--- kind: "range" citation: "12 U.S.C. §§ 1701–1715z–20" title: "12" from: "1701" to: "1715z–20" count: 150 release: "119-102" url: "https://uscodex.org/usc/12/1701..1715z-20" --- # §1701. Short title This chapter may be cited as the “National Housing Act.” # §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.” # §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”. # §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](/usc/12/ch51.md) and subchapter III of [chapter 53](/usc/5/chptIII-sptD-ch53.md) of title 5. The Secretary may make such expenditures as may be necessary to carry out his functions, powers, and duties, and there are authorized 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—** - (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](/usc/12/5301.md?p=18-A) Insurance [Corporation](/usc/12/2277a.md?p=2), 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](/usc/12/1422.md?p=12) or organization concerned, accept and utilize equipment, facilities, or the services of employees of any Federal, [State](/usc/12/1707.md?p=d), or local [public agency](/usc/12/1821.md?p=w-2-B) or instrumentality, educational institution, or nonprofit [agency](/usc/12/1422.md?p=12) 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](/usc/5/5703.md); - (2) utilize, contract with and act through, without regard to [section 6101 of title 41](/usc/41/6101.md), any Federal, [State](/usc/12/1707.md?p=d), or local [public agency](/usc/12/1821.md?p=w-2-B) or instrumentality, educational institution, or non-profit [agency](/usc/12/1422.md?p=12) or organization with the consent of the [agency](/usc/12/1422.md?p=12) or organization concerned, and any [funds](/usc/12/4702.md?p=10) available to said officers for carrying out their respective functions, powers, and duties shall be available to reimburse or pay any such [agency](/usc/12/1422.md?p=12) 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](/usc/31/3324.md); and - (3) make expenditures for all necessary expenses, [including](/usc/12/25b.md?p=a-3) 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](/usc/12/4702.md?p=10) 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](/usc/12/1426a.md?p=g-1) [Agency](/usc/12/1422.md?p=12),[^1] respectively, by or pursuant to law may at their option be consolidated into a single administrative expense [fund](/usc/12/4702.md?p=10) accounts of such officer or [agency](/usc/12/1422.md?p=12) 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](/usc/12/4702.md?p=10) 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](/usc/12/1426a.md?p=g-1) only, or to [members](/usc/12/1426a.md?p=g-1) 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. # [§1701c–1. Omitted — omitted] # [§1701d. Repealed. Pub. L. 89–554, § 8(a), Sept. 6, 1966, 80 Stat. 655 — repealed] # [§1701d–1. Repealed. Pub. L. 90–19, §§ 6(i), 12(a), May 25, 1967, 81 Stat. 22, 23 — repealed] # [§1701d–2. Repealed. Pub. L. 90–19, §§ 6(i), 12(a), May 25, 1967, 81 Stat. 22, 23 — repealed] # [§1701d–3. Repealed. Pub. L. 91–609, title V, § 503(3), Dec. 31, 1970, 84 Stat. 1785 — 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 - (a) The Secretary of Housing and Urban Development may exchange data relating to housing and urban planning and development with other nations and assemble such data from other nations, through [participation](/usc/12/2206a.md?p=a-1) 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](/usc/42/3531.md) et seq.] or other legislation. In carrying out his responsibilities under this subsection the Secretary may— - (1) pay the expenses of [participation](/usc/12/2206a.md?p=a-1) in activities conducted under authority of this section [including](/usc/12/25b.md?p=a-3), but not limited to, the compensation, travel expenses, and per diem in lieu of subsistence of [persons](/usc/12/5481.md?p=19) 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](/usc/12/4702.md?p=10), 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)](#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. # [§1701e. Repealed. Pub. L. 91–609, title V, § 503(1), Dec. 31, 1970, 84 Stat. 1785 — repealed] # [§1701f. Repealed. Pub. L. 91–609, title V, § 503(1), Dec. 31, 1970, 84 Stat. 1785 — repealed] # [§1701f–1. Repealed. Pub. L. 90–19, § 5(c), May 25, 1967, 81 Stat. 21 — repealed] # [§§1701g to 1701g–3. Omitted — omitted] # [§1701g–4. Omitted — omitted] # §1701g–5. Revolving fund in connection with liquidating programs There is established as of June 30, 1954, a revolving [fund](/usc/12/4702.md?p=10), and the Secretary of Housing and Urban Development is authorized to [credit](/usc/12/5481.md?p=7) said [fund](/usc/12/4702.md?p=10) with all moneys hereafter obtained or now held by him or by any constituent [agency](/usc/12/1422.md?p=12) of the Department of Housing and Urban Development or any other official thereof, and to account under said [fund](/usc/12/4702.md?p=10) 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](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s1531)) 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](/usc/42/1592.md) 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](https://uscode.house.gov/view.xhtml?req=(/us/usc/t12/s1701g)) to 1701g–3]; (4) notes or other obligations purchased pursuant to the Alaska Housing Act, as amended ([48 U.S.C. 484(a)](https://uscode.house.gov/view.xhtml?req=(/us/usc/t48/s484/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](/usc/42/1521.md) 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](/usc/42/1592.md) et seq.]; and (7) veterans’ re-use housing under title V of the Lanham Act, as amended [[42 U.S.C. 1571](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s1571)) et seq.]: Provided, That said [fund](/usc/12/4702.md?p=10) shall be available for all necessary expenses ([including](/usc/12/25b.md?p=a-3) administrative expenses) in connection with the liquidation of the programs carried out pursuant to the foregoing provisions of law, [including](/usc/12/25b.md?p=a-3) operation, maintenance, improvement, or disposition of facilities, and for disbursements pursuant to outstanding commitments against moneys herein authorized to be credited to said [fund](/usc/12/4702.md?p=10), repayment of obligations to the Treasury, and refinancing and refunding operations on existing loans: Provided further, That any amount in said [fund](/usc/12/4702.md?p=10) 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](/usc/12/4702.md?p=10) appropriated pursuant to the Alaska Housing Act, as amended ([48 U.S.C. 484(d)](https://uscode.house.gov/view.xhtml?req=(/us/usc/t48/s484/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)](/usc/12/1.md) of Reorganization Plan No. 23 of 1950, shall terminate on June 30, 1954. # §1701g–5a. Transfer of New Communities Fund assets and liabilities The Secretary shall transfer all assets and liabilities of the [fund](/usc/12/4702.md?p=10) established pursuant to section 717 of the Housing and Urban Development Act of 1970, as amended ([42 U.S.C. 4518](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s4518))), to the Revolving [fund](/usc/12/4702.md?p=10) (liquidating programs) established pursuant to title II of the Independent [Offices](/usc/12/2279bb.md?p=4) Appropriation Act, 1955, as amended ([12 U.S.C. 1701g–5](/usc/12/1701g–5.md)). # §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](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s3901)) et seq.] and title VII of the Housing and Urban Development Act of 1970 [[42 U.S.C. 4501](/usc/42/4501.md) 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](/usc/12/4702.md?p=10) (liquidating programs) established pursuant to title II of the Independent [Offices](/usc/12/2279bb.md?p=4) Appropriations Act, 1955 [[12 U.S.C. 1701g–5](/usc/12/1701g–5.md)], 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](/usc/12/4702.md?p=10) authorized under section 717 of title VII [[42 U.S.C. 4518](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s4518))] to such revolving [fund](/usc/12/4702.md?p=10), as required in title I of the Department of Housing and Urban Development-Independent [Agencies](/usc/12/1422.md?p=12) Appropriation Act, 1984 [[12 U.S.C. 1701g–5a](/usc/12/1701g–5a.md)]. 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](/usc/12/1707.md?p=a)) 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)](#a), all moneys in the revolving [fund](/usc/12/4702.md?p=10) (liquidating programs) shall be available for necessary administrative and other expenses of [servicing](/usc/12/2605.md?p=i-3) and liquidating obligations guaranteed pursuant to section 403 and section 713 of title IV and title VII, respectively [[42 U.S.C. 3902](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s3902)), 4514], [including](/usc/12/25b.md?p=a-3) costs of services ([including](/usc/12/25b.md?p=a-3) 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](/usc/12/4702.md?p=10) (liquidating programs), to pay out of any moneys in such [fund](/usc/12/4702.md?p=10) 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](/usc/12/1422.md?p=12) Appropriation Act, 1984 [[12 U.S.C. 1701g–5a](/usc/12/1701g–5a.md)], 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](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s3902)), 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](/usc/31/chstIII-ch31.md) 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 Development-Independent [Agencies](/usc/12/1422.md?p=12) Appropriation Act, 1984 [[12 U.S.C. 1701g–5a](/usc/12/1701g–5a.md)], 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)](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s3906/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. # §1701g–5c. Transfer of rehabilitation loan fund assets and liabilities Notwithstanding [section 289(c)](/usc/12/289.md) of the Cranston-Gonzalez National Affordable Housing Act (Public Law 101–625), the assets and liabilities of the revolving [fund](/usc/12/4702.md?p=10) established by section 1452b[^1] of [title 42](/usc/42.md), and any collections, [including](/usc/12/25b.md?p=a-3) repayments or recaptured amounts, of such [fund](/usc/12/4702.md?p=10) shall be transferred to and merged with the Revolving [Fund](/usc/12/4702.md?p=10) (liquidating programs), established pursuant to title II of the Independent [Offices](/usc/12/2279bb.md?p=4) Appropriation Act, 1955, as amended ([12 U.S.C. 1701g–5](/usc/12/1701g–5.md)), effective October 1, 1991. # §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](/usc/12/5481.md?p=19) serving without compensation as [members](/usc/12/1426a.md?p=g-1) 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](/usc/5/5703.md). # §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](/usc/12/1701h.md), an advisory committee on matters relating to housing for elderly [persons](/usc/12/5481.md?p=19). # [§1701i. Omitted — omitted] # [§1701i–1. Omitted — omitted] # [§1701j. Repealed. Aug. 2, 1954, ch. 649, title VIII, § 813, 68 Stat. 647 — repealed] # §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](/usc/12/1715z–1.md?p=j-2-A) residence and which is approved for [mortgage](/usc/12/1707.md?p=a) insurance prior to the beginning of construction, the seller or builder, and such other [person](/usc/12/5481.md?p=19) as may be required by the said Secretary to become warrantor, shall deliver to the purchaser or [owner](/usc/12/4146.md?p=2) of such property a warranty that the dwelling is constructed in substantial conformity with the plans and specifications ([including](/usc/12/25b.md?p=a-3) 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](/usc/12/25b.md?p=a-3) any amendments thereof, or 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](/usc/12/4146.md?p=2) 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](/usc/12/1707.md?p=a) insured by the Secretary of Housing and Urban Development on and after October 1, 1954, unless such [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/25b.md?p=a-3) 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)](#a) of this section to be made available in their appropriate local [offices](/usc/12/2279bb.md?p=4) 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. # §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](/usc/12/1707.md?p=d), 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](/usc/12/1707.md?p=d), 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](/usc/12/1422.md?p=12) 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)](#a-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](/usc/12/25b.md?p=a-3) 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)](#a-3), an 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](/usc/12/1422.md?p=12) 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](/usc/12/1422.md?p=12) 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](/usc/12/2206a.md?p=a-1) of public and private scientific, technical, and financial organizations, institutions, and [agencies](/usc/12/1422.md?p=12) 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](/usc/12/25b.md?p=a-3) 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](/usc/12/1422.md?p=12) entities operating in the field, and the Consultative Council as provided for under [subsection (c)(8)](#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](/usc/12/221a.md?p=a) of [Directors](/usc/12/2279bb.md?p=3) (hereinafter referred to as the “[Board](/usc/12/221a.md?p=a)”) consisting of not less than fifteen nor more than twenty-one [members](/usc/12/1426a.md?p=g-1), appointed by the President of the United States by and with the advice and consent of the Senate. The [Board](/usc/12/221a.md?p=a) shall be representative of the various segments of the building community, of the various regions of the country, and of the [consumers](/usc/12/5481.md?p=4) 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](/usc/12/25b.md?p=a-3) representatives of construction labor organizations, product manufacturers, and builders, housing management experts, and experts in building standards, codes, and fire safety, and (B) [members](/usc/12/1426a.md?p=g-1) representative of the public interest in such numbers as may be necessary to assure that a majority of the [members](/usc/12/1426a.md?p=g-1) of the [Board](/usc/12/221a.md?p=a) represent the public interest and that there is adequate consideration by the Institute of [consumer](/usc/12/5481.md?p=4) interests in the exercise of its functions and responsibilities. Those representing the public interest on the [Board](/usc/12/221a.md?p=a) shall include architects, professional engineers, officials of Federal, [State](/usc/12/1707.md?p=d), and local [agencies](/usc/12/1422.md?p=12), and representatives of [consumer](/usc/12/5481.md?p=4) organizations. Such [members](/usc/12/1426a.md?p=g-1) of the [Board](/usc/12/221a.md?p=a) shall hold no financial interest or membership in, nor be employed by, or receive other compensation from, any [company](/usc/12/24a.md?p=g-1), [association](/usc/12/1828.md?p=s-4-E-i), 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](/usc/12/1426a.md?p=g-1) of the initial [Board](/usc/12/221a.md?p=a) shall serve as incorporators and shall take whatever actions are necessary to establish the Institute as provided for under [subsection (b)(1)](#b-1). - (3) The term of [office](/usc/12/2279bb.md?p=4) of each [member](/usc/12/1426a.md?p=g-1) of the initial and succeeding [Boards](/usc/12/221a.md?p=a) shall be three years; except that (A) any [member](/usc/12/1426a.md?p=g-1) 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](/usc/12/2279bb.md?p=4) of [members](/usc/12/1426a.md?p=g-1) first taking [office](/usc/12/2279bb.md?p=4) 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](/usc/12/1426a.md?p=g-1) shall be eligible to serve in excess of three consecutive terms of three years each. Notwithstanding the preceding provisions of this subsection, a [member](/usc/12/1426a.md?p=g-1) whose term has expired may serve until his successor has qualified. - (4) Any vacancy in the initial and succeeding [Boards](/usc/12/221a.md?p=a) 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](/usc/12/1426a.md?p=g-1) of the [Board](/usc/12/221a.md?p=a) of [Directors](/usc/12/2279bb.md?p=3) selected each year for terms commencing in that year. - (5) The President shall designate one of the [members](/usc/12/1426a.md?p=g-1) appointed to the initial [Board](/usc/12/221a.md?p=a) as Chairman; thereafter, the [members](/usc/12/1426a.md?p=g-1) of the initial and succeeding [Boards](/usc/12/221a.md?p=a) shall annually elect one of their number as Chairman. The [members](/usc/12/1426a.md?p=g-1) of the [Board](/usc/12/221a.md?p=a) shall also elect one or more of their [Members](/usc/12/1426a.md?p=g-1) 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](/usc/12/1426a.md?p=g-1) of the initial or succeeding [Boards](/usc/12/221a.md?p=a) shall not, by reason of such membership, be deemed to be employees of the United States Government. They shall, while attending meetings of the [Board](/usc/12/221a.md?p=a) or while engaged in duties related to such meetings or in other activities of the [Board](/usc/12/221a.md?p=a) pursuant to this section, be entitled to receive compensation at the rate of $100 per day [including](/usc/12/25b.md?p=a-3) traveltime, and while away from their homes or regular places of business they may be allowed travel expenses, [including](/usc/12/25b.md?p=a-3) per diem in lieu of subsistence, equal to that authorized under [section 5703 of title 5](/usc/5/5703.md), for [persons](/usc/12/5481.md?p=19) in the Government service employed intermittently. - (7) The Institute shall have a president and such other [executive officers](/usc/12/1831o.md?p=b-2-H) and employees as may be appointed by the [Board](/usc/12/221a.md?p=a) at rates of compensation fixed by the [Board](/usc/12/221a.md?p=a). No such [executive officer](/usc/12/1831o.md?p=b-2-H) 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](/usc/12/1422.md?p=12) 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](/usc/12/1422.md?p=12), and [consumer](/usc/12/5481.md?p=4) 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](/usc/12/2279bb.md?p=3), 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](/usc/12/2279bb.md?p=4). - (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](/usc/12/1422.md?p=12), [including](/usc/12/25b.md?p=a-3) test methods and other evaluative techniques relating to building systems, subsystems, components, products, and materials with due regard for [consumer](/usc/12/5481.md?p=4) problems. - (B) Evaluation and prequalification of existing and new building technology in accordance with [subparagraph (A)](#e-1-A). - (C) Conduct of needed investigations in direct support of subparagraphs [(A)](#e-1-A) and [(B)](#e-1-B). - (D) Assembly, storage, and dissemination of technical data and other information directly related to subparagraphs [(A)](#e-1-A), [(B)](#e-1-B), and [(C)](#e-1-C). - (2) The Institute in exercising its functions and responsibilities described in [paragraph (1)](#e-1) shall assign and delegate, to the maximum extent possible, responsibility for conducting each of the needed activities described in [paragraph (1)](#e-1) to one or more of the private organizations, institutions, [agencies](/usc/12/1422.md?p=12), 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)](#e-1) and [(2)](#e-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](/usc/12/1707.md?p=d), 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](/usc/12/1422.md?p=12) 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](/usc/12/1707.md?p=d), and local governmental [agencies](/usc/12/1422.md?p=12) 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)](#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](/usc/12/51c.md) under [subsection (h)](#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](/usc/12/1422.md?p=12), 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 findings 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](/usc/12/1422.md?p=12), 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](/usc/12/1707.md?p=d) 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](/usc/12/1707.md?p=d) and local law to utilize or embody such findings and regulatory provisions; and (B) assistance to [States](/usc/12/1707.md?p=d) in the development of inservice [training programs](/usc/12/4702.md?p=21) for building officials, and in the establishment of fully staffed and qualified [State](/usc/12/1707.md?p=d) technical [agencies](/usc/12/1422.md?p=12) 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](/usc/12/25b.md?p=a-3) 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](/usc/12/3101.md?p=5), 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](/usc/12/3101.md?p=5), monitoring and evaluating the performance of new building technologies for at least 1 year after installation and building occupancy; and - (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](/usc/12/1426a.md?p=g-1) 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](/usc/12/25b.md?p=a-3), 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](/usc/12/5481.md?p=4) organizations, except that serving [members](/usc/12/1426a.md?p=g-1) 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](/usc/12/1422.md?p=12) of the Federal Government involved in any building or construction may [participate](/usc/12/2206a.md?p=a-1) 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](/usc/12/1422.md?p=12). - (B) **Required assurances—** Upon agreement between a participating [Federal agency](/usc/12/3101.md?p=5) 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](/usc/12/3101.md?p=5) with a 5-year 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](/usc/12/3101.md?p=5) 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](/usc/12/3101.md?p=5), monitor and evaluate the performance of the new technology, and - (iv) prepare reports to be made available to [public agencies](/usc/12/1821.md?p=w-2-B) at all levels of government, the industry, and the public on the performance of the new technology. - (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)](#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](/usc/12/51c.md) 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)](#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](/usc/12/5481.md?p=19) 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. # §1701j–3. Preemption of due-on-sale prohibitions - (a) **Definitions—** For the purpose of this section— - (1) the term “due-on-sale clause” means a contract provision which authorizes a [lender](#a-2), at its option, to declare due and payable sums secured by the [lender](#a-2)’s security instrument if all or any part of the property, or an interest therein, securing the [real property loan](#a-3) is sold or transferred without the [lender](#a-2)’s prior written consent; - (2) the term “lender” means a [person](/usc/12/5481.md?p=19) or government [agency](/usc/12/1422.md?p=12) making a [real property loan](#a-3) or any assignee or transferee, in whole or in part, of such a [person](/usc/12/5481.md?p=19) or [agency](/usc/12/1422.md?p=12); - (3) the term “real property loan” means a loan, [mortgage](/usc/12/1707.md?p=a), advance, or [credit](/usc/12/5481.md?p=7) sale secured by a lien on real property, the stock allocated to a dwelling unit in a cooperative housing [corporation](/usc/12/2277a.md?p=2), or a [residential manufactured home](#a-4), 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](/usc/42/5402.md?p=6) 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](/usc/12/25b.md?p=a-3) the judicial decisions) of any [State](#a-5) to the contrary, a [lender](#a-2) may, subject to [subsection (c)](#c), enter into or enforce a contract containing a [due-on-sale clause](#a-1) with respect to a [real property loan](#a-3). - (2) Except as otherwise provided in [subsection (d)](#d), the exercise by the [lender](#a-2) 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](#a-2) and the borrower shall be fixed and governed by the contract. - (3) In the exercise of its option under a [due-on-sale clause](#a-1), a [lender](#a-2) is encouraged to permit an assumption of a [real property loan](#a-3) 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](#a-3) which was made or assumed, [including](/usc/12/25b.md?p=a-3) a transfer of the liened property subject to the [real property loan](#a-3), during the period beginning on the date a [State](#a-5) adopted a constitutional provision or statute prohibiting the exercise of [due-on-sale clauses](#a-1), or the date on which the highest court of such [State](#a-5) 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 [State](#a-5)-wide) prohibiting such exercise, and ending on October 15, 1982, the provisions of [subsection (b)](#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](#a-5), by a [State](#a-5) law enacted by the [State](#a-5) legislature prior to the close of such 3-year period, with respect to [real property loans](#a-3) originated in the [State](#a-5) by [lenders](#a-2) other than [national banks](/usc/12/221a.md?p=a), Federal savings and loan [associations](/usc/12/1828.md?p=s-4-E-i), Federal savings [banks](/usc/12/221a.md?p=a), and Federal [credit unions](/usc/12/3423.md?p=a-1-E), may otherwise regulate such contracts, in which case [subsection (b)](#b) shall apply only if such [State](#a-5) law so provides; and - (B) the Comptroller of the Currency with respect to [real property loans](#a-3) originated by [national banks](/usc/12/221a.md?p=a) or the National [Credit Union](/usc/12/3423.md?p=a-1-E) Administration [Board](/usc/12/221a.md?p=a) with respect to [real property loans](#a-3) originated by Federal [credit unions](/usc/12/3423.md?p=a-1-E) may, by regulation prescribed prior to the close of such period, otherwise regulate such contracts, in which case [subsection (b)](#b) shall apply only if such regulation so provides. - (2) - (A) For any contract to which [subsection (b)](#b) does not apply pursuant to this subsection, a [lender](#a-2) may require any successor or transferee of the borrower to meet customary [credit](/usc/12/5481.md?p=7) standards applied to loans secured by similar property, and the [lender](#a-2) 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](/usc/12/5481.md?p=7) standards. - (B) A [lender](#a-2) may not exercise its option pursuant to a [due-on-sale clause](#a-1) in the case of a transfer of a [real property loan](#a-3) 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](/usc/12/1828.md?p=s-4-E-i) or Federal savings [bank](/usc/12/1426a.md?p=g-1). - (d) **Exemption of specified transfers or dispositions—** With respect to a [real property loan](#a-3) secured by a lien on residential real property containing less than five dwelling units, [including](/usc/12/25b.md?p=a-3) a lien on the stock allocated to a dwelling unit in a cooperative housing [corporation](/usc/12/2277a.md?p=2), or on a [residential manufactured home](#a-4), a [lender](#a-2) may not exercise its option pursuant to a [due-on-sale clause](#a-1) upon— - (1) the creation of a lien or other encumbrance subordinate to the [lender](#a-2)’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](/usc/12/4146.md?p=2) 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](/usc/12/4146.md?p=2) 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](/usc/12/1426a.md?p=g-1) [Board](/usc/12/221a.md?p=a). - (e) **Rules, regulations, and interpretations; future income bearing loans subject to due-on-sale options—** - (1) The [Federal Home Loan Bank](/usc/12/1426a.md?p=g-1) [Board](/usc/12/221a.md?p=a), in consultation with the Comptroller of the Currency and the National [Credit Union](/usc/12/3423.md?p=a-1-E) Administration [Board](/usc/12/221a.md?p=a), is authorized to issue rules and regulations and to publish interpretations governing the implementation of this section. - (2) Notwithstanding the provisions of [subsection (d)](#d), the rules and regulations prescribed under this section may permit a [lender](#a-2) to exercise its option pursuant to a [due-on-sale clause](#a-1) with respect to a [real property loan](#a-3) 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](/usc/12/1707.md?p=a) [Corporation](/usc/12/2277a.md?p=2) (hereinafter referred to as the “[Corporation](/usc/12/2277a.md?p=2)”) 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](#a-1) in [real property loans](#a-3) which are owned in whole or in part by the [Corporation](/usc/12/2277a.md?p=2). - (g) **Balloon payments—** [Federal Home Loan Bank](/usc/12/1426a.md?p=g-1) [Board](/usc/12/221a.md?p=a) regulations restricting the use of a balloon payment shall not apply to a loan, [mortgage](/usc/12/1707.md?p=a), advance, or [credit](/usc/12/5481.md?p=7) sale to which this section applies. # §1701k. Right to redeem property on which United States has lien The right to redeem provided for by [section 2410(c) of title 28](/usc/28/2410.md?p=c), 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](/usc/12/1701.md) et seq.]. # §1701l. Limitation on interest rates of insured mortgages; terms of sales It is the intent of Congress that no sale of a dwelling on which a [mortgage](/usc/12/1707.md?p=a) is insured under the National Housing Act, as amended [[12 U.S.C. 1701](/usc/12/1701.md) et seq.], shall be financed, while such [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) is so insured, on terms less favorable to the purchaser as to amortization, retirement, foreclosure, or forfeiture than those contained in such [mortgage](/usc/12/1707.md?p=a). # §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](/usc/12/1707.md?p=a) insured or assisted under Federal law where the Secretary has reason to believe that the [mortgage](/usc/12/1707.md?p=a) proceeds have been fraudulently misappropriated by the [mortgagor](/usc/12/1707.md?p=b). # §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](/usc/12/5481.md?p=7) and cancel the note or notes of the Housing and Home Finance [Administrator](/usc/12/4702.md?p=1) executed and delivered in connection with loans transferred from the Reconstruction Finance [Corporation](/usc/12/2277a.md?p=2) to the Housing and Home Finance [Agency](/usc/12/1422.md?p=12) 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](/usc/12/1422.md?p=12) 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](/usc/12/1422.md?p=12) on account of such defaulted loans. # §1701n. Reduction of vulnerability of congested urban areas to enemy attack The Department of Housing and Urban Development, and any other departments or [agencies](/usc/12/1422.md?p=12) 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. # §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](/usc/12/25b.md?p=a-3) 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. # §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](/usc/12/1701o.md) 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](/usc/12/25b.md?p=a-3) the amount of loans, contributions and grants contracted for. # §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](/usc/12/1422.md?p=12), the Federal [Deposit](/usc/12/5301.md?p=18-A) Insurance [Corporation](/usc/12/2277a.md?p=2), the [Board](/usc/12/221a.md?p=a) 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](/usc/12/1717.md?p=b-7-A-ii) delinquencies and foreclosures. Each such report shall include information with respect to the number of [residential mortgage](/usc/12/1717.md?p=b-7-A-ii) foreclosures, and the number of sixty- and ninety-day [residential mortgage](/usc/12/1717.md?p=b-7-A-ii) delinquencies, in the Nation and in each [State](/usc/12/1707.md?p=d). # §1701p–2. Default and foreclosure database - (a) **Establishment—** The Secretary of Housing and Urban Development and the [Director](/usc/12/2279bb.md?p=3) of the [Bureau](/usc/12/5481.md?p=2), in consultation with the [Federal agencies](/usc/12/3101.md?p=5) responsible for regulation of banking and [financial institutions](/usc/12/1715k.md?p=h-1-C) involved in [residential mortgage](/usc/12/1717.md?p=b-7-A-ii) lending and [servicing](/usc/12/2605.md?p=i-3), shall establish and maintain a database of information on foreclosures and [defaults](/usc/12/1467a.md?p=e-7-A) on [mortgage](/usc/12/1707.md?p=a) loans for one- to four-unit residential properties and shall make such information publicly available, subject to [subsection (e)](#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](/usc/12/1707.md?p=a) loans that are delinquent by more than 30 days; - (2) the number and percentage of such [mortgage](/usc/12/1707.md?p=a) loans that are delinquent by more than 90 days; - (3) the number and percentage of such properties that are [real estate](/usc/12/1715z–20.md?p=b-2)-owned; - (4) number and percentage of such [mortgage](/usc/12/1707.md?p=a) loans that are in the foreclosure process; - (5) the number and percentage of such [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/2279bb.md?p=3) of the [Bureau](/usc/12/5481.md?p=2) consider appropriate. - (d) **Rule of construction—** Nothing in this section shall be construed to encourage discriminatory or unsound allocation of [credit](/usc/12/5481.md?p=7) or lending policies or practices. - (e) **Privacy and confidentiality—** In establishing and maintaining the database described in [subsection (a)](#a), the Secretary of Housing and Urban Development and the [Director](/usc/12/2279bb.md?p=3) of the [Bureau](/usc/12/5481.md?p=2) shall— - (1) be subject to the standards applicable to [Federal agencies](/usc/12/3101.md?p=5) for the protection of the confidentiality of personally identifiable information and for data security and integrity; - (2) implement the necessary measures to conform to the standards for data integrity and security described in [paragraph (1)](#e-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](/usc/12/5512.md?p=c) and the rules prescribed under such paragraphs, in order to protect privacy and confidentiality. # §1701q. Supportive housing for the elderly - (a) **Purpose—** The purpose of this section is to enable [elderly persons](#k-1) 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](#k-1); and - (2) provides a range of services that are tailored to the needs of [elderly persons](#k-1) occupying such housing. - (b) **General authority—** The [Secretary](#k-6) is authorized to provide assistance to [private nonprofit organizations](#k-4) and [consumer](/usc/12/5481.md?p=4) cooperatives to expand the supply of [supportive housing for the elderly](#k-7). Such assistance shall be provided as (1) [capital](/usc/12/51c.md) advances in accordance with subsection [(c)(1)](#c-1), and [(2)](#c-2) contracts for project rental assistance in accordance with [subsection (c)(2)](#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](#k-7) 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](#k-6) determines are necessary to expand the supply of [supportive housing for the elderly](#k-7). - (c) **Forms of assistance—** - (1) **Capital advances—** A [capital](/usc/12/51c.md) advance provided under this section shall bear no interest and its repayment shall not be required so long as the housing remains available for [very low-income](#k-8) [elderly persons](#k-1) in accordance with this section. Such advance shall be in an amount calculated in accordance with the development cost limitation established in [subsection (h)](#h). - (2) **Project rental assistance—** Contracts for project rental assistance shall obligate the [Secretary](#k-6) to make monthly payments to cover any part of the costs attributed to units occupied (or, as approved by the [Secretary](#k-6), held for occupancy) by [very low-income](#k-8) [elderly persons](#k-1) 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](#k-6). 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](#k-6) 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](#k-8) [person](/usc/12/5481.md?p=19) 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](/usc/12/5481.md?p=19)’s adjusted monthly income, (B) 10 percent of the [person](/usc/12/5481.md?p=19)’s monthly income, or (C) if the [person](/usc/12/5481.md?p=19) is receiving payments for welfare assistance from a [public agency](/usc/12/1821.md?p=w-2-B) and a part of such payments, adjusted in accordance with the [person](/usc/12/5481.md?p=19)’s actual housing costs, is specifically designated by such [agency](/usc/12/1422.md?p=12) to meet the [person](/usc/12/5481.md?p=19)’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](#k-8) [elderly persons](#k-1) for not less than 40 years. - (2) **Contract terms—** The initial term of a contract entered into under [subsection (c)(2)](#c-2) shall be 240 months. The [Secretary](#k-6) 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](#k-6) is authorized to make commitments to extend expiring contracts during the year prior to the date of expiration. - (e) **Applications—** [Funds](/usc/12/4702.md?p=10) made available under this section shall be allocated by the [Secretary](#k-6) among approvable applications submitted by [private nonprofit organizations](#k-4). Applications for assistance under this section shall be submitted by an applicant in such form and in accordance with such procedures as the [Secretary](#k-6) shall establish. Such applications shall contain— - (1) a description of the proposed housing; - (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)](#h); - (4) a description of (A) the category or categories of [elderly persons](#k-1) the housing is intended to serve; (B) the supportive services, if any, to be provided to the [persons](/usc/12/5481.md?p=19) occupying such housing; (C) the manner in which such services will be provided to such [persons](/usc/12/5481.md?p=19), [including](/usc/12/25b.md?p=a-3), in the case of [frail elderly](#k-2) [persons](/usc/12/5481.md?p=19), evidence of such residential supervision as the [Secretary](#k-6) 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](/usc/12/4702.md?p=10) 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](/usc/42/12705.md) that the proposed project is consistent with the approved housing strategy; and - (6) such other information or certifications that the [Secretary](#k-6) determines to be necessary or appropriate to achieve the purposes of this section. The [Secretary](#k-6) 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](#k-6) 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](#k-7) 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](#k-1); - (E) the extent to which the applicant has demonstrated that the supportive services identified in [subsection (e)(4)](#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)](#g-2-A) and [(B)](#g-2-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 category or categories of [elderly persons](#k-1) the housing is intended to serve; and - (H) such other factors as the [Secretary](#k-6) determines to be appropriate to ensure that [funds](/usc/12/4702.md?p=10) made available under this section are used effectively. - (2) **Delegated processing—** - (A) The [Secretary](#k-6) shall establish procedures to delegate the award, review and processing of projects, selected by the [Secretary](#k-6) in a national competition, to a [State](#k-5) or local housing [agency](/usc/12/1422.md?p=12) 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](/usc/12/5481.md?p=7) in combination with the funding under this section; and - (iv) agrees to issue a firm commitment within 12 months of delegation. - (B) The [Secretary](#k-6) shall retain the authority to process funding under this section in cases in which no [State](#k-5) or local housing [agency](/usc/12/1422.md?p=12) has applied to provide delegated processing pursuant to this paragraph or no such [agency](/usc/12/1422.md?p=12) has entered into an agreement with the [Secretary](#k-6) to serve as a delegated processing [agency](/usc/12/1422.md?p=12). - (C) The [Secretary](#k-6) shall develop a schedule for reasonable fees under this subparagraph to be paid to delegated processing [agencies](/usc/12/1422.md?p=12), which shall take into consideration any other fees to be paid to the [agency](/usc/12/1422.md?p=12) for other funding provided to the project by the [agency](/usc/12/1422.md?p=12), [including](/usc/12/25b.md?p=a-3) bonds, tax [credits](/usc/12/5481.md?p=7), and other gap funding. - (D) Assistance under [subsection (c)(2)](#c-2) may be provided for projects which identify in the application for assistance a defined health and other supportive services program [including](/usc/12/25b.md?p=a-3) sources of financing the services for eligible residents and memoranda of understanding with service provision [agencies](/usc/12/1422.md?p=12) 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](#k-6) 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](#k-5) or local [agency](/usc/12/1422.md?p=12). The [Secretary](#k-6) shall provide to such [agency](/usc/12/1422.md?p=12) 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](#k-6) shall ensure that housing assisted under this section provides a range of services tailored to the needs of the category or categories of [elderly persons](#k-1) ([including](/usc/12/25b.md?p=a-3) [frail elderly](#k-2) [persons](/usc/12/5481.md?p=19)) 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)](/usc/12/671.md) of the Housing and Community Development Act of 1992 ([42 U.S.C. 13631(f)](/usc/42/13631.md?p=f)); and (G) such other services as the [Secretary](#k-6) deems essential for maintaining independent living. The [Secretary](#k-6) may permit the provision of services to [elderly persons](#k-1) who are not residents if the [participation](/usc/12/2206a.md?p=a-1) of such [persons](/usc/12/5481.md?p=19) 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](#k-6) shall ensure that [owners](#k-3) 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)](#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)](#c-2). If a project is receiving congregate housing services assistance under [section 8011 of title 42](/usc/42/8011.md), the amount of costs provided under [subsection (c)(2)](#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](/usc/42/8011.md). To the extent that amounts are available pursuant to [subsection (c)(2)](#c-2) for the costs of carrying out this paragraph within a project, an [owner](#k-3) 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](#k-6) shall periodically establish reasonable development cost limitations by market area for various types and sizes of [supportive housing for the elderly](#k-7) 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](#k-7) that meets applicable [State](#k-5) and local housing and building codes; - (B) the cost of movables necessary to the basic operation of the housing, as determined by the [Secretary](#k-6); - (C) the cost of special design features necessary to make the housing accessible to [elderly persons](#k-1); - (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](#h-1) 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](#k-6) in accordance with [section 12709 of title 42](/usc/42/12709.md); and - (G) the cost of land, [including](/usc/12/25b.md?p=a-3) necessary site improvement. In establishing development cost limitations for a given market area under this subsection, the [Secretary](#k-6) 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](/usc/12/25b.md?p=a-3) 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](#k-6) 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](#k-6) shall use the development cost limitations established under paragraph [(1)](#h-1) or [(2)](#h-2) to calculate the amount of financing to be made available to individual [owners](#k-3). [Owners](#k-3) 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](#k-3) which add energy efficiency features which— - (i) exceed the energy efficiency standards promulgated by the [Secretary](#k-6) in accordance with [section 12709 of title 42](/usc/42/12709.md); - (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)](#h-4-A) may be used (i) to supplement services provided to residents of the housing or [funds](/usc/12/4702.md?p=10) set aside for replacement reserves, or (ii) for such other purposes as determined by the [Secretary](#k-6). - (5) **Design flexibility—** The [Secretary](#k-6) shall, to the extent practicable, give [owners](#k-3) 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](#k-3) shall be permitted voluntarily to provide [funds](/usc/12/4702.md?p=10) from sources other than this section for amenities and other features of appropriate design and construction suitable for [supportive housing for the elderly](#k-7) 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](#k-3) shall adopt written tenant selection procedures that are satisfactory to the [Secretary](#k-6) as (A) consistent with the purpose of improving housing opportunities for [very low-income](#k-8) [elderly persons](#k-1); 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](/usc/42/13601.md) et seq.] and any regulations issued under such subtitle. [Owners](#k-3) shall promptly notify in writing any rejected applicant of the grounds for any rejection. - (2) **Information regarding housing under this section—** The [Secretary](#k-6) shall provide to an appropriate [agency](/usc/12/1422.md?p=12) in each area (which may be the applicable Area [Agency](/usc/12/1422.md?p=12) on the Aging) information regarding the availability of housing assisted under this section. - (j) **Miscellaneous provisions—** - (1) **Technical assistance—** The [Secretary](#k-6) shall make available appropriate technical assistance to assure that applicants having limited resources, particularly minority applicants, are able to [participate](/usc/12/2206a.md?p=a-1) more fully in the program carried out under this section. - (2) **Civil rights compliance—** Each [owner](#k-3) shall certify, to the satisfaction of the [Secretary](#k-6), that assistance made available 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](/usc/42/2000d.md) et seq.], the Fair Housing Act [[42 U.S.C. 3601](/usc/42/3601.md) et seq.], and other Federal, [State](#k-5), and local laws prohibiting discrimination and promoting equal opportunity. - (3) **Owner deposit—** - (A) **In general—** The [Secretary](#k-6) shall require an [owner](#k-3) to [deposit](/usc/12/5301.md?p=18-A) an amount not to exceed $25,000 in a special escrow account to assure the [owner](#k-3)’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](#k-6) may reduce or waive the [owner](#k-3) [deposit](/usc/12/5301.md?p=18-A) specified under [paragraph (1)](#j-1) for individual applicants if the [Secretary](#k-6) 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](#k-6) that it has the capacity to manage and maintain the housing in accordance with this section. The [Secretary](#k-6) shall reduce or waive the requirement of the [owner](#k-3) [deposit](/usc/12/5301.md?p=18-A) under [paragraph (1)](#j-1) in the case of a nonprofit applicant that is not affiliated with a national sponsor, as determined by the [Secretary](#k-6). - (4) **Notice of appeal—** The [Secretary](#k-6) shall notify an [owner](#k-3) 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](#k-3) may appeal the proposed cancellation of loan authority. Such appeal, [including](/usc/12/25b.md?p=a-3) review by the [Secretary](#k-6), shall be completed not later than 45 days after the appeal is filed. - (5) **Labor—** - (A) **In general—** The [Secretary](#k-6) 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](#k-6) of Labor in accordance with sections 3141–3144, [3146](/usc/40/3146.md), and [3147](/usc/40/3147.md) of title 40. - (B) **Exemption—** [Subparagraph (A)](#j-5-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. - (6) **Access to residual receipts—** The [Secretary](#k-6) shall authorize the [owner](#k-3) 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](#k-6) based on the needs of the project) for activities to retrofit and renovate the project described under [section 8011(d)(3) of title 42](/usc/42/8011.md?p=d-3), to provide a service coordinator for the project as described in [section 8011(d)(4) of title 42](/usc/42/8011.md?p=d-4), or to provide supportive services (as such term is defined in [section 8011(k) of title 42](/usc/42/8011.md?p=k)) to residents of the project. Any [owner](#k-3) that uses residual receipts under this paragraph shall submit to the [Secretary](#k-6) 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)](#c-2) of this section, the [Secretary](#k-6) 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](#k-3) 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](/usc/42/13601.md) 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](#k-6) determines appropriate, for reducing the number of dwelling units in the project. Such use shall be subject to the approval of the [Secretary](#k-6) to ensure that the use is designed to retrofit units that are currently obsolete or unmarketable. - (9) **Carbon monoxide alarms—** Each [owner](#k-3) of a dwelling unit assisted under this section shall ensure that carbon monoxide alarms or detectors are installed in the dwelling unit in a manner that meets or exceeds— - (A) the standards described in chapters [9](/usc/12/ch9.md) and [11](/usc/12/ch11.md) of the 2018 publication of the International Fire Code, as published by the International Code Council; or - (B) any other standards as may be adopted by the [Secretary](#k-6), [including](/usc/12/25b.md?p=a-3) any relevant updates to the International Fire Code, through a notice published in the Federal Register. - (10) **Qualifying smoke alarms—** - (A) **In general—** Each [owner](#k-3) of a dwelling unit assisted under this section shall ensure that [qualifying smoke alarms](#j-10-B-ii) are installed in accordance with the requirements of applicable codes and standards and the National Fire Protection [Association](/usc/12/1828.md?p=s-4-E-i) Standard 72, or any successor standard, in each level and in or near each sleeping area in such dwelling unit, [including](/usc/12/25b.md?p=a-3) in basements but excepting crawl spaces and unfinished attics, and in each common area in a project containing such a dwelling unit. - (B) **Definitions—** For purposes of this paragraph, the following definitions shall apply: - (i) **Smoke alarm defined—** The term “smoke alarm” has the meaning given the term “smoke detector” in [section 2225(d) of title 15](/usc/15/2225.md?p=d). - (ii) **Qualifying smoke alarm defined—** The term “qualifying smoke alarm” means a [smoke alarm](#j-10-B-i) that— - (I) in the case of a dwelling unit built before December 29, 2022, and not substantially rehabilitated after December 29, 2022— - (aa) - (AA) is hardwired; or - (BB) uses 10-year non rechargeable, nonreplaceable primary batteries and is sealed, is tamper resistant, and contains silencing means; and - (bb) provides notification for [persons](/usc/12/5481.md?p=19) with hearing loss as required by the National Fire Protection [Association](/usc/12/1828.md?p=s-4-E-i) Standard 72, or any successor standard; or - (II) in the case of a dwelling unit built or substantially rehabilitated after December 29, 2022, is hardwired. - (k) **Definitions—** - (1) The term “elderly person” means a household composed of one or more [persons](/usc/12/5481.md?p=19) 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](#k-1) who is unable to perform at least 3 activities of daily living adopted by the [Secretary](#k-6) for purposes of this program. [Owners](#k-3) may establish additional eligibility requirements (acceptable to the [Secretary](#k-6)) based on the standards in local supportive services programs. - (3) The term “owner” means a [private nonprofit organization](#k-4) that receives assistance under this section to develop and operate [supportive housing for the elderly](#k-7). - (4) The term “private nonprofit organization” means— - (A) any incorporated private institution or foundation— - (i) no part of the [net earnings](/usc/12/1441.md?p=k-2) of which inures to the benefit of any [member](/usc/12/1426a.md?p=g-1), founder, contributor, or individual; - (ii) which has a governing [board](/usc/12/221a.md?p=a)— - (I) the membership of which is selected in a manner to assure that there is significant representation of the views of the 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](/usc/12/1821.md?p=w-2-B) that is the sponsoring organization of multiple housing projects assisted under this section, the [Secretary](#k-6) may determine the criteria or conditions under which financial, compliance and other administrative responsibilities exercised by a single-entity [private nonprofit organization](#k-4) that is the [owner](#k-3) [corporation](/usc/12/2277a.md?p=2) responsible for the operation of an individual housing project may be shared or transferred to the governing [board](/usc/12/221a.md?p=a) of such sponsoring organization; and - (iii) which is approved by the [Secretary](#k-6) 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)](#k-4-A); - (ii) a for-profit [corporation](/usc/12/2277a.md?p=2) wholly owned and controlled by one or more organizations meeting the requirements under [subparagraph (A)](#k-4-A); or - (iii) a [limited liability company](/usc/12/1861.md?p=b-7) wholly owned and controlled by one or more organizations meeting the requirements under [subparagraph (A)](#k-4-A). - (5) The term “State” [includes](/usc/12/25b.md?p=a-3) 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](#k-1) 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](#k-1) 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](/usc/42/1437a.md?p=b-2). - (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](/usc/12/51c.md) advances in accordance with [subsection (c)(1)](#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](/usc/12/4702.md?p=10) to be used by the [Secretary](#k-6) 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)](#c-2). - (3) **Nonmetropolitan allocation—** Not less than 15 percent of the [funds](/usc/12/4702.md?p=10) made available for assistance under this section shall be allocated by the [Secretary](#k-6) on a national basis for nonmetropolitan areas. In complying with this paragraph, the [Secretary](#k-6) shall either operate a national competition for the nonmetropolitan [funds](/usc/12/4702.md?p=10) or make allocations to regional [offices](/usc/12/2279bb.md?p=4) 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) **[^1] 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. # §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](/usc/12/1422.md?p=12) 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](/usc/12/1707.md?p=b) of property that [includes](/usc/12/25b.md?p=a-3) 5 or more living units and that has a [mortgage](/usc/12/1707.md?p=a) held pursuant to [section 1701q of this title](/usc/12/1701q.md), who has agreed in writing, as a condition of a transfer of physical assets, a flexible subsidy loan, a [capital](/usc/12/51c.md) improvement loan, a modification of the [mortgage](/usc/12/1707.md?p=a) terms, or a workout agreement, to use nonproject income to make cash contributions for payments due under the note and [mortgage](/usc/12/1707.md?p=a), for payments to the reserve for replacements, to restore the project to good physical condition, or to pay other project liabilities, [knowingly](#h) and materially fails to comply with any of these commitments, the Secretary may impose a civil money penalty on the [mortgagor](/usc/12/1707.md?p=b) 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. - (c) **Violations of regulatory agreement—** - (1) **In general—** The Secretary may also impose a civil money penalty on a [mortgagor](/usc/12/1707.md?p=b) or property that [includes](/usc/12/25b.md?p=a-3) 5 or more living units and that has a [mortgage](/usc/12/1707.md?p=a) held pursuant to [section 1701q of this title](/usc/12/1701q.md) for any knowing and material violation of the regulatory agreement executed by the [mortgagor](/usc/12/1707.md?p=b), 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](/usc/12/25b.md?p=a-3) rents, or paying out any [funds](/usc/12/4702.md?p=10), 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](/usc/12/5301.md?p=18-A) other than the prepayment of the first month’s rent, plus a security [deposit](/usc/12/5301.md?p=18-A) 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](/usc/12/4702.md?p=10) collected as security [deposits](/usc/12/5301.md?p=18-A) separate and apart from all other [funds](/usc/12/4702.md?p=10) 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](/usc/12/2279bb.md?p=4), apparatus, devices, books, contracts, records, documents, and other related papers ([including](/usc/12/25b.md?p=a-3) 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 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](/usc/12/1707.md?p=b) 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](/usc/12/1707.md?p=b), unless the Secretary has approved an extension of the 60-day period in writing. The Secretary shall approve an extension where the [mortgagor](/usc/12/1707.md?p=b) demonstrates that failure to comply with this subparagraph is due to events beyond the [control](/usc/12/24a.md?p=g-1) of the [mortgagor](/usc/12/1707.md?p=b). - (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](/usc/12/1707.md?p=a). - (L) Failure to make promptly all payments due under the note and [mortgage](/usc/12/1707.md?p=a), [including](/usc/12/25b.md?p=a-3) 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)](#c-1). - (d) **Agency procedures—** - (1) **Establishment—** The Secretary shall establish standards and procedures governing the imposition of civil money penalties under subsections [(b)](#b) and [(c)](#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](/usc/12/1707.md?p=b) 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. - (3) **Factors in determining amount of penalty—** In determining the amount of a penalty under subsection [(b)](#b) or [(c)](#c), consideration shall be given to such factors as the gravity of the offense, any history of prior offenses ([including](/usc/12/25b.md?p=a-3) 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)](#b) or [(c)](#c) shall not be subject to review, except as provided in [subsection (e)](#e). - (e) **Judicial review of agency determination—** - (1) **In general—** After exhausting all administrative remedies established by the Secretary under [subsection (d)(1)](#d-1), a [mortgagor](/usc/12/1707.md?p=b) against whom the Secretary has imposed a civil money penalty under subsection [(b)](#b) or [(c)](#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)](#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)](#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](/usc/5/706.md). - (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](/usc/12/1707.md?p=b) fails to comply with the Secretary’s determination or order imposing a civil money penalty under subsection [(b)](#b) or [(c)](#c), after the determination or order is no longer subject to review as provided by subsections [(d)(1)](#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](/usc/12/221a.md?p=a) court to obtain a monetary judgment against the [mortgagor](/usc/12/1707.md?p=b) 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](/usc/12/4702.md?p=10) established under [section 1715z–1a(j) of this title](/usc/12/1715z–1a.md?p=j). # §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](/usc/12/4146.md?p=2) of eligible projects described in [subsection (b)](#b) for one or both of the following activities: - (1) **Repairs—** Substantial [capital](/usc/12/51c.md) 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](#g-1) for elderly [persons](/usc/12/5481.md?p=19). - (B) **Service-enriched housing—** Activities designed to convert dwelling units in the eligible project to [service-enriched housing](#g-2) for elderly [persons](/usc/12/5481.md?p=19). - (b) **Eligible projects—** An eligible project described in this subsection is a [multifamily housing project](/usc/12/1701z–11.md?p=b-1) that is— - (1) - (A) described in subparagraph (B), (C), (D), (E), (F), or (G) of [section 13641(2) of title 42](/usc/42/13641.md?p=2), 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](/usc/42/1485.md); - (2) owned by a private [nonprofit organization](/usc/12/1821.md?p=w-2-B) (as such term is defined in [section 1701q of this title](/usc/12/1701q.md)); and - (3) designated primarily for occupancy by elderly [persons](/usc/12/5481.md?p=19). 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](/usc/12/51c.md) repairs or the proposed conversion activities for either an [assisted living facility](#g-1) or [service-enriched housing](#g-2) for which a grant under this section is requested; - (2) the amount of the grant requested to complete the substantial [capital](/usc/12/51c.md) 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)](#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](#g-1) or [service-enriched housing](#g-2), 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](#g-2) 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](/usc/12/25b.md?p=a-3)— - (i) the right to accept, decline, or choose such services and to have the choice of provider; - (ii) the services made available by or contracted through the grantee; - (iii) the identity of, and relevant information for, all [agencies](/usc/12/1422.md?p=12) or organizations providing any services to residents, which [agencies](/usc/12/1422.md?p=12) 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](/usc/12/51c.md) repairs, the extent to which the project to be repaired is in need of such repair, [including](/usc/12/25b.md?p=a-3) 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](#g-1) or [service-enriched housing](#g-2) that are needed or are expected to be needed by the categories of elderly [persons](/usc/12/5481.md?p=19) that the [assisted living facility](#g-1)[^1] [service-enriched housing](#g-2) is intended to serve, with a special emphasis on [very low-income](/usc/12/4502.md?p=24-B) elderly [persons](/usc/12/5481.md?p=19) who need assistance with activities of daily living; - (3) the inability of the applicant to [fund](/usc/12/4702.md?p=10) the repairs or conversion activities from existing financial resources, as evidenced by the applicant’s financial records, [including](/usc/12/25b.md?p=a-3) 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](/usc/12/5481.md?p=19) that the [assisted living facility](#g-1) or [service-enriched housing](#g-2) 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](#g-1) or [service-enriched housing](#g-2) 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 [funds](/usc/12/4702.md?p=10) 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](/usc/12/25b.md?p=a-3) one or more dwelling units that have been converted to [assisted living facilities](#g-1) or [service-enriched housing](#g-2) 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](/usc/42/1437f.md)], in the same manner in which the project would be eligible for such assistance but for the [assisted living facilities](#g-1) or [service-enriched housing](#g-2) 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](#g-1) or [service-enriched housing](#g-2) 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](/usc/12/1715w.md?p=b); - (2) the term “service-enriched housing” means housing that— - (A) makes available through licensed or certified third party [service providers](/usc/12/5481.md?p=26-A) 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](/usc/12/25b.md?p=a-3) 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](/usc/12/25b.md?p=a-3) common rooms and other facilities appropriate for the provision of supportive services to the residents of the housing; and - (D) provides residents with [control](/usc/12/24a.md?p=g-1) over health care and supportive services decisions, [including](/usc/12/25b.md?p=a-3) 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)](/usc/12/1701.md)[^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. # §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](/usc/12/4702.md?p=10) appropriated for housing for the elderly, as authorized by [section 1701q of this title](/usc/12/1701q.md), as amended, and for supportive housing for [persons](/usc/12/5481.md?p=19) with disabilities, as authorized by [section 8013 of title 42](/usc/42/8013.md), shall be available for the cost of maintaining and disposing of such properties that are acquired or otherwise become the responsibility of the Department. # §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](/usc/12/1707.md?p=a) [credit](/usc/12/5481.md?p=7), 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](/usc/12/5481.md?p=7) 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. # §1701r–1. Pet ownership in assisted rental housing for the elderly or handicapped - (a) **Restrictions on ownership—** No [owner](/usc/12/4146.md?p=2) or manager of any [federally assisted rental housing for the elderly or handicapped](#d) 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](/usc/12/1715z–4a.md?p=a-2) 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](/usc/12/5481.md?p=19). - (b) **Rules and regulations—** - (1) Not later than the expiration of the twelve-month period following November 30, 1983, the Secretary of Housing and Urban Development and the Secretary of Agriculture shall each issue such regulations as may be necessary to ensure (A) compliance with the provisions of [subsection (a)](#a) with respect to any program of assistance referred to in [subsection (d)](#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](/usc/12/4146.md?p=2) or manager of any [federally assisted rental housing for the elderly or handicapped](#d) (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](/usc/12/4146.md?p=2) or manager of [federally assisted rental housing for the elderly or handicapped](#d), 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](/usc/12/5481.md?p=19) 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](/usc/12/1701q.md); or - (2) is assisted under the United States Housing Act of 1937 [[42 U.S.C. 1437](/usc/42/1437.md) et seq.], the National Housing Act [[12 U.S.C. 1701](/usc/12/1701.md) et seq.], or title V of the Housing Act of 1949 [[42 U.S.C. 1471](/usc/42/1471.md) et seq.], and is designated for occupancy by [elderly or handicapped families](/usc/12/1715z–1.md?p=j-2-B), as such term is defined in [section 1701q(d)(4)](/usc/12/1701q.md)[^1] of this title. # §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](#c-1)”, 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](#j-1)” means a private nonprofit [corporation](/usc/12/2277a.md?p=2) or other private nonprofit legal entity, a limited dividend [corporation](/usc/12/2277a.md?p=2) or other limited dividend legal entity, or a cooperative housing [corporation](/usc/12/2277a.md?p=2), which is a [mortgagor](/usc/12/1707.md?p=b) under section 221(d)(3) of the National Housing Act [[12 U.S.C. 1715l(d)(3)](/usc/12/1715l.md)] and which, after August 10, 1965, has been approved for [mortgage](/usc/12/1707.md?p=a) insurance thereunder and has been approved for receiving the benefits of this section: Provided, That, except as provided in [subsection (j)](#j), no payments under this section may be made with respect to any property financed with a [mortgage](/usc/12/1707.md?p=a) receiving the benefits of the interest rate provided for in the proviso in [section 221(d)(5)](/usc/12/221.md) of that Act [[12 U.S.C. 1715l(d)(5)](/usc/12/1715l.md)]. Such term also [includes](/usc/12/25b.md?p=a-3) a private nonprofit [corporation](/usc/12/2277a.md?p=2) or other private nonprofit legal entity, a limited dividend [corporation](/usc/12/2277a.md?p=2) or other limited dividend legal entity, or a cooperative housing [corporation](/usc/12/2277a.md?p=2), which is the [owner](/usc/12/4146.md?p=2) of a [rental](#c) or cooperative housing project financed under a [State](/usc/12/1707.md?p=d) 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)](#j), the term “[housing owner](#j-1)” also has the meaning prescribed in such subsection. Nothing in this section shall be construed as preventing payments to a [housing owner](#j-1) with respect to projects in 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)](#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](/usc/12/1715z–1.md?p=j-2-A) having an [income](#c-2) which would qualify such individual or [family](/usc/12/1715z–1.md?p=j-2-A) for assistance under [section 1437f of title 42](/usc/42/1437f.md), except that such term shall also include any individual or [family](/usc/12/1715z–1.md?p=j-2-A) who was receiving assistance under this section on the day preceding December 21, 1979, so long as such individual or [family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1426a.md?p=g-1) 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](#c-1)” and “tenant” include a [member](/usc/12/1426a.md?p=g-1) 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](/usc/12/1426a.md?p=g-1) of a cooperative, the terms “rental” and “rental charges” mean the charges under the occupancy agreements between such [members](/usc/12/1426a.md?p=g-1) 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](#c) for such unit exceeds 30 per centum of the [tenant](#c)’s adjusted [income](#c-2). - (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](#c), [including](/usc/12/25b.md?p=a-3) criteria and procedures with respect to periodic review of [tenant](#c) [incomes](#c-2) and periodic adjustment of [rental charges](#c). - (2) Procedures adopted by the Secretary hereunder shall provide for recertifications of the [incomes](#c-2) of occupants no less frequently than annually for the purpose of adjusting [rental charges](#c) and annual payments on the basis of occupants’ [incomes](#c-2), but in no event shall [rental charges](#c) adjusted under this section for any dwelling exceed the fair market [rental](#c) of the dwelling. - (3) The Secretary may enter into agreements, or authorize housing owners to enter into agreements, with public or private [agencies](/usc/12/1422.md?p=12) for services required in the selection of [qualified tenants](#c-1), [including](/usc/12/25b.md?p=a-3) those who may be approved, on the basis of the probability of future increases in their [incomes](#c-2), as lessees under an option to purchase (which will give such approved [qualified tenants](#c-1) an exclusive right to purchase at a price established or determined as provided in the option) dwellings, and in the establishment of [rentals](#c). The Secretary is authorized (without limiting his authority under any other provision of law) to delegate to any such public or private [agency](/usc/12/1422.md?p=12) 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](/usc/12/25b.md?p=a-3) 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. - (f) **Omitted—** - (g) **Authority of Secretary—** 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)](/usc/12/221.md), section 231(c)(3), or section 236 of the National Housing Act [[12 U.S.C. 1715l(d)(3)](/usc/12/1715l.md), 1715v(c)(3), 1715z–1], or [section 1701q of this title](/usc/12/1701q.md), [including](/usc/12/25b.md?p=a-3) 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](#c-1). To ensure that [qualified tenants](#c-1) 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](/usc/12/4146.md?p=2) of projects assisted under this section but not subject to [mortgages](/usc/12/1707.md?p=a) insured under title II of the National Housing Act [[12 U.S.C. 1707](/usc/12/1707.md) et seq.] to provide sufficient payments to cover 100 percent of the necessary rent increases and changes in the [incomes](#c-2) of [qualified tenants](#c-1), subject to the availability of authority for such purpose under [section 1437c(c) of title 42](/usc/42/1437c.md?p=c). The Secretary shall take such actions as may be necessary to ensure that payments, [including](/usc/12/25b.md?p=a-3) payments that reflect necessary rent increases and changes in the [incomes](#c-2) of [tenants](#c), are made on a timely basis for all units covered by contracts entered into under this section. - (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](/usc/12/25b.md?p=a-3), 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)](#e), and provide administrative expenses. - (i) **Omitted—** - (j) **Additional definition of housing owner; restrictions on payments—** - (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](#b)” (in addition to the meaning prescribed in [subsection (b)](#b)) [includes](/usc/12/25b.md?p=a-3)— - (A) a private nonprofit [corporation](/usc/12/2277a.md?p=2) or other private nonprofit legal entity, a limited dividend [corporation](/usc/12/2277a.md?p=2) or other limited dividend legal entity, or a cooperative housing [corporation](/usc/12/2277a.md?p=2), which is a [mortgagor](/usc/12/1707.md?p=b) under a [mortgage](/usc/12/1707.md?p=a) 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)](/usc/12/1715l.md)] and which, after August 10, 1965, has been approved for [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/2277a.md?p=2) or other private nonprofit legal entity which is a [mortgagor](/usc/12/1707.md?p=b) under a [mortgage](/usc/12/1707.md?p=a) insured under section 231(c)(3) of the National Housing Act [[12 U.S.C. 1715v(c)(3)](/usc/12/1715v.md?p=c-3)] and which, after August 10, 1965, has obtained final endorsement of such [mortgage](/usc/12/1707.md?p=a) for [mortgage](/usc/12/1707.md?p=a) insurance and has been approved for receiving the benefits of this section; - (C) a private nonprofit [corporation](/usc/12/2277a.md?p=2), a public body or [agency](/usc/12/1422.md?p=12), or a cooperative housing [corporation](/usc/12/2277a.md?p=2), which is a borrower under [section 1701q of this title](/usc/12/1701q.md) 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](/usc/12/2277a.md?p=2) or other private nonprofit legal entity, a limited dividend [corporation](/usc/12/2277a.md?p=2) or other limited dividend legal entity, or a cooperative housing [corporation](/usc/12/2277a.md?p=2), which is assisted under section 236 of the National Housing Act [[12 U.S.C. 1715z–1](/usc/12/1715z–1.md)] 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](/usc/12/1715z–1.md?p=j-2-A) meeting the requirements of [subsection (c)](#c). - (2) Of the amounts approved in appropriation Acts pursuant to [subsection (a)](#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](#b) 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](#b) as defined in paragraphs (1)(B) and (1)(C) of this subsection. - (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)](#a) and any other provision of law, the Secretary may utilize additional authority under [section 1437c(c) of title 42](/usc/42/1437c.md?p=c) 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](/usc/42/1437f.md) or otherwise (1) for the purpose of making assistance payments, [including](/usc/12/25b.md?p=a-3) amendments as provided in [subsection (g)](#g), with respect to housing projects assisted under this section, but not subject to [mortgages](/usc/12/1707.md?p=a) insured under the National Housing Act [[12 U.S.C. 1701](/usc/12/1701.md) 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)](/usc/12/1715z–1.md?p=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](/usc/12/1707.md?p=b), provide interest reduction and [rental](#c) assistance payments for the benefit of projects assisted under this section whose [mortgages](/usc/12/1707.md?p=a) were made by [State](/usc/12/1707.md?p=d) or local housing finance [agencies](/usc/12/1422.md?p=12) or [State](/usc/12/1707.md?p=d) or local government [agencies](/usc/12/1422.md?p=12) for a term equal to the remaining [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=d) or local housing finance [agencies](/usc/12/1422.md?p=12) or [State](/usc/12/1707.md?p=d) or local government [agencies](/usc/12/1422.md?p=12), and - (2) existing allocation under section 236 contracts on projects whose [mortgages](/usc/12/1707.md?p=a) were made by [State](/usc/12/1707.md?p=d) or local housing finance [agencies](/usc/12/1422.md?p=12) or [State](/usc/12/1707.md?p=d) or local government [agencies](/usc/12/1422.md?p=12) 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](/usc/12/1707.md?p=b) submits the application within 548 days after February 5, 1988, along with a certification of the [mortgagee](/usc/12/1707.md?p=b) that amounts are to be utilized hereunder for the purpose of either (A) reducing rents or rent increases to [tenants](#c), 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](#c) assistance payments shall be available only to the extent approved in appropriation Acts. # §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](/usc/42/1441.md), of “a decent home and a suitable living environment for every American [family](/usc/12/1715z–1.md?p=j-2-A)”. The Congress finds that this goal has not been fully realized for many of the Nation’s lower income [families](/usc/12/1715z–1.md?p=j-2-A); 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](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–1.md?p=j-2-A), the highest priority and emphasis should be given to meeting the housing needs of those [families](/usc/12/1715z–1.md?p=j-2-A) 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. # §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](/usc/12/1707.md?p=d) and local governments and other recipients of Federal financial assistance with substantial [funds](/usc/12/4702.md?p=10) for projects and activities that produce significant employment and other economic opportunities; - (2) low- and [very low-income persons](#e-1), 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](#e-1), particularly [persons](/usc/12/5481.md?p=19) 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](#e-1) 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 toward low- and [very low-income persons](#e-1), 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](/usc/12/1422.md?p=12), and their contractors and subcontractors, make their best efforts, consistent with existing Federal, [State](/usc/12/1707.md?p=d), and local laws and regulations, to give to low- and [very low-income persons](#e-1) the training and employment opportunities generated by development assistance provided pursuant to [section 1437c of title 42](/usc/42/1437c.md), operating assistance provided pursuant to [section 1437g of title 42](/usc/42/1437g.md), and modernization grants provided pursuant to section 1437l of title 42.[^1] - (B) **Priority—** The efforts required under [subparagraph (A)](#c-1-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](/usc/12/1422.md?p=12) that is expending the assistance. - (iii) To participants in YouthBuild programs receiving assistance under [section 3226 of title 29](/usc/29/3226.md). - (iv) To other low- and [very low-income persons](#e-1) 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](/usc/12/1707.md?p=d), and local laws and regulations, opportunities for training and employment arising in connection with a housing rehabilitation ([including](/usc/12/25b.md?p=a-3) reduction and abatement of lead-based paint hazards), housing construction, or other public construction project are given to low- and [very low-income persons](#e-1) 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](#e-1) 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](/usc/29/3226.md). - (d) **Contracting—** - (1) **Public and Indian housing program—** - (A) **In general—** The Secretary shall require that public and Indian housing [agencies](/usc/12/1422.md?p=12), and their contractors and subcontractors, make their best efforts, consistent with existing Federal, [State](/usc/12/1707.md?p=d), 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](/usc/42/1437c.md), operating assistance provided pursuant to [section 1437g of title 42](/usc/42/1437g.md), and modernization grants provided pursuant to [section 1437l](/usc/42/1437l.md) of title 42,[^1] to business concerns that provide economic opportunities for low- and [very low-income persons](#e-1). - (B) **Priority—** The efforts required under [subparagraph (A)](#d-1-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](/usc/12/1422.md?p=12) that is providing the assistance. - (iii) To YouthBuild programs receiving assistance under [section 3226 of title 29](/usc/29/3226.md). - (iv) To business concerns that provide economic opportunities for low- and [very low-income persons](#e-1) 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](/usc/12/1707.md?p=d), and local laws and regulations, contracts awarded for work to be performed in connection with a housing rehabilitation ([including](/usc/12/25b.md?p=a-3) 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](#e-1) 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](#e-1) 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](/usc/29/3226.md). - (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 “very low-income families”, respectively, in [section 1437a(b)(2) of title 42](/usc/42/1437a.md?p=b-2). - (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](/usc/12/5481.md?p=19) that has a majority controlling interest in the business; - (B) employs a substantial number of such [persons](/usc/12/5481.md?p=19); 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](/usc/12/4702.md?p=1) of the Small Business Administration, and such other [Federal agencies](/usc/12/3101.md?p=5) 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. # §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](/usc/12/1707.md?p=a) insurance through the Federal Housing Administration. The Congress commends the Department of Housing and Urban Development for its recent 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](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–1.md?p=j-2-A), 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. # §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](/usc/12/1707.md?p=b) whose [mortgages](/usc/12/1707.md?p=a) are insured under section [1715z(i)](/usc/12/1715z.md?p=i) or [(j)(4)](/usc/12/1715z.md?p=j-4) of this title as he determines to be necessary to assist such [mortgagors](/usc/12/1707.md?p=b) 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. # §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](/usc/12/25b.md?p=a-3) 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 low- and moderate-income housing, [including](/usc/12/25b.md?p=a-3) 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](/usc/42/5301.md) et seq.]. - (2) The Secretary (A) shall provide the services described in [clause (iii)](#a-1-iii) of paragraph (1) for homeowners assisted under section 235 of the National Housing Act [[12 U.S.C. 1715z](/usc/12/1715z.md)]; (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)](/usc/42/1472.md?p=h)]; and (C) may provide such services for other [owners](/usc/12/4146.md?p=2) of single [family](/usc/12/1715z–1.md?p=j-2-A) dwelling units insured under title II of the National Housing Act [[12 U.S.C. 1707](/usc/12/1707.md) et seq.] or guaranteed or insured under [chapter 37](/usc/38/chptIII-ch37.md) of title 38. For purposes of this paragraph and [clause (iii)](#a-1-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 moderate-income [families](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1422.md?p=12) and [State housing finance agencies](#h-5). - (B) **Qualified entities.