepted for insurance under this section prior to May 26, 1942,
shall mature three years after the 1st day of
July following the maturity date of the mortgage on the property in exchange for which the
debentures were issued: Provided, That any
mortgagee entitled to receive such debentures
may elect to receive in lieu thereof debentures
which shall 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 by any Territory, dependency, or possession of the United
States, or by the District of Columbia, or by any
State, county, municipality, or local taxing authority, and shall be paid out of the General Insurance Fund, which shall be primarily liable
therefor, and they shall be fully and unconditionally guaranteed as to principal and interest
by the United States, and such guaranty shall be
expressed on the face of the debentures. In the
event that the General Insurance Fund fails to
pay upon demand, when due, the principal of or
interest on any debentures issued under this
subchapter, the Secretary of the Treasury shall
pay to the holders the amount thereof which is
authorized to be appropriated, out of any money
in the Treasury not otherwise appropriated, and
thereupon to the extent of the amount so paid
the Secretary of the Treasury shall succeed to
all the rights of the holders of such debentures.
(e) Certificate of claim
The certificate of claim issued by the Secretary to any mortgagee shall be for an amount
which the Secretary determines to be sufficient,
when added to the face value of the debentures
issued and the cash adjustment paid to the

§ 1739

mortgagee, to equal the amount which the
mortgagee would have received if, at the time of
the conveyance to the Secretary of the property
covered by the mortgage, the mortgagor had redeemed the property and paid in full all obligations under the mortgage and a reasonable
amount for necessary expenses incurred by the
mortgagee in connection with the foreclosure
proceedings, or the acquisition of the mortgaged
property otherwise, and the conveyance thereof
to the Secretary. Each such certificate of claim
shall provide that there shall accrue to the holder of such certificate with respect to the face
amount of such certificate, an increment at the
rate of 3 per centum per annum which shall not
be compounded. The amount to which the holder
of any such certificate shall be entitled shall be
determined as provided in subsection (f).
(f) Division of excess proceeds
(1) If, after deducting (in such manner and
amount as the Secretary shall determine to be
equitable and in accordance with sound accounting practice) the expenses incurred by the Secretary, the net amount realized from any property conveyed to the Secretary under this section and the claims assigned therewith exceed
the face value of the debentures issued and the
cash paid in exchange for such property plus all
interest paid on such debentures, such excess
shall be divided as follows:
(i) If such excess is greater than the total
amount payable under the certificate of claim
issued in connection with such property, the
Secretary shall pay to the holder of such certificate the full amount so payable, and any
excess remaining thereafter shall be paid to
the mortgagor of such property: Provided, That
on and after September 2, 1964, any excess remaining after payment to the holder of the
full amount of the certificate of claim shall be
retained by the Secretary and credited to the
General Insurance Fund; and
(ii) If such excess is equal to or less than the
total amount payable under such certificate of
claim, the Secretary shall pay to the holder of
such certificate the full amount of such excess.
(2) Notwithstanding any other provisions of
this section, the Secretary is authorized, with
the consent of the mortgagee or mortgagor, as
the case may be, to effect the settlement of certificates of claim and refunds at any time after
the sale or transfer of title to the property conveyed to the Secretary under this section and
without awaiting the final liquidation of such
property for the purpose of determining the net
amount to be realized therefrom: Provided, That
the settlement authority created by the Housing
Amendments of 1955 shall be terminated with respect to any certificate of claim outstanding as
of September 2, 1964.
(3) With the consent of the holder thereof, the
Secretary is authorized to settle, without awaiting the final liquidation of the Secretary’s interest in the property, any certificate of claim issued pursuant to subsection (e), with respect to
which a settlement had not been effected prior
to September 2, 1964, by making payment in
cash to the holder thereof of such amount, not
exceeding the face amount of the certificate of

§ 1739

TITLE 12—BANKS AND BANKING

claim, together with the accrued interest increment thereon, as the Secretary may consider appropriate: Provided, That in any case where the
certificate of claim is settled in accordance with
the provisions of this paragraph, any amounts
realized after September 2, 1964, in the liquidation of the Secretary’s interest in the property,
shall be retained by the Secretary and credited
to the applicable insurance fund.
(g) Handling and disposal of property; settlement
of claims
Notwithstanding any other provision of law
relating to the acquisition, handling, or disposal
of real property by the United States, the Secretary shall have power to deal with, complete,
rent, renovate, modernize, insure, make contracts or establish suitable agencies for the
management of, or sell for cash or credit, in his
discretion, any properties conveyed to him in
exchange for debentures and certificates of
claim as provided in this subchapter; and notwithstanding any other provision of law, the
Secretary shall also have power to pursue to
final collection, by way of compromise or otherwise, all claims against mortgagors assigned by
mortgagees to the Secretary as provided in this
subchapter, except that no suit or action shall
be commenced by the Secretary against any
such mortgagor on account of any claim so assigned with respect to mortgages insured under
section 1738 of this title unless such suit or action is commenced within six months after the
assignment of such claim to the Secretary, or
within six months after the last payment was
made to the Secretary with respect to the claim
so assigned, whichever is later: Provided, That
section 6101 of title 41 shall not be construed to
apply to any contract for hazard insurance, or to
any purchase or contract for services or supplies
on account of such property if the amount thereof does not exceed $1,000. The power to convey
and to execute in the name of the Secretary
deeds of conveyances, deeds of release, assignments, and satisfactions of mortgages, and any
other written instrument relating to real property or any interest therein heretofore or hereafter acquired by the Secretary pursuant to the
provisions of this chapter, may be exercised by
an officer appointed by him, without the execution of any express delegation of power or power
of attorney: Provided, That nothing in this subsection shall be construed to prevent the Secretary from delegating such power by order or
by power of attorney in his discretion, to any officer, agent, or employee he may appoint.
(h) Mortgagor’s or mortgagee’s interest in property or claim conveyed
No mortgagee or mortgagor shall have and no
certificate of claim shall be construed to give to
any mortgagee or mortgagor, any right or interest in any property conveyed to the Secretary or
in any claim assigned to him; nor shall the Secretary owe any duty to any mortgagee or mortgagor with respect to the handling or disposal of
any such property or the collection of any such
claim.
(June 27, 1934, ch. 847, title VI, § 604, as added
Mar. 28, 1941, ch. 31, § 1, 55 Stat. 58; amended May
26, 1942, ch. 319, §§ 5–8, 14(b), 56 Stat. 302, 305; Oct.

Page 792

14, 1943, ch. 258, § 2, 57 Stat. 570; May 22, 1946, ch.
268, § 10(e), 60 Stat. 213; Mar. 31, 1948, ch. 165,
§ 1(d), 62 Stat. 101; Apr. 20, 1950, ch. 94, title I,
§ 122, 64 Stat. 59; Aug. 11, 1955, ch. 783, title I,
§ 104, 69 Stat. 637; Pub. L. 88–560, title I, § 105(d),
(f), Sept. 2, 1964, 78 Stat. 772, 774; Pub. L. 89–117,
title XI, § 1108(p), Aug. 10, 1965, 79 Stat. 506; Pub.
L. 90–19, § 1(a)(3), (4), (d), May 25, 1967, 81 Stat. 17,
18.)
REFERENCES IN TEXT
The General Insurance Fund, referred to in text, was
established by section 1735c of this title.
Sections 302 and 306 of the Soldiers’ and Sailors’ Civil
Relief Act of 1940, referred to in subsec. (a)(2), are sections 302 and 306, respectively, of act Oct. 17, 1940, ch.
888, 54 Stat. 1178. That Act was amended generally and
renamed the ‘‘Servicemembers Civil Relief Act’’ by
Pub. L. 108–189, § 1, Dec. 19, 2003, 117 Stat. 2835. As so
amended, provisions of the Servicemembers Civil Relief
Act that are similar to those contained in former sections 302 and 306 of act Oct. 17, 1940, are now contained
in sections 3953 and 3959 of Title 50, War and National
Defense.
The Housing Amendments of 1955, referred to in subsec. (f)(2), is act Aug. 11, 1955, ch. 783, 69 Stat. 635, as
amended. For complete classification of this Act to the
Code, see Short Title of 1955 Amendments note set out
under section 1701 of this title and Tables.
CODIFICATION
In subsec. (g), ‘‘section 6101 of title 41’’ substituted
for ‘‘section 3709 of the Revised Statutes’’ on authority
of Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat. 3854,
which Act enacted Title 41, Public Contracts.
AMENDMENTS
1967—Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’
for ‘‘Commissioner’’ wherever appearing in subsecs. (a),
(a)(2), (b) to (e), (f)(1), (f)(1)(i), (ii), (f)(2), (3), (g), and (h).
Pub. L. 90–19, § 1(a)(4), substituted ‘‘Secretary’s’’ for
‘‘Commissioner’s’’ wherever appearing in subsecs. (b)
and (f)(3) of this section.
Subsec. (g). Pub. L. 90–19, § 1(d), substituted ‘‘an officer’’ for ‘‘the Commissioner or by any Assistant Commissioner’’.
1965—Subsecs. (c), (d), (f)(1)(i). Pub. L. 89–117 substituted ‘‘General Insurance Fund’’ for ‘‘War Housing
Insurance Fund’’.
1964—Subsec. (a). Pub. L. 88–560, § 105(d)(1), (f), inserted ‘‘Provided further, That with respect to any debentures issued on or after September 2, 1964, the Commissioner may, with the consent of the mortgagee (in
lieu of issuing a certificate of claim as provided in subsection (e)), include in debentures, in addition to
amounts otherwise allowed for such costs, an amount
not to exceed one-third of the total foreclosure, acquisition, and conveyance costs actually paid by the mortgagee and approved by the Commissioner, but in no
event may the total allowance for such costs exceed the
amount actually paid by the mortgagee:’’ and struck
out of third sentence ‘‘paid after either of such dates’’
after ‘‘mortgage insurance premiums’’, respectively.
Subsec. (c). Pub. L. 88–560, § 105(d)(2), increased limitation on difference between value of mortgage and aggregate face value of debentures issued from $50 to $350.
Subsec. (d). Pub. L. 88–560, § 105(d)(3), substituted in
second sentence ‘‘default, except that debentures issued
pursuant to claims for insurance filed on or after September 2, 1964, shall be dated as of the date of default
or as of such later date as the Commissioner, in his discretion, may establish by regulation. The debentures’’
for ‘‘default, and’’.
Subsec. (f). Pub. L. 88–560, § 105(d)(4)–(8), designated
introductory par. as par. (1) and substituted ‘‘If, after
deducting (in such manner and amount as the Commissioner shall determine to be equitable and in accordance with sound accounting practice) the expenses in-

Page 793

§ 1743

TITLE 12—BANKS AND BANKING

curred by the Commissioner, the net amount realized
from any property conveyed to the Commissioner under
this section and the claims assigned therewith exceed
the face value’’ for ‘‘If the net amount realized from
any property conveyed to the Commissioner under this
section and the claims assigned therewith, after deducting all expenses incurred by the Commissioner in
handling, dealing with, and disposing of such property
and in collecting such claims, exceeds the face value’’;
redesignated former par. (1) as (i) and substituted
‘‘property: Provided, That on and after September 2,
1964, any excess remaining after payment to the holder
of the full amount of the certificate of claim shall be
retained by the Commissioner and credited to the War
Housing Insurance Fund; and’’ for ‘‘property; and’’; redesignated former par. (2) as (ii); designated concluding
par. as par. (2) and inserted proviso; and added par. (3),
respectively.
1955—Subsec. (f). Act Aug. 11, 1955, authorized the
Commissioner to effect the settlement of certificates of
claim and refunds at any time after the sale or transfer
of title to the property.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.
1948—Subsec. (b). Act Mar. 31, 1948, substituted
‘‘value’’ for ‘‘necessary current cost’’.
1946—Subsec. (b). Act May 22, 1946, substituted ‘‘Administrator’s estimate of the necessary current cost’’
after ‘‘10 per centum of the’’ for ‘‘appraised value of
such property as determined by the Administrator’’.
1943—Subsec. (a). Act Oct. 14, 1943, inserted proviso
dealing with losses due to nonforeclosure of mortgages
to last sentence.
1942—Act May 26, 1942, § 14(b), substituted ‘‘War’’ and
‘‘war’’ for ‘‘Defense’’ and ‘‘defense’’ wherever occurring.
Subsec. (a). Act May 26, 1942, § 5, substituted ‘‘section
1738 of this title’’ for ‘‘this subchapter’’.
Subsec. (c). Act May 26, 1942, § 6, substituted ‘‘subchapter’’ for ‘‘section’’.
Subsec. (d). Act May 26, 1942, § 7, amended subsec. (d).
Subsec. (g). Act May 26, 1942, § 8, substituted ‘‘subchapter’’ for ‘‘section’’ and inserted ‘‘with respect to
mortgages insured under section 1738 of this title’’.

§ 1740. Repealed. Pub. L. 89–117, title
§ 1108(aa), Aug. 10, 1965, 79 Stat. 507

XI,

Section, act June 27, 1934, ch. 847, title VI, § 605, as
added Mar. 28, 1941, ch. 31, § 1, 55 Stat. 61; amended May
26, 1942, ch. 319, §§ 9, 14(b), 56 Stat. 303, 305; 1947 Reorg.
Plan No. 3, § 3, eff. July 27, 1947, 12 F.R. 4981, 61 Stat.
954; Apr. 20, 1950, ch. 94, title I, § 122, 64 Stat. 59, provided for disposition and investment of surplus money
in the War Housing Insurance Fund and for credit and
payment of charges and fees.

§ 1741. State taxation of realty held by Secretary
Nothing in this subchapter shall be construed
to exempt any real property acquired and held
by the Secretary under this subchapter from
taxation by any State or political subdivision
thereof, to the same extent, according to its
value, as other real property is taxed.
(June 27, 1934, ch. 847, title VI, § 606, as added
Mar. 28, 1941, ch. 31, § 1, 55 Stat. 61; amended Apr.
20, 1950, ch. 94, title I, § 122, 64 Stat. 59; Pub. L.
90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’.

§ 1742. Rules and regulations
The Secretary is authorized and directed to
make such rules and regulations as may be nec-

essary to carry out the provisions of this subchapter.
(June 27, 1934, ch. 847, title VI, § 607, as added
Mar. 28, 1941, ch. 31, § 1, 55 Stat. 61; amended Apr.
20, 1950, ch. 94, title I, § 122, 64 Stat. 59; Pub. L.
90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’.

§ 1743. Insurance of mortgages
(a) Additional authorization; advances during
construction
In addition to mortgages insured under section 1738 of this title, the Secretary is authorized to insure mortgages as defined in section
1736 of this title (including advances on such
mortgages during construction) which are eligible for insurance as hereinafter provided.
(b) Eligibility requirements
To be eligible for insurance under this section
a mortgage shall meet the following conditions:
(1) The mortgaged property shall be held by
a mortgagor approved by the Secretary. The
Secretary may, in his discretion, require such
mortgagor to be regulated or restricted as to
rents or sales, charges, capital structure, rate
of return, and methods of operation. The Secretary may make such contracts with, and acquire for not to exceed $100 stock or interest in
any such mortgagor, as the Secretary may
deem necessary to render effective such restriction or regulation. Such stock or interest
shall be paid for out of the General Insurance
Fund, and shall be redeemed by the mortgagor
at par upon the termination of all obligations
of the Secretary under the insurance.
(2) Preference or priority of opportunity in
the occupancy of the mortgaged property for
veterans of World War II and their immediate
families, and for hardship cases as defined by
the Secretary, shall be provided under such
regulations and procedures as may be prescribed by the Secretary.
(3) The mortgage shall involve a principal
obligation in an amount—
(A) not to exceed $5,000,000; and
(B) not to exceed 90 per centum of the
amount which the Secretary estimates will
be the necessary current cost of the completed property or project, including the
land; the proposed physical improvements;
utilities within the boundaries of the property or project; architects’ fees; taxes and
interest accruing during construction; and
other miscellaneous charges incidental to
construction and approved by the Secretary:
Provided, That such mortgage shall not in
any event exceed the amount which the Secretary estimates will be the cost of the completed physical improvements on the property or project, exclusive of off-site public
utilities and streets, and organization and
legal expenses: And provided further, That
the principal obligation of the mortgage
shall not, in any event, exceed 90 per centum
of the Secretary’s estimate of the replace-

§ 1743

TITLE 12—BANKS AND BANKING

ment cost of the property or project on the
basis of the costs prevailing on December 31,
1947, for properties or projects of comparable
quality in the locality where such property
or project is to be located; and
(C) not to exceed $8,100 per family unit for
such part of such property or project as may
be attributable to dwelling use.
The mortgage shall provide for complete amortization by periodic payment within such term
as the Secretary shall prescribe, and shall bear
interest (exclusive of premium charges for insurance) at not to exceed 41⁄2 per centum per annum
on the amount of the principal obligation outstanding at any time. The Secretary may consent to the release of a part or parts of the mortgaged property from the lien of the mortgage
upon such terms and conditions as he may prescribe and the mortgage may provide for such
release.
(c) Payments; default; insurance benefits for
mortgagee; value of mortgage; foreclosure of
mortgage
The failure of the mortgagor to make any payment due under or provided to be paid by the
terms of a mortgage insured under this section
shall be considered a default under such mortgage, and if such default continues for a period
of thirty days, the mortgagee shall be entitled
to receive the benefits of the insurance as hereinafter provided, upon assignment, transfer, and
delivery to the Secretary, within a period and in
accordance with rules and regulations to be prescribed by the Secretary of (1) all rights and interests arising under the mortgage so in default;
(2) all claims of the mortgagee against the mortgagors or others, arising out of the mortgage
transaction; (3) all policies of title or other insurance or surety bonds or other guaranties and
any and all claims thereunder; (4) any balance of
the mortgage loan not advanced to the mortgagor; (5) any cash or property held by the mortgagee, or to which it is entitled, as deposits made
for the account of the mortgagor and which have
not been applied in reduction of the principal of
the mortgage indebtedness; and (6) all records,
documents, books, papers, and accounts relating
to the mortgage transaction. Upon such assignment, transfer, and delivery the obligation of
the mortgagee to pay the premium charges for
mortgage insurance shall cease, and the Secretary shall, subject to the cash adjustment provided for in section 1739(c) of this title, issue to
the mortgagee debentures having a total face
value equal to the value of the mortgage, and a
certificate of claim as hereinafter provided. For
the purposes of this subsection, the value of the
mortgage shall be determined in accordance
with rules and regulations prescribed by the
Secretary, by adding to the amount of the original principal obligation of the mortgage which
was unpaid on the date of default, the amount
the mortgagee may have paid for (A) taxes, special assessments, and water rates, which are
liens prior to the mortgage; (B) insurance on the
property; and (C) reasonable expenses for the
completion 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

Page 794

principal obligation on the date of default; (ii)
any amount received on account of the mortgage after such date; and (iii) any net income received by the mortgagee from the property after
such date: Provided, That the mortgagee 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 Secretary, 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 herein provided,
upon (1) the prompt conveyance to the Secretary of title to the property which meets the
requirements of the rules and regulations of the
Secretary 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 Secretary.
Upon such conveyance and assignment, the obligation of the mortgagee to pay the premium
charges for insurance shall cease and the mortgagee shall be entitled to receive the benefits of
the insurance as provided in this subsection, except that in such event the 1 per centum deduction, set out in (i) hereof, shall not apply.
(d) Certificates of claim; amount
The certificate of claim issued by the Secretary to any mortgagee in connection with the
insurance of mortgages under this section shall
be for an amount determined in accordance with
subsections (e) and (f) of section 1739 of this
title, except that any amount remaining after
the payment of the full amount under the certificate of claim shall be retained by the Secretary and credited to the General Insurance
Fund.
(e) Debentures; date of issuance; interest
Debentures issued under this section shall be
issued in accordance with the provisions of section 1739 (d) of this title except that such debentures shall be dated as of the date of default as
determined in subsection (c) of this section, and
shall bear interest from such date.
(f) Applicability of other provisions
The provisions of section 1713(k) of this title
shall be applicable to mortgages insured under
this section, except that, as applied to such
mortgages, the reference therein to subsection
(g) shall be construed to refer to subsection (c)
of this section.
(g) Mortgages in connection with sale of property under subchapter I, II, VIII, or X
The Secretary shall also have power to insure
under this subchapter or subchapter I, II, VIII,
or X any mortgage executed in connection with
the sale by him of any property acquired under
any of such subchapters without regard to limitations upon eligibility, time, or aggregate
amount contained therein.
(June 27, 1934, ch. 847, title VI, § 608, as added
May 26, 1942, ch. 319, § 11, 56 Stat. 303; amended
Mar. 31, 1945, ch. 48, § 2, 59 Stat. 47; May 22, 1946,
ch. 268, § 10(f), (g), 60 Stat. 214; Aug. 10, 1948, ch.

Page 795

TITLE 12—BANKS AND BANKING

832, title I, § 101(b), (c), 62 Stat. 1269; Apr. 20, 1950,
ch. 94, title I, § 122, 64 Stat. 59; Sept. 1, 1951, ch.
378, title II, § 206, 65 Stat. 303; Pub. L. 89–117, title
XI, § 1108(q), Aug. 10, 1965, 79 Stat. 506; Pub. L.
90–19, § 1(a)(3), (4), May 25, 1967, 81 Stat. 17.)
REFERENCES IN TEXT
The General Insurance Fund, referred to in subsecs.
(b) and (d), was established by section 1735c of this
title.
AMENDMENTS
1967—Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’
for ‘‘Commissioner’’ wherever appearing in subsecs. (a),
(b)(1), (2), (3)(B), following (C), (c), (d), and (g).
Subsec. (b)(3)(B). Pub. L. 90–19, § 1(a)(4), substituted
‘‘Secretary’s’’ for ‘‘Commissioner’s’’.
1965—Subsecs. (b)(1), (d). Pub. L. 89–117, § 1108(q)(1),
substituted ‘‘General Insurance Fund’’ for ‘‘War Housing Insurance Fund’’.
Subsec. (f). Pub. L. 89–117, § 1108(q)(2), struck out provisions that, as applied to mortgages insured under this
section, all references in section 1713(k) of this title to
the ‘‘Housing Fund’’ shall be construed to refer to the
‘‘War Housing Insurance Fund’’.
1951—Subsec. (g). Act Sept. 1, 1951, inserted references
to subchapters I, VIII and X of this chapter.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.
1948—Subsec. (b). Act Aug. 10, 1948, inserted second
proviso in par. (3)(B), substituted ‘‘$8,100 per family
unit’’ for ‘‘$1,500 per room’’ and struck out proviso relating to authority to increase ‘‘$1,500’’ to ‘‘$1,800’’ per
room.
1946—Subsec. (b)(2). Act May 22, 1946, substituted
‘‘Preference or priority of opportunity in the occupancy of the mortgaged property for veterans of World
War II and their immediate families, and for hardship
cases as defined by the Administrator, shall be provided
under such regulations and procedures as may be prescribed by the Administrator’’ for ‘‘The mortgaged
property shall be designed for rent for residential use
by warworkers’’.
Subsec. (b)(3). Act May 22, 1946, substituted ‘‘necessary current cost’’ after ‘‘estimates will be the’’ for
‘‘reasonable replacement cost’’ in par. (B), and increased mortgage per room from $1,350 to $1,500 and inserted proviso in par. (C).
Subsec. (c). Act May 22, 1946, inserted ‘‘and any mortgage insurance premiums paid after default’’ before
semicolon in cl. (C) of third sentence.
1945—Subsec. (g). Act Mar. 31, 1945, inserted provisions empowering Commissioner to insure mortgages
without regard to any limitations upon time or aggregate amount contained in this subchapter.
CONSTRUCTION OF ACT MAY 26, 1942, WITH EX. ORD. NO.
9070, CONSOLIDATING NATIONAL HOUSING AGENCY
Act May 26, 1942, ch. 319, § 12, 56 Stat. 305, provided
that nothing contained in act May 26, 1942, was to be
construed to supersede or be inconsistent with the provisions of Ex. Ord. No. 9070, Feb. 24, 1942.

§ 1744. Insurance of loans for manufacture of
houses
(a) Relief of housing shortage; advances
In order to assist in relieving the acute shortage of housing which now exists and to promote
the production of housing for veterans of World
War II at moderate prices or rentals within their
reasonable ability to pay, through the application of modern industrial processes, the Secretary is authorized to insure loans to finance
the manufacture of housing (including advances
on such loans) when such loans are eligible for
insurance as hereinafter provided.

§ 1744

(b) Eligibility requirements
Loans for the manufacture of houses shall be
eligible for insurance under this section if at the
time of such insurance, the Secretary determines they meet the following conditions:
(1) The manufacturer shall establish that
binding purchase contracts have been executed
satisfactory to the Secretary providing for the
purchase and delivery of the houses to be manufactured, which contracts shall provide for
the payment of the purchase price at such
time as may be agreed to by the parties thereto, but, in no event, shall the purchase price
be payable on a date in excess of thirty days
after the date of delivery of such houses, unless not less than 20 per centum of such purchase price is paid on or before the date of delivery and the lender has accepted and discounted or has agreed to accept and discount,
pursuant to subsection (i) of this section a
promissory note or notes, executed by the purchaser, representing the unpaid portion of
such purchase price, in which event such unpaid portion of the purchase price may be payable on a date not in excess of one hundred and
eighty days from the date of delivery of such
houses;
(2) Such houses to be manufactured shall
meet such requirements of sound quality, durability, livability, and safety as may be prescribed by the Secretary;
(3) The borrower shall establish to the satisfaction of the Secretary that he has or will
have adequate plant facilities, sufficient capital funds, taking into account the loan applied for, and the experience necessary, to
achieve the required production schedule;
(4) The loan shall involve a principal obligation in an amount not to exceed 90 per centum
of the amount which the Secretary estimates
will be the necessary current cost, exclusive of
profit, of manufacturing the houses, which are
the subject of such purchase contracts assigned to secure the loan, less any sums paid
by the purchaser under said purchase contracts prior to the assignment thereof. The
loan shall be secured by an assignment of the
aforesaid purchase contracts and of all sums
payable thereunder on or after the date of
such assignment, with the right in the assignee to proceed against such security in case
of default as provided in the assignment,
which assignment shall be in such form and
contain such terms and conditions, as may be
prescribed by the Secretary; and the Secretary
may require such other agreements and undertakings to further secure the loan as he may
determine, including the right, in case of default or at any time necessary to protect the
lender, to compel delivery to the lender of any
houses then owned and in the possession of the
borrower. The loan shall have a maturity not
in excess of one year from the date of the note,
except that any such loan may be refinanced
and extended in accordance with such terms
and conditions as the Secretary may prescribe
for an additional term not to exceed one year,
and shall bear interest (exclusive of premium
charges for insurance) at not to exceed 4 per
centum per annum on the amount of the principal obligation outstanding at any time.

§ 1744

TITLE 12—BANKS AND BANKING

(c) Release of security
The Secretary may consent to the release of a
part or parts of the property assigned or delivered as security for the loan, upon such terms
and conditions as he may prescribe and the security documents may provide for such release.
(d) Payments; default; insurance benefits for
mortgagee; prerequisites; value of mortgage
The failure of the borrower to make any payment due under or provided to be paid by the
terms of a loan under this section, or the failure
to perform any other covenant or obligation
contained in any assignment, agreement, or
undertaking executed by the borrower in connection with such loan, shall be considered as a
default under this section, and if such default
continues for a period of thirty days, the lender
shall be entitled to receive the benefits of the
insurance hereinafter provided upon assignment,
transfer, and delivery to the Secretary within a
period and in accordance with the rules and regulations prescribed by the Secretary of (1) all
rights and interest arising with respect to the
loan so in default; (2) all claims of the lender
against the borrower or others arising out of the
loan transaction; (3) any cash or property held
by the lender, or to which it is entitled, as deposits made for the account of the borrower and
which have not been applied in reduction of the
principal of the loan; and (4) all records, documents, books, papers, and accounts relating to
the loan transaction. Upon such assignment,
transfer, and delivery, the Secretary shall, subject to the cash adjustment provided for in section 1739(c) of this title, issue to the lender debentures having a face value equal to the unpaid
principal balance of the loan.
(e) Debentures; date of issuance; interest
Debentures issued under this section shall be
issued in accordance with the provisions of section 1739(d) of this title except that such debentures shall be dated as of the date of default as
determined in subsection (d) of this section and
shall bear interest from such date.
(f) Applicability of other provisions
The provisions of sections 1713(k) and 1738(a)
of this title shall be applicable to loans insured
under this section, except that as applied to
such loans (1) the reference in section 1713(k) of
this title to ‘‘subsection (g)’’ shall be construed
to refer to ‘‘subsection (d)’’ of this section; (2)
the references in section 1713(k) of this title to
insured mortgages shall be construed to refer to
the assignment or other security for loans insured under this section; and (3) the references
in section 1738(a) of this title to a mortgage or
mortgages shall be construed to include a loan
or loans under this section. The provisions of
section 1738(d) of this title shall also be applicable to loans insured under this section and the
reference in section 1738(d) of this title to a
mortgage shall be construed to include a loan or
loans with respect to which a contract of insurance is issued pursuant to this section.
(g) Disposal of evidence of debt, contract, claim,
personal property, or security; collection or
compromise of obligations and rights
Notwithstanding any other provision of law,
the Secretary shall have the power to assign or

Page 796

sell at public or private sale, or otherwise dispose of, any evidence of debt, contract, claim,
personal property, or security assigned to or
held by him in connection with the payment of
insurance heretofore or hereafter granted under
this section, and to collect or compromise all
obligations assigned to or held by him and all
legal or equitable rights accruing to him in connection with the payment of such insurance
until such time as such obligations may be referred to the Attorney General for suit or collection.
(h) Premium charges; amount; manner of payment; application fees
The Secretary shall fix a premium charge for
the insurance granted under this section, but
such premium charge shall not exceed an
amount equivalent to 1 per centum of the original principal of such loan, and such premium
charge shall be payable in advance by the financial institution and shall be paid at such time
and in such manner as may be prescribed by the
Secretary. In addition to the premium charge
herein provided for, the Secretary is authorized
to charge and collect such amounts as he may
deem reasonable for examining and processing
applications for the insurance of loans under
this section, including such additional inspections as the Secretary may deem necessary.
(i) Insurance for accepting and discounting
promissory notes; contract provisions; default in payments; remedies; debentures; interest; premium charges
(1) In addition to the insurance of the principal loan to finance the manufacture of housing, as provided in this section, and in order to
provide short-term financing in the sale of
houses to be delivered pursuant to the purchase
contract or contracts assigned as security for
such principal loan, the Secretary is authorized,
under such terms and conditions and subject to
such limitations as he may prescribe, to insure
the lender against any losses it may sustain resulting from the acceptance and discount of a
promissory note or notes executed by a purchaser of any such houses representing an unpaid portion of the purchase price of any such
houses. No such promissory note or notes accepted and discounted by the lender pursuant to
this subsection shall involve a principal obligation in excess of 80 per centum of the purchase
price of the manufactured house or houses; have
a maturity in excess of one hundred and eighty
days from the date of the note or bear interest
in excess of 4 per centum per annum; nor may
the principal amount of such promissory notes,
with respect to any individual principal loan,
outstanding and unpaid at any one time, exceed
in the aggregate an amount prescribed by the
Secretary.
(2) The Secretary is authorized to include in
any contract of insurance executed by him with
respect to the insurance of a loan to finance the
manufacture of houses, provisions to effectuate
the insurance against any such losses under this
subsection.
(3) The failure of the purchaser to make any
payment due under or provided to be paid by the
terms of any note or notes executed by the purchaser and accepted and discounted by the lend-

Page 797

TITLE 12—BANKS AND BANKING

er under the provisions of this subsection, shall
be considered as a default under this subsection,
and if such default continues for a period of thirty days, the lender shall be entitled to receive
the benefits of the insurance, as provided in subsection (d) of this section except that debentures
issued pursuant to this subsection shall have a
face value equal to the unpaid principal balance
of the loan plus interest at the rate of 4 per centum per annum from the date of default to the
date the application is filed for the insurance
benefits.
(4) Debentures issued with respect to the insurance granted under this subsection shall be
issued in accordance with the provisions of section 1739(d) of this title except that such debentures shall be dated as of the date application is
filed for the insurance benefits and shall bear interest from such date.
(5) The Secretary is authorized to fix a premium charge for the insurance granted under
this subsection, in addition to the premium
charge authorized under subsection (h) of this
section. Such premium charge shall not exceed
an amount equivalent to 1 per centum of the
original principal of such promissory note or
notes and shall be paid at such time and in such
manner as may be prescribed by the Secretary.
(June 27, 1934, ch. 847, title VI, § 609, as added
June 30, 1947, ch. 163, title I, § 3, 61 Stat. 193;
amended Aug. 10, 1948, ch. 832, title I, § 101(d), 62
Stat. 1269; Apr. 20, 1950, ch. 94, title I, § 122, 64
Stat. 59; Pub. L. 89–117, title XI, § 1108(r), Aug. 10,
1965, 79 Stat. 506; Pub. L. 90–19, § 1(a)(3), May 25,
1967, 81 Stat. 17.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing in subsecs. (a), (b),
(b)(1) to (4), (c), (d), (g), (h), and (i)(1), (2), (5).
1965—Subsec. (f). Pub. L. 89–117, struck out cl. (1) of
the first sentence which provided that all references in
section 1713(k) of this title to the ‘‘Housing Fund’’ shall
be construed to refer to the ‘‘War Housing Insurance
Fund’’ and redesignated cls. (2), (3), and (4) thereof as
cls. (1), (2), and (3), respectively.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.
1948—Subsec. (b). Act Aug. 10, 1948, § 101(d)(1), (2),
struck out par. (1) and inserted new par. (1), and struck
out first two sentences of par. (4) and inserted two new
sentences.
Subsec. (f). Act Aug. 10, 1948, § 101(d)(3), inserted last
sentence.
Subsec. (i). Act Aug. 10, 1948, § 101(d)(4), added subsec.
(i).