—** The Secretary shall establish standards and guidelines for eligibility of organizations ([including](/usc/12/25b.md?p=a-3) governmental and [nonprofit organizations](#h-1)) to receive assistance under this paragraph, in accordance with [subparagraph (D)](#a-4-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 that the recipients are geographically diverse and include organizations that serve urban or rural areas. - (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](/usc/12/2279bb.md?p=4); or - (II) any organization which employs [applicable individuals](#a-4-D-ii). - (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](/usc/12/2279bb.md?p=4). - (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](/usc/12/2279bb.md?p=4) of Housing Counseling of the Department of Housing and Urban Development; - (ii) the responsibilities of the [Director](/usc/12/2279bb.md?p=3) of Housing Counseling under [paragraphs (2) through (5)](#g-2..g-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](#h-1) or public housing [agencies](/usc/12/1422.md?p=12) 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](/usc/12/1715z–1.md?p=j-2-A) under section 235 of the National Housing Act [[12 U.S.C. 1715z](/usc/12/1715z.md)] 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](/usc/12/25b.md?p=a-3), but not limited to, preliminary surveys and analyses of market needs, preliminary site engineering and architectural fees, site acquisition, application and [mortgage](/usc/12/1707.md?p=a) commitment fees, and 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](#h-1) or public housing [agency](/usc/12/1422.md?p=12) 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](/usc/12/4702.md?p=10) appropriated for the purposes of this subsection shall be deposited in a [fund](/usc/12/4702.md?p=10) which shall be known as the Low and Moderate Income Sponsor [Fund](/usc/12/4702.md?p=10), and which shall be available without fiscal year limitation and be administered by the Secretary as a revolving [fund](/usc/12/4702.md?p=10) for carrying out the purposes of this subsection. Sums received in repayment of loans made under this subsection shall be deposited in such [fund](/usc/12/4702.md?p=10). - (c) **Grants for homeownership counseling organizations—** - (1) **In general—** The Secretary of Housing and Urban Development may make grants— - (A) to [nonprofit organizations](#h-1) experienced in the provision of homeownership counseling to enable the organizations to provide homeownership counseling to [eligible homeowners](#c-6-B); 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-6-B). - (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](/usc/12/25b.md?p=a-3) public assistance programs, [mortgage](/usc/12/1707.md?p=a) 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— - (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](#c-6-D) 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](/usc/12/1707.md?p=a) involving principal obligations ([including](/usc/12/25b.md?p=a-3) 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](/usc/12/1709.md)]; and - (B) to inform the public of the availability of the homeownership counseling. - (4) **Eligibility for counseling—** A [homeowner](#c-6-D) shall be eligible for homeownership counseling under this subsection if— - (A) the [home loan](#c-6-C) is secured by property that is the principal residence (as defined by the Secretary) of the [homeowner](#c-6-D); - (B) the [home loan](#c-6-C) is not assisted under title V of the Housing Act of 1949 [[42 U.S.C. 1471](/usc/42/1471.md) et seq.]; and - (C) the [homeowner](#c-6-D) is, or is expected to be, unable to make payments, correct a [home loan](#c-6-C) delinquency within a reasonable time, or resume full [home loan](#c-6-C) payments due to a reduction in the income of the [homeowner](#c-6-D) because of— - (i) an involuntary loss of, or reduction in, the employment of the [homeowner](#c-6-D), the self-employment of the [homeowner](#c-6-D), or income from the pursuit of the occupation of the [homeowner](#c-6-D); - (ii) any similar loss or reduction experienced by [any person](/usc/12/1715z–4a.md?p=a-2) who contributes to the income of the [homeowner](#c-6-D); - (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](#c-6-D) or an immediate [family member](/usc/12/1707.md?p=e) of the [homeowner](#c-6-D) ([including](/usc/12/25b.md?p=a-3) the spouse, [child](/usc/12/1707.md?p=f), or parent for whom the [homeowner](#c-6-D) 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](#c-6-D) is no greater than the annual income established by the Secretary as being of low- or moderate-income. - (5) **Notification of availability of homeownership counseling—** - (A) **Notification of availability of homeownership counseling—** - (i) **Requirement—** Except as provided in [subparagraph (C)](#c-5-C), the [creditor](#c-6-A) of a loan (or proposed [creditor](#c-6-A)) shall provide notice under [clause (ii) to (I)](#c-5-A-ii..c-5-A-I) any [eligible homeowner](#c-6-B) who fails to pay any amount by the date the amount is due under a [home loan](#c-6-C), and (II) any applicant for a [mortgage](/usc/12/1707.md?p=a) described in [paragraph (4)](#c-4). - (ii) **Content—** Notification under this subparagraph shall— - (I) notify the [homeowner](#c-6-D) or [mortgage](/usc/12/1707.md?p=a) applicant of the availability of any homeownership counseling offered by the [creditor](#c-6-A) (or proposed [creditor](#c-6-A)); - (II) if provided to an eligible [mortgage](/usc/12/1707.md?p=a) applicant, [state](#h-2) that completion of a counseling program is required for insurance pursuant to section 203 of the National Housing Act [[12 U.S.C. 1709](/usc/12/1709.md)]; - (III) notify the [homeowner](#c-6-D) or [mortgage](/usc/12/1707.md?p=a) applicant of the availability of homeownership counseling provided by [nonprofit organizations](#h-1) approved by the Secretary and experienced in the provision of homeownership counseling, or provide the toll-free telephone number described in [subparagraph (D)(i)](#c-5-D-i); - (IV) notify the [homeowner](#c-6-D) 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](/usc/12/1707.md?p=a) 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](/usc/50/3901.md) et seq.], [including](/usc/12/25b.md?p=a-3) 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](/usc/12/1707.md?p=a) applicant of the availability of [mortgage](/usc/12/1707.md?p=a) software systems provided pursuant to [subsection (g)(3)](#g-3). - (B) **Deadline for notification—** The notification required in [subparagraph (A)](#c-5-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)](#c-5-A) shall not be required with respect to any loan for which the [eligible homeowner](#c-6-B) pays the amount overdue before the expiration of the 45-day period under [subparagraph (B)(ii)](#c-5-B-ii). - (D) **Administration and compliance—** The Secretary shall, to the extent of amounts approved in appropriation Acts, 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](#c-6-B) can obtain a list of [nonprofit organizations](#h-1), 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](#c-6-E) of the [homeowner](#c-6-D) is located; - (ii) monitor the compliance of [creditors](#c-6-A) with the requirements of subparagraphs [(A)](#c-5-A) and [(B)](#c-5-B); and - (iii) report to the Secretary not less than annually regarding the extent of compliance of [creditors](#c-6-A) with the requirements of subparagraphs [(A)](#c-5-A) and [(B)](#c-5-B). - (E) **Report—** The Secretary shall submit a report to the Congress not less than annually regarding the extent of compliance of [creditors](#c-6-A) with the requirements of subparagraphs [(A)](#c-5-A) and [(B)](#c-5-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](#c-6-A) who do not comply with such requirements. - (6) **Definitions—** For purposes of this subsection: - (A) The term “creditor” means a [person](/usc/12/5481.md?p=19) or entity that is [servicing](/usc/12/2605.md?p=i-3) a [home loan](#c-6-C) on behalf of itself or another [person](/usc/12/5481.md?p=19) or entity. - (B) The term “eligible homeowner” means a [homeowner](#c-6-D) eligible for counseling under [paragraph (4)](#c-4). - (C) The term “home loan” means a loan secured by a [mortgage](/usc/12/1707.md?p=a) or lien on [residential property](#c-6-E). - (D) The term “homeowner” means a [person](/usc/12/5481.md?p=19) who is obligated under a [home loan](#c-6-C). - (E) The term “residential property” means a 1-[family](/usc/12/1715z–1.md?p=j-2-A) residence, [including](/usc/12/25b.md?p=a-3) a 1-[family](/usc/12/1715z–1.md?p=j-2-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. - (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)](#c-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— - (A) to reduce [defaults](/usc/12/1467a.md?p=e-7-A) and foreclosures on [mortgage](/usc/12/1707.md?p=a) loans insured under the Federal Housing Administration single [family](/usc/12/1715z–1.md?p=j-2-A) [mortgage](/usc/12/1707.md?p=a) insurance program; - (B) to encourage responsible and prudent use of such federally insured [home](#d-9-I) [mortgages](/usc/12/1707.md?p=a); - (C) to assist homeowners with such federally insured [mortgages](/usc/12/1707.md?p=a) to retain the [homes](#d-9-I) they have purchased pursuant to such [mortgages](/usc/12/1707.md?p=a); and - (D) to encourage the availability and expansion of housing opportunities in connection with such federally insured [home](#d-9-I) [mortgages](/usc/12/1707.md?p=a). - (2) **Authority—** The [Secretary](#d-9-L) of Housing and Urban Development shall carry out a program to demonstrate the effectiveness of providing coordinated prepurchase counseling and foreclosure-prevention counseling to [first-time homebuyers](#d-9-H) and homeowners in avoiding [defaults](/usc/12/1467a.md?p=e-7-A) and foreclosures on [mortgages](/usc/12/1707.md?p=a) insured under the Federal Housing Administration single [family](/usc/12/1715z–1.md?p=j-2-A) [home](#d-9-I) [mortgage](/usc/12/1707.md?p=a) insurance program. - (3) **Grants—** Under the demonstration program under this subsection, the [Secretary](#d-9-L) shall make grants to qualified [nonprofit organizations](#h-1) under [paragraph (4)](#d-4) to enable the organizations to provide prepurchase counseling services to [eligible homebuyers](#d-9-F) and foreclosure-prevention counseling services to [eligible homeowners](#d-9-G), in [counseling target areas](#d-9-B). - (4) **Qualified nonprofit organizations—** The [Secretary](#d-9-L) shall select [nonprofit organizations](#h-1) 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 community-based prepurchase and foreclosure-prevention counseling under paragraphs [(5)](#d-5) and [(6)](#d-6) in a [counseling target area](#d-9-B). To be eligible for selection under this paragraph, a [nonprofit organization](#h-1) shall submit an application containing a proposal for providing counseling services in the form and manner required by the [Secretary](#d-9-L). - (5) **Prepurchase counseling—** - (A) **Mandatory participation—** Under the demonstration program, the [Secretary](#d-9-L) shall require any [eligible homebuyer](#d-9-F) who intends to purchase a [home](#d-9-I) located in a [counseling target area](#d-9-B) and who has applied for (as determined by the [Secretary](#d-9-L)) a [qualified mortgage](#d-9-K) (as such term is defined in [paragraph (9)](#d-9)) on such [home](#d-9-I) that involves a [downpayment](#d-9-E) of less than 10 percent of the principal obligation of the [mortgage](/usc/12/1707.md?p=a), to receive counseling prior to signing of a contract to purchase the [home](#d-9-I). 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](/usc/12/1707.md?p=a) amount that the homebuyer can afford; and - (iv) options, programs, and actions available to the homebuyer in the event of actual or potential delinquency or [default](/usc/12/1467a.md?p=e-7-A). - (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](#d-9-K); - (ii) the homebuyer is a [first-time homebuyer](#d-9-H); and - (iii) the [home](#d-9-I) to be purchased under the [qualified mortgage](#d-9-K) is located in a [counseling target area](#d-9-B). - (6) **Foreclosure-prevention counseling—** - (A) **Availability—** Under the demonstration program, the [Secretary](#d-9-L) shall make counseling available for [eligible homeowners](#d-9-G) who are 60 or more days delinquent with respect to a payment under a [qualified mortgage](#d-9-K) on a [home](#d-9-I) located within a [counseling target area](#d-9-B). The counseling shall include counseling with respect to options, programs, and actions available to the homeowner for resolving the delinquency or [default](/usc/12/1467a.md?p=e-7-A). - (B) **Notification of delinquency—** Under the demonstration program, the [Secretary](#d-9-L) shall require the [creditor](#d-9-C) of any [eligible homeowner](#d-9-G) who is delinquent (as described in [subparagraph (A)](#d-6-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](#d-9-B); and - (ii) notifying any counseling organization for the [counseling target area](#d-9-B) of the delinquency and the name, address, and phone number of the delinquent homeowner. - (C) **Coordination with emergency homeownership counseling program—** The [Secretary](#d-9-L) may coordinate the provision of assistance under [subsection (c)](#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](#d-9-I) owned by the homeowner is subject to a [qualified mortgage](#d-9-K); and - (ii) such [home](#d-9-I) is located in a [counseling target area](#d-9-B). - (7) **Scope of demonstration program—** - (A) **Designation of counseling target areas—** The [Secretary](#d-9-L) shall designate 3 [counseling target areas](#d-9-B) (as provided in [subparagraph (B)](#d-7-B)), which shall be located in not less than 2 separate [metropolitan areas](#d-9-J). The [Secretary](#d-9-L) shall provide for counseling under the demonstration program under this subsection with respect to only such [counseling target areas](#d-9-B). - (B) **Counseling target areas—** Each [counseling target area](#d-9-B) 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](/usc/12/221a.md?p=a), or region within a [metropolitan area](#d-9-J) (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](#h-2)); - (iii) in which the average age of existing housing is greater than 20 years; and - (iv) for which (I) the percentage of [qualified mortgages](#d-9-K) on [homes](#d-9-I) 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](#d-9-B), or (II) the number of [qualified mortgages](#d-9-K) originated on [homes](#d-9-I) in such area in the calendar year preceding the calendar year in which the area is selected as a [counseling target area](#d-9-B) exceeds 20 percent of the total number of [mortgages](/usc/12/1707.md?p=a) originated on residences in the area during such year. - (C) **Mortgage characteristics—** In designating [counseling target areas](#d-9-B) under [subparagraph (A)](#d-7-A), the [Secretary](#d-9-L) 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](#d-9-L) may expand any [counseling target area](#d-9-B) during the term of the demonstration program, if the [Secretary](#d-9-L) 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](#d-9-B) expanded and such census tract groups shall not be subject to the provisions of [subparagraph (B)](#d-7-B). - (E) **Designation of control areas—** For purposes of determining the effectiveness of counseling under the demonstration program, the [Secretary](#d-9-L) shall designate 3 [control areas](#d-9-A), each of which shall correspond to 1 of the [counseling target areas](#d-9-B) designated under [subparagraph (A)](#d-7-A). Each [control area](#d-9-A) shall be located in the [metropolitan area](#d-9-J) in which the corresponding [counseling target area](#d-9-B) is located, shall meet the requirements of [subparagraph (B)](#d-7-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](#d-9-A) 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](#d-9-B) complies. - (8) **Evaluation—** Each organization providing counseling under the demonstration program under this subsection shall maintain records with respect to each [eligible homebuyer](#d-9-F) and [eligible homeowner](#d-9-G) counseled and shall provide information with respect to such counseling as the [Secretary](#d-9-L) 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](#d-9-L) under [paragraph (7)(E)](#d-7-E). - (B) The term “counseling target area” means an area designated by the [Secretary](#d-9-L) under [paragraph (7)(A)](#d-7-A). - (C) The term “creditor” means a [person](/usc/12/5481.md?p=19) or entity that is [servicing](/usc/12/2605.md?p=i-3) a loan secured by a [qualified mortgage](#d-9-K) on behalf of itself or another [person](/usc/12/5481.md?p=19) 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](#d-9-I) and [family](/usc/12/1715z–1.md?p=j-2-A); 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](#d-9-I) 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)](#d-5-B). - (G) The term “eligible homeowner” means a homeowner that meets the requirements under [paragraph (6)(D)](#d-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 3-year period ending on the date of purchase of the [home](#d-9-I) pursuant to which counseling is provided under this subsection; - (ii) is a [displaced homemaker](#d-9-D) 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)](#d-9-H-i); or - (iii) is a [single parent](#d-9-M) 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)](#d-9-H-i). - (I) The term “home” [includes](/usc/12/25b.md?p=a-3) any dwelling or dwelling unit eligible for a [qualified mortgage](#d-9-K), and [includes](/usc/12/25b.md?p=a-3) 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](/usc/12/2279bb.md?p=3) of the [Office](/usc/12/2279bb.md?p=4) of Management and Budget. - (K) The term “qualified mortgage” means a [mortgage](/usc/12/1707.md?p=a) on a 1- to 4-[family](/usc/12/1715z–1.md?p=j-2-A) [home](#d-9-I) that is insured under title II of the National Housing Act [[12 U.S.C. 1707](/usc/12/1707.md) 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](#d-9-L) 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-1-iii), [(a)(2)](#a-2), [(a)(4)](#a-4), (c), or (d) of this section, or under [section 1701w of this title](/usc/12/1701w.md), 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)](#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](/usc/12/1707.md?p=a) delinquency and avoidance of eviction and [mortgage](/usc/12/1707.md?p=a) [default](/usc/12/1467a.md?p=e-7-A). - (3) **Requirement under HUD programs—** Any homeownership counseling or rental housing counseling (as such terms are defined in [subsection (g)(1)](#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. - (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)](#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. - (6) **Reviews—** The Secretary— - (A) may conduct periodic reviews; and - (B) shall conduct performance reviews of all organizations receiving assistance under this section that— - (i) consist of a review of the organization’s compliance with all program requirements; and - (ii) may take into account the organization’s aggregate counselor performance under [paragraph (7)(B)](#e-7-B). - (7) **Considerations—** - (A) **Covered mortgage loan defined—** In this paragraph, the term “covered mortgage loan” means any loan which is secured by a first or subordinate lien on residential real property ([including](/usc/12/25b.md?p=a-3) individual units of condominiums and housing cooperatives) designed principally for the occupancy of between 1 and 4 [families](/usc/12/1715z–1.md?p=j-2-A) that is— - (i) insured by the Federal Housing Administration under title II of the National Housing Act ([12 U.S.C. 1707](/usc/12/1707.md) et seq.); or - (ii) guaranteed under section [1715z–13a](/usc/12/1715z–13a.md) or [1715z–13b](/usc/12/1715z–13b.md) of this title. - (B) **Comparison—** For each counselor employed by an organization receiving assistance under this section for prepurchase housing counseling, the Secretary may consider the performance of the counselor compared to the [default](/usc/12/1467a.md?p=e-7-A) rate of all counseled borrowers of a [covered mortgage loan](#e-7-A) in comparable markets and such other factors as the Secretary determines appropriate to further the purposes of this section. - (8) **Certification—** If, based on the comparison required under [paragraph (7)(B)](#e-7-B), the Secretary determines that a counselor lacks competence to provide counseling in the areas described in [subsection (e)(2)](#e-2) and such action will not create a significant loss of capacity for housing counseling services in the service area, the Secretary may— - (A) require continued education coupled with successful completion of a probationary period; - (B) require retesting if the counselor continues to demonstrate a lack of competence under [paragraph (7)(B)](#e-7-B); and - (C) suspend an individual certification if a counselor fails to demonstrate competence after not fewer than 2 retesting opportunities under [subparagraph (B)](#e-8-B). - (f) **Homeownership and rental counselor training and certification programs—** - (1) **Establishment—** To the extent amounts are provided in appropriations Acts under [paragraph (7)](#f-7), the Secretary shall contract with an appropriate entity (which may be a [nonprofit organization](#h-1)) 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)](#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)](#f-2-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)](#f-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)](#e-2). The Secretary, in consultation with the entity selected under [paragraph (2)(B)](#f-2-B), shall establish the curriculum and standards for training counselors under the program. - (4) **Certification—** The entity selected under [paragraph (2)(B)](#f-2-B) shall administer the examination under [subsection (e)(2)](#e-2) and, on behalf of the Secretary, 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)](#f-2-B) may establish and impose reasonable fees for [participation](/usc/12/2206a.md?p=a-1) in the training provided under the program and for examination and certification under [subsection (e)(2)](#e-2), in an amount sufficient to cover any costs of such activities not covered with amounts provided under [paragraph (7)](#f-7). - (6) **Timing—** The entity selected under [paragraph (2)(B)](#f-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](#g-1-C) provided in connection with any program of the Department, [including](/usc/12/25b.md?p=a-3) all requirements, standards, and performance measures that relate to homeownership and [rental housing counseling](#g-1-C). - (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](/usc/12/1717.md?p=b-7-A-ii) loans. Such term [includes](/usc/12/25b.md?p=a-3) counseling related to homeownership and [residential mortgage](/usc/12/1717.md?p=b-7-A-ii) 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)](/usc/42/5305.md?p=a-20)); - (ii) in the United States Housing Act of 1937 [[42 U.S.C. 1437](/usc/42/1437.md) et seq.]— - (I) [section 9(e)](/usc/12/9.md) ([42 U.S.C. 1437g(e)](/usc/42/1437g.md?p=e)); - (II) [section 8(y)(1)(D)](/usc/12/8.md) ([42 U.S.C. 1437f(y)(1)(D)](/usc/42/1437f.md?p=y-1-D)); - (III) section 18(a)(4)(D) ([42 U.S.C. 1437p(a)(4)(D)](/usc/42/1437p.md?p=a-4-D)); - (IV) [section 23(c)(4)](/usc/12/23.md)[^1] ([42 U.S.C. 1437u(c)(4)](/usc/42/1437u.md)); - (V) [section 32(e)(4)](/usc/12/32.md) ([42 U.S.C. 1437z–4(e)(4)](/usc/42/1437z–4.md?p=e-4)); - (VI) section 33(d)(2)(B) ([42 U.S.C. 1437z–5(d)(2)(B)](/usc/42/1437z–5.md?p=d-2-B)); - (VII) sections [302(b)(6)](/usc/12/302.md) and [303(b)(7)](/usc/12/303.md) ([42 U.S.C. 1437aaa–1(b)(6)](/usc/42/1437aaa–1.md?p=b-6), 1437aaa–2(b)(7)); and - (VIII) [section 304(c)(4)](/usc/12/304.md) ([42 U.S.C. 1437aaa–3(c)(4)](/usc/42/1437aaa–3.md?p=c-4)); - (iii) [section 302(a)(4)](/usc/12/302.md) of the American Homeownership and Economic Opportunity Act of 2000 ([42 U.S.C. 1437f](/usc/42/1437f.md) note); - (iv) sections [12773(b)(2)](/usc/42/12773.md?p=b-2) and [12808(b)](/usc/42/12808.md?p=b) of title 42; - (v) this section and [section 1701w of this title](/usc/12/1701w.md); - (vi) [section 4110(d)(2)(G) of this title](/usc/12/4110.md?p=d-2-G); - (vii) sections [12872(b)(6)](/usc/42/12872.md?p=b-6), [12873(b)(7)](/usc/42/12873.md?p=b-7), [12874(c)(4)](/usc/42/12874.md?p=c-4), [12892(b)(6)](/usc/42/12892.md?p=b-6), and [12893(b)(6)](/usc/42/12893.md?p=b-6) of title 42; - (viii) section 11408(b)(1)(F)(iii)[^1] of [title 42](/usc/42.md); - (ix) [sections 202(3)](/usc/12/202.md)[^1] and 810(b)(2)(A)[^1] of the Native American Housing and Self-Determination Act of 1996 ([25 U.S.C. 4132(3)](/usc/25/4132.md?p=3), 4229(b)(2)(A)); - (x) in the National Housing Act [[12 U.S.C. 1701](/usc/12/1701.md) et seq.]— - (I) in [section 203](/usc/12/203.md) ([12 U.S.C. 1709](/usc/12/1709.md)), the penultimate undesignated paragraph of [paragraph (2)](#b-2) of subsection (b), [subsection (c)(2)(A)](#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](/usc/12/1715z–20.md)); - (xi) section 502(h)(4)(B) of the Housing Act of 1949 ([42 U.S.C. 1472(h)(4)(B)](/usc/42/1472.md?p=h-4-B)); - (xii) [section 1701z–7 of this title](/usc/12/1701z–7.md); and - (xiii) [section 1701z–16 of this title](/usc/12/1701z–16.md). - (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)](/usc/42/5305.md?p=a-20)); - (ii) in the United States Housing Act of 1937— - (I) [section 9(e)](/usc/12/9.md) ([42 U.S.C. 1437g(e)](/usc/42/1437g.md?p=e)); - (II) section 18(a)(4)(D) ([42 U.S.C. 1437p(a)(4)(D)](/usc/42/1437p.md?p=a-4-D)); - (III) [section 23(c)(4)](/usc/12/23.md)[^1] ([42 U.S.C. 1437u(c)(4)](/usc/42/1437u.md)); - (IV) [section 32(e)(4)](/usc/12/32.md) ([42 U.S.C. 1437z–4(e)(4)](/usc/42/1437z–4.md?p=e-4)); - (V) section 33(d)(2)(B) ([42 U.S.C. 1437z–5(d)(2)(B)](/usc/42/1437z–5.md?p=d-2-B)); and - (VI) [section 302(b)(6)](/usc/12/302.md) ([42 U.S.C. 1437aaa–1(b)(6)](/usc/42/1437aaa–1.md?p=b-6)); - (iii) [section 12773(b)(2) of title 42](/usc/42/12773.md?p=b-2); - (iv) this section; - (v) [section 12872(b)(6) of title 42](/usc/42/12872.md?p=b-6); - (vi) section 11408(b)(1)(F)(iii)[^1] of [title 42](/usc/42.md); - (vii) [sections 202(3)](/usc/12/202.md)[^1] and 810(b)(2)(A)[^1] of the Native American Housing and Self-Determination Act of 1996 ([25 U.S.C. 4132(3)](/usc/25/4132.md?p=3), 4229(b)(2)(A)); and - (viii) the rental assistance program under section 8 of the United States Housing Act of 1937 ([42 U.S.C. 1437f](/usc/42/1437f.md)). - (2) **Standards for materials—** The Secretary, in consultation with the advisory committee established under [subsection (g)(4)](#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](/usc/12/25b.md?p=a-3) any recipients of assistance pursuant to [subsection (a)(4)](#a-4). - (3) **Mortgage software systems—** - (A) **Certification—** The Secretary shall provide for the certification of various computer software programs for [consumers](/usc/12/5481.md?p=4) to use in evaluating different [residential mortgage](/usc/12/1717.md?p=b-7-A-ii) loan proposals. The Secretary shall require, for such certification, that the [mortgage](/usc/12/1707.md?p=a) software systems take into account— - (i) the [consumer](/usc/12/5481.md?p=4)’s financial situation and the cost of maintaining a home, [including](/usc/12/25b.md?p=a-3) insurance, taxes, and utilities; - (ii) the amount of time the [consumer](/usc/12/5481.md?p=4) 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](/usc/12/5481.md?p=4) 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](/usc/12/5481.md?p=4) during the [residential mortgage](/usc/12/1717.md?p=b-7-A-ii) loan application process, the Secretary shall arrange for the development by private sector software [companies](/usc/12/24a.md?p=g-1) of new [mortgage](/usc/12/1707.md?p=a) 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)](#e). - (C) **Availability—** After a period of initial availability under [subparagraph (B)](#g-3-B) as the Secretary considers appropriate, the Secretary shall take reasonable steps to make [mortgage](/usc/12/1707.md?p=a) software systems certified pursuant to this paragraph widely available through the Internet and at public locations, [including](/usc/12/25b.md?p=a-3) public libraries, senior-citizen centers, public housing sites, [offices](/usc/12/2279bb.md?p=4) of public housing [agencies](/usc/12/1422.md?p=12) 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 paragraph are made available in advance in appropriations Acts. - (4) **National public service multimedia campaigns to promote housing counseling—** - (A) **In general—** The [Director](/usc/12/2279bb.md?p=3) of Housing Counseling shall develop, implement, and conduct national public service multimedia campaigns designed to make [persons](/usc/12/5481.md?p=19) facing [mortgage](/usc/12/1707.md?p=a) foreclosure, [persons](/usc/12/5481.md?p=19) considering a subprime [mortgage](/usc/12/1707.md?p=a) loan to purchase a home, elderly [persons](/usc/12/5481.md?p=19), [persons](/usc/12/5481.md?p=19) who face language barriers, low-income [persons](/usc/12/5481.md?p=19), minorities, and other potentially vulnerable [consumers](/usc/12/5481.md?p=4) aware that it is advisable, before seeking or maintaining a [residential mortgage](/usc/12/1717.md?p=b-7-A-ii) loan, to obtain homeownership counseling from an unbiased and reliable sources[^2] and that such homeownership counseling is available, [including](/usc/12/25b.md?p=a-3) through programs sponsored by the Secretary of Housing and Urban Development. - (B) **Contact information—** Each segment of the multimedia campaign under [subparagraph (A)](#g-4-A) shall publicize the toll-free telephone number and website of the Department of Housing and Urban Development through which [persons](/usc/12/5481.md?p=19) seeking housing counseling can locate a housing counseling [agency](/usc/12/1422.md?p=12) in their [State](#h-2) that is certified by the Secretary of Housing and Urban Development and can provide advice on buying a home, renting, [defaults](/usc/12/1467a.md?p=e-7-A), foreclosures, [credit](/usc/12/5481.md?p=7) issues, and reverse [mortgages](/usc/12/1707.md?p=a). - (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](/usc/12/4702.md?p=10) appropriated pursuant to the authorization under [subparagraph (C)](#g-4-C) shall be used by the [Director](/usc/12/2279bb.md?p=3) 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](/usc/12/5481.md?p=19) living in such areas describing— - (I) tips on avoiding foreclosure rescue scams; - (II) tips on avoiding predatory lending [mortgage](/usc/12/1707.md?p=a) 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)](#g-4-D-i), the [Director](/usc/12/2279bb.md?p=3) of Housing Counseling shall also place an emphasis on serving communities that have a high percentage of retirement communities 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](/usc/12/2279bb.md?p=3) of the [Office](/usc/12/2279bb.md?p=4) 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](/usc/12/2279bb.md?p=3) of the [Office](/usc/12/2279bb.md?p=4) 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 low-income 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](/usc/12/2279bb.md?p=3) of Housing Counseling. - (5) **Education programs—** The Secretary shall provide advice and technical assistance to [States](#h-2), units of general local government, and [nonprofit organizations](#h-1) regarding the establishment and operation of, [including](/usc/12/25b.md?p=a-3) assistance with the development of content and materials for, educational programs to inform and educate [consumers](/usc/12/5481.md?p=4), particularly those most vulnerable with respect to [residential mortgage](/usc/12/1717.md?p=b-7-A-ii) loans (such as elderly [persons](/usc/12/5481.md?p=19), [persons](/usc/12/5481.md?p=19) facing language barriers, low-income [persons](/usc/12/5481.md?p=19), minorities, and other potentially vulnerable [consumers](/usc/12/5481.md?p=4)), regarding home [mortgages](/usc/12/1707.md?p=a), [mortgage](/usc/12/1707.md?p=a) 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](/usc/42/12704.md?p=5), except that [subparagraph (D)](/usc/42/12704.md?p=5-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, township, borough, village, or other general purpose political subdivision of a [State](#h-2). - (4) **HUD-approved counseling agency—** The term “HUD-approved counseling agency” means a private or public [nonprofit organization](#h-1) that is— - (A) exempt from taxation under [section 501(c) of title 26](/usc/26/501.md?p=c); 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](/usc/12/1422.md?p=12), or instrumentality specifically created under [State](#h-2) statute that is authorised to finance activities designed to provide housing and related facilities throughout an entire [State](#h-2) 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](#i-4) uses all amounts of [covered assistance](#i-4) 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](#i-4), to agree to comply with such requirements regarding [covered assistance](#i-4) 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](#i-4) 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](#i-4) is determined by the Secretary to have used any [covered assistance](#i-4) 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](#i-4). The remedies under this paragraph are in addition to any other remedies that may be available under law. - (3) **Termination of assistance—** - (A) **In general—** The Secretary may deny renewal of [covered assistance](#i-4) to an organization or entity receiving [covered assistance](#i-4) if the Secretary determines that the organization or entity, or the individual through which the organization or entity provides counseling, is not in compliance with program requirements— - (i) based on the performance review described in [subsection (e)(6)](#e-6); and - (ii) in accordance with regulations issued by the Secretary. - (B) **Notice—** The Secretary shall give an organization or entity receiving [covered assistance](#i-4) not less than 60 days prior written notice of any denial of renewal under this paragraph, and the determination of renewal shall not be finalized until the end of that notice period. - (C) **Informal conference—** If requested in writing by the organization or entity within the notice period described in [subparagraph (B)](#i-3-B), the organization or entity shall be entitled to an informal conference with the Deputy Assistant Secretary of Housing Counseling on behalf of the Secretary at which the organization or entity may present for consideration specific factors that the organization or entity believes were beyond the [control](/usc/12/24a.md?p=g-1) of the organization or entity and that caused the failure to comply with program requirements, such as a lack of lender or [servicer](/usc/12/4901.md?p=16) coordination or communication with housing counseling [agencies](/usc/12/1422.md?p=12) and individual counselors. - (4) **Covered assistance—** For purposes of this subsection, the term “covered assistance” means any grant or other financial assistance provided under this section. - (j) **Offering foreclosure mitigation counseling—** - (1) **Covered mortgage loan defined—** In this subsection, the term “covered mortgage loan” means any loan which is secured by a first or subordinate lien on residential real property ([including](/usc/12/25b.md?p=a-3) individual units of condominiums and housing cooperatives) or stock or membership in a cooperative ownership housing [corporation](/usc/12/2277a.md?p=2) designed principally for the occupancy of between 1 and 4 [families](/usc/12/1715z–1.md?p=j-2-A) that is— - (A) insured by the Federal Housing Administration under title II of the National Housing Act ([12 U.S.C. 1707](/usc/12/1707.md) et seq.); - (B) guaranteed under section [1715z–13a](/usc/12/1715z–13a.md) or [1715z–13b](/usc/12/1715z–13b.md) of this title; - (C) made, guaranteed, or insured by the Department of Veterans Affairs; or - (D) made, guaranteed, or insured by the Department of Agriculture. - (2) **Opportunity for borrowers—** A borrower with respect to a [covered mortgage loan](#j-1) who is 30 days or more delinquent on payments for the [covered mortgage loan](#j-1) shall be given an opportunity to [participate](/usc/12/2206a.md?p=a-1) in available housing counseling. - (3) **Cost—** If the requirements of sections 202(a)(3) and 205(f) of the National Housing Act ([12 U.S.C. 1708(a)(3)](/usc/12/1708.md?p=a-3), 1711(f)) are met, the fair market rate cost of counseling for delinquent borrowers described in [paragraph (2)](#j-2) with respect to a [covered mortgage loan](#j-1) described in [paragraph (1)(A)](#j-1-A) shall be paid for by the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10), as authorized under section 203(r)(4) of the National Housing Act ([12 U.S.C. 1709(r)(4)](/usc/12/1709.md?p=r-4)). # §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)](#a-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](/usc/12/1707.md?p=b) approved for [participation](/usc/12/2206a.md?p=a-1) in the [mortgage](/usc/12/1707.md?p=a) insurance programs under title II of the National Housing Act [[12 U.S.C. 1707](/usc/12/1707.md) et seq.] shall provide prospective homebuyers, at first contact, whether upon pre-qualification, pre-approval, or initial application, the materials specified in subparagraphs [(A)](#a-1-A), [(B)](#a-1-B), and [(D)](#a-1-D) of subsection (a)(1). - (c) **Requirements for HUD-approved counseling agencies—** Each counseling [agency](/usc/12/1422.md?p=12) 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, the materials specified in subparagraphs [(C)](#a-1-C) and [(D)](#a-1-D) of subsection (a)(1). - (d) **Training—** Training provided the Department of Housing and Urban Development for housing counseling [agencies](/usc/12/1422.md?p=12), 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](/usc/12/25b.md?p=a-3) 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. # §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](/usc/12/1707.md?p=d) and local legal organizations on the basis of a competitive process. For purposes of this subsection “[State](/usc/12/1707.md?p=d) and local legal organizations” are those [State](/usc/12/1707.md?p=d) and local organizations whose primary business or mission is to provide legal assistance. - (c) **Priority to certain areas—** In allocating amounts in accordance with [subsection (b)](#b), the Secretary shall give priority consideration to [State](/usc/12/1707.md?p=d) and local legal organizations that are operating in the 125 metropolitan statistical areas (as that term is defined by the [Director](/usc/12/2279bb.md?p=3) of the [Office](/usc/12/2279bb.md?p=4) of Management and Budget) with the highest home foreclosure rates. - (d) **Legal assistance—** - (1) **In general—** Any [State](/usc/12/1707.md?p=d) or local legal organization that receives financial assistance pursuant to this section may use such amounts only to assist— - (A) homeowners of [owner](/usc/12/4146.md?p=2)-occupied homes with [mortgages](/usc/12/1707.md?p=a) in [default](/usc/12/1467a.md?p=e-7-A), [in danger of default](/usc/12/1467a.md?p=e-7-A), 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](/usc/12/1707.md?p=d) 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](/usc/12/4702.md?p=10) provided to a [State](/usc/12/1707.md?p=d) 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](/usc/12/1707.md?p=a)-related [default](/usc/12/1467a.md?p=e-7-A), 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](/usc/12/2279bb.md?p=4); or - (B) any organization which employs [applicable individuals](#e-2). - (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](/usc/12/2279bb.md?p=4). - (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. # §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](/usc/12/1715z–1.md?p=j-2-A) through such means as— - (A) encouraging the investment in, and sponsoring of, housing for lower income [families](/usc/12/1715z–1.md?p=j-2-A); - (B) encouraging the establishment of programs of assistance and counseling to lower income [families](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–1.md?p=j-2-A); and - (D) providing grants and loans to public and private organizations carrying out homeownership and housing opportunity programs for lower income [families](/usc/12/1715z–1.md?p=j-2-A) to help cover some of the expenses of such programs. - (2) The Foundation shall be deemed to be a [corporation](/usc/12/2277a.md?p=2) without [members](/usc/12/1426a.md?p=g-1) 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](/usc/12/1422.md?p=12) 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](/usc/12/2279bb.md?p=4) in the District of Columbia. - (3) No part of the [net earnings](/usc/12/1441.md?p=k-2) of the Foundation shall inure to the benefit of any private [person](/usc/12/5481.md?p=19), and no substantial part of its activities shall be devoted to attempting to influence legislation. The Foundation shall not [participate](/usc/12/2206a.md?p=a-1) or intervene in any political campaign on behalf of any candidate for public [office](/usc/12/2279bb.md?p=4). 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](/usc/12/1422.md?p=12) and programs, and in carrying out its functions the Foundation is authorized to contract with individuals, private [corporations](/usc/12/2277a.md?p=2), organizations, and [associations](/usc/12/1828.md?p=s-4-E-i), and with [agencies](/usc/12/1422.md?p=12) of the Federal, [State](/usc/12/1707.md?p=d), and local governments. - (6) The Foundation is authorized to receive donations and grants from individuals and from public and private organizations, foundations, and [agencies](/usc/12/1422.md?p=12). - (7) The Foundation may use only donated [funds](/usc/12/4702.md?p=10), or [funds](/usc/12/4702.md?p=10) 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; by-laws—** - (1) The Foundation shall have a [Board](/usc/12/221a.md?p=a) of [Directors](/usc/12/2279bb.md?p=3) consisting of eighteen [members](/usc/12/1426a.md?p=g-1), 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](/usc/12/1426a.md?p=g-1) shall be, ex officio, the Secretary of Housing and Urban Development, the Secretary of Agriculture, and the [Director](/usc/12/2279bb.md?p=3) of the [Office](/usc/12/2279bb.md?p=4) of Economic Opportunity. The President shall appoint one of the fifteen appointed [members](/usc/12/1426a.md?p=g-1) to serve as Chairman of the [Board](/usc/12/221a.md?p=a) during his term of [office](/usc/12/2279bb.md?p=4) as a [member](/usc/12/1426a.md?p=g-1). - (2) Within thirty days after August 1, 1968, the President shall appoint the fifteen appointed [members](/usc/12/1426a.md?p=g-1) of the [Board](/usc/12/221a.md?p=a). Not more than five of such [members](/usc/12/1426a.md?p=g-1) 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](/usc/12/1707.md?p=d) or local government. Each appointed [member](/usc/12/1426a.md?p=g-1) of the [Board](/usc/12/221a.md?p=a) shall hold [office](/usc/12/2279bb.md?p=4) for a term of three years, except that (A) any [member](/usc/12/1426a.md?p=g-1) 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](/usc/12/1426a.md?p=g-1) first taking [office](/usc/12/2279bb.md?p=4) 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](/usc/12/1426a.md?p=g-1) of the [Board](/usc/12/221a.md?p=a), however appointed, shall be eligible for reappointment, but at no time shall there be more than five [members](/usc/12/1426a.md?p=g-1) of the [Board](/usc/12/221a.md?p=a) who at the time of their appointment or reappointment were full-time officers or employees of the Federal Government or of any [State](/usc/12/1707.md?p=d) or local government. - (3) Appointed [members](/usc/12/1426a.md?p=g-1) of the [Board](/usc/12/221a.md?p=a) who are not employees of the Federal Government, while attending meetings or conferences of the [Board](/usc/12/221a.md?p=a) or otherwise serving on business of the [Board](/usc/12/221a.md?p=a), shall be entitled to receive compensation at rates fixed by the President, but not exceeding $100 per day, [including](/usc/12/25b.md?p=a-3) travel time, and while so serving away from their homes or regular places of business they may be allowed travel expenses, [including](/usc/12/25b.md?p=a-3) per diem in lieu of subsistence, as authorized by [section 5703 of title 5](/usc/5/5703.md) for [persons](/usc/12/5481.md?p=19) in the Government service employed intermittently. - (4) The [Board](/usc/12/221a.md?p=a) shall appoint an Executive [Director](/usc/12/2279bb.md?p=3) of the Foundation. The Executive [Director](/usc/12/2279bb.md?p=3) shall be the chief [executive officer](/usc/12/1831o.md?p=b-2-H) of the Foundation and shall serve at the pleasure of the [Board](/usc/12/221a.md?p=a), and all other [executive officers](/usc/12/1831o.md?p=b-2-H) and employees of the [Board](/usc/12/221a.md?p=a) shall be responsible to him. The [Board](/usc/12/221a.md?p=a) 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](/usc/12/2279bb.md?p=4). - (5) The [Board](/usc/12/221a.md?p=a) 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](/usc/12/1715z–1.md?p=j-2-A). 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](/usc/12/25b.md?p=a-3) the establishment of local development [funds](/usc/12/4702.md?p=10) for financing housing for lower income [families](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1707.md?p=a) financing, insurance, and other requirements or aids necessary for conducting programs of housing construction, rehabilitation, or improvement for lower income [families](/usc/12/1715z–1.md?p=j-2-A); - (E) arrange for, or provide on a limited basis, training for [persons](/usc/12/5481.md?p=19) in the skills needed in administering programs of homeownership and housing opportunity for lower income [families](/usc/12/1715z–1.md?p=j-2-A); - (F) encourage research and innovation, and collect and make available such information as may be desirable to further the purposes of this section, [including](/usc/12/25b.md?p=a-3) 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](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–1.md?p=j-2-A), counseling and similar activities designed to advise lower income [families](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–1.md?p=j-2-A); - (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](/usc/12/1715z–1.md?p=j-2-A) for whom housing is being provided, in order to enable those [families](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/4702.md?p=10) requested are not otherwise available from Federal sources: Provided, That a grant or loan under this subsection may be provided to help cover that portion of the cost of an eligible activity not covered by Federal [funds](/usc/12/4702.md?p=10). - (3) The Foundation shall encourage cooperation between public and private organizations carrying out programs of homeownership and housing opportunity for lower income [families](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1422.md?p=12) engaged in providing homeownership and housing opportunities for lower income [families](/usc/12/1715z–1.md?p=j-2-A). - (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](/usc/12/1715z–1.md?p=j-2-A), together with such recommendations as it deems appropriate. - (2) Whenever in its judgement the general unavailability of [mortgage](/usc/12/1707.md?p=a) [funds](/usc/12/4702.md?p=10) is sufficiently serious to deter the Foundation from carrying out its objective of expanding homeownership and housing opportunities for lower income [families](/usc/12/1715z–1.md?p=j-2-A), the Foundation shall, in its annual report or in a separate report to the President and the Congress, [state](/usc/12/1707.md?p=d) its findings and make such recommendations for alternate means of financing housing for such [families](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/2279bb.md?p=4) in accordance with the principles 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](/usc/12/2279bb.md?p=4) 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](/usc/12/51c.md), and surplus or deficit; a statement of sources and application of [funds](/usc/12/4702.md?p=10); 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](/usc/12/4702.md?p=10) of the Foundation shall be deposited, to the extent practicable, in accounts with [financial institutions](/usc/12/1715k.md?p=h-1-C) which are actively engaged in making loans or are otherwise carrying on activities in furtherance of homeownership and housing opportunities for lower income [families](/usc/12/1715z–1.md?p=j-2-A). - (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. # §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](/usc/12/1715z–1.md?p=j-2-A); 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](/usc/12/1715z–1.md?p=j-2-A), 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](/usc/12/1707.md?p=d) 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 program referred to in [subsection (a)](#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](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1707.md?p=a) insurance under [section 1715x(a)(2) of this title](/usc/12/1715x.md?p=a-2), 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)](#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](/usc/40/ch1..11.md) of title 40 and division C (except sections [3302](/usc/12/3302.md), [3307(e)](/usc/12/3307.md), 3501(b), 3509, [3906](/usc/12/3906.md), [4710](/usc/12/4710.md), and [4711](/usc/12/4711.md)) of subtitle I of [title 41](/usc/41.md), any land which is excess property within the meaning of [chapters 1 to 11](/usc/40/ch1..11.md) of title 40 and division C (except sections [3302](/usc/12/3302.md), [3307(e)](/usc/12/3307.md), 3501(b), 3509, [3906](/usc/12/3906.md), [4710](/usc/12/4710.md), and [4711](/usc/12/4711.md)) of subtitle I of [title 41](/usc/41.md) 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](/usc/12/25b.md?p=a-3) evaluations of each such project in accordance with [subsection (c)](#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](/usc/12/1715z–1.md?p=j-2-A) through the use of technologies the efficacy of which has been demonstrated under this section. # §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. # §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](/usc/12/1701z–1.md), 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](/usc/12/1701z–1.md) 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](/usc/12/4702.md?p=10) and authority available to him under the provisions of [section 1701z–1 of this title](/usc/12/1701z–1.md) 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](/usc/12/1701z–1.md) et seq.], to [acquire](/usc/12/1467a.md?p=a-1-J), 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](/usc/40/ch1..11.md) of title 40 and division C (except sections [3302](/usc/12/3302.md), [3307(e)](/usc/12/3307.md), 3501(b), 3509, [3906](/usc/12/3906.md), [4710](/usc/12/4710.md), and [4711](/usc/12/4711.md)) of subtitle I of [title 41](/usc/41.md), any land which is excess property within the meaning of [chapters 1 to 11](/usc/40/ch1..11.md) of title 40 and division C (except sections [3302](/usc/12/3302.md), [3307(e)](/usc/12/3307.md), 3501(b), 3509, [3906](/usc/12/3906.md), [4710](/usc/12/4710.md), and [4711](/usc/12/4711.md)) of subtitle I of [title 41](/usc/41.md) and which is determined by the Secretary to be suitable in furtherance of the purposes of [subsection (b)](#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](/usc/12/1701z–1.md), 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](/usc/12/1701z–1.md), 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](/usc/39/3204.md) or section 4154 of such title with respect to any period before the effective date of such [section 3204](/usc/12/3204.md) 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](/usc/12/1701z–1.md) et seq.], [including](/usc/12/25b.md?p=a-3) 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](/usc/12/1422.md?p=12) of Federal, [State](/usc/12/1707.md?p=d), 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](/usc/12/1701z–1.md) either directly or, without regard to [section 6101 of title 41](/usc/41/6101.md), 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](/usc/31/3324.md) 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](/usc/12/1701z–1.md), the Secretary shall utilize to the fullest extent feasible the available facilities of other Federal departments and [agencies](/usc/12/1422.md?p=12), and shall consult with, and make recommendations to, such departments and [agencies](/usc/12/1422.md?p=12). The Secretary may enter into working agreements with such departments and [agencies](/usc/12/1422.md?p=12) and contract or make grants on their behalf or have such departments and [agencies](/usc/12/1422.md?p=12) contract or make grants on his behalf and such departments and [agencies](/usc/12/1422.md?p=12) 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](/usc/12/1701z–1.md) et seq.] under cooperative agreements with industry and labor, [agencies](/usc/12/1422.md?p=12) of [State](/usc/12/1707.md?p=d) or local governments, educational institutions, and other organizations. He may enter into contracts with and receive [funds](/usc/12/4702.md?p=10) from such [agencies](/usc/12/1422.md?p=12), institutions, and organizations, and may exercise any of the other powers vested in him by [section 1701c(c) of this title](/usc/12/1701c.md?p=c). - (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](/usc/12/1821.md?p=w-2-B). 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](/usc/12/5481.md?p=19) or establishment can be identified, except with the consent of such [person](/usc/12/5481.md?p=19) or establishment. # §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](/usc/12/1715z–1.md?p=j-2-A) in meeting rental or homeownership expenses. - (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](/usc/42/1437.md) et seq.] to carry out the purposes of this section. The Secretary may contract with public or private [agencies](/usc/12/1422.md?p=12) for the performance of administrative functions in connection with the programs authorized by this section. - (2) Notwithstanding the provisions of [paragraph (1)](#b-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)](/usc/42/1437c.md?p=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. # §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](/usc/12/1701z–1.md), 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 recreational or community facilities [including](/usc/12/25b.md?p=a-3) 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](/usc/12/2277a.md?p=2) 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](/usc/12/2277a.md?p=2), nonprofit [corporation](/usc/12/2277a.md?p=2), or [association](/usc/12/1828.md?p=s-4-E-i), cooperative or public body or [agency](/usc/12/1422.md?p=12), or other approved purchaser or lessee, or (2) a purchaser who would be eligible for a [mortgage](/usc/12/1707.md?p=a) insured under section [1715l(d)(3)](/usc/12/1715l.md) or [(d)(4)](/usc/12/1715l.md), [section 1715l(h)(1)](/usc/12/1715l.md), section [1715z(i)](/usc/12/1715z.md?p=i) or [(j)(1)](/usc/12/1715z.md?p=j-1), or [section 1715z–1 of this title](/usc/12/1715z–1.md), 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](/usc/12/1715z–1.md?p=j-2-A) 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 one-third 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](/usc/12/1456.md), [1465](/usc/12/1465.md), and [1466](/usc/12/1466.md)[^1] of [title 42](/usc/42.md), and section 1452b[^1] of [title 42](/usc/42.md), 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](/usc/42.md). # §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](/usc/12/1701z–1.md), 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](/usc/12/25b.md?p=a-3) demonstrations of new housing design or structure involving the use of solar energy). Demonstrations carried out under this section should involve both single [family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1707.md?p=a) 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. # §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](/usc/12/1701z–1.md), the Secretary may undertake special demonstrations to determine the housing design, the housing structure, and the housing-related facilities, and amenities most effective or appropriate to meet the needs of groups with special housing needs [including](/usc/12/25b.md?p=a-3) the elderly, the handicapped, the displaced, single individuals, broken [families](/usc/12/1715z–1.md?p=j-2-A), 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)](#c), not more than $10,000,000 from amounts approved in appropriation Acts shall be available for research under this section. # §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](/usc/12/1701z–1.md), 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 pre-purchase, [default](/usc/12/1467a.md?p=e-7-A) and delinquency counseling and related services to [owners](/usc/12/4146.md?p=2) and purchasers of single-[family](/usc/12/1715z–1.md?p=j-2-A) dwellings insured or to be insured under the unsubsidized [mortgage](/usc/12/1707.md?p=a) insurance programs of the National Housing Act [[12 U.S.C. 1701](/usc/12/1701.md) 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](/usc/12/25b.md?p=a-3) an estimate as to the date when a final report on the results of such demonstrations will be made available to the Congress. # §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](#i-2) [energy conservation measures](#i-3) and [approved](#i-2) [renewable-resource energy measures](#i-3) 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](/usc/12/4146.md?p=2) 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](/usc/12/4146.md?p=2) 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](#i-3); - (4) make use of such [State](/usc/12/1707.md?p=d) 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](/usc/42/6321.md) et seq.]; - (5) consider, with respect to various forms of assistance and procedures for their application, (A) the extent to which [energy conservation measures](#i-3) and [renewable-resource energy measures](#i-3) 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](/usc/12/5481.md?p=19), and (F) the extent to which fraudulent practices can be prevented; and - (6) consult with the [Administrator](#i-1), the Secretary of Housing and Urban Development, and the heads of such other [Federal agencies](/usc/12/3101.md?p=5) 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](#i-2) [energy conservation measure](#i-3), (i) $400, or (ii) 20 per centum of the cost of installing or otherwise implementing such measure; and - (B) with respect to an [approved](#i-2) [renewable-resource energy measure](#i-3), (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](/usc/12/1715z–1.md?p=j-2-A) income for the preceding taxable year is less than the median [family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/5481.md?p=19) shall be eligible for both financial assistance under this section and a [credit](/usc/12/5481.md?p=7) against income tax for the same [energy conservation measure](#i-3) or [renewable-resource energy measure](#i-3). - (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](#i-3) on such measure’s meeting performance standards for reliability and efficiency and such certification procedures as the Secretary may, in consultation with the [Administrator](#i-1), the Secretary of Housing and Urban Development, and other appropriate [Federal agencies](/usc/12/3101.md?p=5), prescribe for the purpose of protecting [consumers](/usc/12/5481.md?p=4). - (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](/usc/12/3101.md?p=5) or with such [State](/usc/12/1707.md?p=d) 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](/usc/12/1707.md?p=d) 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](/usc/42/6321.md) 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 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)](#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](#i-3) or a [renewable-resource energy measure](#i-3), means any such measure which is included on a list of such measures which is published by the [Administrator](#i-1) 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)](/usc/42/6325.md?p=e-1)]. The [Administrator](#i-1) may, by rule, require that an [energy audit](#i-3) be conducted as a condition of obtaining assistance under this section for a [renewable-resource energy measure](#i-3). - (3) The terms “energy audit”, “energy conservation measure”, and “renewable-resource energy measure” have the meanings given the terms in [section 361(c)](/usc/12/361.md) of the Energy Policy and Conservation Act [[42 U.S.C. 6321(c)](/usc/42/6321.md?p=c)]. - (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. # §1701z–9. Expansion of home ownership opportunities in urban areas In carrying out activities under [section 1701z–1 of this title](/usc/12/1701z–1.md), 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](/usc/12/25b.md?p=a-3), but not limited to, the conversion of multifamily housing properties to condominium or cooperative ownership by individuals and [families](/usc/12/1715z–1.md?p=j-2-A). # §1701z–10. Model rehabilitation guidelines in inspection and approval of rehabilitated properties; report to Congress - (a) - (1) The Secretary shall develop model rehabilitation guidelines for the voluntary adoption by [States](/usc/12/1707.md?p=d) and communities to be used in conjunction with existing building codes by [State](/usc/12/1707.md?p=d) 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](/usc/12/1422.md?p=12) and officials of [State](/usc/12/1707.md?p=d) and local governments, representatives of the building industry, and [consumer](/usc/12/5481.md?p=4) 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](/usc/12/1707.md?p=d) 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](/usc/12/1707.md?p=d) and local governments to adopt guidelines or their equivalents, and (2) recommendations for further action. # §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. # §1701z–11. Management and disposition of multifamily housing projects - (a) **Goals—** The [Secretary](#b-9) of Housing and Urban Development shall manage or dispose of [multifamily housing projects](#b-1) that are owned by the [Secretary](#b-9) or that are subject to a [mortgage](/usc/12/1707.md?p=a) held by the [Secretary](#b-9) in a manner that— - (1) is consistent with the National Housing Act [[12 U.S.C. 1701](/usc/12/1701.md) 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](/usc/12/5481.md?p=19); - (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](/usc/12/5481.md?p=19); - (F) minimizing the need to demolish [multifamily housing projects](#b-1); - (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](#b-9) 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](#b-9) was, assisted or insured under the National Housing Act [[12 U.S.C. 1701](/usc/12/1701.md) et seq.], or was subject to a loan under [section 1701q of this title](/usc/12/1701q.md). - (2) **Subsidized project—** The term “subsidized project” means a [multifamily housing project](#b-1) that, immediately prior to the assignment of the [mortgage](/usc/12/1707.md?p=a) on such project to, or the acquisition of such [mortgage](/usc/12/1707.md?p=a) by, the [Secretary](#b-9), was receiving any of the following types of assistance: - (A) Below market interest rate [mortgage](/usc/12/1707.md?p=a) insurance under the proviso of section 221(d)(5) of the National Housing Act [[12 U.S.C. 1715l(d)(5)](/usc/12/1715l.md)]. - (B) Interest reduction payments made in connection with [mortgages](/usc/12/1707.md?p=a) insured under section 236 of the National Housing Act [[12 U.S.C. 1715z–1](/usc/12/1715z–1.md)]. - (C) Direct loans made under [section 1701q of this title](/usc/12/1701q.md). - (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](/usc/12/1701s.md)], - (ii) additional assistance payments under section 236(f)(2) of the National Housing Act [[12 U.S.C. 1715z–1(f)(2)](/usc/12/1715z–1.md?p=f-2)], - (iii) housing assistance payments made under section 23 of the United States Housing Act of 1937 [[42 U.S.C. 1421b](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s1421b))] (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](/usc/42/1437f.md)] (excluding payments made for tenant-based assistance under [section 8](/usc/12/8.md)), 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](#b-1) owned by the [Secretary](#b-9) that was a [subsidized project](#b-2) immediately prior to its acquisition by the [Secretary](#b-9). - (4) **Unsubsidized project—** The term “unsubsidized project” means a [multifamily housing project](#b-1) owned by the [Secretary](#b-9) that is not a [subsidized project](#b-2) or a [formerly subsidized project](#b-3). - (5) **Affordable—** A unit shall be considered affordable if— - (A) for units occupied— - (i) by [very low-income families](#b-6), the rent does not exceed 30 percent of 50 percent of the area median income, as determined by the [Secretary](#b-9), with adjustments for smaller and larger [families](/usc/12/1715z–1.md?p=j-2-A); and - (ii) by [low-income families](#b-6) other than [very low-income families](#b-6), the rent does not exceed 30 percent of 80 percent of the area median income, as determined by the [Secretary](#b-9), with adjustments for smaller and larger [families](/usc/12/1715z–1.md?p=j-2-A); or - (B) the unit, or the [family](/usc/12/1715z–1.md?p=j-2-A) residing in the unit, is receiving assistance under section 8 of the United States Housing Act of 1937 [[42 U.S.C. 1437f](/usc/42/1437f.md)]. - (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)](/usc/42/1437a.md?p=b)]. - (7) **Preexisting tenant—** The term “preexisting tenant” means, with respect to a [multifamily housing project](#b-1) acquired pursuant to this section by a purchaser other than the [Secretary](#b-9) at foreclosure or after sale by the [Secretary](#b-9), a [family](/usc/12/1715z–1.md?p=j-2-A) 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](#b-9). - (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](#b-9) may dispose of a [multifamily housing project](#b-1) owned by the [Secretary](#b-9) on a negotiated, competitive bid, or other basis, on such terms as the [Secretary](#b-9) deems appropriate considering the low-income character of the project and consistent with the goals in [subsection (a)](#a), only to a purchaser determined by the [Secretary](#b-9) to be capable of— - (A) satisfying the conditions of the disposition plan developed under [paragraph (2)](#c-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](/usc/12/1707.md?p=d) or local laws, rules, ordinances, or regulations relating to the physical condition of the housing and any such standards established by the [Secretary](#b-9); - (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](#b-9) may determine. - (2) **Disposition plan—** - (A) **In general—** Prior to the sale of a [multifamily housing project](#b-1) that is owned by the [Secretary](#b-9), the [Secretary](#b-9) shall develop an initial disposition plan for the project that specifies the minimum terms and conditions of the [Secretary](#b-9) for disposition of the project, the initial sales price that is acceptable to the [Secretary](#b-9), and the assistance that the [Secretary](#b-9) 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](#b-1) located in a [market area](#b-8) in which at least 1 other [multifamily housing project](#b-1) owned by the [Secretary](#b-9) is located, the [Secretary](#b-9) may coordinate the disposition of all such [multifamily housing projects](#b-1) located within the same [market area](#b-8) to the extent and in such manner as the [Secretary](#b-9) determines appropriate to carry out the goals under [subsection (a)](#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](/usc/42/1437f.md)], the occupancy profile of the project ([including](/usc/12/25b.md?p=a-3) [family](/usc/12/1715z–1.md?p=j-2-A) size and income levels for tenant [families](/usc/12/1715z–1.md?p=j-2-A)), and any other factors that the [Secretary](#b-9) considers appropriate. - (D) **Community and tenant input—** In carrying out this section, the [Secretary](#b-9) 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](#b-1) to existing tenant organizations with demonstrated capacity, to public or [nonprofit entities](/usc/12/1441a–1.md?p=2) that represent or are affiliated with existing tenant organizations, or to other public or [nonprofit entities](/usc/12/1441a–1.md?p=2). - (E) **Technical assistance—** To carry out the procedures developed under [subparagraph (D)](#c-2-D), the [Secretary](#b-9) 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](/usc/12/4141.md) et seq.], subtitle B of title IV of the Cranston-Gonzalez National Affordable Housing Act [[42 U.S.C. 12871](/usc/42/12871.md) 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](#b-9) shall— - (A) prior to foreclosing on any [mortgage](/usc/12/1707.md?p=a) held by the [Secretary](#b-9) on any [multifamily housing project](#b-1), 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](#b-1) through a foreclosure sale only to a purchaser that the [Secretary](#b-9) 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](/usc/12/1707.md?p=d) or local laws, rules, ordinances, or regulations relating to the physical condition of the housing and any such standards established by the [Secretary](#b-9). - (d) **Management and maintenance of properties—** - (1) **Contracting for management services—** In carrying out this section, the [Secretary](#b-9) may— - (A) contract for management services for a [multifamily housing project](#b-1) that is owned by the [Secretary](#b-9) (or for which the [Secretary](#b-9) is [mortgagee](/usc/12/1707.md?p=b) in possession) with for-profit and [nonprofit entities](/usc/12/1441a–1.md?p=2) and [public agencies](/usc/12/1821.md?p=w-2-B) ([including](/usc/12/25b.md?p=a-3) public housing authorities) on a negotiated, competitive bid, or other basis at a price determined by the [Secretary](#b-9) to be reasonable, with a manager the [Secretary](#b-9) 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](/usc/12/1707.md?p=d) or local laws, rules, ordinances, or regulations relating to the physical condition of the project and any such standards established by the [Secretary](#b-9); - (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](#b-9) may determine; and - (B) require the [owner](/usc/12/4146.md?p=2) of a [multifamily housing project](#b-1) that is subject to a [mortgage](/usc/12/1707.md?p=a) held by the [Secretary](#b-9) to contract for management services for the project in the manner described in [subparagraph (A)](#d-1-A). - (2) **Maintenance of projects owned by Secretary—** In the case of [multifamily housing projects](#b-1) that are owned by the [Secretary](#b-9) (or for which the [Secretary](#b-9) is [mortgagee](/usc/12/1707.md?p=b) in possession), the [Secretary](#b-9) 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 [State](/usc/12/1707.md?p=d) or local laws, rules, ordinances, or regulations relating to the physical condition of the housing and any such standards established by the [Secretary](#b-9); - (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](#b-1) that is subject to a [mortgage](/usc/12/1707.md?p=a) held by the [Secretary](#b-9), the [Secretary](#b-9) shall require the [owner](/usc/12/4146.md?p=2) of the project to carry out the requirements of [paragraph (2)](#d-2). - (e) **Required assistance—** In disposing of multifamily housing property under this section, consistent with the goal of [subsection (a)(3)(A)](#a-3-A), the [Secretary](#b-9) shall take, separately or in combination with other actions under this subsection or [subsection (f)](#f), one or more of the following actions: - (1) **Contract with owner for project-based assistance—** In the case of [multifamily housing projects](#b-1) that are acquired by a purchaser other than the [Secretary](#b-9) at foreclosure or after sale by the [Secretary](#b-9), the [Secretary](#b-9) may enter into contracts under section 8 of the United States Housing Act of 1937 [[42 U.S.C. 1437f](/usc/42/1437f.md)] (to the extent budget authority is available) with [owners](/usc/12/4146.md?p=2) 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](#b-3) referred to in [subparagraphs (A) through (C)](#b-2-A..b-2-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)](#b-2-D) before acquisition or foreclosure, unless the [Secretary](#b-9) acts pursuant to the provisions of [subparagraph (C)](#e-1-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](/usc/12/1715z–1.md?p=j-2-A) who is not eligible for assistance under such [section 8](/usc/12/8.md) [[42 U.S.C. 1437f](/usc/42/1437f.md)], the [owner](/usc/12/4146.md?p=2) shall lease the available unit to a [family](/usc/12/1715z–1.md?p=j-2-A) eligible for assistance under such [section 8](/usc/12/8.md); and - (iii) the [Secretary](#b-9) shall take actions to ensure that any unit in any such project that does not otherwise receive project-based assistance under this subparagraph remains available and affordable for the [remaining useful life](/usc/12/4112.md?p=c-1) of the project, as defined by the [Secretary](#b-9); to carry out this clause, the [Secretary](#b-9) 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](#b-3) referred to in [subsection (b)(2)(D)](#b-2-D) that is not subject to [subparagraph (A)](#e-1-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](#b-9), by an assistance contract under any of the provisions referred to in such subsection, unless the [Secretary](#b-9) acts pursuant to provisions of [subparagraph (C)](#e-1-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](/usc/12/1715z–1.md?p=j-2-A) who is not eligible for assistance under such [section 8](/usc/12/8.md) [[42 U.S.C. 1437f](/usc/42/1437f.md)], the [owner](/usc/12/4146.md?p=2) shall lease the available unit to a [family](/usc/12/1715z–1.md?p=j-2-A) eligible for assistance under such [section 8](/usc/12/8.md). - (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](/usc/42/1437f.md)] in accordance with subparagraph [(A)(i)](#e-1-A-i) or [(B)(i)](#e-1-B-i) for a project, the [Secretary](#b-9) may, for certain units in [unsubsidized projects](#b-4) located within the same [market area](#b-8) 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](#b-6) for the [remaining useful life](/usc/12/4112.md?p=c-1) of the project (as defined by the [Secretary](#b-9)), or - (II) provide project-based assistance under [section 8](/usc/12/8.md) for such units to be occupied by only [very low-income](/usc/12/4502.md?p=24-B) [persons](/usc/12/5481.md?p=19), but only if the requirements under [clause (ii)](#e-1-C-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)](#e-1-A-i) or [(B)(i)](#e-1-B-i), the [Secretary](#b-9) shall make available tenant-based assistance under [section 8](/usc/12/8.md) [[42 U.S.C. 1437f](/usc/42/1437f.md)] to [low-income families](#b-6) 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)](#e-1-C-i) shall be at least equivalent to the number of units otherwise required to be assisted with project-based assistance under [section 8](/usc/12/8.md) in accordance with subparagraph [(A)(i)](#e-1-A-i) or [(B)(i)](#e-1-B-i). - (D) **Unsubsidized projects—** Notwithstanding actions taken pursuant to [subparagraph (C)](#e-1-C), in the case of [unsubsidized projects](#b-4), the contract shall be sufficient to provide— - (i) project-based rental assistance for all units that are covered, or were covered immediately 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)](/usc/42/1437f.md?p=b-2)] (as in effect before October 1, 1983); - (II) the property disposition program under [section 8(b)](/usc/12/8.md) of such Act; - (III) the project-based certificate program under [section 8](/usc/12/8.md) of such Act; - (IV) the moderate rehabilitation program under [section 8(e)(2)](/usc/12/8.md) of such Act; - (V) [section 23](/usc/12/23.md) of such Act [[42 U.S.C. 1421b](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s1421b))] (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](/usc/12/1701s.md)]; 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](/usc/12/1715z–1.md?p=j-2-A) that are [preexisting tenants](#b-7) of the project in units that, immediately before foreclosure or acquisition of the project by the [Secretary](#b-9), 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 tenant-based assistance—** In the case of [multifamily housing projects](#b-1) that are acquired by a purchaser other than the [Secretary](#b-9) at foreclosure or after sale by the [Secretary](#b-9), the [Secretary](#b-9) may enter into annual contribution contracts with public housing [agencies](/usc/12/1422.md?p=12) to provide tenant-based assistance under section 8 of the United States Housing Act of 1937 [[42 U.S.C. 1437f](/usc/42/1437f.md)] on behalf of all [low-income families](#b-6) who are otherwise eligible for assistance in accordance with subparagraph [(A)](#e-1-A), [(B)](#e-1-B), or [(D)](#e-1-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](#b-9) may not take action under this paragraph unless the [Secretary](#b-9) determines that there is available in the area an adequate supply of habitable, affordable housing for [very low-income families](#b-6) and other [low-income families](#b-6) using tenant-based assistance. - (B) **Limitation for subsidized and formerly subsidized projects—** The [Secretary](#b-9) may not take actions under this paragraph in connection with units in subsidized or [formerly subsidized projects](#b-3) for more than 10 percent of the aggregate number of units in such projects disposed of by the [Secretary](#b-9) in any fiscal year. - (3) **Other assistance—** - (A) **In general—** In accordance with the authority provided under the National Housing Act [[12 U.S.C. 1701](/usc/12/1701.md) et seq.], the [Secretary](#b-9) may provide other assistance pursuant to [subsection (f)](#f) to the [owners](/usc/12/4146.md?p=2) of [multifamily housing projects](#b-1) that are acquired by a purchaser other than the [Secretary](#b-9) at foreclosure, or after sale by the [Secretary](#b-9), on terms that ensure that— - (i) at least the units in the project otherwise required to receive project-based assistance pursuant to subparagraphs [(A)](#e-1-A), [(B)](#e-1-B), or [(D)](#e-1-D) of paragraph (1) are available to and affordable by low-income [persons](/usc/12/5481.md?p=19); and - (ii) for the [remaining useful life](/usc/12/4112.md?p=c-1) of the project, as defined by the [Secretary](#b-9), there shall be in force such use or rent restrictions as the [Secretary](#b-9) 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](#b-6) residing in the project who are otherwise required (pursuant to subparagraph [(A)](#e-1-A), [(B)](#e-1-B), or [(D)](#e-1-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](/usc/42/1437f.md)] exceed the amount payable as rent under section 3(a) of the United States Housing Act of 1937 [[42 U.S.C. 1437a(a)](/usc/42/1437a.md?p=a)], the [Secretary](#b-9) shall provide tenant-based assistance under [section 8](/usc/12/8.md) of such Act to such [families](/usc/12/1715z–1.md?p=j-2-A). - (f) **Discretionary assistance—** In addition to the actions required under [subsection (e)](#e) for a subsidized, formerly subsidized, or unsubsidized [multifamily housing project](#b-1), the [Secretary](#b-9) may, pursuant to the disposition plan and the goals in [subsection (a)](#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](/usc/12/1701.md) et seq.], the [Secretary](#b-9) 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](/usc/42/1437f.md)], the occupancy profile of the project ([including](/usc/12/25b.md?p=a-3) [family](/usc/12/1715z–1.md?p=j-2-A) size and income levels for tenant [families](/usc/12/1715z–1.md?p=j-2-A)), and any other factors that the [Secretary](#b-9) considers appropriate. - (2) **Use and rent restrictions—** The [Secretary](#b-9) 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](/usc/12/4502.md?p=24-B) [persons](/usc/12/5481.md?p=19) for the [remaining useful life](/usc/12/4112.md?p=c-1) of the property, as defined by the [Secretary](#b-9). - (3) **Short-term loans—** The [Secretary](#b-9) may provide short-term loans to facilitate the sale of a [multifamily housing project](#b-1) if— - (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](#b-9) determines, based upon documentation provided to the [Secretary](#b-9), 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](#b-9); 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](/usc/2/661a.md). - (4) **Up-front grants—** If the [Secretary](#b-9) determines that action under this paragraph is more cost-effective than establishing rents pursuant to [subsection (h)(2)](#h-2), the [Secretary](#b-9) 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](/usc/42/1437f.md)] to (in addition to providing project-based [section 8](/usc/12/8.md) 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](#b-9) may make available tenant-based assistance under section 8 of the United States Housing Act of 1937 to [families](/usc/12/1715z–1.md?p=j-2-A) residing in a [multifamily housing project](#b-1) 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](#b-7), the [Secretary](#b-9) may allow not more than— - (i) 10 percent of the total number of units in [multifamily housing projects](#b-1) that are disposed of by the [Secretary](#b-9) during any fiscal year to be made available for uses other than rental or cooperative uses, [including](/usc/12/25b.md?p=a-3) low-income homeownership opportunities, or in any particular project, community space, [office](/usc/12/2279bb.md?p=4) space for tenant or housing-related [service providers](/usc/12/5481.md?p=26-A) 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](#b-1) that are disposed of by the [Secretary](#b-9) during any fiscal year to be used in any manner, if the [Secretary](#b-9) 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](#b-9) may take actions under [subparagraph (A)](#f-6-A) only if— - (i) tenant-based rental assistance under section 8 of the United States Housing Act of 1937 [[42 U.S.C. 1437f](/usc/42/1437f.md)] is made available to each eligible [family](/usc/12/1715z–1.md?p=j-2-A) residing in the project that is displaced as a result of such actions; and - (ii) the [Secretary](#b-9) determines that sufficient habitable, affordable rental housing is available in the [market area](#b-8) 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)](#e), the [Secretary](#b-9) may, pursuant to an agreement under [subparagraph (B)](#f-7-B), transfer a [multifamily housing project](#b-1)— - (i) to a public housing [agency](/usc/12/1422.md?p=12) 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](/usc/12/1701q.md) or under section 811 of the Cranston-Gonzalez National Affordable Housing Act [[42 U.S.C. 8013](/usc/42/8013.md)] 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)](#f-7-A) shall— - (i) contain such terms, conditions, and limitations as the [Secretary](#b-9) determines appropriate, [including](/usc/12/25b.md?p=a-3) requirements to ensure use of the project as public housing, supportive housing under [section 1701q of this title](/usc/12/1701q.md), or supportive housing under section 811 of the Cranston-Gonzalez National Affordable Housing Act [[42 U.S.C. 8013](/usc/42/8013.md)], 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](/usc/42/1437f.md)], the [Secretary](#b-9) may provide project-based assistance in accordance with [subsection (e)](#e) of this section to support the rebuilding of a [multifamily housing project](#b-1) 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](#b-9) 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)](#j-2) shall apply to any tenants of the project who are displaced. - (9) **Emergency assistance funds—** The [Secretary](#b-9) may make arrangements with [State](/usc/12/1707.md?p=d) [agencies](/usc/12/1422.md?p=12) and units of general local government of [States](/usc/12/1707.md?p=d) receiving emergency assistance under part A of title IV of the Social Security Act [[42 U.S.C. 601](/usc/42/601.md) et seq.] for the provision of assistance under such Act [[42 U.S.C. 301](/usc/42/301.md) et seq.] on behalf of eligible [families](/usc/12/1715z–1.md?p=j-2-A) who would reside in any [multifamily housing projects](#b-1). - (g) **Protection for unassisted very low-income tenants—** For each [multifamily housing project](#b-1) disposed of under this section, the [Secretary](#b-9) shall require that, for any [very low-income family](/usc/12/4568.md?p=f-5) who is a [preexisting tenant](#b-7) 