§ 1745. Insurance of mortgages on sales of Government housing; limits and conditions;
Greenbelt towns; State housing
Notwithstanding any of the provisions of this
subchapter, the Secretary is authorized, upon
application by the mortgagee, to insure or to
make commitments to insure under section 1738
or section 1743 of this title any mortgage executed in connection with the sale by the Government, or any agency or official thereof, of any
housing acquired or constructed under Public
Law 849, Seventy-sixth Congress, as amended;
Public Law 781, Seventy-sixth Congress, as
amended; or Public Laws 9, 73, or 353, Seventyseventh Congress, as amended (including any

§ 1745

property acquired, held or constructed in connection with such housing or to serve the inhabitants thereof), without regard to—
(1) any limit as to the time when any mortgage may be insured under this subchapter;
(2) any limit as to the aggregate amount of
principal obligations of all mortgages insured
under this subchapter, but the aggregate
amount of principal obligations of all mortgages insured pursuant to this section shall
not exceed $750,000,000;
(3) any requirement that the obligation be
approved for mortgage insurance prior to the
beginning of construction or that the construction be new construction;
(4) any of the provisions of subsections (b)(2)
or (b)(5) of section 1738 of this title or paragraphs (B) and (C) of the first sentence of section 1743(b)(3) of this title:
Provided, That such mortgage shall (1) otherwise
be eligible for insurance under section 1738 or
section 1743 of this title as the case may be, (2)
have a maturity not exceeding twenty-five years
from the date of insurance, (3) involve a principal obligation (including such initial service
charges, appraisal, inspection, and other fees as
the Secretary shall approve) in an amount not
exceeding 90 per centum of the appraised value
of the mortgage property as determined by the
Secretary, and (4) bear interest (exclusive of premium charges) at not to exceed 5 per centum per
annum on the amount of the principal obligation outstanding at any time if such mortgage
covers property on which there is located a
dwelling designed principally for residential use
for not more than four families in the aggregate,
irrespective of whether such dwelling or dwellings have a party wall or are otherwise physically connected with another dwelling or dwellings, or bear interest at not to exceed 41⁄2 per
centum per annum on the amount of the principal obligation outstanding at any time if such
mortgage covers property upon which there is
located a dwelling or dwellings designed principally for residential use for more than four
families.
The Secretary is further authorized to insure
or to make commitments to insure in accordance with the provisions of this section any
mortgage executed in connection with the sale
by the Secretary, or by any public housing agency with the approval of the Secretary, of any
housing (including any property acquired, held,
or constructed in connection with such housing
or to serve the inhabitants thereof) owned or financially assisted pursuant to the provisions of
Public Law 671, Seventy-sixth Congress.
The Secretary is further authorized to insure
or to make commitments to insure in accordance with the provisions of this section any
mortgage executed in connection with the sale
by the Government, or any agency or official
thereof, of any of the so-called Greenbelt towns,
or parts thereof, including projects, or parts
thereof, known as Greenhills, Ohio; Greenbelt,
Maryland; and Greendale, Wisconsin, developed
under the Emergency Relief Appropriation Act
of 1935, or of any of the village properties under
the jurisdiction of the Tennessee Valley Authority, and any mortgage executed in connection
with the first resale, within two years from the

§ 1746

TITLE 12—BANKS AND BANKING

date of its acquisition from the Government, of
any portion of a project or property of the character described in this section.
The Secretary is further authorized to insure
or to make commitments to insure under section 1743 of this title in accordance with the provisions of this section any mortgage executed in
connection with the sale by a State or municipality, or an agency, instrumentality, or body
politic of either, of any permanent housing (including any property acquired, held, or constructed in connection therewith or to serve the
inhabitants thereof), constructed by or on behalf
of such State, municipality, agency, instrumentality or body politic, for the occupancy of veterans of World War II, their families, and others:
Provided, That the principal obligation of any
such mortgage does not exceed either 85 per centum of the appraised value of the mortgage
property as determined by the Secretary or
$8,100 per family unit for such part of such property as may be attributable to dwelling use.
(June 27, 1934, ch. 847, title VI, § 610, as added
Aug. 5, 1947, ch. 495, § 2, 61 Stat. 777; amended
Aug. 10, 1948, ch. 832, title I, § 101(e), 62 Stat. 1270;
Apr. 20, 1950, ch. 94, title I, §§ 120, 122, 64 Stat. 58,
59; July 14, 1952, ch. 723, § 14, 66 Stat. 605; Pub. L.
90–19, § 1(a)(3), (o), May 25, 1967, 81 Stat. 17, 19.)
REFERENCES IN TEXT
Public Law 849, Seventy-sixth Congress, as amended,
referred to in text, is act Oct. 14, 1940, ch. 862, 54 Stat.
1125, as amended, known as the ‘‘Lanham Public War
Housing Act’’, which is classified generally to subchapters II to VII (§§ 1521 et seq., 1531 et seq., 1541 et
seq., 1561 et seq., 1571 et seq., and 1581 et seq.) of chapter
9 of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short
Title note set out under section 1501 of Title 42 and
Tables.
Public Law 781, Seventy-sixth Congress, as amended,
referred to in text, is the Second Supplemental National Defense Appropriation Act, 1941, act Sept. 9, 1940,
ch. 717, 54 Stat. 872. Section 201 thereof appropriated
$100,000,000 to the President for allocation to the former
‘‘War’’ Department, and to the Navy Department, for
the construction of housing necessary to the national
defense program. This provision was not classified to
the code.
Public Laws 9, 73, or 353, Seventy-seventh Congress,
as amended, referred to in text, refer to the following
acts, respectively: Public Law 9, Urgent Deficiency Appropriation Act, 1941, act Mar. 1, 1941, ch. 9, 55 Stat. 14;
Public Law 73, Additional Urgent Deficiency Appropriation Act, 1941, act May 24, 1941, ch. 132, 55 Stat. 197;
and Public Law 353, Third Supplemental National Defense Appropriation Act, 1942, act Dec. 17, 1941, ch. 591,
55 Stat. 810. These three acts appropriated a total of
$320,000,000 to the President for the purpose of providing
housing necessary because of national defense activities and conditions arising out of World War II. These
provisions were not classified to the code, although all
three acts are cited in a ‘‘Prior Additional Appropriations’’ note under section 1523 of Title 42, The Public
Health and Welfare.
Public Law 671, Seventy-sixth Congress, referred to in
text, is act June 28, 1940, ch. 440, 54 Stat. 676, as amended. Provisions of the Act relating to housing are contained in title II, which is classified generally to subchapter I (§ 1501 et seq.) of chapter 9 of Title 42. For
complete classification of this Act to the Code, see
Tables.
The Emergency Relief Appropriation Act of 1935, referred to in text, is Joint Res. Apr. 8, 1935, ch. 48, 49
Stat. 115. It was a temporary legislation, and was formerly set out in a note in former chapter 16 of Title 15,

Page 798

Commerce and Trade. See notes under sections 721 to
728 of that title.
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing, and ‘‘Secretary’’ for
‘‘Public Housing Administration’’ and ‘‘said Administration’’ in second par., respectively.
1952—Act July 14, 1952, inserted last par.
1950—Act Apr. 20, 1950, § 120, made the insurance authority of this section applicable to sale by the Public
Housing Administration, or any public housing agency,
of any housing owned or financially assisted pursuant
to the provisions of sections 1501 to 1505 of Title 42. The
Public Health and Welfare, which provided for the construction of war housing out of prior authorizations for
low-rent public housing on the condition that such
housing would be converted to low-rent use after termination of its use for war housing.
Act Apr. 20, 1950, § 122, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.
1948—Act Aug. 10, 1948, inserted last par. relating to
the Greenbelt towns.

§ 1746. Insurance on mortgages on large-scale
housing projects
(a) Additional authorization; encouragement of
cost-reduction techniques; advances
In addition to mortgages insured under other
sections of this subchapter, and in order to assist and encourage the application of cost-reduction techniques through large-scale modernized
site construction of housing and the erection of
houses produced by modern industrial processes,
the Secretary is authorized to insure mortgages
(including advances on such mortgages during
construction) which are eligible for insurance as
hereinafter provided.
(b) Eligibility requirements
To be eligible for insurance under this section,
a mortgage shall—
(1) have been made to and be held by a mortgagee approved by the Secretary as responsible and able to service the mortgage properly;
(2) cover property, held by a mortgagor approved by the Secretary, upon which there is
to be constructed or erected dwelling units for
not less than twenty-five families consisting
of a group of single-family dwellings approved
by the Secretary for mortgage insurance prior
to the beginning of construction: Provided,
That during the course of construction there
may be located upon the mortgaged property a
plant for the fabrication or storage of such
dwellings or sections or parts thereof, and the
Secretary may consent to the removal or release of such plant from the lien of the mortgage upon such terms and conditions as he
may approve;
(3) involve a principal obligation in an
amount—
(A) not to exceed 85 per centum of the
amount which the Secretary estimates will
be the value of the completed property or
project, exclusive of any plant of the character described in paragraph (2) of this subsection located thereon, and
(B) not to exceed a sum computed on the
individual dwellings comprising the total
project as follows: $5,950 or 85 per centum of
the valuation, whichever is the lower

Page 799

§ 1747

TITLE 12—BANKS AND BANKING

amount, with respect to each single-family
dwelling: Provided, That if the Secretary
finds that it is not feasible, within the dollar
amount limitation in this clause on the
principal obligation of the mortgage, to construct dwellings containing three or four
bedrooms without sacrifice of sound standards of construction, design, and livability,
he may increase such dollar amount limitation by not exceeding $850 for each additional bedroom (as defined by the Secretary)
in excess of two contained in each such
dwelling if he finds that such dwelling meets
sound standards of design and livability as a
three-bedroom unit or a four-bedroom unit,
as the case may be, but the amount computed under this clause for each such dwelling shall not exceed, in any event, $7,650.
With respect to the insurance of advances
during construction, the Secretary is authorized to approve advances by the mortgagee to
cover the cost of materials delivered upon the
mortgaged property and labor performed in
the fabrication or erection thereof;
(4) provide for complete amortization by
periodic payments within such term as the
Secretary shall prescribe and shall bear interest (exclusive of premium charges for insurance) as not to exceed 4 per centum per annum
on the amount of the principal obligation outstanding at any time: Provided, That the Secretary with the approval of the Secretary of
the Treasury, may prescribe by regulation a
higher maximum rate of interest, not exceeding 41⁄2 per centum per annum on the amount
of the principal obligation outstanding at any
time, if he finds that the mortgage market demands it. The Secretary may consent to the
release of a part or parts of the mortgaged
property from the lien of the mortgage upon
such terms and conditions as he may prescribe
and the mortgage may provide for such release, and the mortgage may provide that,
upon the completion of the construction of the
project, such mortgage may be replaced by individual mortgages covering each individual
dwelling in the project. Each such individual
mortgage may be insured under this section
with the mortgagor being either the builder
who constructed the dwellings or the owner
and occupant of the dwelling at the time, and
where the mortgagor is the owner and occupant, may involve a principal obligation in
such amount and have such maturity and interest rate as a mortgage eligible for insurance under section 1709(b)(2)(D) of this title.
(c) Preferences in occupancy for veterans and
hardship cases
Preference or priority of opportunity in the
occupancy of the mortgaged property for veterans of World War II and their immediate families and for hardship cases as defined by the Secretary shall be provided under such regulations
and procedures as may be prescribed by the Secretary.
(d) Applicability of other provisions
The provisions of subsections (c), (d), (e), and
(f) of section 1743 of this title shall be applicable
to mortgages insured under this section cover-

ing a project described in subsection (b) of this
section, and the provisions of subsections (a) to
(f), and (h) of section 1739 of this title shall be
applicable to the individual mortgages insured
pursuant to subsection (b)(4) of this section covering individual dwellings in the project.
(June 27, 1934, ch. 847, title VI, § 611, as added
Aug. 10, 1948, ch. 832, title I, § 101(f), 62 Stat. 1271;
amended Apr. 20, 1950, ch. 94, title I, §§ 121, 122, 64
Stat. 58, 59; Pub. L. 90–19, § 1(a)(3), May 25, 1967,
81 Stat. 17.)
REFERENCES IN TEXT
Section 1709(b)(2)(D) of this title, referred to in subsec. (b)(4), is a reference to subsec. (b)(2)(D) of section
1709 prior to amendment by section 104 of act Aug. 2,
1954, ch. 649, 68 Stat. 590.
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing in subsecs. (a), (b), and
(c).
1950—Act Apr. 20, 1950, § 122, substituted ‘‘Commissioner’’ for ‘‘Administrator’’ wherever appearing.
Subsec. (b)(3). Act Apr. 20, 1950, § 121(1), (2), substituted ‘‘85’’ for ‘‘80’’ in cl. (A), and inserted entirely
new material in cl. (B).
Subsec. (b)(4). Act Apr. 20, 1950, § 121(2), inserted
‘‘, and the mortgage may provide that, upon the completion of the construction of the project, such mortgage may be replaced by individual mortgages covering
each individual dwelling in the project. Each such individual mortgage may be insured under this section
with the mortgagor being either the builder who constructed the dwellings or the owner and occupant of the
dwelling at the time, and where the mortgagor is the
owner and occupant, may involve a principal obligation
in such amount and have such maturity and interest
rate as a mortgage eligible for insurance under section
1709(b)(2)(D) of this title’’.
Subsec. (d). Act Apr. 20, 1950, § 121(3), inserted ‘‘covering a project described in subsection (b) of this section,
and the provisions of subsections (a) to (f), and (h) of
section 1739 of this title shall be applicable to the individual mortgages insured pursuant to subsection (b)(4)
of this section covering individual dwellings in the
project’’.

§ 1746a. Termination of commitment authority
under this subchapter
Notwithstanding any other provision of this
subchapter, no mortgage or loan shall be insured
under any section of this subchapter after August 2, 1954 except pursuant to a commitment to
insure issued on or before such date.
(June 27, 1934, ch. 847, title VI, § 612, as added
Aug. 2, 1954, ch. 649, title I, § 127, 68 Stat. 609.)
SUBCHAPTER VII—INSURANCE FOR INVESTMENTS IN RENTAL HOUSING FOR
FAMILIES OF MODERATE INCOME
§ 1747. Purpose of subchapter; authorization;
terms and conditions; expiration of insurance contract
The purpose of this subchapter is to supplement the existing systems of mortgage insurance for rental housing under this chapter by a
special system of insurance designed to encourage equity investment in rental housing at rents
within the capacity of families of moderate income. To effectuate this purpose, the Secretary
is authorized, upon application by the investor,

§ 1747a

TITLE 12—BANKS AND BANKING

to insure as hereinafter provided, and, prior to
the execution of insurance contracts and upon
such terms as the Secretary shall prescribe, to
make commitments to insure, the minimum annual amortization charge and an annual return
on the outstanding investment of such investor
in any project which is eligible for insurance as
hereinafter provided in an amount (herein called
the ‘‘insured annual return’’) equal to such rate
of return, not exceeding 23⁄4 per centum per
annum, on such outstanding investment as
shall, after consultation with the Secretary of
the Treasury, be fixed in the insurance contract
or in the commitment to insure: Provided, That
any insurance contract made pursuant to this
subchapter shall expire as of the first day of the
operating year for which the outstanding investment amounts to not more than 10 per centum
of the established investment.
(June 27, 1934, ch. 847, title VII, § 701, as added
Aug. 10, 1948, ch. 832, title IV, § 401, 62 Stat. 1276;
amended Apr. 20, 1950, ch. 94, title I, § 122, 64
Stat. 59; Pub. L. 86–372, title I, § 118, Sept. 23,
1959, 73 Stat. 664; Pub. L. 90–19, § 1(a)(3), May 25,
1967, 81 Stat. 17.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.
1959—Pub. L. 86–372 struck out provisions which limited the aggregate amount of contingent liabilities outstanding at any one time under insurance contracts
and commitments to insure made pursuant to this subchapter to not more than $1,000,000,000.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.
SEPARABILITY
Act Aug. 10, 1948, ch. 832, title V, § 505, 62 Stat. 1285,
provided that: ‘‘Except as may be otherwise expressly
provided in this Act [sections 1701c, 1701e to 1701g–3,
1702, 1703, 1709, 1710, 1713, 1716, 1738, 1743 to 1746 and 1747
to 1747l of this title, section 846 of former Title 31,
Money and Finance, section 694 of former Title 38, Pensions, Bonuses, and Veterans’ Relief, and section 1404a
of Title 42, The Public Health and Welfare], all powers
and authorities conferred by this Act shall be cumulative and additional to and not in derogation of any
powers and authorities otherwise existing. Notwithstanding any other evidences of the intention of Congress, it is hereby declared to be the controlling intent
of Congress that if any provisions of this Act, or the application thereof to any person or circumstances, shall
be adjudged by any court of competent jurisdiction to
be invalid, such judgment shall not affect, impair, or
invalidate the remainder of this Act or its application
to other persons and circumstances, but shall be confined in its operation to the provisions of this Act, or
the application thereof to the persons and circumstances, directly involved in the controversy in which
such judgment shall have been rendered.’’
INCONSISTENT PROVISIONS
Act Aug. 10, 1948, ch. 832, title V, § 504, 62 Stat. 1285,
provided that: ‘‘Insofar as the provisions of any other
law are inconsistent with the provisions of this Act
[sections 1701c, 1701e to 1701g–3, 1702, 1703, 1709, 1710,
1713, 1716, 1738, 1743 to 1746 and 1747 to 1747l of this title,
section 846 of former Title 31, Money and Finance, section 694 of former Title 38, Pensions, Bonuses, and Veterans’ Relief, and section 1404a of Title 42, The Public
Health and Welfare], the provisions of this Act shall be
controlling.’’

Page 800

§ 1747a. Eligibility for insurance
(a) To be eligible for insurance under this subchapter, a project shall meet the following conditions:
(1) The Secretary shall be satisfied that
there is, in the locality or metropolitan area
of such project, a need for new rental dwellings at rents comparable to the rents proposed
to be charged for the dwellings in such project.
(2) Such project shall be economically sound,
and the dwellings in such project shall be acceptable to the Secretary as to quality, design, size, and type.
(b) Any insurance contract executed by the
Secretary under this subchapter shall be conclusive evidence of the eligibility of the project and
the investor for such insurance, and the validity
of any insurance contract so executed shall be
incontestable in the hands of an investor from
the date of the execution of such contract, except for fraud or misrepresentation on the part
of such investor.
(c) After completion of the project the investor must establish in a manner satisfactory to
the Secretary that the project is free and clear
of liens and that there are no other outstanding
unpaid obligations contracted in connection
with the construction of the project, except
taxes and such other liens and obligations as
may be approved or prescribed by the Secretary.
Debentures issued by the investor which are
payable out of net income from the project and
from the benefits of the insurance contract shall
not be construed as ‘‘unpaid obligations’’ as
such term is used in this subsection.
(June 27, 1934, ch. 847, title VII, § 702, as added
Aug. 10, 1948, ch. 832, title IV, § 401, 62 Stat. 1276;
amended Apr. 20, 1950, ch. 94, title I, § 122, 64
Stat. 59; Sept. 1, 1951, ch. 378, title VI, § 609(a), 65
Stat. 316; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81
Stat. 17.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing in subsecs. (a)(1), (2),
(b), and (c).
1951—Subsec. (c). Act Sept. 1, 1951, added subsec. (c).
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.

§ 1747b. Premium charges; fees for examination
and inspection
(a) For insurance granted pursuant to this
subchapter the Secretary shall fix and collect a
premium charge in an amount not exceeding
one-half of 1 per centum of the outstanding investment for the operating year for which such
premium charge is payable without taking into
account the excess earnings, if any, applied, in
addition to the minimum annual amortization
charge, to amortization of the outstanding investment. Such premium charge shall be payable annually in advance by the investor, either
in cash or in debentures issued by the Secretary
under this subchapter at par plus accrued interest: Provided, That, if in any operating year the
gross income shall be less than the operating expenses, the premium charge payable during such
operating year shall be waived, but only to the
extent of the amount of the difference between

Page 801

§ 1747f

TITLE 12—BANKS AND BANKING

such expenses and such income and subject to
subsequent payment out of any excess earnings
as hereinafter provided.
(b) With respect to any project offered for insurance under this subchapter, the Secretary is
authorized to charge and collect reasonable fees
for examination, and for inspection during the
construction of the project: Provided, That such
fees shall not aggregate more than one-half of 1
per centum of the estimated investment.
(June 27, 1934, ch. 847, title VII, § 703, as added
Aug. 10, 1948, ch. 832, title IV, § 401, 62 Stat. 1277;
amended Apr. 20, 1950, ch. 94, title I, § 122, 64
Stat. 59; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81
Stat. 17.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing in subsecs. (a) and (b).
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.

§ 1747c. Rent schedules
The Secretary shall require that the rents for
the dwellings in any project insured under this
subchapter shall be established in accordance
with a rent schedule approved by the Secretary,
and that the investor shall not charge or collect
rents for any dwellings in the project in excess
of the appropriate rents therefor as shown in the
latest rent schedule approved pursuant to this
section. Prior to approving the initial or any
subsequent rent schedule pursuant to this section, the Secretary shall find that such schedule
affords reasonable assurance that the rents to be
established thereunder are (1) not lower than
necessary, together with all other income to be
derived from or in connection with the project,
to produce reasonably stable revenues sufficient
to provide for the payment of the operating expenses, the minimum annual amortization
charge, and the minimum annual return; and (2)
not higher than necessary to meet the need for
dwellings for families of moderate income.
(June 27, 1934, ch. 847, title VII, § 704, as added
Aug. 10, 1948, ch. 832, title IV, § 401, 62 Stat. 1277;
amended Apr. 20, 1950, ch. 94, title I, § 122, 64
Stat. 59; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81
Stat. 17.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.

§ 1747d. Excess earnings used for amortization of
original investment
For all of the purposes of any insurance contract made pursuant to this subchapter, 50 per
centum of the excess earnings, if any, for any
operating year may be applied, in addition to
the minimum annual return, to return on the
outstanding investment but only to the extent
that such application thereof does not result in
an annual return of more than 5 per centum of
the outstanding investment for such operating
year, and the balance of any such excess earnings shall be applied, in addition to the minimum annual amortization charge, to amortiza-

tion of the outstanding investment: Provided,
That if in any preceding operating years the
gross income shall have been less than the operating expenses, such excess earnings shall be applied to the extent necessary in whole or in part,
first, to the reimbursement of the amount of the
difference between such expenses (exclusive of
any premium charges previously waived hereunder) and such income, and, second, to the payment of any premium charges previously waived
hereunder.
(June 27, 1934, ch. 847, title VII, § 705, as added
Aug. 10, 1948, ch. 832, title IV, § 401, 62 Stat. 1277.)
§ 1747e. Financial statements by Secretary
With respect to each project insured under
this subchapter, the Secretary shall provide
that, after the close of each operating year, the
investor shall submit to him for approval a financial and operating statement covering such
operating year. If any such financial and operating statement shall not have been submitted or,
for proper cause, shall not have been approved
by the Secretary, payment of any claim submitted by the investor may, at the option of the
Secretary, be withheld, in whole or in part, until
such statement shall have been submitted and
approved.
(June 27, 1934, ch. 847, title VII, § 706, as added
Aug. 10, 1948, ch. 832, title IV, § 401, 62 Stat. 1278;
amended Apr. 20, 1950, ch. 94, title I, § 122, 64
Stat. 59; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81
Stat. 17.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.

§ 1747f. Payment of claims; assignment of benefits by investors
If in any operating year the net income of a
project insured under this subchapter is less
than the aggregate of the minimum annual amortization charge and the insured annual return,
the Secretary, upon submission by the investor
of a claim for the payment of the amount of the
difference between such net income and the aggregate of the minimum annual amortization
charge and the insured annual return and after
proof of the validity of such claim, shall pay to
the investor, in cash from the General Insurance
Fund, the amount of such difference, as determined by the Secretary, but not exceeding, in
any event, an amount equal to the aggregate of
the minimum annual amortization charge and
the insured annual return. Nothing contained in
this subchapter or any other provision of law
shall be construed as preventing or restricting
an investor from assigning, pledging, or otherwise transferring or disposing of, subject to
rules and regulations of the Secretary, any or
all rights, claims, or other benefits under any
insurance contract made pursuant to this subchapter to an assignee, pledgee, or other transferee, including the holders (or the trustee for
such holders) of any debentures issued by the investor in connection with the project to which
such insurance contract relates, and the Sec-

§ 1747g

TITLE 12—BANKS AND BANKING

retary is authorized to pay claims or issue debentures in accordance with the provisions of
this section and section 1747g of this title to any
such assignee, pledgee, or other transferee.
(June 27, 1934, ch. 847, title VII, § 707, as added
Aug. 10, 1948, ch. 832, title IV, § 401, 62 Stat. 1278;
amended Apr. 20, 1950, ch. 94, title I, § 122, 64
Stat. 59; Sept. 1, 1951, ch. 378, title VI, § 609(b), 65
Stat. 316; Pub. L. 89–117, title XI, § 1108(s), Aug.
10, 1965, 79 Stat. 506; Pub. L. 90–19, § 1(a)(3), May
25, 1967, 81 Stat. 17.)
REFERENCES IN TEXT
The General Insurance Fund, referred to in text, was
established by section 1735c of this title.
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.
1965—Pub. L. 89–117 substituted ‘‘General Insurance
Fund’’ for ‘‘Housing Investment Insurance Fund’’.
1951—Act Sept. 1, 1951, inserted second sentence.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.

§ 1747g. Debentures
(a) Acquisition of project by Secretary; issuance
of debentures
If the aggregate of the amounts paid to the investor pursuant to section 1747f of this title with
respect to a project insured under this subchapter shall at any time equal or exceed 15 per
centum of the established investment, the Secretary thereafter shall have the right, after
written notice to the investor of his intentions
so to do, to acquire, as of the first day of any operating year, such project in consideration of
the issuance and delivery to the investor of debentures having a total face value equal to 90
per centum of the outstanding investment for
such operating year. In any such case the investor shall be obligated to convey to said Secretary title to the project which meets the requirements of the rules and regulations of the
Secretary in force at the time the insurance
contract was executed and which is evidenced in
the manner prescribed by such rules and regulations, and, in the event that the investor fails so
to do, said Secretary may, at his option, terminate the insurance contract.
(b) Relinquishment of project by investor
If in any operating year the aggregate of the
differences between the operating expenses (exclusive of any premium charges previously
waived hereunder) and the gross income for the
preceding operating years, less the aggregate of
any deficits in such operating expenses reimbursed from excess earnings as hereinbefore provided, shall at any time equal or exceed 5 per
centum of the established investment, the investor shall thereafter have the right, after written
notice to the Secretary of his intention so to do,
to convey to the Secretary, as of the first day of
any operating year, title to the project which
meets the requirements of the rules and regulations of the Secretary in force at the time the
insurance contract was executed and which is
evidenced in the manner prescribed by such
rules and regulations, and to receive from the
Secretary debentures having a total face value

Page 802

equal to 90 per centum of the outstanding investment for such operating year.
(c) Adjustment of difference between outstanding investment and total face value of debentures
Any difference, not exceeding $50, between 90
per centum of the outstanding investment for
the operating year in which a project is acquired
by the Secretary pursuant to this section and
the total face value of the debentures to be issued and delivered to the investment pursuant
to this section shall be adjusted by the payment
of cash by the Secretary to the investor from
the General Insurance Fund.
(d) Termination of insurance contract by Secretary
Upon the acquisition of a project by the Secretary pursuant to this section, the insurance
contract shall terminate.
(e) Issuance and execution of debentures
Debentures issued under this subchapter to
any investor shall be executed in the name of
the General Insurance Fund as obligor, shall be
signed by the Secretary, by either his written or
engraved signature, and shall be negotiable.
Such debentures shall be dated as of the first
day of the operating year in which the project
for which such debentures were issued was acquired by the Secretary, shall bear interest at a
rate to be determined by the Secretary, with the
approval of the Secretary of the Treasury, at the
time the insurance contract was executed, but
not to exceed 23⁄4 per centum per annum, payable
semiannually on the 1st day of January and the
1st day of July of each year, and shall mature on
the 1st day of July in such calendar year or
years, not later than the fortieth following the
date of the issuance thereof, as shall be determined by the Secretary and stated on the face of
such debentures.
(f) Terms and conditions of debentures
Such debentures shall be in such form and in
such denominations in multiples of $50, shall be
subject to such terms and conditions, and may
include such provisions of redemption as shall
be prescribed by the Secretary, with the approval of the Secretary of the Treasury, and
may be issued in either coupon or registered
form.
(g) Exemption from taxation; exceptions; guaranty
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 by any Territory, dependency, or possession of the United States, or
by the District of Columbia, or by any State,
county, municipality, or local taxing authority,
shall be payable out of the General Insurance
Fund, which shall be primarily liable therefor,
and shall be fully and unconditionally guaranteed, as to both the principal thereof and the interest thereon, by the United States, and such
guaranty shall be expressed on the face thereof.
In the event that the General Insurance Fund
fails to pay upon demand, when due, the principal of or the interest on any debentures so
guaranteed, the Secretary of the Treasury shall

Page 803

§ 1747k

TITLE 12—BANKS AND BANKING

pay to the holders the amount thereof, which is
authorized to be appropriated, out of any money
in the Treasury not otherwise appropriated, and
thereupon, to the extent of the amount so paid,
the Secretary of the Treasury shall succeed to
all the rights of the holders of such debentures.
(h) Payment of expenses and charges; collection
of claims
Notwithstanding any other provisions of law
relating to the acquisition, handling, or disposal
of real and other property by the United States,
the Secretary shall have power, for the protection of the General Insurance Fund, to pay out
of said Fund all expenses or charges in connection with, and to deal with, complete, reconstruct, rent, renovate, modernize, insure, make
contracts for the management of, or establish
suitable agencies for the management of, or sell
for cash or credit or lease in his discretion, in
whole or in part, any project acquired pursuant
to this subchapter; and, notwithstanding any
other provisions of law, the Secretary shall also
have power to pursue to final collection by way
of compromise or otherwise all claims acquired
by, or assigned or transferred to, him in connection with the acquisition or disposal of any
project pursuant to this subchapter: Provided,
That section 6101 of title 41 shall not be construed to apply to any contract for hazard insurance, or to any purchase or contract for services
or supplies on account of any project acquired
pursuant to this subchapter if the amount of
such purchase or contract does not exceed $1,000.
(June 27, 1934, ch. 847, title VII, § 708, as added
Aug. 10, 1948, ch. 832, title IV, § 401, 62 Stat. 1278;
amended Apr. 20, 1950, ch. 94, title I, § 122, 64
Stat. 59; Pub. L. 89–117, title XI, § 1108(t), Aug. 10,
1965, 79 Stat. 506; Pub. L. 90–19, § 1(a)(3), May 25,
1967, 81 Stat. 17.)
REFERENCES IN TEXT
The General Insurance Fund, referred to in text, was
established by section 1735c of this title.
CODIFICATION
In subsec. (h), ‘‘section 6101 of title 41’’ substituted
for ‘‘section 3709 of the Revised Statutes’’ on authority
of Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat. 3854,
which Act enacted Title 41, Public Contracts.
AMENDMENTS
1967—Subsecs. (a) to (f), (h). Pub. L. 90–19 substituted
‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.
1965—Subsecs. (c), (e), (g), (h). Pub. L. 89–117 substituted ‘‘General Insurance Fund’’ for ‘‘Housing Investment Insurance Fund’’ wherever appearing.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.

§ 1747h. Termination of insurance contract by investor
The investor, after written notice to the Secretary of his intention so to do, may terminate,
as of the close of any operating year, any insurance contract made pursuant to this subchapter.
The Secretary shall prescribe the events and
conditions under which said Secretary shall
have the option to terminate any insurance contract made pursuant to this subchapter, and the
events and conditions under which said Secretary may reinstate any insurance contract

terminated pursuant to this section or section
1747g(a) of this title. If any insurance contract is
terminated pursuant to this section, the Secretary may require the investor to pay an adjusted premium charge in such amount as the
Secretary determines to be equitable, but not in
excess of the aggregate amount of the premium
charges which such investor otherwise would
have been required to pay if such insurance contract had not been so terminated.
(June 27, 1934, ch. 847, title VII, § 709, as added
Aug. 10, 1948, ch. 832, title IV, § 401, 62 Stat. 1280;
amended Apr. 20, 1950, ch. 94, title I, § 122, 64
Stat. 59; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81
Stat. 17.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.

§ 1747i. Repealed. Pub. L. 89–117, title
§ 1108(aa), Aug. 10, 1965, 79 Stat. 507

XI,

Section, act June 27, 1934, ch. 847, title VII, § 710, as
added Aug. 10, 1948, ch. 832, title IV, § 401, 62 Stat. 1280;
amended Apr. 20, 1950, ch. 94, title I, § 122, 64 Stat. 59,
created the Housing Investment Insurance Fund, provided for the transfer of funds thereto, and authorized
the payment of claims and the issue and cancellation of
debentures.
For establishment of the General Insurance Fund, see
section 1735c of this title.

§ 1747j. Taxation of real property
Nothing in this subchapter shall be construed
to exempt any real property acquired and held
by the Secretary under this subchapter from
taxation by any State or political subdivision
thereof, to the same extent, according to its
value, as other real property is taxed.
(June 27, 1934, ch. 847, title VII, § 711, as added
Aug. 10, 1948, ch. 832, title IV, § 401, 62 Stat. 1281;
amended Apr. 20, 1950, ch. 94, title I, § 122, 64
Stat. 59; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81
Stat. 17.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.

§ 1747k. Rules and regulations
The Secretary may make such rules and regulations as may be necessary or desirable to
carry out the provisions of this subchapter, including, without limiting the foregoing, rules
and regulations relating to the maintenance by
the investor of books, records, and accounts
with respect to the project and the examination
of such books, records, and accounts by representatives of the Secretary; the submission of
financial and operating statements and the approval thereof; the submission of claims for payments under insurance contracts, the proof of
the validity of such claims, and the payment or
disallowance thereof; the increase of the established investment if the investor shall make
capital improvements or additions to the project; the decrease of the established investment

§ 1747l

TITLE 12—BANKS AND BANKING

if the investor shall sell part of the project; and
the reduction of the outstanding investment for
the appropriate operating year or operating
years pending the restoration of dwelling or
nondwelling facilities damaged by fire or other
casualty. With respect to any investor which is
subject to supervision or regulation by a State
banking, insurance, or other State department
or agency, the Secretary may, in carrying out
any of his supervisory and regulatory functions
with respect to projects insured under this subchapter, utilize, contract with, and act through,
such department or agency and without regard
to section 6101 of title 41.
(June 27, 1934, ch. 847, title VII, § 712, as added
Aug. 10, 1948, ch. 832, title IV, § 401, 62 Stat. 1281;
amended Apr. 20, 1950, ch. 94, title I, § 122, 64
Stat. 59; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81
Stat. 17.)
CODIFICATION
In text, ‘‘section 6101 of title 41’’ substituted for ‘‘section 3709 of the Revised Statutes’’ on authority of Pub.
L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat. 3854, which Act
enacted Title 41, Public Contracts.
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.

§ 1747l. Definitions
The following terms shall have the meanings,
respectively, ascribed to them below, and, unless
the context clearly indicates otherwise, shall include the plural as well as the singular number:
(a) ‘‘Investor’’ shall mean (1) any natural person; (2) any group of not more than ten natural
persons; (3) any corporation, company, association, trust, or other legal entity; or (4) any combination of two or more corporations, companies, associations, trusts, or other legal entities,
having all the powers necessary to comply with
the requirements of this subchapter, which the
Secretary (i) shall find to be qualified by business experience and facilities, to afford assurance of the necessary continuity of long-term
investment, and to have available the necessary
capital required for long-term investment in the
project, and (ii) shall approve as eligible for insurance under this subchapter.
(b) ‘‘Project’’ shall mean a project (including
all property, real and personal, contracts,
rights, and choses in action acquired, owned, or
held by the investor in connection therewith) of
an investor designed and used primarily for the
purpose of providing dwellings the occupancy of
which is permitted by the investor in consideration of agreed charges: Provided, That nothing
in this subchapter shall be construed as prohibiting the inclusion in a project of such stores,
offices, or other commercial facilities, recreational or community facilities, or other nondwelling facilities as the Secretary shall determine to be necessary or desirable appurtenances
to such project.
(c) ‘‘Estimated investment’’ shall mean the estimated cost of the development of the project,
as stated in the application submitted to the
Secretary for insurance under this subchapter.

Page 804

(d) ‘‘Established investment’’ shall mean the
amount of the reasonable costs, as approved by
the Secretary, incurred by the investor in, and
necessary for, carrying out all works and undertakings for the development of a project and
shall include the premium charge for the first
operating year and the cost of all necessary surveys, plans and specifications, architectural, engineering, or other special services, land acquisition, site preparation, construction, and equipment; a reasonable return on the funds of the investor paid out in the course of the development
of the project, up to and including the initial occupancy date; necessary expenses in connection
with the initial occupancy of the project; and
the cost of such other items as the Secretary
shall determine to be necessary for the development of the project, (1) less the amount by
which the rents and revenues derived from the
project up to and including the initial occupancy date exceeded the reasonable and proper
expenses, as approved by the Secretary, incurred
by the investor in, and necessary for, operating
and maintaining said project up to and including the initial occupancy date, or (2) plus the
amount by which such expenses exceeded such
rents and revenues, as the case may be.
(e) ‘‘Physical completion date’’ shall mean the
last day of the calendar month in which the Secretary determines that the construction of the
project is substantially completed and substantially all of the dwellings therein are available
for occupancy.
(f) ‘‘Initial occupancy date’’ shall mean the
last day of the calendar month in which 90 per
centum in number of the dwellings in the project on the physical completion date shall have
been occupied, but shall in no event be later
than the last day of the sixth calendar month
next following the physical completion date.
(g) ‘‘Operating year’’ shall mean the period of
twelve consecutive calendar months next following the initial occupancy date and each succeeding period of twelve consecutive calendar
months, and the period of the first twelve consecutive calendar months next following the initial occupancy date shall be the first operating
year.
(h) ‘‘Gross income’’ for any operating year
shall mean the total rents and revenues and
other income derived from, or in connection
with, the project during such operating year.
(i) ‘‘Operating expenses’’ for any operating
year shall mean the amounts, as approved by
the Secretary, necessary to meet the reasonable
and proper costs of, and to provide for, operating
and maintaining the project, and to establish
and maintain reasonable and proper reserves for
repairs, maintenance, and replacements, and
other necessary reserves during such operating
year, and shall include necessary expenses for
real estate taxes, special assessments, premium
charges made pursuant to this subchapter, administrative expenses, the annual rental under
any lease pursuant to which the real property
comprising the site of the project is held by the
investor, and insurance charges, together with
such other expenses as the Secretary shall determine to be necessary for the proper operation
and maintenance of the project, but shall not include income taxes.

Page 805

§ 1748

TITLE 12—BANKS AND BANKING

(j) ‘‘Net income’’ for any operating year shall
mean gross income remaining after the payment
of the operating expenses.
(k) ‘‘Minimum annual amortization charge’’
shall mean an amount equal to 2 per centum of
the established investment, except that, in the
case of a project where the real property comprising the site thereof is held by the investor
under a lease, if (notwithstanding the proviso of
section 1747b(a) of this title) the gross income
for any operating year shall be less than the
amount required to pay the operating expenses
(including the annual rental under such lease),
the minimum annual amortization charge for
such operating year shall mean an amount equal
to 2 per centum of the established investment
plus the amount of the annual rental under such
lease to the extent that the same is not paid
from the gross income.
(l) ‘‘Annual return’’ for any operating year
shall mean the net income remaining after the
payment of the minimum annual amortization
charge.
(m) ‘‘Insured annual return’’ shall have the
meaning ascribed to it in section 1747 of this
title.
(n) ‘‘Minimum annual return’’ for any operating year shall mean an amount equal to 31⁄2 per
centum of the outstanding investment for such
operating year or such lesser amount as shall be
agreed upon by the investor and the Secretary.
(o) ‘‘Excess earnings’’ for any operating year
shall mean the net income derived from a project in excess of the minimum annual amortization charge and the minimum annual return and
income taxes.
(p) ‘‘Outstanding investment’’ for any operating year shall mean the established investment,
less an amount equal to (1) the aggregate of the
minimum annual amortization charge for each
preceding operating year, plus (2) the aggregate
of the excess earnings, if any, during each preceding operating year applied, in addition to the
minimum annual amortization charge, to amortization in accordance with the provisions of
section 1747d of this title.
(q) ‘‘State’’ shall include the several States
and Puerto Rico, the District of Columbia,
Guam, and the Virgin Islands.
(June 27, 1934, ch. 847, title VII, § 713, as added
Aug. 10, 1948, ch. 832, title IV, § 401, 62 Stat. 1281;
amended Apr. 20, 1950, ch. 94, title I, § 122, 64
Stat. 59; Sept. 1, 1951, ch. 378, title VI, §§ 610, 612,
65 Stat. 316; July 14, 1952, ch. 723, § 10(a)(4), 66
Stat. 603; Pub. L. 86–70, § 10(a), June 25, 1959, 73
Stat. 142; Pub. L. 86–624, § 6, July 12, 1960, 74 Stat.
411; Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat.
17.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing in subsecs. (a) to (e), (i),
and (n).
1960—Subsec. (q). Pub. L. 86–624 struck out ‘‘Hawaii,’’
before ‘‘Puerto Rico’’.
1959—Subsec. (q). Pub. L. 86–70 struck out ‘‘Alaska,’’
before ‘‘Hawaii’’.
1952—Subsec. (q). Act July 14, 1952, added subsec. (q).
1951—Subsec. (n). Act Sept. 1, 1951, § 610, inserted ‘‘or
such lesser amount as shall be agreed upon by the investor and the Commissioner’’.
Subsec. (o). Act Sept. 1, 1951, § 612, inserted ‘‘and income taxes’’.

1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.

SUBCHAPTER VIII—ARMED SERVICES
HOUSING MORTGAGE INSURANCE
AMENDMENTS
1955—Act Aug. 11, 1955, ch. 783, title IV, § 401, 69 Stat.
646, substituted ‘‘ARMED SERVICES’’ for ‘‘MILITARY’’ and inserted ‘‘MORTGAGE’’ in subchapter
heading.

§ 1748. Definitions
As used in this subchapter—
(a) The term ‘‘mortgage’’ means a first mortgage on real estate, in fee simple, or on a leasehold (1) under a lease for not less than ninetynine years which is renewable; or (2) under a
lease for a period of not less than fifty years to
run from the date the mortgage was executed;
and the term ‘‘first mortgage’’ means such
classes of first liens as are commonly given to
secure advances on, or the unpaid purchase price
of, real estate, under the laws of the State in
which the real estate is located, together with
the credit instruments, if any, secured thereby.
(b) The term ‘‘mortgagee’’ includes the original lender under a mortgage, and his successors
and assigns approved by the Secretary; and the
term ‘‘mortgagor’’ includes the original borrower under a mortgage, his successors and assigns.
(c) The term ‘‘maturity date’’ means the date
on which the mortgage indebtedness would be
extinguished if paid in accordance with periodic
payments provided for in the mortgage.
(d) The term ‘‘housing accommodations’’
means housing designed for occupancy by military personnel and their dependents, assigned to
duty at or near the military installation where
such housing units are constructed.
(e) The term ‘‘personnel’’ shall include military and civilian personnel approved by the Secretary of Defense, or his designee, and the dependents of all such personnel.
(f) The term ‘‘military’’ includes Army, Navy,
Marine Corps, Air Force, and Coast Guard.
(g) The term ‘‘State’’ includes the several
States, and Puerto Rico, the District of Columbia, Guam, the Virgin Islands, the Canal Zone,
and Midway Island.
(June 27, 1934, ch. 847, title VIII, § 801, as added
Aug. 8, 1949, ch. 403, § 1, 63 Stat. 570; amended
July 14, 1952, ch. 723, § 10(a)(2), 66 Stat. 603; Aug.
11, 1955, ch. 783, title IV, § 401, 69 Stat. 646; Aug.
7, 1956, ch. 1029, title V, § 501, 70 Stat. 1109; Pub.
L. 86–70, § 10(a), June 25, 1959, 73 Stat. 142; Pub.
L. 86–624, § 6, July 12, 1960, 74 Stat. 411; Pub. L.
90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17.)
REFERENCES IN TEXT
For definition of Canal Zone, referred to in subsec.
(g), see section 3602(b) of Title 22, Foreign Relations
and Intercourse.
AMENDMENTS
1967—Subsec. (b). Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’.
1960—Subsec. (g). Pub. L. 86–624 struck out ‘‘Hawaii,’’
before ‘‘Puerto Rico’’.
1959—Subsec. (g). Pub. L. 86–70 struck out ‘‘Alaska,’’
before ‘‘Hawaii’’.

§ 1748a

TITLE 12—BANKS AND BANKING

1956—Subsec. (g). Act Aug. 7, 1956, inserted reference
to Canal Zone and Midway Island.
1955—Act Aug. 11, 1955, inserted definitions of ‘‘housing accommodations’’ and ‘‘personnel’’ and included
the Coast Guard in definition of ‘‘military’’.
1952—Subsec. (f). Act July 14, 1952, inserted ‘‘Guam,’’
after ‘‘District of Columbia,’’.
SAVINGS PROVISION
Act Aug. 11, 1955, ch. 783, title IV, § 408, 69 Stat. 653,
as amended by act Aug. 7, 1956, ch. 1029, title V, § 511,
70 Stat. 1110, provided that: ‘‘Notwithstanding the provisions of section 401 of this Act [amending this subchapter], the provisions of title VIII of the National
Housing Act [this subchapter] in effect prior to the enactment of the Housing Amendments of 1955 [August 11,
1955] shall continue in full force and effect with respect
to all mortgages insured pursuant to a certification by
the Secretary of Defense or his designee made on or before June 30, 1955, and a commitment to insure issued
on or before June 30, 1956 or pursuant to a certification
by the Atomic Energy Commission or its designee made
on or before June 30, 1956, except that the maximum
dollar amount for each such mortgage shall be
$12,500,000.] Nothing contained in the provisions of title
VIII of the National Housing Act [this subchapter] in
effect prior to August 11, 1955 or any related provision
of law, shall be construed to exempt from State or local
taxes or assessments the interest of a lessee from the
Federal Government in or with respect to any property
covered by a mortgage insured under such provisions of
title VIII: Provided, That, no such taxes or assessments
(not paid or encumbering such property or interest
prior to June 15, 1956) on the interest of such lessee
shall exceed the amount of taxes or assessments on
other similar property of similar value, less such
amount as the Secretary of Defense or his designee determines to be equal to (1) any payments made by the
Federal Government to the local taxing or other public
agencies involved with respect to such property, plus
(2) such amount as may be appropriate for any expenditures made by the Federal Government or the lessee for
the provision or maintenance of streets, sidewalks,
curbs, gutters, sewers, lighting, snow removal or any
other services or facilities which are customarily provided by the State, county, city, or other local taxing
authority with respect to such other similar property:
And provided further, That the provisions of this section
shall not apply to properties leased pursuant to the
provisions of section 805 of the National Housing Act
[12 U.S.C. 1748d] as amended on or after August 11, 1955,
which properties shall be exempt from State or local
taxes or assessments.’’
TRANSFER OF FUNCTIONS
For transfer of authorities, functions, personnel, and
assets of the Coast Guard, including the authorities
and functions of the Secretary of Transportation relating thereto, to the Department of Homeland Security,
and for treatment of related references, see sections
468(b), 551(d), 552(d), and 557 of Title 6, Domestic Security, and the Department of Homeland Security Reorganization Plan of November 25, 2002, as modified, set
out as a note under section 542 of Title 6.
COAST GUARD
Subchapter as applicable to Coast Guard, see section
1594e of Title 42, The Public Health and Welfare.

§ 1748a. Repealed. Pub. L. 89–117, title
§ 1108(aa), Aug. 10, 1965, 79 Stat. 507

XI,

Section, act June 27, 1934, ch. 847, title VIII, § 802, as
added Aug. 8, 1949, ch. 403, § 1, 63 Stat. 571; amended
Aug. 11, 1955, ch. 783, title IV, § 401, 69 Stat. 646, created
the Armed Services Housing Insurance Fund.
For establishment of the General Insurance Fund, see
section 1735c of this title.

Page 806

§ 1748b. Insurance of mortgages
(a) Aggregate amount of insurance; termination
date
In order to assist in relieving the acute shortage and urgent need for family housing which
now exists at or in areas adjacent to military installations because of uncertainty as to the permanency of such installations and to increase
the supply of necessary family housing accommodations for personnel at such installations,
the Secretary is authorized, upon application of
the mortgagee, to insure mortgages (including
advances on such mortgages during construction) which are eligible for insurance as hereinafter provided, and, upon such terms as the Secretary may prescribe, to make commitments for
so insuring such mortgages prior to the date of
their execution or disbursement thereon: Provided, That the aggregate amount of principal
obligations of all mortgages insured under this
subchapter (except mortgages insured pursuant
to the provisions of this subchapter in effect
prior to August 11, 1955) shall not exceed
$2,300,000,000: And provided further, That the limitation in section 1715h of this title shall not
apply to this subchapter: And provided further,
That no more mortgages shall be insured under
this section after October 1, 1962, except pursuant to a commitment to insure before such date,
and not more than twenty-eight thousand family housing units shall be contracted for after
June 30, 1959, pursuant to any mortgage insured
under this section after such date.
(b) Eligibility for insurance
To be eligible for insurance under this subchapter a mortgage shall meet the following
conditions:
(1) The mortgaged property shall be held by
a mortgagor approved by the Secretary. The
Secretary may, in his discretion, require such
mortgagor to be regulated or restricted as to
capital structure, and methods of operation.
The Secretary may make such contracts with,
and acquire for not to exceed $100 stock or interest in, any such mortgagor, as the Secretary may deem necessary to render effective
such restriction or regulation. Such stock or
interest shall be paid for out of the General Insurance Fund, and shall be redeemed by the
mortgagor at par upon the termination of all
obligations of the Secretary under the insurance.
(2) The mortgaged property shall be designed
for use for residential purposes by personnel of
the armed services and situated at or near a
military installation, and the Secretary of Defense or his designee shall have certified that
there is no intention, so far as can reasonably
be foreseen, to substantially curtail the personnel assigned or to be assigned to such installation, and (i) shall have determined that
for reasons of safety, security, or other essential military requirements, it is necessary
that the personnel involved reside in public
quarters: Provided, however, That for the purposes of this subsection housing covered by a
mortgage insured, or for which a commitment
to insure has been issued, under this section
prior to August 11, 1955, may be considered the

Page 807

TITLE 12—BANKS AND BANKING

same as available quarters, and (ii) with the
approval of the Secretary, shall have determined that adequate housing is not available
for such personnel at reasonable rentals within reasonable commuting distance of the installation and that the mortgaged property
will not, so far as can reasonably be foreseen,
substantially curtail occupancy in existing
housing covered by mortgages insured under
this chapter. The housing accommodations
shall comply with such standards and conditions as the Secretary may prescribe to establish the acceptability of such property for
mortgage insurance, except that the certification of the Secretary of Defense or his designee shall (for purposes of mortgage insurance under this subchapter) be conclusive evidence to the Secretary of the existence of the
need for such housing. However, if the Secretary does not concur in the housing needs as
certified by the Secretary of Defense, the Secretary may require the Secretary of Defense
to guarantee the General Insurance Fund
against loss with respect to the mortgage covering such housing. There are authorized to be
appropriated such sums as may be necessary
to provide for payment to meet losses arising
from such guaranty.
(3) The mortgage shall involve a principal
obligation in an amount—
(A) not to exceed the amount which the
Secretary estimates will be the replacement
cost of the property or project when the proposed improvements are completed (the cost
of the property or project as such term is
used in this paragraph may include the cost
of the land, the physical improvements, and
utilities within the boundaries of the property or project);
(B) not to exceed an average of $16,500 per
family unit for such part of such property or
project (including ranges, refrigerators,
shades, screens, and fixtures) as may be attributable to dwelling use: Provided, That
the replacement cost of the property or
project as determined by the Secretary, including the estimated value of any usable
utilities within the boundaries of the property or project where owned by the United
States and not provided for out of the proceeds of the mortgage, shall not exceed an
average of $16,500 per family unit: Provided
further, That should the financing of housing
to be constructed pursuant to a single invitation for bids be accomplished by two or
more mortgages, the principal obligation of
any single mortgage may exceed an average
of $16,500 per family unit if the sum of the
principal obligations of all mortgages for
such housing does not exceed an average of
$16,500 per family unit: And provided further,
That subject to the limitations of this paragraph no family unit included in any mortgaged property shall be contracted for after
June 8, 1960 if the cost of such unit exceeds
$19,800; and
(C) not to exceed the bid of the eligible
bidder with respect to the property or project under section 1594 of title 42.
The mortgage shall provide for complete amortization by periodic payments within such terms

§ 1748b

as the Secretary shall prescribe, but not to exceed thirty years from the beginning of amortization of the mortgage, and shall bear interest
(exclusive of premium charges for insurance) as
not to exceed 41⁄2 per centum per annum of the
amount of the principal obligation outstanding
at any time. The Secretary may consent to the
release of a part or parts of the mortgaged property from the lien of the mortgage upon such
terms and conditions as he may prescribe and
the mortgage may provide for such release. The
property or project may include such nondwelling facilities as the Secretary deems adequate to
serve the occupants.
(c) Premium charges
The Secretary is authorized to fix a premium
charge for the insurance of mortgages under this
subchapter but in the case of any mortgage such
charge shall not be less than an amount equivalent to one-half of 1 per centum per annum nor
more than an amount equivalent to 11⁄2 per centum per annum of the amount of the principal
obligation of the mortgage outstanding at any
time, without taking into account delinquent
payments or prepayments. Such premium
charges shall be payable by the mortgagee, either in cash, or in debentures issued by the Secretary under this subchapter at par plus accrued
interest, in such manner as may be prescribed
by the Secretary: Provided, That the Secretary
may require the payment of one or more such
premium charges at the time the mortgage is insured, at such discount rate as he may prescribe
not in excess of the interest rate specified in the
mortgage. If the Secretary finds, upon the presentation of a mortgage for insurance and the
tender of the initial premium charge and such
other charges as the Secretary may require,
that the mortgage complies with the provisions
of this subchapter, such mortgage may be accepted for insurance by endorsement or otherwise as the Secretary may prescribe. In the
event that the principal obligation of any mortgage accepted for insurance under this subchapter is paid in full prior to the maturity
date, the Secretary is authorized to refund to
the mortgagee for the account of the mortgagor
all, or such portion as he shall determine to be
equitable, of the current unearned premium
charges theretofore paid. The Secretary may reduce the payment of premiums provided for
herein. The Secretary is further authorized to
reduce the amount of the premium charge below
one-half of 1 per centum per annum with respect
to any mortgage on property acquired by the
Secretary of Defense or his designee if the mortgage is insured pursuant to the provisions of
this subchapter as in effect prior to August 11,
1955.
(d) Default by mortgagor; rights of mortgagee
The failure of the mortgagor to make any payment due under or provided to be paid by the
terms of a mortgage insured under this subchapter shall be considered a default under such
mortgage, and, if such default continues for a
period of thirty days, the mortgagee shall be entitled to receive the benefits of the insurance as
hereinafter provided, upon assignment, transfer,
and delivery to the Secretary, within a period
and in accordance with rules and regulations to

§ 1748b

TITLE 12—BANKS AND BANKING

be prescribed by the Secretary of (1) all rights
and interest arising under the mortgage so in
default; (2) all claims of the mortgagee against
the mortgagor or others, arising out of the
mortgage transactions; (3) all policies of title or
other insurance or surety bonds or other guaranties and any and all claims thereunder; (4) any
balance of the mortgage loan not advanced to
the mortgagor; (5) any cash or property held by
the mortgagee, or to which it is entitled, as deposits made for the account of the mortgagor
and which have not been applied in reduction of
the principal of the mortgage indebtedness; and
(6) all records, documents, books, papers, and accounts relating to the mortgage transaction.
Upon such assignment, transfer, and delivery,
the obligation of the mortgagee to pay the premium charges for mortgage insurance shall
cease, and the Secretary shall, subject to the
cash adjustment provided for in subsection (e) of
this section, issue to the mortgagee debentures
having a total face value equal to the value of
the mortgage, and a certificate of claim as hereinafter provided. For the purposes of this subsection, the value of the mortgage shall be determined in accordance with rules and regulations prescribed by the Secretary, by adding to
the amount of the original principal obligation
of the mortgage which was unpaid on the date of
default, the amount the mortgagee may have
paid for (A) taxes, special assessments, and
water rates, which are liens prior to the mortgage; (B) insurance on the property; and (C) reasonable expenses for the completion and preservation of the property and any mortgage insurance premiums paid after default; less the sum
of (i) any amount received on account of the
mortgage after such date; and (ii) any net income received by the mortgagee from the property after such date.
(e) Debentures; issuance; form and denomination
Debentures issued under this subchapter 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
Secretary, 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 Secretary to the
mortgagee from the General Insurance Fund.
(f) Debentures; execution; signature; negotiability; interest rate; tax exemption; guarantee
Debentures issued under this subchapter shall
be executed in the name of the General Insurance Fund as obligor, shall be signed by the Secretary, 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 established by the Secretary pursuant to section 1715o of this title, payable semiannually on the 1st day of January and the 1st
day of July of each year, and shall mature twenty years after the date thereof. Such debentures
shall be exempt, both as to principal and inter-

Page 808

est, from all taxation (except surtaxes, estate,
inheritance, and gift taxes) now or hereafter imposed by any Territory, dependency, or possession of the United States or by the District of
Columbia, or by any State, county, municipality, or local taxing authority. They shall be paid
out of the General Insurance Fund, which shall
be primarily liable therefor, and they shall be
fully and unconditionally guaranteed as to principal and interest by the United States, and
such guaranty shall be expressed on the face of
the debentures. In the event the General Insurance Fund fails to pay upon demand, when due,
the principal of or interest on any debentures so
guaranteed, the Secretary of the Treasury shall
pay to the holders the amount thereof which is
authorized to be appropriated, and thereupon to
the extent of the amount so paid the Secretary
of the Treasury shall succeed to all the rights of
the holders of such debentures.
(g) Claim certificates
The certificate of claim issued by the Secretary to any mortgagee in connection with the
insurance of mortgages under this subchapter
shall be for an amount determined in accordance
with subsections (e) and (f) of section 1739 of this
title, except that any amount remaining after
the payment of the full amount under the certificate of claim shall be retained by the Secretary and credited to the General Insurance
Fund.
(h) Laws applicable
The provisions of section 1713(k) and (l) of this
title shall be applicable to mortgages insured
under this subchapter and to property acquired
by the Secretary hereunder, except that as applied to such mortgages and property, the reference in section 1713(k) of this title to subsection (g) shall be construed to refer to subsection (d) of this section.
(i) Secretary’s additional powers to insure certain mortgages
The Secretary shall also have power to insure
under this subchapter or subchapter II any
mortgage executed in connection with the sale
by him of any property acquired under this subchapter without regard to any limit as to eligibility, time or aggregate amount contained in
this subchapter or subchapter II.
(j) Conclusiveness and validity of insurance contract
Any contract of insurance executed by the
Secretary under this subchapter shall be conclusive evidence of the eligibility of the mortgage
for insurance and the validity of any contract of
insurance so executed shall be incontestable in
the hands of an approved mortgagee from the
date of the execution of such contract, except
for fraud or misrepresentation on the part of
such approved mortgagee.
(k) Certification as to overtime wages paid to laborers and mechanics
The Secretary shall not insure any mortgage
under this section unless the principal contractor or contractors engaged in the construction
of the project involved file a certificate or certificates (at such times, in the course of construction or otherwise, as the Secretary may

Page 809

TITLE 12—BANKS AND BANKING

prescribe) certifying that the laborers and mechanics employed in the construction of such
project have been paid not less than one and
one-half times the regular rate of pay for employment in excess of eight hours in any one day
or in excess of forty hours in any one week.
(June 27, 1934, ch. 847, title VIII, § 803, as added
Aug. 8, 1949, ch. 403, § 1, 63 Stat. 571; amended
Sept. 1, 1951, ch. 378, title VI, § 601(a)–(c), 65 Stat.
312; June 30, 1953, ch. 170, § 10, 67 Stat. 124; June
29, 1954, ch. 410, § 1(2), 68 Stat. 320; Aug. 2, 1954,
ch. 649, title I, §§ 112(c), 128(a), 130, 68 Stat. 593,
609; June 30, 1955, ch. 251, § 1(2), 69 Stat. 225; Aug.
11, 1955, ch. 783, title IV, § 401, 69 Stat. 647; Aug.
7, 1956, ch. 1029, title V, §§ 502–506(a), 70 Stat. 1109,
1110; Pub. L. 85–104, title I, § 108(c), title V, §§ 501,
502, July 12, 1957, 71 Stat. 297, 303; Pub. L. 85–364,
§ 3(b), Apr. 1, 1958, 72 Stat. 73; Pub. L. 86–149, title
IV, § 414(a), Aug. 10, 1959, 73 Stat. 322; Pub. L.
86–372, title VII, § 701, Sept. 23, 1959, 73 Stat. 682;
Pub. L. 86–500, title V, § 507(a), (c), June 8, 1960,
74 Stat. 185, 186; Pub. L. 87–57, title VI, § 607(a),
June 27, 1961, 75 Stat. 111; Pub. L. 87–70, title VI,
§ 604(d), June 30, 1961, 75 Stat. 177; Pub. L. 87–623,
§ 1, Aug. 31, 1962, 76 Stat. 418; Pub. L. 89–117, title
XI, § 1108(u), Aug. 10, 1965, 79 Stat. 506; Pub. L.
90–19, § 1(a)(3), (p), May 25, 1967, 81 Stat. 17, 19;
Pub. L. 96–470, title I, § 107(b), Oct. 19, 1980, 94
Stat. 2238.)
REFERENCES IN TEXT
The General Insurance Fund, referred to in text, was
established by section 1735c of this title.
AMENDMENTS
1980—Subsec. (b)(2). Pub. L. 96–470 struck out provision requiring the Secretary to report to the Committees on Banking and Currency of the Senate and the
House of Representatives each instance in which he has
required the Secretary of Defense to guarantee the
General Insurance Fund and the reasons therefor.
1967—Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’
for ‘‘Commissioner’’ wherever appearing in subsecs. (a),
(b)(1), (2), (3)(A), (B), following (C), and (c) to (k).
Subsec. (b)(2). Pub. L. 90–19, § 1(p)(1)–(4), substituted
‘‘Secretary of Defense’’ for ‘‘Secretary’’ in first, third,
and fourth sentences.
1965—Subsecs. (b)(1), (b)(2), (e), (f), (g). Pub. L. 89–117,
§ 1108(u)(1), substituted ‘‘General Insurance Fund’’ for
‘‘Armed Services Housing Mortgage Insurance Fund’’
wherever appearing.
Subsec. (h). Pub. L. 89–117, § 1108(u)(2), struck out provision that, as applied to mortgages insured under this
subchapter and to property acquired by the Commissioner hereunder, reference in subsecs. (k) and (l) of
section 1713 of this title to the ‘‘Housing Fund’’ shall be
construed to refer to the ‘‘Armed Services Housing
Mortgage Insurance Fund’’.
1962—Subsec. (a). Pub. L. 87–623 substituted ‘‘mortgages shall be insured under this section after October
1, 1962’’ for ‘‘mortgages shall be insured under this subchapter after October 1, 1962’’.
1961—Subsec. (a). Pub. L. 87–70 made amendment
identical to that made by Pub. L. 87–57.
Pub. L. 87–57 substituted ‘‘October 1, 1962’’ for ‘‘October 1, 1961’’, and ‘‘twenty-eight thousand family units’’
for ‘‘twenty-five thousand family housing units’’.
1960—Subsec. (a). Pub. L. 86–500, § 507(a), substituted
‘‘twenty-five thousand family housing units’’ for
‘‘twenty thousand family housing units’’.
Subsec. (b)(3). Pub. L. 86–500, § 507(c), inserted proviso
prohibiting, subject to the limitations of par. (B), the
contracting for any family unit included in any mortgaged property after June 8, 1960, if the cost of the unit
exceeds $19,800.