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)](/usc/42/1437a.md?p=b)]) of the [family](/usc/12/1715z–1.md?p=j-2-A)— - (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](/usc/12/1715z–1.md?p=j-2-A) may not be increased above the rent charged immediately before acquisition; - (2) such [family](/usc/12/1715z–1.md?p=j-2-A) 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)](/usc/42/1437d.md?p=c-4-A), 1437f(d)(1)(A), and 1437f(o)(6)(A)]; and - (3) notice shall be provided to such [family](/usc/12/1715z–1.md?p=j-2-A), not later than the date of the acquisition of the project by the purchaser— - (A) of the requirements under paragraphs [(1)](#g-1) and [(2)](#g-2); and - (B) that, after the expiration of the period under [paragraph (1)](#g-1), the rent for the unit occupied by the [family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/42/1437f.md)] 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](#b-9) finds that, based on the rental charges and financing for the [multifamily housing project](#b-1) 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](#b-9) 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)](/usc/42/1437a.md?p=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](#b-9) to be otherwise in compliance with this section. - (2) **Contract rent—** The [Secretary](#b-9) 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](#b-1) and do not exceed the percentage of the existing housing fair market rentals for the [market area](#b-8) in which the project assisted under the contract is located as determined by the [Secretary](#b-9) under section 8(c) of the United States Housing Act of 1937 [[42 U.S.C. 1437f(c)](/usc/42/1437f.md?p=c)]. - (i) **Right of first refusal for local and State government agencies—** - (1) **Notification—** Not later than 30 days after the [Secretary](#b-9) [acquires](/usc/12/1467a.md?p=a-1-J) title to a [multifamily housing project](#b-1), the [Secretary](#b-9) shall notify the appropriate unit of general local government ([including](/usc/12/25b.md?p=a-3) public housing [agencies](/usc/12/1422.md?p=12)) and [State](/usc/12/1707.md?p=d) [agency](/usc/12/1422.md?p=12) or [agencies](/usc/12/1422.md?p=12) designated by the chief [executive officer](/usc/12/1831o.md?p=b-2-H) of the [State](/usc/12/1707.md?p=d) 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](/usc/12/1422.md?p=12) or [agencies](/usc/12/1422.md?p=12) 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](#b-9) may not sell or offer to sell the [multifamily housing project](#b-1) other than to a party notified under [paragraph (1)](#i-1), unless the unit of general local government and the designated [State](/usc/12/1707.md?p=d) [agency](/usc/12/1422.md?p=12) or [agencies](/usc/12/1422.md?p=12) notify the [Secretary](#b-9) that they will not make an offer to purchase the project. The [Secretary](#b-9) 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](#b-9). - (3) **Procedure—** The [Secretary](#b-9) 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](#b-1) that is owned by the [Secretary](#b-9) (or for which the [Secretary](#b-9) is [mortgagee](/usc/12/1707.md?p=b) in possession), the [Secretary](#b-9) 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](#b-1) that is subject to a [mortgage](/usc/12/1707.md?p=a) held by the [Secretary](#b-9), the [Secretary](#b-9) shall require the [owner](/usc/12/4146.md?p=2) of the project to carry out the requirements of this paragraph, if the [Secretary](#b-9) has authorized the demolition of, repairs to, or conversion in the use of such [multifamily housing project](#b-1). - (2) **Rights of displaced tenants—** The [Secretary](#b-9) shall ensure for any such tenant (who continues to meet applicable qualification standards) the right— - (A) to return, whenever possible, to a repaired or rebuilt unit; - (B) to occupy a unit in another [multifamily housing project](#b-1) owned by the [Secretary](#b-9); - (C) to obtain housing assistance under the United States Housing Act of 1937 [[42 U.S.C. 1437](/usc/42/1437.md) et seq.]; or - (D) to receive any other available similar relocation assistance as the [Secretary](#b-9) determines to be appropriate. - (k) **Mortgage and project sales—** - (1) **In general—** The [Secretary](#b-9) may not approve the sale of any loan or [mortgage](/usc/12/1707.md?p=a) held by the [Secretary](#b-9) ([including](/usc/12/25b.md?p=a-3) any loan or [mortgage](/usc/12/1707.md?p=a) owned by the Government National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i)) on any [subsidized project](#b-2) or [formerly subsidized project](#b-3), 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](/usc/12/1707.md?p=c) of such loan or [mortgage](/usc/12/1707.md?p=a), 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](/usc/12/1707.md?p=a) was made or insured prior to the assignment of the loan or [mortgage](/usc/12/1707.md?p=a) on such project to the [Secretary](#b-9). - (2) **Sale of certain projects—** The [Secretary](#b-9) may not approve the sale of any [subsidized project](#b-2)— - (A) that is subject to a [mortgage](/usc/12/1707.md?p=a) held by the [Secretary](#b-9), or - (B) if the sale transaction involves the provision of any additional subsidy [funds](/usc/12/4702.md?p=10) by the [Secretary](#b-9) or a recasting of the [mortgage](/usc/12/1707.md?p=a), 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](/usc/12/1707.md?p=c) of the loan or [mortgage](/usc/12/1707.md?p=a), 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](/usc/12/1707.md?p=a) 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](#b-9) may carry out negotiated sales of [mortgages](/usc/12/1707.md?p=a) held by the [Secretary](#b-9), without the competitive selection of purchasers or intermediaries, to units of general local government or [State](/usc/12/1707.md?p=d) [agencies](/usc/12/1422.md?p=12), or groups of investors that include at least one such unit of general local government or [State](/usc/12/1707.md?p=d) [agency](/usc/12/1422.md?p=12), if the negotiations are conducted with such [agencies](/usc/12/1422.md?p=12), except that— - (A) the terms of any such sale shall include the agreement of the purchasing [agency](/usc/12/1422.md?p=12) or unit of local government or [State](/usc/12/1707.md?p=d) [agency](/usc/12/1422.md?p=12) to act as [mortgagee](/usc/12/1707.md?p=b) or [owner](/usc/12/4146.md?p=2) of a beneficial interest in such [mortgages](/usc/12/1707.md?p=a), in a manner consistent with maintaining the projects that are subject to such [mortgages](/usc/12/1707.md?p=a) for occupancy by the general tenant group intended to be served by the applicable [mortgage](/usc/12/1707.md?p=a) insurance program, [including](/usc/12/25b.md?p=a-3), to the extent the [Secretary](#b-9) determines appropriate, authorizing such unit of local government or [State](/usc/12/1707.md?p=d) [agency](/usc/12/1422.md?p=12) 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](/usc/12/1707.md?p=a) shall be, in the determination of the [Secretary](#b-9), the best prices that may be obtained for such [mortgages](/usc/12/1707.md?p=a) from a unit of general local government or [State](/usc/12/1707.md?p=d) [agency](/usc/12/1422.md?p=12), consistent with the expectation and intention that the projects financed will be retained for use under the applicable [mortgage](/usc/12/1707.md?p=a) insurance program for the life of the initial [mortgage](/usc/12/1707.md?p=a) insurance contract. - (4) **Sale of mortgages covering unsubsidized projects—** Notwithstanding any other provision of law, the [Secretary](#b-9) may sell [mortgages](/usc/12/1707.md?p=a) held on projects that are not subsidized or [formerly subsidized projects](#b-3) on such terms and conditions as the [Secretary](#b-9) may prescribe. - (5) **Mortgage sale demonstration—** The [Secretary](#b-9) may carry out a demonstration to test the feasibility of restructuring and disposing of troubled multifamily [mortgages](/usc/12/1707.md?p=a) held by the [Secretary](#b-9) through the establishment of partnerships with public, private, and [nonprofit entities](/usc/12/1441a–1.md?p=2). - (6) **Project sale demonstration—** The [Secretary](#b-9) may carry out a demonstration to test the feasibility of disposing of troubled [multifamily housing projects](#b-1) that are owned by the [Secretary](#b-9) through the establishment of partnerships with public, private, and [nonprofit entities](/usc/12/1441a–1.md?p=2). - (l) **Report to Congress—** Not later than June 1 of each year, the [Secretary](#b-9) shall submit to the Congress a report describing the status of [multifamily housing projects](#b-1) owned by or subject to [mortgages](/usc/12/1707.md?p=a) held by the [Secretary](#b-9), 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](/usc/12/1707.md?p=d) 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](/usc/12/1707.md?p=a); - (5) the physical condition of the HUD-held and HUD-owned inventory; - (6) the occupancy profile of the projects, [including](/usc/12/25b.md?p=a-3) the income, [family](/usc/12/1715z–1.md?p=j-2-A) 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](#b-9) is [mortgagee](/usc/12/1707.md?p=b) in possession; - (9) the number of projects sold in foreclosure sales; - (10) the number of HUD-owned projects sold; - (11) a description of actions undertaken pursuant to this section, [including](/usc/12/25b.md?p=a-3) a description of the effectiveness of such actions and any impediments to the disposition or management of [multifamily housing projects](#b-1); - (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](#b-1); - (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](/usc/12/1707.md?p=d); and - (14) a description of the activities carried out under [subsection (i)](#i) during the preceding year. # §1701z–12. Housing access The Secretary shall require any purchaser of a [multifamily housing project](/usc/12/1701z–11.md?p=b-1) 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](/usc/42/1437f.md) to a holder of a certificate of eligibility under that section solely because of such prospective tenant’s status as a certificate holder. # §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](#b-2) as a desirable source of energy for residential single-[family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/42.md), [section 1701q of this title](/usc/12/1701q.md), and [section 1437f of title 42](/usc/42/1437f.md), shall permit the installation of [solar energy systems](#b-2) 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)](#b), the Secretary shall take such steps as may be necessary to encourage the installation of cost-effective and economically feasible [solar energy systems](#b-2) 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](/usc/12/25b.md?p=a-3) the implementation of a plan of action to publicize the availability and feasibility of [solar energy systems](#b-2) 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)](#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](#b-2) in the programs and activities referred to in [subsection (b)](#b). # §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. # §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](/usc/12/2279bb.md?p=4) 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. # §1701z–16. Energy efficient mortgages pilot program - (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](#c-3) pilot program in 5 [States](/usc/12/1707.md?p=d), to promote the purchase of existing energy efficient [residential buildings](#c-4) and the installation of cost-effective improvements in existing [residential buildings](#c-4). - (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](/usc/12/1707.md) et seq.] in accordance with the applicable requirements. - (B) **Approval—** The [mortgagor](/usc/12/1707.md?p=b)’s [base loan](#c-1) application shall be approved if the [mortgagor](/usc/12/1707.md?p=b)’s income and [credit](/usc/12/5481.md?p=7) 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)](/usc/12/203.md)) of the National Housing Act ([12 U.S.C. 1709(b)(2)(A)](/usc/12/1709.md?p=b-2-A);[^1] or - (ii) 2 percent of the limit established under [section 203(b)(2)(B)](/usc/12/203.md) of such Act [[12 U.S.C. 1709(b)(2)(B)](/usc/12/1709.md?p=b-2-B)]. - (D) **Limitation—** In any fiscal year, the aggregate number of [mortgages](/usc/12/1707.md?p=a) insured pursuant to this section may not exceed 5 percent of the aggregate number of [mortgages](/usc/12/1707.md?p=a) for 1- to 4-[family](/usc/12/1715z–1.md?p=j-2-A) residences insured by the Secretary of Housing and Urban Development under title II of the National Housing Act ([12 U.S.C. 1707](/usc/12/1707.md) et seq.) during the preceding fiscal year. - (3) **Authority for mortgagees—** In granting [mortgages](/usc/12/1707.md?p=a) under the pilot program established pursuant to this subsection, the Secretary shall grant [mortgagees](/usc/12/1707.md?p=b) 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](/usc/12/1707.md) et seq.] by an amount not to exceed 100 percent of the cost of the cost-effective energy efficiency improvements, if the [mortgagor](/usc/12/1707.md?p=b)’s request to add the cost of such improvements is received by the [mortgagee](/usc/12/1707.md?p=b) prior to funding of the [base loan](#c-1); - (B) to hold in escrow all [funds](/usc/12/4702.md?p=10) provided to the [mortgagor](/usc/12/1707.md?p=b) to undertake the energy efficiency improvements until the efficiency improvements are actually installed; and - (C) to transfer or sell the [energy efficient mortgage](#c-3) to the appropriate secondary market [agency](/usc/12/1422.md?p=12), after the [mortgage](/usc/12/1707.md?p=a) is issued, but before the energy efficiency improvements are actually installed. - (4) **Promotion of pilot program—** The Secretary shall encourage [participation](/usc/12/2206a.md?p=a-1) in the [energy efficient mortgage](#c-3) pilot program by— - (A) making available information to lending [agencies](/usc/12/1422.md?p=12) and other appropriate authorities regarding the availability and benefits of [energy efficient mortgages](#c-3); - (B) requiring [mortgagees](/usc/12/1707.md?p=b) and designated lending authorities to provide written notice of the availability and benefits of the pilot program to [mortgagors](/usc/12/1707.md?p=b) applying for financing in those [States](/usc/12/1707.md?p=d) designated by the Secretary as participating under the pilot program; and - (C) requiring each applicant for a [mortgage](/usc/12/1707.md?p=a) insured under title II of the National Housing Act [[12 U.S.C. 1707](/usc/12/1707.md) et seq.] in those [States](/usc/12/1707.md?p=d) 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](#c-3). - (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](/usc/12/1422.md?p=12), [real estate](/usc/12/1715z–20.md?p=b-2) [companies](/usc/12/24a.md?p=g-1), and other appropriate organizations regarding the benefits of [energy efficient mortgages](#c-3) 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](#c-3) 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](#c-3) 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](/usc/12/1707.md?p=a) loan for a [residential building](#c-4) eligible for insurance under title II of the National Housing Act [[12 U.S.C. 1707](/usc/12/1707.md) et seq.] or [title 38](/usc/38.md) 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](#c-4), improvements that result in the total present value cost of the improvements ([including](/usc/12/25b.md?p=a-3) 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](#c-1). 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](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i) and the Federal Home Loan [Mortgage](/usc/12/1707.md?p=a) [Corporation](/usc/12/2277a.md?p=2), or by other technically accurate methods. - (3) The term “energy efficient mortgage” means a [mortgage](/usc/12/1707.md?p=a) on a [residential building](#c-4) that recognizes the energy savings of a home that has cost-effective energy saving construction or improvements ([including](/usc/12/25b.md?p=a-3) 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](#c-1). - (4) The term “residential building” means any attached or unattached single [family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1707.md?p=a). 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](/usc/5/553.md) (notwithstanding subsections [(a)(2)](/usc/5/553.md?p=a-2), [(b)(B)](/usc/5/553.md?p=b-B), and [(d)(3)](/usc/5/553.md?p=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. # §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](/usc/42/12704.md). - (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](/usc/12/4702.md?p=1) of the Environmental Protection [Agency](/usc/12/1422.md?p=12), shall consult with the [residential mortgage](/usc/12/1717.md?p=b-7-A-ii) industry and [States](/usc/12/1707.md?p=d) to develop recommendations to eliminate the barriers that exist to increasing the availability, use, and purchase of [energy efficient mortgages](#a), [including](/usc/12/25b.md?p=a-3) such barriers as— - (A) the lack of reliable and accessible information on such [mortgages](/usc/12/1707.md?p=a), [including](/usc/12/25b.md?p=a-3) estimated energy savings and other benefits of energy efficient housing; - (B) the confusion regarding underwriting requirements and differences among various [energy efficient mortgage](#a) programs; - (C) the complex and time consuming process of securing such [mortgages](/usc/12/1707.md?p=a); - (D) the lack of publicly available research on the [default](/usc/12/1467a.md?p=e-7-A) risk of such [mortgages](/usc/12/1707.md?p=a); 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)](#b-1); and - (B) [includes](/usc/12/25b.md?p=a-3) 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](/usc/12/4702.md?p=1) of the Environmental Protection [Agency](/usc/12/1422.md?p=12), and [State](/usc/12/1707.md?p=d) Energy and Housing Finance [Directors](/usc/12/2279bb.md?p=3), shall carry out an education and outreach campaign to inform and educate [consumers](/usc/12/5481.md?p=4), home builders, residential lenders, and other [real estate](/usc/12/1715z–20.md?p=b-2) professionals on the availability, benefits, and advantages of— - (A) improved energy efficiency in housing; and - (B) [energy efficient mortgages](#a). - (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)](#c-1). # §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](/usc/12/1422.md?p=12), accept and utilize such voluntary and uncompensated services, utilize such Federal officers and employees, and, with the consent of the [State](/usc/12/1707.md?p=d), such [State](/usc/12/1707.md?p=d) 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](/usc/12/25b.md?p=a-3) 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](/usc/12/4702.md?p=10). All such compensation, expenses, and allowances shall be paid out of [funds](/usc/12/4702.md?p=10) 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](/usc/12/4702.md?p=10) 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 payment of insurance claims and other than expenditures ([including](/usc/12/25b.md?p=a-3) services on a contract or fee basis, but not [including](/usc/12/25b.md?p=a-3) 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](/usc/12/4702.md?p=10) 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](/usc/12/1707.md?p=d) or Federal. # [§1702a. Repealed. June 28, 1955, ch. 189, § 12(c)(14), 69 Stat. 182 — repealed] # §1703. Insurance of financial institutions (a) Authority to insure [financial institutions](/usc/12/1715k.md?p=h-1-C) The Secretary is authorized and empowered upon such terms and conditions as he may prescribe, to insure [banks](/usc/12/221a.md?p=a), trust [companies](/usc/12/24a.md?p=g-1), personal finance [companies](/usc/12/24a.md?p=g-1), [mortgage](/usc/12/1707.md?p=a) [companies](/usc/12/24a.md?p=g-1), building and loan [associations](/usc/12/1828.md?p=s-4-E-i), installment lending [companies](/usc/12/24a.md?p=g-1) and other such [financial institutions](/usc/12/1715k.md?p=h-1-C), which the Secretary finds to be qualified by experience or facilities and approves as eligible for [credit](/usc/12/5481.md?p=7) insurance, against losses which they may sustain as a result of loans and advances of [credit](/usc/12/5481.md?p=7), and purchases of obligations representing loans and advances of [credit](/usc/12/5481.md?p=7), 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](/usc/12/25b.md?p=a-3) 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](/usc/12/4146.md?p=2) 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](/usc/12/5481.md?p=7); and for the purpose of (ii) financing the purchase of a manufactured home to be used by the [owner](/usc/12/4146.md?p=2) 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](/usc/12/25b.md?p=a-3) 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](/usc/12/4146.md?p=2) 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 criteria; 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](/usc/12/1715k.md?p=h-1-C) on loans, advances of [credit](/usc/12/5481.md?p=7), and purchases made by such [financial institution](/usc/12/1715k.md?p=h-1-C) for such purposes exceed 10 per centum of the total amount of such loans, advances of [credit](/usc/12/5481.md?p=7), and purchases. With respect to any loan, advance of [credit](/usc/12/5481.md?p=7), or purchase, the amount of any claim for loss on any such individual loan, advance of [credit](/usc/12/5481.md?p=7) 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](/usc/12/1422.md?p=12) 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](/usc/12/5481.md?p=7) 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. 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](/usc/42/5401.md) 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, construction of additional or accessory dwelling units, as defined by the Secretary, 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](/usc/42/6862.md?p=9); 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](/usc/42/4851b.md). (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](/usc/12/1715k.md?p=h-1-C) with respect to any obligation representing any such loan, advance of [credit](/usc/12/5481.md?p=7), or purchase by it if the amount of such loan, advance of [credit](/usc/12/5481.md?p=7), or purchase exceeds— (A) $75,000 if made for the purpose of financing alterations, repairs, and improvements upon or in connection with an existing single-[family](/usc/12/1715z–1.md?p=j-2-A) structure, [including](/usc/12/25b.md?p=a-3) a manufactured home; (B) $150,000 or an average amount of $37,500 per [family](/usc/12/1715z–1.md?p=j-2-A) unit if made for the purpose of financing the alteration, repair, improvement, or conversion of an existing structure used or to be used as a dwelling for two or more [families](/usc/12/1715z–1.md?p=j-2-A); (C)(i) $106,405 if made for the purpose of financing the purchase of a single-section manufactured home; and (ii) $195,322 if made for the purpose of financing the purchase of a multi-section manufactured home; (D)(i) $149,782 if made for the purpose of financing the purchase of a single-section manufactured home and a suitably developed lot on which to place the home; and (ii) $238,699 if made for the purpose of financing the purchase of a multi-section manufactured home and a suitably developed lot on which to place the home; (E) $43,377 if made for the purpose of financing the purchase, by an [owner](/usc/12/4146.md?p=2) of a manufactured home which is the principal residence of that [owner](/usc/12/4146.md?p=2), of a suitably developed lot on which to place that manufactured home, and if the [owner](/usc/12/4146.md?p=2) 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; (F) $15,000 per [family](/usc/12/1715z–1.md?p=j-2-A) unit if made for the purpose of financing the preservation of an historic structure; (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; and (H) such principal amount as the Secretary may prescribe if made for the purpose of financing the construction of an accessory dwelling unit. The Secretary shall, by notice, annually set the dollar amount limitations in [subparagraphs (A) through (H)](#A..H) (as such limitations may have been previously adjusted under this sentence) in accordance with the index established pursuant to paragraph (9), or as necessary to achieve the goals of the Federal Housing Administration, periodically reset the dollar amount limitations in [subparagraphs (A) through (H)](#A..H) based on justification and methodology set forth in advance by regulation. (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](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715k.md?p=h-1-C) with respect to any obligation representing any such loan, advance of [credit](/usc/12/5481.md?p=7), or purchase by it if the term to maturity of such loan, advance of [credit](/usc/12/5481.md?p=7) or purchase exceeds such period of time as determined by the Secretary, not to exceed 30 years. (4) For the purpose of this subsection— (A) the term “developed lot” [includes](/usc/12/25b.md?p=a-3) an interest in a condominium project ([including](/usc/12/25b.md?p=a-3) any interest in the common areas) or a share in a cooperative [association](/usc/12/1828.md?p=s-4-E-i); (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](/usc/12/1715k.md?p=h-1-C) with respect to any obligation representing any such loan, advance of [credit](/usc/12/5481.md?p=7), 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](/usc/12/5481.md?p=7) 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](/usc/12/1715k.md?p=h-1-C). (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](/usc/12/4146.md?p=2) of a manufactured home lot purchased without assistance under this section but otherwise meeting the requirements of this 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](/usc/12/4146.md?p=2)-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](/usc/12/604.md) of the National Manufactured Housing Construction and Safety Standards Act of 1974 [[42 U.S.C. 5403](/usc/42/5403.md)]. (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](/usc/12/5481.md?p=7) 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](/usc/12/5481.md?p=7) who knowingly (as defined in [section 1735f–14(g) of this title](/usc/12/1735f–14.md?p=g)) submits to any such [financial institution](/usc/12/1715k.md?p=h-1-C) 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](/usc/12/1735f–14.md) with respect to [mortgagees](/usc/12/1707.md?p=b) and lenders under this chapter. (8) Insurance benefits for manufactured housing loans.—Any contract of insurance with respect to loans, advances of [credit](/usc/12/5481.md?p=7), or purchases in connection with a manufactured home or a lot on which to place a manufactured home (or both) for a [financial institution](/usc/12/1715k.md?p=h-1-C) that is executed under this subchapter after July 30, 2008, by the Secretary shall be conclusive evidence of the eligibility of such [financial institution](/usc/12/1715k.md?p=h-1-C) 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 certain dollar amount limitations.—The Secretary shall develop or choose 1 or more methods of indexing in order to annually set the loan limits established in paragraph (1), based on data the Secretary determines is appropriate for purposes of this section. (10) Financial soundness of manufactured housing program.—The Secretary shall establish such underwriting criteria for loans and advances of [credit](/usc/12/5481.md?p=7) in connection with a manufactured home or a lot on which to place a manufactured home (or both), [including](/usc/12/25b.md?p=a-3) such loans and advances represented by obligations purchased by [financial institutions](/usc/12/1715k.md?p=h-1-C), as may be necessary to ensure that the program under this subchapter for insurance for [financial institutions](/usc/12/1715k.md?p=h-1-C) against losses from such loans, advances of [credit](/usc/12/5481.md?p=7), and purchases is financially sound. (11) Leasehold requirements.—No insurance shall be granted under this section to any such [financial institution](/usc/12/1715k.md?p=h-1-C) with respect to any obligation representing any such loan, advance of [credit](/usc/12/5481.md?p=7), 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 meets the terms and conditions established by the Secretary[^3] (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](/usc/12/5481.md?p=7) 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](/usc/12/25b.md?p=a-3) 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](/usc/12/25b.md?p=a-3) unpaid insurance premiums owed in connection with insurance made available by this subchapter. (2) Advertisements for proposals [Section 6101 of title 41](/usc/41/6101.md) 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](/usc/12/1707.md?p=a), 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 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](/usc/12/1715k.md?p=h-1-C) any insurance in connection with any loans and advances of [credit](/usc/12/5481.md?p=7) which may be sold to it by another approved [financial institution](/usc/12/1715k.md?p=h-1-C). (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](/usc/12/5481.md?p=7), and purchases may be insured under this section and [section 1706a](/usc/12/1706a.md)[^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](/usc/12/5481.md?p=7), 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](/usc/12/5481.md?p=7), or purchase, for the term of such obligation, and such premium charge shall be payable in advance by the [financial institution](/usc/12/1715k.md?p=h-1-C) 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](/usc/12/5481.md?p=7), 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](/usc/12/5481.md?p=7), as follows: (A) At the time of the making of the loan, advance of [credit](/usc/12/5481.md?p=7), 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) 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](/usc/12/5481.md?p=7) subsidy for the program under this section for insurance of loans, advances of [credit](/usc/12/5481.md?p=7), 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](/usc/12/5481.md?p=7) subsidy as described in subparagraph (C). (g) Finality of payment for loss Any payment for loss made to an approved [financial institution](/usc/12/1715k.md?p=h-1-C) 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](/usc/12/25b.md?p=a-3) any elder cottage housing opportunity unit that is small, freestanding, barrier-free, energy efficient, removable, and designed to be installed adjacent to an existing 1- to 4-[family](/usc/12/1715z–1.md?p=j-2-A) dwelling. # [§1704. Repealed. Apr. 3, 1936, ch. 165, § 2, 49 Stat. 1188 — repealed] # §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](/usc/12/4702.md?p=10) or any portion thereof by allotment to the Secretary from any [funds](/usc/12/4702.md?p=10) that are available, or may hereafter be made available, to the President for emergency purposes. # [§1706. Repealed. Aug. 2, 1954, ch. 649, title VIII, § 802(b), 68 Stat. 642 — repealed] # [§1706a. Repealed. June 3, 1939, ch. 175, § 3, 53 Stat. 805 — repealed] # §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](/usc/12/1707.md?p=d) or political subdivision thereof, to the same extent, according to its value, as other real property is taxed. # §1706c. Insurance of mortgages - (a) **Supplemental system; limitation on amount; termination of authority—** To assist in providing adequate housing for [families](/usc/12/1715z–1.md?p=j-2-A) of low and moderate income, particularly in suburban and outlying areas, this section is designed to supplement systems of [mortgage](/usc/12/1707.md?p=a) insurance under other provisions of this chapter by making feasible the insurance of [mortgages](/usc/12/1707.md?p=a) covering properties in areas where it is not practicable to obtain conformity with many of the requirements essential to the insurance of [mortgages](/usc/12/1707.md?p=a) on housing in built-up urban areas. The Secretary is authorized, upon application by the [mortgagee](/usc/12/1707.md?p=b), to insure, as hereinafter provided, any [mortgage](/usc/12/1707.md?p=a) (as defined in [section 1707 of this title](/usc/12/1707.md)) 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](/usc/12/1707.md?p=a) prior to the date of their execution or disbursement thereon: Provided, That the aggregate amount of principal obligations of all [mortgages](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) shall— - (1) have been made to, and be held by, a [mortgagee](/usc/12/1707.md?p=b) approved by the Secretary as responsible and able to service the [mortgage](/usc/12/1707.md?p=a) properly; - (2) involve a principal obligation ([including](/usc/12/25b.md?p=a-3) 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](/usc/12/1707.md?p=a) is accepted for insurance, of a property upon which there is located a dwelling designed principally for a single-[family](/usc/12/1715z–1.md?p=j-2-A) residence, and which is approved for [mortgage](/usc/12/1707.md?p=a) insurance prior to the beginning of construction: Provided, That the [mortgagor](/usc/12/1707.md?p=b) shall be the [owner](/usc/12/4146.md?p=2) 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](/usc/12/1707.md?p=a) is executed is an acceptable risk, giving consideration to the need for providing adequate housing for [families](/usc/12/1715z–1.md?p=j-2-A) of low and moderate income particularly in suburban and outlying areas: And provided further, That, where the [mortgagor](/usc/12/1707.md?p=b) is the [owner](/usc/12/4146.md?p=2) and occupant of the property and establishes (to the satisfaction of the Secretary) that his home, which he occupied as an [owner](/usc/12/4146.md?p=2) 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)](/usc/42/5122.md?p=2) and [5170](/usc/42/5170.md) 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](/usc/12/1707.md?p=a); - (4) contain complete amortization provisions satisfactory to the Secretary requiring periodic payments by the [mortgagor](/usc/12/1707.md?p=b) 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](/usc/12/1707.md?p=b)’s periodic payments (exclusive of the amount allocated to interest and to the premium charge which is required for [mortgage](/usc/12/1707.md?p=a) insurance as hereinafter provided and to the service charge, if any) to amortization of the principal of the [mortgage](/usc/12/1707.md?p=a); and - (7) contain such terms and provisions with respect to insurance, repairs, alterations, payment of taxes, service charges, [default](/usc/12/1467a.md?p=e-7-A) 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](/usc/12/1707.md?p=a) under this section, but in the case of any [mortgage](/usc/12/1707.md?p=a), 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](/usc/12/1707.md?p=a) outstanding at any time, without taking into account delinquent payments or prepayments. Such premium charges shall be payable by the [mortgagee](/usc/12/1707.md?p=b), 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](/usc/12/1707.md?p=a) is insured, at such discount rate as he may prescribe not in excess of the interest rate specified in the [mortgage](/usc/12/1707.md?p=a). If the Secretary finds, upon the presentation of a [mortgage](/usc/12/1707.md?p=a) for insurance and the tender of the initial premium charge or charges so required, that the [mortgage](/usc/12/1707.md?p=a) complies with the provisions of this section, such [mortgage](/usc/12/1707.md?p=a) may be accepted for insurance by endorsement or otherwise as the Secretary may prescribe. In the event that the principal obligation of any [mortgage](/usc/12/1707.md?p=a) accepted for insurance under this section is paid in full prior to the [maturity date](/usc/12/1707.md?p=c), the Secretary is further authorized, in his discretion, to require the payment by the [mortgagee](/usc/12/1707.md?p=b) 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](/usc/12/1707.md?p=b) would otherwise have been required to pay if the [mortgage](/usc/12/1707.md?p=a) had continued to be insured until such [maturity date](/usc/12/1707.md?p=c); 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](/usc/12/1707.md?p=b) for the account of the [mortgagor](/usc/12/1707.md?p=b) 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](/usc/12/1707.md?p=b) from his liability under the [mortgage](/usc/12/1707.md?p=a) or the [credit](/usc/12/5481.md?p=7) instrument secured thereby, or consent to the release of parts of the mortgaged property from the lien of the [mortgage](/usc/12/1707.md?p=a). - (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](/usc/12/1707.md?p=a) for insurance, and the validity of any contract of insurance so executed shall be incontestable in the hands of an approved [mortgagee](/usc/12/1707.md?p=b) from the date of the execution of such contract, except for fraud or misrepresentation on the part of such approved [mortgagee](/usc/12/1707.md?p=b). - (f) **Rights of mortgagee upon foreclosure—** In any case in which the [mortgagee](/usc/12/1707.md?p=b) under a [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=b) after [default](/usc/12/1467a.md?p=e-7-A), the [mortgagee](/usc/12/1707.md?p=b) shall be entitled to receive the benefits of the insurance as provided in [section 1710(a) of this title](/usc/12/1710.md?p=a) with respect to [mortgages](/usc/12/1707.md?p=a) insured under [section 203(b)(2)(D)](/usc/12/203.md) of this Act. - (g) **Applicability of other sections—** Subsections [(c)](#c), [(d)](#d), [(e)](#e), [(f)](#f), [(g)](#g), (h),[^1] (j), and (k)[^1] of [section 1710 of this title](/usc/12/1710.md) shall be applicable to [mortgages](/usc/12/1707.md?p=a) insured under this section except that all references therein to the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Funds](/usc/12/4702.md?p=10) or the [Fund](/usc/12/4702.md?p=10) shall be construed to refer to the General Insurance [Fund](/usc/12/4702.md?p=10), and all references therein to [section 1709 of this title](/usc/12/1709.md) shall be construed to refer to this section: Provided, That debentures issued in connection with [mortgages](/usc/12/1707.md?p=a) insured under this section shall have the same tax exemption as debentures issued in connection with [mortgages](/usc/12/1707.md?p=a) insured under [section 1709 of this title](/usc/12/1709.md). # §1706d. Applicability The provisions of sections [1703](/usc/12/1703.md) and [1706c](/usc/12/1706c.md) of this title shall be applicable in the several [States](/usc/12/1707.md?p=d) and Puerto Rico, the District of Columbia, Guam, the Trust Territory of the Pacific Islands, American Samoa, and the Virgin Islands. # [§1706e. Repealed. Pub. L. 101–625, title II, § 289(b), Nov. 28, 1990, 104 Stat. 4128 — repealed] # §1706f. Prohibition against kickbacks and unearned fees - (a) **In general—** Except as provided in [subsection (b)](#b), the provisions of sections [2602](/usc/12/2602.md), [2607](/usc/12/2607.md), [2614](/usc/12/2614.md), [2615](/usc/12/2615.md), [2616](/usc/12/2616.md), and [2617](/usc/12/2617.md) of this title shall apply to each sale of a manufactured home financed with an FHA-insured loan or [extension of credit](/usc/12/1843.md?p=c-14-F-iv), 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](/usc/12/2602.md), [2607](/usc/12/2607.md), [2614](/usc/12/2614.md), [2615](/usc/12/2615.md), [2616](/usc/12/2616.md), and [2617](/usc/12/2617.md) of this title may reasonably be applied to the transactions described in [subsection (a)](#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](/usc/12/2602.md), [2607](/usc/12/2607.md), [2614](/usc/12/2614.md), [2615](/usc/12/2615.md), [2616](/usc/12/2616.md), and [2617](/usc/12/2617.md) of this title shall include an FHA-insured loan or [extension of credit](/usc/12/1843.md?p=c-14-F-iv) 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](/usc/12/2602.md), [2607](/usc/12/2607.md), [2614](/usc/12/2614.md), [2615](/usc/12/2615.md), [2616](/usc/12/2616.md), and [2617](/usc/12/2617.md) of this title shall include any service rendered in connection with a loan or [extension of credit](/usc/12/1843.md?p=c-14-F-iv) 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](/usc/12/1843.md?p=c-14-F-iv) insured by the Federal Housing Administration under this subchapter, the Secretary shall prohibit acts or practices in connection with loans or extensions of [credit](/usc/12/5481.md?p=7) that the Secretary finds to be unfair, deceptive, or otherwise not in the interests of the borrower. # §1707. Definitions As used in [section 1709 of this title](/usc/12/1709.md)— - (a) The term “mortgage” means (A) a first mortgage on [real estate](#g), in fee simple, (B) a first mortgage on a leasehold on [real estate](#g) (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](#c) 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](#g) consisting of a one-[family](/usc/12/1715z–1.md?p=j-2-A) unit in a multifamily project, [including](/usc/12/25b.md?p=a-3) 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](#g), under the laws of the [State](#d), in which the [real estate](#g) is located, together with the [credit](/usc/12/5481.md?p=7) instruments, if any, secured thereby. - (b) The term “mortgagee” [includes](/usc/12/25b.md?p=a-3) the original lender under a [mortgage](#a), and his successors and assigns approved by the [Secretary](/usc/12/1715z–22a.md?p=4); and the term “mortgagor” [includes](/usc/12/25b.md?p=a-3) the original borrower under a [mortgage](#a) and his successors and assigns. - (c) The term “maturity date” means the date on which the [mortgage](#a) indebtedness would be extinguished if paid in accordance with periodic payments provided for in the [mortgage](#a). - (d) The term “State” [includes](/usc/12/25b.md?p=a-3) 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](#b) under such section, a [child](#f), parent, or grandparent of the [mortgagor](#b) (or the [mortgagor](#b)’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](#f) who is a [member](/usc/12/1426a.md?p=g-1) of an individual’s household, if placed with such individual by an authorized placement [agency](/usc/12/1422.md?p=12) for legal adoption by such individual), and a foster [child](#f) of an individual, shall be treated as a [child](#f) of such individual by blood. - (f) The term “child” means, with respect to a [mortgagor](#b) under such section, a son, stepson, daughter, or stepdaughter of such [mortgagor](#b). - (g) The term “real estate” means land and all natural resources and structures permanently affixed to the land, [including](/usc/12/25b.md?p=a-3) residential buildings and stationary manufactured housing. The [Secretary](/usc/12/1715z–22a.md?p=4) 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](#d) taxation. # §1708. Federal Housing Administration operations - (a) **Mutual Mortgage Insurance Fund—** - (1) **Establishment—** Subject to the provisions of the Federal [Credit](/usc/12/5481.md?p=7) Reform Act of 1990 [[2 U.S.C. 661](/usc/2/661.md) et seq.], there is hereby created a Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10) (in this subchapter referred to as the “[Fund](/usc/12/4702.md?p=10)”), which shall be used by the [Secretary](/usc/12/1715z–22a.md?p=4) to carry out the provisions of this subchapter with respect to [mortgages](/usc/12/1707.md?p=a) insured under [section 1709 of this title](/usc/12/1709.md). The [Secretary](/usc/12/1715z–22a.md?p=4) may enter into commitments to guarantee, and may guarantee, such insured [mortgages](/usc/12/1707.md?p=a). - (2) **Limit on loan guarantees—** The authority of the [Secretary](/usc/12/1715z–22a.md?p=4) to enter into commitments to guarantee such insured [mortgages](/usc/12/1707.md?p=a) shall be effective for any fiscal year only to the extent that the aggregate original principal loan amount under such [mortgages](/usc/12/1707.md?p=a), any part of which is guaranteed, does not exceed the amount specified in appropriations Acts for such fiscal year. - (3) **Fiduciary responsibility—** The [Secretary](/usc/12/1715z–22a.md?p=4) has a responsibility to ensure that the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10) remains financially sound. - (4) **Annual independent actuarial study—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall provide for an independent actuarial study of the [Fund](/usc/12/4702.md?p=10) to be conducted annually, which shall analyze the financial position of the [Fund](/usc/12/4702.md?p=10). The [Secretary](/usc/12/1715z–22a.md?p=4) shall submit a report annually to the Congress describing the results of such study and assessing the financial status of the [Fund](/usc/12/4702.md?p=10). The report shall recommend adjustments to underwriting standards, program [participation](/usc/12/2206a.md?p=a-1), or premiums, if necessary, to ensure that the [Fund](/usc/12/4702.md?p=10) remains financially sound. The report shall also include an evaluation of the quality [control](/usc/12/24a.md?p=g-1) procedures and accuracy of information utilized in the process of underwriting loans guaranteed by the [Fund](/usc/12/4702.md?p=10). 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](/usc/12/1715k.md?p=h-1-C). - (5) **Quarterly reports—** During each fiscal year, the [Secretary](/usc/12/1715z–22a.md?p=4) shall submit a report to the Congress for each calendar quarter, which shall specify for [mortgages](/usc/12/1707.md?p=a) that are obligations of the [Fund](/usc/12/4702.md?p=10)— - (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; - (D) projected versus actual loss rates; and - (E) updated projections of the annual subsidy rates to ensure that increases in risk to the [Fund](/usc/12/4702.md?p=10) are identified and mitigated by adjustments to underwriting standards, program [participation](/usc/12/2206a.md?p=a-1), or premiums, and the financial soundness of the [Fund](/usc/12/4702.md?p=10) 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](/usc/12/4702.md?p=10) required under [paragraph (4)](#a-4), the [Secretary](/usc/12/1715z–22a.md?p=4) determines that the [Fund](/usc/12/4702.md?p=10) is not meeting the operational goals established under [paragraph (7)](#a-7) or there is a substantial probability that the [Fund](/usc/12/4702.md?p=10) will not maintain its established target subsidy rate, the [Secretary](/usc/12/1715z–22a.md?p=4) may either make programmatic adjustments under this subchapter as necessary to reduce the risk to the [Fund](/usc/12/4702.md?p=10), or make appropriate premium adjustments. - (7) **Operational goals—** The operational goals for the [Fund](/usc/12/4702.md?p=10) are— - (A) to minimize the [default](/usc/12/1467a.md?p=e-7-A) risk to the [Fund](/usc/12/4702.md?p=10) and to homeowners by among other actions instituting fraud prevention quality [control](/usc/12/24a.md?p=g-1) screening not later than 18 months after July 30, 2008; and - (B) to meet the housing needs of the borrowers that the single [family](/usc/12/1715z–1.md?p=j-2-A) [mortgage](/usc/12/1707.md?p=a) insurance program under this subchapter is designed to serve. - (8) **Other required reporting—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall— - (A) submit to Congress monthly reports on the [capital](/usc/12/51c.md) ratio required under [section 1711(f)(2) of this title](/usc/12/1711.md?p=f-2); and - (B) notify Congress as soon as practicable after the [Fund](/usc/12/4702.md?p=10) falls below the [capital](/usc/12/51c.md) ratio required under [section 1711(f)(2) of this title](/usc/12/1711.md?p=f-2). - (b) **Advisory Board—** There is created a Federal Housing Administration Advisory [Board](/usc/12/221a.md?p=a) (“[Board](/usc/12/221a.md?p=a)”) that shall review operation of the Federal Housing Administration, [including](/usc/12/25b.md?p=a-3) the activities of the [Mortgagee](/usc/12/1707.md?p=b) Review [Board](/usc/12/221a.md?p=a), 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](/usc/12/221a.md?p=a) shall, in all other respects, be subject to the provisions of [chapter 10](/usc/5/chptI-ch10.md) of title 5. - (1) The Advisory [Board](/usc/12/221a.md?p=a) shall be composed of 15 [members](/usc/12/1426a.md?p=g-1) to be appointed from among individuals who have substantial expertise and broad experience in housing and [mortgage](/usc/12/1707.md?p=a) lending of whom— - (A) 9 shall be appointed by the [Secretary](/usc/12/1715z–22a.md?p=4); - (B) 3 shall be appointed by the Chairman and Ranking Minority [Member](/usc/12/1426a.md?p=g-1) 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](/usc/12/1426a.md?p=g-1) 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](/usc/12/221a.md?p=a) shall include— - (A) not less than 4 [persons](/usc/12/5481.md?p=19) with distinguished private sector careers in housing finance, lending, management, development or insurance; - (B) not less than 4 [persons](/usc/12/5481.md?p=19) with outstanding reputations as licensed actuaries, experts in actuarial science, or economics related to housing; - (C) not less than 4 [persons](/usc/12/5481.md?p=19) with backgrounds of leadership in representing the interests of housing [consumers](/usc/12/5481.md?p=4); - (D) not less than 1 [person](/usc/12/5481.md?p=19) 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](/usc/12/5481.md?p=19) with a background of leadership representing rural housing interests. - (3) [Members](/usc/12/1426a.md?p=g-1) of the Advisory [Board](/usc/12/221a.md?p=a) shall be selected to ensure, to the greatest extent practicable, geographical representation or every region of the country. - (4) Not more than 8 [members](/usc/12/1426a.md?p=g-1) of the Advisory [Board](/usc/12/221a.md?p=a) may be from any one political party. - (5) Membership of the Advisory [Board](/usc/12/221a.md?p=a) shall not include [any person](/usc/12/1715z–4a.md?p=a-2) who, during the previous 24-month period, was required to register with the [Secretary](/usc/12/1715z–22a.md?p=4) under section 3537b(c)[^1] of [title 42](/usc/42.md) or employed a [person](/usc/12/5481.md?p=19) for purposes that required such [person](/usc/12/5481.md?p=19) to so register. - (6) Of the [members](/usc/12/1426a.md?p=g-1) of the Advisory [Board](/usc/12/221a.md?p=a) 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](/usc/12/221a.md?p=a) is empowered to confer with, request information of, and make recommendations to the Federal Housing Commissioner. The Commissioner shall promptly provide the Advisory [Board](/usc/12/221a.md?p=a) with such information as the [Board](/usc/12/221a.md?p=a) determines to be necessary to carry out its review of the activities and policies of the Federal Housing Administration. - (8) The [Board](/usc/12/221a.md?p=a) shall, not later than December 31 of each year, submit to the [Secretary](/usc/12/1715z–22a.md?p=4) and the Congress a report of its assessment of the activities of the Federal Housing Administration, [including](/usc/12/25b.md?p=a-3) the soundness of underwriting procedures, the adequacy of information systems, the appropriateness of staffing patterns, the effectiveness of the [Mortgagee](/usc/12/1707.md?p=b) Review [Board](/usc/12/221a.md?p=a), 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](/usc/12/221a.md?p=a)’s recommendations for improvement and include any minority views. - (9) The [Board](/usc/12/221a.md?p=a) 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](/usc/12/1426a.md?p=g-1). The [Board](/usc/12/221a.md?p=a) shall elect a chair, vice-chair and [secretary](/usc/12/1715z–22a.md?p=4) and adopt methods of procedure. The [Board](/usc/12/221a.md?p=a) may establish committees and subcommittees as needed. - (10) Subject to the provisions of [section 1006 of title 5](/usc/5/1006.md), all [members](/usc/12/1426a.md?p=g-1) of the [Board](/usc/12/221a.md?p=a) may be compensated and shall be entitled to reimbursement from the Department for traveling expenses incurred in attendance at meetings of the [Board](/usc/12/221a.md?p=a). - (11) The [Board](/usc/12/221a.md?p=a) shall terminate on January 1, 1995. - (c) **Mortgagee Review Board—** - (1) **Establishment—** There is established within the Federal Housing Administration the [Mortgagee](#c-7) Review [Board](/usc/12/221a.md?p=a) (“[Board](/usc/12/221a.md?p=a)”). The [Board](/usc/12/221a.md?p=a) is empowered to initiate the issuance of a letter of reprimand, the probation, suspension or withdrawal of any [mortgagee](#c-7) found to be engaging in activities in violation of Federal Housing Administration requirements or the nondiscrimination requirements of the Equal [Credit](/usc/12/5481.md?p=7) Opportunity Act [[15 U.S.C. 1691](/usc/15/1691.md) et seq.], the Fair Housing Act [[42 U.S.C. 3601](/usc/42/3601.md) et seq.], or Executive Order 11063. - (2) **Composition—** The [Board](/usc/12/221a.md?p=a) shall consist of— - (A) the Assistant [Secretary](/usc/12/1715z–22a.md?p=4) of Housing/Federal Housing Commissioner; - (B) the General Counsel of the Department; - (C) the President of the Government National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i); - (D) the Assistant [Secretary](/usc/12/1715z–22a.md?p=4) for Administration; - (E) the Assistant [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/221a.md?p=a) discloses that a basis for an administrative action against a [mortgagee](#c-7) exists, the [Board](/usc/12/221a.md?p=a) shall take one of the following administrative actions: - (A) **Letter of reprimand—** The [Board](/usc/12/221a.md?p=a) may issue a letter of reprimand only once to a [mortgagee](#c-7) 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](#c-7) should take to correct the violation. - (B) **Probation—** The [Board](/usc/12/221a.md?p=a) may place a [mortgagee](#c-7) on probation for a specified period of time not to exceed 6 months for the purpose of evaluating the [mortgagee](#c-7)’s compliance with Federal Housing Administration requirements, the Equal [Credit](/usc/12/5481.md?p=7) Opportunity Act [[15 U.S.C. 1691](/usc/15/1691.md) et seq.], the Fair Housing Act [[42 U.S.C. 3601](/usc/42/3601.md) et seq.], Executive Order 11063, or orders of the [Board](/usc/12/221a.md?p=a). During the probation period, the [Board](/usc/12/221a.md?p=a) may impose reasonable additional requirements on a [mortgagee](#c-7) [including](/usc/12/25b.md?p=a-3) supervision of the [mortgagee](#c-7)’s activities by the Federal Housing Administration, periodic 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](/usc/12/221a.md?p=a) may issue an order temporarily suspending a [mortgagee](#c-7)’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](#c-7)’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)](#c-4-A), a suspension shall be effective upon issuance by the [Board](/usc/12/221a.md?p=a) if the [Board](/usc/12/221a.md?p=a) 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](/usc/12/221a.md?p=a) may extend the suspension for an additional 6 months if it determines the extension is in the public interest. If the [Board](/usc/12/221a.md?p=a) and the [mortgagee](#c-7) agree, these time limits may be extended. During the period of suspension, the Federal Housing Administration shall not commit to insure any [mortgage](/usc/12/1707.md?p=a) originated by the suspended [mortgagee](#c-7). - (D) **Withdrawal—** The [Board](/usc/12/221a.md?p=a) may issue an order withdrawing a [mortgagee](#c-7) if the [Board](/usc/12/221a.md?p=a) has made a determination of a serious violation or repeated violations by the [mortgagee](#c-7). The [Board](/usc/12/221a.md?p=a) shall determine the terms of such withdrawal, but the term shall be not less than 1 year. Where the [Board](/usc/12/221a.md?p=a) has determined that the violation is egregious or willful, the withdrawal shall be permanent. - (E) **Settlements—** The [Board](/usc/12/221a.md?p=a) may at any time enter into a settlement agreement with a [mortgagee](#c-7) 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](#c-7) by a [mortgagor](/usc/12/1707.md?p=b), by a seller or by the Federal Housing Administration; - (iv) actions to collect sums of money wrongfully or incorrectly paid by the [mortgagee](#c-7) to a third party; - (v) indemnification of the Federal Housing Administration for [mortgage](/usc/12/1707.md?p=a) insurance claims on [mortgages](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4). 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](/usc/12/221a.md?p=a) shall issue a written notice to the [mortgagee](#c-7) at least 30 days prior to taking any action against the [mortgagee](#c-7) under subparagraph [(B)](#c-3-B), [(C)](#c-3-C), or [(D)](#c-3-D) of paragraph (3). The notice shall [state](/usc/12/1707.md?p=d) the specific violations which have been alleged, and shall direct the [mortgagee](#c-7) to reply in writing to the [Board](/usc/12/221a.md?p=a) within 30 days. If the [mortgagee](#c-7) fails to reply during such period, the [Board](/usc/12/221a.md?p=a) may make a determination without considering any comments of the [mortgagee](#c-7). - (B) If the [Board](/usc/12/221a.md?p=a) takes action against a [mortgagee](#c-7) under subparagraph [(B)](#c-3-B), [(C)](#c-3-C), or [(D)](#c-3-D) of paragraph (3), the [Board](/usc/12/221a.md?p=a) shall promptly notify the [mortgagee](#c-7) in writing of the nature, duration, and specific reasons for the action. If, within 30 days of receiving the notice, the [mortgagee](#c-7) requests a hearing, the [Board](/usc/12/221a.md?p=a) shall hold a hearing on the record regarding the violations within 30 days of receiving the request. If a [mortgagee](#c-7) fails to request a hearing within such 30-day period, the right of the [mortgagee](#c-7) to a hearing shall be considered waived. - (C) In any case in which the notification of the [Board](/usc/12/221a.md?p=a) does not result in a hearing ([including](/usc/12/25b.md?p=a-3) any settlement by the [Board](/usc/12/221a.md?p=a) and a [mortgagee](#c-7)), any information regarding the nature of the violation and the resolution of the action shall be available to the public. - (5) **Publication—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall establish and publish in the Federal Register a description of and the cause for administrative action against a [mortgagee](#c-7). - (6) **Cease-and-desist orders—** - (A) Whenever the [Secretary](/usc/12/1715z–22a.md?p=4), upon request of the [Mortgagee](#c-7) Review [Board](/usc/12/221a.md?p=a), determines that there is reasonable cause to believe that a [mortgagee](#c-7) is violating, has violated, or is about to violate, a law, rule or regulation or any condition imposed in writing by the [Secretary](/usc/12/1715z–22a.md?p=4) or the [Board](/usc/12/221a.md?p=a), and that such violation could result in significant cost to the Federal Government or the public, the [Secretary](/usc/12/1715z–22a.md?p=4) may issue a temporary order requiring the [mortgagee](#c-7) 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](/usc/12/221a.md?p=a) 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](#c-7). Such order shall remain effective and enforceable for a period not to exceed 30 days pending the completion of proceedings of the [Board](/usc/12/221a.md?p=a) 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](/usc/12/221a.md?p=a) shall provide the [mortgagee](#c-7) 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](#c-7) has been served with a temporary cease-and-desist order, the [mortgagee](#c-7) may apply to the United States [district](/usc/12/221a.md?p=a) court for the judicial [district](/usc/12/221a.md?p=a) in which the home [office](/usc/12/2279bb.md?p=4) of the [mortgagee](#c-7) is located, or the United States [District](/usc/12/221a.md?p=a) 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](#c-7), 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](/usc/12/1715z–22a.md?p=4) may apply to the United States [district](/usc/12/221a.md?p=a) court, or the United States court of any territory, within the jurisdiction of which the home [office](/usc/12/2279bb.md?p=4) of the [mortgagee](#c-7) 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](#c-7) approved under this chapter; - (B) a lender or a loan correspondent approved under subchapter I of this chapter; - (C) a branch [office](/usc/12/2279bb.md?p=4) or [subsidiary](/usc/12/24a.md?p=g-1) of the [mortgagee](#c-7), lender, or loan correspondent; or - (D) a [director](/usc/12/2279bb.md?p=3), officer, employee, agent, or other [person](/usc/12/5481.md?p=19) participating in the conduct of the affairs of the [mortgagee](#c-7), lender, or loan correspondent. - (8) **Report required—** The [Board](/usc/12/221a.md?p=a), in consultation with the Federal Housing Administration Advisory [Board](/usc/12/221a.md?p=a), shall annually recommend to the [Secretary](/usc/12/1715z–22a.md?p=4) such amendments to statute or regulation as the [Board](/usc/12/221a.md?p=a) determines to be appropriate to ensure the long term financial strength of the Federal Housing Administration [fund](/usc/12/4702.md?p=10) and the adequate support for home [mortgage](/usc/12/1707.md?p=a) [credit](/usc/12/5481.md?p=7). - (9) **Prohibition against limitations on Mortgagee Review Board’s power to take action against mortgagees—** No [State](/usc/12/1707.md?p=d) 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](/usc/12/221a.md?p=a) of its power to take any action authorized under paragraphs (3) and (6) of this subsection against any [mortgagee](#c-7). - (d) **Limitations on participation in origination and mortgagee approval—** - (1) **Requirement—** [Any person](/usc/12/1715z–4a.md?p=a-2) or entity that is not approved by the [Secretary](/usc/12/1715z–22a.md?p=4) to serve as a [mortgagee](/usc/12/1707.md?p=b), as such term is defined in [subsection (c)(7)](#c-7), shall not [participate](/usc/12/2206a.md?p=a-1) in the origination of an FHA-insured loan except as authorized by the [Secretary](/usc/12/1715z–22a.md?p=4). - (2) **Eligibility for approval—** In order to be eligible for approval by the [Secretary](/usc/12/1715z–22a.md?p=4), an applicant [mortgagee](/usc/12/1707.md?p=b) shall not be, and shall not have any officer, partner, [director](/usc/12/2279bb.md?p=3), principal, manager, supervisor, loan processor, loan underwriter, or loan originator of the applicant [mortgagee](/usc/12/1707.md?p=b) who is— - (A) currently suspended, debarred, under a limited denial of [participation](/usc/12/2206a.md?p=a-1) (LDP), or otherwise restricted under [part 25 of title 24 of the Code of Federal Regulations](/cfr/24/part25.md), [2 Code of Federal Regulations](/cfr/2.md), part 180 as implemented by part 2424, or any successor regulations to such parts, or under similar provisions of any other [Federal agency](/usc/12/3101.md?p=5); - (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](/usc/12/1707.md?p=b); - (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](/usc/12/1707.md?p=b) or that demonstrate irresponsibility; - (E) convicted of, or who has pled guilty or nolo contendre[^3] to, a felony related to [participation](/usc/12/2206a.md?p=a-1) in the [real estate](/usc/12/1707.md?p=g) or [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) Licensing Act of 2008 ([12 U.S.C. 5101](/usc/12/5101.md) et seq.) or any applicable provision of [State](/usc/12/1707.md?p=d) law; or - (G) in violation of any other requirement as established by the [Secretary](/usc/12/1715z–22a.md?p=4). - (3) **Rulemaking and implementation—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall conduct a rulemaking to carry out this subsection. The [Secretary](/usc/12/1715z–22a.md?p=4) shall implement this subsection not later than the expiration of the 60-day period beginning upon May 20, 2009, by notice, [mortgagee](/usc/12/1707.md?p=b) 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](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i) initiates proceedings that could lead to withdrawing the [mortgagee](/usc/12/1707.md?p=b) from participating in the program, the initiating [agency](/usc/12/1422.md?p=12) shall— - (A) within 24 hours notify the other [agency](/usc/12/1422.md?p=12) in writing of the action taken; - (B) provide to the other [agency](/usc/12/1422.md?p=12) the factual basis for the action taken; and - (C) if a [mortgagee](/usc/12/1707.md?p=b) 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 Administration or the Government National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i) shall— - (A) conduct and complete its own investigation; - (B) provide written notification to the other [agency](/usc/12/1422.md?p=12) of its decision, [including](/usc/12/25b.md?p=a-3) the factual basis for its decision; and - (C) if a [mortgagee](/usc/12/1707.md?p=b) 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](/usc/12/1715z–22a.md?p=4) has taken any discretionary action to suspend or revoke the approval of any [mortgagee](/usc/12/1707.md?p=b) to [participate](/usc/12/2206a.md?p=a-1) in any [mortgage](/usc/12/1707.md?p=a) insurance program under this subchapter, the [Secretary](/usc/12/1715z–22a.md?p=4) shall provide prompt notice of the action and a statement of the reasons for the action to— - (1) the [Secretary](/usc/12/1715z–22a.md?p=4) of Veterans Affairs; - (2) the chief [executive officer](/usc/12/1831o.md?p=b-2-H) of the Federal National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i); - (3) the chief [executive officer](/usc/12/1831o.md?p=b-2-H) of the Federal Home Loan [Mortgage](/usc/12/1707.md?p=a) [Corporation](/usc/12/2277a.md?p=2); - (4) the [Secretary](/usc/12/1715z–22a.md?p=4) of Agriculture; - (5) if the [mortgagee](/usc/12/1707.md?p=b) is a [national bank](/usc/12/221a.md?p=a), a [subsidiary](/usc/12/24a.md?p=g-1) or [affiliate](/usc/12/24a.md?p=g-1) of such [bank](/usc/12/1426a.md?p=g-1), a [Federal savings association](/usc/12/1462.md?p=3) or a [subsidiary](/usc/12/24a.md?p=g-1) or [affiliate](/usc/12/24a.md?p=g-1) of a [savings association](/usc/12/1861.md?p=b-5), the Comptroller of the Currency; - (6) if the [mortgagee](/usc/12/1707.md?p=b) is a [State bank](/usc/12/1835a.md?p=e-1) that is a [member](/usc/12/1426a.md?p=g-1) of the Federal Reserve System or a [subsidiary](/usc/12/24a.md?p=g-1) or [affiliate](/usc/12/24a.md?p=g-1) of such a [bank](/usc/12/1426a.md?p=g-1), or a [bank holding company](/usc/12/1813.md?p=w-2) or a [subsidiary](/usc/12/24a.md?p=g-1) or [affiliate](/usc/12/24a.md?p=g-1) of such a [company](/usc/12/24a.md?p=g-1), the [Board](/usc/12/221a.md?p=a) of Governors of the Federal Reserve System; and - (7) if the [mortgagee](/usc/12/1707.md?p=b) is a [State bank](/usc/12/1835a.md?p=e-1) or [State savings association](/usc/12/1861.md?p=b-9) that is not a [member](/usc/12/1426a.md?p=g-1) of the Federal Reserve System or is a [subsidiary](/usc/12/24a.md?p=g-1) or [affiliate](/usc/12/24a.md?p=g-1) of such a [bank](/usc/12/1426a.md?p=g-1), the [Board](/usc/12/221a.md?p=a) of [Directors](/usc/12/2279bb.md?p=3) of the Federal [Deposit](/usc/12/5301.md?p=18-A) Insurance [Corporation](/usc/12/2277a.md?p=2). - (g) **Appraisal standards—** - (1) The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/2277a.md?p=2) 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](/usc/12/1707.md?p=g) 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](/usc/12/1715k.md?p=h-1-C) Examination Council shall include the [Secretary](/usc/12/1715z–22a.md?p=4) or his designee. - (3) **Direct Endorsement Program.—** - (A) Any [mortgagee](/usc/12/1707.md?p=b) that is authorized by the [Secretary](/usc/12/1715z–22a.md?p=4) to process [mortgages](/usc/12/1707.md?p=a) as a direct endorsement [mortgagee](/usc/12/1707.md?p=b) (pursuant to the single-[family](/usc/12/1715z–1.md?p=j-2-A) home [mortgage](/usc/12/1707.md?p=a) direct endorsement program established by the [Secretary](/usc/12/1715z–22a.md?p=4)) may contract with an appraiser chosen at the discretion of the [mortgagee](/usc/12/1707.md?p=b) for the performance of appraisals in connection with such [mortgages](/usc/12/1707.md?p=a). Such appraisers may include appraisal [companies](/usc/12/24a.md?p=g-1) organized as [corporations](/usc/12/2277a.md?p=2), partnerships, or sole proprietorships. - (B) Any appraisal conducted pursuant to [subparagraph (A)](#g-3-A) shall be conducted by an individual who complies with the qualifications or standards for appraisers established by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/24a.md?p=g-1) ([including](/usc/12/25b.md?p=a-3) any [company](/usc/12/24a.md?p=g-1) organized as a [corporation](/usc/12/2277a.md?p=2), partnership, or sole proprietorship) and who meets the qualifications or standards for appraisers and inclusion on appraiser fee panels established by the [Secretary](/usc/12/1715z–22a.md?p=4), shall be eligible for assignment to conduct appraisals for [mortgages](/usc/12/1707.md?p=a) 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](/usc/12/24a.md?p=g-1) described in [subparagraph (A)](#g-4-A) who is offered an appraisal assignment in connection with a [mortgage](/usc/12/1707.md?p=a) under this subchapter, the [person](/usc/12/5481.md?p=19) utilizing the appraiser may contract directly with the appraisal [company](/usc/12/24a.md?p=g-1) 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](/usc/12/1707.md?p=a) under this subchapter shall— - (A) be certified or licensed by the [State](/usc/12/1707.md?p=d) in which the property to be appraised is located, except that a Federal employee who has as their primary duty conducting appraisal-related activities and who chooses to become a [State](/usc/12/1707.md?p=d)-licensed or certified [real estate](/usc/12/1707.md?p=g) appraiser need only to be licensed or certified in 1 [State](/usc/12/1707.md?p=d) or territory to perform appraisals on [mortgages](/usc/12/1707.md?p=a) insured by the Federal Housing Administration in all [States](/usc/12/1707.md?p=d) and territories; - (B) meet the requirements under the competency rule set forth in the Uniform Standards of Professional Appraisal Practice before accepting an assignment; and - (C) have demonstrated verifiable education in the appraisal requirements established by the Federal Housing Administration under this subsection, which shall include the completion of a course or seminar that educates appraisers on those appraisal requirements, which shall be provided by— - (i) the Federal Housing Administration; or - (ii) a third party, if the course is approved by the [Secretary](/usc/12/1715z–22a.md?p=4) or a [State](/usc/12/1707.md?p=d) appraiser certifying or licensing [agency](/usc/12/1422.md?p=12). - (h) **Use of name—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall, by regulation, require each [mortgagee](/usc/12/1707.md?p=b) approved by the [Secretary](/usc/12/1715z–22a.md?p=4) for [participation](/usc/12/2206a.md?p=a-1) in the FHA [mortgage](/usc/12/1707.md?p=a) insurance programs of the [Secretary](/usc/12/1715z–22a.md?p=4)— - (1) to use the business name of the [mortgagee](/usc/12/1707.md?p=b) that is registered with the [Secretary](/usc/12/1715z–22a.md?p=4) in connection with such approval in all advertisements and promotional materials, as such terms are defined by the [Secretary](/usc/12/1715z–22a.md?p=4), relating to the business of such [mortgagee](/usc/12/1707.md?p=b) in such [mortgage](/usc/12/1707.md?p=a) insurance programs; and - (2) to maintain copies of all such advertisements and promotional materials, in such form and for such period as the [Secretary](/usc/12/1715z–22a.md?p=4) requires. # §1709. Insurance of mortgages - (a) **Authorization—** The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized, upon application by the [mortgagee](/usc/12/1707.md?p=b), to insure as hereinafter provided any [mortgage](/usc/12/1707.md?p=a) offered to him which is eligible for insurance as hereinafter provided, and, upon such terms as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe, to make commitments for the insuring of such [mortgages](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) shall comply with the following: - (1) Have been made to, and be held by, a [mortgagee](/usc/12/1707.md?p=b) approved by the [Secretary](/usc/12/1715z–22a.md?p=4) as responsible and able to service the [mortgage](/usc/12/1707.md?p=a) properly. - (2) Involve a principal obligation ([including](/usc/12/25b.md?p=a-3) such initial service charges, appraisal, inspection, and other fees as the [Secretary](/usc/12/1715z–22a.md?p=4) shall approve) in an amount— - (A) not to exceed the lesser of— - (i) in the case of a 1-[family](/usc/12/1715z–1.md?p=j-2-A) residence, 115 percent of the median 1-[family](/usc/12/1715z–1.md?p=j-2-A) house price in the [area](#b-2), as determined by the [Secretary](/usc/12/1715z–22a.md?p=4); and in the case of a 2-, 3-, or 4-[family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1454.md?p=a-2) for a 2-, 3-, or 4-[family](/usc/12/1715z–1.md?p=j-2-A) residence, respectively, bears to the dollar amount limitation determined under such section for a 1-[family](/usc/12/1715z–1.md?p=j-2-A) residence; or - (ii) 150 percent of the dollar amount limitation determined under the sixth sentence of such [section 1454(a)(2)](/usc/12/1454.md?p=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](#b-2) may not be less than the greater of: (I) the dollar amount limitation in effect under this section for the [area](#b-2) on October 21, 1998; or (II) 65 percent of the dollar amount limitation determined under the sixth sentence of such [section 1454(a)(2)](/usc/12/1454.md?p=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](/usc/12/2279bb.md?p=4) of Management and Budget; and the median 1-[family](/usc/12/1715z–1.md?p=j-2-A) house price for an area shall be equal to the median 1-[family](/usc/12/1715z–1.md?p=j-2-A) 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)](#b-3) of the last paragraph of [section 1703(a) of this title](/usc/12/1703.md)) therein. Notwithstanding any other provision of this paragraph, the [Secretary](/usc/12/1715z–22a.md?p=4) may not insure, or enter into a commitment to insure, a [mortgage](/usc/12/1707.md?p=a) under this section that is executed by a first-time homebuyer and that involves a principal obligation ([including](/usc/12/25b.md?p=a-3) such initial service charges, appraisal, inspection, and other fees as the [Secretary](/usc/12/1715z–22a.md?p=4) shall approve) in excess of 97 percent of the appraised value of the property unless the [mortgagor](/usc/12/1707.md?p=b) has completed a program of counseling with respect to the responsibilities and financial management involved in homeownership that is approved by the [Secretary](/usc/12/1715z–22a.md?p=4); except that the [Secretary](/usc/12/1715z–22a.md?p=4) may, in the discretion of the [Secretary](/usc/12/1715z–22a.md?p=4), waive the applicability of this requirement. - (3) Have a maturity satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4), but not to exceed, in any event, thirty-five years (or thirty years if such [mortgage](/usc/12/1707.md?p=a) is not approved for insurance prior to construction) from the date of the beginning of amortization of the [mortgage](/usc/12/1707.md?p=a). - (4) Contain complete amortization provisions satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4) requiring periodic payments by the [mortgagor](/usc/12/1707.md?p=b) not in excess of his reasonable ability to pay as determined by the [Secretary](/usc/12/1715z–22a.md?p=4). - (5) Bear interest at such rate as may be agreed upon by the [mortgagor](/usc/12/1707.md?p=b) and the [mortgagee](/usc/12/1707.md?p=b). - (6) Provide, in a manner satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4), for the application of the [mortgagor](/usc/12/1707.md?p=b)’s periodic payments (exclusive of the amount allocated to interest and to the premium charge which is required for [mortgage](/usc/12/1707.md?p=a) insurance as hereinafter provided) to amortization of the principal of the [mortgage](/usc/12/1707.md?p=a). - (7) Contain such terms and provisions with respect to insurance, repairs, alterations, payment of taxes, [default](/usc/12/1467a.md?p=e-7-A), reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) insured under this section shall be executed by a [mortgagor](/usc/12/1707.md?p=b) 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](/usc/12/1715z–22a.md?p=4) may determine. - (B) **Family members.—** For purposes of this paragraph, the [Secretary](/usc/12/1715z–22a.md?p=4) shall consider as cash or its equivalent any amounts borrowed from a [family member](/usc/12/1707.md?p=e) (as such term is defined in [section 1707 of this title](/usc/12/1707.md)), 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](/usc/12/1707.md?p=a); and - (ii) the sum of the principal obligation of the [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a). - (C) **Prohibited sources.