§ 1748b

1959—Subsec. (a). Pub. L. 86–372, § 701(a), substituted
‘‘October 1, 1961’’ for ‘‘September 30, 1960’’.
Pub. L. 86–149 inserted provisions in subsec. (a) to
prohibit insurance of mortgages under this subchapter
after Sept. 30, 1960, and to limit the number of housing
units which may be contracted for after June 30, 1959 to
not more than 20,000.
Subsec. (b)(3). Pub. L. 86–372, § 701(b), (c), substituted
‘‘but not to exceed thirty years from the beginning of
amortization of the mortgage’’ for ‘‘have a maturity of
not to exceed twenty-five years’’, and inserted provisions authorizing the property or project to include
such nondwelling facilities as the Commission deems
adequate to serve the occupants.
Subsec. (c). Pub. L. 86–372, § 701(d), authorized the
Commissioner to reduce the amount of the premium
charge below one-half of 1 per centum per annum with
respect to any mortgage on property acquired by the
Secretary of Defense or his designee if the mortgage is
insured pursuant to the provisions of this subchapter as
in effect prior to August 11, 1955.
Subsec. (k). Pub. L. 86–372, § 701(e), added subsec. (k).
1958—Subsec. (b). Pub. L. 85–364 increased the maximum amount of interest from 4 to 41⁄2 per centum per
annum.
1957—Subsec. (a). Pub. L. 85–104, § 501, substituted
‘‘June 30, 1959’’ for ‘‘June 30, 1958’’.
Subsec. (b)(3)(B). Pub. L. 85–104, § 502, inserted proviso
that should financing of housing to be constructed pursuant to a single invitation for bids be accomplished by
two or more mortgages, any single mortgage may exceed an average of $16,500 if sum of all mortgages for
such housing does not exceed average of $16,500.
Subsec. (f). Pub. L. 85–104, § 108(c), substituted, in second sentence, ‘‘established by the Commissioner pursuant to section 1715o of this title’’ for ‘‘determined 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’’.
1956—Subsec. (a). Act Aug. 7, 1956, §§ 502, 503, inserted
‘‘(except mortgages insured pursuant to the provisions
of this subchapter in effect prior to August 11, 1955)’’
and substituted ‘‘$2,300,000’’ for ‘‘$1,363,500,000’’ in first
proviso and ‘‘June 30, 1958’’ for ‘‘September 30, 1956’’ in
third proviso.
Subsec. (b)(2). Act Aug. 7, 1956, § 504, required approval of Commissioner, with determination of Secretary, that new units will not substantially curtail occupancy in existing houses covered by mortgages insured under this chapter, and provided that if Commissioner requires Secretary to guarantee the armed services housing mortgages insurance fund from loss, he
shall report to the Committees on Banking and Currency of the Senate and House of Representatives each
instance in which he required such a guarantee.
Subsec. (b)(3)(B). Act Aug. 7, 1956, § 505, substituted
‘‘$16,500’’ for ‘‘$13,500’’ in two places, and inserted ‘‘(including ranges, refrigerators, shades, screens, and fixtures)’’.
Subsec. (b)(3)(C). Act Aug. 7, 1956, § 506(a), substituted
‘‘eligible bidder with respect to’’ for ‘‘eligible builder
of’’.
1955—Subsec. (a). Act Aug. 11, 1955, increased authorization from $500,000,000 to $1,363,500,000, and extended
from June 30, 1955, to September 30, 1956, period within
which mortgages can be insured.
Act June 30, 1955, extended termination date, with respect to authority to insure, from June 30, 1955, to July
31, 1955.
Subsec. (b). Act Aug. 11, 1955, authorized issuance of
insurance for units necessary for reasons of safety, security, or other essential military requirements, or
where adequate housing is not available at reasonable
rentals within reasonable commuting distance, limited
the amount of the mortgage to not more than the replacement cost of the property or project, restricted
the amount of the mortgage to not more than an average of $13,500 for a family unit, and required the mortgage to mature in not more than 25 years.

§ 1748c

TITLE 12—BANKS AND BANKING

Subsec. (c). Act Aug. 11, 1955, struck out authorization of Commissioner to require payment by mortgagee
of an adjusted premium charge in event that principal
obligation of mortgage is paid in full prior to maturity
date.
Subsec. (d). Act Aug. 11, 1955, struck out provisions
which authorized mortgagee to proceed to foreclose
mortgage in event of a default, and which granted
mortgagee right to elect benefits of insurance when the
United States acquires, or commences condemnation
proceedings to acquire, all or a substantial part, of
mortgaged property.
Subsecs. (e) to (h). Act Aug. 11, 1955, substituted
‘‘Armed Services Housing Mortgage Insurance Fund’’
for ‘‘Military Housing Insurance Fund,’’ wherever appearing.
Subsec. (i). Act Aug. 11, 1955, struck out the power of
the Commissioner to insure under subchapter VI of this
chapter.
Subsec. (j). Act Aug. 11, 1955, reenacted provisions
without change.
Subsec. (k). Act Aug. 11, 1955, struck out provisions
which authorized utilization of the powers of the Federal National Mortgage Association and of any other
Federal corporation or other Federal agency to purchase, service, or sell any mortgages, or partial interest therein.
1954—Subsec. (a). Acts Aug. 2, 1954, § 128(a), and June
29, 1954, extended termination date, with respect to authority to insure, from July 31, 1954, to June 30, 1955,
and from July 1, 1954, to July 31, 1954, respectively.
Subsec. (b). Act Aug. 2, 1954, § 130, in par. immediately
following subpar. (C) of par. (3) of the subsection, substituted the requirement that the mortgagor shall
enter into the agreement required by section 1715r of
this title for former provisions relating to certification
of builders’ costs, the certifications now being prescribed into section 1715r.
Subsec. (f). Act Aug. 2, 1954, § 112(c), in second sentence, substituted a twenty-year period for ten-year period, with respect to the maturity of debentures.
1953—Subsec. (a). Act June 30, 1953, § 10(a), in second
proviso substituted ‘‘July 1, 1954’’ for ‘‘July 1, 1953’’.
Subsec. (b). Act June 30, 1953, § 10(b), (c), inserted par.
commencing ‘‘The mortgagor shall agree’’; and, in first
sentence of par. commencing ‘‘The mortgage shall provide’’, substituted ‘‘41⁄2 per centum’’ for ‘‘4 per centum’’.
1951—Subsec. (a). Act Sept. 1, 1951, § 601(a), substituted ‘‘July 1, 1953’’ for ‘‘July 1, 1951’’ in second proviso.
Subsec. (b)(3)(C). Act Sept. 1, 1951, § 601(b), inserted
proviso.
Subsec. (d). Act Sept. 1, 1951, § 601(c), inserted reference to the Atomic Energy Commission in last sentence.
EFFECTIVE DATE OF 1954 AMENDMENT
Amendment by section 112(c) of act Aug. 2, 1954, as
not applicable in any case where the mortgage involved
was insured or the commitment for such insurance was
issued prior to Aug. 2, 1954, see section 112(e) of that
act, set out as a note under section 1710 of this title.
EFFECTIVE DATE OF 1951 AMENDMENT
Act Sept. 1, 1951, ch. 378, § 601(a), 65 Stat. 312, provided
that the amendment made by that section is effective
July 1, 1951.

§ 1748c. Repealed. Pub. L. 89–117, title
§ 1108(aa), Aug. 10, 1965, 79 Stat. 507

XI,

Section, act June 27, 1934, ch. 847, title VIII, § 804, as
added Aug. 8, 1949, ch. 403, § 1, 63 Stat. 575; amended
Aug. 11, 1955, ch. 783, title IV, § 401, 69 Stat. 650, provided
for disposition and use of excess moneys in Armed
Services Housing Mortgage Insurance Fund, issue and
cancellation of debentures, and receipt and payment of
credits and charges.

Page 810

§ 1748d. Lease of property; terms and conditions
Whenever the Secretary of the Army, Navy, or
Air Force determines that it is necessary to
lease any land held by the United States on or
near a military installation to effectuate the
purposes of this subchapter, he may lease such
land upon such terms and conditions as will, in
his opinion, best serve the national interest. The
authority conferred by this section shall be in
addition to and not in derogation of any other
power or authority of the Secretary of the
Army, Navy, or Air Force.
(June 27, 1934, ch. 847, title VIII, § 805, as added
Aug. 8, 1949, ch. 403, § 1, 63 Stat. 576; amended
Aug. 11, 1955, ch. 783, title IV, § 401, 69 Stat. 651.)
AMENDMENTS
1955—Act Aug. 11, 1955, struck out specific references
to sections authorizing leases of property, and struck
out the power to sell, transfer, and convey real property.

§ 1748e. Mortgages on property in Alaska
The second sentence of section 1715d of this
title, as amended, relating to housing in the
State of Alaska, shall not apply to mortgages
insured under this subchapter on property in
said State.
(June 27, 1934, ch. 847, title VIII, § 806, as added
Aug. 8, 1949, ch. 403, § 1, 63 Stat. 576; amended
Aug. 11, 1955, ch. 783, title IV, § 401, 69 Stat. 651;
Pub. L. 86–70, § 10(d), June 25, 1959, 73 Stat. 143.)
REFERENCES IN TEXT
Section 1715d of this title, referred to in text, was in
the original ‘‘section 214 of the National Housing Act,
as amended’’. Section 214 of that Act was classified
originally to section 1715d of this title and to section
484d of Title 48, Territories and Insular Possessions.
Section 484d of Title 48 has been omitted from the Code.
AMENDMENTS
1959—Pub. L. 86–70 substituted ‘‘State’’ for ‘‘Territory’’ in two places.
1955—Act Aug. 11, 1955, reenacted section without
change.

§ 1748f. Rules and regulations
The Secretary is authorized and directed to
make such rules and regulations as may be necessary to carry out the provisions of this subchapter.
(June 27, 1934, ch. 847, title VIII, § 807, as added
Aug. 8, 1949, ch. 403, § 1, 63 Stat. 576; amended
Aug. 11, 1955, ch. 783, title IV, § 401, 69 Stat. 651;
Pub. L. 90–19, § 1(a)(3), (q), May 25, 1967, 81 Stat.
17, 19.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ and struck out authorization for appointment by the Commissioner of a Special Assistant for
Armed Services Housing for Mortgage Insurance with
an adequate staff to expedite operations and eliminate
administrative obstacles to this subchapter, respectively.
1955—Act Aug. 11, 1955, amended section generally,
striking out provisions which stated that nothing
should be construed as exempting property from taxation, and inserting provisions authorizing the Commissioner to make rules and regulations and to appoint
a Special Assistant.

Page 811

TITLE 12—BANKS AND BANKING

§ 1748g. Cost certification
Except in the case of mortgages on multifamily rental housing projects insured under section
1748h–2 of this title, the cost certification required under section 1715r of this title shall not
be required with respect to mortgages insured
under the provisions of this subchapter.
(June 27, 1934, ch. 847, title VIII, § 808, as added
Aug. 8, 1949, ch. 403, § 1, 63 Stat. 576; amended
Aug. 11, 1955, ch. 783, title IV, § 401, 69 Stat. 651;
Pub. L. 86–372, title VII, § 704(b), Sept. 23, 1959, 73
Stat. 686.)
AMENDMENTS
1959—Pub. L. 86–372 substituted ‘‘Except in the case of
mortgages on multifamily rental housing projects insured under section 1748h–2 of this title, the’’ for
‘‘The’’.
1955—Act Aug. 11, 1955, struck out provisions requiring cost certifications.

§§ 1748g–1, 1748h. Omitted
CODIFICATION
Section 1748g–1, act June 27, 1934, ch. 847, title VIII,
§ 810, as added Sept. 1, 1951, ch. 378, title VI, § 601(d), 65
Stat. 313, which related to mortgages on housing constructed for personnel of the Atomic Energy Commission, was omitted from the amendments to title VIII of
act June 27, 1934, this subchapter, by act Aug. 11, 1955,
ch. 783, title IV, § 401, 69 Stat. 646.
Section 1748h, act June 27, 1934, ch. 847, title VIII,
§ 809, as added May 2, 1950, ch. 151, 64 Stat. 97, which related to the procurement of services of architects and
engineers by the Secretaries of the Army, Navy and Air
Force to effectuate the purposes of this subchapter, was
omitted from the amendment to title VIII of act June
27, 1934, this subchapter, by act Aug. 11, 1955, ch. 783,
title IV, § 401, 69 Stat. 646.

§ 1748h–1. Civilian employees of Armed Forces
(a) Requirements; certificate of need for housing
and employment status
Notwithstanding any other provisions of this
subchapter and in addition to mortgages insured
under section 1748b of this title, the Secretary
may insure any mortgage under this section
which meets the eligibility requirements set
forth in section 1709(b) of this title: Provided,
That a mortgage insured under this section shall
have been executed by a mortgagor who at the
time of insurance is the owner of the property
and either occupies the property or certifies
that his failure to do so is the result of a change
in his employment by the Armed Forces or a
contractor thereof and to whom the Secretary of
Defense or his designee has issued a certificate
indicating that such person requires housing and
is at the date of the certificate a civilian employee at a research or development installation
of one of the military departments of the United
States or a contractor thereof and is considered
by such military department to be an essential,
nontemporary employee at such date. Such certificate shall be conclusive evidence to the Secretary of the employment status of the mortgagor and of the mortgagor’s need for housing.
(b) Certification of housing need to Secretary;
guaranty from loss; authorization of appropriations
No mortgage shall be insured under this section unless the Secretary of Defense or his des-

§ 1748h–1

ignee shall have certified to the Secretary that
the housing is necessary to provide adequate
housing for such civilians employed in connection with such a research or development installation and that there is no present intention to
substantially curtail the number of such civilian
personnel assigned or to be assigned to such installation. Such certification shall be conclusive
evidence to the Secretary of the need for such
housing but if the Secretary determines that insurance of mortgages on such housing is not an
acceptable risk, he may require the Secretary of
Defense to guarantee the General Insurance
Fund from loss with respect to mortgages insured pursuant to this section: Provided, That
the Secretary shall relieve the Secretary of Defense from any obligation to guarantee the General Insurance Fund from loss with respect to a
mortgage assumed by a person ineligible to receive a certificate under subsection (a), if the
original mortgagor is issued another certificate
with respect to a mortgage insured under this
section on property which the Secretary determines is not an acceptable risk. There are authorized to be appropriated such sums as may be
necessary to provide for payment to meet losses
arising from such guaranty.
(c) Economic soundness of property
The Secretary may accept any mortgage for
insurance under this section without regard to
any requirement in any other section of this
chapter, that the project or property be economically sound or an acceptable risk.
(d) Insurance benefits to which mortgagee entitled
Any mortgagee under a mortgage insured
under this section is entitled to the benefits of
insurance as provided in section 1710(a) of this
title with respect to mortgages insured under
section 1709 of this title.
(e) Payment of insurance; meaning of terms
The provisions of subsections (b), (c), (d), (e),
(f), (g), (h),1 (j), and (k) 1 of section 1710 of this
title shall apply to mortgages insured under this
section except that as applicable to those mortgages: (1) all references to the ‘‘Fund’’ or ‘‘Mutual Mortgage Insurance Fund’’ shall refer to
the ‘‘General Insurance Fund’’ and (2) all references to section 1709 of this title shall refer to
this section.
(f) Provisions of subchapter applicable; termination date
The provisions of sections 1748, 1748a,1 1748b(c),
1748b(i), 1748b(j), 1748c(a),1 1748c(b),1 and 1748f of
this title and the provisions of section 1748b(a)
of this title relating to the aggregate amount of
all mortgages insured under this subchapter,
shall be applicable to mortgages insured under
this section.
(g) Housing for persons employed by National
Aeronautics and Space Administration or
Atomic Energy Commission; guaranty from
loss; definitions
(1) A mortgage secured by property which is
intended to provide housing for a person (i) employed or assigned to duty at or in connection
1 See

References in Text note below.

§ 1748h–1

TITLE 12—BANKS AND BANKING

with any research or development installation
of the National Aeronautics and Space Administration and which is located at or near such installation, or (ii) employed at any research or
development installation of the Atomic Energy
Commission and which is located at or near such
installation, may (if the mortgage otherwise
meets the requirements of this section) be insured by the Secretary under the provisions of
this section. The Administrator of the National
Aeronautics and Space Administration (or his
designee), in the case of any mortgage secured
by property intended to provide housing for any
person employed or assigned to duty at any such
installation of the National Aeronautics and
Space Administration, or the Chairman of the
Atomic Energy Commission (or his designee), in
the case of any mortgage secured by property
intended to provide housing for any person employed at such installation of the Atomic Energy Commission, is authorized to guarantee
and indemnify the General Insurance Fund
against loss to the extent required by the Secretary, in accordance with the provisions of subsection (b) of this section.
(2) For purposes of this subsection—
(i) The terms ‘‘Armed Forces’’, ‘‘one of the
military departments of the United States’’,
‘‘military department’’, ‘‘Secretary of Defense
or his designee’’, and ‘‘Secretary of Defense’’,
when used in subsections (a) and (b) of this
section, shall be deemed to refer to the National Aeronautics and Space Administration
(or the Administrator thereof), or the Atomic
Energy Commission (or the Chairman thereof),
as may be appropriate;
(ii) The term ‘‘Secretary of the Army, Navy,
or Air Force’’, when used in section 1748d of
this title, shall be deemed to refer to the National Aeronautics and Space Administration
or the Administrator thereof, as may be appropriate;
(iii) The terms ‘‘civilian employee’’, ‘‘civilians’’, and ‘‘civilian personnel’’, as used in this
section, shall be deemed to refer to (A) employees of the National Aeronautics and Space
Administration or a contractor thereof or to
military personnel assigned to duty at an installation of the National Aeronautics and
Space Administration, or (B) persons employed at or in connection with any research
or development installation of the Atomic Energy Commission, as the case may be; and
(iv) The term ‘‘military installation’’ when
used in section 1748d of this title shall be
deemed to refer to an installation of the National Aeronautics and Space Administration.
(June 27, 1934, ch. 847, title VIII, § 809, as added
June 13, 1956, ch. 381, 70 Stat. 273; amended Pub.
L. 86–372, title I, § 116(b), Sept. 23, 1959, 73 Stat.
664; Pub. L. 86–578, July 5, 1960, 74 Stat. 314; Pub.
L. 86–774, § 3, Sept. 13, 1960, 74 Stat. 915; Pub. L.
87–623, § 2, Aug. 31, 1962, 76 Stat. 418; Pub. L.
88–127, § 1, Sept. 23, 1963, 77 Stat. 163; Pub. L.
89–117, title II, § 202(c), title XI, § 1108(v), Aug. 10,
1965, 79 Stat. 466, 506; Pub. L. 90–19, § 1(a)(3), (r),
May 25, 1967, 81 Stat. 17, 19; Pub. L. 91–78, § 2(d),
Sept. 30, 1969, 83 Stat. 125; Pub. L. 91–152, title I,
§ 101(f), Dec. 24, 1969, 83 Stat. 379; Pub. L. 91–432,
§ 1(d), Oct. 2, 1970, 84 Stat. 887; Pub. L. 91–473,
§ 1(d), Oct. 21, 1970, 84 Stat. 1065; Pub. L. 91–525,

Page 812

§ 1(d), Dec. 1, 1970, 84 Stat. 1384; Pub. L. 91–609,
title I, §§ 101(f), 112, Dec. 31, 1970, 84 Stat. 1770,
1772; Pub. L. 92–503, § 1(f), Oct. 18, 1972, 86 Stat.
906; Pub. L. 93–85, § 1(f), Aug. 10, 1973, 87 Stat. 220;
Pub. L. 93–117, § 1(f), Oct. 2, 1973, 87 Stat. 421;
Pub. L. 93–383, title III, § 316(d), Aug. 22, 1974, 88
Stat. 685; Pub. L. 95–60, § 1(e), June 30, 1977, 91
Stat. 257; Pub. L. 95–80, § 1(e), July 31, 1977, 91
Stat. 339; Pub. L. 95–128, title III, § 301(h), Oct. 12,
1977, 91 Stat. 1131; Pub. L. 95–406, § 1(h), Sept. 30,
1978, 92 Stat. 879; Pub. L. 95–557, title III, § 301(h),
Oct. 31, 1978, 92 Stat. 2096; Pub. L. 96–71, § 1(h),
Sept. 28, 1979, 93 Stat. 501; Pub. L. 96–105, § 1(h),
Nov. 8, 1979, 93 Stat. 794; Pub. L. 96–153, title III,
§ 301(h), Dec. 21, 1979, 93 Stat. 1112; Pub. L. 96–372,
§ 1(h), Oct. 3, 1980, 94 Stat. 1363; Pub. L. 96–399,
title III, § 301(h), Oct. 8, 1980, 94 Stat. 1638; Pub.
L. 97–35, title III, § 331(h)(1), Aug. 13, 1981, 95
Stat. 413; Pub. L. 97–289, § 1(h), Oct. 6, 1982, 96
Stat. 1230; Pub. L. 98–35, § 1(h), May 26, 1983, 97
Stat. 197; Pub. L. 98–109, § 1(h), Oct. 1, 1983, 97
Stat. 745; Pub. L. 98–181, title I [title IV, § 401(g)],
Nov. 30, 1983, 97 Stat. 1208; Pub. L. 99–120,
§ 1(h)(1), Oct. 8, 1985, 99 Stat. 503; Pub. L. 99–156,
§ 1(h)(1), Nov. 15, 1985, 99 Stat. 815; Pub. L. 99–219,
§ 1(h)(1), Dec. 26, 1985, 99 Stat. 1730; Pub. L.
99–267, § 1(i)(1), Mar. 27, 1986, 100 Stat. 74; Pub. L.
99–272, title III, § 3007(h)(1), Apr. 7, 1986, 100 Stat.
105; Pub. L. 99–289, § 1(b), May 2, 1986, 100 Stat.
412; Pub. L. 99–345, § 1, June 24, 1986, 100 Stat. 673;
Pub. L. 99–430, Sept. 30, 1986, 100 Stat. 986; Pub.
L. 100–122, § 1, Sept. 30, 1987, 101 Stat. 793; Pub. L.
100–154, Nov. 5, 1987, 101 Stat. 890; Pub. L. 100–170,
Nov. 17, 1987, 101 Stat. 914; Pub. L. 100–179, Dec.
3, 1987, 101 Stat. 1018; Pub. L. 100–200, Dec. 21,
1987, 101 Stat. 1327; Pub. L. 100–242, title IV,
§ 401(a)(5), Feb. 5, 1988, 101 Stat. 1898; Pub. L.
101–625, title IX, § 952(b), Nov. 28, 1990, 104 Stat.
4418; Pub. L. 102–550, title IX, § 904(b), Oct. 28,
1992, 106 Stat. 3868.)
REFERENCES IN TEXT
The General Insurance Fund, referred to in text, was
established by section 1735c of this title.
Subsection (h) of section 1710 of this title, referred to
in subsec. (e), was redesignated subsec. (i) by Pub. L.
105–276, title VI, § 602(1), Oct. 21, 1998, 112 Stat. 2674.
Subsection (k) of section 1710 of this title, referred to
in subsec. (e), was repealed by Pub. L. 105–276, title VI,
§ 601(c), Oct. 21, 1998, 112 Stat. 2673.
Sections 1748a and 1748c of this title, referred to in
subsec. (f), were repealed by Pub. L. 89–117, title XI,
§ 1108(aa), Aug. 10, 1965, 79 Stat. 507.
PRIOR PROVISIONS
A prior section 809 of title VIII of act June 27, 1934,
as added May 2, 1950, ch. 151, 64 Stat. 97, which related
to the procurement of services of architects and engineers by the armed services to effectuate purposes of
this subchapter, was classified to section 1748h of this
title.
AMENDMENTS
1992—Subsec. (h). Pub. L. 102–550 struck out subsec.
(h) which related to an Advanced Building Technology
Program. See section 1701j–2(h) of this title.
1990—Subsecs. (h) to (j). Pub. L. 101–625, § 952(b), which
directed the addition of subsec. (h) relating to an Advanced Building Technology Program and the redesignation of subsecs. (h) and (i) as (i) and (j), respectively,
was executed by adding subsec. (h) because this section
did not contain subsec. (h) or (i).
1988—Subsec. (f). Pub. L. 100–242 struck out ‘‘No more
mortgages shall be insured under this section after

Page 813

TITLE 12—BANKS AND BANKING

March 15, 1988, except pursuant to a commitment to insure before such date.’’
1987—Subsec. (f). Pub. L. 100–200 substituted ‘‘March
15, 1988’’ for ‘‘December 16, 1987’’.
Pub. L. 100–179 substituted ‘‘December 16, 1987’’ for
‘‘December 2, 1987’’.
Pub. L. 100–170 substituted ‘‘December 2, 1987’’ for
‘‘November 15, 1987’’.
Pub. L. 100–154 substituted ‘‘November 15, 1987’’ for
‘‘October 31, 1987’’.
Pub. L. 100–122 substituted ‘‘October 31, 1987’’ for
‘‘September 30, 1987’’.
1986—Subsec. (f). Pub. L. 99–430 substituted ‘‘September 30, 1987’’ for ‘‘September 30, 1986’’.
Pub. L. 99–345 substituted ‘‘September 30, 1986’’ for
‘‘June 6, 1986’’.
Pub. L. 99–289 substituted ‘‘June 6, 1986’’ for ‘‘April 30,
1986’’.
Pub. L. 99–272 made amendment identical to Pub. L.
99–219. See 1985 Amendment note below.
Pub. L. 99–267 substituted ‘‘April 30, 1986’’ for ‘‘March
17, 1986’’.
1985—Subsec. (f). Pub. L. 99–219 substituted ‘‘March
17, 1986’’ for ‘‘December 15, 1985’’.
Pub. L. 99–156 substituted ‘‘December 15, 1985’’ for
‘‘November 14, 1985’’.
Pub. L. 99–120 substituted ‘‘November 14, 1985’’ for
‘‘September 30, 1985’’.
1983—Subsec. (f). Pub. L. 98–181 substituted ‘‘September 30, 1985’’ for ‘‘November 30, 1983’’.
Pub. L. 98–109 substituted ‘‘November 30, 1983’’ for
‘‘September 30, 1983’’.
Pub. L. 98–35 substituted ‘‘September 30, 1983’’ for
‘‘May 20, 1983’’.
1982—Subsec. (f). Pub. L. 97–289 substituted ‘‘May 20,
1983’’ for ‘‘September 30, 1982’’.
1981—Subsec. (f). Pub. L. 97–35 substituted ‘‘1982’’ for
‘‘1981’’.
1980—Subsec. (f). Pub. L. 96–399 substituted ‘‘September 30, 1981’’ for ‘‘October 15, 1980’’.
Pub. L. 96–372 substituted ‘‘October 15, 1980’’ for ‘‘September 30, 1980’’.
1979—Subsec. (f). Pub. L. 96–153 substituted ‘‘September 30, 1980’’ for ‘‘November 30, 1979’’.
Pub. L. 96–105 substituted ‘‘November 30, 1979’’ for
‘‘October 31, 1979’’.
Pub. L. 96–71 substituted ‘‘October 31, 1979’’ for ‘‘September 30, 1979’’.
1978—Subsec. (f). Pub. L. 95–557 substituted ‘‘September 30, 1979’’ for ‘‘October 31, 1978’’.
Pub. L. 95–406 substituted ‘‘October 31, 1978’’ for ‘‘September 30, 1978’’.
1977—Subsec. (f). Pub. L. 95–128 substituted ‘‘September 30, 1978’’ for ‘‘September 30, 1977’’.
Pub. L. 95–80 substituted ‘‘September 30, 1977’’ for
‘‘July 31, 1977’’.
Pub. L. 95–60 substituted ‘‘July 31, 1977’’ for ‘‘June 30,
1977’’.
1974—Subsec. (f). Pub. L. 93–383 substituted ‘‘June 30,
1977’’ for ‘‘October 1, 1974’’.
1973—Subsec. (f). Pub. L. 93–117 substituted ‘‘October
1, 1974’’ for ‘‘October 1, 1973’’.
Pub. L. 93–85 substituted ‘‘October 1, 1973’’ for ‘‘June
30, 1973’’.
1972—Subsec. (f). Pub. L. 92–503 substituted ‘‘June 30,
1973’’ for ‘‘October 1, 1972’’.
1970—Subsec. (b). Pub. L. 91–609, § 112, inserted the
proviso.
Subsec. (f). Pub. L. 91–609, § 101(f), substituted ‘‘October 1, 1972’’ for ‘‘January 1, 1971’’.
Pub. L. 91–525 substituted ‘‘January 1, 1971’’ for ‘‘December 1, 1970’’.
Pub. L. 91–473 substituted ‘‘December 1, 1970’’ for ‘‘November 1, 1970’’.
Pub. L. 91–432 substituted ‘‘November 1, 1970’’ for ‘‘October 1, 1970’’.
1969—Subsec. (f). Pub. L. 91–152 substituted ‘‘October
1, 1970’’ for ‘‘January 1, 1970’’.
Pub. L. 91–78 substituted ‘‘January 1, 1970’’ for ‘‘October 1, 1969’’.

§ 1748h–2

1967—Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’
for ‘‘Commissioner’’ wherever appearing in subsecs. (a)
to (c) and (g)(1).
Subsec. (a). Pub. L. 90–19, § 1(r)(1), substituted ‘‘Secretary of Defense’’ for ‘‘Secretary’’.
Subsec. (b). Pub. L. 90–19, § 1(r)(1), (2), substituted
‘‘Secretary of Defense’’ for ‘‘Secretary’’ wherever appearing.
Subsec. (g)(2). Pub. L. 90–19, § 1(r)(3), (4), substituted
‘‘Secretary of Defense’’ for ‘‘Secretary’’ in cl. (i) and
‘‘the National Aeronautics and Space Administration’’
for ‘‘such Administration’’, wherever appearing, respectively.
1965—Subsecs. (b), (e). Pub. L. 89–117, § 1108(v), substituted ‘‘General Insurance Fund’’ for ‘‘Armed Services Housing Mortgage Insurance Fund’’ wherever appearing.
Subsec. (f). Pub. L. 89–117, § 202(c), substituted ‘‘October 1, 1969’’ for ‘‘October 1, 1965’’.
Subsec. (g). Pub. L. 89–117, § 1108(v), substituted ‘‘General Insurance Fund’’ for ‘‘Armed Services Housing
Mortgage Insurance Fund’’ wherever appearing.
1963—Subsec. (f). Pub. L. 88–127, § 1(1), substituted
‘‘October 1, 1965’’ for ‘‘October 1, 1963’’.
Subsec. (g)(1). Pub. L. 88–127, § 1(2), substituted ‘‘or in
connection with any’’ for ‘‘a’’, struck out requirement
that such installation belong to a military department
of the United States on or after June 13, 1956, before its
transfer to the Administration, in cl. (i), and extended
cl. (ii) to include persons at any installation of the
Atomic Energy Commission instead of only the one in
Los Alamos County, N. Mex.
Subsec. (g)(2)(iii). Pub. L. 88–127, § 1(3), extended cl.
(B) to include persons at any installation of the Atomic
Energy Commission instead of only the one in Los Alamos, N. Mex.
1962—Subsec. (f). Pub. L. 87–623 provided that no
mortgages shall be insured under this section after October 1, 1963, except pursuant to a commitment before
such date, and struck out ‘‘and the expiration date of
the Commissioner’s authority to insure’’ after ‘‘amount
of all mortgages insured’’.
1960—Subsec. (g). Pub. L. 86–774 designated part of existing provisions as par. (1), inserting cl. (ii) and ‘‘in
the case of any mortgage secured by property intended
to provide housing for any person employed or assigned
to duty at any such installation of the National Aeronautics and Space Administration, or the Chairman of
the Atomic Energy Commission (or his designee), in the
case of any mortgage secured by property intended to
provide housing for any person employed at such installation of the Atomic Energy Commission’’ and
striking out ‘‘in the case of mortgages referred to in
this subsection’’ after ‘‘subsection (b) of this section’’,
and designated cl. (1) as par. (2)(i) and (ii), cl. (2) as par.
(2)(iii), adding subpar. (B), and cl. (3) as par. (2)(iv).
Subsec. (g). Pub. L. 86–578 added subsec. (g).
1959—Subsec. (e). Pub. L. 86–372 inserted reference to
subsec. (k) to section 1710 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
TRANSFER OF FUNCTIONS
Atomic Energy Commission abolished and functions
transferred by sections 5814 and 5841 of Title 42, The
Public Health and Welfare. See also Transfer of Functions notes set out under those sections.

§ 1748h–2. Insurance of mortgages for defense
housing for impacted areas
(a) Authorization
Notwithstanding any other provision of this
subchapter, the Secretary may insure and make
commitments to insure any mortgage under this
section which meets the eligibility requirements
hereinafter set forth.

§ 1748h–2

TITLE 12—BANKS AND BANKING

(b) Eligibility requirements
No mortgage shall be insured under this section unless (1) the housing which is covered by
the insured mortgage is necessary in the interest of national security in order to provide adequate housing for (A) military personnel and essential civilian personnel serving or employed in
connection with any installation of one of the
armed services of the United States, or (B) essential personnel employed or assigned to duty
at or in connection with any research or development installation of the National Aeronautics
and Space Administration or of the Atomic Energy Commission, (2) there is no present intention to curtail substantially the number of such
personnel assigned or to be assigned to the installation, (3) adequate housing is not available
for such personnel at reasonable rentals within
reasonable commuting distances of such installation, and (4) the mortgaged property will not
so far as can be reasonably foreseen substantially curtail occupancy in any existing housing
in the vicinity of the installation which is covered by mortgages insured under this chapter.
(c) Economical soundness of property or project
The Secretary may accept any mortgage for
insurance under this section without regard to
any requirement in any other section of this
chapter that the property or project be economically sound.
(d) Rental conditions; preferences and priorities
in the sale or rental of dwellings
The Secretary shall require each project covered by a mortgage insured under this section to
be held for rental for a period of not less than
five years after the project or dwelling is made
available for initial occupancy or until he finds
that the housing may be released from such
rental condition. The Secretary shall prescribe
such procedures as in his judgment are necessary to secure reasonable preference or priority in the sale or rental of dwellings covered by
a mortgage insured under this section for military personnel and essential civilian employees
of the armed services, employees of contractors
for the armed services, and persons described in
clause (1)(B) of subsection (b) of this section.
(e) Property held by mortgagor approved by Secretary; acquisition of stock or interest; redemption
For the purpose of providing multifamily rental housing projects or housing projects consisting of individual single-family dwellings for
sale, the Secretary is authorized to insure mortgages (including advances on such mortgages
during construction) which cover property held
by a mortgagor approved by the Secretary. Any
such mortgagor shall possess powers necessary
therefor and incidental thereto and shall until
the termination of all obligations of the Secretary under such insurance be regulated or restricted as to rents or sales, charges, capital
structure, rate of return, and methods of operation to such extent and in such manner as to
provide reasonable rentals to tenants and a reasonable return on the investment. The Secretary may make such contracts with, and acquire for not to exceed $100 such stock or interest in, any such mortgagor as he may deem nec-

Page 814

essary to render effective such restriction or
regulation. Such stock or interest shall be paid
for out of the General Insurance Fund, and shall
be redeemed by the mortgagor at par upon the
termination of all obligations of the Secretary
under the insurance.
(f) Mortgage limitations for multifamily rental
property or project
To be eligible for insurance under this section,
a mortgage on any multifamily rental property
or project shall involve a principal obligation in
an amount not to exceed, for such part of such
property or project as may be attributable to
dwelling use, $9,000 per family unit without a
bedroom, $12,500 per family unit with one bedroom, $15,000 per family unit with two bedrooms,
and $18,500 per family unit with three or more
bedrooms, and not to exceed 90 per centum of
the estimated value of the property or project
when the proposed physical improvements are
completed. The Secretary may, by regulation,
increase any of the foregoing dollar amount limitations contained in this paragraph by not to
exceed 45 per centum in any geographical area
where he finds that cost levels so require.
(g) Mortgage limitation for property or project
constructed for eventual sale of single-family
dwellings
To be eligible for insurance under this section
a mortgage on any property or project constructed for eventual sale of single-family dwellings shall involve a principal obligation in an
amount not to exceed a sum computed on the
basis of a separate mortgage for each singlefamily dwelling (irrespective of whether such
dwelling has a party wall or is otherwise physically connected with another dwelling or dwellings) comprising the property or project equal
to the total of each of the maximum principal
obligations of such mortgages which would meet
the requirements of section 1709(b)(2) of this
title if the mortgagor were the owner and occupant who had made the required payment on account of the property prescribed in such paragraph.
(h) Amortization; interest; release of part of
mortgaged property from lien; replacement
of certain mortgages by individual mortgages; commercial and community facilities
Any mortgage insured under this section shall
provide for complete amortization by periodic
payments within such terms as the Secretary
may prescribe but not to exceed the maximum
term applicable to mortgages under section 1713
of this title and shall bear interest at such rate
as may be agreed upon by the mortgagor and the
mortgagee, except that individual mortgages of
the character described in subsection (g) covering the individual dwellings in the project may
have a term not in excess of the maximum term
applicable to mortgages insured under section
1709 of this title or the unexpired term of the
project mortgage at the time of the release of
the mortgaged property from such project mortgage, whichever is the greater, and shall bear interest at such rate as may be agreed upon by the
mortgagor and the mortgagee. The Secretary
may consent to the release of a part or parts of
the mortgaged property from the lien of the

Page 815

mortgage upon such terms and conditions as he
may prescribe and the mortgage may provide for
such release, and a mortgage of the character
described in subsection (g) of this section may
provide that, at any time after the release of the
project from the rental period prescribed by subsection (d), such mortgage may be replaced, in
whole or in part, by individual mortgages covering each individual dwelling in the project in
amounts not to exceed the unpaid balance of the
blanket mortgage allocable to the individual
property. Each such individual mortgage may be
insured under this section. Property covered by
a mortgage insured under this section may include eight or more family units and may include such commercial and community facilities
as the Secretary deems adequate to serve the occupants.
(i) Limitation on aggregate number of dwelling
units
The aggregate number of dwelling units (including all units in multifamily projects or individual dwellings) covered by outstanding commitments to insure and mortgages insured
under this section shall at no time exceed five
thousand dwelling units.
(j) Applicability of other laws
The provisions of subsections (d), (e), (g), (h),
(i), (j), (k), (l), and (n) of section 1713 of this title
shall be applicable to mortgages insured under
this section except individual mortgages of the
character described in subsection (g) of this section covering the individual dwellings in the
project, and as to such individual mortgages the
provisions of subsections (a), (c), (d), (e), (f), (g),
(h),1 (j), and (k) 1 of section 1710 of this title shall
be applicable: Provided, That wherever the words
‘‘Fund’’ or ‘‘Mutual Mortgage Insurance Fund’’
appear in section 1710 of this title, such reference shall refer to the General Insurance Fund
with respect to mortgages insured under this
section.
(k) Aggregate amount of mortgages insured; termination date
The provisions of sections 1748, 1748a,1 1748b(c),
1748b(i), 1748b(j), 1748c(a), 1748c(b),1 and 1748f of
this title and the provisions of section 1748b(a)
of this title relating to the aggregate amount of
all mortgages insured under this subchapter
shall be applicable to mortgages insured under
this section.
(June 27, 1934, ch. 847, title VIII, § 810, as added
Pub. L. 86–372, title VII, § 704(a), Sept. 23, 1959, 73
Stat. 683; amended Pub. L. 87–70, title VI,
§ 611(a), June 30, 1961, 75 Stat. 180; Pub. L. 87–623,
§ 3, Aug. 31, 1962, 76 Stat. 418; Pub. L. 88–127, § 2,
Sept. 23, 1963, 77 Stat. 163; Pub. L. 88–560, title I,
§ 107(f), Sept. 2, 1964, 78 Stat. 776; Pub. L. 89–117,
title II, § 202(c), title XI, § 1108(w), Aug. 10, 1965,
79 Stat. 466, 506; Pub. L. 90–19, § 1(a)(3), May 25,
1967, 81 Stat. 17; Pub. L. 90–448, title XVII,
§ 1722(f), Aug. 1, 1968, 82 Stat. 611; Pub. L. 91–78,
§ 2(e), Sept. 30, 1969, 83 Stat. 125; Pub. L. 91–152,
title I, § 101(g), Dec. 24, 1969, 83 Stat. 379; Pub. L.
91–432, § 1(e), Oct. 2, 1970, 84 Stat. 887; Pub. L.
91–473, § 1(e), Oct. 21, 1970, 84 Stat. 1065; Pub. L.
1 See

References in Text note below.

§ 1748h–2

TITLE 12—BANKS AND BANKING

91–525, § 1(e), Dec. 1, 1970, 84 Stat. 1384; Pub. L.
91–609, title I, § 101(g), Dec. 31, 1970, 84 Stat. 1770;
Pub. L. 92–503, § 1(g), Oct. 18, 1972, 86 Stat. 906;
Pub. L. 93–85, § 1(g), Aug. 10, 1973, 87 Stat. 220;
Pub. L. 93–117, § 1(g), Oct. 2, 1973, 87 Stat. 421;
Pub. L. 93–383, title III, §§ 304(j), 316(e), Aug. 22,
1974, 88 Stat. 678, 685; Pub. L. 95–60, § 1(f), June 30,
1977, 91 Stat. 257; Pub. L. 95–80, § 1(f), July 31,
1977, 91 Stat. 339; Pub. L. 95–128, title III, § 301(i),
Oct. 12, 1977, 91 Stat. 1131; Pub. L. 95–406, § 1(i),
Sept. 30, 1978, 92 Stat. 879; Pub. L. 95–557, title
III, § 301(i), Oct. 31, 1978, 92 Stat. 2096; Pub. L.
96–71, § 1(i), Sept. 28, 1979, 93 Stat. 501; Pub. L.
96–105, § 1(i), Nov. 8, 1979, 93 Stat. 794; Pub. L.
96–153, title III, § 301(i), Dec. 21, 1979, 93 Stat.
1112; Pub. L. 96–372, § 1(i), Oct. 3, 1980, 94 Stat.
1363; Pub. L. 96–399, title III, § 301(i), Oct. 8, 1980,
94 Stat. 1639; Pub. L. 97–35, title III, § 331(h)(2),
Aug. 13, 1981, 95 Stat. 413; Pub. L. 97–289, § 1(i),
Oct. 6, 1982, 96 Stat. 1230; Pub. L. 98–35, § 1(i),
May 26, 1983, 97 Stat. 197; Pub. L. 98–109, § 1(i),
Oct. 1, 1983, 97 Stat. 745; Pub. L. 98–181, title I
[title IV, § 401(h)], Nov. 30, 1983, 97 Stat. 1208;
Pub. L. 99–120, § 1(h)(2), Oct. 8, 1985, 99 Stat. 503;
Pub. L. 99–156, § 1(h)(2), Nov. 15, 1985, 99 Stat. 816;
Pub. L. 99–219, § 1(h)(2), Dec. 26, 1985, 99 Stat.
1731; Pub. L. 99–267, § 1(i)(2), Mar. 27, 1986, 100
Stat. 74; Pub. L. 99–272, title III, § 3007(h)(2), Apr.
7, 1986, 100 Stat. 105; Pub. L. 99–289, § 1(b), May 2,
1986, 100 Stat. 412; Pub. L. 99–345, § 1, June 24,
1986, 100 Stat. 673; Pub. L. 99–430, Sept. 30, 1986,
100 Stat. 986; Pub. L. 100–122, § 1, Sept. 30, 1987,
101 Stat. 793; Pub. L. 100–154, Nov. 5, 1987, 101
Stat. 890; Pub. L. 100–170, Nov. 17, 1987, 101 Stat.
914; Pub. L. 100–179, Dec. 3, 1987, 101 Stat. 1018;
Pub. L. 100–200, Dec. 21, 1987, 101 Stat. 1327; Pub.
L. 100–242, title IV, §§ 401(a)(6), 429(k), Feb. 5,
1988, 101 Stat. 1898, 1919.)
REFERENCES IN TEXT
The General Insurance Fund, referred to in text, was
established by section 1735c of this title.
Subsection (h) of section 1710 of this title, referred to
in subsec. (j), was redesignated subsec. (i) by Pub. L.
105–276, title VI, § 602(1), Oct. 21, 1998, 112 Stat. 2674.
Subsection (k) of section 1710 of this title, referred to
in subsec. (j), was repealed by Pub. L. 105–276, title VI,
§ 601(c), Oct. 21, 1998, 112 Stat. 2673.
Sections 1748a and 1748c of this title, referred to in
subsec. (k), were repealed by Pub. L. 89–117, title XI,
§ 1108 (aa), Aug. 10, 1965, 79 Stat. 507.
PRIOR PROVISIONS
A prior section 810 of title VIII of act June 27, 1934,
ch. 847, as added Sept. 1, 1951, ch. 378, title VI, § 601(d),
65 Stat. 313, which related to mortgage on housing constructed for personnel of the Atomic Energy Commission, was classified to section 1748g–1 of this title.
AMENDMENTS
1988—Subsec. (h). Pub. L. 100–242, § 429(k), substituted
‘‘at such rate as may be agreed upon by the mortgagor
and the mortgagee’’ for ‘‘(exclusive of premium charges
for insurance) at not to exceed the rate applicable to
mortgages insured under section 1713 of this title’’ and
‘‘such rate as may be agreed upon by the mortgagor
and the mortgagee’’ for ‘‘not to exceed the rate applicable to mortgages insured under section 1709 of this
title’’.
Subsec. (k). Pub. L. 100–242, § 401(a)(6), struck out ‘‘No
more mortgages shall be insured under this section
after March 15, 1988, except pursuant to a commitment
to insure before such date.’’
1987—Subsec. (k). Pub. L. 100–200 substituted ‘‘March
15, 1988’’ for ‘‘December 16, 1987’’.

§ 1748h–2

TITLE 12—BANKS AND BANKING

Pub. L. 100–179 substituted ‘‘December 16, 1987’’ for
‘‘December 2, 1987’’.
Pub. L. 100–170 substituted ‘‘December 2, 1987’’ for
‘‘November 15, 1987’’.
Pub. L. 100–154 substituted ‘‘November 15, 1987’’ for
‘‘October 31, 1987’’.
Pub. L. 100–122 substituted ‘‘October 31, 1987’’ for
‘‘September 30, 1987’’.
1986—Subsec. (k). Pub. L. 99–430 substituted ‘‘September 30, 1987’’ for ‘‘September 30, 1986’’.
Pub. L. 99–345 substituted ‘‘September 30, 1986’’ for
‘‘June 6, 1986’’.
Pub. L. 99–289 substituted ‘‘June 6, 1986’’ for ‘‘April 30,
1986’’.
Pub. L. 99–272 made amendment identical to Pub. L.
99–219. See 1985 Amendment note below.
Pub. L. 99–267 substituted ‘‘April 30, 1986’’ for ‘‘March
17, 1986’’.
1985—Subsec. (k). Pub. L. 99–219 substituted ‘‘March
17, 1986’’ for ‘‘December 15, 1985’’.
Pub. L. 99–156 substituted ‘‘December 15, 1985’’ for
‘‘November 14, 1985’’.
Pub. L. 99–120 substituted ‘‘November 14, 1985’’ for
‘‘September 30, 1985’’.
1983—Subsec. (k). Pub. L. 98–181 substituted ‘‘September 30, 1985’’ for ‘‘November 30, 1983’’.
Pub. L. 98–109 substituted ‘‘November 30, 1983’’ for
‘‘September 30, 1983’’.
Pub. L. 98–35 substituted ‘‘September 30, 1983’’ for
‘‘May 20, 1983’’.
1982—Subsec. (k). Pub. L. 97–289 substituted ‘‘May 20,
1983’’ for ‘‘September 30, 1982’’.
1981—Subsec. (k). Pub. L. 97–35 substituted ‘‘1982’’ for
‘‘1981’’.
1980—Subsec. (k). Pub. L. 96–399 substituted ‘‘September 30, 1981’’ for ‘‘October 15, 1980’’.
Pub. L. 96–372 substituted ‘‘October 15, 1980’’ for ‘‘September 30, 1980’’.
1979—Subsec. (k). Pub. L. 96–153 substituted ‘‘September 30, 1980’’ for ‘‘November 30, 1979’’.
Pub. L. 96–105 substituted ‘‘November 30, 1979’’ for
‘‘October 31, 1979’’.
Pub. L. 96–71 substituted ‘‘October 31, 1979’’ for ‘‘September 30, 1979’’.
1978—Subsec. (k). Pub. L. 95–557 substituted ‘‘September 30, 1979’’ for ‘‘October 31, 1978’’.
Pub. L. 95–406 substituted ‘‘October 31, 1978’’ for ‘‘September 30, 1978’’.
1977—Subsec. (k). Pub. L. 95–128 substituted ‘‘September 30, 1978’’ for ‘‘September 30, 1977’’.
Pub. L. 95–80 substituted ‘‘September 30, 1977’’ for
‘‘July 31, 1977’’.
Pub. L. 95–60 substituted ‘‘July 31, 1977’’ for ‘‘June 30,
1977’’.
1974—Subsec. (f). Pub. L. 93–383, § 304(j)(1), struck out
‘‘(1) not to exceed $5,000,000 or (2)’’ after ‘‘in an
amount’’.
Subsec. (g). Pub. L. 93–383, § 304(j)(2), struck out ‘‘not
to exceed $5,000,000 and’’ after ‘‘in an amount’’.
Subsec. (k). Pub. L. 93–383, § 316(e), substituted ‘‘June
30, 1977’’ for ‘‘October 1, 1974’’.
1973—Subsec. (k). Pub. L. 93–117 substituted ‘‘October
1, 1974’’ for ‘‘October 1, 1973’’.
Pub. L. 93–85 substituted ‘‘October 1, 1973’’ for ‘‘June
30, 1973’’.
1972—Subsec. (k). Pub. L. 92–503 substituted ‘‘June 30,
1973’’ for ‘‘October 1, 1972’’.
1970—Subsec. (k). Pub. L. 91–609 substituted ‘‘October
1, 1972’’ for ‘‘January 1, 1971’’.
Pub. L. 91–525 substituted ‘‘January 1, 1971’’ for ‘‘December 1, 1970’’.
Pub. L. 91–473 substituted ‘‘December 1, 1970’’ for ‘‘November 1, 1970’’.
Pub. L. 91–432 substituted ‘‘November 1, 1970’’ for ‘‘October 1, 1970’’.
1969—Subsec. (k). Pub. L. 91–152 substituted ‘‘October
1, 1970’’ for ‘‘January 1, 1970’’.
Pub. L. 91–78 substituted ‘‘January 1, 1970’’ for ‘‘October 1, 1969’’.
1968—Subsec. (e). Pub. L. 90–448 substituted ‘‘mortgagor approved by the Secretary’’ for ‘‘private corpora-

Page 816

tion, association, cooperative society, or trust’’ in first
sentence, and ‘‘mortgagor’’ for ‘‘corporation, association, cooperative society, or trust’’ in third and fourth
sentences.
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing in subsecs. (a), (c) to (f),
and (h).
1965—Subsec. (e). Pub. L. 89–117, § 1108(w)(1), substituted ‘‘General Insurance Fund’’ for ‘‘Armed Services Housing Mortgage Insurance Fund’’.
Subsec. (j). Pub. L. 89–117, § 1108(w)(2), (3), struck out
reference to subsecs. (m) and (p) of section 1713 of this
title and, in proviso, substituted ‘‘General Insurance
Fund’’ for ‘‘Armed Services Housing Mortgage Insurance Fund’’ and struck out reference to the appearance
of ‘‘Housing Insurance Fund’’ in sections 1710 and 1713
of this title and the appearance of ‘‘Fund’’ or ‘‘Mutual
Mortgage Insurance Fund’’ in section 1713 of this title.
Subsec. (k). Pub. L. 89–117, § 202(c), substituted ‘‘October 1, 1969’’ for ‘‘October 1, 1965’’.
1964—Subsec. (f). Pub. L. 88–560 changed limits on
mortgages for multifamily rental property or project,
in cl. (2) of the first sentence from ‘‘$2,500 per room (or
$9,000 per family unit if the number of rooms in such
property or project is less than four per family unit)’’
to ‘‘$9,000 per family unit without a bedroom, $12,500
per family unit with one bedroom, $15,000 per family
unit with two bedrooms, and $18,500 per family unit
with three or more bedrooms’’; and, in the second sentence, inserted ‘‘, by regulation,’’ and substituted provisions authorizing an increase ‘‘by not to exceed 45 per
centum’’ of any of such limits because of cost levels for
former provision authorizing such an increase ‘‘by not
to exceed $1,000 per room’’, respectively.
1963—Subsec. (b)(1). Pub. L. 88–127, § 2(1), included essential personnel employed or assigned to duty at or in
connection with any research or development installation of the National Aeronautics and Space Administration or of the Atomic Energy Commission.
Subsec. (d). Pub. L. 88–127, § 2(2), included persons described in cl. (1)(B) of subsec. (b) of this section.
Subsec. (k). Pub. L. 88–127, § 2(3), substituted ‘‘October
1, 1965’’ for ‘‘October 1, 1963’’.
1962—Subsec. (k). Pub. L. 87–623 provided that no
mortgages shall be insured under this section after October 1, 1963, except pursuant to a commitment before
such date, and struck out ‘‘and the expiration date of
the Commissioner’s authority to insure’’ after ‘‘amount
of all mortgages insured’’.
1961—Subsec. (b). Pub. L. 87–70, § 611(a)(1), struck out
provisions which required certification by Secretary of
Defense or his designee.
Subsec. (d). Pub. L. 87–70, § 611(a)(2), struck out provisions which related to certification and advice of Secretary of Defense or his designee.
Subsec. (l). Pub. L. 87–70, § 611(a)(3), repealed subsec.
(l) which required Secretary of Defense to guarantee
Armed Services Housing Mortgage Insurance Fund
from loss.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
TRANSFER OF FUNCTIONS
Atomic Energy Commission abolished and functions
transferred by sections 5814 and 5841 of Title 42, The
Public Health and Welfare. See, also, Transfer of Functions notes set out under those sections.
AMENDMENTS TO PROVISIONS FOR FAMILY UNIT LIMITS
ON RENTAL HOUSING; EQUITABLE APPLICATION OF
SUCH AMENDMENTS OR PRE-AMENDMENT PROVISIONS
TO PROJECTS SUBMITTED FOR CONSIDERATION PRIOR
TO SEPTEMBER 2, 1964
Equitable application of amendment to subsec. (f) of
this section by section 107(f) of Pub. L. 88–560 or preamendment provisions to projects submitted for con-

Page 817

TITLE 12—BANKS AND BANKING

sideration prior to Sept. 2, 1964, see section 107(g) of
Pub. L. 88–560, set out as a note under section 1713 of
this title.

§ 1748h–3. Payments in lieu of taxes; limitations;
exemption from taxation
(a) The Secretary is authorized to make payments in lieu of taxes on any real property to
which title has been or is hereafter acquired by
him in fee under section 1748b of this title as effective prior to August 11, 1955, and on which
taxes or payments in lieu of such taxes were
payable or paid prior to acquisition by the Secretary. Such payments may be made in connection with tax years occurring prior to or subsequent to October 5, 1962. The amount of any such
payments shall not exceed taxes on similar
property and shall not include interest or penalties. If the Secretary has acquired or hereafter
acquires title in fee to real property by foreclosure or by transfer from some other department or agency of the Government or otherwise
during a tax year, he may make a payment in
lieu of taxes prorated for that portion of the
year remaining after his acquisition of title.
This subsection shall not authorize any lien
against property held by the Secretary, nor the
payment of any tax, nor any payment in lieu of
any tax, on any interest of the Secretary as lessee or mortgagee.
(b) Nothing in this subchapter shall be construed to exempt any real property which has
been or is hereafter acquired and held by the
Secretary under section 1748h–1 or 1748h–2 of this
title from taxation by any State or political
subdivision thereof, to the same extent, according to its value, as other real property is taxed.
(June 27, 1934, ch. 847, title VIII, § 811, as added
Pub. L. 87–756, Oct. 5, 1962, 76 Stat. 751; amended
Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81 Stat. 17.)
AMENDMENTS
1967—Subsecs. (a), (b). Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.

§ 1748i. Omitted
CODIFICATION
Section, act Sept. 28, 1951, ch. 434, title V, § 505, 65
Stat. 365, related to appropriation and expenditure of
funds for acquisition of land, installation of outside
utilities, and site preparation for housing projects constructed under this subchapter.

SUBCHAPTER IX—HOUSING FOR
EDUCATIONAL INSTITUTIONS
§§ 1749 to 1749c. Repealed. Pub. L. 99–498, title
VII, § 702, Oct. 17, 1986, 100 Stat. 1545
Section 1749, acts Apr. 20, 1950, ch. 94, title IV, § 401,
64 Stat. 77; June 30, 1953, ch. 170, § 24(b), 67 Stat. 128;
Aug. 2, 1954, ch. 649, title VIII, § 808(b), 68 Stat. 646; Aug.
11, 1955, ch. 783, title III, § 301, 69 Stat. 644; Aug. 7, 1956,
ch. 1029, title VI, § 601, 70 Stat. 1113; July 12, 1957, Pub.
L. 85–104, title VI, § 601(a), 71 Stat. 303; Sept. 23, 1959,
Pub. L. 86–372, title VI, §§ 601, 603(b), 73 Stat. 681, 682;
Sept. 14, 1960, Pub. L. 86–788, § 2(b), 74 Stat. 1028; June
30, 1961, Pub. L. 87–70, title IV, § 401, 75 Stat. 172; Aug.
10, 1965, Pub. L. 89–117, title VI, §§ 601, 602, 604(b), 79
Stat. 489; May 24, 1966, Pub. L. 89–429, § 3(b), 80 Stat. 166;
Nov. 3, 1966, Pub. L. 89–754, title X, § 1014(b), 80 Stat.
1292; May 25, 1967, Pub. L. 90–19, § 8(a), 81 Stat. 22; Aug.
1, 1968, Pub. L. 90–448, title XVII, § 1705(b)–(e), (g)(1), 82

§ 1749d

Stat. 604, 605; Dec. 24, 1969, Pub. L. 91–152, title II, § 219,
83 Stat. 390; July 24, 1970, Pub. L. 91–351, title VII, § 710,
84 Stat. 463; Dec. 31, 1970, Pub. L. 91–609, title II, § 205,
84 Stat. 1777; Oct. 17, 1984, Pub. L. 98–479, title II,
§ 203(e)(1), 98 Stat. 2230, authorized Federal loans and
grants to assist educational institutions in providing
housing and other educational facilities for students
and faculties.
Section 1749a, acts Apr. 20, 1950, ch. 94, title IV, § 402,
64 Stat. 78; Sept. 23, 1959, Pub. L. 86–372, title VI, § 602,
73 Stat. 681; May 25, 1967, Pub. L. 90–19, § 8(a), (b), 81
Stat. 22; Jan. 2, 1975, Pub. L. 93–604, title VII, § 705(b), 88
Stat. 1964; Oct. 31, 1983, Pub. L. 98–139, title III, § 308, 97
Stat. 895; Oct. 17, 1984, Pub. L. 98–479, title II,
§§ 201(d)(1), 203(e)(2)–(4), 204(d), 98 Stat. 2228, 2230, 2233;
Nov. 8, 1984, Pub. L. 98–619, title III, § 308, 98 Stat. 3329;
Dec. 12, 1985, Pub. L. 99–178, title III, § 307, 99 Stat. 1128;
Oct. 18, 1986, Pub. L. 99–500, § 101(i) [H.R. 5233, title III,
§ 307], 100 Stat. 1783–287, and Oct. 30, 1986, Pub. L. 99–591,
§ 101(i) [H.R. 5233, title III, § 307], 100 Stat. 3341–287; Dec.
22, 1987, Pub. L. 100–202, § 106, 101 Stat. 1329–433, related
to powers and duties of Secretary in carrying out subchapter.
Section 1749b, acts Apr. 20, 1950, ch. 94, title IV, § 403,
64 Stat. 80; June 30, 1961, Pub. L. 87–70, title IV, § 402, 75
Stat. 173; Aug. 1, 1968, Pub. L. 90–448, title XVII,
§ 1705(f), 82 Stat. 604, related to apportionment of funds.
Section 1749c, acts Apr. 20, 1950, ch. 94, title IV, § 404,
64 Stat. 80; Aug. 11, 1955, ch. 783, title III, §§ 302, 303, 69
Stat. 645; July 12, 1957, Pub. L. 85–104, title VI, § 601(b),
71 Stat. 304; Sept. 23, 1959, Pub. L. 86–372, title VI,
§ 603(a), 73 Stat. 682; June 30, 1961, Pub. L. 87–70, title IV,
§ 403, 75 Stat. 173; Sept. 2, 1964, Pub. L. 88–560, title X,
§ 1002, 78 Stat. 806; Aug. 10, 1965, Pub. L. 89–117, title VI,
§§ 603, 604(a), 79 Stat. 489; Nov. 3, 1966, Pub. L. 89–754,
title X, § 1014(a), 80 Stat. 1292; May 25, 1967, Pub. L.
90–19, § 8(a), (c), 81 Stat. 22; Aug. 1, 1968, Pub. L. 90–448,
title XVII, § 1705(g)(2)–(7), 82 Stat. 605; Oct. 17, 1984, Pub.
L. 98–479, title II, § 201(d)(2), 98 Stat. 2228, defined terms
used in subchapter.

§ 1749d. Cost of inspections and of providing representatives
On and after December 19, 1963, necessary expenses of inspections and of providing representatives at the site of projects being planned or
undertaken by local public agencies pursuant to
title I of the Housing Act of 1949, as amended [42
U.S.C. 1450 et seq.], projects financed through
loans to educational institutions authorized by
this subchapter, projects and facilities financed
by loans to public agencies pursuant to title II
of the Housing Amendments of 1955, as amended
[42 U.S.C. 1491 et seq.], urban planning financed
through grants to State and local government
agencies pursuant to chapter 35 of title 40, and
reserves of planned public works financed
through advances to municipalities and other
public agencies pursuant to chapter 35 of title
40, as amended, shall be compensated by such
agencies or institutions by the payment of fixed
fees which in the aggregate will cover the costs
of rendering such services, and expenses for such
purpose shall be considered nonadministrative;
and for the purpose of providing such inspections, the Secretary of Housing and Urban Development may utilize any agency and such
agency may accept reimbursement or payment
for such services from such institutions, or the
Secretary, and shall credit such amounts to the
appropriations or funds against which such
charges have been made.
(Pub. L. 88–215, title I, Dec. 19, 1963, 77 Stat. 437;
Pub. L. 89–174, § 5, Sept. 9, 1965, 79 Stat. 669.)