—** In no case shall the [funds](/usc/12/4702.md?p=10) required by [subparagraph (A)](#b-9-A) consist, in whole or in part, of [funds](/usc/12/4702.md?p=10) provided by any of the following parties before, during, or after closing of the property sale: - (i) The seller or any other [person](/usc/12/5481.md?p=19) 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)](#b-9-C-i). This subparagraph shall apply only to [mortgages](/usc/12/1707.md?p=a) for which the [mortgagee](/usc/12/1707.md?p=b) has issued [credit](/usc/12/5481.md?p=7) approval for the borrower on or after October 1, 2008. - (c) **Premium charges—** - (1) The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to fix premium charges for the insurance of [mortgages](/usc/12/1707.md?p=a) under the separate sections of this subchapter but in the case of any [mortgage](/usc/12/1707.md?p=a) such charge shall be not less than an amount equivalent to one-fourth 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](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) that is determined by the [Secretary](/usc/12/1715z–22a.md?p=4) to involve additional risk, or (2) under [subsection (n)](#n) are not required to be the same as the premium charges for [mortgages](/usc/12/1707.md?p=a) insured under the other provisions of this section, but in no case shall premium charges under [subsection (n)](#n) exceed 1 per centum per annum: Provided, That any reduced premium charge so fixed and computed may, in the discretion of the [Secretary](/usc/12/1715z–22a.md?p=4), also be made applicable in such manner as the [Secretary](/usc/12/1715z–22a.md?p=4) shall prescribe to each insured [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=b), either in cash, or in debentures issued by the [Secretary](/usc/12/1715z–22a.md?p=4) under this subchapter at par plus accrued interest, in such manner as may be prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4): Provided, That debentures presented in payment of premium charges shall represent obligations of the particular insurance [fund](/usc/12/4702.md?p=10) or account to which such premium charges are to be credited: Provided further, That the [Secretary](/usc/12/1715z–22a.md?p=4) may require the payment of one or more such premium charges at the time the [mortgage](/usc/12/1707.md?p=a) is insured, at such discount rate as he may prescribe not in excess of the interest rate specified in the [mortgage](/usc/12/1707.md?p=a). If the [Secretary](/usc/12/1715z–22a.md?p=4) finds upon the presentation of a [mortgage](/usc/12/1707.md?p=a) for insurance and the tender of the initial premium charge or charges so required that the [mortgage](/usc/12/1707.md?p=a) complies with the provisions of this section, such [mortgage](/usc/12/1707.md?p=a) may be accepted for insurance by endorsement or otherwise as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe; but no [mortgage](/usc/12/1707.md?p=a) shall be accepted for insurance under this section unless the [Secretary](/usc/12/1715z–22a.md?p=4) finds that the project with respect to which the [mortgage](/usc/12/1707.md?p=a) is executed is economically sound. In the event that the principal obligation of any [mortgage](/usc/12/1707.md?p=a) accepted for insurance is paid in full prior to the [maturity date](/usc/12/1707.md?p=c), the [Secretary](/usc/12/1715z–22a.md?p=4) is further authorized in his discretion to require the payment by the [mortgagee](/usc/12/1707.md?p=b) of an adjusted premium charge in such amount as the [Secretary](/usc/12/1715z–22a.md?p=4) determines to be equitable, but not in excess of the aggregate amount of the premium charges that the [mortgagee](/usc/12/1707.md?p=b) would otherwise have been required to pay if the [mortgage](/usc/12/1707.md?p=a) had continued to be insured under this section until such [maturity date](/usc/12/1707.md?p=c); and in the event that the principal obligation is paid in full as herein set forth the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to refund to the [mortgagee](/usc/12/1707.md?p=b) for the account of the [mortgagor](/usc/12/1707.md?p=b) 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](/usc/12/1707.md?p=a) (1) for which the [Secretary](/usc/12/1715z–22a.md?p=4) requires, at the time the [mortgage](/usc/12/1707.md?p=a) is insured, the payment of a single premium charge to cover the total premium obligation for the insurance of the [mortgage](/usc/12/1707.md?p=a), and (2) on which the principal obligation is paid before the number of years on which the premium with respect to a particular [mortgage](/usc/12/1707.md?p=a) was based, or the property is sold subject to the [mortgage](/usc/12/1707.md?p=a) or is sold and the [mortgage](/usc/12/1707.md?p=a) is assumed prior to such time, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=b) over the term of the [mortgage](/usc/12/1707.md?p=a), in accordance with procedures established by the [Secretary](/usc/12/1715z–22a.md?p=4) which take into account sound financial and actuarial considerations. - (2) Notwithstanding any other provision of this section, each [mortgage](/usc/12/1707.md?p=a) secured by a 1- to 4-[family](/usc/12/1715z–1.md?p=j-2-A) dwelling that is an obligation of the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10) shall be subject to the following requirements: - (A) The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a). In the case of a [mortgage](/usc/12/1707.md?p=a) for which the [mortgagor](/usc/12/1707.md?p=b) 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](/usc/12/1715z–22a.md?p=4), the premium payment under this subparagraph shall not exceed 2.75 percent of the amount of the original insured principal obligation of the [mortgage](/usc/12/1707.md?p=a). Upon payment in full of the principal obligation of a [mortgage](/usc/12/1707.md?p=a) prior to the [maturity date](/usc/12/1707.md?p=c) of the [mortgage](/usc/12/1707.md?p=a), the [Secretary](/usc/12/1715z–22a.md?p=4) shall refund all of the unearned premium charges paid on the [mortgage](/usc/12/1707.md?p=a) pursuant to this subparagraph, provided that the [mortgagor](/usc/12/1707.md?p=b) refinances the unpaid principal obligation under this subchapter. - (B) In addition to the premium under [subparagraph (A)](#c-2-A), the [Secretary](/usc/12/1715z–22a.md?p=4) 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)](#c-2-A) and without taking into account delinquent payments or prepayments) for the following periods: - (i) For any [mortgage](/usc/12/1707.md?p=a) involving an original principal obligation (excluding any premium collected under [subparagraph (A)](#c-2-A)) that is less than 90 percent of the appraised value of the property (as of the date the [mortgage](/usc/12/1707.md?p=a) is accepted for insurance), for the first 11 years of the [mortgage](/usc/12/1707.md?p=a) term. - (ii) For any [mortgage](/usc/12/1707.md?p=a) involving an original principal obligation (excluding any premium collected under [subparagraph (A)](#c-2-A)) that is greater than or equal to 90 percent of such value, for the first 30 years of the [mortgage](/usc/12/1707.md?p=a) term; except that notwithstanding the matter preceding [clause (i)](#c-2-B-i), for any [mortgage](/usc/12/1707.md?p=a) involving an original principal obligation (excluding any premium collected under [subparagraph (A)](#c-2-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)](#c-2-A) and without taking into account delinquent payments or prepayments). - (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](/usc/12/1707.md?p=a) amounts for insuring a [mortgage](/usc/12/1707.md?p=a) secured by a one- to four-[family](/usc/12/1715z–1.md?p=j-2-A) dwelling, the maximum amount of the [mortgage](/usc/12/1707.md?p=a) determined under any such provision may be increased by the amount of the [mortgage](/usc/12/1707.md?p=a) insurance premium paid at the time the [mortgage](/usc/12/1707.md?p=a) is insured. - (2) The maximum amount of a [mortgage](/usc/12/1707.md?p=a) determined under [subsection (b)(2)(B)](#b-2-B) of this section may not be increased as provided in [paragraph (1)](#d-1). - (e) **Contract of insurance as evidence of eligibility—** Any contract of insurance heretofore or hereafter executed by the [Secretary](/usc/12/1715z–22a.md?p=4) under this subchapter shall be conclusive evidence of the eligibility of the loan or [mortgage](/usc/12/1707.md?p=a) for insurance, and the validity of any contract of insurance so executed shall be incontestable in the hands of an approved [financial institution](/usc/12/1715k.md?p=h-1-C) or approved [mortgagee](/usc/12/1707.md?p=b) from the date of the execution of such contract, except for fraud or misrepresentation on the part of such approved [financial institution](/usc/12/1715k.md?p=h-1-C) or approved [mortgagee](/usc/12/1707.md?p=b). - (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](/usc/12/1707.md?p=a) products offered by that lender and for which the borrower would qualify. - (2) **Notice—** The notice required under [paragraph (1)](#f-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](/usc/12/1715z–22a.md?p=4) under [subsection (b)](#b) with the note rates, insurance premiums (if applicable), and other costs and fees that would be expected to be due if the [mortgagor](/usc/12/1707.md?p=b) obtained instead other [mortgage](/usc/12/1707.md?p=a) products offered by the lender and for which the borrower would qualify with a similar loan-to-value ratio— - (i) in connection with a conventional [mortgage](/usc/12/1707.md?p=a) (as that term is used in [section 1454(a)(2) of this title](/usc/12/1454.md?p=a-2) or [section 1717(b)(2) of this title](/usc/12/1717.md?p=b-2), as applicable), assuming prevailing interest rates; and - (ii) in connection with a loan guaranteed or insured under [chapter 37](/usc/38/chptIII-ch37.md) of title 38, assuming prevailing interest rates; and - (B) a statement regarding when the requirement of the [mortgagor](/usc/12/1707.md?p=b) to pay the [mortgage](/usc/12/1707.md?p=a) insurance premiums for a [mortgage](/usc/12/1707.md?p=a) insured under this section would terminate, or a statement that the requirement shall terminate only if the [mortgage](/usc/12/1707.md?p=a) is refinanced, paid off, or otherwise terminated. - (g) **Limitation on use of single family mortgage insurance by investors—** - (1) The [Secretary](/usc/12/1715z–22a.md?p=4) may insure a [mortgage](/usc/12/1707.md?p=a) under this subchapter that is secured by a 1- to 4-[family](/usc/12/1715z–1.md?p=j-2-A) dwelling, or approve a [substitute mortgagor](#g-3) with respect to any such [mortgage](/usc/12/1707.md?p=a), only if the [mortgagor](/usc/12/1707.md?p=b) is to occupy the dwelling as his or her principal residence or as a secondary residence, as determined by the [Secretary](/usc/12/1715z–22a.md?p=4). In making this determination with respect to the occupancy of secondary residences, the [Secretary](/usc/12/1715z–22a.md?p=4) may not insure [mortgages](/usc/12/1707.md?p=a) with respect to such residences unless the [Secretary](/usc/12/1715z–22a.md?p=4) determines that it is necessary to avoid undue hardship to the [mortgagor](/usc/12/1707.md?p=b). In no event may a secondary residence under this subsection include a vacation home, as determined by the [Secretary](/usc/12/1715z–22a.md?p=4). - (2) The occupancy requirement established in [paragraph (1)](#g-1) shall not apply to any [mortgagor](/usc/12/1707.md?p=b) (or co-[mortgagor](/usc/12/1707.md?p=b), as appropriate) that is— - (A) a public entity, as provided in section [1715d](/usc/12/1715d.md) or [1715z–12](/usc/12/1715z–12.md) of this title, or any other [State](/usc/12/1707.md?p=d) or local government or an [agency](/usc/12/1422.md?p=12) thereof; - (B) a private nonprofit or public entity, as provided in section [1715l(h)](/usc/12/1715l.md) or [1715z(j)](/usc/12/1715z.md?p=j) of this title, or other private [nonprofit organization](/usc/12/1821.md?p=w-2-B) that is exempt from taxation under [section 501(c)(3) of title 26](/usc/26/501.md?p=c-3) and intends to sell or lease the mortgaged property to low or moderate-income [persons](/usc/12/5481.md?p=19), as determined by the [Secretary](/usc/12/1715z–22a.md?p=4); - (C) an [Indian tribe](/usc/12/1710.md?p=h-8-H), as provided in [section 1715z–13 of this title](/usc/12/1715z–13.md); - (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](/usc/12/1715g.md) or subsection [(b)(4)](/usc/12/1715m.md) or [(f)](/usc/12/1715m.md) of section 1715m[^1] of this title; - (E) a [mortgagor](/usc/12/1707.md?p=b) or co-[mortgagor](/usc/12/1707.md?p=b) under [subsection (k)](#k); or - (F) a [mortgagor](/usc/12/1707.md?p=b) that, pursuant to [section 1715n(a)(7) of this title](/usc/12/1715n.md?p=a-7), is refinancing an existing [mortgage](/usc/12/1707.md?p=a) insured under this chapter for not more than the outstanding balance of the existing [mortgage](/usc/12/1707.md?p=a), if the amount of the monthly payment due under the refinancing [mortgage](/usc/12/1707.md?p=a) is less than the amount due under the existing [mortgage](/usc/12/1707.md?p=a) for the month in which the refinancing [mortgage](/usc/12/1707.md?p=a) is executed. - (3) For purposes of this subsection, the term “substitute mortgagor” means a [person](/usc/12/5481.md?p=19) who, upon the release by a [mortgagee](/usc/12/1707.md?p=b) of a previous [mortgagor](/usc/12/1707.md?p=b) from personal liability on the [mortgage](/usc/12/1707.md?p=a) note, assumes such liability and agrees to pay the [mortgage](/usc/12/1707.md?p=a) debt. - (h) **Disaster housing—** Notwithstanding any other provision of this section, the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to insure any [mortgage](/usc/12/1707.md?p=a) which involves a principal obligation not in excess of the applicable maximum dollar limit under [subsection (b)](#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](/usc/12/1715z–1.md?p=j-2-A) residence, where the [mortgagor](/usc/12/1707.md?p=b) establishes (to the satisfaction of the [Secretary](/usc/12/1715z–22a.md?p=4)) that his home which he occupied as an [owner](/usc/12/4146.md?p=2) 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)](/usc/42/5122.md?p=2) and [5170](/usc/42/5170.md) 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](/usc/12/1707.md?p=a) insured under this section shall not be taken into account in determining the amount of [real estate](/usc/12/1707.md?p=g) loans which a [national bank](/usc/12/221a.md?p=a) may make in relation to its [capital](/usc/12/51c.md) and surplus or its time and savings [deposits](/usc/12/5301.md?p=18-A). - (k) **Rehabilitation of one- to four-family structures; definitions; eligibility; refinancing and extension; General Insurance Fund—** - (1) The [Secretary](/usc/12/1715z–22a.md?p=4) may, in order to assist in the [rehabilitation](#k-2-B) of one- to four-[family](/usc/12/1715z–1.md?p=j-2-A) structures used primarily for residential purposes, insure and make commitments to insure [rehabilitation loans](#k-2-A) ([including](/usc/12/25b.md?p=a-3) advances made during [rehabilitation](#k-2-B)) made by [financial institutions](/usc/12/1715k.md?p=h-1-C). Such commitments to insure and such insurance shall be made upon such terms and conditions which the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe and which are consistent with the provisions of subsections [(b)](#b), [(c)](#c), [(e)](#e), [(i)](#i),[^1] and (j) of this section, except as modified by the provisions of this subsection. - (2) For the purpose of this subsection— - (A) the term “rehabilitation loan” means a loan, advance of [credit](/usc/12/5481.md?p=7), or purchase of an obligation representing a loan or advance of [credit](/usc/12/5481.md?p=7), made for the purpose of financing— - (i) the [rehabilitation](#k-2-B) of an existing one- to four-unit structure which will be used primarily for residential purposes; - (ii) the [rehabilitation](#k-2-B) 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](#k-2-B) 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](/usc/12/25b.md?p=a-3) improvements designed to meet cost-effective energy conservation standards prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4)) 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](/usc/12/4146.md?p=2) 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](/usc/42/4851b.md). - (3) To be eligible for insurance under this subsection, a [rehabilitation loan](#k-2-A) shall— - (A) involve a principal obligation ([including](/usc/12/25b.md?p=a-3) such initial service charges, appraisal, inspection, and other fees as the [Secretary](/usc/12/1715z–22a.md?p=4) 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)](#b-2); except that, in determining the amount of the principal obligation for purposes of this subsection, the [Secretary](/usc/12/1715z–22a.md?p=4) shall establish as the appraised value of the property an amount not to exceed the sum of the estimated cost of [rehabilitation](#k-2-B) and the [Secretary](/usc/12/1715z–22a.md?p=4)’s estimate of the value of the property before [rehabilitation](#k-2-B); - (B) bear interest at such rate as may be agreed upon by the borrower and the [financial institution](/usc/12/1715k.md?p=h-1-C); - (C) be an acceptable risk, as determined by the [Secretary](/usc/12/1715z–22a.md?p=4); and - (D) comply with such other terms, conditions, and restrictions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe. - (4) Any [rehabilitation loan](#k-2-A) insured under this subsection may be refinanced and extended in accordance with such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe, but in no event for an additional amount or term which exceeds the maximum provided for in this subsection. - (5) All [funds](/usc/12/4702.md?p=10) received and all disbursements made pursuant to the authority established by this subsection shall be credited or charged, as appropriate, to the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10), and insurance benefits shall be paid in cash out of such [Fund](/usc/12/4702.md?p=10) or in debentures executed in the name of such [Fund](/usc/12/4702.md?p=10). Insurance benefits paid with respect to loans secured by a [first mortgage](/usc/12/1707.md?p=a) and insured under this subsection shall be paid in accordance with [section 1710 of this title](/usc/12/1710.md). Insurance benefits paid with respect to loans secured by a [mortgage](/usc/12/1707.md?p=a) other than a [first mortgage](/usc/12/1707.md?p=a) and insured under this subsection shall be paid in accordance with paragraphs (6) and (7) of [section 1715k(h) of this title](/usc/12/1715k.md?p=h), 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](/usc/12/1715z–22a.md?p=4) is authorized to insure under this section any [mortgage](#n-2-A) meeting the requirements of [subsection (b)](#b) of this section, except as modified by this subsection. To be eligible, the [mortgage](#n-2-A) shall involve a dwelling unit in a cooperative housing project which is covered by a blanket [mortgage](#n-2-A) insured under this chapter or the construction of which was completed more than a year prior to the application for the [mortgage](#n-2-A) insurance. The [mortgage](#n-2-A) amount as determined under the other provisions of [subsection (b)](#b) of this section shall be reduced by an amount equal to the portion of the unpaid balance of the blanket [mortgage](#n-2-A) covering the project which is attributable (as of the date the [mortgage](#n-2-A) 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](/usc/12/1707.md?p=d) where the [property](#n-2-B) is located and accompanied by such security and other undertakings as may be required under regulations of the [Secretary](/usc/12/1715z–22a.md?p=4)) to secure a loan made to finance the purchase of stock or membership in a cooperative ownership housing [corporation](/usc/12/2277a.md?p=2) the permanent occupancy of the dwelling units of which is restricted to [members](/usc/12/1426a.md?p=g-1) of such [corporation](/usc/12/2277a.md?p=2), 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)](#n-2-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](/usc/12/25b.md?p=a-3) a dwelling unit in such a cooperative project. - (C) The term “mortgagor” [includes](/usc/12/25b.md?p=a-3) a [person](/usc/12/5481.md?p=19) or [persons](/usc/12/5481.md?p=19) giving a first or subordinate [mortgage](#n-2-A) or lien (of the type described in [subparagraph (A)](#n-2-A)) to secure a loan to finance the purchase of stock or membership in a cooperative housing [corporation](/usc/12/2277a.md?p=2). - (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](/usc/12/1715z–22a.md?p=4) shall take appropriate actions to reduce losses under the single-[family](/usc/12/1715z–1.md?p=j-2-A) [mortgage](/usc/12/1707.md?p=a) insurance programs carried out under this subchapter. Such actions shall include— - (1) an annual review by the [Secretary](/usc/12/1715z–22a.md?p=4) of the rate of early serious [defaults](/usc/12/1467a.md?p=e-7-A) and claims, in accordance with [section 1735f–11 of this title](/usc/12/1735f–11.md); - (2) requiring that at least one [person](/usc/12/5481.md?p=19) acquiring ownership of a one- to four-[family](/usc/12/1715z–1.md?p=j-2-A) residential property encumbered by a [mortgage](/usc/12/1707.md?p=a) insured under this subchapter be determined to be creditworthy under standards prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4), whether or not such [person](/usc/12/5481.md?p=19) assumes personal liability under the [mortgage](/usc/12/1707.md?p=a) (except that acquisitions by devise or descent shall not be subject to this requirement); - (3) in any case where personal liability under a [mortgage](/usc/12/1707.md?p=a) is assumed, requiring that the original [mortgagor](/usc/12/1707.md?p=b) 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](/usc/12/1707.md?p=b) whose [mortgages](/usc/12/1707.md?p=a) are insured under this section, using the [Fund](/usc/12/4702.md?p=10) 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](/usc/12/1467a.md?p=e-7-A) 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](/usc/12/1467a.md?p=e-7-A) on the [mortgage](/usc/12/1707.md?p=a) unless the [mortgage](/usc/12/1707.md?p=a) is in [default](/usc/12/1467a.md?p=e-7-A) at the time of the expiration of the 5-year period. - (s) **Transferred—** - (t) **Disclosure regarding interest due upon mortgage prepayment—** - (1) Each [mortgagee](/usc/12/1707.md?p=b) (or [servicer](/usc/12/4901.md?p=16)) with respect to a [mortgage](/usc/12/1707.md?p=a) under this section shall provide each [mortgagor](/usc/12/1707.md?p=b) of such [mortgagee](/usc/12/1707.md?p=b) (or [servicer](/usc/12/4901.md?p=16)) written notice, not less than annually, containing a statement of the amount outstanding for prepayment of the principal amount of the [mortgage](/usc/12/1707.md?p=a) and describing any requirements the [mortgagor](/usc/12/1707.md?p=b) 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](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=b) (or [servicer](/usc/12/4901.md?p=16)) with respect to a [mortgage](/usc/12/1707.md?p=a) under this section shall, at or before closing with respect to any such [mortgage](/usc/12/1707.md?p=a), provide the [mortgagor](/usc/12/1707.md?p=b) with written notice (in such form as the [Secretary](/usc/12/1715z–22a.md?p=4) shall prescribe, by regulation, before the expiration of the 90-day period beginning upon November 28, 1990) describing any requirements the [mortgagor](/usc/12/1707.md?p=b) must fulfill upon prepayment of the principal amount of the [mortgage](/usc/12/1707.md?p=a) to prevent the accrual of any interest on the principal amount after the date of such prepayment. This paragraph shall apply to any [mortgage](/usc/12/1707.md?p=a) executed after the expiration of the period under [paragraph (1)](#t-1). - (u) **Accountability of mortgage lenders—** - (1) No [mortgagee](/usc/12/1707.md?p=b) may make or hold [mortgages](/usc/12/1707.md?p=a) insured under this section if the customary lending practices of the [mortgagee](/usc/12/1707.md?p=b), as determined by the [Secretary](/usc/12/1715z–22a.md?p=4) pursuant to [section 1735f–17 of this title](/usc/12/1735f–17.md), provide for a variation in [mortgage charge rates](#u-2-C) that exceeds 2 percent for insured [mortgages](/usc/12/1707.md?p=a) made by the [mortgagee](/usc/12/1707.md?p=b) on dwellings located within an [area](#u-2-A). The [Secretary](/usc/12/1715z–22a.md?p=4) shall ensure that any permissible variations in the [mortgage charge rates](#u-2-C) of any [mortgagee](/usc/12/1707.md?p=b) are based only on actual variations in fees or costs to the [mortgagee](/usc/12/1707.md?p=b) to make the loan. - (2) For purposes of this subsection— - (A) the term “area” means a metropolitan statistical area as established by the [Office](/usc/12/2279bb.md?p=4) of Management and Budget; - (B) the term “mortgage charges” [includes](/usc/12/25b.md?p=a-3) the interest rate, discount points, loan origination fee, and any other amount charged to a [mortgagor](/usc/12/1707.md?p=b) with respect to an insured [mortgage](/usc/12/1707.md?p=a); and - (C) the term “mortgage charge rate” means the amount of [mortgage charges](#u-2-B) for an insured [mortgage](/usc/12/1707.md?p=a) expressed as a percentage of the initial principal amount of the [mortgage](/usc/12/1707.md?p=a). - (v) **Use of FHA insurance with assistance under 42 U.S.C. 1437f—** The insurance of a [mortgage](/usc/12/1707.md?p=a) under this section in connection with the assistance provided under [section 1437f(y) of title 42](/usc/42/1437f.md?p=y) shall be the obligation of the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10). - (w) **Annual report—** The [Secretary](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development shall submit to the Congress an annual report on the single [family](/usc/12/1715z–1.md?p=j-2-A) [mortgage](/usc/12/1707.md?p=a) insurance program under this section. Each report shall set forth— - (1) an analysis of the income groups served by the single [family](/usc/12/1715z–1.md?p=j-2-A) insurance program, [including](/usc/12/25b.md?p=a-3)— - (A) the percentage of borrowers whose incomes do not exceed 100 percent of the median income for the [area](#b-2); - (B) the percentage of borrowers whose incomes do not exceed 80 percent of the median income for the [area](#b-2); and - (C) the percentage of borrowers whose incomes do not exceed 60 percent of the median income for the [area](#b-2); - (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](/usc/12/1715z–22a.md?p=4) in carrying out the program has employed methods to ensure that needs of low and moderate income [families](/usc/12/1715z–1.md?p=j-2-A), underserved [areas](#b-2), and historically disadvantaged groups are served by the program; and - (4) the current impediments to having the program serve low and moderate income borrowers; borrowers from central city [areas](#b-2); borrowers from rural [areas](#b-2); and minority borrowers. The report required under this subsection shall include the report required under [section 1735f–18(c) of this title](/usc/12/1735f–18.md?p=c) and the report required under [section 1711(g)](/usc/12/1711.md)[^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](/usc/12/1715z–22a.md?p=4) shall submit to Congress a report on the plan of the [Secretary](/usc/12/1715z–22a.md?p=4) to address each material weakness, reportable condition, and noncompliance with an applicable law or regulation (as defined by the [Director](/usc/12/2279bb.md?p=3) of the [Office](/usc/12/2279bb.md?p=4) of Management and Budget) identified in the most recent audited financial statement of the Federal Housing Administration submitted under [section 3515 of title 31](/usc/31/3515.md). - (2) **Contents of annual report—** Each report submitted under [paragraph (1)](#x-1) shall include— - (A) an estimate of the resources, [including](/usc/12/25b.md?p=a-3) 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)](#x-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)](#x-1); and - (C) the progress of the [Secretary](/usc/12/1715z–22a.md?p=4) in implementing the plan of the [Secretary](/usc/12/1715z–22a.md?p=4) included in the report submitted under [paragraph (1)](#x-1) for the preceding year, except that this subparagraph does not apply to the initial report submitted under [paragraph (1)](#x-1). - (y) **Requirements for mortgages for condominiums—** - (1) **Project recertification requirements—** Notwithstanding any other law, regulation, or guideline of the [Secretary](/usc/12/1715z–22a.md?p=4), [including](/usc/12/25b.md?p=a-3) chapter 2.4 of the Condominium Project Approval and Processing Guide of the FHA, the [Secretary](/usc/12/1715z–22a.md?p=4) shall streamline the project certification requirements that are applicable to the insurance under this section for [mortgages](/usc/12/1707.md?p=a) for condominium projects so that recertifications are substantially less burdensome than certifications. The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4), [including](/usc/12/25b.md?p=a-3) 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](/usc/12/1707.md?p=a) on a condominium property under this section regarding the percentage of the floor space of a condominium property that may be used for nonresidential or commercial purposes, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/2279bb.md?p=4) 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](/usc/12/25b.md?p=a-3) the total number of [family](/usc/12/1715z–1.md?p=j-2-A) units in the project, shall be considered. Not later than the expiration of the 90-day period beginning on July 29, 2016, the [Secretary](/usc/12/1715z–22a.md?p=4) shall issue regulations to implement this paragraph, which shall include any standards, training requirements, and remedies and penalties that the [Secretary](/usc/12/1715z–22a.md?p=4) considers appropriate. - (3) **Transfer fees—** Notwithstanding any other law, regulation, or guideline of the [Secretary](/usc/12/1715z–22a.md?p=4), [including](/usc/12/25b.md?p=a-3) chapter 1.8.8 of the Condominium Project Approval and Processing Guide of the FHA and section 203.41 of the [Secretary](/usc/12/1715z–22a.md?p=4)’s regulations ([24 CFR 203.41](/cfr/24/203.41.md)), existing standards of the Federal Housing Finance [Agency](/usc/12/1422.md?p=12) relating to encumbrances under private transfer fee covenants shall apply to the insurance of [mortgages](/usc/12/1707.md?p=a) by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) by the Federal National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i) and the Federal Home Loan [Mortgage](/usc/12/1707.md?p=a) [Corporation](/usc/12/2277a.md?p=2). If the provisions of part 1228 of the [Director](/usc/12/2279bb.md?p=3) of the Federal Housing Finance [Agency](/usc/12/1422.md?p=12)’s regulations ([12 CFR part 1228](/cfr/12/part1228.md)) are amended or otherwise changed after July 29, 2016, the [Secretary](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development shall adopt any such amendments or changes for purposes of this paragraph, unless the [Secretary](/usc/12/1715z–22a.md?p=4) causes to be published in the Federal Register a notice explaining why the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) shall, by rule, notice, or [mortgagee](/usc/12/1707.md?p=b) letter, issue guidance regarding the percentage of units that must be occupied by the [owners](/usc/12/4146.md?p=2) as a principal residence or a secondary residence (as such terms are defined by the [Secretary](/usc/12/1715z–22a.md?p=4)), or must have been sold to [owners](/usc/12/4146.md?p=2) who intend to meet such occupancy requirements, [including](/usc/12/25b.md?p=a-3) justifications for the percentage requirements, in order for a condominium project to be acceptable to the [Secretary](/usc/12/1715z–22a.md?p=4) for insurance under this section of a [mortgage](/usc/12/1707.md?p=a) within such condominium property. - (B) **Failure to act—** If the [Secretary](/usc/12/1715z–22a.md?p=4) fails to issue the guidance required under [subparagraph (A)](#y-4-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](/usc/12/1715z–22a.md?p=4) for insurance under this section, at least 35 percent of all [family](/usc/12/1715z–1.md?p=j-2-A) units ([including](/usc/12/25b.md?p=a-3) units not covered by FHA-insured [mortgages](/usc/12/1707.md?p=a)) must be occupied by the [owners](/usc/12/4146.md?p=2) as a principal residence or a secondary residence (as such terms are defined by the [Secretary](/usc/12/1715z–22a.md?p=4)), or must have been sold to [owners](/usc/12/4146.md?p=2) who intend to meet such occupancy requirement. - (ii) **Other considerations—** The [Secretary](/usc/12/1715z–22a.md?p=4) may increase the percentage applicable pursuant to [clause (i)](#y-4-B-i) to a condominium project on a project-by-project 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](/usc/12/25b.md?p=a-3) the total number of [family](/usc/12/1715z–1.md?p=j-2-A) units in the project. # [§1709–1. Repealed. Pub. L. 98–181, title I [title IV, § 404(a)], Nov. 30, 1983, 97 Stat. 1208 — repealed] # §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](/usc/12/1707.md?p=d) 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](/usc/12/1707.md?p=d) expressly limiting the amount of interest which may be charged, taken, received, or reserved shall not apply to— - (1) any loan or [mortgage](/usc/12/1707.md?p=a) which is secured by a one- to four-[family](/usc/12/1715z–1.md?p=j-2-A) dwelling and which is (A) insured under title I or II [[12 U.S.C. 1702](/usc/12/1702.md) et seq. or 1707 et seq.] of the National Housing Act, or (B) insured, guaranteed, or made under [chapter 37](/usc/38/chptIII-ch37.md) 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](/usc/12/1707.md?p=a) so insured, guaranteed, or made is declared. - (b) The provisions of this section shall apply to such loans, [mortgages](/usc/12/1707.md?p=a), or other interim financing made or executed in any [State](/usc/12/1707.md?p=d) until the effective date (after June 30, 1976) of a provision of law of that [State](/usc/12/1707.md?p=d) limiting the amount of interest which may be charged, taken, received, or reserved on such loans, [mortgages](/usc/12/1707.md?p=a), or financing. # §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](/usc/12/1715z–1.md?p=j-2-A) dwellings ([including](/usc/12/25b.md?p=a-3) condominiums and cooperatives) which are subject to a loan in [default](/usc/12/1467a.md?p=e-7-A) at time of purchase or in [default](/usc/12/1467a.md?p=e-7-A) within one year subsequent to the purchase and the loan is secured by a [mortgage](/usc/12/1707.md?p=a) or deed of trust insured or held by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) 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](/usc/12/4146.md?p=2) under any business organization or trust purchasing such dwelling, or to an officer, [director](/usc/12/2279bb.md?p=3), or agent of any such purchaser. Nothing in this section shall apply to the purchaser of only one such dwelling. # §1709a. Determination of loan-to-value ratios The [Secretary](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development, in establishing maximum loan-to-value ratios for [mortgages](/usc/12/1707.md?p=a) insured by him under the National Housing Act [[12 U.S.C. 1701](/usc/12/1701.md) 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](/usc/12/1717.md?p=b-7-A-ii) [credit](/usc/12/5481.md?p=7) assisted under the Servicemen’s Readjustment Act of 1944, as amended. # [§1709b. Repealed. Pub. L. 85–364, § 6, Apr. 1, 1958, 72 Stat. 77 — repealed] # §1710. Payment of insurance - (a) **In general—** - (1) **Authorized claims procedures—** The [Secretary](/usc/12/1715z–22a.md?p=4) may, in accordance with this subsection and terms and conditions prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4), pay insurance benefits to a [mortgagee](/usc/12/1707.md?p=b) for any [mortgage](/usc/12/1707.md?p=a) insured under [section 1709 of this title](/usc/12/1709.md) through any of the following methods: - (A) **Assignment of mortgage—** The [Secretary](/usc/12/1715z–22a.md?p=4) may pay insurance benefits whenever a [mortgage](/usc/12/1707.md?p=a) has been in a monetary [default](/usc/12/1467a.md?p=e-7-A) for not less than 3 full monthly installments or whenever the [mortgagee](/usc/12/1707.md?p=b) is entitled to foreclosure for a nonmonetary [default](/usc/12/1467a.md?p=e-7-A). Insurance benefits shall be paid pursuant to this subparagraph only upon the assignment, transfer, and delivery to the [Secretary](/usc/12/1715z–22a.md?p=4) of— - (i) all rights and interests arising under the [mortgage](/usc/12/1707.md?p=a); - (ii) all claims of the [mortgagee](/usc/12/1707.md?p=b) against the [mortgagor](/usc/12/1707.md?p=b) or others arising out of the [mortgage](/usc/12/1707.md?p=a) transaction; - (iii) title evidence satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4); and - (iv) such records relating to the [mortgage](/usc/12/1707.md?p=a) transaction as the [Secretary](/usc/12/1715z–22a.md?p=4) may require. - (B) **Conveyance of title to property—** The [Secretary](/usc/12/1715z–22a.md?p=4) may pay insurance benefits if the [mortgagee](/usc/12/1707.md?p=b) has acquired title to the mortgaged property through foreclosure or has otherwise acquired such property from the [mortgagor](/usc/12/1707.md?p=b) after a [default](/usc/12/1467a.md?p=e-7-A) upon— - (i) the prompt conveyance to the [Secretary](/usc/12/1715z–22a.md?p=4) of title to the property which meets the standards of the [Secretary](/usc/12/1715z–22a.md?p=4) in force at the time the [mortgage](/usc/12/1707.md?p=a) was insured and which is evidenced in the manner provided by such standards; and - (ii) the assignment to the [Secretary](/usc/12/1715z–22a.md?p=4) of all claims of the [mortgagee](/usc/12/1707.md?p=b) against the [mortgagor](/usc/12/1707.md?p=b) or others, arising out of [mortgage](/usc/12/1707.md?p=a) transaction or foreclosure proceedings, except such claims as may have been released with the consent of the [Secretary](/usc/12/1715z–22a.md?p=4). The [Secretary](/usc/12/1715z–22a.md?p=4) may permit the [mortgagee](/usc/12/1707.md?p=b) to tender to the [Secretary](/usc/12/1715z–22a.md?p=4) a satisfactory conveyance of title and transfer of possession directly from the [mortgagor](/usc/12/1707.md?p=b) or other appropriate grantor, and may pay to the [mortgagee](/usc/12/1707.md?p=b) the insurance benefits to which it would otherwise be entitled if such conveyance had been made to the [mortgagee](/usc/12/1707.md?p=b) and from the [mortgagee](/usc/12/1707.md?p=b) to the [Secretary](/usc/12/1715z–22a.md?p=4). - (C) **Claim without conveyance of title—** The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4), and upon assignment to the [Secretary](/usc/12/1715z–22a.md?p=4) of all claims referred to in [clause (ii)](#a-1-B-ii) of subparagraph (B). - (D) **Preforeclosure sale—** The [Secretary](/usc/12/1715z–22a.md?p=4) may pay insurance benefits upon the sale of the mortgaged property by the [mortgagor](/usc/12/1707.md?p=b) after [default](/usc/12/1467a.md?p=e-7-A) and the assignment to the [Secretary](/usc/12/1715z–22a.md?p=4) of all claims referred to in [clause (ii)](#a-1-B-ii) of subparagraph (B), if— - (i) the sale of the mortgaged property has been approved by the [Secretary](/usc/12/1715z–22a.md?p=4); - (ii) the [mortgagee](/usc/12/1707.md?p=b) receives an amount at least equal to the fair market value of the property (with appropriate adjustments), as determined by the [Secretary](/usc/12/1715z–22a.md?p=4); and - (iii) the [mortgagor](/usc/12/1707.md?p=b) has received an appropriate disclosure, as determined by the [Secretary](/usc/12/1715z–22a.md?p=4). - (2) **Payment for loss mitigation—** The [Secretary](/usc/12/1715z–22a.md?p=4) may pay insurance benefits to the [mortgagee](/usc/12/1707.md?p=b) to recompense the [mortgagee](/usc/12/1707.md?p=b) for all or part of any costs of the [mortgagee](/usc/12/1707.md?p=b) for taking loss mitigation actions that provide an alternative to foreclosure of a [mortgage](/usc/12/1707.md?p=a) that is in [default](/usc/12/1467a.md?p=e-7-A) or faces imminent [default](/usc/12/1467a.md?p=e-7-A), as defined by the [Secretary](/usc/12/1715z–22a.md?p=4) ([including](/usc/12/25b.md?p=a-3) 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](/usc/12/25b.md?p=a-3) assignment of [mortgages](/usc/12/1707.md?p=a) to the [Secretary](/usc/12/1715z–22a.md?p=4) under section subsection[^1] (a)(1)(A) or [section 1715u(c) of this title](/usc/12/1715u.md?p=c)). No actions taken under this paragraph, nor any failure to act under this paragraph, by the [Secretary](/usc/12/1715z–22a.md?p=4) or by a [mortgagee](/usc/12/1707.md?p=b) shall be subject to judicial review. - (3) **Determination of claims procedure—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall publish guidelines for determining which of the procedures for payment of insurance under [paragraph (1)](#a-1) are available to a [mortgagee](/usc/12/1707.md?p=b) when it claims insurance benefits. At least one of the procedures for payment of insurance benefits specified in paragraph [(1)(A)](#a-1-A) or [(1)(B)](#a-1-B) shall be available to a [mortgagee](/usc/12/1707.md?p=b) with respect to a [mortgage](/usc/12/1707.md?p=a), but the same procedure shall not be required to be available for all of the [mortgages](/usc/12/1707.md?p=a) held by a [mortgagee](/usc/12/1707.md?p=b). - (4) **Servicing of assigned mortgages—** If a [mortgage](/usc/12/1707.md?p=a) is assigned to the [Secretary](/usc/12/1715z–22a.md?p=4) under [paragraph (1)(A)](#a-1-A), the [Secretary](/usc/12/1715z–22a.md?p=4) may permit the assigning [mortgagee](/usc/12/1707.md?p=b) or its [servicer](/usc/12/4901.md?p=16) to continue to service the [mortgage](/usc/12/1707.md?p=a) for reasonable compensation and on terms and conditions determined by the [Secretary](/usc/12/1715z–22a.md?p=4). Neither the [Secretary](/usc/12/1715z–22a.md?p=4) nor any [servicer](/usc/12/4901.md?p=16) of the [mortgage](/usc/12/1707.md?p=a) shall be required to forbear from collection of amounts due under the [mortgage](/usc/12/1707.md?p=a) or otherwise pursue loss mitigation measures. - (5) **Calculation of insurance benefits—** Insurance benefits shall be paid in accordance with [section 1735d of this title](/usc/12/1735d.md) and shall be equal to the [original principal obligation of the mortgage](/usc/12/1715z–17.md?p=c) (with such additions and deductions as the [Secretary](/usc/12/1715z–22a.md?p=4) determines are appropriate) which was unpaid upon the date of— - (A) assignment of the [mortgage](/usc/12/1707.md?p=a) to the [Secretary](/usc/12/1715z–22a.md?p=4); - (B) the institution of foreclosure proceedings; - (C) the acquisition of the property after [default](/usc/12/1467a.md?p=e-7-A) other than by foreclosure; or - (D) sale of the mortgaged property by the [mortgagor](/usc/12/1707.md?p=b). - (6) **Forbearance and recasting after default—** The [mortgagee](/usc/12/1707.md?p=b) may, upon such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe— - (A) extend the time for the curing of the [default](/usc/12/1467a.md?p=e-7-A) and the time for commencing foreclosure proceedings or for otherwise acquiring title to the mortgaged property, to such time as the [mortgagee](/usc/12/1707.md?p=b) determines is necessary and desirable to enable the [mortgagor](/usc/12/1707.md?p=b) to complete the [mortgage](/usc/12/1707.md?p=a) payments, [including](/usc/12/25b.md?p=a-3) an extension of time beyond the stated maturity of the [mortgage](/usc/12/1707.md?p=a), and in the event of a subsequent foreclosure or acquisition of the property by other means the [Secretary](/usc/12/1715z–22a.md?p=4) may include in the amount of insurance benefits an amount equal to any unpaid [mortgage](/usc/12/1707.md?p=a) interest; or - (B) provide for a modification of the terms of the [mortgage](/usc/12/1707.md?p=a) for the purpose of recasting, over the remaining term of the [mortgage](/usc/12/1707.md?p=a) or over such longer period pursuant to guidelines as may be prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4), the total unpaid amount then due, with the modification to become effective currently or to become effective upon the termination of an agreed-upon extension of the period for curing the [default](/usc/12/1467a.md?p=e-7-A); and the principal amount of the [mortgage](/usc/12/1707.md?p=a), as modified, shall be considered the “[original principal obligation of the mortgage](/usc/12/1715z–17.md?p=c)” for purposes of [paragraph (5)](#a-5). - (7) **Termination of premium obligation—** The obligation of the [mortgagee](/usc/12/1707.md?p=b) to pay the premium charges for insurance shall cease upon fulfillment of the appropriate requirements under which the [Secretary](/usc/12/1715z–22a.md?p=4) may pay insurance benefits, as described in [paragraph (1)](#a-1). The [Secretary](/usc/12/1715z–22a.md?p=4) may also terminate the [mortgagee](/usc/12/1707.md?p=b)’s obligation to pay [mortgage](/usc/12/1707.md?p=a) insurance premiums upon receipt of an application filed by the [mortgagee](/usc/12/1707.md?p=b) for insurance benefits under [paragraph (1)](#a-1), or in the event the contract of insurance is terminated pursuant to [section 1715t of this title](/usc/12/1715t.md). - (8) **Effect on payment of insurance benefits under section 1715u—** Nothing in this section shall limit the authority of the [Secretary](/usc/12/1715z–22a.md?p=4) to pay insurance benefits under [section 1715u of this title](/usc/12/1715u.md). - (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](/usc/12/1715z–22a.md?p=4) to operate the program of [mortgage](/usc/12/1707.md?p=a) assignment and forbearance that was operated by the [Secretary](/usc/12/1715z–22a.md?p=4) pursuant to the Amended Stipulation and under the authority of [section 1715u of this title](/usc/12/1715u.md), prior to its amendment by section 407(b) of The Balanced Budget Downpayment Act, I (Public Law 104–99; 110 Stat. 45), no [mortgage](/usc/12/1707.md?p=a) assigned under this section may be included in any [mortgage](/usc/12/1707.md?p=a) foreclosure avoidance program that is the same or substantially equivalent to such a program of [mortgage](/usc/12/1707.md?p=a) assignment and forbearance. - (b) **Consent to release of mortgagor or property—** The [Secretary](/usc/12/1715z–22a.md?p=4) may at any time, under such terms and conditions as he may prescribe, consent to the release of the [mortgagor](/usc/12/1707.md?p=b) from his liability under the [mortgage](/usc/12/1707.md?p=a) or the [credit](/usc/12/5481.md?p=7) instrument secured thereby, or consent to the release of parts of the mortgaged property from the lien of the [mortgage](/usc/12/1707.md?p=a). - (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](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development, with the approval of the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury; and - (4) may be in book entry or certificated registered form, or such other form as the [Secretary](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development may prescribe in regulations. - (d) **Debentures; issuance; negotiability; terms; tax exemptions—** The debentures issued under this section to any mortagee[^2] with respect to [mortgages](/usc/12/1707.md?p=a) insured under [section 1709 of this title](/usc/12/1709.md) shall be issued in the name of the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10) as obligor and shall be negotiable, and, if in book entry form, transferable, in the manner described by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=b) after [default](/usc/12/1467a.md?p=e-7-A): 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](/usc/12/1467a.md?p=e-7-A) or as of such later date as the [Secretary](/usc/12/1715z–22a.md?p=4), in his discretion, may establish by regulation. The debentures shall bear interest from such date at a rate established by the [Secretary](/usc/12/1715z–22a.md?p=4) pursuant to [section 1715o](/usc/12/1715o.md) 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](/usc/12/1707.md?p=a) insured under [section 1709](/usc/12/1709.md) or [section 1713 of this title](/usc/12/1713.md) prior to February 3, 1938 shall be subject only to such Federal, [State](/usc/12/1707.md?p=d), and local taxes as the [mortgages](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10), but such debentures shall be fully and unconditionally guaranteed as to principal and interest by the United States; but any [mortgagee](/usc/12/1707.md?p=b) 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](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=d), county, municipality, or local taxing authority; and such debentures shall be paid out of the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10), 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](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10) fails to pay upon demand, when due, the principal of or interest on any debentures issued under this section, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) of the Treasury shall succeed to all the rights of the holders of such debentures. - (e) **Certificate of claim—** - (1) Subject to [paragraph (2)](#e-2), the certificate of claim issued by the [Secretary](/usc/12/1715z–22a.md?p=4) to any [mortgagee](/usc/12/1707.md?p=b) shall be for an amount which the [Secretary](/usc/12/1715z–22a.md?p=4) determines to be sufficient, when added to the face value of the debentures issued and the cash adjustment paid to the [mortgagee](/usc/12/1707.md?p=b), to equal the amount which the [mortgagee](/usc/12/1707.md?p=b) would have received if, at the time of the conveyance to the [Secretary](/usc/12/1715z–22a.md?p=4) of the property covered by the [mortgage](/usc/12/1707.md?p=a), the [mortgagor](/usc/12/1707.md?p=b) had redeemed the property and paid in full all obligations under the [mortgage](/usc/12/1707.md?p=a) and a reasonable amount for necessary expenses incurred by the [mortgagee](/usc/12/1707.md?p=b) in connection with the foreclosure proceedings, or the acquisition of the mortgaged property otherwise, and the conveyance thereof to the [Secretary](/usc/12/1715z–22a.md?p=4). 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). - (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](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) shall determine to be equitable and in accordance with sound accounting practice) the expenses incurred by the [Secretary](/usc/12/1715z–22a.md?p=4), the net amount realized from any property conveyed to the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) shall pay to the holder of such certificate the full amount so payable, and any excess remaining thereafter shall be paid to the [mortgagor](/usc/12/1707.md?p=b) of such property if the [mortgage](/usc/12/1707.md?p=a) was insured under [section 1709 of this title](/usc/12/1709.md): 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](/usc/12/1715z–22a.md?p=4) and credited to the applicable insurance [fund](/usc/12/4702.md?p=10); and - (ii) If such excess is equal to or less than the total amount payable under such certificate of claim, the [Secretary](/usc/12/1715z–22a.md?p=4) shall pay to the holder of such certificate the full amount of such excess. - (2) Notwithstanding any other provisions of this section, the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized, with respect to [mortgages](/usc/12/1707.md?p=a) insured pursuant to commitments for insurance issued after August 11, 1955, and, with the consent of the [mortgagee](/usc/12/1707.md?p=b) or [mortgagor](/usc/12/1707.md?p=b), as the case may be, with respect to [mortgages](/usc/12/1707.md?p=a) insured pursuant to commitments issued prior to such date, to effect the settlement of certificates of claim and refunds to [mortgagors](/usc/12/1707.md?p=b) at any time after the sale or transfer of title to the property conveyed to the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) is authorized, without awaiting the final liquidation of the [Secretary](/usc/12/1715z–22a.md?p=4)’s interest in the property, to settle any certificate of claim issued pursuant to [subsection (e)](#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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4)’s interest in the property, shall be retained by the [Secretary](/usc/12/1715z–22a.md?p=4) and credited to the applicable insurance [fund](/usc/12/4702.md?p=10). - (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](/usc/12/1715z–22a.md?p=4) shall have power to deal with, complete, rent, renovate, modernize, insure, or sell for cash or [credit](/usc/12/5481.md?p=7), 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](/usc/12/1715z–22a.md?p=4) shall also have power to pursue to final collection, by way of compromise or otherwise, all claims against [mortgagors](/usc/12/1707.md?p=b) assigned by [mortgagees](/usc/12/1707.md?p=b) to the [Secretary](/usc/12/1715z–22a.md?p=4) as provided in this section: Provided, That [section 6101 of title 41](/usc/41/6101.md) 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](/usc/12/1715z–22a.md?p=4) shall, by regulation, carry out a program of sales of such properties and shall develop and implement appropriate [credit](/usc/12/5481.md?p=7) terms and standards to be used in carrying out the program. The power to convey and to execute in the name of the [Secretary](/usc/12/1715z–22a.md?p=4) deeds of conveyance, deeds of release, assignments and satisfactions of [mortgages](/usc/12/1707.md?p=a), and any other written instrument relating to real or personal property or any interest therein heretofore or hereafter acquired by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development, his successors and assigns, without identifying the [Secretary](/usc/12/1715z–22a.md?p=4) therein, shall be deemed a proper conveyance or transfer to the same extent and of like effect as if the [Secretary](/usc/12/1715z–22a.md?p=4) were personally named in such conveyance or transfer. The [Secretary](/usc/12/1715z–22a.md?p=4) may sell real and personal property acquired by the [Secretary](/usc/12/1715z–22a.md?p=4) pursuant to the provisions of this chapter on such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe. - (h) **Disposition of assets in revitalization areas—** - (1) **In general—** The purpose of this subsection is to require the [Secretary](/usc/12/1715z–22a.md?p=4) to carry out a program under which [eligible assets](#h-2) (as such term is defined in [paragraph (2)](#h-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)](#g), the [Secretary](/usc/12/1715z–22a.md?p=4) shall dispose of all [eligible assets](#h-2) 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](/usc/12/1715z–22a.md?p=4), unless the [Secretary](/usc/12/1715z–22a.md?p=4) determines at any time that the [asset property](#h-8-B) is economically or otherwise infeasible to rehabilitate or that the best use of the [asset property](#h-8-B) is as open space ([including](/usc/12/25b.md?p=a-3) park land): - (A) **Properties—** Any property that— - (i) is designed as a dwelling for occupancy by 1 to 4 [families](/usc/12/1715z–1.md?p=j-2-A); - (ii) is located in a revitalization area; - (iii) was previously subject to a [mortgage](/usc/12/1707.md?p=a) insured under the provisions of this chapter; and - (iv) is owned by the [Secretary](/usc/12/1715z–22a.md?p=4) pursuant to the payment of insurance benefits under this chapter. - (B) **Mortgages—** Any [mortgage](/usc/12/1707.md?p=a) that— - (i) is an interest in a property that meets the requirements of clauses [(i)](#h-2-A-i) and [(ii)](#h-2-A-ii) of subparagraph (A); - (ii) was previously insured under the provisions of this chapter except for [mortgages](/usc/12/1707.md?p=a) insured under or made pursuant to sections [1715z](/usc/12/1715z.md), [1715z–12](/usc/12/1715z–12.md), or [1715z–20](/usc/12/1715z–20.md) of this title; and - (iii) is held by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](#h-8-A) of a [preferred purchaser](#h-8-E), if the property described in [clause (i)](#h-2-B-i) is located in such area. - (3) **Revitalization areas—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall designate areas as revitalization areas for purposes of this subsection. Before designation of an area as a revitalization area, the [Secretary](/usc/12/1715z–22a.md?p=4) shall consult with affected units of general local government, [States](#h-8-G), and [Indian tribes](#h-8-H) and interested [nonprofit organizations](#h-8-D). The [Secretary](/usc/12/1715z–22a.md?p=4) 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](#h-8-G) in which the area is located. - (B) **High concentration of eligible assets—** A high rate of [default](/usc/12/1467a.md?p=e-7-A) or foreclosure for single [family](/usc/12/1715z–1.md?p=j-2-A) [mortgages](/usc/12/1707.md?p=a) insured under this chapter has resulted, or may result, in the area— - (i) having a disproportionately high concentration of [eligible assets](#h-2), in comparison with the concentration of such assets in surrounding areas; or - (ii) being detrimentally impacted by [eligible assets](#h-2) in the vicinity of the area. - (C) **Low home ownership rate—** The rate for home ownership of single [family](/usc/12/1715z–1.md?p=j-2-A) homes in the area is substantially below the rate for homeownership in the metropolitan area. - (4) **Preference for sale to preferred purchasers—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall provide a preference, among prospective purchasers of [eligible assets](#h-2), for sale of such assets to any purchaser who— - (A) is— - (i) the [unit of general local government](#h-8-F), [State](#h-8-G), or [Indian tribe](#h-8-H) having jurisdiction with respect to the area in which are located the [eligible assets](#h-2) to be sold; or - (ii) a [nonprofit organization](#h-8-D); - (B) in making a purchase under the program under this subsection— - (i) establishes an [asset control area](#h-8-A), which shall be an area that consists of part or all of a revitalization area; and - (ii) purchases all assets of the [Secretary](/usc/12/1715z–22a.md?p=4) in the category or categories of [eligible assets](#h-2) set forth in the sale agreement required under [paragraph (7)](#h-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](#h-8-A) of the purchaser; and - (C) has the capacity to carry out the purchase of the category or categories of [eligible assets](#h-2) 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](/usc/12/1715z–22a.md?p=4) may sell an [eligible asset](#h-2) as provided in [paragraph (4)](#h-4) to a [preferred purchaser](#h-8-E) only pursuant to a binding agreement by the [preferred purchaser](#h-8-E) that the [eligible asset](#h-2) 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](#h-8-A), established pursuant to [paragraph (4)(B)(i)](#h-4-B-i) by the purchaser, in which the [eligible asset](#h-2) is located. - (ii) Under the plan, the [preferred purchaser](#h-8-E) has established, and agreed to meet, specific performance goals for increasing the rate of home ownership for [eligible assets](#h-2) in the [asset control area](#h-8-A) that are under the purchaser’s [control](/usc/12/24a.md?p=g-1). The plan shall provide that the [Secretary](/usc/12/1715z–22a.md?p=4) may waive or modify such goals or deadlines only upon a determination by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](#h-8-E) has established rehabilitation standards that meet or exceed the standards for housing quality established under subparagraph (B)(iii) by the [Secretary](/usc/12/1715z–22a.md?p=4), and has agreed that each [asset property](#h-8-B) for an [eligible asset](#h-2) purchased will be rehabilitated in accordance with such standards. - (B) **Non-preferred purchasers—** Under the program under this subsection, the [Secretary](/usc/12/1715z–22a.md?p=4) may sell an [eligible asset](#h-2) to a purchaser who is not a [preferred purchaser](#h-8-E) 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](/usc/12/1715z–22a.md?p=4) for home ownership of the [asset properties](#h-8-B) for the [eligible assets](#h-2) purchased by the purchaser, except that the [Secretary](/usc/12/1715z–22a.md?p=4) may, by [including](/usc/12/25b.md?p=a-3) a provision in the sale agreement required under [paragraph (7)](#h-7), provide for a lower rate of home ownership in sales involving exceptional circumstances. - (ii) The purchaser has agreed that each [asset property](#h-8-B) for an [eligible asset](#h-2) purchased will be rehabilitated to comply with minimum standards for housing quality established by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](#h-2) made under the program under this subsection by [preferred purchasers](#h-8-E), each [eligible asset](#h-2) sold through the program under this subsection to a [preferred purchaser](#h-8-E) 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](#h-8-B) (as such term is defined in [paragraph (8)](#h-8)). - (B) **Appraisals—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall require that each appraisal of an [eligible asset](#h-2) under this paragraph is based upon— - (i) the market value of the [asset property](#h-8-B) 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](/usc/12/1715z–22a.md?p=4), in the sole discretion of the [Secretary](/usc/12/1715z–22a.md?p=4), shall establish the discount under this paragraph for an [eligible asset](#h-2). In determining the discount, the [Secretary](/usc/12/1715z–22a.md?p=4) may consider the condition of the [asset property](#h-8-B), the extent of resources available to the [preferred purchaser](#h-8-E), the comprehensive revitalization plan undertaken by such purchaser, the financial safety and soundness of the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10), and any other circumstances the [Secretary](/usc/12/1715z–22a.md?p=4) considers appropriate[^3] - (7) **Sale agreement—** The [Secretary](/usc/12/1715z–22a.md?p=4) may sell an [eligible asset](#h-2) 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](#h-2) 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](/usc/12/1715z–22a.md?p=4) 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](#h-2) that are covered by the agreement; and - (ii) in the case of a [preferred purchaser](#h-8-E), the [asset control area](#h-8-A) established pursuant to [paragraph (4)(B)(i)](#h-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](#h-2). - (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](#h-8-E), the requirements under [paragraph (5)(A)](#h-5-A), which agreements shall provide that the [eligible assets](#h-2) 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](/usc/12/25b.md?p=a-3)— - (I) the goals of the plan for the [eligible assets](#h-2) purchased and for the [asset control area](#h-8-A) subject to the plan; - (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](#h-2) 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](#h-8-E), the requirements under [paragraph (5)(B)](#h-5-B). - (E) **Purchase price and discount—** The sale agreement shall establish the purchase price of the [eligible assets](#h-2), which in the case of a [preferred purchaser](#h-8-E) shall provide for a discount in accordance with [paragraph (6)](#h-6). - (F) **Housing quality—** The sale agreement shall provide for compliance of the [eligible assets](#h-2) purchased with the rehabilitation standards established under [paragraph (5)(A)(iii)](#h-5-A-iii) or the minimum standards for housing quality established under [paragraph (5)(B)(ii)](#h-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)](#h-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](#h-8-E), the time period referred to in [paragraph (4)(B)(ii)](#h-4-B-ii); and - (ii) in the case of a purchaser who is not a [preferred purchaser](#h-8-E), the time period for purchase of [eligible assets](#h-2) 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](#h-2) 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](#h-8-E) pursuant to [paragraph (4)(B)(i)](#h-4-B-i). - (B) **Asset property—** The term “asset property” means— - (i) with respect to an [eligible asset](#h-2) that is a property, such property; and - (ii) with respect to an [eligible asset](#h-2) that is a [mortgage](/usc/12/1707.md?p=a), the property that is subject to the [mortgage](/usc/12/1707.md?p=a). - (C) **Eligible asset—** The term “[eligible asset](#h-2)” means an asset described in [paragraph (2)](#h-2). - (D) **Nonprofit organization—** The term “nonprofit organization” means a private organization that— - (i) is organized under [State](#h-8-G) or local laws; - (ii) has no part of its [net earnings](/usc/12/1441.md?p=k-2) inuring to the benefit of any [member](/usc/12/1426a.md?p=g-1), shareholder, founder, contributor, or individual; and - (iii) complies with standards of financial responsibility that the [Secretary](/usc/12/1715z–22a.md?p=4) may require. - (E) **Preferred purchaser—** The term “preferred purchaser” means a purchaser described in [paragraph (4)](#h-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](#h-8-G), and any [agency](/usc/12/1422.md?p=12) or instrumentality thereof that is established pursuant to legislation and designated by the chief [executive officer](/usc/12/1831o.md?p=b-2-H) 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](/usc/12/1422.md?p=12) or instrumentality thereof that is established pursuant to legislation and designated by the chief [executive officer](/usc/12/1831o.md?p=b-2-H) 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)](/usc/12/1715z–13.md)[^5] of this title. - (9) **Secretary’s discretion—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall have the authority to implement and administer the program under this subsection in such manner as the [Secretary](/usc/12/1715z–22a.md?p=4) may determine. The [Secretary](/usc/12/1715z–22a.md?p=4) may, in the sole discretion of the [Secretary](/usc/12/1715z–22a.md?p=4), enter into contracts to provide for the proper administration of the program with such public or [nonprofit entities](/usc/12/1441a–1.md?p=2) as the [Secretary](/usc/12/1715z–22a.md?p=4) determines are qualified. - (10) **Regulations—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall issue regulations to implement the program under this subsection through rulemaking in accordance with the procedures established under [section 553 of title 5](/usc/5/553.md) 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](/usc/12/1707.md?p=b) or [mortgagor](/usc/12/1707.md?p=b) shall have, and no certificate of claim shall be construed to give to any [mortgagee](/usc/12/1707.md?p=b) or [mortgagor](/usc/12/1707.md?p=b), any right or interest in any property conveyed to the [Secretary](/usc/12/1715z–22a.md?p=4) or in any claim assigned to him; nor shall the [Secretary](/usc/12/1715z–22a.md?p=4) owe any duty to any [mortgagee](/usc/12/1707.md?p=b) or [mortgagor](/usc/12/1707.md?p=b) 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](/usc/12/1707.md?p=b) under a [mortgage](/usc/12/1707.md?p=a) insured under [section 1709 of this title](/usc/12/1709.md) (other than a [mortgagee](/usc/12/1707.md?p=b) receiving insurance benefits under clause (1)(A) of the second sentence of [subsection (a)](#a)) forecloses on the mortgaged property but does not convey such property to the [Secretary](/usc/12/1715z–22a.md?p=4) in accordance with this section, and the [Secretary](/usc/12/1715z–22a.md?p=4) is given written notice thereof, or in the event that the [mortgagor](/usc/12/1707.md?p=b) pays the obligation under the [mortgage](/usc/12/1707.md?p=a) in full prior to the maturity thereof, and the [mortgagee](/usc/12/1707.md?p=b) pays any adjusted premium charge required under the provisions of [section 1709(c) of this title](/usc/12/1709.md?p=c), and the [Secretary](/usc/12/1715z–22a.md?p=4) is given written notice by the [mortgagee](/usc/12/1707.md?p=b) of the payment of such obligation, the obligation to pay any subsequent premium charge for insurance shall cease, and all rights of the [mortgagee](/usc/12/1707.md?p=b) and the [mortgagor](/usc/12/1707.md?p=b) 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](/usc/12/1715z–22a.md?p=4) or a [contract mortgagee](#l-3-A) (pursuant to its contract with the [Secretary](/usc/12/1715z–22a.md?p=4)) forecloses on a [Secretary-held single family mortgage](#l-3-C) in any Federal or [State](/usc/12/1707.md?p=d) court or pursuant to a power of sale in a [mortgage](#l-3-B), 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](/usc/12/1715z–22a.md?p=4) or the [contract mortgagee](#l-3-A), as the case may be. Notwithstanding any [State](/usc/12/1707.md?p=d) law to the contrary, there shall be no right of redemption ([including](/usc/12/25b.md?p=a-3) in all instances any right to possession based upon any right of redemption) in the [mortgagor](/usc/12/1707.md?p=b) or any other [person](/usc/12/5481.md?p=19) subsequent to the foreclosure sale in connection with a [Secretary-held single family mortgage](#l-3-C). The appropriate [State](/usc/12/1707.md?p=d) 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](/usc/12/1707.md?p=d) 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](/usc/12/1707.md?p=b) or any other [person](/usc/12/5481.md?p=19). - (B) In the case of a foreclosure pursuant to a power of sale provision in the [mortgage](#l-3-B), the statement required in [subparagraph (A)](#l-2-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. - (3) For purposes of this subsection: - (A) The term “contract mortgagee” means a [person](/usc/12/5481.md?p=19) or entity under a contract with the [Secretary](/usc/12/1715z–22a.md?p=4) that provides for the assignment of a [single-family mortgage](#l-3-D) from the [Secretary](/usc/12/1715z–22a.md?p=4) to the [person](/usc/12/5481.md?p=19) 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](/usc/12/25b.md?p=a-3) leaseholds, life estates, reversionary interests, and any other estates under applicable [State](/usc/12/1707.md?p=d) 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](#l-3-D) held by the [Secretary](/usc/12/1715z–22a.md?p=4) or by a [contract mortgagee](#l-3-A) at the time of initiation of foreclosure that— - (i) was formerly insured by the [Secretary](/usc/12/1715z–22a.md?p=4) under any section of this subchapter; or - (ii) was taken by the [Secretary](/usc/12/1715z–22a.md?p=4) as a purchase money [mortgage](#l-3-B) in connection with the sale or other transfer of [Secretary](/usc/12/1715z–22a.md?p=4)-owned property under any section of this subchapter. - (D) the term “single-family mortgage” means a [mortgage](#l-3-B) that covers property on which is located a 1-to-4 [family](/usc/12/1715z–1.md?p=j-2-A) residence. # §1711. General Surplus and Participating Reserve Accounts - (a) **Establishment; abolishment of General Reinsurance Account—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall establish as of July 1, 1954, in the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10) a General Surplus Account and a Participating Reserve Account. All of the assets of the General 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](/usc/12/1707.md?p=a) 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](/usc/12/1441a–1.md?p=4) thereafter received or any net loss thereafter sustained by the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10) by payment of any [mortgage](/usc/12/1707.md?p=a) insured thereunder, the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to distribute to the [mortgagor](/usc/12/1707.md?p=b) a share of the Participating Reserve Account in such manner and amount as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=b) to the year of termination of the insurance. The [Secretary](/usc/12/1715z–22a.md?p=4) shall not distribute any share to an eligible [mortgagor](/usc/12/1707.md?p=b) under this subsection beginning on the date which is 6 years after the date the [Secretary](/usc/12/1715z–22a.md?p=4) first transmitted written notification of eligibility to the last known address of the [mortgagor](/usc/12/1707.md?p=b), unless the [mortgagor](/usc/12/1707.md?p=b) has applied in accordance with procedures prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4) for payment of the share within the 6-year period. The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=b) or [mortgagee](/usc/12/1707.md?p=b) of any [mortgage](/usc/12/1707.md?p=a) insured under [section 1709 of this title](/usc/12/1709.md) shall have any vested right in a [credit](/usc/12/5481.md?p=7) balance in any such account or be subject to any liability arising out of the mutuality of the [Fund](/usc/12/4702.md?p=10) and the determination of the [Secretary](/usc/12/1715z–22a.md?p=4) as to the amount to be paid by him to any [mortgagor](/usc/12/1707.md?p=b) shall be final and conclusive. - (e) **Actuarial status of entire Fund—** In determining whether there is a surplus for distribution to [mortgagors](/usc/12/1707.md?p=b) under this section, the [Secretary](/usc/12/1715z–22a.md?p=4) shall take into account the actuarial status of the entire [Fund](/usc/12/4702.md?p=10). - (f) **Capital ratio for Mutual Mortgage Insurance Fund—** - (1) The [Secretary](/usc/12/1715z–22a.md?p=4) shall ensure that the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10) attains a [capital ratio](#f-4-B) of not less than 1.25 percent within 24 months after November 5, 1990, and maintains such ratio thereafter, subject to [paragraph (2)](#f-2). - (2) The [Secretary](/usc/12/1715z–22a.md?p=4) shall endeavor to ensure that the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10) attains a [capital ratio](#f-4-B) of not less than 2.0 percent within 10 years after November 5, 1990, and shall ensure that the [Fund](/usc/12/4702.md?p=10) maintains at least such [capital ratio](#f-4-B) at all times thereafter. - (3) Upon the expiration of the 24-month period beginning on November 5, 1990, the [Secretary](/usc/12/1715z–22a.md?p=4) shall submit to the Congress a report describing the actions the [Secretary](/usc/12/1715z–22a.md?p=4) will take to ensure that the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10) attains the [capital ratio](#f-4-B) required under [paragraph (2)](#f-2). - (4) For purposes of this subsection: - (A) The term “[capital](/usc/12/51c.md)” means the [economic net worth](#f-4-C) of the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10), as determined by the [Secretary](/usc/12/1715z–22a.md?p=4) under the annual audit required under [section 1735f–16 of this title](/usc/12/1735f–16.md). - (B) The term “capital ratio” means the ratio of [capital](/usc/12/51c.md) to [unamortized insurance-in-force](#f-4-D). - (C) The term “economic net worth” means the current cash available to the [Fund](/usc/12/4702.md?p=10), plus the net present value of all future cash inflows and outflows expected to result from the outstanding [mortgages](/usc/12/1707.md?p=a) in the [Fund](/usc/12/4702.md?p=10). - (D) The term “unamortized insurance-in-force” means the remaining obligation on outstanding [mortgages](/usc/12/1707.md?p=a) which are obligations of the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10), as estimated by the [Secretary](/usc/12/1715z–22a.md?p=4). # §1712. Investment of funds Moneys in the [Fund](/usc/12/4702.md?p=10) not needed for the current operations of the Department of Housing and Urban Development related to insurance under [section 1709 of this title](/usc/12/1709.md) shall be deposited with the Treasurer of the United States to the [credit](/usc/12/5481.md?p=7) of the [Fund](/usc/12/4702.md?p=10), 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](/usc/12/1422.md?p=12) 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](/usc/12/1717.md?p=b-7-A-ii) market. The [Secretary](/usc/12/1715z–22a.md?p=4) may, with the approval of the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury, purchase in the open market debentures issued under the provisions of [section 1710 of this title](/usc/12/1710.md). 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. # §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](/usc/12/1713.md?p=c-3-A); - (2) [section 1715e(b)(2)(A) of this title](/usc/12/1715e.md?p=b-2-A); - (3) [section 1715k(d)(3)(B)(iii)(I) of this title](/usc/12/1715k.md?p=d-3-B-iii-I); - (4) [section 1715l(d)(3)(ii)(I)](/usc/12/1715l.md) of this title; - (5) [section 1715l(d)(4)(ii)(I)](/usc/12/1715l.md) of this title; - (6) [section 1715v(c)(2)(A) of this title](/usc/12/1715v.md?p=c-2-A); and - (7) [section 1715y(e)(3)(A) of this title](/usc/12/1715y.md?p=e-3-A); (collectively hereinafter referred to as the “Dollar Amounts”) shall be adjusted annually, commencing on July 1, 2025. The adjustment of the Dollar Amounts shall be calculated by the [Secretary](/usc/12/1715z–22a.md?p=4) using the percentage change in the Price Deflator Index of Multifamily Residential Units Under Construction released by the [Bureau](/usc/12/5481.md?p=2) of the Census from March of the previous year to March of the year in which the adjustment is made, or by the [Secretary](/usc/12/1715z–22a.md?p=4) using an alternative indicator after publishing information about such alternative indicator in the Federal Register for public comment if the Price Deflator Index of Multifamily Residential Units Under Construction is not available or published. - (b) **Publication—** - (1) **In general—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall publish in the Federal Register any adjustments made to the Dollar Amounts. - (2) **Rounding—** The dollar amount of any adjustment described in [paragraph (1)](#b-1) shall be rounded to the next lower dollar. # §1713. Rental housing insurance - (a) **Definitions—** As used in this section— - (1) The term “mortgage” means a first mortgage on [real estate](/usc/12/1707.md?p=g) 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 constructed facilities for manufactured homes, and the term “first mortgage” means such classes of first liens as are commonly given to secure advances ([including](/usc/12/25b.md?p=a-3) but not being limited to advances during construction) on, or the unpaid purchase price of, [real estate](/usc/12/1707.md?p=g) under the laws of the [State](#a-7), in which the [real estate](/usc/12/1707.md?p=g) is located, together with the [credit](/usc/12/5481.md?p=7) 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](/usc/12/5481.md?p=7) instruments. - (2) The term “mortgagee” means the original lender under a [mortgage](#a-1), and its successors and assigns, and [includes](/usc/12/25b.md?p=a-3) the holders of [credit](/usc/12/5481.md?p=7) instruments issued under a trust [mortgage](#a-1) 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](#a-1) and its successors and assigns. - (4) The term “maturity date” means the date on which the [mortgage](#a-1) indebtedness would be extinguished if paid in accordance with the periodic payments provided for in the [mortgage](#a-1). - (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](/usc/12/4146.md?p=2) 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](/usc/12/25b.md?p=a-3) 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](#a-1) insured under [section 1709 of this title](/usc/12/1709.md), the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to insure [mortgages](#a-1) as defined in this section ([including](/usc/12/25b.md?p=a-3) advances on such [mortgages](#a-1) during construction) which cover property held by— - (1) Federal or [State](#a-7) instrumentalities, municipal corporate instrumentalities of one or more [States](#a-7), or limited dividend or redevelopment or housing [corporations](/usc/12/2277a.md?p=2) restricted by Federal or [State](#a-7) laws or regulations of State banking or insurance departments as to rents, charges, [capital](/usc/12/51c.md) structure, rate of return, or methods of operation; or - (2) any other [mortgagor](#a-3) approved by the [Secretary](/usc/12/1715z–22a.md?p=4). The [Secretary](/usc/12/1715z–22a.md?p=4) may, in the [Secretary](/usc/12/1715z–22a.md?p=4)’s discretion, require any such [mortgagor](#a-3) to be regulated or restricted as to rents or sales, charges, [capital](/usc/12/51c.md) structure, rate of return, and methods of operation so as to provide 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](/usc/12/1715z–22a.md?p=4), in the [Secretary](/usc/12/1715z–22a.md?p=4)’s discretion, may require, [including](/usc/12/25b.md?p=a-3) until the termination of all obligations of the [Secretary](/usc/12/1715z–22a.md?p=4) under the insurance and during such further period of time as the [Secretary](/usc/12/1715z–22a.md?p=4) shall be the [owner](/usc/12/4146.md?p=2), holder, or reinsurer of the [mortgage](#a-1). The [Secretary](/usc/12/1715z–22a.md?p=4) may make such contracts with and [acquire](/usc/12/1467a.md?p=a-1-J), for not to exceed $100, such stock or interest in the [mortgagor](#a-3) as he may deem necessary to render effective any such regulations or restrictions. The stock or interest acquired by the [Secretary](/usc/12/1715z–22a.md?p=4) shall be paid for out of the General Insurance [Fund](/usc/12/4702.md?p=10), and shall be redeemed by the [mortgagor](#a-3) at par upon the termination of all obligations of the [Secretary](/usc/12/1715z–22a.md?p=4) under the insurance. The insurance of [mortgages](#a-1) under this section is intended to facilitate particularly the production of rental accommodations, at reasonable rents, of design and size suitable for [family](/usc/12/1715z–1.md?p=j-2-A) living. The [Secretary](/usc/12/1715z–22a.md?p=4) is, therefore, authorized in the administration of this section to take action, by regulation or otherwise, which will direct the benefits of [mortgage](#a-1) insurance hereunder primarily to those projects which make adequate provision for [families](/usc/12/1715z–1.md?p=j-2-A) with children, and in which every effort has been made to achieve moderate rental charges. Notwithstanding any other provisions of this section, the [Secretary](/usc/12/1715z–22a.md?p=4) may not insure any [mortgage](#a-1) under this section (except a [mortgage](#a-1) with respect to a manufactured home park designed exclusively for occupancy by elderly [persons](/usc/12/5481.md?p=19)) unless the [mortgagor](#a-3) certifies under oath that in selecting tenants for the property covered by the [mortgage](#a-1) he will not discriminate against any [family](/usc/12/1715z–1.md?p=j-2-A) by reason of the fact that there are children in the [family](/usc/12/1715z–1.md?p=j-2-A), 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](/usc/12/1715z–22a.md?p=4). 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](#a-1) 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](#a-1) on housing in Alaska or in Guam, but such a [mortgage](#a-1) may involve a principal obligation in an amount not to exceed 90 per centum of the amount which the [Secretary](/usc/12/1715z–22a.md?p=4) 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 and approved by the [Secretary](/usc/12/1715z–22a.md?p=4)): And provided further, That nothing contained in this section shall preclude the insurance of [mortgages](#a-1) covering existing construction located in [slum or blighted areas](#a-5), as defined in [paragraph (5)](#a-5) of subsection (a) of this section, and the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4)), $167,310 per [family](/usc/12/1715z–1.md?p=j-2-A) unit without a bedroom, $185,328 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with one bedroom, $221,364 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with two bedrooms, $272,844 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with three bedrooms, and $308,880 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with four or more bedrooms; except that as to projects to consist of elevator type structures the [Secretary](/usc/12/1715z–22a.md?p=4) may in his discretion, increase the dollar amount limitations per [family](/usc/12/1715z–1.md?p=j-2-A) unit to not to exceed $193,050 per [family](/usc/12/1715z–1.md?p=j-2-A) unit without a bedroom, $216,216 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with one bedroom, $265,122 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with two bedrooms, $332,046 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with three bedrooms, and $375,443 per [family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–22a.md?p=4) may, by regulation, increase any of the dollar amount limitations in [subparagraph (A)](#c-3-A) (as such limitations may have been adjusted in accordance with [section 1712a of this title](/usc/12/1712a.md)) by not to exceed 170 percent in any geographical area where the [Secretary](/usc/12/1715z–22a.md?p=4) finds that cost levels so require and by not to exceed 170 percent, or 215 percent in high cost areas, where the [Secretary](/usc/12/1715z–22a.md?p=4) determines it necessary on a project-by-project basis, but in no case may any such increase exceed 90 percent where the [Secretary](/usc/12/1715z–22a.md?p=4) determines that a [mortgage](#a-1) purchased or to be purchased by the Government National [Mortgage](#a-1) [Association](/usc/12/1828.md?p=s-4-E-i) in implementing its special assistance functions under [section 1720](/usc/12/1720.md)[^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)](#c-3) of the last paragraph of [section 1703(a) of this title](/usc/12/1703.md)) or residential energy conservation measures (as defined in section [8211(11)(A) through (G)](/usc/42/8211.md?p=11-A..11-G) and (I) of title 42)[^1] in cases where the [Secretary](/usc/12/1715z–22a.md?p=4) 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](#a-1) shall provide for complete amortization by periodic payments (unless otherwise approved by the [Secretary](/usc/12/1715z–22a.md?p=4)) within such term as the [Secretary](/usc/12/1715z–22a.md?p=4) shall prescribe, and shall bear interest at such rate as may be agreed upon by the [mortgagor](#a-3) and the [mortgagee](#a-2). The [Secretary](/usc/12/1715z–22a.md?p=4) may consent to the release of a part or parts of the mortgaged property from the lien of the [mortgage](#a-1) upon such terms and conditions as he may prescribe and the [mortgage](#a-1) may provide for such release. No [mortgage](#a-1) shall be accepted for insurance under this section or [section 1715a](/usc/12/1715a.md)[^1] of this title unless the [Secretary](/usc/12/1715z–22a.md?p=4) finds that the property or project, with respect to which the [mortgage](#a-1) is executed, is economically sound. Such property or project may include five or more [family](/usc/12/1715z–1.md?p=j-2-A) units and may include such commercial and community facilities as the [Secretary](/usc/12/1715z–22a.md?p=4) deems adequate to serve the occupants. - (d) **Premium, appraisal, and inspection charges—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall collect a premium charge for the insurance of [mortgages](#a-1) under this section which shall be payable annually in advance by the [mortgagee](#a-2), either in cash or in debentures issued by the [Secretary](/usc/12/1715z–22a.md?p=4) under any subchapter and section of this chapter, except debentures of the Mutual [Mortgage](#a-1) Insurance [Fund](/usc/12/4702.md?p=10), or of the Cooperative Management Housing Insurance [Fund](/usc/12/4702.md?p=10) at par plus accrued interest. In addition to the premium charge herein provided for the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–18.md?p=c). - (e) **Adjusted premium charge on payment of mortgage—** In the event that the principal obligation of any [mortgage](#a-1) accepted for insurance under this section is paid in full prior to the [maturity date](#a-4), the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized in his discretion to require the payment by the [mortgagee](#a-2) of an adjusted premium charge in such amount as the [Secretary](/usc/12/1715z–22a.md?p=4) determines to be equitable, but not in excess of the aggregate amount of the premium charges that the [mortgagee](#a-2) would otherwise have been required to pay if the [mortgage](#a-1) had continued to be insured until such [maturity date](#a-4). - (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](#a-3) to make any payment due under or provided to be paid by the terms of a [mortgage](#a-1) insured under this section shall be considered a [default](/usc/12/1467a.md?p=e-7-A) under such [mortgage](#a-1) and, if such [default](/usc/12/1467a.md?p=e-7-A) continues for a period of thirty days, the [mortgagee](#a-2) shall be entitled to receive the benefits of the insurance as hereinafter provided, upon assignment, transfer, and delivery to the [Secretary](/usc/12/1715z–22a.md?p=4), within a period and in accordance with rules and regulations to be prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4) of (1) all rights and interests arising under the [mortgage](#a-1) so in [default](/usc/12/1467a.md?p=e-7-A); (2) all claims of the [mortgagee](#a-2) against the [mortgagor](#a-3) or others, arising out of the [mortgage](#a-1) 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](#a-1) loans not advanced to the [mortgagor](#a-3); (5) any cash or property held by the [mortgagee](#a-2), or to which it is entitled, as [deposits](/usc/12/5301.md?p=18-A) made for the account of the [mortgagor](#a-3) and which have not been applied in reduction of the principal of the [mortgage](#a-1) indebtedness; and (6) all records, documents, books, papers, and accounts relating to the [mortgage](#a-1) transactions. Upon such assignment, transfer, and delivery the obligation of the [mortgagee](#a-2) to pay the premium charges for [mortgage](#a-1) insurance shall cease, and the [Secretary](/usc/12/1715z–22a.md?p=4) shall issue to the [mortgagee](#a-2) a certificate of claim as provided in [subsection (h)](#h), and debentures having a par value equal to the [original principal face amount of the mortgage](/usc/12/1715z–18.md?p=c) plus such amount as the [mortgagee](#a-2) may have paid for (A) taxes, special assessments, and water rates, which are liens prior to the [mortgage](#a-1); (B) insurance on the property; and (C) reasonable expenses for the completion and preservation of the property and any [mortgage](#a-1) insurance premiums paid after [default](/usc/12/1467a.md?p=e-7-A), less the sum of (i) that part of the amount of the principal obligation that has been repaid by the [mortgagor](#a-3), (ii) an amount equivalent to 1 per centum of the unpaid amount of such principal obligation, and (iii) any [net income](/usc/12/1441a–1.md?p=4) received by the [mortgagee](#a-2) from the property: Provided, That the [mortgagee](#a-2) in the event of a [default](/usc/12/1467a.md?p=e-7-A) under the [mortgage](#a-1) may, at its option and in accordance with regulations of, and in a period to be determined by, the [Secretary](/usc/12/1715z–22a.md?p=4), proceed to foreclose on and obtain possession of or otherwise [acquire](/usc/12/1467a.md?p=a-1-J) such property from the [mortgagor](#a-3) after [default](/usc/12/1467a.md?p=e-7-A), and receive the benefits of the insurance as herein provided, upon (1) the prompt conveyance to the [Secretary](/usc/12/1715z–22a.md?p=4) of title to the property which meets the requirements of the rules and regulations of the [Secretary](/usc/12/1715z–22a.md?p=4) in force at the time the [mortgage](#a-1) 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](#a-2) against the [mortgagor](#a-3) or others, arising out of the [mortgage](#a-1) transaction or foreclosure proceedings, except such claims that may have been released with the consent of the [Secretary](/usc/12/1715z–22a.md?p=4). Upon such conveyance and assignment, the obligation of the [mortgagee](#a-2) to pay the premium charges for insurance shall cease and the [mortgagee](#a-2) 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](#a-1) insured under this chapter, the [Secretary](/usc/12/1715z–22a.md?p=4) may terminate the [mortgagee](#a-2)’s obligation to pay premium charges on the [mortgage](#a-1). - (h) **Certificate of claim; division of excess proceeds—** The certificate of claim issued under this section shall be for an amount which the [Secretary](/usc/12/1715z–22a.md?p=4) determines to be sufficient, when added to the face value of the debentures issued and the cash adjustment paid to the [mortgagee](#a-2), to equal the amount which the [mortgagee](#a-2) would have received if, on the date of the assignment, transfer and delivery to the [Secretary](/usc/12/1715z–22a.md?p=4) provided for in [subsection (g)](#g), the [mortgagor](#a-3) had extinguished the [mortgage](#a-1) indebtedness by payment in full of all obligations under the [mortgage](#a-1) and a reasonable amount for necessary expenses incurred by the [mortgagee](#a-2) in connection with the foreclosure proceedings, or the acquisition of the mortgaged property otherwise, and the conveyance thereof to the [Secretary](/usc/12/1715z–22a.md?p=4). 