§§ 1749aa to 1749ll

TITLE 12—BANKS AND BANKING

REFERENCES IN TEXT
The Housing Act of 1949, as amended, referred to in
text, is act July 15, 1949, ch. 338, 63 Stat. 413, as amended. Title I of the Housing Act of 1949 which was classified generally to subchapter II (§ 1450 et seq.) of chapter
8A of Title 42, The Public Health and Welfare, was
omitted from the Code pursuant to section 5316 of Title
42 which terminated the authority to make grants or
loans under such chapter after Jan. 1, 1975. For complete classification of this Act to the Code, see Short
Title note set out under section 1441 of Title 42 and
Tables.
The Housing Amendments of 1955, referred to in text,
is act Aug. 11, 1955, ch. 783, 69 Stat. 645, as amended.
Title II of the Act was classified generally to chapter
8B (§ 1491 et seq.) of Title 42, The Public Health and
Welfare, and was omitted from the Code pursuant to
section 5316 of Title 42 which terminated authority to
make grants or loans under such title II after Jan. 1,
1975. For complete classification of this Act to the
Code, see Short Title note set out under section 1701 of
this title and Tables.
CODIFICATION
‘‘Chapter 35 of title 40’’ substituted in text for ‘‘title
VII of the Housing Act of 1954, as amended’’ and for
‘‘title VII of the Housing Act of 1954’’ on authority of
Pub. L. 107–217, § 5(c), Aug. 21, 2002, 116 Stat. 1303, the
first section of which enacted Title 40, Public Buildings, Property, and Works.
Section was enacted as part of the Independent Offices Appropriation Act, 1964, Pub. L. 88–215, and not as
part of the National Housing Act which comprises this
chapter. Similar provisions were contained in the following prior appropriation acts:
Oct. 3, 1962, Pub. L. 87–741, title I, 76 Stat. 728.
Aug. 17, 1961, Pub. L. 87–141, title I, 75 Stat. 353.
July 12, 1960, Pub. L. 86–626, title I, 74 Stat. 434.
Sept. 14, 1959, Pub. L. 86–255, title I, 73 Stat. 508.
Aug. 28, 1958, Pub. L. 85–844, title I, 72 Stat. 1070.
June 29, 1957, Pub. L. 85–69, title I, 71 Stat. 233.
June 27, 1956, ch. 452, title I, 70 Stat. 345.
June 30, 1955, ch. 244, title I, 69 Stat. 206.
June 24, 1954, ch. 359, title I, 68 Stat. 283.
July 31, 1953, ch. 302, title I, 67 Stat. 305.
July 5, 1952, ch. 578, title I, 66 Stat. 402.
Aug. 31, 1951, ch. 376, title I, 65 Stat. 276.
Sept. 6, 1950, ch. 896, Ch. VIII, title I, 64 Stat. 709.
TRANSFER OF FUNCTIONS
‘‘Secretary’’ substituted for ‘‘Administrator’’ pursuant to section 5 of Pub. L. 89–174, Sept. 9, 1965, 79 Stat.
669, which transferred functions, powers, and duties of
Housing and Home Finance Agency and its Administrator to Secretary of Housing and Urban Development,
and which is classified to section 3534 of Title 42, The
Public Health and Welfare.
LIMITATION ON EXPENSE
Pub. L. 89–555, title I, § 101, Sept. 6, 1966, 80 Stat. 684,
limited nonadministrative expenses to $5,535,000 for fiscal year 1966. Similar provisions for prior fiscal years
were contained in acts Aug. 31, 1951, ch. 376, title I,
§ 101, 65 Stat. 276; July 5, 1952, ch. 578, title I, § 101, 66
Stat. 402; July 31, 1953, ch. 302, title I, § 101, 67 Stat. 305;
June 24, 1954, ch. 359, title I, § 101, 68 Stat. 283; June 30,
1955, ch. 244, title I, § 101, 69 Stat. 206; May 19, 1956, ch.
313, Ch. V, § 501, 70 Stat. 166; June 27, 1956, ch. 452, title
I, § 101, 70 Stat. 346; June 29, 1957, Pub. L. 85–69, title I,
§ 101, 71 Stat. 233; Aug. 28, 1958, Pub. L. 85–844, title I,
§ 101, 72 Stat. 1070; Sept. 14, 1959, Pub. L. 86–255, title I,
§ 101, 73 Stat. 508; July 12, 1960, Pub. L. 86–626, title I,
§ 101, 74 Stat. 435; Aug. 17, 1961, Pub. L. 87–141, title I,
§ 101, 75 Stat. 353; Oct. 3, 1962, Pub. L. 87–741, title I,
§ 101, 76 Stat. 729; Dec. 19, 1963, Pub. L. 88–215, title I,
§ 101, 77 Stat. 437; Aug. 30, 1964, Pub. L. 88–507, title I,
§ 101, 78 Stat. 655; Aug. 16, 1965, Pub. L. 89–128, title I,
§ 101, 79 Stat. 531.

Page 818

SUBCHAPTER
IX–A—MORTGAGE
INSURANCE FOR LAND DEVELOPMENT AND
NEW COMMUNITIES
§§ 1749aa to 1749ll. Repealed. Pub. L. 101–235,
title I, § 133(a), Dec. 15, 1989, 103 Stat. 2027
Section 1749aa, act June 27, 1934, ch. 847, title X,
§ 1001, as added Aug. 10, 1965, Pub. L. 89–117, title II,
§ 201(a), 79 Stat. 461; amended Nov. 3, 1966, Pub. L.
89–754, title X, §§ 1019, 1020(f), 80 Stat. 1295, 1296; May 25,
1967, Pub. L. 90–19, § 1(a)(3), 81 Stat. 17, defined terms for
this subchapter.
Section 1749bb, act June 27, 1934, ch. 847, title X,
§ 1002, as added Aug. 10, 1965, Pub. L. 89–117, title II,
§ 201(a), 79 Stat. 462; amended Nov. 3, 1966, Pub. L.
89–754, title IV, § 402, 80 Stat. 1272; May 25, 1967, Pub. L.
90–19, § 1(a)(3), (4), 81 Stat. 17; Aug. 1, 1968, Pub. L.
90–448, title III, § 310, 82 Stat. 509; Sept. 30, 1969, Pub. L.
91–78, § 2(f), 83 Stat. 125; Dec. 24, 1969, Pub. L. 91–152,
title I, § 101(h), 83 Stat. 379; Oct. 2, 1970, Pub. L. 91–432,
§ 1(f), 84 Stat. 887; Oct. 21, 1970, Pub. L. 91–473, § 1(f), 84
Stat. 1065; Dec. 1, 1970, Pub. L. 91–525, § 1(f), 84 Stat. 1384;
Dec. 31, 1970, Pub. L. 91–609, title I, § 101(h), 84 Stat. 1770;
Oct. 18, 1972, Pub. L. 92–503, § 1(h), 86 Stat. 906; Aug. 10,
1973, Pub. L. 93–85, § 1(h), 87 Stat. 220; Oct. 2, 1973, Pub.
L. 93–117, § 1(h), 87 Stat. 422; Aug. 22, 1974, Pub. L. 93–383,
title III, §§ 304(k), 314, 316(f), 88 Stat. 678, 684, 685; June
30, 1977, Pub. L. 95–60, § 1(g), 91 Stat. 257; July 31, 1977,
Pub. L. 95–80, § 1(g), 91 Stat. 339; Oct. 12, 1977, Pub. L.
95–128, title III, § 301(j), 91 Stat. 1131; Sept. 30, 1978, Pub.
L. 95–406, § 1(j), 92 Stat. 879; Oct. 31, 1978, Pub. L. 95–557,
title III, § 301(j), 92 Stat. 2096; Sept. 28, 1979, Pub. L.
96–71, § 1(j), 93 Stat. 501; Nov. 8, 1979, Pub. L. 96–105,
§ 1(j), 93 Stat. 794; Dec. 21, 1979, Pub. L. 96–153, title III,
§ 301(j), 93 Stat. 1112; Oct. 3, 1980, Pub. L. 96–372, § 1(j), 94
Stat. 1363; Oct. 8, 1980, Pub. L. 96–399, title III, § 301(j),
94 Stat. 1639; Aug. 13, 1981, Pub. L. 97–35, title III,
§ 331(i), 95 Stat. 413; Oct. 6, 1982, Pub. L. 97–289, § 1(j), 96
Stat. 1230; May 26, 1983, Pub. L. 98–35, § 1(j), 97 Stat. 197;
Oct. 1, 1983, Pub. L. 98–109, § 1(j), 97 Stat. 745; Nov. 30,
1983, Pub. L. 98–181, title I [title IV, §§ 401(i), 404(b)(16)],
97 Stat. 1208, 1210; Oct. 8, 1985, Pub. L. 99–120, § 1(i), 99
Stat. 503; Nov. 15, 1985, Pub. L. 99–156, § 1(i), 99 Stat. 816;
Dec. 26, 1985, Pub. L. 99–219, § 1(i), 99 Stat. 1731; Mar. 27,
1986, Pub. L. 99–267, § 1(j), 100 Stat. 74; Apr. 7, 1986, Pub.
L. 99–272, title III, § 3007(i), 100 Stat. 105; May 2, 1986,
Pub. L. 99–289, § 1(b), 100 Stat. 412; June 24, 1986, Pub. L.
99–345, § 1, 100 Stat. 673; Sept. 30, 1986, Pub. L. 99–430, 100
Stat. 986; Sept. 30, 1987, Pub. L. 100–122, § 1, 101 Stat. 793;
Nov. 5, 1987, Pub. L. 100–154, 101 Stat. 890; Nov. 17, 1987,
Pub. L. 100–170, 101 Stat. 914; Dec. 3, 1987, Pub. L.
100–179, 101 Stat. 1018; Dec. 21, 1987, Pub. L. 100–200, 101
Stat. 1327; Feb. 5, 1988, Pub. L. 100–242, title IV,
§ 401(a)(7), 101 Stat. 1898, authorized Secretary to insure
mortgages in accordance with provisions of this subchapter.
Section 1749cc, act June 27, 1934, ch. 847, title X, § 1003,
as added Aug. 10, 1965, Pub. L. 89–117, title II, § 201(a), 79
Stat. 463; amended May 25, 1967, Pub. L. 90–19, § 1(a)(3),
(u), 81 Stat. 17, 19; Dec. 31, 1970, Pub. L. 91–609, title I,
§ 119, 84 Stat. 1775, directed that land development covered by mortgage insured under this subchapter be
undertaken pursuant to a schedule and in accordance
with an overall development plan.
Section 1749cc–1, act June 27, 1934, ch. 847, title X,
§ 1004, as added Nov. 3, 1966, Pub. L. 89–754, title IV,
§ 401(a), 80 Stat. 1271, related to approval of new communities for mortgage insurance.
Section 1749dd, act June 27, 1934, ch. 847, title X,
§ 1005, formerly § 1004, as added Aug. 10, 1965, Pub. L.
89–117, title II, § 201(a), 79 Stat. 463; renumbered § 1005
and amended Nov. 3, 1966, Pub. L. 89–754, title IV,
§§ 401(a), 403, 80 Stat. 1271, 1272; May 25, 1967, Pub. L.
90–19, § 1(a)(3), 81 Stat. 17, directed adoption of requirements to encourage homebuilding industry and proper
balance of housing for moderate and low income families.
Section 1749ee, act June 27, 1934, ch. 847, title X, § 1006,
formerly § 1005, as added Aug. 10, 1965, Pub. L. 89–117,

Page 819

TITLE 12—BANKS AND BANKING

title II, § 201(a), 79 Stat. 463; renumbered § 1006 and
amended Nov. 3, 1966, Pub. L. 89–754, title IV, §§ 401(a),
404, 80 Stat. 1271, 1272, related to service of land by public water and sewerage systems after development.
Section 1749ff, act June 27, 1934, ch. 847, title X, § 1007,
formerly § 1006, as added Aug. 10, 1965, Pub. L. 89–117,
title II, § 201(a), 79 Stat. 464; renumbered § 1007, Nov. 3,
1966, Pub. L. 89–754, title IV, § 401(a), 80 Stat. 1271;
amended May 25, 1967, Pub. L. 90–19, § 1(a)(3), 81 Stat. 17,
related to release or subordination of mortgaged property.
Section 1749gg, act June 27, 1934, ch. 847, title X,
§ 1008, formerly § 1007, as added Aug. 10, 1965, Pub. L.
89–117, title II, § 201(a), 79 Stat. 464; renumbered § 1008,
Nov. 3, 1966, Pub. L. 89–754, title IV, § 401(a), 80 Stat.
1271; amended May 25, 1967, Pub. L. 90–19, § 1(a)(3), 81
Stat. 17, related to premium rates and other charges for
mortgage insurance and report to Congress thereon.
Section 1749hh, act June 27, 1934, ch. 847, title X,
§ 1009, formerly § 1008, as added Aug. 10, 1965, Pub. L.
89–117, title II, § 201(a), 79 Stat. 464; renumbered § 1009,
Nov. 3, 1966, Pub. L. 89–754, title IV, § 401(a), 80 Stat.
1271; amended May 25, 1967, Pub. L. 90–19, § 1(a)(3), 81
Stat. 17, related to applicability of other provisions of
law to this subchapter.
Section 1749ii, act June 27, 1934, ch. 847, title X, § 1010,
formerly § 1009, as added Aug. 10, 1965, Pub. L. 89–117,
title II, § 201(a), 79 Stat. 464; renumbered § 1010, Nov. 3,
1966, Pub. L. 89–754, title IV, § 401(a), 80 Stat. 1271;
amended May 25, 1967, Pub. L. 90–19, § 1(a)(3), 81 Stat. 17,
provided that insurance contract under this subchapter
was conclusive evidence of eligibility for insurance and
that the validity of such contract was incontestable.
Section 1749jj, act June 27, 1934, ch. 847, title X, § 1011,
formerly § 1010, as added Aug. 10, 1965, Pub. L. 89–117,
title II, § 201(a), 79 Stat. 464; renumbered § 1011, Nov. 3,
1966, Pub. L. 89–754, title IV, § 401(a), 80 Stat. 1271;
amended May 25, 1967, Pub. L. 90–19, § 1(a)(3), 81 Stat. 17,
authorized making rules and regulations to carry out
provisions of subchapter.
Section 1749kk, act June 27, 1934, ch. 847, title X,
§ 1012, formerly § 1011, as added Aug. 10, 1965, Pub. L.
89–117, title II, § 201(a), 79 Stat. 464; renumbered § 1012,
Nov. 3, 1966, Pub. L. 89–754, title IV, § 401(a), 80 Stat.
1271; amended May 25, 1967, Pub. L. 90–19, § 1(a)(3), 81
Stat. 17, related to taxation of real property acquired
by Secretary.
Section 1749ll, act June 27, 1934, ch. 847, title X, § 1013,
formerly § 1012, as added Aug. 10, 1965, Pub. L. 89–117,
title II, § 201(a), 79 Stat. 464; renumbered § 1013, Nov. 3,
1966, Pub. L. 89–754, title IV, § 401(a), 80 Stat. 1271;
amended May 25, 1967, Pub. L. 90–19, § 1(a)(3), (4), 81
Stat. 17, related to requirements to assure that amount
of mortgage was not excessive and to requirement that
mortgagor certify costs of land development.
SAVINGS PROVISION
Pub. L. 101–235, title I, § 133(c), Dec. 15, 1989, 103 Stat.
2027, provided that: ‘‘Any contract of insurance entered
into under title X [this subchapter, §§ 1749aa to 1749ll]
before the date of enactment of this Act [Dec. 15, 1989]
shall be governed by the provisions of such title as such
title existed immediately before such date.’’
APPLICABILITY OF REPEAL
Pub. L. 101–235, title I, § 133(b), Dec. 15, 1989, 103 Stat.
2027, provided that: ‘‘On or after the date of enactment
of this Act [Dec. 15, 1989], no mortgage may be insured
under title X [this subchapter, §§ 1749aa to 1749ll], as
such title existed immediately before such date, except
pursuant to a commitment to insure made before such
date.’’

§ 1749aaa

SUBCHAPTER
IX–B—MORTGAGE
INSURANCE FOR GROUP PRACTICE FACILITIES
AND MEDICAL PRACTICE FACILITIES
§ 1749aaa. Insurance of mortgages
(a) Authority of Secretary; termination date
The Secretary is authorized (1) to insure mortgages (including advances on such mortgages
during construction), upon such terms and conditions as he may prescribe, in accordance with
the provisions of this subchapter, and (2) to
make commitments for the insuring of such
mortgages prior to the date of their execution or
disbursement thereon.
(b) Eligibility for insurance
To be eligible for insurance under this subchapter, the mortgage shall (1) be executed by a
mortgagor that is a group practice unit or organization or other mortgagor approved by the
Secretary, (2) be made to and held by a mortgagee approved by the Secretary as responsible
and able to service the mortgage properly, and
(3) cover a property or project which is approved
for mortgage insurance prior to the beginning of
construction or rehabilitation and is designed
for use as a group practice facility or medical
practice facility which the Secretary finds will
be constructed in an economical manner, will
not be of elaborate or extravagant design or materials, and will be adequate and suitable for
carrying out the purposes of this subchapter. No
mortgage shall be insured under this subchapter
unless it is shown to the satisfaction of the Secretary that the applicant would be unable to obtain the mortgage loan without such insurance
on terms comparable to those specified in subsection (c).
(c) Replacement cost of property; maturity; amortization; interest rate
The mortgage shall—
(1) Repealed. Pub. L. 93–383, title III, § 304(l),
Aug. 22, 1974, 88 Stat. 678;
(2) not exceed 90 per centum of the amount
which the Secretary estimates will be the replacement cost of the property or project
when construction or rehabilitation is completed. The replacement cost of the property
may include the land and the proposed physical improvements, equipment, utilities within
the boundaries of the property, a solar energy
system (as defined in subparagraph (3) of the
last paragraph of section 1703(a) of this title)
or residential energy conservation measures
(as defined in section 8211(11)(A) through (G)
and (I) of title 42) 1 in cases where the Secretary determines that such measures are in
addition to those required under the minimum
property standards and will be cost-effective
over the life of the measure, architects’ fees,
taxes, and interest accruing during construction or rehabilitation, and other miscellaneous charges incident to construction or rehabilitation and approved by the Secretary;
(3) have a maturity satisfactory to the Secretary but not to exceed twenty-five years
from the beginning of the amortization of the
mortgage, and provide for complete amortiza1 See

References in Text note below.

§ 1749aaa

TITLE 12—BANKS AND BANKING

tion of the principal obligation by periodic
payments within such term as the Secretary
shall prescribe; and
(4) bear interest at such rate as may be
agreed upon by the mortgagor and the mortgagee.
(d) Conclusiveness of insurance contract as to
eligibility; validity of contract incontestable
Any contract of insurance executed by the
Secretary under this subchapter shall be conclusive evidence of the eligibility of the mortgage
for insurance, and the validity of any contract
for insurance so executed shall be incontestable
in the hands of an approved mortgagee from the
date of the execution of such contract, except
for fraud or misrepresentation on the part of
such approved mortgagee.
(e) Undertaking
Each mortgage insured under this subchapter
shall contain an undertaking (in accordance
with regulations prescribed under this subchapter and in force at the time the mortgage is
approved for insurance) to the effect that, except as authorized by the Secretary and the
mortgagee, the property will be used as a group
practice facility or medical practice facility
until the mortgage has been paid in full or the
contract of insurance otherwise terminated.
(f) Recordkeeping; reports; examination and
audit
No mortgage shall be insured under this subchapter unless the mortgagor and the mortgagee
certify (1) that they will keep such records relating to the mortgage transaction and indebtedness, to the construction of the facility covered by the mortgage, and to the use of such facility as a group practice facility or medical
practice facility as are prescribed by the Secretary at the time of such certification, (2) that
they will make such reports as may from time
to time be required by the Secretary pertaining
to such matters, and (3) that the Secretary shall
have access to and the right to examine and
audit such records.
(June 27, 1934, ch. 847, title XI, § 1101, as added
Pub. L. 89–754, title V, § 502(a), Nov. 3, 1966, 80
Stat. 1274; amended Pub. L. 90–448, title XVII,
§ 1722(d), Aug. 1, 1968, 82 Stat. 610; Pub. L. 91–78,
§ 2(g), Sept. 30, 1969, 83 Stat. 125; Pub. L. 91–152,
title I, § 101(i), title IV, § 418(f), Dec. 24, 1969, 83
Stat. 379, 402; Pub. L. 91–432, § 1(g), Oct. 2, 1970, 84
Stat. 887; Pub. L. 91–473, § 1(g), Oct. 21, 1970, 84
Stat. 1065; Pub. L. 91–525, § 1(g), Dec. 1, 1970, 84
Stat. 1384; Pub. L. 91–609, title I, § 101(i), Dec. 31,
1970, 84 Stat. 1770; Pub. L. 92–503, § 1(i), Oct. 18,
1972, 86 Stat. 906; Pub. L. 93–85, § 1(i), Aug. 10,
1973, 87 Stat. 220; Pub. L. 93–117, § 1(i), Oct. 2,
1973, 87 Stat. 422; Pub. L. 93–383, title III, §§ 304(l),
312(a)(1)–(4), 316(g), Aug. 22, 1974, 88 Stat. 678, 683,
685; Pub. L. 95–60, § 1(h), June 30, 1977, 91 Stat.
257; Pub. L. 95–80, § 1(h), July 31, 1977, 91 Stat.
339; Pub. L. 95–128, title III, § 301(k), Oct. 12, 1977,
91 Stat. 1131; Pub. L. 95–406, § 1(k), Sept. 30, 1978,
92 Stat. 879; Pub. L. 95–557, title III, § 301(k), Oct.
31, 1978, 92 Stat. 2096; Pub. L. 96–71, § 1(k), Sept.
28, 1979, 93 Stat. 501; Pub. L. 96–105, § 1(k), Nov. 8,
1979, 93 Stat. 794; Pub. L. 96–153, title III, § 301(k),
Dec. 21, 1979, 93 Stat. 1112; Pub. L. 96–372, § 1(k),
Oct. 3, 1980, 94 Stat. 1363; Pub. L. 96–399, title III,

Page 820

§§ 301(k), 310(i), Oct. 8, 1980, 94 Stat. 1639, 1643;
Pub. L. 97–35, title III, § 331(j), Aug. 13, 1981, 95
Stat. 413; Pub. L. 97–289, § 1(k), Oct. 6, 1982, 96
Stat. 1230; Pub. L. 98–35, § 1(k), May 26, 1983, 97
Stat. 197; Pub. L. 98–109, § 1(k), Oct. 1, 1983, 97
Stat. 745; Pub. L. 98–181, title I [title IV, § 401(j)],
Nov. 30, 1983, 97 Stat. 1208; Pub. L. 98–479, title I,
§ 104(a)(8), Oct. 17, 1984, 98 Stat. 2225; Pub. L.
99–120, § 1(j), Oct. 8, 1985, 99 Stat. 503; Pub. L.
99–156, § 1(j), Nov. 15, 1985, 99 Stat. 816; Pub. L.
99–219, § 1(j), Dec. 26, 1985, 99 Stat. 1731; Pub. L.
99–267, § 1(k), Mar. 27, 1986, 100 Stat. 74; Pub. L.
99–272, title III, § 3007(j), Apr. 7, 1986, 100 Stat.
105; Pub. L. 99–289, § 1(b), May 2, 1986, 100 Stat.
412; Pub. L. 99–345, § 1, June 24, 1986, 100 Stat. 673;
Pub. L. 99–430, Sept. 30, 1986, 100 Stat. 986; Pub.
L. 100–122, § 1, Sept. 30, 1987, 101 Stat. 793; Pub. L.
100–154, Nov. 5, 1987, 101 Stat. 890; Pub. L. 100–170,
Nov. 17, 1987, 101 Stat. 914; Pub. L. 100–179, Dec.
3, 1987, 101 Stat. 1018; Pub. L. 100–200, Dec. 21,
1987, 101 Stat. 1327; Pub. L. 100–242, title IV,
§ 401(a)(8), Feb. 5, 1988, 101 Stat. 1898.)
REFERENCES IN TEXT
Section 8211 of title 42, referred to in subsec. (c)(2),
was omitted from the Code pursuant to section 8229 of
Title 42, The Public Health and Welfare, which terminated authority under that section on June 30, 1989.
AMENDMENTS
1988—Subsec. (a). Pub. L. 100–242 struck out at end
‘‘No mortgage shall be insured under this subchapter
after March 15, 1988, except pursuant to a commitment
to insure issued before that date.’’
1987—Subsec. (a). Pub. L. 100–200 substituted ‘‘March
15, 1988’’ for ‘‘December 16, 1987’’.
Pub. L. 100–179 substituted ‘‘December 16, 1987’’ for
‘‘December 2, 1987’’.
Pub. L. 100–170 substituted ‘‘December 2, 1987’’ for
‘‘November 15, 1987’’.
Pub. L. 100–154 substituted ‘‘November 15, 1987’’ for
‘‘October 31, 1987’’.
Pub. L. 100–122 substituted ‘‘October 31, 1987’’ for
‘‘September 30, 1987’’.
1986—Subsec. (a). Pub. L. 99–430 substituted ‘‘September 30, 1987’’ for ‘‘September 30, 1986’’.
Pub. L. 99–345 substituted ‘‘September 30, 1986’’ for
‘‘June 6, 1986’’.
Pub. L. 99–289 substituted ‘‘June 6, 1986’’ for ‘‘April 30,
1986’’.
Pub. L. 99–272 made amendment identical to Pub. L.
99–219. See 1985 Amendment note below.
Pub. L. 99–267 substituted ‘‘April 30, 1986’’ for ‘‘March
17, 1986’’.
1985—Subsec. (a). Pub. L. 99–219 substituted ‘‘March
17, 1986’’ for ‘‘December 15, 1985’’.
Pub. L. 99–156 substituted ‘‘December 15, 1985’’ for
‘‘November 14, 1985’’.
Pub. L. 99–120 substituted ‘‘November 14, 1985’’ for
‘‘September 30, 1985’’.
1984—Subsec. (c)(4). Pub. L. 98–479 substituted ‘‘at
such rate as may be agreed upon by the mortgagor and
the mortgagee,’’ for ‘‘(exclusive of premium charges for
insurance, and service charges if any) at a rate of not
to exceed 5 per centum per annum of the amount of the
principal obligation outstanding at any time, or not to
exceed such rate (not in excess of 6 per centum per
annum) as the Secretary finds necessary to meet the
mortgage market.’’
1983—Subsec. (a). Pub. L. 98–181 substituted ‘‘September 30, 1985’’ for ‘‘November 30, 1983’’.
Pub. L. 98–109 substituted ‘‘November 30, 1983’’ for
‘‘September 30, 1983’’.
Pub. L. 98–35 substituted ‘‘September 30, 1983’’ for
‘‘May 20, 1983’’.
1982—Subsec. (a). Pub. L. 97–289 substituted ‘‘May 20,
1983’’ for ‘‘September 30, 1982’’.

Page 821

§ 1749aaa–3

TITLE 12—BANKS AND BANKING

1981—Subsec. (a). Pub. L. 97–35 substituted ‘‘1982’’ for
‘‘1981’’.
1980—Subsec. (a). Pub. L. 96–399, § 301(k), substituted
‘‘September 30, 1981’’ for ‘‘October 15, 1980’’.
Pub. L. 96–372 substituted ‘‘October 15, 1980’’ for ‘‘September 30, 1980’’.
Subsec. (c)(2). Pub. L. 96–399, § 310(i), inserted provisions relating to solar energy systems and residential
energy conservation measures.
1979—Subsec. (a). Pub. L. 96–153 substituted ‘‘September 30, 1980’’ for ‘‘November 30, 1979’’.
Pub. L. 96–105 substituted ‘‘November 30, 1979’’ for
‘‘October 31, 1979’’.
Pub. L. 96–71 substituted ‘‘October 31, 1979’’ for ‘‘September 30, 1979’’.
1978—Subsec. (a). Pub. L. 95–557 substituted ‘‘September 30, 1979’’ for ‘‘October 31, 1978’’.
Pub. L. 95–406 substituted ‘‘October 31, 1978’’ for ‘‘September 30, 1978’’.
1977—Subsec. (a). Pub. L. 95–128 substituted ‘‘September 30, 1978’’ for ‘‘September 30, 1977’’.
Pub. L. 95–80 substituted ‘‘September 30, 1977’’ for
‘‘July 31, 1977’’.
Pub. L. 95–60 substituted ‘‘July 31, 1977’’ for ‘‘June 30,
1977’’.
1974—Subsec. (a). Pub. L. 93–383, § 316(g), substituted
‘‘June 30, 1977’’ for ‘‘October 1, 1974’’.
Subsec. (b). Pub. L. 93–383, § 312(a)(1), (2), in cl. (1) inserted ‘‘or other mortgagor’’ after ‘‘or organization’’,
and in cl. (3) inserted ‘‘or medical practice facility’’
after ‘‘group practice facility’’.
Subsec. (c)(1). Pub. L. 93–383, § 304(l), struck out par.
(1) which set forth limitation on amount of mortgage.
Subsecs. (e), (f). Pub. L. 93–383, § 312(a)(3), (4), inserted
‘‘or medical practice facility’’ after ‘‘group practice facility’’.
1973—Subsec. (a). Pub. L. 93–117 substituted ‘‘October
1, 1974’’ for ‘‘October 1, 1973’’.
Pub. L. 93–85 substituted ‘‘October 1, 1973’’ for ‘‘June
30, 1973’’.
1972—Subsec. (a). Pub. L. 92–503 substituted ‘‘June 30,
1973’’ for ‘‘October 1, 1972’’.
1970—Subsec. (a). Pub. L. 91–609 substituted ‘‘October
1, 1972’’ for ‘‘January 1, 1971’’.
Pub. L. 91–525 substituted ‘‘January 1, 1971’’ for ‘‘December 1, 1970’’.
Pub. L. 91–473 substituted ‘‘December 1, 1970’’ for ‘‘November 1, 1970’’.
Pub. L. 91–432 substituted ‘‘November 1, 1970’’ for ‘‘October 1, 1970’’.
1969—Subsec. (a). Pub. L. 91–152, § 101(i), substituted
‘‘October 1, 1970’’ for ‘‘January 1, 1970’’.
Pub. L. 91–78 substituted ‘‘January 1, 1970’’ for ‘‘October 1, 1969’’.
Subsec. (c)(2). Pub. L. 91–152, § 418(f), substituted ‘‘replacement cost’’ for ‘‘value’’ wherever appearing.
1968—Subsec. (c)(3). Pub. L. 90–448 limited term of
mortgage to not more than twenty-five years from beginning of amortization of mortgage.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97–35 effective Oct. 1, 1981, see
section 371 of Pub. L. 97–35, set out as an Effective Date
note under section 3701 of this title.
DECLARATION OF PURPOSE
Pub. L. 89–754, title V, § 501, Nov. 3, 1966, 80 Stat. 1273,
provided that: ‘‘It is the purpose of this title [enacting
this subchapter and amending sections 24, 371, 1715c,
and 1715r of this title, section 663 of former Title 11,
Bankruptcy, and section 77ddd of Title 15, Commerce
and Trade] to assure the availability of credit on reasonable terms to units or organizations engaged in the
group practice of medicine, optometry, or dentistry,
particularly those in smaller communities and those
sponsored by cooperative or other nonprofit organizations, to assist in financing the construction and equipment of group practice facilities.’’

§ 1749aaa–1. Premiums and other charges
The Secretary shall fix premium charges for
the insurance of mortgages under this sub-

chapter, but such charges shall not be more than
1 per centum per annum of the amount of the
principal obligation of the mortgage outstanding at any time, without taking into account delinquent payments or prepayments. In addition
to the premium charge, the Secretary is authorized to charge and collect such amounts as he
may deem reasonable for the analysis of a proposed project and the appraisal and inspection of
the property and improvements. Where the principal obligation of any mortgage accepted for
insurance under this subchapter is paid in full
prior to the maturity date, the Secretary is authorized to require the payment by the mortgagee of an adjusted premium charge. This charge
shall be in such amount as the Secretary determines to be equitable, but not in excess of the
aggregate amount of the premium charges that
the mortgagee would otherwise have been required to pay if the mortgage had continued to
be insured until the maturity date. Where such
prepayment occurs, the Secretary is authorized
to refund to the mortgagee for the account of
the mortgagor all, or such portion as he shall
determine to be equitable, of the current unearned premium charges theretofore paid. Premium charges fixed under this section shall be
payable by the mortgagee either in cash, or in
debentures which are the obligation of the General Insurance Fund at par plus accrued interest, at such times and in such manner as may be
prescribed by the Secretary.
(June 27, 1934, ch. 847, title XI, § 1102, as added
Pub. L. 89–754, title V, § 502(a), Nov. 3, 1966, 80
Stat. 1275.)
§ 1749aaa–2. Payment of insurance benefits
The mortgagee shall be entitled to receive the
benefits of the insurance under this subchapter
in the manner provided in subsection (g) of section 1713 of this title with respect to mortgages
insured under that section. For such purpose the
provisions of subsections (g), (h), (i), (j), (k), (l),
and (n) of such section 1713 shall apply to mortgages insured under this subchapter and all references in such subsections to such section 1713
shall be deemed to refer to this subchapter.
(June 27, 1934, ch. 847, title XI, § 1103, as added
Pub. L. 89–754, title V, § 502(a), Nov. 3, 1966, 80
Stat. 1275.)
§ 1749aaa–3. Regulations
The Secretary shall prescribe such regulations
as may be necessary to carry out this subchapter, after consulting with the Secretary of
Health and Human Services with respect to any
health or medical aspects of the program under
this subchapter which may be involved in such
regulations.
(June 27, 1934, ch. 847, title XI, § 1104, as added
Pub. L. 89–754, title V, § 502(a), Nov. 3, 1966, 80
Stat. 1275; amended Pub. L. 98–479, title II,
§ 201(a)(2), Oct. 17, 1984, 98 Stat. 2227.)
AMENDMENTS
1984—Pub. L. 98–479 substituted ‘‘Health and Human
Services’’ for ‘‘Health, Education, and Welfare’’.