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](#a-1), and all claims in connection therewith, so assigned, transferred, and delivered, and from the property covered by such [mortgage](#a-1) and all claims in connection with such property, after deducting all expenses incurred by the [Secretary](/usc/12/1715z–22a.md?p=4) in handling, dealing with, acquiring title to, and disposing of such [mortgage](#a-1) and property and in collecting such claims, exceeds the face value of the debentures issued and the cash adjustment paid to the [mortgagee](#a-2) 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](/usc/12/1715z–22a.md?p=4) shall pay to the holder of such certificate the full amount so payable, and any excess remaining thereafter shall be retained by the [Secretary](/usc/12/1715z–22a.md?p=4) and credited to the General Insurance [Fund](/usc/12/4702.md?p=10); and - (2) If such excess is equal to or less than the total amount payable under such certificate of claim, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/4702.md?p=10) as obligor, shall be negotiable, and, if in book entry form, transferable, in the manner described by the [Secretary](/usc/12/1715z–22a.md?p=4) in regulations, and shall be dated as of the date of [default](/usc/12/1467a.md?p=e-7-A) as determined in [subsection (g)](#g) of this section, except that debentures issued pursuant to the provisions of [section 1715k(f)](/usc/12/1715k.md?p=f), [section 1715l(g)](/usc/12/1715l.md), and [section 1715x of this title](/usc/12/1715x.md) may be dated as of the date the [mortgage](#a-1) is assigned (or the property is conveyed) to the [Secretary](/usc/12/1715z–22a.md?p=4) and shall bear interest from such date. They shall bear interest at a rate established by the [Secretary](/usc/12/1715z–22a.md?p=4) pursuant to [section 1715o](/usc/12/1715o.md) 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](#a-1) 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](#a-7), county, municipality, or local taxing authority. They shall be paid out of the General Insurance [Fund](/usc/12/4702.md?p=10) 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 the General Insurance [Fund](/usc/12/4702.md?p=10) fails to pay upon demand, when due, the principal of or interest on any debentures so guaranteed, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development, with the approval of the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury; and - (4) may be in book entry or certificated registered form, or such other form as the [Secretary](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development may prescribe in regulations. - (k) **Acquisition of property by conveyance or foreclosure—** The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized either to (1) [acquire](/usc/12/1467a.md?p=a-1-J) possession of and title to any property, covered by a [mortgage](#a-1) insured under this section and assigned to him, by voluntary conveyance in extinguishment of the [mortgage](#a-1) indebtedness, or (2) institute proceedings for foreclosure on the property covered by any such insured [mortgage](#a-1) and prosecute such proceedings to conclusion. The [Secretary](/usc/12/1715z–22a.md?p=4) at any sale under foreclosure may, in his discretion, for the protection of the General Insurance [Fund](/usc/12/4702.md?p=10), bid any sum up to but not in excess of the total unpaid indebtedness secured by the [mortgage](#a-1), 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](/usc/12/1715z–22a.md?p=4) shall act consistently with the goal established in [section 1701z–11(a)(1) of this title](/usc/12/1701z–11.md?p=a-1). The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to pay from the General Insurance [Fund](/usc/12/4702.md?p=10) 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](/usc/12/1715z–22a.md?p=4) is authorized, with respect to any [mortgage](#a-1) assigned to him under the provisions of [subsection (g)](#g), to exercise all the rights of a [mortgagee](#a-2) under such [mortgage](#a-1), [including](/usc/12/25b.md?p=a-3) the right to sell such [mortgage](#a-1), and to take such action and advance such sums as may be necessary to preserve or protect the lien of such [mortgage](#a-1). - (l) **Handling and disposal of property; settlement 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](/usc/12/1715z–22a.md?p=4) shall also have power, for the protection of the interests of the General Insurance [Fund](/usc/12/4702.md?p=10), to pay out of the General Insurance [Fund](/usc/12/4702.md?p=10) 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](/usc/12/1422.md?p=12) for the management of, or sell for cash or [credit](/usc/12/5481.md?p=7) or lease in his discretion, any property acquired by him under this section, and notwithstanding any other provision of law, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1467a.md?p=e-7-A), to foreclose on any property secured by any [mortgage](#a-1) assigned and transferred to or held by him: Provided, That [section 6101 of title 41](/usc/41/6101.md) 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](#a-1) insured under this section becomes in [default](/usc/12/1467a.md?p=e-7-A) through failure of the [mortgagor](#a-3) to make any payment due under or provided to be paid by the terms of the [mortgage](#a-1) and such [mortgage](#a-1) continues in [default](/usc/12/1467a.md?p=e-7-A) for a period of thirty days, but the [mortgagee](#a-2) does not foreclose on or otherwise [acquire](/usc/12/1467a.md?p=a-1-J) the property, or does not assign and transfer such [mortgage](#a-1) and the [credit](/usc/12/5481.md?p=7) instrument secured thereby to the [Secretary](/usc/12/1715z–22a.md?p=4), in accordance with [subsection (g)](#g), and the [Secretary](/usc/12/1715z–22a.md?p=4) is given written notice thereof, or in the event that the [mortgagor](#a-3) pays the obligation under the [mortgage](#a-1) in full prior to the maturity thereof, and the [mortgagee](#a-2) pays any adjusted premium charge required under the provisions of [subsection (e)](#e), and the [Secretary](/usc/12/1715z–22a.md?p=4) is given written notice by the [mortgagee](#a-2) of the payment of such obligation, the obligation to pay the annual premium charge for insurance shall cease, and all rights of the [mortgagee](#a-2) and the [mortgagor](#a-3) under this section shall terminate as of the date of such notice. - (o) **Reissue of prior insurance—** The [Secretary](/usc/12/1715z–22a.md?p=4), with the consent of the [mortgagee](#a-2) and the [mortgagor](#a-3) of a [mortgage](#a-1) insured under this section prior to February 3, 1938, shall be empowered to reissue such [mortgage](#a-1) 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. - (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](/usc/12/1715z–22a.md?p=4) is authorized to include in any [mortgage](#a-1) insured under any subchapter of this chapter after September 23, 1959, a provision requiring the [mortgagor](#a-3) to pay a service charge to the [Secretary](/usc/12/1715z–22a.md?p=4) in the event such [mortgage](#a-1) is assigned to and held by the [Secretary](/usc/12/1715z–22a.md?p=4). Such service charge shall not exceed the amount prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4) for [mortgage](#a-1) insurance premiums applicable to such [mortgage](#a-1). # §1714. Taxation Nothing in this subchapter shall be construed to exempt any real property acquired and held by the [Secretary](/usc/12/1715z–22a.md?p=4) under this subchapter from taxation by any [State](/usc/12/1707.md?p=d) or political subdivision thereof, to the same extent, according to its value, as other real property is taxed. # §1715. Statistical and economic surveys The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) market in the United States, and shall 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](/usc/12/4702.md?p=10) or [funds](/usc/12/4702.md?p=10), as the [Secretary](/usc/12/1715z–22a.md?p=4) shall determine. # [§1715a. Repealed. June 3, 1939, ch. 175, § 13, 53 Stat. 807 — repealed] # §1715b. Rules and regulations The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized and directed to make such rules and regulations as may be necessary to carry out the provisions of this subchapter. # §1715c. Labor standards - (a) The [Secretary](/usc/12/1715z–22a.md?p=4) shall not insure under [section 1713](/usc/12/1713.md) or [section 1715a of this title](/usc/12/1715a.md) or under [section 1743 of this title](/usc/12/1743.md) pursuant to any application for insurance filed subsequent to the effective date of this section, or under [section 1715e of this title](/usc/12/1715e.md), or under subchapter VII pursuant to any application filed subsequent to sixty days after April 20, 1950, or under section [1748b](/usc/12/1748b.md) or [1748h–2](/usc/12/1748h–2.md) of this title, or under [section 1750g of this title](/usc/12/1750g.md), a [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) of Labor, in accordance with sections 3141–3144, [3146](/usc/40/3146.md), and [3147](/usc/40/3147.md) 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](/usc/12/1707.md?p=a) under [section 1715k](/usc/12/1715k.md) or [section 1715x of this title](/usc/12/1715x.md) which covers property on which there is located a dwelling or dwellings designed principally for residential use for twelve or more [families](/usc/12/1715z–1.md?p=j-2-A). The provisions of this section shall apply to the insurance under [section 1715l](/usc/12/1715l.md) of this title of any [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) described in subsection (h)(1) or [section 1715z(j)(1) of this title](/usc/12/1715z.md?p=j-1) which covers property on which there is located a dwelling or dwellings designed principally for residential use for more than eight [families](/usc/12/1715z–1.md?p=j-2-A); except that compliance with such provisions may be waived by the [Secretary](/usc/12/1715z–22a.md?p=4)— - (1) with respect to [mortgages](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) determines that any amounts saved thereby are fully credited to the cooperative undertaking the construction, and - (2) with respect to [mortgages](/usc/12/1707.md?p=a) described in such subsection (h)(1) or [section 1715z(j)(1) of this title](/usc/12/1715z.md?p=j-1), in cases or classes of cases where prospective [owners](/usc/12/4146.md?p=2) of such dwellings, voluntarily donate their services without compensation, or other [persons](/usc/12/5481.md?p=19) (not otherwise employed at any time in the rehabilitation of the property) voluntarily donate their services without compensation, and the [Secretary](/usc/12/1715z–22a.md?p=4) determines that any amounts saved thereby are fully credited to the [nonprofit organization](/usc/12/1821.md?p=w-2-B) undertaking the rehabilitation. The provisions of this section shall also apply to the insurance of any [mortgage](/usc/12/1707.md?p=a) under sections [1715v](/usc/12/1715v.md), [1715w](/usc/12/1715w.md), or [1715z–1](/usc/12/1715z–1.md) of this title except that compliance with such provisions may be waived by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) determines that any amounts thereby saved are fully credited to the nonprofit [corporation](/usc/12/2277a.md?p=2), [association](/usc/12/1828.md?p=s-4-E-i), or other organization undertaking the construction. The provisions of this section shall also apply to the insurance of any [mortgage](/usc/12/1707.md?p=a) under [section 1715y(d) of this title](/usc/12/1715y.md?p=d). The provisions of this section shall also apply to the insurance of any [mortgage](/usc/12/1707.md?p=a) under [section 1715z–7 of this title](/usc/12/1715z–7.md), except that compliance with such provisions may be waived by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) determines that any amounts thereby saved are fully credited to the nonprofit [corporation](/usc/12/2277a.md?p=2), [association](/usc/12/1828.md?p=s-4-E-i), or other organization undertaking the construction; and each laborer or mechanic employed on any facility covered by a [mortgage](/usc/12/1707.md?p=a) insured under [section 1715z–7 of this title](/usc/12/1715z–7.md) 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](/usc/12/1707.md?p=a) under subchapter IX–B; and each laborer or mechanic employed on any facility covered by a [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) 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)](#a). # §1715d. Insurance of mortgages on property in Alaska, Guam, Hawaii, and Virgin Islands If the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) amounts provided in this chapter, the [Secretary](/usc/12/1715z–22a.md?p=4) may, by regulations or otherwise, prescribe, with respect to dollar amount, a higher maximum or maxima for the principal obligation of [mortgages](/usc/12/1707.md?p=a) 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 higher costs but not to exceed, in any event, the maximum or maxima otherwise applicable ([including](/usc/12/25b.md?p=a-3) increased [mortgage](/usc/12/1707.md?p=a) amounts in geographical areas where cost levels so require) by more than one-half thereof. No [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) may be insured or accepted for insurance without regard to any requirement in any other section of this chapter that the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1422.md?p=12) or instrumentality thereof shall be eligible as [mortgagor](/usc/12/1707.md?p=b) or [mortgagee](/usc/12/1707.md?p=b), as the case may be, for any of the purposes of [mortgage](/usc/12/1707.md?p=a) insurance under the provisions of this chapter. Upon application by the [mortgagee](/usc/12/1707.md?p=b) (1) where the [mortgagor](/usc/12/1707.md?p=b) 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](/usc/12/1422.md?p=12) or instrumentality thereof is the [mortgagor](/usc/12/1707.md?p=b) or [mortgagee](/usc/12/1707.md?p=b), for the insurance of a [mortgage](/usc/12/1707.md?p=a) under any provisions of this chapter, the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to insure the [mortgage](/usc/12/1707.md?p=a) ([including](/usc/12/25b.md?p=a-3) advances thereon where otherwise authorized), and to make commitments for the insuring of any such [mortgages](/usc/12/1707.md?p=a) prior to the date of their execution or disbursement thereon, under such provision (and this section) without regard to any requirement that the [mortgagor](/usc/12/1707.md?p=b) shall have paid a prescribed amount on account of such property. Without limiting the authority of the [Secretary](/usc/12/1715z–22a.md?p=4) under any other provision of law, the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized, with respect to any [mortgagor](/usc/12/1707.md?p=b) in such case (except where the Alaska Housing Authority is the [mortgagor](/usc/12/1707.md?p=b) or [mortgagee](/usc/12/1707.md?p=b)), to require the [mortgagor](/usc/12/1707.md?p=b) to be regulated or restricted as to rents or sales, charges, [capital](/usc/12/51c.md) structure, rate of return, and methods of operation to such an extent and in such manner as the [Secretary](/usc/12/1715z–22a.md?p=4) determines advisable to provide reasonable rentals and sales prices and a reasonable return on the investment. # §1715e. Cooperative housing insurance - (a) **Projects insurable—** In addition to [mortgages](/usc/12/1707.md?p=a) insured under [section 1713 of this title](/usc/12/1713.md), the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to insure [mortgages](/usc/12/1707.md?p=a) as defined in [section 1713(a) of this title](/usc/12/1713.md?p=a) ([including](/usc/12/25b.md?p=a-3) advances on such [mortgages](/usc/12/1707.md?p=a) during construction), which cover property held by— - (1) a nonprofit cooperative ownership housing [corporation](/usc/12/2277a.md?p=2) or nonprofit cooperative ownership housing trust, the permanent occupancy of the dwellings of which is restricted to [members](/usc/12/1426a.md?p=g-1) of such [corporation](/usc/12/2277a.md?p=2) or to beneficiaries of such trust; - (2) a nonprofit [corporation](/usc/12/2277a.md?p=2) or nonprofit trust organized for the purpose of construction of homes for [members](/usc/12/1426a.md?p=g-1) of the [corporation](/usc/12/2277a.md?p=2) or for beneficiaries of the trust; or - (3) a [mortgagor](/usc/12/1707.md?p=b), approved by the [Secretary](/usc/12/1715z–22a.md?p=4) which (A) has certified to the [Secretary](/usc/12/1715z–22a.md?p=4), as a condition of obtaining the insurance of a [mortgage](/usc/12/1707.md?p=a) under this section, that upon completion of the property or project covered by such [mortgage](/usc/12/1707.md?p=a) it intends to sell such property or project to a nonprofit [corporation](/usc/12/2277a.md?p=2) 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](/usc/12/1715r.md) 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](/usc/12/1715z–22a.md?p=4) as to rents, charges, [capital](/usc/12/51c.md) structure, rate of return, and methods of operation during any period while it holds the mortgaged property or project; and for such purpose the [Secretary](/usc/12/1715z–22a.md?p=4) may make such contracts with, and [acquire](/usc/12/1467a.md?p=a-1-J) for not to exceed $100 such stock or interest in, any such [mortgagor](/usc/12/1707.md?p=b) as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/4702.md?p=10) and to be redeemed by such [mortgagor](/usc/12/1707.md?p=b) at par upon the sale of such property or project to such nonprofit [corporation](/usc/12/2277a.md?p=2) or nonprofit trust; which [corporations](/usc/12/2277a.md?p=2) 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)](#b-1) and [(2)](#b-2) of subsection (b) of [section 1713 of this title](/usc/12/1713.md): Provided, That as applied to [mortgages](/usc/12/1707.md?p=a) the [mortgage](/usc/12/1707.md?p=a) insurance for which is the obligation of the Management [Fund](/usc/12/4702.md?p=10), the reference to the General Insurance [Fund](/usc/12/4702.md?p=10) in [section 1713(b)(2) of this title](/usc/12/1713.md?p=b-2) shall be construed to refer to the Management [Fund](/usc/12/4702.md?p=10). 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](/usc/12/1715z–22a.md?p=4). - (b) **Eligibility conditions for projects under subsection (a)(1) of this section—** To be eligible for insurance under this section a [mortgage](/usc/12/1707.md?p=a) on any property or project of a [corporation](/usc/12/2277a.md?p=2) or trust of the character described in [paragraph (1)](#a-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](/usc/12/1715z–22a.md?p=4)), $181,311 per [family](/usc/12/1715z–1.md?p=j-2-A) unit without a bedroom, $209,048 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with one bedroom, $252,120 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with two bedrooms, $322,709 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with three bedrooms, and $359,515 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with four or more bedrooms, and not to exceed 98 per centum of the amount which the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) may, in his discretion, increase the dollar amount limitations per [family](/usc/12/1715z–1.md?p=j-2-A) unit to not to exceed $193,050 per [family](/usc/12/1715z–1.md?p=j-2-A) unit without a bedroom, $218,724 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with one bedroom, $265,962 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with two bedrooms, $344,067 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with three bedrooms, and $377,678 per [family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–22a.md?p=4) may, by regulation, increase any of the dollar amount limitations in [subparagraph (A)](#b-2-A) (as such limitations may have been adjusted in accordance with [section 1712a of this title](/usc/12/1712a.md)) by not to exceed 170 percent in any geographical area where the [Secretary](/usc/12/1715z–22a.md?p=4) finds that cost levels so require and by not to exceed 170 percent, or 215 percent in high cost areas, where the [Secretary](/usc/12/1715z–22a.md?p=4) determines it necessary on a project-by-project basis, but in no case may any such increase exceed 90 percent where the [Secretary](/usc/12/1715z–22a.md?p=4) determines that a [mortgage](/usc/12/1707.md?p=a) purchased or to be purchased by the Government National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i) in implementing its special assistance functions under [section 1720](/usc/12/1720.md)[^1] of this title (as such section existed immediately before November 30, 1983) is involved; and (ii) in the case of a [mortgagor](/usc/12/1707.md?p=b) of the character described in [paragraph (3)](#a-3) of subsection (a) the [mortgage](/usc/12/1707.md?p=a) shall involve a principal obligation in an amount not to exceed 90 per centum of the amount which the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=b) of the character described in [paragraph (3)](#a-3) of subsection (a) to a nonprofit cooperative ownership housing [corporation](/usc/12/2277a.md?p=2) or trust within two years after the completion of such property or project the [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) on any property or project of a [corporation](/usc/12/2277a.md?p=2) or trust of the character described in [paragraph (2)](#a-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](/usc/12/1707.md?p=a) for each single-[family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1707.md?p=a) which would meet the requirements of [section 1709(b)(2) of this title](/usc/12/1709.md?p=b-2) if the [mortgagor](/usc/12/1707.md?p=b) were the [owner](/usc/12/4146.md?p=2) 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](/usc/12/1707.md?p=a) insured under this section shall provide for complete amortization by periodic payments within such term as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe but not to exceed 40 years from the beginning of amortization of the [mortgage](/usc/12/1707.md?p=a), and shall bear interest at such rate as may be agreed upon by the [mortgagor](/usc/12/1707.md?p=b) and the [mortgagee](/usc/12/1707.md?p=b). The [Secretary](/usc/12/1715z–22a.md?p=4) may consent to the release of a part or parts of the mortgaged property from the lien of the [mortgage](/usc/12/1707.md?p=a) upon such terms and conditions as he may prescribe and the [mortgage](/usc/12/1707.md?p=a) may provide for such release, and a [mortgage](/usc/12/1707.md?p=a) on any project of a [corporation](/usc/12/2277a.md?p=2) or trust of the character described in [paragraph (2)](#a-2) of subsection (a) of this section may provide that, at any time after the completion of the construction of the project, such [mortgage](/usc/12/1707.md?p=a) may be replaced, in whole or in part, by individual [mortgages](/usc/12/1707.md?p=a) covering each individual dwelling in the project in amounts not to exceed the unpaid balance of the blanket [mortgage](/usc/12/1707.md?p=a) allocable to the individual property. Each such individual [mortgage](/usc/12/1707.md?p=a) may be insured under this section. Property covered by a [mortgage](/usc/12/1707.md?p=a), insured under this section, on a property or project of a [corporation](/usc/12/2277a.md?p=2) or trust of the character described in [paragraph (1)](#a-1) of subsection (a) of this section may include five or more [family](/usc/12/1715z–1.md?p=j-2-A) units and may include such commercial and community facilities as the [Secretary](/usc/12/1715z–22a.md?p=4) deems adequate to serve the occupants. Property held by a [corporation](/usc/12/2277a.md?p=2) or trust of the character described in paragraph numbered (2) of [subsection (a)](#a) of this section which is covered by a [mortgage](/usc/12/1707.md?p=a) insured under this section may include such community facilities, and property held by a [mortgagor](/usc/12/1707.md?p=b) of the character described in paragraph numbered (3) of [subsection (a)](#a) of this section which is covered by a [mortgage](/usc/12/1707.md?p=a) insured under this section may include such commercial and community facilities, as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1713.md) shall be applicable to [mortgages](/usc/12/1707.md?p=a) insured under this section except individual [mortgages](/usc/12/1707.md?p=a) insured pursuant to [subsection (d)](#d) of this section covering the individual dwellings in the project, and as to such individual [mortgages](/usc/12/1707.md?p=a) the provisions of subsections [(a)](#a), [(c)](#c), [(d)](#d), [(e)](#e), [(f)](#f), [(g)](#g), [(h)](#h),[^1] (j), and (k)[^1] of [section 1710 of this title](/usc/12/1710.md) shall be applicable: Provided, That as applied to [mortgages](/usc/12/1707.md?p=a) or loans the insurance for which is the obligation of the Management [Fund](/usc/12/4702.md?p=10) (1) all references to the General Insurance [Fund](/usc/12/4702.md?p=10) shall be construed to refer to the Management [Fund](/usc/12/4702.md?p=10), and (2) all references to [section 1713 of this title](/usc/12/1713.md) shall be construed to refer to subsections [(a)(1)](#a-1), [(a)(3)](#a-3) (if the project involved is acquired by a cooperative [corporation](/usc/12/2277a.md?p=2)), (i), and (j) of this section. - (f) **Technical advice and assistance—** The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized, with respect to [mortgages](/usc/12/1707.md?p=a) insured or to be insured under this section, to furnish technical advice and assistance in the organization of [corporations](/usc/12/2277a.md?p=2) or trusts of the character described in [subsection (a)](#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](/usc/12/1707.md?p=a) under this section covering a housing project designed for occupancy by single [persons](/usc/12/5481.md?p=19), and dwelling units in such a project shall constitute [family](/usc/12/1715z–1.md?p=j-2-A) units within the meaning of this section. - (h) **Failure to sell to a nonprofit organization—** In the event that a [mortgagor](/usc/12/1707.md?p=b) of the character described in [paragraph (3)](#a-3) of subsection (a) obtains an insured [mortgage](/usc/12/1707.md?p=a) loan pursuant to this section and fails to sell the property or project covered by such [mortgage](/usc/12/1707.md?p=a) to a nonprofit housing [corporation](/usc/12/2277a.md?p=2) or nonprofit housing trust of the character described in [paragraph (1)](#a-1) of subsection (a), the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) loans made to such [mortgagor](/usc/12/1707.md?p=b) or to any other investor-sponsor [mortgagor](/usc/12/1707.md?p=b) where, in the determination of the [Secretary](/usc/12/1715z–22a.md?p=4), any of its stockholders were identified with such [mortgagor](/usc/12/1707.md?p=b). - (i) **Mortgages executed by consumer cooperatives covering existing structures—** Nothing in this chapter shall be construed to prevent the insurance of a [mortgage](/usc/12/1707.md?p=a) executed by a [mortgagor](/usc/12/1707.md?p=b) of the character described in [paragraph (1)](#a-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](/usc/12/1707.md?p=a) insurance hereunder: Provided, That the [Secretary](/usc/12/1715z–22a.md?p=4) determines that the [consumer](/usc/12/5481.md?p=4) interest is protected and that the [mortgagor](/usc/12/1707.md?p=b) will be a [consumer](/usc/12/5481.md?p=4) cooperative. In the case of properties other than new construction, the limitations in this section upon the amount of the [mortgage](/usc/12/1707.md?p=a) shall be based upon the appraised value of the property for continued use as a cooperative rather than upon the [Secretary](/usc/12/1715z–22a.md?p=4)’s estimate of the replacement cost. As to any project on which construction was commenced after September 23, 1959, the [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) and where there was compliance with the provisions of [section 1715c of this title](/usc/12/1715c.md). 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](/usc/12/1715c.md), shall not be a prerequisite. - (j) **Insurance of supplementary cooperative loans—** - (1) With respect to any property covered by a [mortgage](/usc/12/1707.md?p=a) insured under this section (or any cooperative housing project covered by a [mortgage](/usc/12/1707.md?p=a) insured under [section 1713 of this title](/usc/12/1713.md) as in effect prior to April 20, 1950), the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized, upon such terms and conditions as he may prescribe, to make commitments to insure and to insure supplementary cooperative loans ([including](/usc/12/25b.md?p=a-3) advances during construction or improvement) made by [financial institutions](/usc/12/1715k.md?p=h-1-C) approved by the [Secretary](/usc/12/1715z–22a.md?p=4). The [Secretary](/usc/12/1715z–22a.md?p=4) is further authorized to make commitments to insure and to insure supplementary cooperative loans ([including](/usc/12/25b.md?p=a-3) advances during construction or improvement) with respect to any property purchased from the Federal Government by a nonprofit [corporation](/usc/12/2277a.md?p=2) or trust of the character described in [paragraph (1)](#a-1) of subsection (a), if the property is covered by an uninsured [mortgage](/usc/12/1707.md?p=a) representing a part of the purchase price. As used in this subsection “supplementary cooperative loan” means a loan, advance of [credit](/usc/12/5481.md?p=7), or purchase of an obligation representing a loan or advance of [credit](/usc/12/5481.md?p=7) made for the purpose of financing any of the following: - (A) Improvements or repairs of the property covered by such [mortgage](/usc/12/1707.md?p=a); - (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](/usc/12/1426a.md?p=g-1) 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](/usc/12/1707.md?p=a) indebtedness on the property, creates a total outstanding indebtedness which does not exceed the [original principal obligation of the mortgage](/usc/12/1715z–17.md?p=c); 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](/usc/12/1715z–22a.md?p=4) estimates will be the value of such improvements or facilities, and the new outstanding indebtedness may exceed the [original principal obligation of the mortgage](/usc/12/1715z–17.md?p=c) if such new outstanding indebtedness does not exceed the limitations imposed by [subsection (b)](#b); - (B) have a maturity satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4) but not to exceed the remaining term of the [mortgage](/usc/12/1707.md?p=a); except that, in the case of repairs or improvements to a property covered by an uninsured [mortgage](/usc/12/1707.md?p=a) dated more than twenty years prior to the date of the commitment to insure, of such magnitude that the [Secretary](/usc/12/1715z–22a.md?p=4) deems them to be a major rehabilitation or modernization of such property, the loan may have a [maturity date](/usc/12/1707.md?p=c) up to ten years in excess of the remaining term of the uninsured [mortgage](/usc/12/1707.md?p=a); - (C) be secured in such manner as the [Secretary](/usc/12/1715z–22a.md?p=4) may require; - (D) contain such other terms, conditions, and restrictions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe; and - (E) represent the obligation of a borrower of the character described in [paragraph (1)](#a-1) of subsection (a). - (k) **Cooperative Management Housing Insurance Fund—** There is hereby created a Cooperative Management Housing Insurance [Fund](/usc/12/4702.md?p=10) (hereinafter referred to as the “Management [Fund](/usc/12/4702.md?p=10)”). The Management [Fund](/usc/12/4702.md?p=10) shall be used by the [Secretary](/usc/12/1715z–22a.md?p=4) as a revolving [fund](/usc/12/4702.md?p=10) for carrying out the provisions of this section with respect to [mortgages](/usc/12/1707.md?p=a) or loans insured, on or after August 10, 1965, under subsections [(a)(1)](#a-1), [(a)(3)](#a-3) (if the project is acquired by a cooperative [corporation](/usc/12/2277a.md?p=2)), (i), and (j). The Management [Fund](/usc/12/4702.md?p=10) shall also be used as a revolving [fund](/usc/12/4702.md?p=10) for [mortgages](/usc/12/1707.md?p=a), loans, and commitments transferred to it pursuant to [subsection (m)](#m). The [Secretary](/usc/12/1715z–22a.md?p=4) is directed to transfer to the Management [Fund](/usc/12/4702.md?p=10) from the General Insurance [Fund](/usc/12/4702.md?p=10) an amount equal to the total of the premium payments theretofore made with respect to the insurance of [mortgages](/usc/12/1707.md?p=a) and loans transferred to the Management [Fund](/usc/12/4702.md?p=10) pursuant to [subsection (m)](#m) minus the total of any administrative expenses theretofore incurred in connection with such [mortgages](/usc/12/1707.md?p=a) and loans, plus such other amounts as the [Secretary](/usc/12/1715z–22a.md?p=4) determines to be necessary and appropriate. General expenses of operation of the Department of Housing and Urban Development relating to [mortgages](/usc/12/1707.md?p=a) or loans which are the obligation of the Management [Fund](/usc/12/4702.md?p=10) may be charged to the Management [Fund](/usc/12/4702.md?p=10). - (l) **General Surplus Account; Participating Reserve Account—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall establish in the Management [Fund](/usc/12/4702.md?p=10), as of August 10, 1965, a General Surplus Account and a Participating Reserve Account. The aggregate [net income](/usc/12/1441a–1.md?p=4) thereafter received or any net loss thereafter sustained by the Management [Fund](/usc/12/4702.md?p=10), 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](/usc/12/1715z–22a.md?p=4) may determine to be in accord with sound actuarial and accounting practice. Upon termination of the insurance obligation of the Management [Fund](/usc/12/4702.md?p=10) by payment of any [mortgage](/usc/12/1707.md?p=a) or loan insured under this section, and at such time or times prior to such termination as the [Secretary](/usc/12/1715z–22a.md?p=4) may determine, the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to distribute to the [mortgagor](/usc/12/1707.md?p=b) or borrower a share of the Participating Reserve Account in such manner and amount as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=b) or borrower to the year of payment of the share less the total amount of any share or shares previously distributed by the [Secretary](/usc/12/1715z–22a.md?p=4) to the [mortgagor](/usc/12/1707.md?p=b) or borrower: And provided further, That in no event may a distributable share be distributed until any [funds](/usc/12/4702.md?p=10) transferred from the General Insurance [Fund](/usc/12/4702.md?p=10) to the Management [Fund](/usc/12/4702.md?p=10) pursuant to [subsection (o)](#o) have been repaid in full to the General Insurance [Fund](/usc/12/4702.md?p=10). No [mortgagor](/usc/12/1707.md?p=b), [mortgagee](/usc/12/1707.md?p=b), borrower, or lender shall have any vested right in a [credit](/usc/12/5481.md?p=7) balance in any such account or be subject to any liability arising out of the mutuality of the Management [Fund](/usc/12/4702.md?p=10). The determination of the [Secretary](/usc/12/1715z–22a.md?p=4) as to the amount to be paid by him to any [mortgagor](/usc/12/1707.md?p=b) or borrower shall be final and conclusive. - (m) **Transfer of insurance to Management Fund—** The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to transfer to the Management [Fund](/usc/12/4702.md?p=10) commitments for insurance issued under subsections [(a)(1)](#a-1), (i), and [(j)](#j) prior to August 10, 1965, and to transfer to the Management [Fund](/usc/12/4702.md?p=10) the insurance of any [mortgage](/usc/12/1707.md?p=a) or loan insured prior to August 10, 1965, under subsection [(a)(1)](#a-1), [(a)(3)](#a-3) (if the project is acquired by a cooperative [corporation](/usc/12/2277a.md?p=2)), (i), or (j): Provided, That the insurance of any [mortgage](/usc/12/1707.md?p=a) or loan shall not be transferred under the provisions of this subsection if on August 10, 1965, the [mortgage](/usc/12/1707.md?p=a) or loan is in [default](/usc/12/1467a.md?p=e-7-A) and the [mortgagee](/usc/12/1707.md?p=b) or lender has notified the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/4702.md?p=10). - (n) **Payment of premium charges in debentures—** Notwithstanding the limitations contained in other provisions of this chapter, premium charges for [mortgages](/usc/12/1707.md?p=a) or loans the insurance of which is the obligation of either the Management [Fund](/usc/12/4702.md?p=10) or the General Insurance [Fund](/usc/12/4702.md?p=10) may be payable in debentures issued in connection with [mortgages](/usc/12/1707.md?p=a) or loans transferred to the Management [Fund](/usc/12/4702.md?p=10) or in connection with [mortgages](/usc/12/1707.md?p=a) or loans insured pursuant to commitments transferred to the Management [Fund](/usc/12/4702.md?p=10), as provided in [subsection (m)](#m) of this section. Premium charges on the insurance of [mortgages](/usc/12/1707.md?p=a) or loans transferred to the Management [Fund](/usc/12/4702.md?p=10) or insured pursuant to commitments transferred to the Management [Fund](/usc/12/4702.md?p=10) may be payable in debentures which are the obligation of either the Management [Fund](/usc/12/4702.md?p=10) or the General Insurance [Fund](/usc/12/4702.md?p=10). - (o) **Transfer of funds between Management Fund and General Insurance Fund; investment of monies—** Notwithstanding any other provision of this chapter the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to transfer [funds](/usc/12/4702.md?p=10) between the Cooperative Management Housing Insurance [Fund](/usc/12/4702.md?p=10) and the General Insurance [Fund](/usc/12/4702.md?p=10) in such amounts and at such times as he may determine, taking into consideration the requirements of each such [Fund](/usc/12/4702.md?p=10), to assist in carrying out effectively the insurance programs for which such [Funds](/usc/12/4702.md?p=10) were respectively established. Moneys in the Cooperative Management Housing Insurance [Fund](/usc/12/4702.md?p=10) not needed for current operations of the [fund](/usc/12/4702.md?p=10) shall be deposited with the Treasurer of the United States to the [credit](/usc/12/5481.md?p=7) of the Cooperative Management Housing Insurance [Fund](/usc/12/4702.md?p=10) 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](/usc/12/1422.md?p=12) 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](/usc/12/1717.md?p=b-7-A-ii) market. The [Secretary](/usc/12/1715z–22a.md?p=4) may, with the approval of the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury, purchase in the open market debentures which are the obligations of the Cooperative Management Housing Insurance [Fund](/usc/12/4702.md?p=10). 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](/usc/12/1707.md?p=a) 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](/usc/12/1703.md)) or residential energy conservation measures (as defined in section [8211(11)(A) through (G)](/usc/42/8211.md?p=11-A..11-G) and (I) of title 42)[^1] in cases where the [Secretary](/usc/12/1715z–22a.md?p=4) 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. # §1715f. Process of applications and issuance of commitments The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to process applications and issue commitments with respect to insurance of [mortgages](/usc/12/1707.md?p=a) under [section 1706c of this title](/usc/12/1706c.md) and subchapter II, VI, VIII, or X of this chapter, even though the permanent [mortgage](/usc/12/1707.md?p=a) financing may not be insured under this chapter, and in the event the [mortgage](/usc/12/1707.md?p=a) is not so insured the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to charge an additional application fee determined by him to be reasonable. The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to make such rules and regulations as may be necessary to carry out the provisions of this section. # §1715g. Insurance of mortgage where mortgagor is not occupant of property The [Secretary](/usc/12/1715z–22a.md?p=4) is hereby authorized to insure any [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=b) of the property at the time of insurance, where the [Secretary](/usc/12/1715z–22a.md?p=4) is satisfied that the inability of the [mortgagor](/usc/12/1707.md?p=b) 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](/usc/12/1707.md?p=b) expresses an intent to meet such requirement upon his release from active duty. # [§1715h. Repealed. Pub. L. 100–242, title IV, § 401(a)(1), Feb. 5, 1988, 101 Stat. 1898 — repealed] # [§1715i. Repealed. Pub. L. 86–372, title I, § 108, Sept. 23, 1959, 73 Stat. 657 — repealed] # [§1715j. Repealed. Pub. L. 89–117, title XI, § 1108(aa), Aug. 10, 1965, 79 Stat. 507 — repealed] # §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](#c) under sections [1709](/usc/12/1709.md) and [1713](/usc/12/1713.md) of this title with a system of loan and [mortgage](#c) 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)](#d-1) of subsection (d) of this section. - (b) **Authorization—** The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized, upon application by the [mortgagee](#c), to insure, as hereinafter provided, any [mortgage](#c) ([including](/usc/12/25b.md?p=a-3) advances during construction on [mortgages](#c) covering property of the character described in [paragraph (3)(B)](#d-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](#c) 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](/usc/12/1707.md). - (d) **Eligibility for insurance; conditions; limits—** To be eligible for insurance under this section a [mortgage](#c) 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](/usc/42/1450.md) 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](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s1462))], 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](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s1468))], or (v) an area, designated by the [Secretary](/usc/12/1715z–22a.md?p=4), 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 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](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development, and the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/42/111.md) [[42 U.S.C. 1462](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s1462))]) has been approved for such area by such governing body and by the [Secretary](/usc/12/1715z–22a.md?p=4), and the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) shall prescribe to establish the acceptability of such property for [mortgage](#c) insurance under this section. - (2) The mortgaged property shall be held by— - (A) a [mortgagor](#c) approved by the [Secretary](/usc/12/1715z–22a.md?p=4), and the [Secretary](/usc/12/1715z–22a.md?p=4) may in his discretion require such [mortgagor](#c) to be regulated or restricted as to rents or sales, charges, [capital](/usc/12/51c.md) structure, rate of return and methods of operation, and for such purpose the [Secretary](/usc/12/1715z–22a.md?p=4) may make such contracts with and [acquire](/usc/12/1467a.md?p=a-1-J) for not to exceed $100 stock or interest in any such [mortgagor](#c) as the [Secretary](/usc/12/1715z–22a.md?p=4) may deem necessary to render effective such restriction or regulations. Such stock or interest shall be paid for out of the General Insurance [Fund](/usc/12/4702.md?p=10) and shall be redeemed by the [mortgagor](#c) at par upon the termination of all obligations of the [Secretary](/usc/12/1715z–22a.md?p=4) under the insurance; or - (B) by Federal or [State](#c) instrumentalities, municipal corporate instrumentalities of one or more [States](#c), or limited dividend or redevelopment or housing [corporations](/usc/12/2277a.md?p=2) or other legal entities restricted by or under Federal or [State](#c) laws or regulations of State banking or insurance departments as to rents, charges, [capital](/usc/12/51c.md) structure, rate of return, or methods of operation. - (3) The [mortgage](#c) shall— - (A) - (i) involve a principal obligation ([including](/usc/12/25b.md?p=a-3) such initial service charges, appraisal, inspection, and other fees as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1709.md?p=b); or in the case of a dwelling designed principally for residential use for more than four [families](/usc/12/1715z–1.md?p=j-2-A) (but not exceeding such additional number of [family](/usc/12/1715z–1.md?p=j-2-A) units as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe) the applicable maximum principal obligation secured by a four-[family](/usc/12/1715z–1.md?p=j-2-A) residence which may be insured in the area under [section 1709(b) of this title](/usc/12/1709.md?p=b) plus not to exceed $9,165 for each additional [family](/usc/12/1715z–1.md?p=j-2-A) 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](#c) 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](#c) insurance, 90 per centum) of $25,000 of the [Secretary](/usc/12/1715z–22a.md?p=4)’s estimate of replacement cost of the property, as of the date the [mortgage](#c) 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](#c) shall be based upon the sum of the estimated cost of repair and rehabilitation and the [Secretary](/usc/12/1715z–22a.md?p=4)’s estimate of the value of the property before repair and rehabilitation rather than upon the [Secretary](/usc/12/1715z–22a.md?p=4)’s estimate of the replacement cost: Provided further, That if the [mortgagor](#c) is a veteran and the [mortgage](#c) to be insured under this section covers property upon which there is located a dwelling designed principally for a one-[family](/usc/12/1715z–1.md?p=j-2-A) residence, the principal obligation may be in an amount equal to the sum of (1) 100 per centum of $25,000 of the [Secretary](/usc/12/1715z–22a.md?p=4)’s estimate of replacement cost of the property, as of the date the [mortgage](#c) 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](/usc/12/1715z–4a.md?p=a-2) 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](/usc/12/1715z–22a.md?p=4) of Defense as having performed extrahazardous service), and who was discharged or released therefrom under conditions other than dishonorable, except that [persons](/usc/12/5481.md?p=19) 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](/usc/38/5303A.md?p=d); 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](/usc/12/1715z–22a.md?p=4)) 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](/usc/12/1715z–22a.md?p=4) 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 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](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1715z–22a.md?p=4), 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](#c) shall be based upon the sum of the estimated cost of repair and rehabilitation and the [Secretary](/usc/12/1715z–22a.md?p=4)’s estimate of the value of the property before repair and rehabilitation rather than upon the [Secretary](/usc/12/1715z–22a.md?p=4)’s estimate of the replacement cost: Provided further, That the [mortgage](#c) may involve the financing of the purchase of property which has been rehabilitated by a local [public agency](/usc/12/1821.md?p=w-2-B) with Federal assistance pursuant to section 110(c)(8) of the Housing Act of 1949 [[42 U.S.C. 1460(c)(8)](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s1460/c/8))], and, in such case the foregoing limitations upon the amount of the [mortgage](#c) shall be based upon the appraised value of the property as of the date the [mortgage](#c) 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](/usc/12/1715z–22a.md?p=4)), $167,310 per [family](/usc/12/1715z–1.md?p=j-2-A) unit without a bedroom, $185,328 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with one bedroom, $221,364 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with two bedrooms, $272,844 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with three bedrooms, and $308,880 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with four or more bedrooms; except that as to projects to consist of elevator-type structures the [Secretary](/usc/12/1715z–22a.md?p=4) may, in his discretion, increase the dollar amount limitations per [family](/usc/12/1715z–1.md?p=j-2-A) unit to not to exceed $193,050 per [family](/usc/12/1715z–1.md?p=j-2-A) unit without a bedroom, $216,216 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with one bedroom, $265,122 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with two bedrooms, $332,046 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with three bedrooms, and $375,443 per [family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–1.md?p=j-2-A) units, the [Secretary](/usc/12/1715z–22a.md?p=4) may by regulation increase by 25 per centum any of the dollar amount limitations in [subparagraph (B)(iii)(I)](#d-3-B-iii-I) (as such limitations may have been adjusted in accordance with [section 1712a of this title](/usc/12/1712a.md)) which are applicable to units with two, three, or four or more bedrooms; (III) the [Secretary](/usc/12/1715z–22a.md?p=4) may, by regulation, increase the dollar amount limitations contained in [subparagraph (B)(iii)(I)](#d-3-B-iii-I) (as such limitations may have been adjusted in accordance with [section 1712a of this title](/usc/12/1712a.md)) by not to exceed 170 percent in any geographical area where the [Secretary](/usc/12/1715z–22a.md?p=4) finds that cost levels so require and by not to exceed 170 percent, or 215 percent in high cost areas, where the [Secretary](/usc/12/1715z–22a.md?p=4) determines it necessary on a project-by-project basis, but in no case may any such increase exceed 90 percent where the [Secretary](/usc/12/1715z–22a.md?p=4) determines that a [mortgage](#c) purchased or to be purchased by the Government National [Mortgage](#c) [Association](/usc/12/1828.md?p=s-4-E-i) in implementing its special assistance functions under [section 1720](/usc/12/1720.md)[^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)](#d-3-B-iii-I) shall preclude the insurance of [mortgages](#c) covering existing multifamily dwellings to be rehabilitated or reconstructed for the purposes set forth in [subsection (a)](#a) of this section; (V) the [Secretary](/usc/12/1715z–22a.md?p=4) 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)](#d-3) of the last paragraph of [section 1703(a) of this title](/usc/12/1703.md)) or residential energy conservation measures (as defined in section [8211(11)(A) through (G)](/usc/42/8211.md?p=11-A..11-G) and (I) of title 42)[^1] in cases where the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](#c) shall be found by the [Secretary](/usc/12/1715z–22a.md?p=4) to contribute to the economic feasibility of the project, and the [Secretary](/usc/12/1715z–22a.md?p=4) shall give due consideration to the possible effect of the project on other business enterprises in the community. - (4) The [mortgage](#c) shall provide for complete amortization by periodic payments (unless otherwise approved by the [Secretary](/usc/12/1715z–22a.md?p=4)) within such terms as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe, but as to [mortgages](#c) 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](/usc/12/1709.md?p=b-3). The [mortgage](#c) shall bear interest at such rate as may be agreed upon by the [mortgagor](#c) and the [mortgagee](#c) and contain such terms and provisions with respect to the application of the [mortgagor](#c)’s periodic payment to amortization of the principal of the [mortgage](#c), insurance, repairs, alterations, payment of taxes, [default](/usc/12/1467a.md?p=e-7-A) reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters as the [Secretary](/usc/12/1715z–22a.md?p=4) may in the [Secretary](/usc/12/1715z–22a.md?p=4)’s discretion prescribe. - (e) **Release of mortgagor or part of property—** The [Secretary](/usc/12/1715z–22a.md?p=4) may at any time, under such terms and conditions as he may prescribe, consent to the release of the [mortgagor](#c) from his liability under the [mortgage](#c) or the [credit](/usc/12/5481.md?p=7) instrument secured thereby, or consent to the release of parts of the mortgaged property from the lien of the [mortgage](#c). - (f) **Entitlement of mortgagee to benefits; payment in cash or debentures; acquisition of mortgages; applicability of other provisions—** The [mortgagee](#c) shall be entitled to receive the benefits of the insurance as hereinafter provided— - (1) as to [mortgages](#c) meeting the requirements of [paragraph (3)(A)](#d-3-A) of subsection (d) of this section as provided in [section 1710(a) of this title](/usc/12/1710.md?p=a) with respect to [mortgages](#c) insured under [section 1709 of this title](/usc/12/1709.md), and the provisions of subsections [(b)](#b), [(c)](#c), [(d)](#d), [(e)](#e), [(f)](#f), [(g)](#g), [(h)](#h),[^1] (j), and (k)[^1] of [section 1710 of this title](/usc/12/1710.md) shall be applicable to such [mortgages](#c) insured under this section, except that all references therein to the Mutual [Mortgage](#c) Insurance [Fund](/usc/12/4702.md?p=10) or the [Fund](/usc/12/4702.md?p=10) shall be construed to refer to the General Insurance [Fund](/usc/12/4702.md?p=10) and all references therein to [section 1709 of this title](/usc/12/1709.md) shall be construed to refer to this section; - (2) as to [mortgages](#c) meeting the requirements of [paragraph (3)(B)](#d-3-B) of subsection (d) of this section, as provided in [section 1713(g) of this title](/usc/12/1713.md?p=g) with respect to [mortgages](#c) insured under said [section 1713](/usc/12/1713.md), and the provisions of subsections (h), (i), (j), (k), and (l) of [section 1713 of this title](/usc/12/1713.md) shall be applicable to such [mortgages](#c) insured under this section, and all references therein to the Housing Insurance [Fund](/usc/12/4702.md?p=10) or the Housing [Fund](/usc/12/4702.md?p=10) shall be construed to refer to the General Insurance [Fund](/usc/12/4702.md?p=10); or - (3) as to [mortgages](#c) 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](/usc/12/1715z–22a.md?p=4) 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](#c) insurance contract), or may [acquire](/usc/12/1467a.md?p=a-1-J) a [mortgage](#c) loan that is in [default](/usc/12/1467a.md?p=e-7-A) and the security therefor upon payment to the [mortgagee](#c) in cash or in debentures (as provided in the [mortgage](#c) 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](/usc/12/1715z–22a.md?p=4) and made previously by the [mortgagee](#c) under the provisions of the [mortgage](#c). After the acquisition of the [mortgage](#c) by the [Secretary](/usc/12/1715z–22a.md?p=4) the [mortgagee](#c) 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](/usc/12/1710.md) and [1713](/usc/12/1713.md) of this title relating to the rights, liabilities, and obligations of a [mortgagee](#c) shall apply with respect to the [Secretary](/usc/12/1715z–22a.md?p=4) when he has acquired an insured [mortgage](#c) 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](/usc/12/1715z–22a.md?p=4), except that as applied to [mortgages](#c) so acquired (A) all references in [section 1710 of this title](/usc/12/1710.md) to the Mutual [Mortgage](#c) Insurance [Fund](/usc/12/4702.md?p=10) or the [Fund](/usc/12/4702.md?p=10) shall be construed to refer to the General Insurance [Fund](/usc/12/4702.md?p=10), and (B) all references in [section 1710 of this title](/usc/12/1710.md) to [section 1709 of this title](/usc/12/1709.md) 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](/usc/12/1715z–22a.md?p=4). - (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](#h-1-B), 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](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s1468))], as provided in [paragraph (1)](#d-1) of subsection (d) of this section, the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized upon such terms and conditions as he may prescribe to make commitments to insure and to insure [home improvement loans](#h-1-A) ([including](/usc/12/25b.md?p=a-3) advances during construction or [improvement](#h-1-B)) made by [financial institutions](#h-1-C) on and after June 30, 1961. As used in this subsection— - (A) the term “home improvement loan” means a loan, advance of [credit](/usc/12/5481.md?p=7), or purchase of an obligation representing a loan or advance of [credit](/usc/12/5481.md?p=7) made— - (i) for the purpose of financing the [improvement](#h-1-B) 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](/usc/12/5481.md?p=7), or purchase, and which is used or will be used primarily for residential purposes: Provided, That a [home improvement loan](#h-1-A) shall include a loan, advance, or purchase with respect to the [improvement](#h-1-B) 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](#h-1-B), 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](#h-1-B), 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](/usc/12/4146.md?p=2) 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](/usc/12/1715z–22a.md?p=4) as eligible for insurance under [section 1703 of this title](/usc/12/1703.md) or a [mortgagee](#c) approved under [section 1709(b)(1) of this title](/usc/12/1709.md?p=b-1). - (2) To be eligible for insurance under this subsection, a [home improvement loan](#h-1-A) shall— - (i) not exceed the [Secretary](/usc/12/1715z–22a.md?p=4)’s estimate of the cost of [improvement](#h-1-B), or $12,000 per [family](/usc/12/1715z–1.md?p=j-2-A) unit, whichever is the lesser, and be limited as required by [paragraph (11)](#h-11): Provided, That the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4)) creates a total outstanding indebtedness which does not exceed the limits provided in [subsection (d)(3)](#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](#c) and the [mortgagee](#c); - (iv) have a maturity satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1715z–22a.md?p=4) may prescribe; and - (vi) represent the obligation of a borrower who is the [owner](/usc/12/4146.md?p=2) 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](#c) of the loan. - (3) Any [home improvement loan](#h-1-A) insured under this subsection may be refinanced and extended in accordance with such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) is authorized to fix a premium charge for the insurance of [home improvement loans](#h-1-A) 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](#h-1-C) either in cash or in debentures (at par plus accrued interest) issued by the [Secretary](/usc/12/1715z–22a.md?p=4) as obligations of the General Insurance [Fund](/usc/12/4702.md?p=10), in such manner as may be prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4), and the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) may prescribe. In the event the principal obligation of any loan accepted for insurance under this subsection is paid in full prior to the [maturity date](#c), the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to refund to the [financial institution](#h-1-C) 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](/usc/12/1467a.md?p=e-7-A) on loans insured under this subsection, upon receiving notice of [default](/usc/12/1467a.md?p=e-7-A), the [Secretary](/usc/12/1715z–22a.md?p=4), in accordance with such regulations as he may prescribe, may [acquire](/usc/12/1467a.md?p=a-1-J) the loan and any security therefor upon payment to the [financial institution](#h-1-C) 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](/usc/12/1715z–22a.md?p=4) made previously by the [financial institution](#h-1-C) 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](/usc/12/1715z–22a.md?p=4). 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](/usc/12/1715z–22a.md?p=4). - (7) Debentures issued under this subsection shall be executed in the name of the General Insurance [Fund](/usc/12/4702.md?p=10) as obligor, shall be negotiable, and, if in book entry form, transferable, in the manner described by the [Secretary](/usc/12/1715z–22a.md?p=4) in regulations, and shall be dated as of the date the loan is assigned to the [Secretary](/usc/12/1715z–22a.md?p=4) and shall bear interest from that date. They shall bear interest at a rate established by the [Secretary](/usc/12/1715z–22a.md?p=4) pursuant to [section 1715o](/usc/12/1715o.md) 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](/usc/12/1713.md?p=i) with respect to debentures issued under that section. They shall be paid out of the General Insurance [Fund](/usc/12/4702.md?p=10) 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](/usc/12/4702.md?p=10) fails to pay upon demand, when due, the principal of or interest on any debentures so guaranteed, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development, with the approval of the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury; and may be in book entry or certificated registered form, or such other form as the [Secretary](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development may prescribe in regulations. - (8) The provisions of subsections (c), (d), and (h) of [section 1703 of this title](/usc/12/1703.md) shall apply to [home improvement loans](#h-1-A) insured under this subsection, and for the purposes of this subsection references in subsections (c), (d), and (h) of [section 1703 of this title](/usc/12/1703.md) 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](#h-1-A) executed in connection with the [improvement](#h-1-B) of a structure for use as rental accommodations for five or more [families](/usc/12/1715z–1.md?p=j-2-A) shall be insured under this subsection unless the borrower has agreed (i) to certify, upon completion of the [improvement](#h-1-B) and prior to final endorsement of the loan, either that the [actual cost](#h-9-B) of [improvement](#h-1-B) equaled or exceeded the proceeds of the [home improvement loan](#h-1-A), or the amount by which the proceeds of the loan exceed the [actual cost](#h-9-B), as the case may be, and (ii) to pay forthwith to the [financial institution](#h-1-C), for application to the reduction of the principal of the loan, the amount, if any, certified to be in excess of the [actual cost](#h-9-B) of [improvement](#h-1-B). Upon the [Secretary](/usc/12/1715z–22a.md?p=4)’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)](#h-9-A), the term “actual cost” means the cost to the borrower of the [improvement](#h-1-B), [including](/usc/12/25b.md?p=a-3) 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](/usc/12/1715z–22a.md?p=4), and other items of expense approved by the [Secretary](/usc/12/1715z–22a.md?p=4), plus a reasonable allowance for builder’s profit if the borrower is also the builder, as defined by the [Secretary](/usc/12/1715z–22a.md?p=4), and excluding the amount of any kickbacks, rebates, or trade discounts received in connection with the [improvement](#h-1-B). - (10) Notwithstanding any other provision of this chapter, the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized and empowered (i) to make expenditures and advances out of [funds](/usc/12/4702.md?p=10) 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](/usc/12/1715z–22a.md?p=4) or by the United States under this subsection, or section [1703](/usc/12/1703.md) or [1709(k)](/usc/12/1709.md?p=k) of this title; and (ii) to bid for and to purchase at any foreclosure or other sale or otherwise [acquire](/usc/12/1467a.md?p=a-1-J) 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](/usc/12/1715z–22a.md?p=4) or by the United States under this subsection or section [1703](/usc/12/1703.md) or [1709(k)](/usc/12/1709.md?p=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](/usc/12/1710.md?p=g). - (11) Notwithstanding any other provision of this chapter, no [home improvement loan](#h-1-A) made in whole or in part for the purpose specified in clause (A)(ii) of the second sentence of [paragraph (1)](#h-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 loans insured under this subsection or [section 1709(k) of this title](/usc/12/1709.md?p=k) 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](/usc/12/1715z–22a.md?p=4) 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. # §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](/usc/12/1715z–22a.md?p=4) is authorized, upon application by the mortgagee, to insure under this section as hereinafter provided any mortgage ([including](/usc/12/25b.md?p=a-3) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md). (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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/25b.md?p=a-3) such initial service charges, appraisal, inspection, and other fees as the [Secretary](/usc/12/1715z–22a.md?p=4) shall approve) in an amount (A) not to exceed (i) $31,000 (or $36,000, if the mortgagor’s family [includes](/usc/12/25b.md?p=a-3) five or more [persons](/usc/12/5481.md?p=19)) 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](/usc/12/1715z–22a.md?p=4) may increase the foregoing amounts to not to exceed $36,000 (or $42,000 if the mortgagor’s family [includes](/usc/12/25b.md?p=a-3) five or more [persons](/usc/12/5481.md?p=19)), $45,000, $57,600, and $68,400, respectively, in any geographical area where he finds 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 two-family dwelling, $600 in the case of a three-family dwelling, and $800 in the case of a four-family 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](/usc/12/1715z–22a.md?p=4)’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](/usc/12/1715z–22a.md?p=4)’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](/usc/12/1715z–22a.md?p=4)) 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](/usc/12/1422.md?p=12) (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](/usc/42/1437f.md)], which certifies that it is not receiving financial assistance from the United States exclusively pursuant to such Act [[42 U.S.C. 1437](/usc/42/1437.md) et seq.]) a cooperative ([including](/usc/12/25b.md?p=a-3) an investor-sponsor who meets such requirements as the [Secretary](/usc/12/1715z–22a.md?p=4) may impose to assure that the [consumer](/usc/12/5481.md?p=4) interest is protected), or a limited dividend [corporation](/usc/12/2277a.md?p=2) (as defined by the [Secretary](/usc/12/1715z–22a.md?p=4)), or a private nonprofit [corporation](/usc/12/2277a.md?p=2) or [association](/usc/12/1828.md?p=s-4-E-i), or other mortgagor approved by the [Secretary](/usc/12/1715z–22a.md?p=4), and regulated or supervised under Federal or State laws or by political subdivisions of States, or [agencies](/usc/12/1422.md?p=12) thereof, or by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4)) $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 consist of elevator-type structures the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1712a.md)) by not to exceed 170 percent in any geographical area where the [Secretary](/usc/12/1715z–22a.md?p=4) finds that cost levels so require and by not to exceed 170 percent, or 215 percent in high cost areas, where the [Secretary](/usc/12/1715z–22a.md?p=4) determines it necessary on a project-by-project basis, but in no case may any such increase exceed 90 percent where the [Secretary](/usc/12/1715z–22a.md?p=4) determines that a mortgage purchased or to be purchased by the Government National Mortgage [Association](/usc/12/1828.md?p=s-4-E-i) in implementing its special assistance functions under [section 1720](/usc/12/1720.md)[^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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4)), or (2) in the case of repair and rehabilitation, the sum of the estimated cost of repair and rehabilitation and the [Secretary](/usc/12/1715z–22a.md?p=4)’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](/usc/12/1821.md?p=w-2-B) with Federal assistance pursuant to section 110(c)(8) of the Housing Act of 1949 [[42 U.S.C. 1460(c)(8)](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s1460/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](/usc/12/2277a.md?p=2) or [association](/usc/12/1828.md?p=s-4-E-i), cooperative ([including](/usc/12/25b.md?p=a-3) 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 occupancy in accordance with such regulations and procedures as may be prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4) and the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4)— (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](/usc/12/1715z–22a.md?p=4)), $166,509 per family unit without a bedroom, $188,997 per family unit with one bedroom, $228,448 per family unit with two bedrooms, $286,744 per family unit with three bedrooms, and $324,922 per family unit with four or more bedrooms; except that as to projects to consist of elevator-type structures the [Secretary](/usc/12/1715z–22a.md?p=4) may, in his discretion, increase the dollar amount limitations per family unit to not to exceed $179,854 per family unit without a bedroom, $206,180 per family unit with one bedroom, $250,708 per family unit with two bedrooms, $324,324 per family unit with three bedrooms, and $356,017 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1712a.md)) by not to exceed 170 percent in any geographical area where the [Secretary](/usc/12/1715z–22a.md?p=4) finds that cost levels so require and by not to exceed 170 percent, or 215 percent in high cost areas, where the [Secretary](/usc/12/1715z–22a.md?p=4) determines it necessary on a project-by-project basis, but in no case may any such increase exceed 90 percent where the [Secretary](/usc/12/1715z–22a.md?p=4) determines that a mortgage purchased or to be purchased by the Government National Mortgage [Association](/usc/12/1828.md?p=s-4-E-i) in implementing its special assistance functions under [section 1720](/usc/12/1720.md)[^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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1715z–22a.md?p=4), after certification 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](/usc/12/25b.md?p=a-3) the cost of evaluating and reducing lead-based paint hazards, as such terms are defined in [section 4851b of title 42](/usc/42/4851b.md)) and the [Secretary](/usc/12/1715z–22a.md?p=4)’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](/usc/12/1715z–22a.md?p=4) may, in his discretion, require the mortgagor to be regulated or restricted as to rents or sales, charges, [capital](/usc/12/51c.md) structure, rate of return, and methods of operation, and for such purpose the [Secretary](/usc/12/1715z–22a.md?p=4) may make such contracts with and [acquire](/usc/12/1467a.md?p=a-1-J) for not to exceed $100 such stock or interest in any such mortgagor as the [Secretary](/usc/12/1715z–22a.md?p=4) may deem necessary to render effective such restrictions or regulations, with such stock or interest being paid for out of the General Insurance [Fund](/usc/12/4702.md?p=10) and being required to be redeemed by the mortgagor at par upon the termination of all obligations of the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1467a.md?p=e-7-A) reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) of the Treasury at the request of the [Secretary](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1715z–22a.md?p=4)) within such terms as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4), to make the required payments under a mortgage having a 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](/usc/12/1715z–22a.md?p=4) as provided in subsection (d)(3) [includes](/usc/12/25b.md?p=a-3) 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](/usc/12/1715z–22a.md?p=4)) with a private nonprofit [corporation](/usc/12/2277a.md?p=2) 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](/usc/12/2277a.md?p=2) at the actual cost of the project, as certified pursuant to [section 1715r of this title](/usc/12/1715r.md). The mortgagor to whom the property is sold shall be regulated or supervised by the [Secretary](/usc/12/1715z–22a.md?p=4) as provided in subsection (d)(3) to effectuate its purposes. (2) The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/5481.md?p=7) 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](/usc/12/51c.md) improvements The property or project shall comply with such standards and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe to establish the acceptability of such property for mortgage insurance and may include such commercial and community facilities as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715k.md?p=d-3-B-iv) 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](/usc/12/1715k.md?p=d-3-B-iv) 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](/usc/12/1715z–22a.md?p=4), contain kitchen facilities, and such projects may include central dining and other shared facilities. The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to adopt such procedures and requirements as he determines are desirable to assure that the dwelling accommodations provided under this section are available to displaced families. Notwithstanding any provision of this chapter, the [Secretary](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/4702.md?p=10) for any net losses in connection with such insurance. [Any person](/usc/12/1715z–4a.md?p=a-2) who is sixty-two years of age or over, or who is a handicapped [person](/usc/12/5481.md?p=19) within the meaning of [section 1701q](/usc/12/1701q.md)[^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](/usc/12/5481.md?p=19) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715k.md?p=d-3-B-iv) 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](/usc/12/5481.md?p=19), 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](/usc/42/5121.md) et seq.]. In order to induce advances by [owners](/usc/12/4146.md?p=2) for [capital](/usc/12/51c.md) improvements (excluding any [owner](/usc/12/4146.md?p=2) contributions that may be required by the [Secretary](/usc/12/1715z–22a.md?p=4) as a condition for assistance under [section 201](/usc/12/201.md) 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](/usc/12/1715z–22a.md?p=4) may include an amount that would permit a return of such advances with interest to the [owner](/usc/12/4146.md?p=2) out of project income, on such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) 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 comparable housing established under section 8(c) of the United States Housing Act of 1937 [[42 U.S.C. 1437f(c)](/usc/42/1437f.md?p=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](/usc/42/1437f.md)] 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](/usc/12/5481.md?p=7) 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](/usc/12/1710.md?p=a) with respect to mortgages insured under [section 1709 of this title](/usc/12/1709.md), and the provisions of subsections (b), (c), (d), (e), (f), (g), (h),[^2] (j), and (k)[^2] of [section 1710 of this title](/usc/12/1710.md) shall be applicable to such mortgages insured under this section, except that all references therein to the Mutual Mortgage Insurance [Fund](/usc/12/4702.md?p=10) or the [Fund](/usc/12/4702.md?p=10) shall be construed to refer to the General Insurance [Fund](/usc/12/4702.md?p=10) and all references therein to [section 1709 of this title](/usc/12/1709.md) 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](/usc/12/1713.md?p=g) with respect to mortgages insured under said [section 1713](/usc/12/1713.md), and the provisions of subsections (h), (i), (j), (k), and (l) of [section 1713 of this title](/usc/12/1713.md) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1467a.md?p=a-1-J) a mortgage loan that is in [default](/usc/12/1467a.md?p=e-7-A) 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](/usc/12/1715z–22a.md?p=4) and made previously by the mortgagee under the provisions of the mortgage, and after the acquisition of any such mortgage by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1710.md) and [1713](/usc/12/1713.md) 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](/usc/12/1710.md) and [1713](/usc/12/1713.md) of this title relating to the rights, liabilities, and obligations of a mortgagee shall apply with respect to the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4), except that as applied to mortgages so acquired (A) all references in [section 1710 of this title](/usc/12/1710.md) to the Mutual Mortgage Insurance [Fund](/usc/12/4702.md?p=10) or the [Fund](/usc/12/4702.md?p=10) shall be construed to refer to the General Insurance [Fund](/usc/12/4702.md?p=10), and (B) all references in [section 1710 of this title](/usc/12/1710.md) to [section 1709 of this title](/usc/12/1709.md) 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](/usc/12/1715z–22a.md?p=4). (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](/usc/12/1467a.md?p=e-7-A) 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](/usc/12/1715z–22a.md?p=4), have the option to assign, transfer, and deliver to the [Secretary](/usc/12/1715z–22a.md?p=4) the original [credit](/usc/12/5481.md?p=7) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) shall issue to the mortgagee debentures having a par value equal to the amount of the [original principal obligation of the mortgage](/usc/12/1715z–17.md?p=c) 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](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1715z–22a.md?p=4) of the Treasury shall specify as applicable to the six-month period (consisting of January through June or July through December) which [includes](/usc/12/25b.md?p=a-3) the issuance date of such debentures, which applicable rate for each such six-month period shall be determined by the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury 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](/usc/12/1715z–22a.md?p=4) shall have the same authority with respect to mortgages assigned to him under this paragraph as contained in sections [1713(k)](/usc/12/1713.md?p=k) and [1713(l)](/usc/12/1713.md?p=l) of this title as to mortgages insured by the [Secretary](/usc/12/1715z–22a.md?p=4) and assigned to him under [section 1713 of this title](/usc/12/1713.md). (B) In processing a claim for insurance benefits under this paragraph, the [Secretary](/usc/12/1715z–22a.md?p=4) may direct the mortgagee to assign, transfer, and deliver the original [credit](/usc/12/5481.md?p=7) instrument and the mortgage securing it directly to the Government National Mortgage [Association](/usc/12/1828.md?p=s-4-E-i) in lieu of assigning, transferring, and delivering the [credit](/usc/12/5481.md?p=7) instrument and the mortgage to the [Secretary](/usc/12/1715z–22a.md?p=4). Upon the assignment, transfer, and delivery of the [credit](/usc/12/5481.md?p=7) instrument and the mortgage to the [Association](/usc/12/1828.md?p=s-4-E-i), the mortgage insurance contract shall terminate and the mortgagee shall receive insurance benefits as provided in subparagraph (A). The [Association](/usc/12/1828.md?p=s-4-E-i) is authorized to accept such loan documents in its own name and to hold, service, and sell such loans as agent for the [Secretary](/usc/12/1715z–22a.md?p=4). 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](/usc/12/1828.md?p=s-4-E-i) or by the [Secretary](/usc/12/1715z–22a.md?p=4). The [Secretary](/usc/12/1715z–22a.md?p=4) shall have the same authority with respect to mortgages assigned to the [Secretary](/usc/12/1715z–22a.md?p=4) or the [Association](/usc/12/1828.md?p=s-4-E-i) under this subparagraph as provided by [section 1715n(c) of this title](/usc/12/1715n.md?p=c). (C)(i) In lieu of accepting assignment of the original [credit](/usc/12/5481.md?p=7) instrument and the mortgage securing the [credit](/usc/12/5481.md?p=7) instrument under subparagraph (A) in exchange for receipt of debentures, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/2206a.md?p=a-1) certificates, or other mortgage-backed obligations in a form acceptable to the [Secretary](/usc/12/1715z–22a.md?p=4) (in this subparagraph referred to as “[participation](/usc/12/2206a.md?p=a-1) certificates”). The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) shall conduct a public auction to determine the lowest interest rate necessary to accomplish a sale of the beneficial interests in the original [credit](/usc/12/5481.md?p=7) instrument and mortgage securing the [credit](/usc/12/5481.md?p=7) instrument. (II) A mortgagee who elects to assign a mortgage shall provide the [Secretary](/usc/12/1715z–22a.md?p=4) and [persons](/usc/12/5481.md?p=19) bidding at the auction a description of the characteristics of the original [credit](/usc/12/5481.md?p=7) instrument and mortgage securing the original [credit](/usc/12/5481.md?p=7) instrument, which shall include the principal mortgage balance, original stated interest rate, service fees, [real estate](/usc/12/1707.md?p=g) and tenant characteristics, the level and duration of applicable Federal subsidies, and any other information determined by the [Secretary](/usc/12/1715z–22a.md?p=4) to be appropriate. The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/4146.md?p=2) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) conduct an auction before 2 months after receiving the mortgagee’s written notice of intent to assign its mortgage to the [Secretary](/usc/12/1715z–22a.md?p=4). (IV) In any auction under this subparagraph, the [Secretary](/usc/12/1715z–22a.md?p=4) shall accept the lowest interest rate bid for purchase that the [Secretary](/usc/12/1715z–22a.md?p=4) determines to be acceptable. The [Secretary](/usc/12/1715z–22a.md?p=4) shall cause the accepted bid to be published in the Federal Register. Settlement for the sale of the [credit](/usc/12/5481.md?p=7) instrument and the mortgage securing the [credit](/usc/12/5481.md?p=7) instrument shall occur not later than 30 [business days](/usc/12/5002.md?p=5) after the date winning bidders are selected in the auction, unless the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4), or settlement does not occur within the period under subclause (IV), the mortgagee shall retain all rights ([including](/usc/12/25b.md?p=a-3) the right to interest, at a rate to be determined by the [Secretary](/usc/12/1715z–22a.md?p=4), for the period covering any actions taken under this subparagraph) under this section to assign the mortgage loan to the [Secretary](/usc/12/1715z–22a.md?p=4). (iii) As part of the auction process, the [Secretary](/usc/12/1715z–22a.md?p=4) shall agree to provide a monthly interest subsidy payment from the General Insurance [Fund](/usc/12/4702.md?p=10) to the purchaser under the auction of the original [credit](/usc/12/5481.md?p=7) instrument or the mortgage securing the [credit](/usc/12/5481.md?p=7) 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](/usc/12/2206a.md?p=a-1) certificates (less the [servicing](/usc/12/2605.md?p=i-3) fee, if appropriate) for the then unpaid principal balance plus accrued interest at a rate determined by the [Secretary](/usc/12/1715z–22a.md?p=4). 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](/usc/12/1467a.md?p=e-7-A) and full payment of insurance benefits on the mortgage loan by the Federal Housing Administration. (iv) The [Secretary](/usc/12/1715z–22a.md?p=4) shall require that the mortgage loans or [participation](/usc/12/2206a.md?p=a-1) certificates presented for assignment are auctioned as whole loans with [servicing](/usc/12/2605.md?p=i-3) rights released and also are auctioned with [servicing](/usc/12/2605.md?p=i-3) rights retained by the current [servicer](/usc/12/4901.md?p=16). (v) To the extent practicable, the [Secretary](/usc/12/1715z–22a.md?p=4) shall encourage State housing finance [agencies](/usc/12/1422.md?p=12), [nonprofit organizations](/usc/12/1821.md?p=w-2-B), 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](/usc/12/2206a.md?p=a-1) in the auction. (vi) The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) receives a mortgagee’s written notice of intent to assign its mortgage to the [Secretary](/usc/12/1715z–22a.md?p=4) on or before such date. Not later than January 31 of each year (beginning in 1992), the [Secretary](/usc/12/1715z–22a.md?p=4) shall submit to the Congress a report [including](/usc/12/25b.md?p=a-3) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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 of title 2](/usc/2/661a.md)), [including](/usc/12/25b.md?p=a-3) the cost of modifying loans. (h) Insurance of mortgages to finance purchase and rehabilitation by [nonprofit organizations](/usc/12/1821.md?p=w-2-B) 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](/usc/12/1821.md?p=w-2-B) (1) In addition to mortgages insured under the other provisions of this section, the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized, upon application by the mortgagee, to insure under this subsection as hereinafter provided any mortgage ([including](/usc/12/25b.md?p=a-3) advances under such mortgage during rehabilitation) which is executed by a [nonprofit organization](/usc/12/1821.md?p=w-2-B) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/2277a.md?p=2) or [association](/usc/12/1828.md?p=s-4-E-i), approved by the [Secretary](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/4146.md?p=2) 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) 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](/usc/12/1715z–22a.md?p=4)) 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](/usc/12/1715z–22a.md?p=4) to have incomes below the maximum amount specified (with respect to the area involved) in [section 1701s(c)(1) of this title](/usc/12/1701s.md?p=c-1). (B) The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1715z–22a.md?p=4) 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 dwellings 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](/usc/12/1715z–22a.md?p=4) upon such termination. (F) Any mortgage insured under this paragraph shall 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1821.md?p=w-2-B) which executed the principal mortgage, (ii) a public housing [agency](/usc/12/1422.md?p=12) having jurisdiction under the United States Housing Act of 1937 [[42 U.S.C. 1437](/usc/42/1437.md) 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](/usc/12/1715z–22a.md?p=4). (6) In addition to the mortgages that may be insured under paragraphs (1) and (5), the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1821.md?p=w-2-B) 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](/usc/12/1715z–22a.md?p=4)’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](/usc/12/1715z–22a.md?p=4)) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4), to the extent appropriate 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1821.md?p=w-2-B) 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](/usc/12/1422.md?p=12) having jurisdiction under the United States Housing Act of 1937 [[42 U.S.C. 1437](/usc/42/1437.md) 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](/usc/12/1715z–22a.md?p=4). (7) Where the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4). (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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) is authorized, upon application by the mortgagee, to insure under this subsection mortgages financing the purchase of individual family units under the plan prescribed in paragraph (1). Commitments may be issued by the [Secretary](/usc/12/1715z–22a.md?p=4) for the insurance of such mortgages prior to the date of their execution or disbursement thereon, upon such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/25b.md?p=a-3) such initial service charges, and such appraisal, inspection, and other fees, as the [Secretary](/usc/12/1715z–22a.md?p=4) shall approve) in an amount not to exceed the [Secretary](/usc/12/1715z–22a.md?p=4)’s estimate of the appraised value of the family unit, [including](/usc/12/25b.md?p=a-3) 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](/usc/12/1715z–22a.md?p=4) (which may vary in accordance with the regulations of the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/25b.md?p=a-3) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4), or (ii) a low or moderate income purchaser who has an income within the limits prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4) 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). The mortgage shall also contain a provision that, if the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/25b.md?p=a-3) 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](/usc/12/25b.md?p=a-3) the land and such commercial, community, and other facilities as are approved by the [Secretary](/usc/12/1715z–22a.md?p=4). (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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4). Membership in such cooperative shall be made available only to those families having an income within the limits prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1426a.md?p=g-1) in the cooperative under such special terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe. (2) The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) for the insurance of such mortgages prior to the date of their execution or disbursement thereon, upon such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe. To be eligible for such insurance, the mortgage shall— (i) involve a principal obligation ([including](/usc/12/25b.md?p=a-3) such initial service charges and appraisal, inspection, and other fees as the [Secretary](/usc/12/1715z–22a.md?p=4) 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 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1703.md)) or residential energy conservation measures (as defined in section [8211(11)(A) through (G)](/usc/42/8211.md?p=11-A..11-G) and (I) of title 42)[^2] in cases where the [Secretary](/usc/12/1715z–22a.md?p=4) 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)](/usc/42/1437f.md?p=b)] for the jurisdiction in which the housing is located. An [owner](/usc/12/4146.md?p=2) 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](/usc/12/1715z–22a.md?p=4) under subsection (d)(3) and assisted under [section 1701s of this title](/usc/12/1701s.md) or section 8 of the United States Housing Act of 1937 [[42 U.S.C. 1437f](/usc/42/1437f.md)]; or (B) insured or held by the [Secretary](/usc/12/1715z–22a.md?p=4) and bears interest at a rate determined under the proviso of subsection (d)(5). # [§1715m. Repealed. Pub. L. 110–289, div. B, title I, § 2120(a)(5), July 30, 2008, 122 Stat. 2835 — repealed] # §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](/usc/12/1709.md?p=g), the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized, upon application by the [mortgagee](/usc/12/1707.md?p=b), to insure or make commitments to insure under any section or subchapter of this chapter any [mortgage](/usc/12/1707.md?p=a)— - (1) executed in connection with the sale by the Government, or any [agency](/usc/12/1422.md?p=12) 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](/usc/12/25b.md?p=a-3) 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](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development, or by any public housing [agency](/usc/12/1422.md?p=12) with the approval of the [Secretary](/usc/12/1715z–22a.md?p=4), of any housing ([including](/usc/12/25b.md?p=a-3) 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](/usc/12/1422.md?p=12) or official thereof, of any of the so-called Greenbelt towns, or parts thereof, [including](/usc/12/25b.md?p=a-3) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/43/617.md) et seq.] located within the Boulder City municipal area: Provided, That for purposes of the application of this subchapter to sales by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1422.md?p=12) or official thereof, of any housing ([including](/usc/12/25b.md?p=a-3) 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](/usc/42/2301.md) 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](/usc/12/1707.md?p=d) or municipality, or an [agency](/usc/12/1422.md?p=12), instrumentality, or political subdivision of either, of a project consisting of any permanent housing ([including](/usc/12/25b.md?p=a-3) any property acquired, held, or constructed in connection therewith or to serve the inhabitants thereof), constructed by or on behalf of such [State](/usc/12/1707.md?p=d), municipality, [agency](/usc/12/1422.md?p=12), instrumentality, or political subdivision, for the occupancy of veterans of World War II, or Korean veterans, their [families](/usc/12/1715z–1.md?p=j-2-A), 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)](#a-1), [(2)](#a-2), [(3)](#a-3), and [(4)](#a-4) above; or - (7) given to refinance an existing [mortgage](/usc/12/1707.md?p=a) insured under this chapter, or an existing [mortgage](/usc/12/1707.md?p=a) held by the [Secretary](/usc/12/1715z–22a.md?p=4) that is subject to a [mortgage](/usc/12/1707.md?p=a) restructuring and rental assistance sufficiency plan pursuant to the Multifamily Assisted Housing Reform and Affordability Act of 1997 ([42 U.S.C. 1437f](/usc/42/1437f.md) note), provided that— - (A) the principal amount of any such refinancing [mortgage](/usc/12/1707.md?p=a) shall not exceed the original principal amount or the unexpired term of such existing [mortgage](/usc/12/1707.md?p=a) and shall bear interest at such rate as may be agreed upon by the [mortgagor](/usc/12/1707.md?p=b) and the [mortgagee](/usc/12/1707.md?p=b), except that (i) the principal amount of any such refinancing [mortgage](/usc/12/1707.md?p=a) may equal the outstanding balance of an existing [mortgage](/usc/12/1707.md?p=a) insured pursuant to [section 1715z–10](/usc/12/1715z–10.md)[^1] of this title, if the amount of the monthly payment due under the refinancing [mortgage](/usc/12/1707.md?p=a) is less than that due under the existing [mortgage](/usc/12/1707.md?p=a) for the month in which the refinancing [mortgage](/usc/12/1707.md?p=a) is executed; (ii) a [mortgagee](/usc/12/1707.md?p=b) may not require a minimum principal amount to be outstanding on the loan secured by the existing [mortgage](/usc/12/1707.md?p=a); (iii) in any case involving the refinancing of a loan in which the [Secretary](/usc/12/1715z–22a.md?p=4) determines that the insurance of a [mortgage](/usc/12/1707.md?p=a) for an additional term will inure to the benefit of the applicable insurance [fund](/usc/12/4702.md?p=10), taking into consideration the outstanding insurance liability under the existing insured [mortgage](/usc/12/1707.md?p=a), such refinancing [mortgage](/usc/12/1707.md?p=a) may have a term not more than twelve years in excess of the unexpired term of such existing insured [mortgage](/usc/12/1707.md?p=a); and (iv) any multifamily [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) of the character described in [paragraphs (1) through (6)](#1..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](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=b) and the [mortgagee](/usc/12/1707.md?p=b); - (C) a [mortgage](/usc/12/1707.md?p=a) that is subject to a [mortgage](/usc/12/1707.md?p=a) restructuring and rental assistance sufficiency plan pursuant to the Multifamily Assisted Housing Reform and Affordability Act of 1997 ([42 U.S.C. 1437f](/usc/42/1437f.md) 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](/usc/42/3374.md). - (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](/usc/12/1715l.md) of this title, the [Secretary](/usc/12/1715z–22a.md?p=4) may in his discretion insure under [section 1715l(d)(3)](/usc/12/1715l.md) of this title any [mortgage](/usc/12/1707.md?p=a) executed by a [mortgagor](/usc/12/1707.md?p=b) of the character described therein where such [mortgage](/usc/12/1707.md?p=a) is given to refinance a [mortgage](/usc/12/1707.md?p=a) covering an existing property or project (other than a one- to four-[family](/usc/12/1715z–1.md?p=j-2-A) structure) located in an urban renewal area, if the [Secretary](/usc/12/1715z–22a.md?p=4) finds that such insurance will facilitate the occupancy of dwelling units in the property or project by [families](/usc/12/1715z–1.md?p=j-2-A) of low or moderate income or [families](/usc/12/1715z–1.md?p=j-2-A) displaced from an urban renewal area or displaced as a result of governmental action. - (c) **Insurance of certain assigned mortgages—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall also have authority to insure under this chapter any [mortgage](/usc/12/1707.md?p=a) assigned to the [Secretary](/usc/12/1715z–22a.md?p=4) in connection with payment under a contract of [mortgage](/usc/12/1707.md?p=a) insurance or executed in connection with the sale by the [Secretary](/usc/12/1715z–22a.md?p=4), [including](/usc/12/25b.md?p=a-3) a sale through another entity acting under authority of the fourth sentence of [section 1710(g) of this title](/usc/12/1710.md?p=g), 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](/usc/12/1707.md?p=a), 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](/usc/12/1715z–22a.md?p=4) is authorized to insure loans made to cover the operating losses of certain projects that have existing project [mortgages](/usc/12/1707.md?p=a) insured by the [Secretary](/usc/12/1715z–22a.md?p=4). Insurance under this subsection shall be in the [Secretary](/usc/12/1715z–22a.md?p=4)’s discretion and upon such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) debt, [mortgage](/usc/12/1707.md?p=a) insurance premiums, hazard insurance premiums, and the expense of maintenance and operation of the project covered by the [mortgage](/usc/12/1707.md?p=a), exceeds the income of the project. - (2) To be eligible for insurance pursuant to this paragraph— - (A) the existing project [mortgage](/usc/12/1707.md?p=a) (i) shall have been insured by the [Secretary](/usc/12/1715z–22a.md?p=4) at any time before or after February 5, 1988; and (ii) shall cover any property, other than a property upon which there is located a 1- to 4-[family](/usc/12/1715z–1.md?p=j-2-A) dwelling; - (B) the [operating loss](#d-1) shall have occurred during the first 24 months after the date of completion of the project, as determined by the [Secretary](/usc/12/1715z–22a.md?p=4); and - (C) the loan shall be in an amount not exceeding the [operating loss](#d-1). - (3) To be eligible for insurance pursuant to this paragraph— - (A) the existing project [mortgage](/usc/12/1707.md?p=a) (i) shall have been insured by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–1.md?p=j-2-A) dwelling; and (iii) shall not cover a subsidized project, as defined by the [Secretary](/usc/12/1715z–22a.md?p=4); - (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](/usc/12/4146.md?p=2) 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](/usc/12/1715z–22a.md?p=4), except that in no event may the amount of the loan exceed the [operating loss](#d-1) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=b) and [mortgagee](/usc/12/1707.md?p=b); (B) be secured in such manner as the [Secretary](/usc/12/1715z–22a.md?p=4) shall require; (C) be limited to a term not exceeding the unexpired term of the original [mortgage](/usc/12/1707.md?p=a); and (D) be insured under the same section as the original [mortgage](/usc/12/1707.md?p=a). The [Secretary](/usc/12/1715z–22a.md?p=4) may provide insurance pursuant to paragraph [(2)](#d-2) or [(3)](#d-3), or pursuant to both such paragraphs, in connection with an existing project [mortgage](/usc/12/1707.md?p=a), except that the [Secretary](/usc/12/1715z–22a.md?p=4) may not provide insurance pursuant to both such paragraphs in connection with the same period of months referred to in paragraphs [(2)(B)](#d-2-B) and [(3)(B)](#d-3-B). The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a). This premium shall be payable in cash or in debentures of the insurance [fund](/usc/12/4702.md?p=10) 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](/usc/12/1707.md?p=a), both the loan and original [mortgage](/usc/12/1707.md?p=a) shall be considered in [default](/usc/12/1467a.md?p=e-7-A), and if such [default](/usc/12/1467a.md?p=e-7-A) 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](/usc/12/1707.md?p=a), except that in determining the interest rate under [section 1715o](/usc/12/1715o.md) 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 commitment or insurance date for the original [mortgage](/usc/12/1707.md?p=a). - (5) A loan involving a project covered by a [mortgage](/usc/12/1707.md?p=a) insured under [section 1715e of this title](/usc/12/1715e.md) that is the obligation of the Cooperative Management Housing Insurance [Fund](/usc/12/4702.md?p=10) shall be the obligation of such [fund](/usc/12/4702.md?p=10), and loans involving projects covered by a [mortgage](/usc/12/1707.md?p=a) insured under [section 1715z–1 of this title](/usc/12/1715z–1.md) or under any section of this subchapter pursuant to [subsection (e)](#e) of this section shall be the obligation of the Special Risk Insurance [Fund](/usc/12/4702.md?p=10). - (6) In determining the amount of an [operating loss](#d-1) loan to be insured pursuant to this subsection, the [Secretary](/usc/12/1715z–22a.md?p=4) shall not reduce such amount solely to reflect any amounts placed in escrow (at the time the existing project [mortgage](/usc/12/1707.md?p=a) was insured) for initial operating deficits. If an [operating loss](#d-1) loan was insured by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715c.md), 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](/usc/12/1709.md?p=g), the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized, upon application by the [mortgagee](/usc/12/1707.md?p=b), to insure under any section of this subchapter or subchapter IX–B a [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) finds that (1) the area is reasonably viable, giving consideration to the need for providing adequate housing or group practice facilities for [families](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1707.md?p=a) pursuant to this subsection shall be the obligation of the Special Risk Insurance [Fund](/usc/12/4702.md?p=10). - (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](/usc/12/1715z–22a.md?p=4) is authorized, in his discretion, to insure under any section of this subchapter a [mortgage](/usc/12/1707.md?p=a) executed in connection with the purchase of[^2] refinancing of an existing [multifamily housing project](/usc/12/1701z–11.md?p=b-1) or the purchase or refinancing of existing debt of an existing hospital (or existing nursing home, existing [assisted living facility](/usc/12/1701q–2.md?p=g-1), existing intermediate care facility, existing [board](/usc/12/221a.md?p=a) and care home, or any combination thereof). - (2) In the case of the purchase or refinancing under this subsection of a [multifamily housing project](/usc/12/1701z–11.md?p=b-1) located in an older, declining urban area, the [Secretary](/usc/12/1715z–22a.md?p=4) shall make available an amount not to exceed $30,000,000 of available purchase authority pursuant to [section 1720](/usc/12/1720.md)[^1] of this title to reduce interest rates on low- and moderate-income 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=b); and - (B) during the [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4). - (3) For all insurance authorized by this subsection and provided pursuant to a commitment entered into after October 8, 1980, the [Secretary](/usc/12/1715z–22a.md?p=4) may not accept an offer to prepay or request refinancing of a [mortgage](/usc/12/1707.md?p=a) secured by rental housing unless the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) purchased under [section 1720](/usc/12/1720.md)[^1] of this title) unless the [Secretary](/usc/12/1715z–22a.md?p=4) 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 low- and 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](/usc/12/1701q–2.md?p=g-1), existing intermediate care facility, existing [board](/usc/12/221a.md?p=a) and care home, or any combination thereof) the [Secretary](/usc/12/1715z–22a.md?p=4) shall prescribe such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) deems necessary to assure that— - (A) the refinancing is employed to lower the monthly debt service costs (taking into account any fees or charges connected with such refinancing) of such existing hospital (or existing nursing home, existing [assisted living facility](/usc/12/1701q–2.md?p=g-1), existing intermediate care facility, existing [board](/usc/12/221a.md?p=a) 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](/usc/12/1701q–2.md?p=g-1), existing intermediate care facility, existing [board](/usc/12/221a.md?p=a) and care home, or any combination thereof); - (C) such existing hospital (or existing nursing home, existing [assisted living facility](/usc/12/1701q–2.md?p=g-1), existing intermediate care facility, existing [board](/usc/12/221a.md?p=a) 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](/usc/12/1715w.md) (for the existing nursing home, existing [assisted living facility](/usc/12/1701q–2.md?p=g-1), intermediate care facility, [board](/usc/12/221a.md?p=a) and care home, or any combination thereof, proposed to be refinanced) or of [section 1715z–7 of this title](/usc/12/1715z–7.md) (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](/usc/42.md), the [Secretary](/usc/12/1715z–22a.md?p=4) may— - (A) include rehabilitation or development costs of not to exceed $20,000 per unit, except that the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) financing provided by [State](/usc/12/1707.md?p=d) or local governments or [agencies](/usc/12/1422.md?p=12) thereof; and - (C) pay such benefits in cash unless the [mortgagee](/usc/12/1707.md?p=b) 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](/usc/12/1715z–22a.md?p=4) may, in his discretion, insure a [mortgage](/usc/12/1707.md?p=a) covering a [multifamily housing project](/usc/12/1701z–11.md?p=b-1) [including](/usc/12/25b.md?p=a-3) units which are not self-contained. # §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](/usc/12/1707.md?p=a) accepted for insurance on or after thirty days following August 2, 1954 (except debentures issued pursuant to [paragraph (4)](/usc/12/1715l.md) 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](/usc/12/1707.md?p=a) was issued, or the date the loan or [mortgage](/usc/12/1707.md?p=a) was endorsed for insurance, or (when there are two or more insurance endorsements) the date the loan or [mortgage](/usc/12/1707.md?p=a) was initially endorsed for insurance, whichever rate is the highest, except that debentures issued pursuant to section [1715k(f)](/usc/12/1715k.md?p=f), [1715k(h)(7)](/usc/12/1715k.md?p=h-7), [1715l(g)](/usc/12/1715l.md), [1715x](/usc/12/1715x.md), or [1715z–3](/usc/12/1715z–3.md) of this title may, at the discretion of the [Secretary](/usc/12/1715z–22a.md?p=4), bear interest at the rate in effect on the date they are issued. The [Secretary](/usc/12/1715z–22a.md?p=4) shall from time to time, with the approval of the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury, establish such interest rate in an amount not in excess of the annual rate of interest determined by the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury, at the request of the [Secretary](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1707.md?p=c) 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](/usc/12/1707.md?p=a) that is insured under section [1709](/usc/12/1709.md) or [1715y](/usc/12/1715y.md) of this title and is endorsed for [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1467a.md?p=e-7-A) on the [mortgage](/usc/12/1707.md?p=a) occurred, on United States Treasury Securities adjusted to a constant maturity of 10 years. # §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](/usc/12/1707.md?p=a) 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](/usc/12/1715z–1.md?p=j-2-A) in the aggregate, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=b) pursuant to an “open-end” provision in the [mortgage](/usc/12/1707.md?p=a), and to add the amount of such advance to the original principal obligation in determining the value of the [mortgage](/usc/12/1707.md?p=a) for the purpose of computing the amounts of debentures and certificate of claim to which the [mortgagee](/usc/12/1707.md?p=b) may be entitled: Provided, That the [Secretary](/usc/12/1715z–22a.md?p=4) may require the payment of such charges, [including](/usc/12/25b.md?p=a-3) 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](/usc/12/1715z–17.md?p=c) would exceed the amount of such original principal obligation unless the [mortgagor](/usc/12/1707.md?p=b) 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 “open-end” advances shall not be taken into account in determining the aggregate amount of principal obligations of [mortgages](/usc/12/1707.md?p=a) which may be insured under this chapter. # §1715q. Delivery of statement of appraisal or estimates to home buyers The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–1.md?p=j-2-A) residence or a two-[family](/usc/12/1715z–1.md?p=j-2-A) residence and which is approved for [mortgage](/usc/12/1707.md?p=a) insurance under section [1709](/usc/12/1709.md) or [1715e](/usc/12/1715e.md) of this title with respect to any property or project of a [corporation](/usc/12/2277a.md?p=2) or trust of the character described in paragraph (2) of subsection (a) of [section 1715e of this title](/usc/12/1715e.md), 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](/usc/12/5481.md?p=19) as may be designated by the [Secretary](/usc/12/1715z–22a.md?p=4) shall agree to deliver, prior to the sale of the property, to the [person](/usc/12/5481.md?p=19) 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](/usc/12/1715z–22a.md?p=4). This section shall not apply in any case where the [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) is authorized to require, in connection with any [mortgage](/usc/12/1707.md?p=a) where the [mortgage](/usc/12/1707.md?p=a) amount is computed on the basis of the [Secretary](/usc/12/1715z–22a.md?p=4)’s estimate of the replacement cost of the property, or on the basis of any other estimates of the [Secretary](/usc/12/1715z–22a.md?p=4), 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. # §1715r. Requirement of builder’s cost certification; definitions - (a) **Requirement—** Except as provided in [subsection (b)](#b) and notwithstanding any other provision of this chapter, no [mortgage](/usc/12/1707.md?p=a) covering [new or rehabilitated multifamily housing](#c-1) or a property or project described in subchapter IX–B shall be insured under this chapter unless the [mortgagor](/usc/12/1707.md?p=b) 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](/usc/12/1707.md?p=a), either (i) that the [approved percentage](#c-2) of actual cost (as those terms are herein defined) equaled or exceeded the proceeds of the [mortgage](/usc/12/1707.md?p=a) loan or (ii) the amount by which the proceeds of the [mortgage](/usc/12/1707.md?p=a) loan exceeded such [approved percentage](#c-2) of actual cost, as the case may be, and (B) to pay forthwith to the [mortgagee](/usc/12/1707.md?p=b), for application to the reduction of the principal obligation of such [mortgage](/usc/12/1707.md?p=a), the amount, if any, certified to be in excess of such [approved percentage](#c-2) of actual cost. Upon the [Secretary](/usc/12/1715z–22a.md?p=4)’s approval of the [mortgagor](/usc/12/1707.md?p=b)’s certification as required hereunder, such certification shall be final and incontestable, except for fraud or material misrepresentation on the part of the [mortgagor](/usc/12/1707.md?p=b). - (b) **Exemption for certain projects assisted with low-income housing tax credit—** In the case of any [mortgage](/usc/12/1707.md?p=a) insured under any provision of this subchapter that is executed in connection with the construction, rehabilitation, purchase, or refinancing of a [multifamily housing project](/usc/12/1701z–11.md?p=b-1) for which equity[^1] provided through any low-income housing tax [credit](/usc/12/5481.md?p=7) pursuant to [section 42 of title 26](/usc/26/42.md), if the [Secretary](/usc/12/1715z–22a.md?p=4) 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)](#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](/usc/12/1707.md?p=a) insurance prior to the construction or the repair and rehabilitation involved and covered by a [mortgage](/usc/12/1707.md?p=a) insured or to be insured (i) under [section 1713 of this title](/usc/12/1713.md), (ii) under [section 1715e of this title](/usc/12/1715e.md) with respect to any property or project of a [corporation](/usc/12/2277a.md?p=2) or trust of the character described in paragraph (1) of subsection (a) of [section 1715e of this title](/usc/12/1715e.md) or with respect to any property or project of a [mortgagor](/usc/12/1707.md?p=b) of the character described in paragraph (3) of subsection (a) thereof, (iii) under [section 1715k of this title](/usc/12/1715k.md) if the [mortgage](/usc/12/1707.md?p=a) meets the requirements of paragraph (3)(B) of subsection (d) thereof, (iv) under [section 1715l](/usc/12/1715l.md) of this title if the [mortgage](/usc/12/1707.md?p=a) meets the requirements of [paragraph (3)](#c-3) or paragraph (4) of subsection (d) thereof, (v) under [section 1715v of this title](/usc/12/1715v.md), (vi) under [section 1715x of this title](/usc/12/1715x.md) if the [mortgage](/usc/12/1707.md?p=a) meets the requirements of subsection [(b)](#b), (vii) under [section 1748h–2 of this title](/usc/12/1748h–2.md) if the [mortgage](/usc/12/1707.md?p=a) meets the requirements of subsection (f), (viii) under [section 1715y(d) of this title](/usc/12/1715y.md?p=d), or (ix) under [section 1715z–1 of this title](/usc/12/1715z–1.md); - (2) The term “approved percentage” means the percentage figure which, under applicable provisions of this chapter, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) amount; except that if the [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) is to assist the financing of new construction, the term means the actual cost to the [mortgagor](/usc/12/1707.md?p=b) of such construction, [including](/usc/12/25b.md?p=a-3) amounts paid for labor, materials, construction contracts, off-site public utilities, streets, organizational and legal expenses, such allocations of general overhead items as are acceptable to the [Secretary](/usc/12/1715z–22a.md?p=4), and other items of expense approved by the [Secretary](/usc/12/1715z–22a.md?p=4), plus (I) a reasonable allowance for builder’s profit if the [mortgagor](/usc/12/1707.md?p=b) is also the builder as defined by the [Secretary](/usc/12/1715z–22a.md?p=4), and (II) an amount equal to the [Secretary](/usc/12/1715z–22a.md?p=4)’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](/usc/12/1707.md?p=b) in fee (or, in case the land in the property or project is held by the [mortgagor](/usc/12/1707.md?p=b) under a leasehold or other interest less than a fee, such amount as the [mortgagor](/usc/12/1707.md?p=b) 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](/usc/12/1707.md?p=a) is to assist the financing of repair or rehabilitation the term means the actual cost to the [mortgagor](/usc/12/1707.md?p=b) of such repair or rehabilitation, [including](/usc/12/25b.md?p=a-3) 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](/usc/12/1715z–22a.md?p=4), and other items of expense approved by the [Secretary](/usc/12/1715z–22a.md?p=4), plus (I) a reasonable allowance for builder’s profit if the [mortgagor](/usc/12/1707.md?p=b) is also the builder as defined by the [Secretary](/usc/12/1715z–22a.md?p=4), and (II) an additional amount equal to (A) in case the land and improvements are to be acquired by the [mortgagor](/usc/12/1707.md?p=b) and the purchase price thereof is to be financed with part of the proceeds of the [mortgage](/usc/12/1707.md?p=a), 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](/usc/12/1707.md?p=b) subject to an outstanding indebtedness to be refinanced with part of the proceeds of the [mortgage](/usc/12/1707.md?p=a), 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 received 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](/usc/12/1715z–22a.md?p=4)’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](#c-2) of the [Secretary](/usc/12/1715z–22a.md?p=4)’s estimate of the fair market value of such land and improvements prior to such repair or rehabilitation. In the case of a [mortgage](/usc/12/1707.md?p=a) insured under section [1715k](/usc/12/1715k.md), [1715l(d)(3)](/usc/12/1715l.md), [1715l(d)(4)](/usc/12/1715l.md), [1715v](/usc/12/1715v.md), [1715x](/usc/12/1715x.md), or [1715z–1](/usc/12/1715z–1.md) of this title where the [mortgagor](/usc/12/1707.md?p=b) is also the builder as defined by the [Secretary](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1707.md?p=a) insured under section [1715k](/usc/12/1715k.md), [1715l(d)(3)](/usc/12/1715l.md), [1715l(d)(4)](/usc/12/1715l.md), [1715v](/usc/12/1715v.md), [1715x](/usc/12/1715x.md), or [1715z–1](/usc/12/1715z–1.md) of this title, where the [mortgagor](/usc/12/1707.md?p=b) is not also the builder as defined by the [Secretary](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1707.md?p=b) under a general construction contract. # §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](/usc/12/1707.md?p=a) insured under any provision of this subchapter that is executed in connection with the construction, rehabilitation, purchase, or refinancing of a [multifamily housing project](/usc/12/1701z–11.md?p=b-1) for which equity[^1] provided through any low-income housing tax [credit](/usc/12/5481.md?p=7) pursuant to [section 42 of title 26](/usc/26/42.md). - (b) **Acceptance of letters of credit—** In the case of an [insured mortgage covering a tax credit project](#a), the [Secretary](/usc/12/1715z–22a.md?p=4) may not require the escrowing of equity provided by the sale of any low-income housing tax [credits](/usc/12/5481.md?p=7) for the project pursuant to [section 42 of title 26](/usc/26/42.md), or any other form of security, such as a letter of [credit](/usc/12/5481.md?p=7). - (c) **Asset management requirements—** In the case of an [insured mortgage covering a tax credit project](#a) for which project the applicable tax [credit](/usc/12/5481.md?p=7) allocating [agency](/usc/12/1422.md?p=12) is causing to be performed periodic inspections in compliance with the requirements of [section 42 of title 26](/usc/26/42.md), such project shall be exempt from requirements imposed by the [Secretary](/usc/12/1715z–22a.md?p=4) regarding periodic inspections of the property by the [mortgagee](/usc/12/1707.md?p=b). To the extent that other compliance monitoring is being performed with respect to such a project by such an allocating [agency](/usc/12/1422.md?p=12) pursuant to such [section 42](/usc/12/42.md), the [Secretary](/usc/12/1715z–22a.md?p=4) shall, to the extent that the [Secretary](/usc/12/1715z–22a.md?p=4) determines such monitoring is sufficient to ensure compliance with any requirements established by the [Secretary](/usc/12/1715z–22a.md?p=4), accept such [agency](/usc/12/1422.md?p=12)’s evidence of compliance for purposes of determining compliance with the [Secretary](/usc/12/1715z–22a.md?p=4)’s requirements. - (d) **Streamlined processing pilot program—** - (1) **In general—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall establish a pilot program to demonstrate the effectiveness of streamlining the review process, which shall include all applications for [mortgage](/usc/12/1707.md?p=a) insurance under any provision of this subchapter for [mortgages](/usc/12/1707.md?p=a) executed in connection with the construction, rehabilitation, purchase, or refinancing of a [multifamily housing project](/usc/12/1701z–11.md?p=b-1) for which equity[^1] provided through any low-income housing tax [credit](/usc/12/5481.md?p=7) pursuant to [section 42 of title 26](/usc/26/42.md). The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) to appoint designated underwriters, who shall be responsible for reviewing such [mortgage](/usc/12/1707.md?p=a) insurance applications and making determinations regarding the eligibility of such applications for such [mortgage](/usc/12/1707.md?p=a) insurance in lieu of the processing functions regarding such applications that are otherwise performed by other employees of the Department of Housing and Urban Development; - (B) submission of applications for such [mortgage](/usc/12/1707.md?p=a) insurance by [mortgagees](/usc/12/1707.md?p=b) who have previously been expressly approved by the [Secretary](/usc/12/1715z–22a.md?p=4); and - (C) determinations regarding the eligibility of such applications for such [mortgage](/usc/12/1707.md?p=a) insurance to be made by the chief underwriter pursuant to requirements prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4), which shall include requiring submission of reports regarding applications of proposed [mortgagees](/usc/12/1707.md?p=b) by third-party entities expressly approved by the chief underwriter. # §1715t. Voluntary termination of insurance Notwithstanding any other provision of this chapter and with respect to any loan or [mortgage](/usc/12/1707.md?p=a) heretofore or hereafter insured under this chapter, except under [section 1703 of this title](/usc/12/1703.md) and except as specified under [section 1715z–15 of this title](/usc/12/1715z–15.md) and subtitle B of the Emergency Low Income Housing Preservation Act of 1987,,[^1] the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to terminate any insurance contract upon request by the borrower or [mortgagor](/usc/12/1707.md?p=b) and the [financial institution](/usc/12/1715k.md?p=h-1-C) or [mortgagee](/usc/12/1707.md?p=b) and upon payment of such termination charge as the [Secretary](/usc/12/1715z–22a.md?p=4) determines to be equitable, taking into consideration the necessity of protecting the various insurance [Funds](/usc/12/4702.md?p=10). Upon such termination, borrowers and [mortgagors](/usc/12/1707.md?p=b) and [financial institutions](/usc/12/1715k.md?p=h-1-C) and [mortgagees](/usc/12/1707.md?p=b) 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](/usc/12/1707.md?p=a). # §1715u. Authority to assist mortgagors in default - (a) **Loss mitigation—** Upon [default](/usc/12/1467a.md?p=e-7-A) or imminent [default](/usc/12/1467a.md?p=e-7-A), as defined by the [Secretary](/usc/12/1715z–22a.md?p=4)[^1] of any [mortgage](/usc/12/1707.md?p=a) insured under this subchapter, [mortgagees](/usc/12/1707.md?p=b) shall engage in loss mitigation actions for the purpose of providing an alternative to foreclosure ([including](/usc/12/25b.md?p=a-3) 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](/usc/12/25b.md?p=a-3) assignment of [mortgages](/usc/12/1707.md?p=a) to the [Secretary](/usc/12/1715z–22a.md?p=4) under [section 1710(a)(1)(A) of this title](/usc/12/1710.md?p=a-1-A)) or [subsection (c)](#c),[^2] as provided in regulations by the [Secretary](/usc/12/1715z–22a.md?p=4). - (b) **Payment of partial claim—** - (1) **Establishment of program—** The [Secretary](/usc/12/1715z–22a.md?p=4) may establish a program for payment of a partial claim to a [mortgagee](/usc/12/1707.md?p=b) that agrees to apply the claim amount to payment of a [mortgage](/usc/12/1707.md?p=a) on a 1- to 4-[family](/usc/12/1715z–1.md?p=j-2-A) residence that is in [default](/usc/12/1467a.md?p=e-7-A) or faces imminent [default](/usc/12/1467a.md?p=e-7-A), as defined by the [Secretary](/usc/12/1715z–22a.md?p=4). - (2) **Payments and exceptions—** Any payment of a partial claim under the program established in [paragraph (1)](#b-1) to a [mortgagee](/usc/12/1707.md?p=b) shall be made in the sole discretion of the [Secretary](/usc/12/1715z–22a.md?p=4) and on terms and conditions acceptable to the [Secretary](/usc/12/1715z–22a.md?p=4), except that— - (A) the amount of the payment shall be in an amount determined by the [Secretary](/usc/12/1715z–22a.md?p=4), not to exceed an amount equivalent to 30 percent of the unpaid principal balance of the [mortgage](/usc/12/1707.md?p=a) and any costs that are approved by the [Secretary](/usc/12/1715z–22a.md?p=4); - (B) the amount of the partial claim payment shall first be applied to any arrearage on the [mortgage](/usc/12/1707.md?p=a), and may also be applied to achieve principal reduction; - (C) the [mortgagor](/usc/12/1707.md?p=b) shall agree to repay the amount of the insurance claim to the [Secretary](/usc/12/1715z–22a.md?p=4) upon terms and conditions acceptable to the [Secretary](/usc/12/1715z–22a.md?p=4); - (D) the [Secretary](/usc/12/1715z–22a.md?p=4) may permit compensation to the [mortgagee](/usc/12/1707.md?p=b) for lost income on monthly payments, due to a reduction in the interest rate charged on the [mortgage](/usc/12/1707.md?p=a); - (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](/usc/12/1707.md?p=a) to a maximum of 40 years from the date of the modification; and - (G) the [Secretary](/usc/12/1715z–22a.md?p=4) may permit incentive payments to the [mortgagee](/usc/12/1707.md?p=b), on the borrower’s behalf, based on successful performance of a modified [mortgage](/usc/12/1707.md?p=a), which shall be used to reduce the amount of principal indebtedness. - (3) **Payments in connection with certain activities—** The [Secretary](/usc/12/1715z–22a.md?p=4) may pay the [mortgagee](/usc/12/1707.md?p=b), from the appropriate insurance [fund](/usc/12/4702.md?p=10), in connection with any activities that the [mortgagee](/usc/12/1707.md?p=b) is required to undertake concerning repayment by the [mortgagor](/usc/12/1707.md?p=b) of the amount owed to the [Secretary](/usc/12/1715z–22a.md?p=4). - (c) **Assignment and loan modification—** - (1) **Assignment—** - (A) **Program authority—** The [Secretary](/usc/12/1715z–22a.md?p=4) may establish a program for assignment to the [Secretary](/usc/12/1715z–22a.md?p=4), upon request of the [mortgagee](/usc/12/1707.md?p=b), of a [mortgage](/usc/12/1707.md?p=a) on a 1- to 4-[family](/usc/12/1715z–1.md?p=j-2-A) residence insured under this chapter. - (B) **Program requirements—** The [Secretary](/usc/12/1715z–22a.md?p=4) may accept assignment of a [mortgage](/usc/12/1707.md?p=a) under this paragraph only if— - (i) the [mortgage](/usc/12/1707.md?p=a) was in [default](/usc/12/1467a.md?p=e-7-A) or facing imminent [default](/usc/12/1467a.md?p=e-7-A), as defined by the [Secretary](/usc/12/1715z–22a.md?p=4); - (ii) the [mortgagee](/usc/12/1707.md?p=b) has modified the [mortgage](/usc/12/1707.md?p=a) to cure the [default](/usc/12/1467a.md?p=e-7-A) and provide for [mortgage](/usc/12/1707.md?p=a) payments within the reasonable ability of the [mortgagor](/usc/12/1707.md?p=b) to pay, at interest rates not exceeding current market interest rates; and - (iii) the [Secretary](/usc/12/1715z–22a.md?p=4) arranges for [servicing](/usc/12/2605.md?p=i-3) of the assigned [mortgage](/usc/12/1707.md?p=a) by a [mortgagee](/usc/12/1707.md?p=b) (which may include the assigning [mortgagee](/usc/12/1707.md?p=b)) through procedures that the [Secretary](/usc/12/1715z–22a.md?p=4) has determined to be in the best interests of the appropriate insurance [fund](/usc/12/4702.md?p=10). - (C) **Payment of insurance benefits—** Upon accepting assignment of a [mortgage](/usc/12/1707.md?p=a) under this paragraph, the [Secretary](/usc/12/1715z–22a.md?p=4) may pay insurance benefits to the [mortgagee](/usc/12/1707.md?p=b) from the appropriate insurance [fund](/usc/12/4702.md?p=10), in an amount that the [Secretary](/usc/12/1715z–22a.md?p=4) determines to be appropriate, not to exceed the amount necessary to compensate the [mortgagee](/usc/12/1707.md?p=b) for the assignment and any losses and expenses resulting from the [mortgage](/usc/12/1707.md?p=a) modification. - (2) **Assignment and loan modification—** - (A) **Authority—** The [Secretary](/usc/12/1715z–22a.md?p=4) may encourage loan modifications for eligible delinquent [mortgages](/usc/12/1707.md?p=a) or [mortgages](/usc/12/1707.md?p=a) facing imminent [default](/usc/12/1467a.md?p=e-7-A), as defined by the [Secretary](/usc/12/1715z–22a.md?p=4), through the payment of insurance benefits and assignment of the [mortgage](/usc/12/1707.md?p=a) to the [Secretary](/usc/12/1715z–22a.md?p=4) and the subsequent modification of the terms of the [mortgage](/usc/12/1707.md?p=a) according to a loan modification approved by the [mortgagee](/usc/12/1707.md?p=b). - (B) **Payment of benefits and assignment—** In carrying out this paragraph, the [Secretary](/usc/12/1715z–22a.md?p=4) may pay insurance benefits for a [mortgage](/usc/12/1707.md?p=a), in the amount determined in accordance with [section 1710(a)(5) of this title](/usc/12/1710.md?p=a-5), without reduction for any amounts modified, but only upon the assignment, transfer, and delivery to the [Secretary](/usc/12/1715z–22a.md?p=4) of all rights, interest, claims, evidence, and records with respect to the [mortgage](/usc/12/1707.md?p=a) specified in clauses (i) through (iv) of [section 1710(a)(1)(A) of this title](/usc/12/1710.md?p=a-1-A). - (C) **Disposition—** After modification of a [mortgage](/usc/12/1707.md?p=a) pursuant to this paragraph, the [Secretary](/usc/12/1715z–22a.md?p=4) may provide insurance under this subchapter for the [mortgage](/usc/12/1707.md?p=a). The [Secretary](/usc/12/1715z–22a.md?p=4) may subsequently— - (i) re-assign the [mortgage](/usc/12/1707.md?p=a) to the [mortgagee](/usc/12/1707.md?p=b) under terms and conditions as are agreed to by the [mortgagee](/usc/12/1707.md?p=b) and the [Secretary](/usc/12/1715z–22a.md?p=4); - (ii) act as a Government National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i) issuer, or contract with an entity for such purpose, in order to pool the [mortgage](/usc/12/1707.md?p=a) into a Government National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i) security; or - (iii) re-sell the [mortgage](/usc/12/1707.md?p=a) in accordance with any program that has been established for purchase by the Federal Government of [mortgages](/usc/12/1707.md?p=a) insured under this subchapter, and the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) may require the existing [servicer](/usc/12/4901.md?p=16) of a [mortgage](/usc/12/1707.md?p=a) assigned to the [Secretary](/usc/12/1715z–22a.md?p=4) to continue [servicing](/usc/12/2605.md?p=i-3) the [mortgage](/usc/12/1707.md?p=a) as an agent of the [Secretary](/usc/12/1715z–22a.md?p=4) during the period that the [Secretary](/usc/12/1715z–22a.md?p=4) [acquires](/usc/12/1467a.md?p=a-1-J) and holds the [mortgage](/usc/12/1707.md?p=a) for the purpose of modifying the terms of the [mortgage](/usc/12/1707.md?p=a), provided that the [Secretary](/usc/12/1715z–22a.md?p=4) compensates the existing [servicer](/usc/12/4901.md?p=16) appropriately, as such compensation is determined by the [Secretary](/usc/12/1715z–22a.md?p=4) consistent, to the maximum extent possible, with [section 1709(b) of this title](/usc/12/1709.md?p=b). If the [mortgage](/usc/12/1707.md?p=a) is resold pursuant to [subparagraph (C)(iii)](#c-2-C-iii), the [Secretary](/usc/12/1715z–22a.md?p=4) may provide for the existing [servicer](/usc/12/4901.md?p=16) to continue to service the [mortgage](/usc/12/1707.md?p=a) or may engage another entity to service the [mortgage](/usc/12/1707.md?p=a). - (d) **Prohibition of judicial review—** No decision by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) to provide an alternative to foreclosure for [mortgagees](/usc/12/1707.md?p=b) with [mortgages](/usc/12/1707.md?p=a) on 1- to 4-[family](/usc/12/1715z–1.md?p=j-2-A) residences insured by the [Secretary](/usc/12/1715z–22a.md?p=4) under this chapter, or to accept assignments of such [mortgages](/usc/12/1707.md?p=a). # §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](#a-1) for [elderly persons](#a-2) and to increase the supply of rental [housing](#a-1) for [elderly persons](#a-2). 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](#a-2); - (2) the term “elderly person” means [any person](/usc/12/1715z–4a.md?p=a-2), married or single, who is sixty-two years of age or over; and - (3) the terms “[mortgage](/usc/12/1707.md?p=a)”, “[mortgagee](/usc/12/1707.md?p=b)”, “[mortgagor](/usc/12/1707.md?p=b)”, and “[maturity date](/usc/12/1707.md?p=c)” shall have the meanings respectively set forth in [section 1713 of this title](/usc/12/1713.md). - (b) **Authorization—** The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to insure any [mortgage](/usc/12/1707.md?p=a) ([including](/usc/12/25b.md?p=a-3) advances on [mortgages](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) to provide [housing](#a-1) for [elderly persons](#a-2) shall— - (1) Repealed. Pub. L. 93–383, title III, § 304(f), Aug. 22, 1974, 88 Stat. 678. - (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](/usc/12/1715z–22a.md?p=4)), $166,509 per [family](/usc/12/1715z–1.md?p=j-2-A) unit without a bedroom, $188,997 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with one bedroom, $228,448 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with two bedrooms, $286,744 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with three bedrooms, and $324,922 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with four or more bedrooms; except that as to projects to consist of elevator-type structures the [Secretary](/usc/12/1715z–22a.md?p=4) may, in his discretion, increase the dollar amount limitations per [family](/usc/12/1715z–1.md?p=j-2-A) unit to not to exceed $179,854 per [family](/usc/12/1715z–1.md?p=j-2-A) unit without a bedroom, $206,180 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with one bedroom, $250,708 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with two bedrooms, $324,324 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with three bedrooms, and $356,017 per [family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–22a.md?p=4) may, by regulation, increase any of the dollar limitations in [subparagraph (A)](#c-2-A) (as such limitations may have been adjusted in accordance with [section 1712a of this title](/usc/12/1712a.md)) by not to exceed 170 percent in any geographical area where the [Secretary](/usc/12/1715z–22a.md?p=4) finds that cost levels so require and by not to exceed 170 percent, or 215 percent in high cost areas, where the [Secretary](/usc/12/1715z–22a.md?p=4) determines it necessary on a project-by-project basis, but in no case may any such increase exceed 90 percent where the [Secretary](/usc/12/1715z–22a.md?p=4) determines that a [mortgage](/usc/12/1707.md?p=a) purchased or to be purchased by the Government National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i) in implementing its special assistance functions under [section 1720](/usc/12/1720.md)[^1] of this title (as such section existed immediately before November 30, 1983) is involved; (C) the [Secretary](/usc/12/1715z–22a.md?p=4) may, by regulation, increase any of the dollar limitations in [subparagraph (A)](#c-2-A) (as such limitations may have been adjusted in accordance with [section 1712a of this title](/usc/12/1712a.md)) 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)](#c-3) of the last paragraph of [section 1703(a) of this title](/usc/12/1703.md)) or residential energy conservation measures (as defined in section [8211(11)(A) through (G)](/usc/42/8211.md?p=11-A..11-G) and (I) of title 42)[^1] in cases where the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=b) which is a public instrumentality or a private nonprofit [corporation](/usc/12/2277a.md?p=2) or [association](/usc/12/1828.md?p=s-4-E-i) or other acceptable private [nonprofit organization](/usc/12/1821.md?p=w-2-B) regulated or supervised under Federal or [State](/usc/12/1707.md?p=d) laws or by political subdivisions of [States](/usc/12/1707.md?p=d), or [agencies](/usc/12/1422.md?p=12) thereof, or by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4), will effectuate the purpose of this section, involve a principal obligation not in excess of the amount which the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4)): Provided, That in the case of properties other than new construction, the principal obligation shall not exceed the appraised value rather than the [Secretary](/usc/12/1715z–22a.md?p=4)’s estimate of the replacement cost; - (4) if executed by a [mortgagor](/usc/12/1707.md?p=b) which is approved by the [Secretary](/usc/12/1715z–22a.md?p=4) but is not a public instrumentality or a private [nonprofit organization](/usc/12/1821.md?p=w-2-B), involve a principal obligation not in excess (in the case of a property or project approved for [mortgage](/usc/12/1707.md?p=a) insurance prior to the beginning of construction) of 90 per centum of the amount which the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1715z–22a.md?p=4)’s estimate of the value of the property or project: And provided further, That the [Secretary](/usc/12/1715z–22a.md?p=4) may in his discretion require such [mortgagor](/usc/12/1707.md?p=b) to be regulated or restricted as to rents or sales, charges, [capital](/usc/12/51c.md) structure, rate of return, and methods of operating, and for such purpose the [Secretary](/usc/12/1715z–22a.md?p=4) may make contracts with and [acquire](/usc/12/1467a.md?p=a-1-J) for not to exceed $100 such stock or interest in any such [mortgagor](/usc/12/1707.md?p=b) as the [Secretary](/usc/12/1715z–22a.md?p=4) may deem necessary to render effective such restrictions or regulations; such stock or interest shall be paid for out of the General Insurance [Fund](/usc/12/4702.md?p=10) and shall be redeemed by the [mortgagor](/usc/12/1707.md?p=b) at par upon the termination of all obligations of the [Secretary](/usc/12/1715z–22a.md?p=4) under the insurance; - (5) provide for a complete amortization by periodic payments (unless otherwise approved by the [Secretary](/usc/12/1715z–22a.md?p=4)) within such terms as the [Secretary](/usc/12/1715z–22a.md?p=4) shall prescribe; - (6) bear interest at such rate as may be agreed upon by the [mortgagor](/usc/12/1707.md?p=b) and the [mortgagee](/usc/12/1707.md?p=b); and - (7) cover a property or project which is approved for [mortgage](/usc/12/1707.md?p=a) 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](#a-2) in accordance with standards established by the [Secretary](/usc/12/1715z–22a.md?p=4), and which may include such commercial and special facilities as the [Secretary](/usc/12/1715z–22a.md?p=4) deems adequate to serve the occupants. - (d) **Release of part of mortgaged property or project from lien; preferences and priorities in rental of dwellings—** The [Secretary](/usc/12/1715z–22a.md?p=4) may consent to the release of a part or parts of the mortgaged property or proj­ect from the lien of any [mortgage](/usc/12/1707.md?p=a) 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-2) 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](/usc/12/1713.md) shall apply to [mortgages](/usc/12/1707.md?p=a) insured under this section and all references therein to [section 1713 of this title](/usc/12/1713.md) 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](#a-1) provided under this section may include [family](/usc/12/1715z–1.md?p=j-2-A) units which are specially designed for the use and occupancy of [any person](/usc/12/1715z–4a.md?p=a-2) or [family](/usc/12/1715z–1.md?p=j-2-A) qualifying as a handicapped [family](/usc/12/1715z–1.md?p=j-2-A) as defined in [section 1701q](/usc/12/1701q.md)[^1] of this title, and such special facilities as the [Secretary](/usc/12/1715z–22a.md?p=4) deems adequate to serve handicapped [families](/usc/12/1715z–1.md?p=j-2-A) (as so defined). The [Secretary](/usc/12/1715z–22a.md?p=4) may also prescribe procedures to secure to such [families](/usc/12/1715z–1.md?p=j-2-A) preference or priority of opportunity to rent the living units specially designed for their use and occupancy. # §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](#b-1) for the care and treatment of convalescents and other [persons](/usc/12/5481.md?p=19) who are not acutely ill and do not need hospital care but who require skilled nursing care and related medical services, [including](/usc/12/25b.md?p=a-3) additional facilities for the nonresident 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](#b-2) and [board and care homes](#b-5) for the care of [persons](/usc/12/5481.md?p=19) who, while not in need of [nursing home](#b-1) 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](/usc/12/25b.md?p=a-3) 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](#b-6) for the care of [frail elderly persons](#b-7). - (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](/usc/12/2277a.md?p=2) or [association](/usc/12/1828.md?p=s-4-E-i), licensed or regulated by the [State](/usc/12/1707.md?p=d) (or, if there is no [State](/usc/12/1707.md?p=d) law providing for such licensing and regulation by the [State](/usc/12/1707.md?p=d), by the municipality or other political subdivision in which the facility is located), for the accommodation of convalescents or other [persons](/usc/12/5481.md?p=19) 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](/usc/12/5481.md?p=19) licensed to provide such care or services in accordance with the laws of the [State](/usc/12/1707.md?p=d) where the facility is located; - (2) the term “intermediate care facility” means a proprietary facility or facility of a private nonprofit [corporation](/usc/12/2277a.md?p=2) or [association](/usc/12/1828.md?p=s-4-E-i) licensed or regulated by the [State](/usc/12/1707.md?p=d) (or, if there is no [State](/usc/12/1707.md?p=d) law providing for such licensing and regulation by the [State](/usc/12/1707.md?p=d), by the municipality or other political subdivision in which the facility is located) for the accommodation of [persons](/usc/12/5481.md?p=19) 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](#b-1)” or “[intermediate care facility](#b-2)” may include such additional facilities as may be authorized by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a)” means a [first mortgage](/usc/12/1707.md?p=a) on [real estate](/usc/12/1707.md?p=g) 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](/usc/12/1707.md?p=c) of the [mortgage](/usc/12/1707.md?p=a). The term “[first mortgage](/usc/12/1707.md?p=a)” means such classes of first liens as are commonly given to secure advances ([including](/usc/12/25b.md?p=a-3) but not limited to advances during construction) on, or the unpaid purchase price of, [real estate](/usc/12/1707.md?p=g) under the laws of the [State](/usc/12/1707.md?p=d) in which the [real estate](/usc/12/1707.md?p=g) is located, together with the [credit](/usc/12/5481.md?p=7) instrument or instruments, if any, secured thereby, and any [mortgage](/usc/12/1707.md?p=a) may be in the form of one or more trust [mortgages](/usc/12/1707.md?p=a) or [mortgage](/usc/12/1707.md?p=a) indentures or deeds of trust, securing notes, bonds, or other [credit](/usc/12/5481.md?p=7) 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](/usc/12/1707.md?p=b)” shall have the meaning set forth in [section 1713(a) of this title](/usc/12/1713.md?p=a); - (5) the term “board and care home” means any residential facility providing room, [board](/usc/12/221a.md?p=a), and continuous protective oversight that is regulated by a [State](/usc/12/1707.md?p=d) pursuant to the provisions of section 1616(e) of the Social Security Act [[42 U.S.C. 1382e(e)](/usc/42/1382e.md?p=e)], so long as the home is located in a [State](/usc/12/1707.md?p=d) that, at the time of an application is made for insurance under this section, has demonstrated to the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/2277a.md?p=2) that— - (A) is licensed and regulated by the [State](/usc/12/1707.md?p=d) (or if there is no [State](/usc/12/1707.md?p=d) law providing for such licensing and regulation by the [State](/usc/12/1707.md?p=d), 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](/usc/12/25b.md?p=a-3) 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](/usc/42/8011.md?p=k). - (c) **Authorization—** The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to insure any [mortgage](/usc/12/1707.md?p=a) ([including](/usc/12/25b.md?p=a-3) advances on such [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) is authorized to insure any [mortgage](/usc/12/1707.md?p=a) which covers a new or rehabilitated [nursing home](#b-1),,[^2] [assisted living facility](#b-6), or [intermediate care facility](#b-2), [including](/usc/12/25b.md?p=a-3) a new addition to an existing [nursing home](#b-1), [assisted living facility](#b-6), or [intermediate care facility](#b-2) and regardless of whether the existing home or facility is being rehabilitated, or any combination of [nursing home](#b-1), [assisted living facility](#b-6), and [intermediate care facility](#b-2) or a [board and care home](#b-5), [including](/usc/12/25b.md?p=a-3) equipment to be used in its operation, subject to the following conditions: - (1) The [mortgage](/usc/12/1707.md?p=a) shall be executed by a [mortgagor](/usc/12/1707.md?p=b) approved by the [Secretary](/usc/12/1715z–22a.md?p=4). The [Secretary](/usc/12/1715z–22a.md?p=4) may in his discretion require any such [mortgagor](/usc/12/1707.md?p=b) to be regulated or restricted as to charges and methods of financing, and, in addition thereto, if the [mortgagor](/usc/12/1707.md?p=b) is a corporate entity, as to [capital](/usc/12/51c.md) structure and rate of return. As an aid to the regulation or restriction of any [mortgagor](/usc/12/1707.md?p=b) with respect to any of the foregoing matters, the [Secretary](/usc/12/1715z–22a.md?p=4) may make such contracts with and [acquire](/usc/12/1467a.md?p=a-1-J) for not to exceed $100 such stock or interest in such [mortgagor](/usc/12/1707.md?p=b) as he may deem necessary. Any stock or interest so purchased shall be paid for out of the General Insurance [Fund](/usc/12/4702.md?p=10), and shall be redeemed by the [mortgagor](/usc/12/1707.md?p=b) at par upon the termination of all obligations of the [Secretary](/usc/12/1715z–22a.md?p=4) under the insurance. - (2) The [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=b) that is a private nonprofit [corporation](/usc/12/2277a.md?p=2) or [association](/usc/12/1828.md?p=s-4-E-i) (under the meaning given such term for purposes of [section 1715l(d)(3)](/usc/12/1715l.md) of this title), [including](/usc/12/25b.md?p=a-3)— - (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)](#d-3) of the last paragraph of [section 1703(a) of this title](/usc/12/1703.md)) or residential energy conservation measures (as defined in section [8211(11)(A) through (G)](/usc/42/8211.md?p=11-A..11-G) and (I) of title 42)[^3] in cases where the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) shall— - (A) provide for complete amortization by periodic payments within such terms as the [Secretary](/usc/12/1715z–22a.md?p=4) shall prescribe; and - (B) bear interest at such rate as may be agreed upon by the [mortgagor](/usc/12/1707.md?p=b) and the [mortgagee](/usc/12/1707.md?p=b). The [Secretary](/usc/12/1715z–22a.md?p=4) shall not promulgate regulations or establish terms or conditions that interfere with the ability of the [mortgagor](/usc/12/1707.md?p=b) and [mortgagee](/usc/12/1707.md?p=b) to determine the interest rate; and[^4] - (4) - (A) With respect to [nursing homes](#b-1) and [intermediate care facilities](#b-2) and combined [nursing home](#b-1) and [intermediate care facilities](#b-2), the [Secretary](/usc/12/1715z–22a.md?p=4) shall not insure any [mortgage](/usc/12/1707.md?p=a) under this section unless he has received, from the [State](/usc/12/1707.md?p=d) [agency](/usc/12/1422.md?p=12) designated in accordance with [section 604(a)(1)](/usc/12/604.md) or section 1521[^3] of the Public Health Service Act [[42 U.S.C. 291d](/usc/42/291d.md) (a)(1), 300m] for the [State](/usc/12/1707.md?p=d) in which is located the [nursing home](#b-1) or [intermediate care facility](#b-2) or combined [nursing home](#b-1) and [intermediate care facility](#b-2) covered by the [mortgage](/usc/12/1707.md?p=a), 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](/usc/12/1707.md?p=d) or in the municipality or other political subdivision of the [State](/usc/12/1707.md?p=d) 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](/usc/12/1707.md?p=a) shall be insured under this section unless the [Secretary](/usc/12/1715z–22a.md?p=4) has received such assurance as he may deem satisfactory from the [State](/usc/12/1707.md?p=d) [agency](/usc/12/1422.md?p=12) that such standards will be applied and enforced with respect to any home or facility or combined home and facility located in the [State](/usc/12/1707.md?p=d) for which [mortgage](/usc/12/1707.md?p=a) insurance is provided under this section. If no such [State](/usc/12/1707.md?p=d) [agency](/usc/12/1422.md?p=12) exists, or if the [State](/usc/12/1707.md?p=d) [agency](/usc/12/1422.md?p=12) 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)](#i) of the first sentence, the [Secretary](/usc/12/1715z–22a.md?p=4) shall not insure any [mortgage](/usc/12/1707.md?p=a) under this section unless (i) the [State](/usc/12/1707.md?p=d) 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](/usc/12/1715z–22a.md?p=4) in form and substance; and (IV) in the event the [State](/usc/12/1707.md?p=d) does not prepare the study, is prepared by a financial consultant who is selected by the [State](/usc/12/1707.md?p=d) or the applicant for [mortgage](/usc/12/1707.md?p=a) insurance and is approved by the [Secretary](/usc/12/1715z–22a.md?p=4); and (ii) the [State](/usc/12/1707.md?p=d) complies with the other provisions of this subparagraph that would otherwise be required to be met by a [State](/usc/12/1707.md?p=d) [agency](/usc/12/1422.md?p=12) designated in accordance with [section 604(a)(1)](/usc/12/604.md) or [section 1521](/usc/42/1521.md)[^3] of the Public Health Service Act. The proposed [mortgagor](/usc/12/1707.md?p=b) may reimburse the [State](/usc/12/1707.md?p=d) for the cost of the independent feasibility study required in the preceding sentence. In the case of a small [intermediate care facility](#b-2) for the mentally retarded or developmentally disabled, or a [board and care home](#b-5) housing less than 10 individuals, the [State](/usc/12/1707.md?p=d) program [agency](/usc/12/1422.md?p=12) or [agencies](/usc/12/1422.md?p=12) responsible for licensing, certifying, financing, or monitoring the facility or home may, in lieu of the requirements of [clause (i)](#i) of the third sentence, provide the [Secretary](/usc/12/1715z–22a.md?p=4) with written support identifying the need for the facility or home. - (B) With respect to [board and care homes](#b-5), the [Secretary](/usc/12/1715z–22a.md?p=4) shall not insure any [mortgage](/usc/12/1707.md?p=a) under this section unless he has received from the appropriate [State](/usc/12/1707.md?p=d) licensing [agency](/usc/12/1422.md?p=12) a statement verifying that the [State](/usc/12/1707.md?p=d) 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)](/usc/42/1382e.md?p=e)]. - (C) With respect to [assisted living facilities](#b-6) or any such facility combined with any other home or facility, the [Secretary](/usc/12/1715z–22a.md?p=4) shall not insure any [mortgage](/usc/12/1707.md?p=a) under this section unless— - (i) the [Secretary](/usc/12/1715z–22a.md?p=4) determines that the level of financing acquired by the [mortgagor](/usc/12/1707.md?p=b) 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)](#b-6); - (ii) the [mortgagor](/usc/12/1707.md?p=b) provides assurances satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4) that each dwelling unit in the facility will not be occupied by more than 1 [person](/usc/12/5481.md?p=19) without the consent of all such occupants; and - (iii) the appropriate [State](/usc/12/1707.md?p=d) licensing [agency](/usc/12/1422.md?p=12) for the [State](/usc/12/1707.md?p=d), municipality, or other political subdivision in which the facility is or is to be located provides such assurances as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) may consent to the release of a part or parts of the mortgaged property or proj­ect from the lien of any [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1713.md) shall apply to [mortgages](/usc/12/1707.md?p=a) insured under this section and all references therein to [section 1713 of this title](/usc/12/1713.md) shall refer to this section. - (g) **Regulations covering intermediate care facilities; consultations—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall prescribe such regulations as may be necessary to carry out the provisions of this section relating to [intermediate care facilities](#b-2), after consulting with the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) shall also consult with the [Secretary](/usc/12/1715z–22a.md?p=4) of Health and Human Services as to the need for and the availability of [intermediate care facilities](#b-2) in any area for which an [intermediate care facility](#b-2) 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](/usc/12/1715z–22a.md?p=4) is authorized upon such terms and conditions as he may prescribe to make commitments to insure and to insure loans made by [financial institutions](/usc/12/1715k.md?p=h-1-C) or other approved [mortgagees](/usc/12/1707.md?p=b) to [nursing homes](#b-1), [assisted living facilities](#b-6), and [intermediate care facilities](#b-2) or to [board and care homes](#b-5) 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](/usc/12/1828.md?p=s-4-E-i) (or any subsequent edition specified by the [Secretary](/usc/12/1715z–22a.md?p=4) of Health and Human Services) or other such codes or requirements approved by the [Secretary](/usc/12/1715z–22a.md?p=4) of Health and Human Services as conditions of [participation](/usc/12/2206a.md?p=a-1) for providers of services under title XVIII and title XIX of the Social Security Act [[42 U.S.C. 1395](/usc/42/1395.md) et seq., 1396 et seq.] or as mandated by a [State](/usc/12/1707.md?p=d) under the provisions of section 1616(e) of such Act [[42 U.S.C. 1382e(e)](/usc/42/1382e.md?p=e)]. - (2) To be eligible for insurance under this subsection a loan shall— - (A) not exceed the [Secretary](/usc/12/1715z–22a.md?p=4)’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](/usc/12/1707.md?p=b) and the [mortgagee](/usc/12/1707.md?p=b); - (C) have a maturity satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4); - (D) be made by a [financial institution](/usc/12/1715k.md?p=h-1-C) or other [mortgagee](/usc/12/1707.md?p=b) approved by the [Secretary](/usc/12/1715z–22a.md?p=4) as eligible for insurance under [section 1703 of this title](/usc/12/1703.md) or a [mortgagee](/usc/12/1707.md?p=b) approved under [section 1709(b)(1) of this title](/usc/12/1709.md?p=b-1); - (E) comply with other such terms, conditions, and restrictions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe; and - (F) in the case of [board and care homes](#b-5), be made with respect to such a home located in a [State](/usc/12/1707.md?p=d) with respect to which the [Secretary](/usc/12/1715z–22a.md?p=4) has received from the appropriate [State](/usc/12/1707.md?p=d) licensing [agency](/usc/12/1422.md?p=12) a statement verifying that the [State](/usc/12/1707.md?p=d) 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)](/usc/42/1382e.md?p=e)]. - (3) The provisions of paragraphs (5), (6), (7), (9), and (10) of [section 1715k(h) of this title](/usc/12/1715k.md?p=h) 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](/usc/12/1703.md) 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](/usc/12/1715z–22a.md?p=4) shall establish schedules and deadlines for the processing and approval (or provision of notice of disapproval) of applications for [mortgage](/usc/12/1707.md?p=a) insurance under this section. The [Secretary](/usc/12/1715z–22a.md?p=4) 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. # §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](/usc/12/1715z–22a.md?p=4) is authorized to insure and to make commitments to insure, under this section, [mortgages](/usc/12/1707.md?p=a) ([including](/usc/12/25b.md?p=a-3) home improvement loans, and [including](/usc/12/25b.md?p=a-3) advances on [mortgages](/usc/12/1707.md?p=a) during construction) secured by properties [including](/usc/12/25b.md?p=a-3) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) deems to be significant in reducing housing costs or improving housing standards, quality, livability, or durability, or improving neighborhood design, and (C) the [mortgages](/usc/12/1707.md?p=a) are eligible for insurance under the provisions of this section and under any further terms and conditions which may be prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4) to establish the acceptability of the [mortgages](/usc/12/1707.md?p=a) for insurance. - (2) The [Secretary](/usc/12/1715z–22a.md?p=4) is further authorized to insure and to make commitments to insure, under this section, [mortgages](/usc/12/1707.md?p=a) ([including](/usc/12/25b.md?p=a-3) advances on [mortgages](/usc/12/1707.md?p=a) during construction) secured by properties in projects to be carried out in accordance with plans approved by the [Secretary](/usc/12/1715z–22a.md?p=4) under [section 1701z of this title](/usc/12/1701z.md). - (b) **Eligibility for insurance; conditions; limits—** To be eligible for insurance under this section, a [mortgage](/usc/12/1707.md?p=a) shall meet the requirements of one 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](/usc/12/1715z–22a.md?p=4) shall estimate the cost of replacing the property using comparable conventional design, materials, and construction, and any limitation upon the maximum [mortgage](/usc/12/1707.md?p=a) amount available to a nonoccupant [owner](/usc/12/4146.md?p=2) shall not, in the discretion of the [Secretary](/usc/12/1715z–22a.md?p=4), be applicable to [mortgages](/usc/12/1707.md?p=a) insured under this section. - (c) **Contracts, agreements, and financial undertakings with mortgagor—** The [Secretary](/usc/12/1715z–22a.md?p=4) may enter into such contracts, agreements, and financial undertakings with the [mortgagor](/usc/12/1707.md?p=b) and others as he deems necessary or desirable to carry out the purposes of this section, and may expend available [funds](/usc/12/4702.md?p=10) for such purposes, [including](/usc/12/25b.md?p=a-3) the correction (when he determines it necessary to protect the occupants), at any time subsequent to insurance of a [mortgage](/usc/12/1707.md?p=a), of defects or failures in the dwellings which the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) may exercise in connection with a [mortgage](/usc/12/1707.md?p=a), or property covered by a [mortgage](/usc/12/1707.md?p=a), insured under any other section of this subchapter ([including](/usc/12/25b.md?p=a-3) payments to reduce rentals for, or to facilitate homeownership by, lower income [families](/usc/12/1715z–1.md?p=j-2-A)) may be exercised in connection with a [mortgage](/usc/12/1707.md?p=a), or property covered by a [mortgage](/usc/12/1707.md?p=a), meeting the requirements of such other section (except as specified in [subsection (b)](#b)), which is insured under this section to the same extent and in the same manner as if the [mortgage](/usc/12/1707.md?p=a) insured under this section was insured under such other section. - (d) **Investigations and analysis of data; publication and distribution of reports—** The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=b) or lender under a [mortgage](/usc/12/1707.md?p=a) insured under [subsection (b)](#b) shall be entitled to insurance benefits determined in the same manner as such benefits would be determined if such [mortgage](/usc/12/1707.md?p=a) 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)](#e) of this section, in the case of [default](/usc/12/1467a.md?p=e-7-A) on any [mortgage](/usc/12/1707.md?p=a) insured under this section, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) insurance contract), or may [acquire](/usc/12/1467a.md?p=a-1-J) the [mortgage](/usc/12/1707.md?p=a) loan and the security therefor upon payment to the [mortgagee](/usc/12/1707.md?p=b) in cash or in debentures (as provided in the [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) made previously by the [mortgagee](/usc/12/1707.md?p=b) under the provisions of the [mortgage](/usc/12/1707.md?p=a). After the acquisition of the [mortgage](/usc/12/1707.md?p=a) by the [Secretary](/usc/12/1715z–22a.md?p=4) the [mortgagee](/usc/12/1707.md?p=b) shall have no further rights, liabilities, or obligations with respect to the [mortgage](/usc/12/1707.md?p=a). The appropriate provisions of sections [1710](/usc/12/1710.md) and [1713](/usc/12/1713.md) 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](/usc/12/1710.md) and [1713](/usc/12/1713.md) of this title relating to the rights, liabilities, and obligations of a [mortgagee](/usc/12/1707.md?p=b) shall apply with respect to the [Secretary](/usc/12/1715z–22a.md?p=4) when he has acquired an insured [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4), except that as applied to [mortgages](/usc/12/1707.md?p=a) insured under this section (1) all references in [section 1710 of this title](/usc/12/1710.md) to the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10) or the [Fund](/usc/12/4702.md?p=10) shall be construed to refer to the General Insurance [Fund](/usc/12/4702.md?p=10), and (2) all references in [section 1710 of this title](/usc/12/1710.md) to [section 1709 of this title](/usc/12/1709.md) 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](/usc/12/1715z–22a.md?p=4). # §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](/usc/12/1707.md?p=d) in which the property is located, real property title and ownership are established with respect to a one-[family](/usc/12/1715z–1.md?p=j-2-A) unit which is part of a multifamily project. - (b) **Definitions—** The terms “[mortgage](/usc/12/1707.md?p=a)”, “[mortgagee](/usc/12/1707.md?p=b)”, “[mortgagor](/usc/12/1707.md?p=b)”, “[maturity date](/usc/12/1707.md?p=c)”, and “[State](/usc/12/1707.md?p=d)” shall have the meanings respectively set forth in [section 1707 of this title](/usc/12/1707.md), except that the term “[mortgage](/usc/12/1707.md?p=a)” for the purposes of [subsection (c)](#c) may include a [first mortgage](/usc/12/1707.md?p=a) given to secure the unpaid purchase price of a fee interest in, or a long-term leasehold interest in, a one-[family](/usc/12/1715z–1.md?p=j-2-A) unit in a multifamily project, [including](/usc/12/25b.md?p=a-3) 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](/usc/12/1707.md?p=a) is determined by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4). - (c) **Authorization; eligibility for insurance; conditions; limits—** The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized, in his discretion and under such terms and conditions as he may prescribe ([including](/usc/12/25b.md?p=a-3) the minimum number of [family](/usc/12/1715z–1.md?p=j-2-A) units in the project which shall be offered for sale and provisions for the protection of the [consumer](/usc/12/5481.md?p=4) and the public interest), to insure any [mortgage](#b) covering a one-[family](/usc/12/1715z–1.md?p=j-2-A) unit in a multifamily project and an undivided interest in the [common areas and facilities](#b) which serve the project, if (1) the [mortgage](#b) meets the requirements of this subsection and of [section 1709(b) of this title](/usc/12/1709.md?p=b), except as that section is modified by this subsection, (2) at least 80 percent of the units in the project covered by [mortgages](#b) insured under this subchapter are occupied by the [mortgagors](#b) or comortgagors, and (3) the project has a blanket [mortgage](#b) insured by the [Secretary](/usc/12/1715z–22a.md?p=4) under [subsection (d)](#d). Any project proposed to be constructed or rehabilitated after June 30, 1961, with the assistance of [mortgage](#b) insurance under this chapter, where the sale of [family](/usc/12/1715z–1.md?p=j-2-A) units is to be assisted with [mortgage](#b) insurance under this subsection, shall be subject to such requirements as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe. To be eligible for insurance pursuant to this subsection, a [mortgage](#b) shall (A) involve a principal obligation in an amount not to exceed the maximum principal obligation of a [mortgage](#b) which may be insured in the area pursuant to [section 1709(b)(2) of this title](/usc/12/1709.md?p=b-2) or pursuant to [section 1709(h) of this title](/usc/12/1709.md?p=h) under the conditions described in [section 1709(h) of this title](/usc/12/1709.md?p=h), and (B) have a maturity satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4), but not to exceed, in any event, thirty-five years from the date of the beginning of amortization of the [mortgage](#b). The [mortgage](#b) shall contain such provisions as the [Secretary](/usc/12/1715z–22a.md?p=4) determines to be necessary for the maintenance of [common areas and facilities](#b) and the multifamily project. The [mortgagor](#b) shall have exclusive right to the use of the one-[family](/usc/12/1715z–1.md?p=j-2-A) unit covered by the [mortgage](#b) and, together with the [owners](/usc/12/4146.md?p=2) of other units in the multifamily project, shall have the right to the use of the [common areas and facilities](#b) serving the project and the obligation of maintaining all such [common areas and facilities](#b). The [Secretary](/usc/12/1715z–22a.md?p=4) may require that the rights and obligations of the [mortgagor](#b) and the [owners](/usc/12/4146.md?p=2) of other dwelling units in the project shall be subject to such [controls](/usc/12/24a.md?p=g-1) as he determines to be necessary and feasible to promote and protect individual [owners](/usc/12/4146.md?p=2), the multifamily project, and its occupants. For the purposes of this subsection, the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized in his discretion and under such terms and conditions as he may prescribe to permit one-[family](/usc/12/1715z–1.md?p=j-2-A) units and interests in [common areas and facilities](#b) in multifamily projects covered by [mortgages](#b) insured under any section of this chapter (other than section [1715e(a)(1)](/usc/12/1715e.md?p=a-1) and [(2)](/usc/12/1715e.md?p=a-2) of this title) to be released from the liens of those [mortgages](#b). - (d) **Blanket mortgages of multifamily projects; plan of family unit ownership; regulations; stock purchase and redemption—** In addition to individual [mortgages](/usc/12/1707.md?p=a) insured under [subsection (c)](#c), the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized, in his discretion and under such terms and conditions as he may prescribe, to insure blanket [mortgages](/usc/12/1707.md?p=a) ([including](/usc/12/25b.md?p=a-3) advances on such [mortgages](/usc/12/1707.md?p=a) during construction) which cover multifamily projects to be constructed or rehabilitated in cases where the [mortgage](/usc/12/1707.md?p=a) is held by a [mortgagor](/usc/12/1707.md?p=b), approved by the [Secretary](/usc/12/1715z–22a.md?p=4), which— - (1) has