§ 1749aaa–4

TITLE 12—BANKS AND BANKING

§ 1749aaa–4. Administration
(a) Technical assistance
At the request of individuals or organizations
operating or contemplating the operation of
group practice facilities or medical practice facility (as defined in section 1749aaa–5 of this
title), the Secretary may provide or obtain technical assistance in the planning for and construction of such facilities.
(b) Utilization of services and facilities of Federal agencies; payment; advances or reimbursement
With a view to avoiding unnecessary duplication of existing staffs and facilities of the Federal Government, the Secretary is authorized to
utilize available services and facilities of any
agency of the Federal Government in carrying
out the provisions of this subchapter, and to pay
for such services and facilities, either in advance
or by way of reimbursement, in accordance with
an agreement between the Secretary and the
head of such agency.
(June 27, 1934, ch. 847, title XI, § 1105, as added
Pub. L. 89–754, title V, § 502(a), Nov. 3, 1966, 80
Stat. 1276; amended Pub. L. 93–383, title III,
§ 312(a)(5), Aug. 22, 1974, 88 Stat. 683.)
AMENDMENTS
1974—Subsec. (a). Pub. L. 93–383 substituted ‘‘or medical practice facility (as defined in section 1749aaa–5 of
this title)’’ for ‘‘(as defined in section 1749aaa–5(1) of
this title)’’.

§ 1749aaa–5. Definitions
For the purposes of this subchapter—
(1) The term ‘‘group practice facility’’ means
a facility in a State for the provision of preventive, diagnostic, and treatment services to
ambulatory patients (in which patient care is
under the professional supervision of persons
licensed to practice medicine or osteopathy in
the State or, in the case of optometric care or
treatment, is under the professional supervision of persons licensed to practice optometry in the State, or, in the case of dental diagnosis or treatment, is under the professional
supervision of persons licensed to practice
dentistry in the State, or, in the case of podiatric care or treatment, is under the professional supervision of persons licensed to practice podiatry in the State) and which is primarily for the provision of such health services by a medical or dental group.
(2) The term ‘‘medical practice facility’’
means an adequately equipped facility in
which not more than four persons licensed to
practice medicine in the State where the facility is located can provide, as may be appropriate, preventive, diagnostic, and treatment
services, and which is situated in a rural area
or small town, or in a low-income section of
an urban area, in which there exists, as determined by the Secretary, a critical shortage of
physicians. As used in this paragraph—
(A) the term ‘‘small town’’ means any
town, village, or city having a population of
not more than 10,000 inhabitants according
to the most recent available data compiled
by the Bureau of the Census; and

Page 822

(B) the term ‘‘low-income section of an
urban area’’ means a section of a larger
urban area in which the median family income is substantially lower, as determined
by the Secretary, than the median family income for the area as a whole.
(3) The term ‘‘medical or dental group’’
means a partnership or other association or
group of persons licensed to practice medicine,
osteopathy, or surgery in the State, or of persons licensed to practice optometry in the
State, or of persons licensed to practice dentistry in the State, or of persons licensed to
practice podiatry in the State, or of any combination of such persons, who, as their principal professional activity and as a group responsibility, engage or undertake to engage in
the coordinated practice of their profession
primarily in one or more group practice facilities, and who (in this connection) share common overhead expenses (if and to the extent
such expenses are paid by members of the
group), medical and other records, and substantial portions of the equipment and the
professional, technical, and administrative
staffs, and which partnership or association or
group is composed of at least such professional
personnel and make available at least such
health services as may be provided in regulations prescribed under this subchapter.
(4) The term ‘‘group practice unit or organization’’ means—
(A) a private nonprofit agency or organization undertaking to provide, directly or
through arrangements with a medical or
dental group, comprehensive medical care,
osteopathic care, optometric care, dental
care, or podiatric care, or any combination
thereof, which may include hospitalization,
to members or subscribers primarily on a
group practice prepayments basis; or
(B) a private nonprofit agency or organization, established for the purpose of improving the availability of medical, osteopathic,
optometric, dental or podiatric care in the
community or having some function or functions related to the provision of such care,
which will, through lease or other arrangement, make the group practice facility with
respect to which assistance has been requested under this subchapter available to a
medical or dental group for use by it.
(5) The term ‘‘nonprofit organization’’
means a corporation, association, foundation,
trust, or other organization no part of the net
earnings of which inures, or may lawfully
inure, to the benefit of any private shareholder or individual except, in the case of an
organization the purposes of which include the
provision of personal health services to its
members or subscribers or their dependents
under a plan of such organization for the provision of such services to them (which plan
may include the provision of other services or
insurance benefits to them), through the provision of such health services (or such other
services or insurance benefits) to such members or subscribers or dependents under such
plan.
(6) The term ‘‘State’’ includes the Commonwealth of Puerto Rico, Guam, the Virgin Is-

Page 823

TITLE 12—BANKS AND BANKING

lands, American Samoa, and the District of
Columbia.
(7) The term ‘‘mortgage’’ means a first mortgage on real estate in fee simple, or on the interest of either the lessor or lessee thereof (A)
under a lease for not less than ninety-nine
years which is renewable, or (B) under a lease
having a period of not less than fifty years to
run from the date the mortgage was executed.
The term ‘‘first mortgage’’ means such classes
of first liens as are commonly given to secure
advances (including but not limited to advances during construction) on, or the unpaid
purchase price of, real estate under the laws of
the State in which the real estate is located,
together with the credit instrument or instruments, if any, secured thereby, and any mortgage may be in the form of one or more trust
mortgages or mortgage indentures or deeds of
trust, securing notes, bonds, or other credit instruments, and, by the same instrument or by
a separate instrument, may create a security
interest in initial equipment, whether or not
attached to the realty.
(8) The term ‘‘mortgagee’’ means the original lender under a mortgage, and his or its
successors and assigns, and includes the holders of credit instruments issued under a trust
mortgage or deed of trust pursuant to which
such holders act by and through a trustee
named therein.
(9) The term ‘‘mortgagor’’ means the original borrower under a mortgage and his or its
successors and assigns.
(June 27, 1934, ch. 847, title XI, § 1106, as added
Pub. L. 89–754, title V, § 502(a), Nov. 3, 1966, 80
Stat. 1276; amended Pub. L. 93–383, title III,
§ 312(a)(6), (b), Aug. 22, 1974, 88 Stat. 683, 684.)
AMENDMENTS
1974—Par. (1). Pub. L. 93–383, § 312(b)(1), inserted references to practice of osteopathy and authorized inclusion of podiatric care or treatment under the professional supervision of persons licensed to practice podiatry in the State.
Par. (2). Pub. L. 93–383, § 312(a)(6), added par. (2).
Former par. (2) redesignated (3).
Par. (3). Pub. L. 93–383, § 312(a)(6), (b)(2), redesignated
former par. (2) as par. (3) and inserted references to persons licensed to practice osteopathy and persons licensed to practice podiatry. Former par. (3) redesignated (4).
Par. (4). Pub. L. 93–383, § 312(a)(6), (b)(3), (4), redesignated former par. (3) as par. (4) and in cls. (A) and (B)
inserted references to osteopathic care and podiatric
care wherever appearing. Former par. (4) redesignated
(5).
Pars. (5) to (9). Pub. L. 93–383, § 312(a)(6), redesignated
former pars. (4) to (8) as pars. (5) to (9), respectively.

SUBCHAPTER IX–C—NATIONAL INSURANCE
DEVELOPMENT PROGRAM
§§ 1749bbb to 1749bbb–2. Omitted
CODIFICATION
Sections 1749bbb to 1749bbb–2 were omitted in view of
the termination of parts A to D of this subchapter by
former section 1749bbb of this title.
Section 1749bbb, act June 27, 1934, ch. 847, title XII,
§ 1201, as added Pub. L. 90–448, title XI, § 1103, Aug. 1,
1968, 82 Stat. 556; amended Pub. L. 91–609, title VI,
§ 602(a), Dec. 31, 1970, 84 Stat. 1788; Pub. L. 94–13, § 2, Apr.
8, 1975, 89 Stat. 69; Pub. L. 95–24, title I, § 104(a), Apr. 30,

§§ 1749bbb–3 to 1749bbb–6a

1977, 91 Stat. 55; Pub. L. 95–406, § 5, Sept. 30, 1978, 92
Stat. 880; Pub. L. 95–557, title III, § 307(a), Oct. 31, 1978,
92 Stat. 2097; Pub. L. 96–153, title VI, § 601, Dec. 21, 1979,
93 Stat. 1137; Pub. L. 97–35, title III, § 342(a), Aug. 13,
1981, 95 Stat. 420; Pub. L. 97–289, § 4(c), Oct. 6, 1982, 96
Stat. 1231; Pub. L. 98–35, § 4(c), May 26, 1983, 97 Stat. 198;
Pub. L. 98–109, § 5(c), Oct. 1, 1983, 97 Stat. 746; Pub. L.
98–181, title I [title IV, § 452(a), (b)(1)], Nov. 30, 1983, 97
Stat. 1230; Pub. L. 98–473, title I, § 113, Oct. 12, 1984, 98
Stat. 1964; Pub. L. 99–120, § 4(b), Oct. 8, 1985, 99 Stat. 503;
Pub. L. 99–156, § 4(b), Nov. 15, 1985, 99 Stat. 816; Pub. L.
99–219, § 4(b), Dec. 26, 1985, 99 Stat. 1731; Pub. L. 99–267,
§ 4(b), Mar. 27, 1986, 100 Stat. 74; Pub. L. 99–272, title III,
§ 3010(b), Apr. 7, 1986, 100 Stat. 106; Pub. L. 99–289, § 1(b),
May 2, 1986, 100 Stat. 412; Pub. L. 99–345, § 1, June 24,
1986, 100 Stat. 673; Pub. L. 99–430, Sept. 30, 1986, 100 Stat.
986; Pub. L. 100–122, § 1, Sept. 30, 1987, 101 Stat. 793; Pub.
L. 100–154, Nov. 5, 1987, 101 Stat. 890; Pub. L. 100–170,
Nov. 17, 1987, 101 Stat. 914; Pub. L. 100–179, Dec. 3, 1987,
101 Stat. 1018; Pub. L. 100–200, Dec. 21, 1987, 101 Stat.
1327; Pub. L. 100–242, title V, §§ 542(a), (b), 545(a), Feb. 5,
1988, 101 Stat. 1940, 1942; Pub. L. 101–137, § 6(a), (b), Nov.
3, 1989, 103 Stat. 825; Pub. L. 101–508, title II, § 2301(a),
(b), Nov. 5, 1990, 104 Stat. 1388–23, read as follows:
‘‘(a) The Director is authorized to establish and carry
out the programs provided for in parts A, B, C, and D
of this subchapter.
‘‘(b) The powers of the Director under part B shall
terminate on November 30, 1983, and part A shall terminate on September 30, 1985, and parts C and D shall terminate on September 30, 1995, except to the extent necessary—
‘‘(1) to continue reinsurance and direct insurance in
accordance
with
the
provisions
of
sections
1749bbb–9(b) and 1749bbb–10a(c) of this title until September 30, 1985, and September 30, 1996, respectively;
‘‘(2) to process, verify, and pay claims for reinsured
losses and directly insured losses and perform other
necessary functions in connection therewith; and
‘‘(3) to complete the liquidation and termination of
the reinsurance and direct insurance programs.’’
Section 1749bbb–1, act June 27, 1934, ch. 847, title XII,
§ 1202, as added Pub. L. 90–448, title XI, § 1103, Aug. 1,
1968, 82 Stat. 556; amended Pub. L. 98–181, title I [title
IV, § 452(b)(1)], Nov. 30, 1983, 97 Stat. 1230, established an
Advisory Board.
Section 1749bbb–2, act June 27, 1934, ch. 847, title XII,
§ 1203, as added Pub. L. 90–448, title XI, § 1103, Aug. 1,
1968, 82 Stat. 557; amended Pub. L. 91–609, title VI,
§ 602(b), Dec. 31, 1970, 84 Stat. 1788; Pub. L. 98–181, title
I [title IV, § 452(b)(1), (2)], Nov. 30, 1983, 97 Stat. 1230, defined terms for this subchapter.

PART A—STATEWIDE PLANS TO ASSURE FAIR
ACCESS TO INSURANCE REQUIREMENTS
§§ 1749bbb–3 to 1749bbb–6a. Omitted
CODIFICATION
Sections 1749bbb–3 to 1749bbb–6a, comprising part A of
this subchapter, terminated on Sept. 30, 1985, pursuant
to former section 1749bbb(b) of this title.
Section 1749bbb–3, act June 27, 1934, ch. 847, title XII,
§ 1211, as added Pub. L. 90–448, title XI, § 1103, Aug. 1,
1968, 82 Stat. 558; amended Pub. L. 95–557, title III,
§ 307(b), (c), Oct. 31, 1978, 92 Stat. 2097, 2098; Pub. L.
97–35, title III, § 342(b), Aug. 13, 1981, 95 Stat. 420; Pub.
L. 98–181, title I [title IV, § 452(b)(1)], Nov. 30, 1983, 97
Stat. 1230, related to fair access to insurance requirements (FAIR plans).
Section 1749bbb–4, act June 27, 1934, ch. 847, title XII,
§ 1212, as added Pub. L. 90–448, title XI, § 1103, Aug. 1,
1968, 82 Stat. 560, related to all-industry placement facility.
Section 1749bbb–5, act June 27, 1934, ch. 847, title XII,
§ 1213, as added Pub. L. 90–448, title XI, § 1103, Aug. 1,
1968, 82 Stat. 560; amended Pub. L. 98–181, title I [title
IV, § 452(b)(1)], Nov. 30, 1983, 97 Stat. 1230, related to cooperation within insurance industry.

§§ 1749bbb–7 to 1749bbb–10

TITLE 12—BANKS AND BANKING

Section 1749bbb–6, act June 27, 1934, ch. 847, title XII,
§ 1214, as added Pub. L. 90–448, title XI, § 1103, Aug. 1,
1968, 82 Stat. 560; amended Pub. L. 98–181, title I [title
IV, § 452(b)(1)], Nov. 30, 1983, 97 Stat. 1230, related to
plan evaluation and modification or waiver of plan criteria.
Section 1749bbb–6a, act June 27, 1934, ch. 847, title XII,
§ 1215, as added Pub. L. 91–609, title VI, § 603, Dec. 31,
1970, 84 Stat. 1791; amended Pub. L. 98–181, title I [title
IV, § 452(b)(1)], Nov. 30, 1983, 97 Stat. 1230, related to
periodic review of plans through an Office of Review
and Compliance.

PART B—REINSURANCE COVERAGE
§§ 1749bbb–7 to 1749bbb–10. Omitted
CODIFICATION
Sections 1749bbb–7 to 1749bbb–10, comprising part B of
this subchapter, were omitted in view of termination of
powers of Director under this part on Nov. 30, 1983, pursuant to former section 1749bbb(b) of this title.
Section 1749bbb–7, act June 27, 1934, ch. 847, title XII,
§ 1221, as added Pub. L. 90–448, title XI, § 1103, Aug. 1,
1968, 82 Stat. 560; amended Pub. L. 91–609, title VI,
§ 602(c), Dec. 31, 1970, 84 Stat. 1789; Pub. L. 98–181, title
I [title IV, § 452(b)(1)], Nov. 30, 1983, 97 Stat. 1230, related
to reinsurance of losses from riots or civil disorders.
Section 1749bbb–8, act June 27, 1934, ch. 847, title XII,
§ 1222, as added Pub. L. 90–448, title XI, § 1103, Aug. 1,
1968, 82 Stat. 561; amended Pub. L. 91–152, title IV, § 405,
Dec. 24, 1969, 83 Stat. 396; Pub. L. 91–609, title VI,
§ 602(e), Dec. 31, 1970, 84 Stat. 1790; Pub. L. 95–24, title I,
§ 104(b), Apr. 30, 1977, 91 Stat. 56; Pub. L. 98–181, title I
[title IV, § 452(b)(1)], Nov. 30, 1983, 97 Stat. 1230; Pub. L.
98–479, title II, § 203(i)(1), Oct. 17, 1984, 98 Stat. 2230; Pub.
L. 100–242, title V, § 545(b), Feb. 5, 1988, 101 Stat. 1942, related to reinsurance agreements and premiums.
Section 1749bbb–9, act June 27, 1934, ch. 847, title XII,
§ 1223, as added Pub. L. 90–448, title XI, § 1103, Aug. 1,
1968, 82 Stat. 562; amended Pub. L. 91–152, title IV, § 406,
Dec. 24, 1969, 83 Stat. 396; Pub. L. 98–181, title I [title IV,
§ 452(b)(1)], Nov. 30, 1983, 97 Stat. 1230, related to conditions of reinsurance.
Section 1749bbb–10, act June 27, 1934, ch. 847, title XII,
§ 1224, as added Pub. L. 90–448, title XI, § 1103, Aug. 1,
1968, 82 Stat. 563; amended Pub. L. 98–181, title I [title
IV, § 452(b)(1)], Nov. 30, 1983, 97 Stat. 1230, related to recovery of premiums, jurisdiction, and statute of limitations.

PART C—FEDERAL INSURANCE AGAINST
BURGLARY AND THEFT
§§ 1749bbb–10a to 1749bbb–10d. Omitted
CODIFICATION
Sections 1749bbb–10a to 1749bbb–10d, comprising part
C of this subchapter, terminated on Sept. 30, 1995, with
certain exceptions, pursuant to former section
1749bbb(b) of this title.
Section 1749bbb–10a, act June 27, 1934, ch. 847, title
XII, § 1231, as added Pub. L. 91–609, title VI, § 602(d), Dec.
31, 1970, 84 Stat. 1789; amended Pub. L. 98–181, title I
[title IV, § 452(b)(1)], Nov. 30, 1983, 97 Stat. 1230, related
to review of market availability, Government crime insurance, and termination of insurance.
Section 1749bbb–10b, act June 27, 1934, ch. 847, title
XII, § 1232, as added Pub. L. 91–609, title VI, § 602(d), Dec.
31, 1970, 84 Stat. 1789; amended Pub. L. 98–181, title I
[title IV, § 452(b)(1), (3)], Nov. 30, 1983, 97 Stat. 1230, related to use of existing facilities and services.
Section 1749bbb–10c, act June 27, 1934, ch. 847, title
XII, § 1233, as added Pub. L. 91–609, title VI, § 602(d), Dec.
31, 1970, 84 Stat. 1790; amended Pub. L. 98–181, title I
[title IV, § 452(b)(1)], Nov. 30, 1983, 97 Stat. 1230, related
to establishment of affordable rates, factors considered,
uniform national rates, and periodic modification.
Section 1749bbb–10d, act June 27, 1934, ch. 847, title
XII, § 1234, as added Pub. L. 91–609, title VI, § 602(d), Dec.

Page 824

31, 1970, 84 Stat. 1790; amended Pub. L. 96–470, title II,
§ 205(a), Oct. 19, 1980, 94 Stat. 2244; Pub. L. 98–181, title
I [title IV, § 452(b)(1)], Nov. 30, 1983, 97 Stat. 1230; Pub.
L. 101–137, § 6(d), Nov. 3, 1989, 103 Stat. 825, related to reports to Congress on operations.

PART D—GENERAL PROVISIONS
§§ 1749bbb–11 to 1749bbb–21. Omitted
CODIFICATION
Sections 1749bbb–11 to 1749bbb–21, comprising part D
of this subchapter, terminated on Sept. 30, 1995, with
certain exceptions, pursuant to former section
1749bbb(b) of this title.
Section 1749bbb–11, act June 27, 1934, ch. 847, title XII,
§ 1241, formerly § 1231, as added Pub. L. 90–448, title XI,
§ 1103, Aug. 1, 1968, 82 Stat. 563; renumbered § 1241 and
amended Pub. L. 91–609, title VI, § 602(d), (g), (h), Dec.
31, 1970, 84 Stat. 1789, 1790; Pub. L. 98–181, title I [title
IV, § 452(b)(1)], Nov. 30, 1983, 97 Stat. 1230, related to submission of claims, judicial review, jurisdiction, and
statute of limitations.
Section 1749bbb–12, act June 27, 1934, ch. 847, title XII,
§ 1242, formerly § 1232, as added Pub. L. 90–448, title XI,
§ 1103, Aug. 1, 1968, 82 Stat. 563; renumbered § 1242 and
amended Pub. L. 91–609, title VI, § 602(d), (i), Dec. 31,
1970, 84 Stat. 1789, 1790; Pub. L. 98–181, title I [title IV,
§ 452(b)(1)], Nov. 30, 1983, 97 Stat. 1230, related to fiscal
intermediaries and servicing agents.
Section 1749bbb–13, act June 27, 1934, ch. 847, title XII,
§ 1243, formerly § 1233, as added Pub. L. 90–448, title XI,
§ 1103, Aug. 1, 1968, 82 Stat. 564; renumbered § 1243 and
amended Pub. L. 91–609, title VI, § 602(d), (j), Dec. 31,
1970, 84 Stat. 1789, 1790; Pub. L. 98–181, title I [title IV,
§ 452(b)(1)], Nov. 30, 1983, 97 Stat. 1230; Pub. L. 98–479,
title II, § 203(i)(2), Oct. 17, 1984, 98 Stat. 2231; Pub. L.
100–242, title V, § 545(c), Feb. 5, 1988, 101 Stat. 1942, related to National Insurance Development Fund.
Section 1749bbb–14, act June 27, 1934, ch. 847, title XII,
§ 1244, formerly § 1234, as added Pub. L. 90–448, title XI,
§ 1103, Aug. 1, 1968, 82 Stat. 565; renumbered § 1244 and
amended Pub. L. 91–609, title VI, § 602(d), (f), (k), (l),
Dec. 31, 1970, 84 Stat. 1789–1791; Pub. L. 98–181, title I
[title IV, § 452(b)(1)], Nov. 30, 1983, 97 Stat. 1230, related
to records, annual statement, and audits.
Section 1749bbb–15, act June 27, 1934, ch. 847, title XII,
§ 1245, formerly § 1235, as added Pub. L. 90–448, title XI,
§ 1103, Aug. 1, 1968, 82 Stat. 565; amended Pub. L. 91–152,
title IV, § 407, Dec. 24, 1969, 83 Stat. 396; renumbered
§ 1245, Pub. L. 91–609, title VI, § 602(d), Dec. 31, 1970, 84
Stat. 1789; amended Pub. L. 98–181, title I [title IV,
§ 452(b)(1)], Nov. 30, 1983, 97 Stat. 1230, related to study
of reinsurance and other programs, and report to the
President and Congress.
Section 1749bbb–16, act June 27, 1934, ch. 847, title XII,
§ 1246, formerly § 1236, as added Pub. L. 90–448, title XI,
§ 1103, Aug. 1, 1968, 82 Stat. 565; renumbered § 1246, Pub.
L. 91–609, title VI, § 602(d), Dec. 31, 1970, 84 Stat. 1789;
amended Pub. L. 98–181, title I [title IV, § 452(b)(1)], Nov.
30, 1983, 97 Stat. 1230, related to other studies and cooperation with State insurance authorities and private
insurance industry.
Section 1749bbb–17, act June 27, 1934, ch. 847, title XII,
§ 1247, formerly § 1237, as added Pub. L. 90–448, title XI,
§ 1103, Aug. 1, 1968, 82 Stat. 566; renumbered § 1247, Pub.
L. 91–609, title VI, § 602(d), Dec. 31, 1970, 84 Stat. 1789;
amended Pub. L. 98–181, title I [title IV, § 452(b)(1), (4)],
Nov. 30, 1983, 97 Stat. 1230; Pub. L. 98–479, title II,
§ 202(a)(2), Oct. 17, 1984, 98 Stat. 2228, related to general
powers of Director.
Section 1749bbb–18, act June 27, 1934, ch. 847, title XII,
§ 1248, formerly § 1238, as added Pub. L. 90–448, title XI,
§ 1103, Aug. 1, 1968, 82 Stat. 566; renumbered § 1248, Pub.
L. 91–609, title VI, § 602(d), Dec. 31, 1970, 84 Stat. 1789;
amended Pub. L. 98–181, title I [title IV, § 452(b)(1)], Nov.
30, 1983, 97 Stat. 1230, related to utilization of services
and facilities of other agencies.
Section 1749bbb–19, act June 27, 1934, ch. 847, title XII,
§ 1249, formerly § 1239, as added Pub. L. 90–448, title XI,

Page 825

TITLE 12—BANKS AND BANKING

§ 1103, Aug. 1, 1968, 82 Stat. 566; renumbered § 1249, Pub.
L. 91–609, title VI, § 602(d), Dec. 31, 1970, 84 Stat. 1789;
amended Pub. L. 98–181, title I [title IV, § 452(b)(1)], Nov.
30, 1983, 97 Stat. 1230, related to advance payments.
Section 1749bbb–20, act June 27, 1934, ch. 847, title XII,
§ 1250, formerly § 1240, as added Pub. L. 90–448, title XI,
§ 1103, Aug. 1, 1968, 82 Stat. 566; renumbered § 1250, Pub.
L. 91–609, title VI, § 602(d), Dec. 31, 1970, 84 Stat. 1789;
amended Pub. L. 98–181, title I [title IV, § 452(b)(1)], Nov.
30, 1983, 97 Stat. 1230, related to tax issues.
Section 1749bbb–21, act June 27, 1934, ch. 847, title XII,
§ 1251, formerly § 1241, as added Pub. L. 90–448, title XI,
§ 1103, Aug. 1, 1968, 82 Stat. 566; renumbered § 1251, Pub.
L. 91–609, title VI, § 602(d), Dec. 31, 1970, 84 Stat. 1789, related to authorization of appropriations for subchapter.

SUBCHAPTER X—NATIONAL DEFENSE
HOUSING INSURANCE
EXPIRATION DATE
Insurance of mortgages under this subchapter prohibited, with certain exceptions, after July 31, 1954, see
section 1591c of Title 42, The Public Health and Welfare.

§ 1750. Definitions
As used in this subchapter, the terms ‘‘mortgage’’, ‘‘first mortgage’’, ‘‘mortgagee’’, ‘‘mortgagor’’, ‘‘maturity date’’, and ‘‘State’’ shall
have the same meaning as in section 1707 of this
title.
(June 27, 1934, ch. 847, title IX, § 901, as added
Sept. 1, 1951, ch. 378, title II, § 201, 65 Stat. 295.)
§ 1750a. Repealed. Pub. L. 89–117, title
§ 1108(aa), Aug. 10, 1965, 79 Stat. 507

XI,

Section, act June 27, 1934, ch. 847, title IX, § 902, as
added Sept. 1, 1951, ch. 378, title II, § 201, 65 Stat. 296,
created the National Defense Housing Insurance Fund.
For establishment of the General Insurance Fund, see
section 1735c of this title.

§ 1750a–1. Omitted
CODIFICATION
Section, act Nov. 1, 1951, ch. 665, Ch. V, 65 Stat. 763,
authorized the National Defense Housing Insurance
Fund to be available for administrative expenses of the
Federal Housing Administration. Pub. L. 89–117, title
XI, § 1108(aa), Aug. 10, 1965, 79 Stat. 507, eliminated the
Fund, and all functions, powers, and duties of the Federal Housing Administration and its Administrator
were transferred to and vested in the Secretary of
Housing and Urban Development by Pub. L. 89–174, § 5,
Sept. 9, 1965, 79 Stat. 669, classified to section 3534 of
Title 42, The Public Health and Welfare. Act June 27,
1934, ch. 847, title V, § 519, as added Aug. 10, 1965, Pub.
L. 89–117, title II, § 214, 79 Stat. 471, classified to section
1735c of this title, created the General Insurance Fund,
which authorized the general expenses of the operations of the Department of Housing and Urban Development relating to mortgages and loans which are obligations of the General Insurance Fund to be charged to
the General Insurance Fund.

§ 1750b. Insurance in critical areas
(a) Limitations; termination of certain commitments; requirements; discrimination against
children
This subchapter is designed to supplement systems of mortgage insurance under other provisions of this chapter in order to assist in providing adequate housing in areas which the President, pursuant to section 1591 of title 42, shall
have determined to be critical defense housing

§ 1750b

areas. The Secretary is authorized, upon application by the mortgagee, to insure under this
section or section 1750g of this title as hereinafter provided any mortgage which is eligible for
insurance as hereinafter provided and upon such
terms as the Secretary may prescribe to make
commitments for the insuring of such mortgages prior to the date of their execution or disbursement thereon: Provided, That the property
covered by the mortgage is in an area which the
President, pursuant to section 1591 of title 42,
shall have determined to be a critical defense
housing area, and that the total number of
dwelling units in properties covered by mortgages insured under this subchapter in any such
area does not exceed the number authorized by
the Secretary of Housing and Urban Development from time to time as needed in such area
for defense purposes and to be insured pursuant
to this subchapter: Provided further, That in the
event the Secretary has issued a commitment to
insure a mortgage under this section, which
commitment was in force and effect on June 1,
1953, and the Secretary determines that, because
of changes in defense requirements, there is reasonable doubt that such housing is needed for
defense purposes and that it is probable that the
mortgage would become immediately in default
and claim made for payment under the mortgage insurance contract if the unit or units are
completed and the mortgage insured, the Secretary is authorized, in the interest of conserving the General Insurance Fund, to pay (in cash
from the General Insurance Fund) to the mortgagee for the account of the mortgagor such
amount as the Secretary shall determine to be
necessary to reimburse the mortgagor the
amounts paid or to be paid by the mortgagor on
account of labor performed and materials in
place, less the Secretary’s estimate of the reasonable salvage value of such materials, plus an
allowance for development costs equal to 4 per
centum of the principal amount of the mortgage
specified in such commitment, and no payments
shall be made pursuant to this proviso unless a
claim therefor is filed not later than six months
from date of the determination of lack of need
and the claim is in such form and contains such
supporting information, documents, and data as
the Secretary may require: Provided further,
That the aggregate amount of principal obligations of all mortgages insured under this subchapter shall not exceed such sum as may be authorized by the President from time to time for
the purposes of this subchapter pursuant to his
authority under section 1715h 1 of this title: Provided further, That the Secretary shall have
power to require properties covered by mortgages insured under this subchapter to be held
for rental for such periods of time and at such
rentals or other charges as he may prescribe;
and, with respect to such properties being held
for rental, (1) to require that the property be
held by a mortgagor approved by him, and (2) to
prescribe such requirements as he deems to be
reasonable governing the method of operation
and prohibiting or restricting sales of such properties or interests therein or agreements relating to such sales: Provided further, That the Sec1 See

References in Text note below.

§ 1750b

TITLE 12—BANKS AND BANKING

retary shall require each dwelling covered by a
mortgage insured under this section, for which a
commitment to insure is issued after August 2,
1954, to be held for rental for a period of not less
than three years after the dwelling is made
available for initial occupancy: And provided further, That no mortgage shall be insured under
this subchapter unless the mortgagor certifies
under oath that in selecting tenants for any
property covered by the mortgage he will not
discriminate against any family by reason of the
fact that there are children in the family, and
that he will not sell the property while the insurance is in effect unless the purchaser so certifies, such certification to be filed with the Secretary. Violation of any such certification shall
be a misdemeanor punishable by a fine of not to
exceed $500.
(b) Eligibility requirements
To be eligible for insurance under this section
a mortgage shall—
(1) have been made to, and be held by, a
mortgagee approved by the Secretary as responsible and able to service the mortgage
properly;
(2) involve a principal obligation (including
such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve) in an amount not to exceed 90 per centum of the appraised value (as of the date the
mortgage is accepted for insurance) of a property, urban, suburban, or rural, upon which
there is located a dwelling designed principally for residential use for not more than
two families in the aggregate, which is approved for mortgage insurance prior to the beginning of construction, the construction of
which is begun after September 1, 1951. The
principal obligation of such mortgage shall
not, however, exceed $8,100 if such dwelling is
designed for a single-family residence, or
$15,000 if such dwelling is designed for a twofamily residence except that the Secretary
may by regulation increase these amounts to
not to exceed $9,000 and $16,000, respectively,
in any geographical area where he finds that
cost levels so require: Provided, That if the
Secretary finds that it is not feasible within
the aforesaid dollar amount limitations to
construct dwellings containing three or four
bedrooms per family unit without sacrifice of
sound standards of construction, design, and
livability, he may increase such dollar amount
limitations by not exceeding $1,080 for each
additional bedroom (as defined by the Secretary) in excess of two contained in such family unit if he finds that such unit meets sound
standards of livability as a three-bedroom or a
four-bedroom unit as the case may be;
(3) have a maturity satisfactory to the Secretary but not to exceed thirty years from the
date of the insurance of the mortgage;
(4) contain complete amortization provisions
satisfactory to the Secretary;
(5) bear interest (exclusive of premium
charges for insurance) at not to exceed 41⁄2 per
centum per annum on the amount of the principal obligation outstanding at any time;
(6) provide, in a manner satisfactory to the
Secretary, for the application of the mortga-

Page 826

gor’s periodic payments (exclusive of the
amount allocated to interest and to the premium charge which is required for mortgage
insurance as herein provided) to amortization
of the principal of the mortgage; and
(7) contain such terms and provisions with
respect to insurance, repairs, alterations, payment of taxes, default reserves, delinquency
charges, foreclosure proceedings, anticipation
of maturity, additional and secondary liens,
and other matters as the Secretary may in his
discretion prescribe.
(c) Premium charges; payments; needs of national defense as prerequisite; adjustments
and refunds
The Secretary is authorized to fix a premium
charge for the insurance of mortgages under this
subchapter but in the case of any mortgage such
charge shall not be less than an amount equivalent to one-half of 1 per centum per annum nor
more than an amount equivalent to 11⁄2 per centum per annum of the amount of the principal
obligation of the mortgage outstanding at any
time, without taking into account delinquent
payments or prepayments. Such premium
charges shall be payable by the mortgagee, either in cash or in debentures issued by the Secretary under this subchapter at par plus accrued
interest, in such manner as may be prescribed
by the Secretary: Provided, That the Secretary
may require the payment of one or more such
premium charges at the time the mortgage is insured, at such discount rate as he may prescribe
not in excess of the interest rate specified in the
mortgage. If the Secretary finds upon the presentation of a mortgage for insurance and the
tender of the initial premium charge or charges
so required that the mortgage complies with the
provisions of this subchapter, such mortgage
may be accepted for insurance by endorsement
or otherwise as the Secretary may prescribe; but
no mortgage shall be accepted for insurance
under this subchapter unless the Secretary
finds that the project with respect to which the
mortgage is executed is an acceptable risk in
view of the needs of national defense. In the
event that the principal obligation of any mortgage accepted for insurance under this subchapter is paid in full prior to the maturity
date, the Secretary is further authorized in his
discretion to require the payment by the mortgagee of an adjusted premium charge in such
amount as the Secretary determines to be equitable, but not in excess of the aggregate amount
of the premium charges that the mortgagee
would otherwise have been required to pay if the
mortgage has continued to be insured under this
subchapter until such maturity date; and in the
event that the principal obligation is paid in full
as herein set forth the Secretary is authorized
to refund to the mortgagee for the account of
the mortgagor all, or such portion as he shall
determine to be equitable, of the current unearned premium charges theretofore paid. Upon
application of the mortgagee with the consent of
the mortgagor of a mortgage for which a commitment to insure has been issued pursuant to
section 1709 of this title covering property on
which the construction of the dwellings thereon
was begun prior to the enactment of this sub-

Page 827

TITLE 12—BANKS AND BANKING

chapter and the determination of prevailing
wages in the locality in accordance with section
1715c of this title, the Secretary is authorized,
notwithstanding such beginning of construction,
to convert such commitment to a commitment
under section 1750g of this title; any charges or
fees paid to the Secretary with respect to such
insurance under section 1709 of this title shall be
credited to charges or fees due the Secretary
with respect to such insurance under section
1750g of this title; and the determination of prevailing wages in the locality for purposes of section 1715c of this title may be made by the Secretary of Labor at any time prior to the insurance under section 1750g of this title: Provided,
That such mortgage, or the mortgage covering
the same property executed in substitution
therefor, is otherwise eligible for insurance
under section 1750g of this title.
(d) Preference or priority in purchasing or renting properties
Notwithstanding any other provisions of this
chapter or any other Act, except provisions of
law enacted hereafter expressly referring to this
subsection (d), the Secretary is further authorized to prescribe such procedures as are necessary to secure to persons engaged or to be engaged in national defense activities preference
or priority of opportunity to purchase or rent
properties, or interests therein, covered by
mortgages insured under this subchapter.
(e) Conclusiveness of insurance contract as to
eligibility
Any contract of insurance heretofore or hereafter executed by the Secretary under this subchapter shall be conclusive evidence of the eligibility of the mortgage for insurance, and the validity of any contract of insurance so executed
shall be incontestable in the hands of an approved mortgagee from the date of the execution
of such contract, except for fraud or misrepresentation on the part of such approved mortgagee.
(June 27, 1934, ch. 847, title IX, § 903, as added
Sept. 1, 1951, ch. 378, title II, § 201, 65 Stat. 296;
amended July 14, 1952, ch. 723, § 13, 66 Stat. 604;
June 30, 1953, ch. 170, § 11, 67 Stat. 124; Aug. 2,
1954, ch. 649, title I, § 128(b), 68 Stat. 609; Pub. L.
89–117, title XI, § 1108(x), Aug. 10, 1965, 79 Stat.
507; Pub. L. 90–19, § 1(a)(3), (4), (s), (t), May 25,
1967, 81 Stat. 17, 19.)
REFERENCES IN TEXT
The General Insurance Fund, referred to in text, was
established by section 1735c of this title.
Section 1715h of this title, referred to in subsec. (a),
was repealed by Pub. L. 100–242, title IV, § 401(a)(1), Feb.
5, 1988, 101 Stat. 1898.
AMENDMENTS
1967—Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’
for ‘‘Commissioner’’ wherever appearing in subsecs. (a),
(b)(1) to (4), (6), (7), and (c) to (e).
Subsec. (a). Pub. L. 90–19, § 1(a)(4), (s), substituted
‘‘Secretary’s’’ and ‘‘Secretary of Housing and Home Development’’ for ‘‘Commissioner’s’’ and ‘‘Housing and
Home Finance Administrator’’, respectively.
Subsec. (d). Pub. L. 90–19, § 1(t), struck out ‘‘, with
the approval of the Housing and Home Finance Administrator,’’ before ‘‘is further authorized’’.
1965—Subsec. (a). Pub. L. 89–117 substituted ‘‘General
Insurance Fund’’ for ‘‘National Defense Housing Insurance Fund’’.

§ 1750c

1954—Subsec. (a). Act Aug. 2, 1954, inserted proviso relating to requirement for rental for a period of not less
than three years after dwelling is made available for
initial occupancy.
1953—Subsec. (a). Act June 30, 1953, inserted proviso
commencing ‘‘Provided further, That in the event’’.
1952—Subsec. (c). Act July 14, 1952, inserted last sentence.

§ 1750c. Mortgage insurance benefits
(a) Conveyance and assignment by mortgagee
after foreclosure; debentures and certificates
of claim; cost of foreclosure
In any case in which the mortgagee under a
mortgage insured under section 1750b of this
title shall have foreclosed and taken possession
of the mortgaged property, in accordance with
regulations of, and within a period to be determined by, the Secretary, or shall, with the consent of the Secretary, have otherwise acquired
such property from the mortgagor after default,
the mortgagee shall be entitled to receive the
benefit of the insurance as hereinafter provided,
upon (1) the prompt conveyance to the Secretary of title to the property which meets the
requirements of rules and regulations of the
Secretary 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 as may have
been released with the consent of the Secretary.
Upon such conveyance and assignment the obligation of the mortgagee to pay the premium
charges for insurance shall cease and the Secretary shall, subject to the cash adjustment
hereinafter provided, issue to the mortgagee debentures having a total face value equal to the
value of the mortgage and a certificate of claim,
as hereinafter provided. For the purposes of this
subsection, the value of the mortgage shall be
determined, in accordance with rules and regulations prescribed by the Secretary, by adding
to the amount of the original principal obligation of the mortgage which was unpaid on the
date of the institution of foreclosure proceedings, or on the date of the acquisition of the
property after default other than by foreclosure,
the amount of all payments which have been
made by the mortgagee for taxes, ground rents,
and water rates, which are liens prior to the
mortgage, special assessments which are noted
on the application for insurance or which become liens after the insurance of the mortgage,
insurance of the mortgaged property, and any
mortgage insurance premiums and by deducting
from such total amount any amount received on
account of the mortgage after either of such
dates and any amount received as rent or other
income from the property, less reasonable expenses incurred in handling the property, after
either of such dates: Provided, That with respect
to mortgages which are foreclosed before there
shall have been paid on account of the principal
obligation of the mortgage a sum equal to 10 per
centum of the appraised value of the property as
of the date the mortgage was accepted for insurance, there may be included in the debentures
issued by the Secretary, on account of the cost

§ 1750c

TITLE 12—BANKS AND BANKING

of foreclosure (or of acquiring the property by
other means) actually paid by the mortgagee
and approved by the Secretary an amount—
(1) not in excess of 2 per centum of the unpaid principal of the mortgage as of the date
of the institution of foreclosure proceedings
and not in excess of $75; or
(2) not in excess of two-thirds of such cost,
whichever is the greater: Provided further,
That with respect to any debentures issued on
or after September 2, 1964, the Secretary may,
with the consent of the mortgagee (in lieu of
issuing a certificate of claim as provided in
subsection (e)), include in debentures, in addition to amounts otherwise allowed for such
costs, an amount not to exceed one-third of
the total foreclosure, acquisition, and conveyance costs actually paid by the mortgagee and
approved by the Secretary, but in no event
may the total allowance for such costs exceed
the amount actually paid by the mortgagee:
And provided further, That with respect to
mortgages to which the provisions of sections
302 and 306 of the Soldiers’ and Sailors’ Civil
Relief Act of 1940,1 as now or hereafter amended, apply and which are insured under section
1750b of this title, and subject to such regulations and conditions as the Secretary may prescribe, there shall be included in the debentures an amount which the Secretary finds to
be sufficient to compensate the mortgagee for
any loss which it may have sustained on account of interest on debentures and the payment of insurance premiums by reason of its
having postponed the institution of foreclosure proceedings or the acquisition of the
property by other means during any part or all
of the period of such military service and
three months thereafter.
(b) Consent to release of mortgagee or property
The Secretary may at any time, under such
terms and conditions as he may prescribe, consent to the release of the mortgagor from his liability under the mortgage or the credit instrument secured thereby, or consent to the release
of parts of the mortgaged property from the lien
of the mortgage.
(c) Debentures; form and denomination
Debentures issued under this subchapter 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
Secretary with the approval of the Secretary of
the Treasury, and may be in coupon or registered form. Any difference between the
amount of debentures to which the mortgagee is
entitled under this section or section 1750g of
this title and the aggregate face value of the debentures issued, not to exceed $350, shall be adjusted by the payment of cash by the Secretary
to the mortgagee from the General Insurance
Fund.
(d) Debentures; execution; negotiability; terms;
tax exemptions
The debentures issued under this section to
any mortgagee shall be executed in the name of
1 See

References in Text note below.

Page 828

the General Insurance Fund as obligor, shall be
signed by the Secretary by either his written or
engraved signature, and shall be negotiable. All
such debentures shall be dated as of the date
foreclosure proceedings were instituted, or the
property was otherwise acquired by the mortgagee after default, except that debentures issued
pursuant to claims for insurance filed on or
after September 2, 1964 shall be dated as of the
date of default or as of such later date as the
Secretary, in his discretion, may establish by
regulation. The debentures shall bear interest
from such date at a rate determined by the Secretary, 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 1st day
of January and the 1st day of July of each year.
Such debentures shall mature twenty years
after the date thereof. Such debentures shall be
exempt, both as to principal and interest, from
all taxation (except surtaxes, estate, inheritance, or gift taxes) now or hereafter imposed by
any Territory, dependency, or possession of the
United States, or by the District of Columbia, or
by any State, county, municipality, or local taxing authority, and shall be paid out of the General Insurance Fund, which shall be primarily
liable therefor, and they shall be fully and unconditionally guaranteed as to principal and interest by the United States, and such guaranty
shall be expressed on the face of the debentures.
In the event that the General Insurance Fund
fails to pay upon demand, when due, the principal of or interest on any debentures issued
under this subchapter, the Secretary of the
Treasury shall pay to the holders the amount
thereof which is authorized to be appropriated,
out of any money in the Treasury not otherwise
appropriated, and thereupon to the extent of the
amount so paid the Secretary of the Treasury
shall succeed to all the rights of the holders of
such debentures.
(e) Certificate of claim; division of excess proceeds
The certificate of claim issued by the Secretary to any mortgagee under this section shall
be for an amount determined in accordance
with, and shall contain provisions and shall be
paid in accordance with, the provisions of section 1710(e) and section 1710(f) of this title.
(f) Handling and disposal of property; settlement
of claims
Notwithstanding any other provision of law
relating to the acquisition, handling, or disposal
of real property by the United States, the Secretary shall have power to deal with, complete,
rent, renovate, modernize, insure, make contracts or establish suitable agencies for the
management of, or sell for cash or credit, in his
discretion, any properties conveyed to him in
exchange for debentures and certificates of
claim as provided in this section; and, notwithstanding any other provision of law, the Secretary shall also have power to pursue to final
collection, by way of compromise or otherwise,
all claims against mortgagors assigned by mortgagees to the Secretary as provided in this subchapter: Provided, That section 6101 of title 41
shall not be construed to apply to any purchase

Page 829

§ 1750f

TITLE 12—BANKS AND BANKING

or contract for services or supplies on account of
such property if the amount thereof does not exceed $1,000. The power to convey and to execute
in the name of the Secretary deeds of conveyances, deeds of release, assignments, and satisfactions of mortgages, and any other written instrument relating to real property or any interest therein heretofore or hereafter acquired by
the Secretary pursuant to the provisions of this
chapter, may be exercised by an officer appointed by him, without the execution of any
express delegation of power or power of attorney: Provided, That nothing in this subsection
shall be construed to prevent the Secretary from
delegating such power by order or by power of
attorney in his discretion, to any officer, agent,
or employee he may appoint.
(g) Mortgagor’s or mortgagee’s interest in property or claim conveyed
No mortgagee or mortgagor shall have, and no
certification of claim shall be construed to give
to any mortgagee or mortgagor, any right or interest in any property conveyed to the Secretary or in any claim assigned to him; nor shall
the Secretary owe any duty to any mortgagee or
mortgagor with respect to the handling or disposal of any such property or the collection of
any such claim.
(June 27, 1934, ch. 847, title IX, § 904, as added
Sept. 1, 1951, ch. 378, title II, § 201, 65 Stat. 298;
amended Aug. 2, 1954, ch. 649, title I, § 112(d), 68
Stat. 593; Pub. L. 88–560, title I, § 105(e), (f), Sept.
2, 1964, 78 Stat. 773, 774; Pub. L. 89–117, title XI,
§ 1108(y), Aug. 10, 1965, 79 Stat. 507; Pub. L. 90–19,
§ 1(a)(3), (d), May 25, 1967, 81 Stat. 17, 18; Pub. L.
98–479, title II, § 204(a)(23), Oct. 17, 1984, 98 Stat.
2233.)
REFERENCES IN TEXT
The General Insurance Fund, referred to in text, was
established by section 1735c of this title.
Sections 302 and 306 of the Soldiers’ and Sailors’ Civil
Relief Act of 1940, referred to in subsec. (a)(2), are sections 302 and 306, respectively, of act Oct. 17, 1940, ch.
888, 54 Stat. 1178. That Act was amended generally and
renamed the ‘‘Servicemembers Civil Relief Act’’ by
Pub. L. 108–189, § 1, Dec. 19, 2003, 117 Stat. 2835. As so
amended, provisions of the Servicemembers Civil Relief
Act that are similar to those contained in former sections 302 and 306 of act Oct. 17, 1940, are now contained
in sections 3953 and 3959 of Title 50.
CODIFICATION
In subsec. (f), ‘‘section 6101 of title 41’’ substituted for
‘‘section 3709 of the Revised Statutes’’ on authority of
Pub. L. 111–350, § 6(c), Jan. 4, 2011, 124 Stat. 3854, which
Act enacted Title 41, Public Contracts.
AMENDMENTS
1984—Subsec. (d). Pub. L. 98–479 substituted ‘‘authorized’’ for ‘‘auhorized’’ in last sentence.
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing in subsecs. (a), (a)(2),
and (b) to (g).
Subsec. (f). Pub. L. 90–19, § 1(d), substituted ‘‘an officer’’ for ‘‘the Commissioner or by any Assistant Commissioner’’.
1965—Subsecs. (c), (d). Pub. L. 89–117, § 1108(y)(1), substituted ‘‘General Insurance Fund’’ for ‘‘National Defense Housing Insurance Fund’’.
Subsec. (e). Pub. L. 89–117, § 1108(y)(2), removed limitation which had rendered applicable to certificates of
claim only those provisions of sections 1710(e) and

1710(f) of this title which were applicable to mortgages
insured under section 1713 of this title and struck out
provision that reference in section 1710(f) of this title
to the ‘‘Housing Insurance Fund’’ shall be deemed for
the purpose of this section to be reference to the ‘‘National Defense Housing Insurance Fund’’.
1964—Subsec. (a). Pub. L. 88–560, § 105(e)(1), (f), inserted ‘‘Provided further, That with respect to any debentures issued on or after September 2, 1964, the Commissioner may, with the consent of the mortgagee (in
lieu of issuing a certificate of claim as provided in subsection (e)), include in debentures, in addition to
amounts otherwise allowed for such costs, an amount
not to exceed one-third of the total foreclosure, acquisition, and conveyance costs actually paid by the mortgagee and approved by the Commissioner, but in no
event may the total allowance for such costs exceed the
amount actually paid by the mortgagee:’’ and struck
out ‘‘paid after either of such dates’’ after ‘‘mortgage
insurance premiums’’ in third sentence, respectively.
Subsec. (c). Pub. L. 88–560, § 105(e)(2), increased limitation on difference between amount of debentures to
which the mortgagee is entitled under this section or
section 1750g of this title and aggregate face value of
debentures issued from $50 to $350.
Subsec. (d). Pub. L. 88–560, § 105(e)(3), substituted in
second sentence ‘‘default, except that debentures issued
pursuant to claims for insurance filed on or after September 2, 1964 shall be dated as of the date of default
or as of such later date as the Commissioner, in his discretion, may establish by regulation. The debentures’’
for ‘‘default, and’’.
1954—Subsec. (d). Act Aug. 2, 1954, in third sentence,
substituted a twenty-year period for the ten-year period, with respect to the maturity of debentures.
EFFECTIVE DATE OF 1954 AMENDMENT
Amendment by act Aug. 2, 1954, as not applicable in
any case where the mortgage involved was insured or
the commitment for such insurance was issued prior to
Aug. 2, 1954, see section 112(e) of that act, set out as a
note under section 1710 of this title.

§ 1750d. Repealed. Pub. L. 89–117, title
§ 1108(aa), Aug. 10, 1965, 79 Stat. 507

XI,

Section, act June 27, 1934, ch. 847, title IX, § 905, as
added Sept. 1, 1951, ch. 378, title II, § 201, 65 Stat. 301,
provided for management of National Defense Housing
Insurance Fund, issue and cancellation of debentures,
and receipt and payment of charges and fees.

§ 1750e. Taxation
Nothing in this subchapter shall be construed
to exempt any real property acquired and held
by the Secretary under this subchapter from
taxation by any State or political subdivision
thereof, to the same extent, according to its
value, as other real property is taxed.
(June 27, 1934, ch. 847, title IX, § 906, as added
Sept. 1, 1951, ch. 378, title II, § 201, 65 Stat. 301;
amended Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81
Stat. 17.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’.

§ 1750f. Rules and regulations
The Secretary is authorized and directed to
make such rules and regulations as may be necessary to carry out the provisions of this subchapter.
(June 27, 1934, ch. 847, title IX, § 907, as added
Sept. 1, 1951, ch. 378, title II, § 201, 65 Stat. 301;

§ 1750g

TITLE 12—BANKS AND BANKING

amended Pub. L. 90–19, § 1(a)(3), May 25, 1967, 81
Stat. 17.)
AMENDMENTS
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’.

§ 1750g. Insurance of additional mortgages
(a) Authorization
In addition to mortgages insured under section 1750b of this title, the Secretary is authorized to insure mortgages as defined in section
1750 of this title (including advances on such
mortgages during construction) which are eligible for insurance as hereinafter provided.
(b) Eligibility requirements; release of part of
property
To be eligible for insurance under this section
a mortgage shall meet the following conditions:
(1) The mortgaged property shall be held by
a mortgagor approved by the Secretary. The
Secretary may, in his discretion, require such
mortgagor to be regulated or restricted as to
rents or sales, charges, capital structure, rate
of return, and methods of operation. The Secretary may make such contracts with, and acquire for not to exceed $100 stock or interest in
any such mortgagor, as the Secretary may
deem necessary to render effective such restriction or regulation. Such stock or interest
shall be paid for out of the General Insurance
Fund, and shall be redeemed by the mortgagor
at par upon the termination of all obligations
of the Secretary under the insurance.
(2) The mortgage shall involve a principal
obligation in an amount—
(A) not to exceed $5,000,000; and
(B) not to exceed 90 per centum of the
amount which the Secretary estimates will
be the value of the property or project when
the proposed improvements are completed:
Provided, That such mortgage shall not in
any event exceed the amount which the Secretary estimates will be the cost of the completed physical improvements on the property or project exclusive of off-site public
utilities and streets and organization and
legal expenses; and
(C) not to exceed $8,100 per family unit (or
$7,200 per family unit if the number of rooms
in such property or project does not equal or
exceed four per family unit) for such part of
such property or project as may be attributable to dwelling use: Provided, That the
Secretary may by regulation increase such
dollar amount limitations by not exceeding
$900 in any geographical area where he finds
that cost levels so require.
(3) The mortgagor shall enter into the agreement required by section 1715r of this title.
The mortgage shall provide for complete amortization by periodic payments within such term
as the Secretary shall prescribe, and shall bear
interest (exclusive of premium charges for insurance) at not to exceed 41⁄2 per centum per annum
on the amount of the principal obligation outstanding at any time. The Secretary may consent to the release of a part or parts of the mortgaged property from the lien of the mortgage

Page 830

upon such terms and conditions as he may prescribe and the mortgage may provide for such
release.
(c) Default; debentures; cash adjustment; certificate of claim
The mortgagee shall be entitled to receive debentures in connection with mortgages insured
under this section in the amount and under the
conditions specified in subsection (g) of section
1713 of this title, and the references in said subsection (g) to the cash adjustment provided for
in subsection (j) of section 1713 and to the certificate of claim provided for in subsection (h) of
section 1713 shall be deemed to refer respectively
to the cash adjustment provided for in subsection (c) of section 1750c of this title and to
the certificate of claim provided for in subsection (d) of this section.
(d) Certificate of claim; contents and payment
The certificate of claim issued by the Secretary to any mortgagee under this section shall
be for an amount determined in accordance
with, and shall contain provisions and shall be
paid in accordance with, the provisions of section 1713(h) of this title.
(e) Debentures; issuance and payment in accordance with section 1750c(c), (d) of this title
Debentures issued under this section shall be
issued in accordance with the provisions of section 1750c(c) and (d) of this title except that
such debentures shall be dated as of the date of
default as determined in subsection (c) of this
section, and shall bear interest from such date.
(f) Applicability of section 1713(k), (l) of this title
The provisions of section 1713(k) and (l) of this
title shall be applicable to mortgages insured
under this section and to property acquired by
the Secretary hereunder, except that, as applied
to such mortgages and property, the reference
therein to subsection (g) shall be construed to
refer to subsection (c) of this section.
(g) Applications under section 1743; credit for
fees upon reapplication under this section
In any case where an application for insurance
under section 1743 of this title was received by
the Secretary of Housing and Urban Development on or before March 1, 1950, and has not
been rejected or committed upon, the mortgagee
upon reapplication for insurance of a mortgage
under this section with respect to the same
property shall receive credit for any application
fees paid in connection with the prior application: Provided, That this subsection shall not
constitute a waiver of any requirements otherwise applicable to the insurance of mortgages
under this section.
(h) Preferences
The Secretary shall grant preference to applications for insurance under this subchapter to
mortgages covering housing of lower rents.
(June 27, 1934, ch. 847, title IX, § 908, as added
Sept. 1, 1951, ch. 378, title II, § 201, 65 Stat. 301;
amended June 30, 1953, ch. 170, § 10(c), 67 Stat.
124; Aug. 2, 1954, ch. 649, title I, § 130, 68 Stat. 609;
Pub. L. 89–117, title XI, § 1108(z), Aug. 10, 1965, 79
Stat. 507; Pub. L. 90–19, § 1(a)(2), (3), May 25, 1967,
81 Stat. 17.)

Page 831

TITLE 12—BANKS AND BANKING
REFERENCES IN TEXT

The General Insurance Fund, referred to in text, was
established by section 1735c of this title.
AMENDMENTS
1967—Pub. L. 90–19, § 1(a)(3), substituted ‘‘Secretary’’
for ‘‘Commissioner’’ wherever appearing in subsecs. (a),
(b)(1), (2)(B), (C), last par. following (C), (d), (f), and (h).
Subsec. (g). Pub. L. 90–19, § 1(a)(2), substituted ‘‘Secretary of Housing and Urban Development’’ for ‘‘Federal Housing Commissioner’’.
1965—Subsec. (b)(1). Pub. L. 89–117, § 1108(z)(1), substituted ‘‘General Insurance Fund’’ for ‘‘National Defense Housing Insurance Fund’’.
Subsec. (d). Pub. L. 89–117, § 1108(z)(2), struck out provision that reference in section 1713(h) of this title to
‘‘the Housing Insurance Fund’’ shall be deemed for the
purposes of this section to be a reference to the National Defense Housing Insurance Fund.
Subsec. (f). Pub. L. 89–117, § 1108(z)(3), struck out provision that references in subsections (k) and (l) of section 1713 of this title ‘‘Housing Fund’’ shall be construed to refer to the ‘‘National Defense Housing Insurance Fund’’.
1954—Subsec. (b)(3). Act Aug. 2, 1954, substituted requirement that mortgagor shall enter into the agreement required by section 1715r of this title for former
provisions relating to certification of builders’ costs,
such certifications now being prescribed in said section
1715r.
1953—Subsec. (b). Act June 30, 1953, in paragraph commencing ‘‘The mortgage shall provide’’, substituted
‘‘41⁄2 per centum’’ for ‘‘4 per centum’’.

SUBCHAPTER XI—VOLUNTARY HOME
MORTGAGE CREDIT
CODIFICATION
This subchapter was enacted as part of the Housing
Act of 1954, and not as part of the National Housing Act
which comprises this chapter.

§§ 1750aa to 1750jj. Omitted
CODIFICATION
Section 1750aa, act Aug. 2, 1954, ch. 649, title VI, § 601,
68 Stat. 637, contained a declaration of policy for voluntary home mortgage credit.
Section 1750bb, acts Aug. 2, 1954, ch. 649, title VI, § 602,
68 Stat. 637; Sept. 2, 1958, Pub. L. 85–857, § 13(s)(1), 72
Stat. 1266, defined ‘‘Insured or guaranteed mortgage
loan’’, ‘‘Private financing institutions’’, ‘‘Administrator’’, and ‘‘State’’.
Section 1750cc, acts Aug. 2, 1954, ch. 649, title VI, § 603,
68 Stat. 637; Aug. 11, 1955, ch. 783, title I, § 109(a)(3), 69
Stat. 640, provided for establishment and composition
of National Voluntary Mortgage Credit Extension Committee.
Section 1750dd, act Aug. 2, 1954, ch. 649, title VI, § 604,
68 Stat. 638, provided for establishment, composition,
and organization of regional subcommittees of National Voluntary Mortgage Credit Extension Committee.
Section 1750ee, act Aug. 2, 1954, ch. 649, title VI, § 605,
68 Stat. 638, set forth general functions of National
Committee and regional subcommittees.
Section 1750ff, act Aug. 2, 1954, ch. 649, title VI, § 606,
68 Stat. 638, authorized National Committee to study
and review demand and supply of funds for residential
mortgage loans, to receive reports from and correlate
the activities of regional subcommittees to report periodically to Commissioner of Federal Housing Administration and Administrator of Veterans’ Affairs, to
maintain liaison with State and local government
housing officials, and to submit reports to Congress.
Section 1750gg, acts Aug. 2, 1954, ch. 649, title VI, § 607,
68 Stat. 639; Sept. 2, 1958, Pub. L. 85–857, § 13(s)(1), 72
Stat. 1266, set forth the functions, powers, and duties of
regional subcommittees.

§§ 1750aa to 1750jj

Section 1750hh, act Aug. 2, 1954, ch. 649, title VI, § 608,
68 Stat. 640, authorized Administrator, after consultation with National Committee, to issue general rules
and procedures for implementation of this subchapter
and functioning of regional subcommittees.
Section 1750ii, act Aug. 2, 1954, ch. 649, title VI, § 609,
68 Stat. 640, exempted laws promulgated pursuant to
this subchapter from prohibitions of antitrust laws or
Federal Trade Commission Act of United States, provided for status of members of National Committee or
any of regional subcommittees, and provided for an office, staff assistance and expenses of members.
Section 1750jj, acts Aug. 2, 1954, ch. 649, title VI, § 610,
68 Stat. 640; June 29, 1957, Pub. L. 85–66, 71 Stat. 209;
July 12, 1957, Pub. L. 85–104, title VI, § 602, 71 Stat. 304;
July 31, 1959, Pub. L. 86–119, 73 Stat. 266; Sept. 23, 1959,
Pub. L. 86–372, title VIII, § 806, 73 Stat. 687; June 30, 1961,
Pub. L. 87–70, title IX, § 903, 75 Stat. 191, provided that,
unless Congress authorized for an earlier termination,
this subchapter and all authority conferred hereunder
was to terminate at close of Oct. 1, 1965.

CHAPTER 14—FEDERAL CREDIT UNIONS
Sec.

1751.
1751a.

Short title.
Omitted.
SUBCHAPTER I—GENERAL PROVISIONS

1752.
1752a.
1753.
1754.
1755.
1756.
1756a.
1757.
1757a.
1758.
1759.
1760.
1761.
1761a.
1761b.

Definitions.
National Credit Union Administration.
Federal credit union organization.
Approval of organization certificate.
Fees.
Reports and examinations.
Omitted.
Powers.
Limitation on member business loans.
Bylaws.
Membership.
Members’ meetings.
Management.
Officers of the board.
Board of directors; meetings; powers and duties; executive committee; membership officers; membership application.
1761c.
Credit committee.
1761d.
Supervisory committee; powers and duties;
suspension of members; passbook.
1762.
Repealed.
1763.
Dividends.
1764.
Expulsion and withdrawal.
1765.
Minors.
1766.
Powers of Board.
1767.
Fiscal agents and depositories; authorization
to secure deposits by governmental bodies.
1768.
Taxation.
1769.
Separability; right to alter, amend, or repeal
chapter.
1770.
Allotment of space in Federal buildings or
Federal land.
1771.
Conversion from Federal to State credit
union and from State to Federal credit
union.
1772.
Territorial application of chapter.
1772a.
Gifts; acceptance of conditional gifts; deposit.
1772b.
Apportionment.
1772c.
Trust fund.
1772c–1. Community development revolving loan fund
for credit unions.
1772d.
Forfeiture of organization certificate for
money laundering or cash transaction reporting offenses.
1773.
District of Columbia credit unions; conversion to Federal status.
1774.
Approval of certificate; assets and obligations
of applicant credit union.
1775.
Conditions upon conversion to Federal status.
SUBCHAPTER II—SHARE INSURANCE
1781.

Insurance of member accounts.