certified to the [Secretary](/usc/12/1715z–22a.md?p=4), as a condition of obtaining the insurance of a blanket [mortgage](/usc/12/1707.md?p=a) under this subsection, that upon completion of the multifamily project covered by such [mortgage](/usc/12/1707.md?p=a) it intends to commit the ownership of the multifamily project to a plan of [family](/usc/12/1715z–1.md?p=j-2-A) unit ownership under which each [family](/usc/12/1715z–1.md?p=j-2-A) unit would be eligible for individual [mortgage](/usc/12/1707.md?p=a) insurance under [subsection (c)](#c) and will faithfully and diligently make and carry out all reasonable efforts to establish such plan of [family](/usc/12/1715z–1.md?p=j-2-A) unit ownership and to sell such [family](/usc/12/1715z–1.md?p=j-2-A) units to purchasers approved by the [Secretary](/usc/12/1715z–22a.md?p=4); and - (2) may, in the [Secretary](/usc/12/1715z–22a.md?p=4)’s discretion, be regulated or restricted as to rents, charges, [capital](/usc/12/51c.md) structure, rate of return, and methods of operation until the termination of all obligations of the [Secretary](/usc/12/1715z–22a.md?p=4) under the insurance and during such further period of time as the [Secretary](/usc/12/1715z–22a.md?p=4) shall be the [owner](/usc/12/4146.md?p=2), holder or reinsurer of the [mortgage](/usc/12/1707.md?p=a). The [Secretary](/usc/12/1715z–22a.md?p=4) may make such contracts with and [acquire](/usc/12/1467a.md?p=a-1-J) for not to exceed $100 such stock or interest in such [mortgagor](/usc/12/1707.md?p=b) as he may deem necessary to render effective any such regulation or restriction of such [mortgagor](/usc/12/1707.md?p=b). The stock or interest acquired by the [Secretary](/usc/12/1715z–22a.md?p=4) shall be paid for out of the General Insurance [Fund](/usc/12/4702.md?p=10), and shall be redeemed by the [mortgagor](/usc/12/1707.md?p=b) at par at any time upon the request of the [Secretary](/usc/12/1715z–22a.md?p=4) after the termination of all obligations of the [Secretary](/usc/12/1715z–22a.md?p=4) under the insurance. - (e) **Eligibility for insurance of blanket mortgages of multifamily projects—** To be eligible for insurance, a blanket [mortgage](/usc/12/1707.md?p=a) on any multifamily project of a [mortgagor](/usc/12/1707.md?p=b) of the character described in [subsection (d)](#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](/usc/12/1715z–22a.md?p=4) 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 defined by the [Secretary](/usc/12/1715z–22a.md?p=4)), $185,011 per [family](/usc/12/1715z–1.md?p=j-2-A) unit without a bedroom, $213,316 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with one bedroom, $257,263 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with two bedrooms, $329,296 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with three bedrooms, and $366,850 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with four or more bedrooms; except that as to projects to consist of elevator-type structures the [Secretary](/usc/12/1715z–22a.md?p=4) may, in his discretion, increase the dollar amount limitations per [family](/usc/12/1715z–1.md?p=j-2-A) unit to not to exceed $194,700 per [family](/usc/12/1715z–1.md?p=j-2-A) unit without a bedroom, $223,186 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with one bedroom, $271,392 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with two bedrooms, $351,089 per [family](/usc/12/1715z–1.md?p=j-2-A) unit with three bedrooms, and $385,387 per [family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–22a.md?p=4) may, by regulation, increase any of the dollar limitations in [subparagraph (A)](#e-3-A) (as such limitations may have been adjusted in accordance with [section 1712a of this title](/usc/12/1712a.md)) by not to exceed 170 percent in any geographical area where the [Secretary](/usc/12/1715z–22a.md?p=4) finds that cost levels so require and by not to exceed 170 percent, or 215 percent in high cost areas, where the [Secretary](/usc/12/1715z–22a.md?p=4) determines it necessary on a project-by-project basis, but in no case may any such increase exceed 90 percent where the [Secretary](/usc/12/1715z–22a.md?p=4) determines that a [mortgage](/usc/12/1707.md?p=a) purchased or to be purchased by the Government National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i) in implementing its special assistance functions under [section 1720](/usc/12/1720.md)[^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](/usc/12/1707.md?p=a) amounts determined under the provisions of [subsection (c)](#c) assuming the [mortgagor](/usc/12/1707.md?p=b) to be the [owner](/usc/12/4146.md?p=2) and occupant of each [family](/usc/12/1715z–1.md?p=j-2-A) unit. - (f) **Amortization of blanket mortgages of multifamily projects; interest; releases; extent of project—** Any blanket [mortgage](/usc/12/1707.md?p=a) insured under [subsection (d)](#d) shall provide for complete amortization by periodic payments within such terms as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe but not to exceed 40 years from the beginning of amortization of the [mortgage](/usc/12/1707.md?p=a), and shall bear interest at such rate as may be agreed upon by the [mortgagor](/usc/12/1707.md?p=b) and the [mortgagee](/usc/12/1707.md?p=b). The [Secretary](/usc/12/1715z–22a.md?p=4) may consent to the release of a part or parts of the mortgaged property from the lien of the blanket [mortgage](/usc/12/1707.md?p=a) upon such terms and conditions as he may prescribe and the blanket [mortgage](/usc/12/1707.md?p=a) may provide for such release. The project covered by the blanket [mortgage](/usc/12/1707.md?p=a) may include four or more [family](/usc/12/1715z–1.md?p=j-2-A) units and such commercial and community facilities as the [Secretary](/usc/12/1715z–22a.md?p=4) deems adequate to serve the occupants. - (g) **Entitlement to insurance benefits as provided in section 1710(a) of this title—** Any [mortgagee](/usc/12/1707.md?p=b) under a [mortgage](/usc/12/1707.md?p=a) insured under [subsection (c)](#c) of this section is entitled to receive the benefits of the insurance as provided in [section 1710(a) of this title](/usc/12/1710.md?p=a) with respect to [mortgages](/usc/12/1707.md?p=a) insured under [section 1709 of this title](/usc/12/1709.md), and the provisions of subsections [(b)](#b), [(c)](#c), [(d)](#d), [(e)](#e), [(f)](#f), [(g)](#g), [(h)](#h),[^1] (j), and (k)[^1] of [section 1710 of this title](/usc/12/1710.md) shall be applicable to the [mortgages](/usc/12/1707.md?p=a) insured under [subsection (c)](#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](/usc/12/1713.md) shall be applicable to [mortgages](/usc/12/1707.md?p=a) insured under [subsection (d)](#d) of this section. - (i) **Applicability of other provisions—** The provisions of sections [1715p](/usc/12/1715p.md) and [1715u](/usc/12/1715u.md) of this title shall be applicable to the [mortgages](/usc/12/1707.md?p=a) insured under [subsection (c)](#c) of this section. - (j) **Increase in maximum insurance amounts for costs incurred from solar energy systems and energy conservation measures—** The [Secretary](/usc/12/1715z–22a.md?p=4) may further increase the dollar amount limitations which would otherwise apply under [subsection (e)](#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)](#e-3) of the last paragraph of [section 1703(a) of this title](/usc/12/1703.md)) or residential energy conservation measures (as defined in section [8211(11)(A) through (G)](/usc/42/8211.md?p=11-A..11-G) and (I) of title 42)[^1] in cases where the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=b) 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](/usc/12/1715z–22a.md?p=4) for a commitment to insure a [mortgage](/usc/12/1707.md?p=a) covering any unit in the project, (B) in the case of direct endorsement, the [mortgagee](/usc/12/1707.md?p=b) received the case number assigned by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/38/chptIII-ch37.md) of title 38. # §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](/usc/12/1715z–1.md?p=j-2-A) in acquiring homeownership or in acquiring membership in a cooperative [association](/usc/12/1828.md?p=s-4-E-i) operating a housing project, the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to make, and to contract to make, periodic assistance payments on behalf of such homeowners and cooperative [members](/usc/12/1426a.md?p=g-1). The assistance shall be accomplished through payments to [mortgagees](/usc/12/1707.md?p=b) holding [mortgages](/usc/12/1707.md?p=a) meeting the special requirements specified in this section or which [mortgages](/usc/12/1707.md?p=a) are assisted under a [State](/usc/12/1707.md?p=d) or local program providing assistance through loans, loan insurance or tax abatement. In making such assistance available, the [Secretary](/usc/12/1715z–22a.md?p=4) shall give preference to low-income [families](/usc/12/1715z–1.md?p=j-2-A) who, without such assistance, would be likely to be involuntarily displaced ([including](/usc/12/25b.md?p=a-3) those who would be likely to be displaced from rental units which are to be converted into a condominium project or a cooperative project). Such assistance may include the acquisition of a condominium or a membership in a cooperative [association](/usc/12/1828.md?p=s-4-E-i). - (2) - (A) Notwithstanding any other provision of this section, the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to make periodic assistance payments under this section on behalf of [families](/usc/12/1715z–1.md?p=j-2-A) whose incomes do not exceed the maximum income limits prescribed pursuant to [subsection (h)(2)](#h-2) of this section for the purpose of assisting such [families](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/4146.md?p=2) of lower-income of a manufactured home as described in the preceding sentence to the [financial institution](/usc/12/1715k.md?p=h-1-C) which makes the loan, advance of [credit](/usc/12/5481.md?p=7), or purchase of an obligation representing the loan or advance of [credit](/usc/12/5481.md?p=7) 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](/usc/12/1703.md) covering such loan, advance of [credit](/usc/12/5481.md?p=7), or obligation has been granted to such institution. - (B) Notwithstanding the provisions of [subsection (c)](#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](/usc/12/1703.md) due under the loan or advance of [credit](/usc/12/5481.md?p=7) 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](/usc/12/1703.md) which the manufactured homeowner is obligated to pay under the loan or advance of [credit](/usc/12/5481.md?p=7) and the monthly payment of principal and interest which the [owner](/usc/12/4146.md?p=2) would be obligated to pay if the loan or advance of [credit](/usc/12/5481.md?p=7) were to bear interest at a rate derived by subtracting from the interest rate applicable to such loan or advance of [credit](/usc/12/5481.md?p=7) the interest rate differential between the maximum interest rate plus [mortgage](/usc/12/1707.md?p=a) insurance premium applicable to [mortgages](/usc/12/1707.md?p=a) insured under [subsection (i)](#i) of this section at the time such loan or advance of [credit](/usc/12/5481.md?p=7) is made and the interest rate which such [mortgages](/usc/12/1707.md?p=a) are presumed, under regulations prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4), to bear for purposes of [subsection (c)(2)](#c-2) of this section. - (b) **Qualifications and eligibility requirements for assistance payments—** To qualify for assistance payments, the homeowner or the cooperative [member](/usc/12/1426a.md?p=g-1) shall be of lower income and satisfy eligibility requirements prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4), and— - (1) the homeowner shall be a [mortgagor](/usc/12/1707.md?p=b) under a [mortgage](/usc/12/1707.md?p=a) which meets the requirements of and is insured under subsection [(i)](#i) or [(j)(4)](#j-4) of this section: Provided, That a [mortgage](/usc/12/1707.md?p=a) meeting the requirements of [subsection (i)(3)(A)](#i-3-A) of this section but insured under [section 1715z–2 of this title](/usc/12/1715z–2.md) may qualify for assistance payments if such [mortgage](/usc/12/1707.md?p=a) was executed by a [mortgagor](/usc/12/1707.md?p=b) who is determined not to be an acceptable [credit](/usc/12/5481.md?p=7) risk for [mortgage](/usc/12/1707.md?p=a) insurance purposes (but otherwise eligible) under [subsection (j)(4)](#j-4) of this section or under section [1715l(d)(2)](/usc/12/1715l.md) or [1715y(c)](/usc/12/1715y.md?p=c) of this title and accepted as a reasonably satisfactory [credit](/usc/12/5481.md?p=7) risk under [section 1715z–2](/usc/12/1715z–2.md)[^1] of this title; or - (2) the cooperative [association](/usc/12/1828.md?p=s-4-E-i) of which the [family](/usc/12/1715z–1.md?p=j-2-A) is a [member](/usc/12/1426a.md?p=g-1) shall operate (A) a housing project the construction or substantial rehabilitation of which has been financed with a [mortgage](/usc/12/1707.md?p=a) insured under [section 1715e](/usc/12/1715e.md) or [section 1715l(d)(3)](/usc/12/1715l.md) 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](/usc/12/1715z–1.md?p=j-2-A): Provided, That if any cooperative [member](/usc/12/1426a.md?p=g-1) who has received assistance payments transfers his membership and occupancy rights to another [person](/usc/12/5481.md?p=19) who satisfies the eligibility requirements prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4) and undertakes the obligation to pay occupancy charges, the new cooperative [member](/usc/12/1426a.md?p=g-1) 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](/usc/12/1715z–22a.md?p=4) may prescribe, if the [family](/usc/12/1715z–1.md?p=j-2-A) qualifies as a displaced [family](/usc/12/1715z–1.md?p=j-2-A) as defined in [section 1715l(f)](/usc/12/1715l.md) of this title, or a [family](/usc/12/1715z–1.md?p=j-2-A) which [includes](/usc/12/25b.md?p=a-3) five or more minor [persons](/usc/12/5481.md?p=19), or a [family](/usc/12/1715z–1.md?p=j-2-A) occupying low-rent public housing: Provided further, That the amount of the [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) authorizes an increase on the basis of a finding that costs levels so require), except that with respect to any [family](/usc/12/1715z–1.md?p=j-2-A) with five or more [persons](/usc/12/5481.md?p=19) the foregoing limits shall be $47,500 and $55,000, respectively; or (B) a housing project which is financed under a [State](/usc/12/1707.md?p=d) 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](/usc/12/1707.md?p=b) by the [Secretary](/usc/12/1715z–22a.md?p=4) on behalf of a [mortgagor](/usc/12/1707.md?p=b) shall be made during such time as the [mortgagor](/usc/12/1707.md?p=b) shall continue to occupy the property which secures the [mortgage](/usc/12/1707.md?p=a): Provided, That assistance payments may be made on behalf of a homeowner who assumes a [mortgage](/usc/12/1707.md?p=a) insured under subsection [(i)](#i) or [(j)(4)](#j-4) with respect to which assistance payments have been made on behalf of the previous [owner](/usc/12/4146.md?p=2), if the homeowner is approved by the [Secretary](/usc/12/1715z–22a.md?p=4) as eligible for receiving such assistance: Provided further, That the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to continue making such assistance payments where the [mortgage](/usc/12/1707.md?p=a) has been assigned to the [Secretary](/usc/12/1715z–22a.md?p=4). Assistance payments pursuant to any new contract, other than a contract in connection with a refinancing under [subsection (r)](#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 10-year 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](/usc/12/1707.md?p=a) insurance premium due under the [mortgage](/usc/12/1707.md?p=a) remaining unpaid after applying 20 per centum of the [mortgagor](/usc/12/1707.md?p=b)’s income; or - (B) the difference between the amount of the monthly payment for principal, interest and [mortgage](/usc/12/1707.md?p=a) insurance premium which the [mortgagor](/usc/12/1707.md?p=b) is obligated to pay under the [mortgage](/usc/12/1707.md?p=a) and the monthly payment for principal and interest which the [mortgagor](/usc/12/1707.md?p=b) would be obligated to pay if the [mortgage](/usc/12/1707.md?p=a) were to bear interest at the rate of 1 per centum per annum (4 per centum per annum in the case of a [mortgage](/usc/12/1707.md?p=a) described in [subsection (o)](#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](/usc/12/4146.md?p=2)’s unit in the case of a two- to four-[family](/usc/12/1715z–1.md?p=j-2-A) property) for a period longer than one year, the [Secretary](/usc/12/1715z–22a.md?p=4) 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)](#e), or (ii) an amount equal to at least 50 per centum of the net appreciation of the property, as determined by the [Secretary](/usc/12/1715z–22a.md?p=4). 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](/usc/12/1707.md?p=a) amount as of the time of sale over the original [mortgage](/usc/12/1707.md?p=a) balance due to the [mortgage](/usc/12/1707.md?p=a) being insured pursuant to [section 1715z–10](/usc/12/1715z–10.md)[^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](/usc/12/1715z–22a.md?p=4) may provide for such recapture. - (B) [Subparagraph (A)](#c-2-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](/usc/12/1707.md?p=a), loan, or other advance of [credit](/usc/12/5481.md?p=7) insured pursuant to [subsection (q)](#q). - (3) - (A) There hereby is established in the Treasury of the United States a [fund](/usc/12/4702.md?p=10), which, to the extent approved in appropriation Acts, may be used by the [Secretary](/usc/12/1715z–22a.md?p=4) for purposes of carrying out [subparagraph (B)](#c-3-B). There shall be deposited into such [fund](/usc/12/4702.md?p=10) (i) any amount recaptured under [paragraph (2)](#c-2); (ii) any authority to make assistance payments under [subsection (a)](#a) that is committed for use in a contract but is unused because the [mortgage](/usc/12/1707.md?p=a), loan, or advance of [credit](/usc/12/5481.md?p=7) involved is refinanced (except to the extent provided in [subsection (r)](#r) for [mortgages](/usc/12/1707.md?p=a) 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)](#c-3-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)](#c-1), and who is determined by the [Secretary](/usc/12/1715z–22a.md?p=4) to be unable to assume the full payments due under the [mortgage](/usc/12/1707.md?p=a), loan, or advance of [credit](/usc/12/5481.md?p=7) involved, the [Secretary](/usc/12/1715z–22a.md?p=4) shall, to the extent of the availability of amounts in the [fund](/usc/12/4702.md?p=10) established in [subparagraph (A)](#c-3-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)](#c-1) or [subsection (a)(2)(B)](#a-2-B) and for such period as the [Secretary](/usc/12/1715z–22a.md?p=4) determines to be appropriate. - (C) Any amounts in such [fund](/usc/12/4702.md?p=10) determined by the [Secretary](/usc/12/1715z–22a.md?p=4) to be in excess of the amounts currently required to carry out the provisions of [subparagraph (B)](#c-3-B) shall be invested by the [Secretary](/usc/12/1715z–22a.md?p=4) in obligations of, or obligations guaranteed as to both principal and interest by, the United States or any [agency](/usc/12/1422.md?p=12) of the United States. Notwithstanding the preceding sentence, any amounts of budget authority or contract authority recaptured from assistance payments contracts relating to [mortgages](/usc/12/1707.md?p=a) that are being refinanced that are not required for assistance payments contracts relating to [mortgages](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=b) by the [Secretary](/usc/12/1715z–22a.md?p=4) on behalf of a [family](/usc/12/1715z–1.md?p=j-2-A) holding membership in a cooperative [association](/usc/12/1828.md?p=s-4-E-i) operating a housing project shall be made only during such time as the [family](/usc/12/1715z–1.md?p=j-2-A) is an occupant of such proj­ect and shall be in amounts computed on the basis of the formula set forth in [subsection (c)](#c) applying the cooperative [member](/usc/12/1426a.md?p=g-1)’s proportionate share of the obligations under the project [mortgage](/usc/12/1707.md?p=a) to the items specified in the formula. - (e) **Reimbursement for expenses in handling the mortgage—** The [Secretary](/usc/12/1715z–22a.md?p=4) may include in the payment to the [mortgagee](/usc/12/1707.md?p=b) such amount, in addition to the amount computed under subsection [(a)(2)(B)](#a-2-B), (c), (d), [(j)(7)](#j-7), or [(r)](#r), as he deems appropriate to reimburse the [mortgagee](/usc/12/1707.md?p=b) for its expenses in handling the [mortgage](/usc/12/1707.md?p=a). - (f) **Adoption of procedures for recertifications of mortgagor’s or cooperative member’s income—** Procedures shall be adopted by the [Secretary](/usc/12/1715z–22a.md?p=4) for recertifications of the [mortgagor](/usc/12/1707.md?p=b)’s (or cooperative [member](/usc/12/1426a.md?p=g-1)’s) income at intervals of two years (or at shorter intervals where the [Secretary](/usc/12/1715z–22a.md?p=4) deems it desirable) for the purpose of adjusting the amount of such assistance payments within the limits of the formula described in [subsection (c)](#c). - (g) **Regulations to assure that sales price or other consideration paid is not increased above appraised value—** The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) which the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/25b.md?p=a-3) 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](/usc/42/1437c.md?p=c-1)). 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](/usc/12/1707.md?p=a) insured under [subsection (r)](#r)), may not exceed such sums of new budget authority as may be appropriated after November 30, 1983. The [Secretary](/usc/12/1715z–22a.md?p=4) shall begin issuing new commitments and reservations to provide [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) shall not enter into new contracts for assistance payments under this section (except under [subsection (r)](#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 the [Secretary](/usc/12/1715z–22a.md?p=4) prior to June 30, 1981, reserving [funds](/usc/12/4702.md?p=10) 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](/usc/42/5318.md)], 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](/usc/12/4702.md?p=10) obtained under title I of the Housing and Community Development Act of 1974 [[42 U.S.C. 5301](/usc/42/5301.md) et seq.] and at least $2,000 per unit of additional [funds](/usc/12/4702.md?p=10) to assist housing under this section. In no event may the [Secretary](/usc/12/1715z–22a.md?p=4) enter into any new contract for assistance payments under this section (other than a contract in connection with a [mortgage](/usc/12/1707.md?p=a) insured under [subsection (r)](#r)) after September 30, 1989. - (2) Assistance payments under this section may be made only with respect to a [family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–22a.md?p=4) with adjustments for smaller and larger [families](/usc/12/1715z–1.md?p=j-2-A), except that the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–1.md?p=j-2-A) incomes, or other factors. - (3) Notwithstanding the provisions of subsections [(b)(2)](#b-2) and [(i)(3)(A)](#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)](#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](/usc/12/1707.md?p=a) insured under [subsection (r)](#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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) is authorized, upon application by the [mortgagee](/usc/12/1707.md?p=b), to insure a [mortgage](/usc/12/1707.md?p=a) ([including](/usc/12/25b.md?p=a-3) advances with respect to property construction or rehabilitation pursuant to a self-help program) executed by a [mortgagor](/usc/12/1707.md?p=b) who meets the eligibility requirements for assistance payments prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4) under [subsection (b)](#b). Commitments for the insurance of such [mortgages](/usc/12/1707.md?p=a) may be issued by the [Secretary](/usc/12/1715z–22a.md?p=4) prior to the date of their execution or disbursement thereon, upon such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe. - (2) To be eligible for insurance under this subsection, a [mortgage](/usc/12/1707.md?p=a) shall meet the requirements of section [1715l(d)(2)](/usc/12/1715l.md) or [1715y(c)](/usc/12/1715y.md?p=c) of this title, except as such requirements are modified by this subsection. - (3) A [mortgage](/usc/12/1707.md?p=a) to be insured under this subsection shall— - (A) involve a single-[family](/usc/12/1715z–1.md?p=j-2-A) or a two-[family](/usc/12/1715z–1.md?p=j-2-A) dwelling which has been approved by the [Secretary](/usc/12/1715z–22a.md?p=4) prior to the beginning of construction or substantial rehabilitation, or a three-[family](/usc/12/1715z–1.md?p=j-2-A) dwelling which is approved by the [Secretary](/usc/12/1715z–22a.md?p=4) prior to the beginning of substantial rehabilitation, or a one-[family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–1.md?p=j-2-A) unit and the unit has had no previous occupant other than the [mortgagor](/usc/12/1707.md?p=b): Provided, That the [mortgage](/usc/12/1707.md?p=a) may involve an existing dwelling or a [family](/usc/12/1715z–1.md?p=j-2-A) unit in an existing condominium project which meets such standards as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe: Provided further, That the [mortgage](/usc/12/1707.md?p=a) may involve an existing dwelling or a [family](/usc/12/1715z–1.md?p=j-2-A) unit in an existing condominium proj­ect if assistance payments have been made on behalf of the previous [owner](/usc/12/4146.md?p=2) of the dwelling or [family](/usc/12/1715z–1.md?p=j-2-A) unit with respect to a [mortgage](/usc/12/1707.md?p=a) insured under [subsection (j)(4)](#j-4): Provided further, That the [mortgage](/usc/12/1707.md?p=a) may involve a dwelling unit in an existing project covered by a [mortgage](/usc/12/1707.md?p=a) insured under [section 1715z–1 of this title](/usc/12/1715z–1.md) 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](/usc/12/1701s.md)]; - (B) where it is to cover a one-[family](/usc/12/1715z–1.md?p=j-2-A) unit in a condominium project, have a principal obligation not exceeding $40,000 ($47,500 in any geographical area where the [Secretary](/usc/12/1715z–22a.md?p=4) authorizes an increase on the basis of a finding that cost levels so require), except that with respect to any [family](/usc/12/1715z–1.md?p=j-2-A) with five or more [persons](/usc/12/5481.md?p=19) 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](/usc/12/25b.md?p=a-3) such initial service charges, appraisal, inspection, and other fees as the [Secretary](/usc/12/1715z–22a.md?p=4) shall approve) in an amount not to exceed $40,000 ($47,500 in any geographical area where the [Secretary](/usc/12/1715z–22a.md?p=4) authorizes an increase on the basis of a finding that cost levels so require), except that with respect to any [family](/usc/12/1715z–1.md?p=j-2-A) with five or more [persons](/usc/12/5481.md?p=19) the foregoing limits shall be $47,500 and $55,000, respectively; - (D) involve, in the case of a two-[family](/usc/12/1715z–1.md?p=j-2-A) or three-[family](/usc/12/1715z–1.md?p=j-2-A) dwelling, a principal obligation ([including](/usc/12/25b.md?p=a-3) such initial service charges, appraisal, inspection, and other fees as the [Secretary](/usc/12/1715z–22a.md?p=4) shall approve) in an amount not to exceed $60,000 ($66,250 in any geographical area where the [Secretary](/usc/12/1715z–22a.md?p=4) authorizes an increase on the basis of a finding that cost levels so require); - (E) be executed by a [mortgagor](/usc/12/1707.md?p=b) 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](/usc/12/1715z–22a.md?p=4)’s estimate of the cost of acquisition (excluding the [mortgage](/usc/12/1707.md?p=a) insurance premium paid at the time the [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) finds necessary to meet the [mortgage](/usc/12/1707.md?p=a) market, taking into consideration the yields on [mortgages](/usc/12/1707.md?p=a) in the primary and secondary markets. - (4) In insuring eligible [mortgages](/usc/12/1707.md?p=a) under this subsection, the [Secretary](/usc/12/1715z–22a.md?p=4) may not deny insurance on the basis that a [mortgage](/usc/12/1707.md?p=a) involves a two- to three-[family](/usc/12/1715z–1.md?p=j-2-A) dwelling or is to be used to finance substantial rehabilitation rather than new construction. - (5) As a condition of insuring a [mortgage](/usc/12/1707.md?p=a) on a two- to three-[family](/usc/12/1715z–1.md?p=j-2-A) dwelling, the [Secretary](/usc/12/1715z–22a.md?p=4) shall require the [mortgagor](/usc/12/1707.md?p=b) (A) not to discriminate against prospective tenants on the basis of their receipt of or eligibility for housing assistance under any Federal, [State](/usc/12/1707.md?p=d) or local housing assistance program and (B) to agree that during the term of the [mortgage](/usc/12/1707.md?p=a) each of the rental units shall be occupied by, or available for occupancy by, [persons](/usc/12/5481.md?p=19) and [families](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1707.md?p=a) insured under the provisions of [subsection (i)](#i), the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized, upon application by the [mortgagee](/usc/12/1707.md?p=b), to insure a [mortgage](/usc/12/1707.md?p=a) ([including](/usc/12/25b.md?p=a-3) advances under such [mortgage](/usc/12/1707.md?p=a) during rehabilitation) which is executed by a [nonprofit organization](/usc/12/1821.md?p=w-2-B) or public body or [agency](/usc/12/1422.md?p=12) 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](/usc/12/1715z–22a.md?p=4) under [subsection (b)](#b). Commitments for the insurance of such [mortgages](/usc/12/1707.md?p=a) may be issued by the [Secretary](/usc/12/1715z–22a.md?p=4) prior to the date of their execution or disbursement thereon, upon such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe. - (2) To be eligible for insurance under paragraph (1) of this subsection, a [mortgage](/usc/12/1707.md?p=a) shall— - (A) be executed by a private [nonprofit organization](/usc/12/1821.md?p=w-2-B) or public body or [agency](/usc/12/1422.md?p=12), approved by the [Secretary](/usc/12/1715z–22a.md?p=4), for the purpose of financing the 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](#j-6) of detached, semidetached, or row construction, or (ii) four or more one-[family](/usc/12/1715z–1.md?p=j-2-A) units in a structure or structures for which a plan of [family](/usc/12/1715z–1.md?p=j-2-A) unit ownership approved by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) determines is necessary to meet the [mortgage](/usc/12/1707.md?p=a) market, taking into consideration the yields on [mortgages](/usc/12/1707.md?p=a) in the primary and secondary markets; - (D) provide for complete amortization (subject to [paragraph (4)(E)](#j-4-E)) by periodic payments within such term as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe; and - (E) provide for the release of individual [single-family dwellings](#j-6) from the lien of the [mortgage](/usc/12/1707.md?p=a) upon their sale in accordance with [paragraph (4)](#j-4). - (3) No [mortgage](/usc/12/1707.md?p=a) shall be insured under [paragraph (1)](#j-1) unless the [mortgagor](/usc/12/1707.md?p=b) shall have demonstrated to the satisfaction of the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=b)’s related activities and the activities of other [owners](/usc/12/4146.md?p=2) 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](/usc/12/1707.md?p=a) shall be insured under [paragraph (1)](#j-1) unless the [mortgagor](/usc/12/1707.md?p=b) enters into an agreement, satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4), that it will offer to sell the dwellings involved, after purchase and upon completion of any rehabilitation, to lower income individuals or [families](/usc/12/1715z–1.md?p=j-2-A) meeting the eligibility requirements established by the [Secretary](/usc/12/1715z–22a.md?p=4) under [subsection (b)](#b). - (B) The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to insure under this paragraph [mortgages](/usc/12/1707.md?p=a) executed to finance the sale of [individual dwellings](#j-5) to lower income purchasers as provided in [subparagraph (A)](#j-4-A). Any such [mortgage](/usc/12/1707.md?p=a) shall— - (i) be in a principal amount not in excess of that portion of the unpaid principal balance of the blanket [mortgage](/usc/12/1707.md?p=a) covering the property which is allocable to the [individual dwelling](#j-5) involved; - (ii) bear interest at the same rate as the blanket [mortgage](/usc/12/1707.md?p=a); and - (iii) provide for complete amortization by periodic payments within a term equal to the remaining term (determined without regard to [subparagraph (E)](#j-4-E)) of such blanket [mortgage](/usc/12/1707.md?p=a). - (C) The price for which any [individual dwelling](#j-5) is sold under this paragraph shall be in an amount equal to that portion of the unpaid principal balance of the blanket [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) may determine to be reasonable. - (D) Upon the sale under this paragraph of any [individual dwelling](#j-5), such dwelling shall be released from the lien of the blanket [mortgage](/usc/12/1707.md?p=a). Until all of the [individual dwellings](#j-5) in the property covered by the blanket [mortgage](/usc/12/1707.md?p=a) have been sold, the [mortgagor](/usc/12/1707.md?p=b) shall hold and operate the dwellings remaining unsold at any given time, in such manner and under such terms as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe, as though they constituted rental units. - (E) Upon the sale under this paragraph of all the [individual dwellings](#j-5) in the property covered by the blanket [mortgage](/usc/12/1707.md?p=a) and the release of all [individual dwellings](#j-5) from the lien of the blanket [mortgage](/usc/12/1707.md?p=a), the insurance of the blanket [mortgage](/usc/12/1707.md?p=a) shall be terminated and no adjusted premium charge shall be charged by the [Secretary](/usc/12/1715z–22a.md?p=4) upon such termination. - (5) Where the [Secretary](/usc/12/1715z–22a.md?p=4) has approved a plan of [family](/usc/12/1715z–1.md?p=j-2-A) unit ownership the terms “[single-family dwelling](#j-6)”, “[single-family dwellings](#j-6)”, “individual dwelling”, and “individual dwellings” shall mean a [family](/usc/12/1715z–1.md?p=j-2-A) unit or [family](/usc/12/1715z–1.md?p=j-2-A) 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)](#j-5)) shall include a two- to three-[family](/usc/12/1715z–1.md?p=j-2-A) dwelling which has been approved by the [Secretary](/usc/12/1715z–22a.md?p=4). - (7) In addition to the assistance payments authorized under [subsection (b)](#b), the [Secretary](/usc/12/1715z–22a.md?p=4) may make such payments to a [mortgagee](/usc/12/1707.md?p=b) on behalf of a [nonprofit organization](/usc/12/1821.md?p=w-2-B) or public body or [agency](/usc/12/1422.md?p=12) which is a [mortgagor](/usc/12/1707.md?p=b) under the provisions of [paragraph (1)](#j-1) in an amount not exceeding the difference between the monthly payment for principal, interest, and [mortgage](/usc/12/1707.md?p=a) insurance premium which the [mortgagor](/usc/12/1707.md?p=b) is obligated to pay under the [mortgage](/usc/12/1707.md?p=a) and the monthly payment for principal and interest such [mortgagor](/usc/12/1707.md?p=b) would be obligated to pay if the [mortgage](/usc/12/1707.md?p=a) were to bear interest at the rate of 1 per centum per annum. - (8) A [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) may be insured under [section 1715l(h)](/usc/12/1715l.md) of this title. - (9) In insuring eligible [mortgages](/usc/12/1707.md?p=a) under this subsection, the [Secretary](/usc/12/1715z–22a.md?p=4) may not deny insurance on the basis that a [mortgage](/usc/12/1707.md?p=a) involves a two- to three-[family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–22a.md?p=4) shall from time to time allocate and transfer to the [Secretary](/usc/12/1715z–22a.md?p=4) of Agriculture, 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)](#h-1). - (l) **Deductions for minors in determining income limits; exclusion of earnings of minors—** In determining the income of [any person](/usc/12/1715z–4a.md?p=a-2) for the purposes of this section, there shall be deducted an amount equal to $300 for each minor [person](/usc/12/5481.md?p=19) who is a [member](/usc/12/1426a.md?p=g-1) of the immediate [family](/usc/12/1715z–1.md?p=j-2-A) of such [person](/usc/12/5481.md?p=19) and living with such [family](/usc/12/1715z–1.md?p=j-2-A), and the earnings of any such minor [person](/usc/12/5481.md?p=19) shall not be included in the income of such [person](/usc/12/5481.md?p=19) or his [family](/usc/12/1715z–1.md?p=j-2-A). - (m) **Termination date for insurance of mortgages—** No [mortgage](/usc/12/1707.md?p=a) (except a [mortgage](/usc/12/1707.md?p=a) insured under [subsection (r)](#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](/usc/12/1707.md?p=a) may be insured under this section on a unit in a subdivision, after October 12, 1977, which, when added to any other [mortgages](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) or to a [mortgage](/usc/12/1707.md?p=a) insured under [subsection (r)](#r). - (o) **Mortgage insurance over maximum limits involving dwellings of community sponsored programs of concentrated redevelopment or revitalization—** The [Secretary](/usc/12/1715z–22a.md?p=4) may insure a [mortgage](/usc/12/1707.md?p=a) under this section involving a principal obligation which exceeds, by not more than 20 per centum, the maximum limits specified under subsection [(b)(2)](#b-2) or [(i)(3)](#i-3) of this section if the [mortgage](/usc/12/1707.md?p=a) relates to a dwelling in an urban neighborhood where the [Secretary](/usc/12/1715z–22a.md?p=4) determines that a community sponsored program of concentrated redevelopment or revitalization is being undertaken and the [Secretary](/usc/12/1715z–22a.md?p=4) determines that such action is necessary to enable eligible [families](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–22a.md?p=4) may insure a [mortgage](/usc/12/1707.md?p=a) under this section involving a principal obligation which exceeds, by not more than 10 per centum, the maximum limits specified under subsection [(b)(2)](#b-2) or [(i)(3)](#i-3) of this section, or, if applicable, the maximum principal obligation insurable pursuant to [subsection (o)](#o) of this section, if the [mortgage](/usc/12/1707.md?p=a) relates to a dwelling to be occupied by a physically handicapped [person](/usc/12/5481.md?p=19) and the [Secretary](/usc/12/1715z–22a.md?p=4) determines that such action is necessary to reflect the cost of making such dwelling accessible to and usable by such [person](/usc/12/5481.md?p=19). - (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)](#n), if the [Secretary](/usc/12/1715z–22a.md?p=4) determines that there is a substantial need for emergency stimulation of the housing market, the [Secretary](/usc/12/1715z–22a.md?p=4) 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)](#h-1), on behalf of homeowners, [including](/usc/12/25b.md?p=a-3) [owners](/usc/12/4146.md?p=2) of manufactured homes, to [mortgagees](/usc/12/1707.md?p=b) or other lenders holding [mortgages](/usc/12/1707.md?p=a), loans, or advances of [credit](/usc/12/5481.md?p=7) which meet the requirements of this subsection. The [Secretary](/usc/12/1715z–22a.md?p=4) may establish such criteria, terms, and conditions relating to homeowners and [mortgages](/usc/12/1707.md?p=a), loans, or advances of [credit](/usc/12/5481.md?p=7) assisted under this subsection as the [Secretary](/usc/12/1715z–22a.md?p=4) deems appropriate, consistent with the provisions of this subsection. The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to insure a [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) under this subsection shall terminate on September 30, 1989, or at such earlier date as the [Secretary](/usc/12/1715z–22a.md?p=4) may deem appropriate, upon a determination by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) and who— - (A) - (i) is a [mortgagor](/usc/12/1707.md?p=b) under a [mortgage](/usc/12/1707.md?p=a) which meets the requirements of and is insured under this subsection, or (ii) is the original [owner](/usc/12/4146.md?p=2) 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](/usc/12/1703.md) covering the loan, advance of [credit](/usc/12/5481.md?p=7), or purchase of an obligation representing such loan or advance of [credit](/usc/12/5481.md?p=7) to finance the purchase of such manufactured home and lot has been granted to the lender making such loan, advance of [credit](/usc/12/5481.md?p=7), or purchase of an obligation; and - (B) has a [family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–1.md?p=j-2-A), unusually high or low median [family](/usc/12/1715z–1.md?p=j-2-A) income, or other factors), as determined by the [Secretary](/usc/12/1715z–22a.md?p=4). - (3) Assistance payments to a [mortgagee](/usc/12/1707.md?p=b) or other lender by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a), loan, or advance of [credit](/usc/12/5481.md?p=7). The [Secretary](/usc/12/1715z–22a.md?p=4) may, where a [mortgage](/usc/12/1707.md?p=a) insured under this subsection has been assigned to the [Secretary](/usc/12/1715z–22a.md?p=4), continue making such assistance payments. - (4) The amount of the assistance payments in the case of a [mortgage](/usc/12/1707.md?p=a) shall not at any time exceed the lesser of— - (A) the balance of the monthly payment for principal, interest, taxes, insurance, and any [mortgage](/usc/12/1707.md?p=a) insurance premium due under the [mortgage](/usc/12/1707.md?p=a) remaining unpaid after applying a minimum of 25 per centum of the [mortgagor](/usc/12/1707.md?p=b)’s income, except that the [Secretary](/usc/12/1715z–22a.md?p=4) may reduce such per centum of income to the extent he deems necessary, but not lower than 20 per centum of the [mortgagor](/usc/12/1707.md?p=b)’s income; or - (B) the difference between the amount of the monthly payment for principal, interest, and any [mortgage](/usc/12/1707.md?p=a) insurance premium which would be required if the [mortgage](/usc/12/1707.md?p=a) were a level payment [mortgage](/usc/12/1707.md?p=a) bearing interest at a rate equal to the maximum interest rate which is applicable to level payment [mortgages](/usc/12/1707.md?p=a) insured under [section 1709(b) of this title](/usc/12/1709.md?p=b), other than [mortgages](/usc/12/1707.md?p=a) subject to [section 1709–1(2)](/usc/12/1709–1.md)[^1] of this title, and the monthly payment for principal and interest which the [mortgagor](/usc/12/1707.md?p=b) would be obligated to pay if the [mortgage](/usc/12/1707.md?p=a) were a level payment [mortgage](/usc/12/1707.md?p=a) bearing interest at the rate of at least 9½ per centum per annum. - (5) Assistance payments on behalf of the [owner](/usc/12/4146.md?p=2) 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](/usc/12/1703.md) due under the loan or advance of [credit](/usc/12/5481.md?p=7) remaining unpaid after applying a minimum of 25 per centum of the manufactured homeowner’s income, except that the [Secretary](/usc/12/1715z–22a.md?p=4) may reduce such per centum of income to the extent he deems necessary, but not lower than 20 per centum of the [mortgagor](/usc/12/1707.md?p=b)’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](/usc/12/1703.md) which the manufactured homeowner is obligated to pay under the loan or advance of [credit](/usc/12/5481.md?p=7) and the monthly payment of principal and interest which the [owner](/usc/12/4146.md?p=2) would be obligated to pay if the loan or advance of [credit](/usc/12/5481.md?p=7) were to bear an interest rate determined by the [Secretary](/usc/12/1715z–22a.md?p=4) which shall not be less than 12 per centum per annum. - (6) The [Secretary](/usc/12/1715z–22a.md?p=4) may include in the payment to the [mortgagee](/usc/12/1707.md?p=b) or other lender such amount, in addition to the amount computed under paragraph [(4)](#q-4) or [(5)](#q-5), as the [Secretary](/usc/12/1715z–22a.md?p=4) deems appropriate to reimburse the [mortgagee](/usc/12/1707.md?p=b) or other lender for its reasonable and necessary expenses in handling the [mortgage](/usc/12/1707.md?p=a), loan, or advance of [credit](/usc/12/5481.md?p=7). - (7) The [Secretary](/usc/12/1715z–22a.md?p=4) shall prescribe such regulations as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4). - (8) Assistance payments pursuant to [paragraph (5)](#q-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](/usc/12/1715z–22a.md?p=4) may, in addition to [mortgages](/usc/12/1707.md?p=a) insured under subsection [(i)](#i) or [(j)](#j), insure, upon application by the [mortgagee](/usc/12/1707.md?p=b), a [mortgage](/usc/12/1707.md?p=a) executed by a [mortgagor](/usc/12/1707.md?p=b) who meets the eligibility requirements for assistance payments prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4) under [paragraph (2)](#q-2). Commitments for the insurance of such [mortgages](/usc/12/1707.md?p=a) may be issued by the [Secretary](/usc/12/1715z–22a.md?p=4) prior to the date of their execution or disbursement thereon, upon such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe. - (10) To be eligible for insurance under this subsection, a [mortgage](/usc/12/1707.md?p=a) shall— - (A) be a first lien on [real estate](/usc/12/1707.md?p=g) held in fee simple, or on a leasehold under a lease which meets terms and conditions established by the [Secretary](/usc/12/1715z–22a.md?p=4); - (B) have been made to, and be held by, a [mortgagee](/usc/12/1707.md?p=b) approved by the [Secretary](/usc/12/1715z–22a.md?p=4) as responsible and able to service the [mortgage](/usc/12/1707.md?p=a) properly; - (C) involve a one- to four-[family](/usc/12/1715z–1.md?p=j-2-A) dwelling which has been approved by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=b); - (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](/usc/12/1707.md?p=a) which may be insured in the area pursuant to [section 1709(b)(2) of this title](/usc/12/1709.md?p=b-2), determined without regard to the last sentence of such section; - (E) have maturity and amortization provisions satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4); - (F) bear interest (exclusive of premium charges for insurance, and service charges if any) at not to exceed the applicable maximum rate for [mortgages](/usc/12/1707.md?p=a) insured pursuant to [section 1709(b) of this title](/usc/12/1709.md?p=b); - (G) be executed by a [mortgagor](/usc/12/1707.md?p=b) 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](/usc/12/1715z–22a.md?p=4)’s estimate of the cost of acquisition; and - (H) contain such other terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe. - (11) The [Secretary](/usc/12/1715z–22a.md?p=4) shall, to the extent practicable, insure [mortgages](/usc/12/1707.md?p=a) under this subsection which are secured by properties which contribute to the conservation of land and energy resources. - (12) A [mortgage](/usc/12/1707.md?p=a) to be assisted under this subsection shall, where the [Secretary](/usc/12/1715z–22a.md?p=4) deems it appropriate, provide for graduated payments pursuant to [section 1715z–10](/usc/12/1715z–10.md)[^1] of this title. - (13) The [Secretary](/usc/12/1715z–22a.md?p=4) 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 he deems appropriate. Assistance provided under this subsection shall not be subject to [section 1439 of title 42](/usc/42/1439.md). - (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](/usc/12/4146.md?p=2)’s unit in the case of a two- to four-[family](/usc/12/1715z–1.md?p=j-2-A) residence) for a period longer than one year, the [Secretary](/usc/12/1715z–22a.md?p=4) 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)](#q-6), or (B) an amount at least equal to 50 per centum of the net appreciation of the property, as determined by the [Secretary](/usc/12/1715z–22a.md?p=4). 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](/usc/12/1707.md?p=a) balance as of the time of sale over the original [mortgage](/usc/12/1707.md?p=a) balance due to the [mortgage](/usc/12/1707.md?p=a) being insured pursuant to [section 1715z–10](/usc/12/1715z–10.md)[^1] of this title. In providing for such recapture, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) may provide for such recapture. - (15) Procedures shall be adopted by the [Secretary](/usc/12/1715z–22a.md?p=4) for recertification of the homeowner’s income at intervals of two years (or at shorter intervals where the [Secretary](/usc/12/1715z–22a.md?p=4) deems it desirable) for the purpose of adjusting the amount of such assistance payments within the limits of the formula described in paragraph [(4)](#q-4) or [(5)](#q-5). - (r) **Refinancing—** - (1) The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized, upon application of a [mortgagee](/usc/12/1707.md?p=b), to insure under this subsection a [mortgage](/usc/12/1707.md?p=a) the proceeds of which are used to refinance a [mortgage](/usc/12/1707.md?p=a) insured under this section. - (2) To be eligible for insurance under this subsection, a [mortgage](/usc/12/1707.md?p=a) must be executed by a [mortgagor](/usc/12/1707.md?p=b) meeting the requirements of [paragraph (3)](#r-3) and shall— - (A) be a first lien on [real estate](/usc/12/1707.md?p=g) 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](/usc/12/1707.md?p=c) of the [mortgage](/usc/12/1707.md?p=a); - (B) have been made to, and held by, a [mortgagee](/usc/12/1707.md?p=b) approved by the [Secretary](/usc/12/1715z–22a.md?p=4); - (C) be in an amount not exceeding the outstanding principal balance, [including](/usc/12/25b.md?p=a-3) any unpaid interest, due on the [mortgage](/usc/12/1707.md?p=a) being refinanced; - (D) have a maturity not exceeding the unexpired term of the [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) finds necessary to meet the [mortgage](/usc/12/1707.md?p=a) market, taking into consideration the yields on [mortgages](/usc/12/1707.md?p=a) in the primary and secondary markets; to the extent that the amounts described in paragraphs [(4)(A)](#r-4-A) and [(B)](#r-4-B) are not otherwise paid by the [Secretary](/usc/12/1715z–22a.md?p=4), the foregoing interest rate may be increased, in the discretion of the [Secretary](/usc/12/1715z–22a.md?p=4), to compensate the [mortgagee](/usc/12/1707.md?p=b) for its payment to, or on behalf of, the [mortgagor](/usc/12/1707.md?p=b) of such amounts; and - (F) meet the criteria for refinancing as determined by the [Secretary](/usc/12/1715z–22a.md?p=4). - (3) Notwithstanding the provisions of [subsection (h)(2)](#h-2), assistance payments in connection with [mortgages](/usc/12/1707.md?p=a) insured under [paragraph (2)](#r-2) shall be made only with respect to a [family](/usc/12/1715z–1.md?p=j-2-A) who is eligible for, and receiving assistance payments with respect to, the insured [mortgage](/usc/12/1707.md?p=a) being refinanced. - (4) The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized and, to the extent provided in appropriation Acts, may pay to the [mortgagor](/usc/12/1707.md?p=b) (directly, through the [mortgagee](/usc/12/1707.md?p=b), or otherwise)— - (A) an amount, as approved by the [Secretary](/usc/12/1715z–22a.md?p=4), as an incentive to the [mortgagor](/usc/12/1707.md?p=b) to refinance a [mortgage](/usc/12/1707.md?p=a) insured under this section; and - (B) an amount as approved by the [Secretary](/usc/12/1715z–22a.md?p=4) for costs incurred in connection with the refinancing, [including](/usc/12/25b.md?p=a-3) 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](/usc/12/1707.md?p=a) insured under this subsection shall be derived from amounts recaptured from assistance payments contracts relating to [mortgages](/usc/12/1707.md?p=a) that are being refinanced. For purposes of [subsection (c)(3)(A)](#c-3-A), the amount of recaptured budget authority that the [Secretary](/usc/12/1715z–22a.md?p=4) commits for assistance payments contracts relating to [mortgages](/usc/12/1707.md?p=a) insured under this subsection shall not be construed as “unused”. - (6) The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to take any actions to identify and communicate with any [mortgagor](/usc/12/1707.md?p=b) of a [mortgage](/usc/12/1707.md?p=a) insured under this section to implement the refinancing of such [mortgages](/usc/12/1707.md?p=a) with insurance under this subsection. The [Secretary](/usc/12/1715z–22a.md?p=4) may take such actions directly, or under contract. Notwithstanding the restriction of [section 552a(b) of title 5](/usc/5/552a.md?p=b), upon the request of an approved [mortgagee](/usc/12/1707.md?p=b), the [Secretary](/usc/12/1715z–22a.md?p=4) may disclose to such [mortgagee](/usc/12/1707.md?p=b) the name and address of any [mortgagor](/usc/12/1707.md?p=b) of a [mortgage](/usc/12/1707.md?p=a) insured under this section that meets the criteria for refinancing, pursuant to [paragraph (2)(F)](#r-2-F), and the unpaid principal balance and interest rate on such [mortgage](/usc/12/1707.md?p=a). - (7) The [Secretary](/usc/12/1715z–22a.md?p=4) shall implement the provisions of this subsection by a notice published in the Federal Register. # §1715z–1. Rental and cooperative housing for lower income families - (a) **Authorization for periodic interest reduction payments on behalf of owner of rental housing project—** For the purpose of reducing [rentals](#k) for lower income [families](#j-2-A), the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to make, and to contract to make, periodic interest reduction payments on behalf of the [owner](/usc/12/4146.md?p=2) of a [rental housing project](#k) designed for occupancy by lower income [families](#j-2-A), which shall be accomplished through payments to morgagees[^1] holding [mortgages](/usc/12/1707.md?p=a) meeting the special requirements specified in this section. - (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](#k) housing proj­ect and is subject to a [mortgage](/usc/12/1707.md?p=a) which meets the requirements of, and is insured under, [subsection (j)](#j) of this section: Provided, That the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to continue making such interest reduction payments where the [mortgage](/usc/12/1707.md?p=a) has been assigned to the [Secretary](/usc/12/1715z–22a.md?p=4): Provided further, That interest reduction payments may be made with respect to a [mortgage](/usc/12/1707.md?p=a) or part thereof on a [rental](#k) or cooperative housing project owned by a private nonprofit [corporation](/usc/12/2277a.md?p=2) or other private [nonprofit entity](/usc/12/1441a–1.md?p=2), a limited dividend [corporation](/usc/12/2277a.md?p=2) or other limited dividend entity, public[^2] entity, or a cooperative housing [corporation](/usc/12/2277a.md?p=2), which is financed under a [State](/usc/12/1707.md?p=d) 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](/usc/12/1707.md?p=d) or local program, means such fees and charges, approved by the [Secretary](/usc/12/1715z–22a.md?p=4), as are payable by the [mortgagor](/usc/12/1707.md?p=b) to the [State](/usc/12/1707.md?p=d) or local [agency](/usc/12/1422.md?p=12) [mortgagee](/usc/12/1707.md?p=b) to meet reserve requirements and administrative expenses of such [agency](/usc/12/1422.md?p=12). - (c) **Amount of payments—** The interest reduction payments to a [mortgagee](/usc/12/1707.md?p=b) by the [Secretary](/usc/12/1715z–22a.md?p=4) on behalf of a project [owner](/usc/12/4146.md?p=2) shall be in an amount not exceeding the difference between the monthly payment for principal, interest, and [mortgage insurance premium](#b) which the project [owner](/usc/12/4146.md?p=2) as a [mortgagor](/usc/12/1707.md?p=b) is obligated to pay under the [mortgage](/usc/12/1707.md?p=a) and the monthly payment for principal and interest such project [owner](/usc/12/4146.md?p=2) would be obligated to pay if the [mortgage](/usc/12/1707.md?p=a) were to bear interest at the rate of 1 per centum per annum. - (d) **Mortgage handling expenses—** The [Secretary](/usc/12/1715z–22a.md?p=4) may include in the payment to the [mortgagee](/usc/12/1707.md?p=b) such amount, in addition to the amount computed under [subsection (c)](#c), as he deems appropriate to reimburse the [mortgagee](/usc/12/1707.md?p=b) for its expenses in handling the [mortgage](/usc/12/1707.md?p=a). - (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](/usc/12/4146.md?p=2) shall operate the project in accordance with such requirements with respect to [tenant](#k) eligibility and rents as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe. Procedures shall be adopted by the [Secretary](/usc/12/1715z–22a.md?p=4) for review of [tenant](#k) incomes at intervals of one year (or at shorter intervals where the [Secretary](/usc/12/1715z–22a.md?p=4) deems it desirable). - (2) A project for which interest reduction payments are made under this section and for which the [mortgage](/usc/12/1707.md?p=a) on the project has been refinanced 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](/usc/12/4146.md?p=2) enters into such binding commitments as the [Secretary](/usc/12/1715z–22a.md?p=4) may require (which shall be applicable to any subsequent [owner](/usc/12/4146.md?p=2)) to ensure that the [owner](/usc/12/4146.md?p=2) 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](/usc/12/1715z–22a.md?p=4), a basic [rental charge](#k) and fair market [rental charge](#k). - (ii) The basic [rental charge](#k) shall be— - (I) the amount needed to operate the project with payments of principal and interest due under a [mortgage](/usc/12/1707.md?p=a) bearing interest at the rate of 1 percent per annum; or - (II) an amount greater than that determined under [clause (ii)(I)](#f-1-A-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](#k) shall be— - (I) the amount needed to operate the project with payments of principal, interest, and [mortgage insurance premium](#b) which the [mortgagor](/usc/12/1707.md?p=b) is obligated to pay under the [mortgage](/usc/12/1707.md?p=a) covering the project; or - (II) an amount greater than that determined under [clause (iii)(I)](#f-1-A-iii-I), but not greater than the market rent for a comparable unassisted unit. - (iv) The [Secretary](/usc/12/1715z–22a.md?p=4) may approve a basic [rental charge](#k) and fair market [rental charge](#k) for a unit that exceeds the minimum amounts permitted by this subparagraph for such charges only if— - (I) the approved basic [rental charge](#k) and fair market [rental charges](#k) each exceed the applicable minimum charge by the same amount; and - (II) the project [owner](/usc/12/4146.md?p=2) agrees to restrictions on project use or [mortgage](/usc/12/1707.md?p=a) prepayment that are acceptable to the [Secretary](/usc/12/1715z–22a.md?p=4). - (v) The [Secretary](/usc/12/1715z–22a.md?p=4) may approve a basic [rental charge](#k) and fair market [rental charge](#k) under this paragraph for a unit with assistance under [section 1437f of title 42](/usc/42/1437f.md) that differs from the basic [rental charge](#k) and fair market [rental charge](#k) 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](#k) in units without such assistance. - (B) - (i) The [rental charge](#k) for each dwelling unit shall be at the basic [rental charge](#k) or such greater amount, not exceeding the fair market [rental charge](#k) determined pursuant to [subparagraph (A)](#f-1-A), as represents 30 percent of the [tenant](#k)’s adjusted income, except as otherwise provided in this subparagraph. - (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](/usc/12/1707.md?p=d) or local project, the [Secretary](/usc/12/1715z–22a.md?p=4) may reduce the [rental charge](#k) ceiling, but in no case shall the [rental charge](#k) be below the basic [rental charge](#k) set forth in [subparagraph (A)(ii)(I)](#f-1-A-ii-I). - (iii) For plans of action approved for [capital](/usc/12/51c.md) grants under the Low-Income Housing Preservation and Resident Homeownership Act of 1990 [[12 U.S.C. 4101](/usc/12/4101.md) et seq.] or the Emergency Low Income Housing Preservation Act of 1987, the [rental charge](#k) for each dwelling unit shall be at the minimum basic [rental charge](#k) set forth in [subparagraph (A)(ii)(I)](#f-1-A-ii-I) or such greater amount, not exceeding the lower of: (I) the fair market [rental charge](#k) set forth in [subparagraph (A)(iii)(I)](#f-1-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](#k)’s adjusted income. - (C) With respect to those projects which the [Secretary](/usc/12/1715z–22a.md?p=4) determines have separate utility metering paid by the [tenants](#k) for some or all dwelling units, the [Secretary](/usc/12/1715z–22a.md?p=4) may— - (i) permit the basic [rental charge](#k) and the fair market [rental charge](#k) 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](#k) for such dwelling units at such an amount less than 30 percent of a [tenant](#k)’s adjusted income as the [Secretary](/usc/12/1715z–22a.md?p=4) determines represents a proportionate decrease for the utility charges to be paid by such [tenant](#k), but in no case shall [rental](#k) be lower than 25 percent of a [tenant](#k)’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](/usc/12/1715z–22a.md?p=4) shall make, and contract to make, additional assistance payments to the project [owner](/usc/12/4146.md?p=2) on behalf of [tenants](#k) whose incomes are too low for them to afford the basic [rentals](#k) ([including](/usc/12/25b.md?p=a-3) 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](#k) payment ([including](/usc/12/25b.md?p=a-3) the amount allowed for utilities in the case of a project with separate utility metering) by the [tenant](#k) to the highest of the following amounts, rounded to the nearest dollar: - (A) 30 per centum of the [tenant](#k)’s monthly adjusted income; - (B) 10 per centum of the [tenant](#k)’s monthly income; or - (C) if the [family](#j-2-A) is receiving payments for welfare assistance from a [public agency](/usc/12/1821.md?p=w-2-B) and a part of such payments, adjusted in accordance with the [family](#j-2-A)’s actual housing costs, is specifically designated by such [agency](/usc/12/1422.md?p=12) to meet the [family](#j-2-A)’s housing costs, the portion of such payments which is so designated. Notwithstanding the foregoing provisions of this paragraph, the [Secretary](/usc/12/1715z–22a.md?p=4) may— - (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](#k), or that such action is to be taken to meet the housing needs of [elderly or handicapped families](#j-2-B). - (3) The [Secretary](/usc/12/1715z–22a.md?p=4) shall utilize amounts credited to the [fund](/usc/12/4702.md?p=10) described in [subsection (g)](#g) for the sole purpose of carrying out the purposes of [section 201](/usc/12/201.md) of the Housing and Community Development Amendments of 1978. No payments may be made from such [fund](/usc/12/4702.md?p=10) 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](#k) 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)](#f-2), the [Secretary](/usc/12/1715z–22a.md?p=4) shall offer annually to amend contracts entered into under this subsection with [owners](/usc/12/4146.md?p=2) of projects assisted but not subject to [mortgages](/usc/12/1707.md?p=a) 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](#k), subject to the availability of authority for such purpose under [section 1437c(c) of title 42](/usc/42/1437c.md?p=c). The [Secretary](/usc/12/1715z–22a.md?p=4) shall take such actions as may be necessary to ensure that payments, [including](/usc/12/25b.md?p=a-3) payments that reflect necessary rent increases and changes in the incomes of [tenants](#k), are made on a timely basis for all units covered by contracts entered into under [paragraph (2)](#f-2). - (5) - (A) In order to induce advances by [owners](/usc/12/4146.md?p=2) for [capital](/usc/12/51c.md) improvements (excluding any [owner](/usc/12/4146.md?p=2) contributions that may be required by the [Secretary](/usc/12/1715z–22a.md?p=4) as a condition for assistance under [section 201](/usc/12/201.md) of the Housing and Community Development Amendments of 1978) to benefit projects assisted under this section, in establishing basic [rental charges](#k) and fair market [rental charges](#k) under [paragraph (1)](#f-1) the [Secretary](/usc/12/1715z–22a.md?p=4) may include an amount that would permit a return of such advances with interest to the [owner](/usc/12/4146.md?p=2) out of project income, on such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](#k) or the published existing fair market rent for comparable housing established under [section 1437f(c) of title 42](/usc/42/1437f.md?p=c); - (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](/usc/42/1437f.md) shall be provided, to the extent available under appropriations Acts, if necessary to mitigate any adverse effects on income-eligible [tenants](#k). - (6) Repealed. Pub. L. 104–99, title IV, § 405(d)(2), Jan. 26, 1996, 110 Stat. 45. - (7) The [Secretary](/usc/12/1715z–22a.md?p=4) shall determine whether and under what conditions the provisions of this subsection shall apply to [mortgages](/usc/12/1707.md?p=a) sold by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/4146.md?p=2) shall, as required by the [Secretary](/usc/12/1715z–22a.md?p=4), accumulate, safeguard, and periodically pay the [Secretary](/usc/12/1715z–22a.md?p=4) or such other entity as determined by the [Secretary](/usc/12/1715z–22a.md?p=4) and upon such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) deems appropriate, all [rental charges](#k) collected on a unit-by-unit basis in excess of the basic [rental charges](#k). Unless otherwise directed by the [Secretary](/usc/12/1715z–22a.md?p=4), such excess charges shall be credited to a reserve used by the [Secretary](/usc/12/1715z–22a.md?p=4) to make additional assistance payments as provided in [paragraph (3)](#f-3) of subsection (f). - (2) Notwithstanding any other requirements of this subsection, a project [owner](/usc/12/4146.md?p=2) may retain some or all of such excess charges for project use if authorized by the [Secretary](/usc/12/1715z–22a.md?p=4). Such excess charges shall be used for the project and upon terms and conditions established by the [Secretary](/usc/12/1715z–22a.md?p=4), unless the [Secretary](/usc/12/1715z–22a.md?p=4) permits the [owner](/usc/12/4146.md?p=2) to retain [funds](/usc/12/4702.md?p=10) for non-project use after a determination that the project is well-maintained housing in good condition and that the [owner](/usc/12/4146.md?p=2) 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](/usc/12/4702.md?p=10) for non-project use, the [Secretary](/usc/12/1715z–22a.md?p=4) may require the project [owner](/usc/12/4146.md?p=2) to enter into a binding commitment (which shall be applicable to any subsequent [owner](/usc/12/4146.md?p=2)) to ensure that the [owner](/usc/12/4146.md?p=2) 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 of not less than the term of the existing affordability restrictions plus an additional 5 years. - (3) The [Secretary](/usc/12/1715z–22a.md?p=4) shall not withhold approval of the retention by the [owner](/usc/12/4146.md?p=2) of such excess charges because of the existence of unpaid excess charges if such unpaid amount is being remitted to the [Secretary](/usc/12/1715z–22a.md?p=4) over a period of time in accordance with a workout agreement with the [Secretary](/usc/12/1715z–22a.md?p=4), unless the [Secretary](/usc/12/1715z–22a.md?p=4) determines that the [owner](/usc/12/4146.md?p=2) is in violation of the workout agreement. - (h) **Rules and regulations—** In addition to establishing the requirements specified in [subsection (e)](#e), the [Secretary](/usc/12/1715z–22a.md?p=4) 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 provisions of this section, [including](/usc/12/25b.md?p=a-3) such sums as may be necessary to make interest reduction payments under contracts entered into by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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)](#f-2) to contracts for assistance under [section 1437f of title 42](/usc/42/1437f.md) or otherwise for the purpose of making assistance payments, [including](/usc/12/25b.md?p=a-3) amendments as provided in [subsection (f)(4)](#f-4), with respect to housing projects assisted, but not subject to [mortgages](/usc/12/1707.md?p=a) insured, under this section that remain covered by assistance under [subsection (f)(2)](#f-2). - (2) Contracts for assistance payments under this section may be entered into only with respect to [tenants](#k) whose incomes do not exceed 80 per centum of the median [family](#j-2-A) income for the area, as determined by the [Secretary](/usc/12/1715z–22a.md?p=4) with adjustments for smaller and larger [families](#j-2-A), except that the [Secretary](/usc/12/1715z–22a.md?p=4) 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](#j-2-A) 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](/usc/12/1715z–22a.md?p=4) 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](#j-2-B). As used in this paragraph, the term “elderly families” means [families](#j-2-A) which consist of two or more [persons](/usc/12/5481.md?p=19) 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](/usc/12/5481.md?p=19) who is sixty-two years of age or over or is handicapped. A [person](/usc/12/5481.md?p=19) shall be considered handicapped if such [person](/usc/12/5481.md?p=19) is determined, pursuant to regulations issued by the [Secretary](/usc/12/1715z–22a.md?p=4), to have an impairment which (A) is expected to be of long-continued 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. - (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](/usc/12/1715z–22a.md?p=4) is authorized, upon application by the [mortgagee](/usc/12/1707.md?p=b), to insure a [mortgage](/usc/12/1707.md?p=a) ([including](/usc/12/25b.md?p=a-3) advances on such [mortgage](/usc/12/1707.md?p=a) during construction) which meets the requirements of this subsection. Commitments for the insurance of such [mortgages](/usc/12/1707.md?p=a) may be issued by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715l.md) of this title; - (B) the term “elderly or handicapped families” shall have the same meaning as in [section 1701q](/usc/12/1701q.md)[^3] of this title; and - (C) the terms “[mortgage](/usc/12/1707.md?p=a)”, “[mortgagee](/usc/12/1707.md?p=b)”, and “[mortgagor](/usc/12/1707.md?p=b)” shall have the same meaning as in [section 1707 of this title](/usc/12/1707.md). - (3) To be eligible for insurance under this subsection, a [mortgage](/usc/12/1707.md?p=a) shall meet the requirements specified in subsections [(d)(1)](/usc/12/1715l.md) and [(d)(3)](/usc/12/1715l.md) 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](/usc/12/1707.md?p=a) insured under this subsection which involves a [mortgagor](/usc/12/1707.md?p=b) other than a cooperative or a private nonprofit [corporation](/usc/12/2277a.md?p=2) or [association](/usc/12/1828.md?p=s-4-E-i) and which is sold to a cooperative or a nonprofit [corporation](/usc/12/2277a.md?p=2) or [association](/usc/12/1828.md?p=s-4-E-i), the [Secretary](/usc/12/1715z–22a.md?p=4) is further authorized to insure under this subsection a [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) to be insured under this subsection shall— - (A) be executed by a [mortgagor](/usc/12/1707.md?p=b) eligible under subsection [(d)(3)](/usc/12/1715l.md) or [(e)](/usc/12/1715l.md) 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](/usc/12/1715z–22a.md?p=4) determines is necessary to meet the [mortgage](/usc/12/1707.md?p=a) market, taking into consideration the yields on [mortgages](/usc/12/1707.md?p=a) in the primary and secondary markets; and - (C) provide for complete amortization by periodic payments within such term as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe. - (5) The property or project shall— - (A) comply with such standards and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe to establish the acceptability of the property for [mortgage](/usc/12/1707.md?p=a) insurance and may include such nondwelling facilities as the [Secretary](/usc/12/1715z–22a.md?p=4) deems adequate and appropriate to serve the occupants and the surrounding neighborhood: Provided, That the project shall be predominantly residential and any nondwelling facility included in the [mortgage](/usc/12/1707.md?p=a) shall be found by the [Secretary](/usc/12/1715z–22a.md?p=4) to contribute to the economic feasibility of the project, and the [Secretary](/usc/12/1715z–22a.md?p=4) 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](#j-2-B), the project may include related facilities for use by [elderly or handicapped families](#j-2-B), [including](/usc/12/25b.md?p=a-3) 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](#j-2-A), need not, with the approval of the [Secretary](/usc/12/1715z–22a.md?p=4), contain kitchen facilities; and - (C) be designed primarily for use as a [rental](#k) project to be occupied by lower income [families](#j-2-A) or by [elderly or handicapped families](#j-2-B): Provided, That lower income [persons](/usc/12/5481.md?p=19) 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](/usc/12/1715z–22a.md?p=4) 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)](#j-5-A) except the requirement that the project be predominantly residential). - (6) With the approval of the [Secretary](/usc/12/1715z–22a.md?p=4), the [mortgagor](/usc/12/1707.md?p=b) may sell the individual dwelling units to lower income or elderly or handicapped purchasers. The [Secretary](/usc/12/1715z–22a.md?p=4) may consent to the release of the [mortgagor](/usc/12/1707.md?p=b) from his liability under the [mortgage](/usc/12/1707.md?p=a) and the [credit](/usc/12/5481.md?p=7) instrument secured thereby, or consent to the release of parts of the mortgaged property from the lien of the [mortgage](/usc/12/1707.md?p=a), upon such terms and conditions as he may prescribe, and the [mortgage](/usc/12/1707.md?p=a) may provide for such release. - (k) **Definitions—** As used in this section the term “tenant” [includes](/usc/12/25b.md?p=a-3) a [member](/usc/12/1426a.md?p=g-1) of a cooperative; the term “rental housing project” [includes](/usc/12/25b.md?p=a-3) a cooperative housing project; and the terms “rental” and “rental charge” mean, with respect to [members](/usc/12/1426a.md?p=g-1) of a cooperative, the charges under the occupancy agreements between such [members](/usc/12/1426a.md?p=g-1) 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](/usc/12/1715z–22a.md?p=4) shall from time to time allocate and transfer to the [Secretary](/usc/12/1715z–22a.md?p=4) of Agriculture, 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 periodic interest reduction payments as approved in appropriation Acts under [subsection (i)](#i). - (m) **“Income” defined—** For the purpose of this section the term “income” means income from all sources of each [member](/usc/12/1426a.md?p=g-1) of the household, as determined in accordance with criteria prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4), except that any amounts not actually received by the [family](#j-2-A) may not be considered as income under this subsection. In determining amounts to be excluded from income, the [Secretary](/usc/12/1715z–22a.md?p=4) may, in the [Secretary](/usc/12/1715z–22a.md?p=4)’s discretion, take into account the number of minor children in the household and such other factors as the [Secretary](/usc/12/1715z–22a.md?p=4) may determine are appropriate. - (n) **Termination date for insurance of mortgages; exception—** No [mortgage](/usc/12/1707.md?p=a) shall be insured under this section after November 30, 1983, except pursuant to a commitment to insure before that date. A [mortgage](/usc/12/1707.md?p=a) may be insured under this section after the date in the preceding sentence in order to refinance a [mortgage](/usc/12/1707.md?p=a) insured under this section or to finance pursuant to [subsection (j)(3)](#j-3) the purchase, by a cooperative or nonprofit [corporation](/usc/12/2277a.md?p=2) or [association](/usc/12/1828.md?p=s-4-E-i), of a project assisted under this section. - (o) **State funding of interest reduction payments—** The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to enter into agreements with any [State](/usc/12/1707.md?p=d) or [agency](/usc/12/1422.md?p=12) thereof under which such [State](/usc/12/1707.md?p=d) or [agency](/usc/12/1422.md?p=12) 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](/usc/12/1715z–22a.md?p=4) under this section, with respect to all or a part of a project covered by a [mortgage](/usc/12/1707.md?p=a) insured under this section. Any [funds](/usc/12/4702.md?p=10) provided by a [State](/usc/12/1707.md?p=d) or [agency](/usc/12/1422.md?p=12) thereof for the purpose of making interest reduction payments shall be administered, disbursed and accounted for by the [Secretary](/usc/12/1715z–22a.md?p=4) in accordance with the agreements entered into by the [Secretary](/usc/12/1715z–22a.md?p=4) with the [State](/usc/12/1707.md?p=d) or [agency](/usc/12/1422.md?p=12) thereof and for such fees as shall be specified therein. Before entering into any agreements pursuant to this subsection the [Secretary](/usc/12/1715z–22a.md?p=4) shall require assurances satisfactory to him that the [State](/usc/12/1707.md?p=d) or [agency](/usc/12/1422.md?p=12) thereof is able to provide sufficient [funds](/usc/12/4702.md?p=10) 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](/usc/12/1715z–22a.md?p=4) is authorized to enter into contracts with [State](/usc/12/1707.md?p=d) or local [agencies](/usc/12/1422.md?p=12) approved by him to provide for the monitoring and supervision by such [agencies](/usc/12/1422.md?p=12) of the management by private sponsors of projects assisted under this section. Such contracts shall require that such [agencies](/usc/12/1422.md?p=12) promptly report to the [Secretary](/usc/12/1715z–22a.md?p=4) any deficiencies in the management of such projects in order to enable the [Secretary](/usc/12/1715z–22a.md?p=4) to take corrective action at the earliest practicable time. - (q) **Assistance to residents of covered projects; contracting authority; applicability—** The [Secretary](/usc/12/1715z–22a.md?p=4) may provide assistance under [section 1437f of title 42](/usc/42/1437f.md) with respect to residents of units in a project assisted under this section. In entering into contracts under [section 1437c(c) of title 42](/usc/42/1437c.md?p=c) with respect to the additional authority provided on October 1, 1980, the [Secretary](/usc/12/1715z–22a.md?p=4) shall not utilize more than $20,000,000 of such additional authority to provide assistance for [elderly or handicapped families](#j-2-B) which, at the time of applying for assistance under such [section 1437f of title 42](/usc/42/1437f.md), are residents of a project assisted under this section and are expending more than 50 percent of their income on [rental](#k) payments. - (r) **Payments for benefit of certain projects having mortgages made by State or local housing finance or government agencies—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall, not later than 45 days after receipt of an application by the [mortgagee](/usc/12/1707.md?p=b), provide interest reduction and [rental](#k) assistance payments for the benefit of projects assisted under this section whose [mortgages](/usc/12/1707.md?p=a) were made by [State](/usc/12/1707.md?p=d) or local housing finance [agencies](/usc/12/1422.md?p=12) or [State](/usc/12/1707.md?p=d) or local government [agencies](/usc/12/1422.md?p=12) for a term equal to the remaining [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=d) or local housing finance [agencies](/usc/12/1422.md?p=12) or [State](/usc/12/1707.md?p=d) or local government [agencies](/usc/12/1422.md?p=12), and - (2) existing allocation under section 236 contracts on projects whose [mortgages](/usc/12/1707.md?p=a) were made by [State](/usc/12/1707.md?p=d) or local housing finance [agencies](/usc/12/1422.md?p=12) or [State](/usc/12/1707.md?p=d) or local government [agencies](/usc/12/1422.md?p=12) which are not being funded, to the extent of such excess allocation, for any purposes permitted under the provisions of this section, [including](/usc/12/25b.md?p=a-3) without limitation rent supplement and [rental](#k) assistance payment unit increases and [mortgage](/usc/12/1707.md?p=a) increases for any eligible purpose under this section, [including](/usc/12/25b.md?p=a-3) without limitation operating deficit loans. An application shall be eligible for assistance under the previous sentence only if the [mortgagee](/usc/12/1707.md?p=b) submits the application within 548 days after February 5, 1988, along with a certification of the [mortgagee](/usc/12/1707.md?p=b) that amounts hereunder are to be utilized only for the purpose of either (A) reducing rents or rent increases to [tenants](#k), 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](/usc/12/1707.md?p=a) term equal to the lesser of a 40-year amortization period or the term of that part of the [mortgage](/usc/12/1707.md?p=a) 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 [rental](#k) 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](/usc/12/1715z–22a.md?p=4) may make grants and loans for the [capital](/usc/12/51c.md) costs of rehabilitation to [owners](/usc/12/4146.md?p=2) 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](/usc/12/51c.md) 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](/usc/42/1437f.md) on October 27, 1997; and - (iii) the project [mortgage](/usc/12/1707.md?p=a) was not held by a [State](/usc/12/1707.md?p=d) [agency](/usc/12/1422.md?p=12) as of October 27, 1997; - (B) if the project [owner](/usc/12/4146.md?p=2) agrees to maintain the housing quality standards as required by the [Secretary](/usc/12/1715z–22a.md?p=4); - (C) the project [owner](/usc/12/4146.md?p=2) enters into such binding commitments as the [Secretary](/usc/12/1715z–22a.md?p=4) may require (which shall be applicable to any subsequent [owner](/usc/12/4146.md?p=2)) to ensure that the [owner](/usc/12/4146.md?p=2) 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)](#s-5-C); - (D) - (i) if the [Secretary](/usc/12/1715z–22a.md?p=4) determines that the [owner](#s-2-D-iv) or [purchaser](#s-2-D-iv) 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](/usc/12/1715z–22a.md?p=4) elects to make such determination, that the [owner](#s-2-D-iv) or [purchaser](#s-2-D-iv) of the project has not engaged in material adverse financial or managerial actions or omissions with regard to other projects of such [owner](#s-2-D-iv) or [purchaser](#s-2-D-iv) that are federally assisted or financed with a loan from, or [mortgage](/usc/12/1707.md?p=a) insured or guaranteed by, an [agency](/usc/12/1422.md?p=12) 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](/usc/12/1707.md?p=d), 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](/usc/42/1437f.md), after receipt of notice and an opportunity to cure; - (III) materially violating any applicable regulatory or other agreement with the [Secretary](/usc/12/1715z–22a.md?p=4) or a participating administrative entity, after receipt of notice and an opportunity to cure; - (IV) repeatedly failing to make [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4); 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](/usc/42/1437f.md?p=f), also means an affiliate of the owner; the term “purchaser” as used in this subsection means any private [person](/usc/12/5481.md?p=19) or entity, [including](/usc/12/25b.md?p=a-3) a cooperative, an [agency](/usc/12/1422.md?p=12) of the Federal Government, or a public housing [agency](/usc/12/1422.md?p=12), 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](/usc/12/1715z–4a.md?p=a-2) or entity ([including](/usc/12/25b.md?p=a-3), but not limited to, a general partner or managing [member](/usc/12/1426a.md?p=g-1), 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](/usc/12/4146.md?p=2) demonstrates to the satisfaction of the [Secretary](/usc/12/1715z–22a.md?p=4)— - (i) using information in a comprehensive needs assessment, that [capital](/usc/12/51c.md) 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)](#s-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](/usc/12/51c.md) improvements, under such terms and conditions as are determined by the [Secretary](/usc/12/1715z–22a.md?p=4). - (4) **Grant and loan agreements—** - (A) **In general—** The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4). - (B) **Affordability and use clauses—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall include in a grant or loan agreement under this subsection a requirement for the project [owners](/usc/12/4146.md?p=2) to maintain such affordability and use restrictions as the [Secretary](/usc/12/1715z–22a.md?p=4) determines to be appropriate and consistent with [paragraph (2)(C)](#s-2-C). - (C) **Other terms—** The [Secretary](/usc/12/1715z–22a.md?p=4) may include in a grant or loan agreement under this subsection such other terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) determines to be necessary. - (5) **Loan terms—** A loan under this subsection— - (A) shall provide amounts for the eligible uses under [paragraph (3)](#s-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)](#s-7-A-i) or [(ii)](#s-7-A-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](/usc/12/1707.md?p=a) or [mortgages](/usc/12/1707.md?p=a) that [fund](/usc/12/4702.md?p=10) repayment of the loan would have continued after extinguishment or writedown of the [mortgage](/usc/12/1707.md?p=a) (in accordance with the terms of such [mortgage](/usc/12/1707.md?p=a) in effect immediately before such extinguishment or writedown); - (D) shall bear interest at a rate, as determined by the [Secretary](/usc/12/1715z–22a.md?p=4) 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)](#s-5-B) over the term determined in accordance with [subparagraph (C)](#s-5-C), with interest at the rate determined under [subparagraph (D)](#s-5-D). - (6) **Delegation—** - (A) **In general—** In addition to the authorities set forth in [subsection (p)](#p), the [Secretary](/usc/12/1715z–22a.md?p=4) may delegate to [State](/usc/12/1707.md?p=d) 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)](#s-6-A). - (7) **Funding—** - (A) **In general—** For purposes of carrying out this subsection, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) under this section was extinguished; - (ii) that become available as a result of the outstanding principal balance of a [mortgage](/usc/12/1707.md?p=a) having been written down; - (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](/usc/12/1715z–22a.md?p=4) may liquidate obligations entered into under this subsection under [section 1305(10) of title 31](/usc/31/1305.md?p=10). - (C) **Capital grants—** In making [capital](/usc/12/51c.md) grants under the terms of this subsection, using the amounts that the [Secretary](/usc/12/1715z–22a.md?p=4) has recaptured from contracts for interest reduction payments, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) had not been extinguished or the principal amount had not been written down, and the interest reduction payments that the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) has recaptured from contracts for interest reduction payments pursuant to clause [(i)](#s-7-A-i) or [(ii)](#s-7-A-ii) of paragraph (7)(A)— - (i) the [Secretary](/usc/12/1715z–22a.md?p=4) may use such recaptured amounts for costs (as such term is defined in [section 661a of title 2](/usc/2/661a.md)) of such loans; and - (ii) the [Secretary](/usc/12/1715z–22a.md?p=4) may make loans in any fiscal year only to the extent or in such amounts that amounts are used under [clause (i)](#s-7-D-i) to cover costs of such loans. # §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](/usc/12/51c.md) 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](/usc/12/1701.md) et seq.], the United States Housing Act of 1937 [[42 U.S.C. 1437](/usc/42/1437.md) 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](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development (hereinafter referred to in this section as the “[Secretary](/usc/12/1715z–22a.md?p=4)”) 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](/usc/12/4146.md?p=2) 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](/usc/12/1701.md) 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](/usc/12/1715z–1.md)] or the proviso of section 221(d)(5) of the National Housing Act [[12 U.S.C. 1715l(d)(5)](/usc/12/1715l.md)], or under section 101 of the Housing and Urban Development Act of 1965 [[12 U.S.C. 1701s](/usc/12/1701s.md)], or received a loan under section 202 of the Housing Act of 1959 [[12 U.S.C. 1701q](/usc/12/1701q.md)] 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](https://uscode.house.gov/view.xhtml?req=(/us/usc/t42/s1421b))], as in effect immediately before January 1, 1975, section 8 of the United States Housing Act of 1937 [[42 U.S.C. 1437f](/usc/42/1437f.md)] following conversion to such assistance from assistance under section 236 of the National Housing Act [[12 U.S.C. 1715z–1](/usc/12/1715z–1.md)] or section 101 of the Housing and Urban Development Act of 1965 [[12 U.S.C. 1701s](/usc/12/1701s.md)]; or - (C) met the criteria specified in subparagraph (A) of this paragraph before the acquisition of such project by the [Secretary](/usc/12/1715z–22a.md?p=4) and has been sold by the [Secretary](/usc/12/1715z–22a.md?p=4), subject to a [mortgage](/usc/12/1707.md?p=a) insured or held by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) may prescribe. - (d) **Criteria for granting financial assistance—** No assistance may be made available under this section unless the [Secretary](/usc/12/1715z–22a.md?p=4) has determined that— - (1) such assistance, when considered with other resources available to the project, is necessary and, in the determination of the [Secretary](/usc/12/1715z–22a.md?p=4), 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](/usc/12/4146.md?p=2) 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](/usc/12/1707.md?p=a); - (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](/usc/12/1715z–22a.md?p=4) could maintain the low- and moderate-income character of the project; - (3) the [owner](/usc/12/4146.md?p=2) of the project, together with the [mortgagee](/usc/12/1707.md?p=b) in the case of a project not insured under the National Housing Act [[12 U.S.C. 1701](/usc/12/1701.md) et seq.], has provided or has agreed to provide assistance to the project in such manner as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/5481.md?p=19) who meet minimum levels of competency and experience prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4); - (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 [Secretary](/usc/12/1715z–22a.md?p=4), and which [includes](/usc/12/25b.md?p=a-3) 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](/usc/12/1715z–22a.md?p=4); (D) a plan to improve financial and management [control](/usc/12/24a.md?p=g-1) 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](/usc/12/1715z–22a.md?p=4); and (F) such other requirements as the [Secretary](/usc/12/1715z–22a.md?p=4) may determine; except that the [Secretary](/usc/12/1715z–22a.md?p=4) may excuse an [owner](/usc/12/4146.md?p=2) from compliance with the plan requirement set forth in this paragraph in any case in which such [owner](/usc/12/4146.md?p=2) seeks only assistance for [capital](/usc/12/51c.md) improvements under this section; and except that the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) by the [owner](/usc/12/4146.md?p=2), but if the [Secretary](/usc/12/1715z–22a.md?p=4) fails to inform the [owner](/usc/12/4146.md?p=2) 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](/usc/12/4146.md?p=2) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=g) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/51c.md) improvements) in any amount which the [Secretary](/usc/12/1715z–22a.md?p=4) determines is consistent with the project’s management-improvement-and-operating plan described in [subsection (d)(6)](#d-6) and which does not exceed the sum of— - (A) an amount determined by the [Secretary](/usc/12/1715z–22a.md?p=4) 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 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/4702.md?p=10) established by the project [owner](/usc/12/4146.md?p=2) for the purpose of replacing [capital](/usc/12/51c.md) 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](/usc/12/1715z–22a.md?p=4) to be necessary to carry out a plan to upgrade the project to meet cost-effective energy efficiency standards prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4). - (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](/usc/12/1715z–22a.md?p=4) without regard to section 236(f)(1) of the National Housing Act [[12 U.S.C. 1715z–1(f)(1)](/usc/12/1715z–1.md?p=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](/usc/12/4146.md?p=2) of such project under [section 221(d)(5)](/usc/12/221.md) or section 236 of the National Housing Act [[12 U.S.C. 1715l(d)(5)](/usc/12/1715l.md) or 1715z–1] during such year; and - (D) other income attributable to the project as determined by the [Secretary](/usc/12/1715z–22a.md?p=4); except that— - (E) in computing the estimated amount of rent to be expended by tenants, the [Secretary](/usc/12/1715z–22a.md?p=4) 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)](#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)](/usc/12/1715z–1.md?p=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](/usc/12/1715z–22a.md?p=4) may permit a delinquency-and-vacancy allowance of not more than 6 per centum of 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](/usc/12/1715z–22a.md?p=4) may permit such allowance for such project to exceed such 6 percent by an amount which the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) shall include all estimated operating costs which the [Secretary](/usc/12/1715z–22a.md?p=4) determines to be necessary and consistent with the management-improvement-and-operating plan for the project for such year, [including](/usc/12/25b.md?p=a-3), 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](/usc/12/4146.md?p=2) for the purpose of establishing or maintaining a reserve [fund](/usc/12/4702.md?p=10) for replacement costs. The [Secretary](/usc/12/1715z–22a.md?p=4) may not include in such estimated operating expenses any return on the equity investment of the [owner](/usc/12/4146.md?p=2) in such project. - (3) In order to carry out the purposes of this section, the [Secretary](/usc/12/1715z–22a.md?p=4) may, notwithstanding the provisions of section 236(f)(1) of the National Housing Act [[12 U.S.C. 1715z–1(f)(1)](/usc/12/1715z–1.md?p=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](/usc/12/1715z–22a.md?p=4) may determine, and may be in any amount (which the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/51c.md) improvements) may not exceed the amount computed pursuant to paragraph (1) of this subsection. The [Secretary](/usc/12/1715z–22a.md?p=4) shall review the operations of the project at the time of such payments to determine that such operations are consistent with the management-improvement-and-operating plan. - (g) **Rules and regulations—** The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to issue such rules and regulations as may be necessary to carry out the provisions and purposes of this section, [including](/usc/12/25b.md?p=a-3) regulations requiring the establishment of a project reserve or such other safeguards as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1701s.md)]. - (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](/usc/12/4702.md?p=10), to be known as the Flexible Subsidy [Fund](/usc/12/4702.md?p=10). The [Fund](/usc/12/4702.md?p=10) shall, to the extent approved in appropriation Acts, be available to the [Secretary](/usc/12/1715z–22a.md?p=4) to provide assistance under this section ([including](/usc/12/25b.md?p=a-3) assistance for [capital](/usc/12/51c.md) 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](/usc/12/4702.md?p=10) 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](/usc/12/4702.md?p=10) described in section 236(g) of the National Housing Act [[12 U.S.C. 1715z–1(g)](/usc/12/1715z–1.md?p=g)]; (D) any other amount received by the [Secretary](/usc/12/1715z–22a.md?p=4) under this section ([including](/usc/12/25b.md?p=a-3) any amount realized under [paragraph (3)](#j-3)),[^2] and (E) any amount received by the [Secretary](/usc/12/1715z–22a.md?p=4) pursuant to section 537 of the National Housing Act [[12 U.S.C. 1735f–15](/usc/12/1735f–15.md)] and section 202a of the Housing Act of 1959 [[12 U.S.C. 1701q–1](/usc/12/1701q–1.md)]. - (3) Any amounts in the [Fund](/usc/12/4702.md?p=10) determined by the [Secretary](/usc/12/1715z–22a.md?p=4) to be in excess of the amounts currently required to carry out the provisions of this section shall be invested by the [Secretary](/usc/12/1715z–22a.md?p=4) in obligations of, or obligations guaranteed as to both principal and interest by, the United States or any [agency](/usc/12/1422.md?p=12) of the United States. - (4) The [Secretary](/usc/12/1715z–22a.md?p=4) shall, to the extent of approvable applications and subject to [paragraph (1)](#j-1), use not less than $30,000,000 or 40 percent (whichever is less) of the amounts available from the [Fund](/usc/12/4702.md?p=10) in any fiscal year for purposes of providing assistance for [capital](/usc/12/51c.md) improvements in accordance with this section. Any amount reserved under this paragraph for assistance for [capital](/usc/12/51c.md) 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](/usc/12/4702.md?p=10) 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](/usc/12/51c.md) improvements under this section shall include assistance for any major repair or replacement of a [capital](/usc/12/51c.md) item in a [multifamily housing project](/usc/12/1701z–11.md?p=b-1), [including](/usc/12/25b.md?p=a-3) any such repair or replacement required as a result of deferred or inadequate maintenance. [Capital](/usc/12/51c.md) improvements do not include maintenance of any such item. Assistance for [capital](/usc/12/51c.md) improvements under this section shall be in the form of a loan. - (2) The [owner](/usc/12/4146.md?p=2) of a project receiving assistance for [capital](/usc/12/51c.md) improvements shall agree to contribute assistance to such project in such amounts, from such sources, and in such manner as the [Secretary](/usc/12/1715z–22a.md?p=4) determines to be appropriate. - (3) The [Secretary](/usc/12/1715z–22a.md?p=4) may provide assistance for [capital](/usc/12/51c.md) improvements under this section if the [Secretary](/usc/12/1715z–22a.md?p=4) finds that the reserve [funds](/usc/12/4702.md?p=10) established by the [owner](/usc/12/4146.md?p=2) of a project for the purpose of making [capital](/usc/12/51c.md) improvements are insufficient to finance both the [capital](/usc/12/51c.md) improvements for which such assistance is to be used and other [capital](/usc/12/51c.md) 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](/usc/12/4146.md?p=2) to comply with any standard established by the [Secretary](/usc/12/1715z–22a.md?p=4) for management of such reserve [funds](/usc/12/4702.md?p=10). - (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](/usc/12/51c.md) improvements under this section that is provided to the [owner](/usc/12/4146.md?p=2) of a project shall not exceed the difference between the contribution made by the [owner](/usc/12/4146.md?p=2) in accordance with [subsection (k)(2)](#k-2) and the sum of— - (A) the amount determined by the [Secretary](/usc/12/1715z–22a.md?p=4) to be necessary for such [owner](/usc/12/4146.md?p=2) to make [capital](/usc/12/51c.md) improvements with respect to [capital](/usc/12/51c.md) 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](/usc/12/1715z–22a.md?p=4) to be necessary to carry out a plan to upgrade the [capital](/usc/12/51c.md) items being improved, and any other [capital](/usc/12/51c.md) items determined by the [Secretary](/usc/12/1715z–22a.md?p=4) to be associated with such [capital](/usc/12/51c.md) items being improved and to require upgrading, to meet cost-effective energy efficiency standards prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4); and - (C) the amount determined by the [Secretary](/usc/12/1715z–22a.md?p=4) to be necessary to comply with the requirements of [section 794 of title 29](/usc/29/794.md). - (2) - (A) The term of any assistance for [capital](/usc/12/51c.md) improvements in the form of a loan under this section shall not exceed the remaining term of the [mortgage](/usc/12/1707.md?p=a) of the project with respect to which such loan is provided. - (B) Each loan for [capital](/usc/12/51c.md) improvements provided under this section shall bear interest at a rate determined by the [Secretary](/usc/12/1715z–22a.md?p=4) to be appropriate, except that— - (i) such rate shall not be more than 3 percentage points below a rate determined by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/51c.md) improvements provided under this section shall be considered to be a liability of the project involved, and shall not be dischargeable in any bankruptcy proceeding under section [727](/usc/11/727.md), [1141](/usc/11/1141.md), or [1328(b)](/usc/11/1328.md?p=b) of title 11. - (D) The [Secretary](/usc/12/1715z–22a.md?p=4) may establish such additional conditions on loans provided under this section as the [Secretary](/usc/12/1715z–22a.md?p=4) determines to be appropriate. The [Secretary](/usc/12/1715z–22a.md?p=4) may require [owners](/usc/12/4146.md?p=2) receiving assistance for [capital](/usc/12/51c.md) improvements under this section to retain the housing as housing affordable for [very low-income families](/usc/12/4568.md?p=f-5) or [persons](/usc/12/5481.md?p=19), low-income [families](/usc/12/1715z–1.md?p=j-2-A) or [persons](/usc/12/5481.md?p=19) and moderate-income [families](/usc/12/1715z–1.md?p=j-2-A) or [persons](/usc/12/5481.md?p=19) 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](/usc/12/51c.md) components are replaced as becomes necessary. - (E) The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/51c.md) 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](/usc/12/51c.md) 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)](/usc/42/1437a.md?p=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](/usc/12/1715z–22a.md?p=4) 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](/usc/42/1437f.md)], to the extent amounts are available for such assistance and without regard to [section 16](/usc/12/16.md) of such Act [[42 U.S.C. 1437n](/usc/42/1437n.md)]. - (B) Notwithstanding [subsection (l)(2)(B)](#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](/usc/12/1707.md?p=a) on such project. - (D) Increase the amount of assistance to be provided by the [owner](/usc/12/4146.md?p=2) of such project under [subsection (k)(2)](#k-2), if applicable, to an amount not to exceed 30 percent of the total estimated cost of the [capital](/usc/12/51c.md) 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)](#d). - (n) **Allocation of assistance—** - (1) **Set-aside—** In providing, and contracting to provide, assistance for [capital](/usc/12/51c.md) improvements under this section, in each fiscal year the [Secretary](/usc/12/1715z–22a.md?p=4) shall set aside an amount, as determined by the [Secretary](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1715z–22a.md?p=4) may make such assistance available on a noncompetitive basis. - (2) **General rules for allocation—** Except as provided in [paragraph (3)](#n-3), with respect to assistance under this section not set aside for projects under [paragraph (1)](#n-1), the [Secretary](/usc/12/1715z–22a.md?p=4)— - (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](/usc/12/1467a.md?p=e-7-A) of federally insured [mortgages](/usc/12/1707.md?p=a). - (3) **Exceptions—** The [Secretary](/usc/12/1715z–22a.md?p=4) may make exceptions to selection criteria set forth in [paragraph (2)(B)](#n-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](/usc/12/1467a.md?p=e-7-A) of a project whose [owner](/usc/12/4146.md?p=2) 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](/usc/12/1715z–22a.md?p=4) may specify by regulation or by notice printed in the Federal Register. - (4) **Considerations—** In providing assistance under this section, the [Secretary](/usc/12/1715z–22a.md?p=4) shall take into consideration— - (A) the extent to which there is evidence that there will be significant opportunities for residents ([including](/usc/12/25b.md?p=a-3) a [resident council](/usc/12/4146.md?p=2) or resident management [corporation](/usc/12/2277a.md?p=2), 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](/usc/12/4146.md?p=2) has provided competent management and complied with all regulatory and administrative requirements. - (o) **Coordination of assistance—** The [Secretary](/usc/12/1715z–22a.md?p=4) 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)](/usc/42/1437f.md?p=v)] and [section 1701z–11 of this title](/usc/12/1701z–11.md) to enhance the cost effectiveness of the Federal response to troubled [multifamily housing](/usc/12/1715z–22a.md?p=1). - (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](/usc/12/1715z–22a.md?p=4), shall be considered [eligible low-income housing](/usc/12/4146.md?p=2) under section 229 of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 ([12 U.S.C. 4119](/usc/12/4119.md)) 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)](/usc/42/1437f.md?p=t)) (pursuant to [section 223(f)](/usc/12/223.md) of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 ([12 U.S.C. 4113(f)](/usc/12/4113.md?p=f))). # §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](/usc/12/2206a.md?p=a-1) of tenants in creating a suitable living environment in [multifamily housing](/usc/12/1715z–22a.md?p=1) proj­ects and in contributing to the successful operation of such projects, [including](/usc/12/25b.md?p=a-3) their good physical condition, proper maintenance, security, energy efficiency, and [control](/usc/12/24a.md?p=g-1) 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](/usc/12/1715z–1a.md?p=c) or [section 1701q of this title](/usc/12/1701q.md), or a project which receives project-based assistance under [section 1437f of title 42](/usc/42/1437f.md) or enhanced vouchers under the Low-Income Housing Preservation and Resident Homeownership Act of 1990 [[12 U.S.C. 4101](/usc/12/4101.md) 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](/usc/12/1715z–22a.md?p=4) shall assure that— - (1) where the [Secretary](/usc/12/1715z–22a.md?p=4)’s written approval is required with respect to an [owner](/usc/12/4146.md?p=2)’s request for rent increase, conversion of residential rental units to any other use ([including](/usc/12/25b.md?p=a-3) 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](/usc/12/1715z–22a.md?p=4) proposes to sell a [mortgage](/usc/12/1707.md?p=a) secured by a [multifamily housing project](#a), 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](/usc/12/1715z–22a.md?p=4), any proposed disposition of the project) and that such comments are taken into consideration by the [Secretary](/usc/12/1715z–22a.md?p=4); - (2) project [owners](/usc/12/4146.md?p=2) not interfere with the efforts of tenants to obtain rent subsidies or other public assistance; - (3) leases approved by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/4146.md?p=2) do not impede the reasonable efforts of resident tenant organizations to represent their [members](/usc/12/1426a.md?p=g-1) or the reasonable efforts of tenants to organize. - (c) **Regulations—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall promulgate regulations to carry out the provisions of this section not later than 90 days after October 31, 1978. # §1715z–1c. Regulation of rents in insured projects After December 1, 1987, the [Secretary](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development shall [control](/usc/12/24a.md?p=g-1) rents and charges as they were controlled prior to April 19, 1983, for any [multifamily housing project](/usc/12/1701z–11.md?p=b-1) insured under the National Housing Act [[12 U.S.C. 1701](/usc/12/1701.md) et seq.] if— - (1) during the period of April 19, 1983, through December 1, 1987, the project [owner](/usc/12/4146.md?p=2) and the [Secretary](/usc/12/1715z–22a.md?p=4) have not executed, and the project [owner](/usc/12/4146.md?p=2) has not filed a written request with the [Secretary](/usc/12/1715z–22a.md?p=4) to enter into, an amendment to the regulatory agreement pursuant to regulations published by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/42/1437f.md) (other than under the existing housing certificate program of [section 1437f(b)(1) of title 42](/usc/42/1437f.md?p=b-1)); or - (B) not less than 50 percent of the units in the project are occupied by lower income [families](/usc/12/1715z–1.md?p=j-2-A) (as defined in section 1437a(a)(2)[^1] of [title 42](/usc/42.md)). # [§1715z–2. Repealed. Pub. L. 110–289, div. B, title I, § 2120(a)(6), July 30, 2008, 122 Stat. 2835 — repealed] # §1715z–3. Special Risk Insurance Fund - (a) **Entitlement to benefits; computation and payment of benefits to mortgagee—** - (1) Any [mortgagee](/usc/12/1707.md?p=b) under a [mortgage](/usc/12/1707.md?p=a) insured under section [1715z(i)](/usc/12/1715z.md?p=i), [(j)(4)](/usc/12/1715z.md?p=j-4), [1715z–2](/usc/12/1715z–2.md), or [1715z–8](/usc/12/1715z–8.md) of this title shall be entitled to receive the benefits of the insurance as provided in [section 1710(a) of this title](/usc/12/1710.md?p=a) with respect to [mortgages](/usc/12/1707.md?p=a) insured under [section 1709 of this title](/usc/12/1709.md). The provisions of subsections [(b)](#b), [(c)](#c), (d), (g), (j), and (k)[^1] of [section 1710 of this title](/usc/12/1710.md) shall be applicable to [mortgages](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10)” shall be construed to refer to the “Special Risk Insurance [Fund](/usc/12/4702.md?p=10)”, and all references therein to [section 1709 of this title](/usc/12/1709.md) shall be construed to refer to section [1715z(i)](/usc/12/1715z.md?p=i), [(j)(4)](/usc/12/1715z.md?p=j-4), [1715z–2](/usc/12/1715z–2.md), or [1715z–8](/usc/12/1715z–8.md) of this title, as may be appropriate. - (2) Any [mortgagee](/usc/12/1707.md?p=b) under a [mortgage](/usc/12/1707.md?p=a) insured under section [1715z(j)(1)](/usc/12/1715z.md?p=j-1) or [1715z–1](/usc/12/1715z–1.md) of this title shall be entitled to receive the benefits of insurance as provided in [section 1713(g) of this title](/usc/12/1713.md?p=g) with respect to [mortgages](/usc/12/1707.md?p=a) insured under [section 1713 of this title](/usc/12/1713.md). The provisions of subsections (d), (e), (h), (i), (j), (k), (l), and (n) of [section 1713 of this title](/usc/12/1713.md) shall be applicable to [mortgages](/usc/12/1707.md?p=a) insured under section [1715z(j)(1)](/usc/12/1715z.md?p=j-1) or [1715z–1](/usc/12/1715z–1.md) of this title, except that all references therein to the “General Insurance [Fund](/usc/12/4702.md?p=10)” shall be construed to refer to the “Special Risk Insurance [Fund](/usc/12/4702.md?p=10)” and the premium charge provided in [section 1713(d) of this title](/usc/12/1713.md?p=d) shall be payable only in cash or debentures of the Special Risk Insurance [Fund](/usc/12/4702.md?p=10). - (3) In lieu of the amount of insurance benefits computed pursuant to paragraph (1) or (2) of this subsection the [Secretary](/usc/12/1715z–22a.md?p=4), in his discretion and in accordance with such regulations as he may prescribe, may (with respect to any [mortgage](/usc/12/1707.md?p=a) loan acquired by him) compute and pay insurance benefits to the [mortgagee](/usc/12/1707.md?p=b) in a total amount equal to the unpaid principal balance of the loan plus any accrued interest and any advances approved by the [Secretary](/usc/12/1715z–22a.md?p=4) and made previously by the [mortgagee](/usc/12/1707.md?p=b) under the provisions of the [mortgage](/usc/12/1707.md?p=a). - (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](/usc/12/4702.md?p=10) (hereinafter referred to as the “[fund](/usc/12/4702.md?p=10)”) which shall be used by the [Secretary](/usc/12/1715z–22a.md?p=4) as a revolving [fund](/usc/12/4702.md?p=10) for carrying out the [mortgage](/usc/12/1707.md?p=a) insurance obligations of sections 1715n(e), 1715x(a)(2), 1715z, 1715z–1, 1715z–2,[^1] and 1715z–8 of this title, and the [Secretary](/usc/12/1715z–22a.md?p=4) is hereby authorized to advance to the [fund](/usc/12/4702.md?p=10), 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](/usc/12/4702.md?p=10) established pursuant to the provisions of [section 1735c of this title](/usc/12/1735c.md). Such advance shall be repayable at such times and at such rates of interest as the [Secretary](/usc/12/1715z–22a.md?p=4) deems appropriate. Premium charges, adjusted premium charges, inspection and other fees, service charges, and any other income received by the [Secretary](/usc/12/1715z–22a.md?p=4) under sections [1715n(e)](/usc/12/1715n.md?p=e), [1715x(a)(2)](/usc/12/1715x.md?p=a-2), [1715z](/usc/12/1715z.md), [1715z–1](/usc/12/1715z–1.md), [1715z–2](/usc/12/1715z–2.md), and [1715z–8](/usc/12/1715z–8.md) of this title, together with all earnings on the assets of the [fund](/usc/12/4702.md?p=10), shall be credited to the [fund](/usc/12/4702.md?p=10). All payments made pursuant to claims of [mortgagees](/usc/12/1707.md?p=b) with respect to [mortgages](/usc/12/1707.md?p=a) insured under sections [1715x(a)(2)](/usc/12/1715x.md?p=a-2), [1715z](/usc/12/1715z.md), [1715z–1](/usc/12/1715z–1.md), [1715z–2](/usc/12/1715z–2.md), and [1715z–8](/usc/12/1715z–8.md) of this title or pursuant to [section 1715n(e) of this title](/usc/12/1715n.md?p=e), cash adjustments, the principal of and interest paid on debentures which are the obligation of the [fund](/usc/12/4702.md?p=10), 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](/usc/12/1707.md?p=a) insurance operations under such sections shall be paid out of the [fund](/usc/12/4702.md?p=10). Moneys in the [fund](/usc/12/4702.md?p=10) not needed for current operations of the [fund](/usc/12/4702.md?p=10) shall be deposited with the Treasurer of the United States to the [credit](/usc/12/5481.md?p=7) of the [fund](/usc/12/4702.md?p=10) or invested in bonds or other obligations of, or in bonds or other obligations guaranteed by, the United States or any [agency](/usc/12/1422.md?p=12) 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](/usc/12/1717.md?p=b-7-A-ii) market. The [Secretary](/usc/12/1715z–22a.md?p=4), with the approval of the [Secretary](/usc/12/1715z–22a.md?p=4) of the Treasury, may purchase in the open market debentures which are the obligation of the [fund](/usc/12/4702.md?p=10). 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](/usc/12/1715z–22a.md?p=4) is authorized, upon application by the [mortgagee](/usc/12/1707.md?p=b), to insure under any section of this subchapter a [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) finds that the benefits to be derived from such use outweigh the risk of probable cost to the Government, and (B) the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) pursuant to this subsection shall be the obligation of the Special Risk Insurance [Fund](/usc/12/4702.md?p=10). - (2) The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized (A) to establish such premiums and other charges as may be necessary to assure that the [mortgage](/usc/12/1707.md?p=a) insurance program pursuant to this subsection is made available on a basis which, in the [Secretary](/usc/12/1715z–22a.md?p=4)’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](/usc/12/1715z–22a.md?p=4) to be necessary and appropriate, and which are to the maximum extent possible, consistent with provisions otherwise applicable to [mortgage](/usc/12/1707.md?p=a) insurance and payment of insurance benefits. - (3) The [Secretary](/usc/12/1715z–22a.md?p=4) shall undertake an annual assessment of the risks associated with each of the insurance programs comprising the Special Risk Insurance [Fund](/usc/12/4702.md?p=10), and shall present findings from such review to the Congress in the FHA Annual Management Report. # §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](/usc/12/1715z–22a.md?p=4) shall not consent to any request for an extension of the time for curing a [default](/usc/12/1467a.md?p=e-7-A) under any [mortgage](/usc/12/1707.md?p=a) covering [multifamily housing](/usc/12/1715z–22a.md?p=1), as defined in the regulations of the [Secretary](/usc/12/1715z–22a.md?p=4), or for a modification of the terms of such [mortgage](/usc/12/1707.md?p=a), except in conformity with regulations prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/4702.md?p=10) derived by the [mortgagor](/usc/12/1707.md?p=b) from the property covered by the [mortgage](/usc/12/1707.md?p=a) which is not required to meet actual and necessary expenses arising in connection with the operation of such property, [including](/usc/12/25b.md?p=a-3) amortization charges under the [mortgage](/usc/12/1707.md?p=a), be held in trust by the [mortgagor](/usc/12/1707.md?p=b) and distributed only with the consent of the [Secretary](/usc/12/1715z–22a.md?p=4); except that the [Secretary](/usc/12/1715z–22a.md?p=4) may provide for the granting of consent to any request for an extension of the time for curing a [default](/usc/12/1467a.md?p=e-7-A) under any [mortgage](/usc/12/1707.md?p=a) covering [multifamily housing](/usc/12/1715z–22a.md?p=1), or for a modification of the term of such [mortgage](/usc/12/1707.md?p=a), 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](/usc/12/1715z–22a.md?p=4)) jeopardize the interests of the United States. # §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](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development (referred to in this section as the “[Secretary](/usc/12/1715z–22a.md?p=4)”) may request the Attorney General to bring an action in a United States [district](/usc/12/221a.md?p=a) court to recover any assets or income used by [any person](#a-2) in violation of (A) a regulatory agreement that applies to a multifamily project, nursing home, intermediate care facility, [board](/usc/12/221a.md?p=a) and care home, [assisted living facility](/usc/12/1701q–2.md?p=g-1), or hospital whose [mortgage](/usc/12/1707.md?p=a) is or, at the time of the violations, was insured or held by the [Secretary](/usc/12/1715z–22a.md?p=4) under title II of the National Housing Act [[12 U.S.C. 1707](/usc/12/1707.md) et seq.]; (B) a regulatory agreement that applies to a multifamily project whose [mortgage](/usc/12/1707.md?p=a) is or, at the time of the violations, was insured or held by the [Secretary](/usc/12/1715z–22a.md?p=4) under [section 1701q of this title](/usc/12/1701q.md) ([including](/usc/12/25b.md?p=a-3) property subject to [section 1701q of this title](/usc/12/1701q.md) as it existed before November 28, 1990); (C) a regulatory agreement or such other form of regulatory [control](/usc/12/24a.md?p=g-1) as may be imposed by the [Secretary](/usc/12/1715z–22a.md?p=4) that applies to [mortgages](/usc/12/1707.md?p=a) insured or held or, at the time of the violations, was[^1] insured or held by the [Secretary](/usc/12/1715z–22a.md?p=4) under [section 1715z–22 of this title](/usc/12/1715z–22.md), but not reinsured under [section 1715z–22 of this title](/usc/12/1715z–22.md); 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](/usc/12/24a.md?p=g-1) as may be imposed by the [Secretary](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1715z–22a.md?p=4) and in reasonable condition for proper audit. - (2) For purposes of a [mortgage](/usc/12/1707.md?p=a) insured or held by the [Secretary](/usc/12/1715z–22a.md?p=4) under title II of the National Housing Act [[12 U.S.C. 1707](/usc/12/1707.md) et seq.], under [section 1701q of this title](/usc/12/1701q.md) ([including](/usc/12/25b.md?p=a-3) [section 1701q of this title](/usc/12/1701q.md) as it existed before November 28, 1990) and under [section 1715z–22 of this title](/usc/12/1715z–22.md), the term “any person” shall mean any person or entity that owns or operates a property, as identified in the regulatory agreement, [including](/usc/12/25b.md?p=a-3) but not limited to— - (A) any stockholder holding 25 percent or more interest of a [corporation](/usc/12/2277a.md?p=2) that owns that property; - (B) any beneficial [owner](/usc/12/4146.md?p=2) of the property under any business or trust; - (C) any officer, [director](/usc/12/2279bb.md?p=3), 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](/usc/12/5481.md?p=19) or entity that [controls](/usc/12/24a.md?p=g-1) the property regardless of that [person](/usc/12/5481.md?p=19) or entity’s official relationship to the property; and - (G) any heir, assignee, successor in interest, or agent of [any person](#a-2) or entity described in the preceding subparagraphs. - (b) **Initiation of proceedings and temporary relief—** The Attorney General, upon request of the [Secretary](/usc/12/1715z–22a.md?p=4), 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](/usc/12/25b.md?p=a-3) restraining orders, injunctions, and acceptance of satisfactory performance bonds, to protect the interests of the [Secretary](/usc/12/1715z–22a.md?p=4) and to prevent use of assets or income in violation of the regulatory agreement, or such other form of regulatory [control](/usc/12/24a.md?p=g-1) as may be imposed by the [Secretary](/usc/12/1715z–22a.md?p=4), 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](/usc/12/24a.md?p=g-1) as may be imposed by the [Secretary](/usc/12/1715z–22a.md?p=4), or any applicable regulation, plus all costs relating to the action, [including](/usc/12/25b.md?p=a-3) but not limited to reasonable attorney and auditing fees. Notwithstanding any other provision of law, the [Secretary](/usc/12/1715z–22a.md?p=4) may apply the recovery, or any portion of the recovery, to the property or to the applicable insurance [fund](/usc/12/4702.md?p=10) under the National Housing Act [[12 U.S.C. 1701](/usc/12/1701.md) et seq.] or, in the case of any project for which the [mortgage](/usc/12/1707.md?p=a) is held by the [Secretary](/usc/12/1715z–22a.md?p=4) under [section 1701q of this title](/usc/12/1701q.md) ([including](/usc/12/25b.md?p=a-3) property subject to [section 1701q of this title](/usc/12/1701q.md) as it existed before November 28, 1990), to the project or to the Department for use by the appropriate [office](/usc/12/2279bb.md?p=4) within the Department for administrative costs related to enforcement of the requirements of the various programs administered by the [Secretary](/usc/12/1715z–22a.md?p=4), as appropriate. - (d) **Time limitation—** Notwithstanding any other statute of limitations, the [Secretary](/usc/12/1715z–22a.md?p=4) may request the Attorney General to bring an action under this section at any time up to and [including](/usc/12/25b.md?p=a-3) 6 years after the latest date that the [Secretary](/usc/12/1715z–22a.md?p=4) discovers any use of a property’s assets and income in violation of the regulatory agreement, or such other form of regulatory [control](/usc/12/24a.md?p=g-1) as may be imposed by the [Secretary](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1715z–22a.md?p=4) or the United States. # §1715z–5. Purchase of fee simple title from lessors - (a) **Authorization to insure loans for purpose of financing purchases—** The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized, upon such terms and conditions as he may prescribe, to make commitments to insure and to insure loans made by [financial institutions](/usc/12/1715k.md?p=h-1-C) for the purpose of financing purchases by [homeowners](#b-2) 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](/usc/12/1715k.md?p=h-1-C)” means a lender approved by the [Secretary](/usc/12/1715z–22a.md?p=4) as eligible for insurance under [section 1703 of this title](/usc/12/1703.md) or a [mortgagee](/usc/12/1707.md?p=b) approved under [section 1709(b)(1) of this title](/usc/12/1709.md?p=b-1); 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](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–22a.md?p=4)) creates a total outstanding indebtedness which does not exceed the applicable [mortgage](/usc/12/1707.md?p=a) limit prescribed in [section 1709(b) of this title](/usc/12/1709.md?p=b); - (4) bear interest at such rate as may be agreed upon by the [mortgagor](/usc/12/1707.md?p=b) and the [mortgagee](/usc/12/1707.md?p=b); - (5) have a maturity satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715k.md?p=h) 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. # §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](#c) insured under any section or subchapter of this chapter or covered by a [mortgage](#c) held by the [Secretary](/usc/12/1715z–22a.md?p=4), the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized, upon such terms and conditions as he may prescribe, to make commitments to insure, and to insure, supplemental [loans](#c) ([including](/usc/12/25b.md?p=a-3) advances during construction or improvement) made by [financial institutions](/usc/12/1715k.md?p=h-1-C) approved by the [Secretary](/usc/12/1715z–22a.md?p=4). As used in this section, “supplemental [loan](#c)” means a [loan](#c), advance of [credit](/usc/12/5481.md?p=7), or purchase of an obligation representing a [loan](#c) or advance of [credit](/usc/12/5481.md?p=7) made for the purpose of financing improvements or additions to such proj­ect, hospital, or facility: Provided, That a [loan](#c) 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](#c) shall— - (1) be limited to 90 per centum of the amount which the [Secretary](/usc/12/1715z–22a.md?p=4) estimates will be the value of such improvements, additions, and equipment, except that such amount when added to the outstanding balance of the [mortgage](#c) covering the project or facility, shall not exceed the maximum [mortgage](#c) amount insurable under the section or subchapter pursuant to which the [mortgage](#c) covering such project or facility is insured or an amount acceptable to the [Secretary](/usc/12/1715z–22a.md?p=4); - (2) have a maturity satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4); - (3) bear interest at such rate as may be agreed upon by the borrower and the [financial institution](/usc/12/1715k.md?p=h-1-C); - (4) be secured in such manner as the [Secretary](/usc/12/1715z–22a.md?p=4) may require; - (5) be governed by the labor standards provisions of [section 1715c of this title](/usc/12/1715c.md) that are applicable to the section or subchapter pursuant to which the [mortgage](#c) covering the proj­ect or facility is insured or pursuant to which the original [mortgage](#c) covering the project or facility was insured; and - (6) contain such other terms, conditions, and restrictions as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1713.md) 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](/usc/12/1715e.md) that is the obligation of the Cooperative Management Housing Insurance [Fund](/usc/12/4702.md?p=10) shall be insured under and shall be the obligation of such [fund](/usc/12/4702.md?p=10), and (3) loans involving projects covered by a mortgage insured under [section 1715z–1 of this title](/usc/12/1715z–1.md) shall be insured under and shall be the obligation of the Special Risk Insurance [Fund](/usc/12/4702.md?p=10). - (d) **Authorization to insure loans for improvements or additions; terms and conditions; limitation on amount—** Notwithstanding the foregoing, the [Secretary](/usc/12/1715z–22a.md?p=4) may insure a [loan](#c) for improvements or additions to a [multifamily housing project](/usc/12/1701z–11.md?p=b-1), or a group practice or medical practice facility or hospital or other health facility approved by the [Secretary](/usc/12/1715z–22a.md?p=4), which is not covered by a [mortgage](#c) insured under this chapter, if he finds that such a [loan](#c) would assist in preserving, expanding, or improving housing opportunities, or in providing protection against fire or other hazards. Such [loans](#c) shall have a maturity satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4) and shall meet such other conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe. In no event shall such a [loan](#c) 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](#c) insured under this chapter. At any sale under foreclosure of a [mortgage](#c) on a project or facility which is not insured under this chapter but which is senior to a [loan](#c) assigned to the [Secretary](/usc/12/1715z–22a.md?p=4) pursuant to [subsection (c)](#c), the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to bid, in addition to amounts authorized under [section 1713(k) of this title](/usc/12/1713.md?p=k), any sum up to but not in excess of the total unpaid indebtedness secured by such senior [mortgage](#c), plus taxes, insurance, foreclosure costs, fees, and other expenses. In the event that, pursuant to [subsection (c)](#c), the [Secretary](/usc/12/1715z–22a.md?p=4) [acquires](/usc/12/1467a.md?p=a-1-J) title to, or is assigned, a [loan](#c) covering a project or facility which is subject to a [mortgage](#c) which is not insured under this chapter, the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to make payments from the General Insurance [Fund](/usc/12/4702.md?p=10) on the debt secured by such [mortgage](#c), and to take such other steps as the [Secretary](/usc/12/1715z–22a.md?p=4) may deem appropriate to preserve or protect the [Secretary](/usc/12/1715z–22a.md?p=4)’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](/usc/12/1715z–22a.md?p=4) may insure a [loan](#c) for purchasing and installing energy conserving improvements (as defined in [subparagraph (2)](#e-2) of the last paragraph of [section 1703(a) of this title](/usc/12/1703.md)), for purchasing and installing a solar energy system (as defined in [subparagraph (3)](#e-3) of the last paragraph of [section 1703(a) of this title](/usc/12/1703.md)), and for purchasing or installing (or both) individual utility meters in a [multifamily housing project](/usc/12/1701z–11.md?p=b-1) 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 energy conservation established by the [Secretary](/usc/12/1715z–22a.md?p=4), without regard to whether the proj­ect is covered by a [mortgage](#c) under this chapter. - (2) Notwithstanding the provisions of [subsection (b)](#b), a [loan](#c) insured under this subsection shall— - (A) not exceed an amount which the [Secretary](/usc/12/1715z–22a.md?p=4) determines is necessary for the purchase and installation of individual utility meters plus an amount which the [Secretary](/usc/12/1715z–22a.md?p=4) deems appropriate taking into account amounts which will be saved in operation costs over the period of repayment of the [loan](#c) 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](/usc/12/5481.md?p=19) holding the note for the [loan](#c); except that, for cooperative multifamily projects receiving assistance under [section 1715z–1 of this title](/usc/12/1715z–1.md) or financed with a below market interest rate [mortgage](#c) insured under [section 1715l(d)(3)](/usc/12/1715l.md) 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](/usc/12/1715z–22a.md?p=4) determines, after consulting with the [Secretary](/usc/12/1715z–22a.md?p=4) of Energy, to be necessary to meet market demands; - (D) have a maturity satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4); - (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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) may prescribe. - (3) The provisions of [subsection (c)](#c) shall apply to [loans](#c) insured under this subsection. - (4) The [Secretary](/usc/12/1715z–22a.md?p=4) shall provide that [any person](/usc/12/1715z–4a.md?p=a-2) obligated on the note for any [loan](#c) insured under this section be regulated or restricted, until the termination of all obligations of the [Secretary](/usc/12/1715z–22a.md?p=4) under the insurance, by the [Secretary](/usc/12/1715z–22a.md?p=4) as to rents or sales, charges, [capital](/usc/12/51c.md) 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](#c) under this section in connection with eligible multifamily housing, the [Secretary](/usc/12/1715z–22a.md?p=4) may assume that any rental assistance provided for purposes of [servicing](/usc/12/2605.md?p=i-3) the additional debt will be extended for the term of the rehabilitation [loan](#c). The [Secretary](/usc/12/1715z–22a.md?p=4) shall exercise prudent underwriting practices in insuring rehabilitation [loans](#c) under this section. For purposes of this subsection, the term “eligible multifamily housing” means any housing financed by a [loan](#c) or [mortgage](#c) that is— - (A) insured or held by the [Secretary](/usc/12/1715z–22a.md?p=4) under [section 1715l(d)(3)](/usc/12/1715l.md) of this title and assisted under [section 1701s of this title](/usc/12/1701s.md) or [section 1437f of title 42](/usc/42/1437f.md); - (B) insured or held by the [Secretary](/usc/12/1715z–22a.md?p=4) and bears interest at a rate determined under the proviso of [section 1715l(d)(5)](/usc/12/1715l.md) of this title; or - (C) insured, assisted or held by the [Secretary](/usc/12/1715z–22a.md?p=4) under [section 1715z–1 of this title](/usc/12/1715z–1.md). - (2) A [mortgagee](/usc/12/1707.md?p=b) approved by the [Secretary](/usc/12/1715z–22a.md?p=4) may not withhold consent to a rehabilitation [loan](#c) insured in connection with [eligible multifamily housing](#g-1) on which that [mortgagee](/usc/12/1707.md?p=b) holds a [mortgage](#c). # §1715z–7. Mortgage insurance for hospitals - (a) **Purpose—** The purpose of this section is to assist the provision of urgently needed [hospitals](#b-1) for the care and treatment of [persons](/usc/12/5481.md?p=19) who are acutely ill or who otherwise require medical care and related services of the kind customarily furnished only (or most effectively) by [hospitals](#b-1). Such assistance shall be provided regardless of the amount of public financial or other support a [hospital](#b-1) may receive, and the [Secretary](/usc/12/1715z–22a.md?p=4) 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-1). - (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](/usc/12/25b.md?p=a-3) 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, mental, nervous and mental, and tuberculosis, unless the facility is a critical access [hospital](#b-1) (as that term is defined in section 1861(mm)(1) of the Social Security Act ([42 U.S.C. 1395x(mm)(1)](/usc/42/1395x.md?p=mm-1))); and - (C) which is a public facility, proprietary facility, or facility of a private nonprofit [corporation](/usc/12/2277a.md?p=2) or [association](/usc/12/1828.md?p=s-4-E-i), licensed or regulated by the [State](/usc/12/1707.md?p=d) (or, if there is no [State](/usc/12/1707.md?p=d) law providing for such licensing or regulation by the [State](/usc/12/1707.md?p=d), by the municipality or other political subdivision in which the facility is located); and - (2) the terms “[mortgage](/usc/12/1707.md?p=a)” and “[mortgagor](/usc/12/1707.md?p=b)” shall have the meanings respectfully set forth in [section 1713(a) of this title](/usc/12/1713.md?p=a). - (c) **Authorization to insure; prohibition of premiums on guarantees of principal and interest under title VII of the Public Health Service Act—** The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to insure any [mortgage](/usc/12/1707.md?p=a) ([including](/usc/12/25b.md?p=a-3) advances on such [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) prior to the date of its execution or disbursement thereon. No [mortgage](/usc/12/1707.md?p=a) 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](/usc/42/292.md) 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](/usc/12/1715z–22a.md?p=4) is authorized to insure any [mortgage](/usc/12/1707.md?p=a) which covers a new or rehabilitated [hospital](#b-1), [including](/usc/12/25b.md?p=a-3) equipment to be used in its operation, subject to the following conditions: - (1) The [mortgage](/usc/12/1707.md?p=a) shall be executed by a [mortgagor](/usc/12/1707.md?p=b) approved by the [Secretary](/usc/12/1715z–22a.md?p=4). The [Secretary](/usc/12/1715z–22a.md?p=4) may in his discretion require any such [mortgagor](/usc/12/1707.md?p=b) to be regulated or restricted as to charges and methods of financing, and, in addition thereto, if the [mortgagor](/usc/12/1707.md?p=b) is a corporate entity, as to [capital](/usc/12/51c.md) structure and rate of return. As an aid to the regulation or restriction of any [mortgagor](/usc/12/1707.md?p=b) with respect to any of the foregoing matters, the [Secretary](/usc/12/1715z–22a.md?p=4) may make such contracts with and [acquire](/usc/12/1467a.md?p=a-1-J) for not to exceed $100 such stock or interest in such [mortgagor](/usc/12/1707.md?p=b) as he may deem necessary. Any stock or interest so purchased shall be paid for out of the General Insurance [Fund](/usc/12/4702.md?p=10), and shall be redeemed by the [mortgagor](/usc/12/1707.md?p=b) at par upon the termination of all obligations of the [Secretary](/usc/12/1715z–22a.md?p=4) under the insurance. - (2) The [mortgage](/usc/12/1707.md?p=a) shall involve a principal obligation in the amount requested by the [mortgagor](/usc/12/1707.md?p=b) if such amount does not exceed 90 percent of the estimated replacement cost of the property or project [including](/usc/12/25b.md?p=a-3)— - (A) equipment to be used in the operation of the [hospital](#b-1), when the proposed improvements are completed and the equipment is installed; and - (B) a solar energy system (as defined in [subparagraph (3)](#d-3) of the last paragraph of [section 1703(a) of this title](/usc/12/1703.md)) or residential energy conservation measures (as defined in section [8211(11)(A) through (G)](/usc/42/8211.md?p=11-A..11-G) and (I) of title 42)[^1] in cases where the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) shall— - (A) provide for complete amortization by periodic payments within such term as the [Secretary](/usc/12/1715z–22a.md?p=4) shall prescribe; and - (B) bear interest at such rate as may be agreed upon by the [mortgagor](/usc/12/1707.md?p=b) and the [mortgagee](/usc/12/1707.md?p=b). - (4) - (A) The [Secretary](/usc/12/1715z–22a.md?p=4) shall require satisfactory evidence that the [hospital](#b-1) will be located in a [State](/usc/12/1707.md?p=d) or political subdivision of a [State](/usc/12/1707.md?p=d) with reasonable minimum standards of licensure and methods of operation for [hospitals](#b-1) and satisfactory assurance that such standards will be applied and enforced with respect to the [hospital](#b-1). - (B) The [Secretary](/usc/12/1715z–22a.md?p=4) shall establish the means for determining need and feasibility for the [hospital](#b-1), if the [State](/usc/12/1707.md?p=d) does not have an official procedure for determining need for [hospitals](#b-1). If the [State](/usc/12/1707.md?p=d) has an official procedure for determining need for [hospitals](#b-1), the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) shall not insure any [mortgage](/usc/12/1707.md?p=a) or approve any modification of an existing [mortgage](/usc/12/1707.md?p=a) insured pursuant to this section or [section 1715n(f) of this title](/usc/12/1715n.md?p=f) if such insurance or modification is to be made in connection with a guarantee, as authorized pursuant to [section 1721 of this title](/usc/12/1721.md), 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](/usc/12/1715z–22a.md?p=4) shall not refuse to insure such a [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1721.md), 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](#b-1) has been submitted to the appropriate [office](/usc/12/2279bb.md?p=4) of the Department of Health and Human Services prior to March 29, 1979; or - (B) in the case of a nonprofit [mortgagor](/usc/12/1707.md?p=b) which is seeking refinancing or modification of an existing [mortgage](/usc/12/1707.md?p=a) insured pursuant to this section or [section 1715n(f) of this title](/usc/12/1715n.md?p=f), the [mortgagor](/usc/12/1707.md?p=b) (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 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](/usc/42/1395.md) et seq.] and XIX [[42 U.S.C. 1396](/usc/42/1396.md) 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](#b-1) which derive revenue from such titles. This paragraph shall not limit the authority of the [Secretary](/usc/12/1715z–22a.md?p=4) to approve a [mortgage](/usc/12/1707.md?p=a) increase on any [mortgage](/usc/12/1707.md?p=a) eligible for insurance under this paragraph at any time prior to final endorsement of the loan for insurance; except that such [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development and by the [Secretary](/usc/12/1715z–22a.md?p=4) of Health and Human Services. - (6) To the extent that a private nonprofit or public facility [mortgagor](/usc/12/1707.md?p=b) is required by the [Secretary](/usc/12/1715z–22a.md?p=4) to provide cash equity in excess of the amount of the [mortgage](/usc/12/1707.md?p=a) to complete the project, the [mortgagor](/usc/12/1707.md?p=b) shall be entitled, at the option of the [mortgagee](/usc/12/1707.md?p=b), to [fund](/usc/12/4702.md?p=10) the excess with a letter of [credit](/usc/12/5481.md?p=7). In such event, [mortgage](/usc/12/1707.md?p=a) proceeds may be advanced to the [mortgagor](/usc/12/1707.md?p=b) prior to any demand being made on the letter of [credit](/usc/12/5481.md?p=7). - (e) **Release of part of property or project from lien—** The [Secretary](/usc/12/1715z–22a.md?p=4) may consent to the release of a part or parts of the mortgaged property or proj­ect from the lien of any [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1422.md?p=12) involved so as to encourage programs that undertake responsibility to provide comprehensive health care, [including](/usc/12/25b.md?p=a-3) outpatient and preventive care, as well as hospitalization, to a defined population, and, in the case of public [hospitals](#b-1), 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](/usc/12/1715z–22a.md?p=4) shall begin immediately to process applications of public facilities for [mortgage](/usc/12/1707.md?p=a) insurance under this section in accordance with regulations, guidelines, and procedures applicable to facilities of private nonprofit [corporations](/usc/12/2277a.md?p=2) and [associations](/usc/12/1828.md?p=s-4-E-i). - (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](/usc/12/1715z–22a.md?p=4) may insure under this section a [mortgage](/usc/12/1707.md?p=a) which provides permanent financing or refinancing of existing [mortgage](/usc/12/1707.md?p=a) indebtedness in the case of a [hospital](#b-1) whose permanent financing is presently lacking, if the construction of such [hospital](#b-1) was completed between January 1, 1966, and August 1, 1968. - (2) The aggregate principal balance of all [mortgages](/usc/12/1707.md?p=a) insured under [paragraph (1)](#g-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](/usc/12/1713.md) shall apply to [mortgages](/usc/12/1707.md?p=a) insured under this section and all references therein to [section 1713 of this title](/usc/12/1713.md) 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](#b-1) under [subsection (b)(1)(B)](#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](/usc/12/1715z–22a.md?p=4) shall submit a report to Congress detailing the effects of the exemption of critical access [hospitals](#b-1) from the provisions of [subsection (b)(1)(B)](#b-1-B) on— - (A) the provision of [mortgage](/usc/12/1707.md?p=a) insurance to [hospitals](#b-1) under this section; and - (B) the General Insurance [Fund](/usc/12/4702.md?p=10) established under [section 1735c of this title](/usc/12/1735c.md). # §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](/usc/12/1715z–22a.md?p=4) is authorized to make, and to contract to make, periodic assistance payments on behalf of [families](/usc/12/1715z–1.md?p=j-2-A) of middle income. The assistance shall be accomplished through interest subsidy payments to the Federal National [Mortgage](/usc/12/1707.md?p=a) [Association](/usc/12/1828.md?p=s-4-E-i) or the Federal Home Loan [Mortgage](/usc/12/1707.md?p=a) [Corporation](/usc/12/2277a.md?p=2) (hereinafter referred to as “the investor”) with respect to [mortgages](/usc/12/1707.md?p=a) 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 middle-income [family](/usc/12/1715z–1.md?p=j-2-A) shall be a [mortgagor](#d-2-A) under a [mortgage](/usc/12/1707.md?p=a) which is (1) insured under [subsection (j)](#j) of this section, (2) guaranteed under [chapter 37](/usc/38/chptIII-ch37.md) of title 38, or (3) a conventional [mortgage](/usc/12/1707.md?p=a) meeting the requirements of [subsection (j)(3)](#j-3) of this section. In addition to the foregoing requirement, the [Secretary](/usc/12/1715z–22a.md?p=4) may require that the [mortgagor](#d-2-A) have an income, at the time of [acquisition of the property](#d-2-B), of not more than the median income for the area in which the property is located, as determined by the [Secretary](/usc/12/1715z–22a.md?p=4), with appropriate adjustments for smaller and larger [families](/usc/12/1715z–1.md?p=j-2-A). - (c) **Termination of interest subsidy payments—** The interest subsidy payments authorized by this section shall cease when (1) the [mortgagor](/usc/12/1707.md?p=b) no longer occupies the property which secures the [mortgage](/usc/12/1707.md?p=a), (2) the [mortgages](/usc/12/1707.md?p=a) are no longer held by the investor, or (3) the rate of interest paid by the [mortgagor](/usc/12/1707.md?p=b) reaches the rate of interest specified on the [mortgage](/usc/12/1707.md?p=a). - (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](/usc/12/1707.md?p=a) on which the [mortgagor](/usc/12/1707.md?p=b) makes monthly payments towards principal and interest equal to an amount which would be required if the [mortgage](/usc/12/1707.md?p=a) bore an effective interest rate of 7 per centum per annum [including](/usc/12/25b.md?p=a-3) any discounts or charges in the nature of points or otherwise (but not [including](/usc/12/25b.md?p=a-3) premiums, if any, for [mortgage](/usc/12/1707.md?p=a) insurance) or such higher rate (not to exceed the rate specified in the [mortgage](/usc/12/1707.md?p=a)), which the [mortgagor](/usc/12/1707.md?p=b) 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](/usc/12/25b.md?p=a-3) the monthly payment for principal, interest, [mortgage](/usc/12/1707.md?p=a) insurance premium, insurance, and taxes due under the [mortgage](/usc/12/1707.md?p=a). - (2) In addition to the [mortgages](/usc/12/1707.md?p=a) eligible for assistance under paragraph (1) of this subsection, the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to make periodic assistance payments on behalf of cooperative [members](/usc/12/1426a.md?p=g-1) of middle income. Such assistance payments shall be accomplished through interest subsidy payments to the investor with respect to [mortgages](/usc/12/1707.md?p=a) insured (subsequent to July 24, 1970) under [section 1715e of this title](/usc/12/1715e.md) which are executed by cooperatives, the membership in which is limited to middle-income [families](/usc/12/1715z–1.md?p=j-2-A). For purposes of this paragraph— - (A) the term “[mortgagor](/usc/12/1707.md?p=b)”, when used in [subsection (b)](#b) in the case of a [mortgage](/usc/12/1707.md?p=a) covering a cooperative housing proj­ect, means a [member](/usc/12/1426a.md?p=g-1) of the cooperative; - (B) the term “acquisition of the property”, when used in [subsection (b)](#b), means the [family](/usc/12/1715z–1.md?p=j-2-A)’s application for a dwelling unit; and - (C) in the case of a cooperative [mortgagor](/usc/12/1707.md?p=b), [subsection (c)](#c) shall not apply and the interest subsidy payments shall cease when the [mortgage](/usc/12/1707.md?p=a) is no longer held by the investor or the cooperative fails to limit membership to [families](/usc/12/1715z–1.md?p=j-2-A) whose incomes at the time of their application for a dwelling unit meets such requirements as are laid down by the [Secretary](/usc/12/1715z–22a.md?p=4) pursuant to [subsection (b)](#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](/usc/12/1715z–22a.md?p=4), between the total amount of interest per calendar quarter received by the investor on [mortgages](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) was equal to the sum of (1) the average costs (expressed as an annual percentage rate) to it of all borrowed [funds](/usc/12/4702.md?p=10) 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](/usc/12/1715z–22a.md?p=4) to be necessary and appropriate taking into account the purpose of this section to provide additional [mortgage](/usc/12/1707.md?p=a) [credit](/usc/12/5481.md?p=7) at reasonable rates of interest to middle-income [families](/usc/12/1715z–1.md?p=j-2-A). - (f) **Adoption of procedures for recertifications of mortgagor’s income—** Procedures shall be adopted by the [Secretary](/usc/12/1715z–22a.md?p=4) for recertifications of the [mortgagor](/usc/12/1707.md?p=b)’s income at intervals of two years (or at shorter intervals where the [Secretary](/usc/12/1715z–22a.md?p=4) deems it desirable) for the purpose of adjusting the amount of the [mortgagor](/usc/12/1707.md?p=b)’s payments pursuant to [subsection (d)](#d). - (g) **Regulations to assure that sales price or other consideration paid is not increased above appraised value—** The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) which the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–1.md?p=j-2-A) for the purposes of this section, income from all sources of each [member](/usc/12/1426a.md?p=g-1) of the [family](/usc/12/1715z–1.md?p=j-2-A) in the household shall be included, except that the [Secretary](/usc/12/1715z–22a.md?p=4) shall exclude income earned by any minor [person](/usc/12/5481.md?p=19). - (j) **Insurance of mortgages executed by mortgagors meeting eligibility requirements for assistance payments; issuance of commitment; eligibility requirements for insurance—** - (1) The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized, upon application by the [mortgagee](/usc/12/1707.md?p=b), to insure a [mortgage](/usc/12/1707.md?p=a) executed by a [mortgagor](/usc/12/1707.md?p=b) who meets the eligibility requirements for assistance payments prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4) under [subsection (b)](#b). Commitments for the insurance of such [mortgages](/usc/12/1707.md?p=a) may be issued by the [Secretary](/usc/12/1715z–22a.md?p=4) prior to the date of their execution or disbursement thereon, upon such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe. - (2) To be eligible for insurance under this subsection, a [mortgage](/usc/12/1707.md?p=a) shall meet the requirements of section [1715l(d)(2)](/usc/12/1715l.md) or [1715y(c)](/usc/12/1715y.md?p=c) of this title, except as such requirements are modified by this subsection: Provided, however, That in the discretion of the [Secretary](/usc/12/1715z–22a.md?p=4) 25 per centum of the authority conferred by this section and subject to all the terms thereof may be used for [mortgages](/usc/12/1707.md?p=a) on existing housing. - (3) A [mortgage](/usc/12/1707.md?p=a) to be insured under this section shall— - (i) involve a single-[family](/usc/12/1715z–1.md?p=j-2-A) dwelling which has been approved by the [Secretary](/usc/12/1715z–22a.md?p=4) prior to the beginning of construction, or a one-[family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–1.md?p=j-2-A) unit and the unit shall have had no previous occupant other than the [mortgagor](/usc/12/1707.md?p=b); - (ii) involve a single-[family](/usc/12/1715z–1.md?p=j-2-A) dwelling whose appraised value, as determined by the [Secretary](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1715z–22a.md?p=4) authorizes an increase on the basis of a finding that the cost level so requires); and - (iii) be executed by a [mortgagor](/usc/12/1707.md?p=b) 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. # §1715z–9. Co-insurance of eligible mortgage, advance, or loan - (a) **Authority of Secretary; request of mortgagee; premium charges; provisions of contract of co-insurance; non-applicability of state insurance laws—** 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](/usc/12/1715z–22a.md?p=4), upon request of any [mortgagee](/usc/12/1707.md?p=b) and for such [mortgage](/usc/12/1707.md?p=a) insurance premium as he may prescribe (which premium, or other charges to be paid by the [mortgagor](/usc/12/1707.md?p=b), 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](/usc/12/1707.md?p=a), advance, or loan otherwise eligible under such provision, pursuant to a co-insurance contract providing that the [mortgagee](/usc/12/1707.md?p=b) will— - (1) assume a percentage of any loss on the insured [mortgage](/usc/12/1707.md?p=a), 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](/usc/12/1707.md?p=b) that may be specified in the event of unusual or catastrophic losses that may be incurred by any one [mortgagee](/usc/12/1707.md?p=b); and - (2) carry out (under a delegation or otherwise and with or without compensation but subject to audit, exception, or review requirements) such [credit](/usc/12/5481.md?p=7) approval, appraisal, inspection, commitment, property disposition, or other functions as the [Secretary](/usc/12/1715z–22a.md?p=4), 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](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) may prescribe pursuant to regulations. A [mortgagee](/usc/12/1707.md?p=b) 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](/usc/12/1715z–22a.md?p=4), [including](/usc/12/25b.md?p=a-3) provisions relating to the retention of risks in the event of sale or assignment of a [mortgage](/usc/12/1707.md?p=a), be made subject to any [State](/usc/12/1707.md?p=d) law regulating the [business of insurance](/usc/12/5371.md?p=a-4). - (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](/usc/12/1707.md?p=a) insurance pursuant to other provisions of this subchapter. - (c) **Repealed. Pub. L. 100–242, title IV, § 414(a), Feb. 5, 1988, 101 Stat. 1907—** - (d) **Repealed. Pub. L. 100–242, title IV, § 401(a)(3), Feb. 5, 1988, 101 Stat. 1898—** - (e) **Availability unaffecting insurance otherwise authorized; criteria for exercise of authority by Secretary—** The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) [credit](/usc/12/5481.md?p=7) 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](/usc/12/1707.md?p=a) covers a [multifamily housing](/usc/12/1715z–22a.md?p=1) proj­ect, the co-insurance contract may provide that the [mortgagee](/usc/12/1707.md?p=b) assume (i) the full amount of any loss on the insured [mortgage](/usc/12/1707.md?p=a) up to an amount equal to a fixed percentage of the outstanding principal balance of the [mortgage](/usc/12/1707.md?p=a) at the time of claim for insurance benefits, or (ii) the full amount of any losses on insured [mortgages](/usc/12/1707.md?p=a) in a portfolio of [mortgages](/usc/12/1707.md?p=a) approved by the [Secretary](/usc/12/1715z–22a.md?p=4) up to an amount equal to a fixed percentage of the outstanding principal balance of all [mortgages](/usc/12/1707.md?p=a) in such portfolio at the time of claim for insurance benefits on a [mortgage](/usc/12/1707.md?p=a) in the portfolio, plus a share of any loss in excess of the amount under clause [(i)](#i) or (ii), whichever is applicable. - (2) The [Secretary](/usc/12/1715z–22a.md?p=4) may make loans, from the applicable insurance [fund](/usc/12/4702.md?p=10), to [public housing agencies](#f-4) in connection with [mortgages](/usc/12/1707.md?p=a) which have been insured pursuant to this subsection and which are in [default](/usc/12/1467a.md?p=e-7-A). - (3) The [Secretary](/usc/12/1715z–22a.md?p=4) may insure and make a commitment to insure in connection with a co-insurance contract pursuant to this subsection (A) a [mortgage](/usc/12/1707.md?p=a) on a project assisted under the second proviso in the first sentence of [section 1715z–1(b) of this title](/usc/12/1715z–1.md?p=b), and (B) a [mortgage](/usc/12/1707.md?p=a) or advance on a [mortgage](/usc/12/1707.md?p=a) made to a [public housing agency](#f-4) 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](/usc/42/1437a.md?p=b-6). - (5) Notwithstanding any other provision of this chapter, the [Secretary](/usc/12/1715z–22a.md?p=4) may include in the determination of replacement cost of a project to be covered by a [mortgage](/usc/12/1707.md?p=a) made to a [public housing agency](#f-4) 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](#f-4) consistent with such [agency](/usc/12/1422.md?p=12)’s procedures and underwriting standards. - (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](/usc/12/1707.md?p=a) insured under [section 1715n(f) of this title](/usc/12/1715n.md?p=f) secured by property which is to be rehabilitated or developed under section 1437o[^1] of [title 42](/usc/42.md), such co-insurance may include provisions that— - (1) insurance benefits shall equal the sum of (A) 90 per centum of the [mortgage](/usc/12/1707.md?p=a) on the date of institution of foreclosure proceedings (or on the date of acquisition of the property otherwise after [default](/usc/12/1467a.md?p=e-7-A)), and (B) 90 per centum of interest arrears on the date benefits are paid; - (2) the [mortgagee](/usc/12/1707.md?p=b) shall remit to the [Secretary](/usc/12/1715z–22a.md?p=4), for [credit](/usc/12/5481.md?p=7) to the General Insurance [Fund](/usc/12/4702.md?p=10), 90 per centum of any proceeds of the property, [including](/usc/12/25b.md?p=a-3) sale proceeds, net of the [mortgagee](/usc/12/1707.md?p=b)’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](/usc/12/1707.md?p=b) submits a written request for debenture payment; and - (4) the underwriter of co-insurance may reinsure 10 per centum of the [mortgage](/usc/12/1707.md?p=a) amount with a private [mortgage](/usc/12/1707.md?p=a) [insurance company](/usc/12/1841.md?p=q) or with a [State](/usc/12/1707.md?p=d) [mortgage](/usc/12/1707.md?p=a) insurance [agency](/usc/12/1422.md?p=12). - (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](/usc/12/1707.md?p=b) which enters into a contract of co-insurance under this section shall have the authority to assign its interest in any note or [mortgage](/usc/12/1707.md?p=a) subject to a contract of co-insurance to a warehouse [bank](/usc/12/1426a.md?p=g-1) or other [financial institution](/usc/12/1715k.md?p=h-1-C) which provides interim funding for a loan co-insured under this section, and to retain the co-insurance risk of such note or [mortgage](/usc/12/1707.md?p=a), upon such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) shall prescribe. - (i) **[^2] Annual review of, and assessment of compliance with, requirements; report; adjustment of requirements—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall, by January 15 and July 15 of each year (1) review the adequacy of [capital](/usc/12/51c.md) and other requirements for [mortgagees](/usc/12/1707.md?p=b) under this section, (2) assess the compliance by [mortgagees](/usc/12/1707.md?p=b) with such requirements, and (3) make such adjustment to such requirements as the [Secretary](/usc/12/1715z–22a.md?p=4), after providing opportunity for hearing, determines to be appropriate to improve the long-term financial soundness of the Federal Housing Administration [funds](/usc/12/4702.md?p=10). Such requirements shall include the minimum [capital](/usc/12/51c.md) or net worth of [mortgagees](/usc/12/1707.md?p=b); the ratio that [mortgagees](/usc/12/1707.md?p=b) shall maintain between the [mortgagee](/usc/12/1707.md?p=b)’s [capital](/usc/12/51c.md) and the volume of [mortgages](/usc/12/1707.md?p=a) co-insured by such [mortgagee](/usc/12/1707.md?p=b); and such other requirements as the [Secretary](/usc/12/1715z–22a.md?p=4) determines to be appropriate to ensure the long-term financial soundness of the Federal Housing Administration [funds](/usc/12/4702.md?p=10). The [Secretary](/usc/12/1715z–22a.md?p=4) shall submit to the Committee on Banking, 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](/usc/12/1715z–22a.md?p=4)’s reasons for making any adjustment in requirements authorized under this section. # [§1715z–10. Repealed. Pub. L. 110–289, div. B, title I, § 2120(a)(7), July 30, 2008, 122 Stat. 2835 — repealed] # §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](/usc/12/1715z–22a.md?p=4) sells a [multifamily housing project](/usc/12/1701z–11.md?p=b-1) acquired as the result of a [default](/usc/12/1467a.md?p=e-7-A) on a [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1426a.md?p=g-1), or to a nonprofit [corporation](/usc/12/2277a.md?p=2) which operates as a [consumer](/usc/12/5481.md?p=4) cooperative as defined by the [Secretary](/usc/12/1715z–22a.md?p=4), the [Secretary](/usc/12/1715z–22a.md?p=4) may accept a purchase money [mortgage](/usc/12/1707.md?p=a), or upon application of the [mortgagee](/usc/12/1707.md?p=b), insure a [mortgage](/usc/12/1707.md?p=a) under this section upon such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) may add to the [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) deems reasonable and appropriate. Prior to such disposition of a project, [funds](/usc/12/4702.md?p=10) may be expended by the [Secretary](/usc/12/1715z–22a.md?p=4) for necessary repairs and improvements. # §1715z–11a. Disposition of HUD-owned properties - (a) **Flexible authority for multifamily projects—** During fiscal year 1997 and fiscal years thereafter, the [Secretary](/usc/12/1715z–22a.md?p=4) may manage and dispose of multifamily properties owned by the [Secretary](/usc/12/1715z–22a.md?p=4), [including](/usc/12/25b.md?p=a-3), for fiscal years 1997, 1998, 1999, 2000, and thereafter, the provision of grants and loans from the General Insurance [Fund](/usc/12/4702.md?p=10) ([12 U.S.C. 1735c](/usc/12/1735c.md)) for the necessary costs of rehabilitation, demolition, or construction on the properties (which shall be eligible whether vacant or occupied), and multifamily [mortgages](/usc/12/1707.md?p=a) held by the [Secretary](/usc/12/1715z–22a.md?p=4) on such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/4702.md?p=10). - (b) **Transfer of unoccupied and substandard housing to local governments and community development corporations—** - (1) **Transfer authority—** Notwithstanding the authority under [subsection (a)](#a) and the last sentence of [section 1710(g) of this title](/usc/12/1710.md?p=g), the [Secretary](#b-11-E) of Housing and Urban Development shall transfer ownership of any [qualified HUD property](#b-2), subject to the requirements of this section, to a [unit of general local government](#b-11-I) having jurisdiction for the area in which the property is located or to a [community development corporation](#b-11-A) which operates within such a [unit of general local government](#b-11-I) in accordance with this subsection, but only to the extent that units of general local government and [community development corporations](#b-11-A) consent to transfer and the [Secretary](#b-11-E) 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)](#b-3-B), not less than 6 months have elapsed since the later of the date that the property was acquired by the [Secretary](#b-11-E) or the date that the property was determined to be [unoccupied](#b-11-J) or [substandard](#b-11-H), that is owned by the [Secretary](#b-11-E) and is— - (A) an [unoccupied](#b-11-J) [multifamily housing project](/usc/12/1701z–11.md?p=b-1); - (B) a [substandard](#b-11-H) [multifamily housing project](/usc/12/1701z–11.md?p=b-1); or - (C) an [unoccupied](#b-11-J) [single family property](#b-11-G) that— - (i) has been determined by the [Secretary](#b-11-E) not to be an eligible asset under [section 1710(h) of this title](/usc/12/1710.md?p=h); or - (ii) is an eligible asset under such [section 1710(h) of this title](/usc/12/1710.md?p=h), but— - (I) is not subject to a specific sale agreement under such section; and - (II) has been determined by the [Secretary](#b-11-E) to be inappropriate for continued inclusion in the program under such [section 1710(h) of this title](/usc/12/1710.md?p=h) pursuant to [paragraph (10)](/usc/12/1710.md?p=h-10) of such section. - (3) **Timing—** The [Secretary](#b-11-E) 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](#b-11-A) of [qualified HUD properties](#b-2) in their jurisdictions; - (C) such units and [corporations](/usc/12/2277a.md?p=2) to express interest in the transfer under this subsection of such properties; - (D) a right of first refusal for transfer of [qualified HUD properties](#b-2) to units of general local government and [community development corporations](#b-11-A), under which— - (i) the [Secretary](#b-11-E) shall establish a period during which the [Secretary](#b-11-E) may not transfer such properties except to such units and [corporations](/usc/12/2277a.md?p=2); - (ii) the [Secretary](#b-11-E) shall offer [qualified HUD properties](#b-2) that are [single family properties](#b-11-G) 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](#b-11-G) established by the [Secretary](#b-11-E) pursuant to the authority under the last sentence of [section 1710(g) of this title](/usc/12/1710.md?p=g); - (iii) the [Secretary](#b-11-E) may accept an offer to purchase a property made by a [community development corporation](#b-11-A) only if the offer provides for purchase on a [cost recovery basis](#b-11-B); and - (iv) the [Secretary](#b-11-E) shall accept an offer to purchase such a property that is made during such period by such a unit or [corporation](/usc/12/2277a.md?p=2) and that complies with the requirements of this paragraph; and - (E) a written explanation, to any [unit of general local government](#b-11-I) or [community development corporation](#b-11-A) making an offer to purchase a [qualified HUD property](#b-2) 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](#b-2), if the [Secretary](#b-11-E) does not receive an acceptable offer to purchase the property pursuant to the procedure established under [paragraph (3)](#b-3), the [Secretary](#b-11-E) shall dispose of the property to the [unit of general local government](#b-11-I) in which property is located or to [community development corporations](#b-11-A) located in such [unit of general local government](#b-11-I) on a negotiated, competitive bid, or other basis, on such terms as the [Secretary](#b-11-E) deems appropriate. - (5) **Satisfaction of indebtedness—** Before transferring ownership of any [qualified HUD property](#b-2) pursuant to this subsection, the [Secretary](#b-11-E) 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](#b-11-E) shall take the following actions: - (A) **Upon enactment—** Upon the enactment of this subsection [December 21, 2000], the [Secretary](#b-11-E) shall promptly assess each [residential property](#b-11-D) owned by the [Secretary](#b-11-E) to determine whether such property is a [qualified HUD property](#b-2). - (B) **Upon acquisition—** Upon acquiring any [residential property](#b-11-D), the [Secretary](#b-11-E) shall promptly determine whether the property is a [qualified HUD property](#b-2). - (C) **Updates—** The [Secretary](#b-11-E) shall periodically reassess the [residential properties](#b-11-D) owned by the [Secretary](#b-11-E) to determine whether any such properties have become [qualified HUD properties](#b-2). - (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](#b-11-D) before the date that such property becomes a [qualified HUD property](#b-2). - (8) **Use of property—** Property transferred under this subsection shall be used only for appropriate neighborhood revitalization efforts, [including](/usc/12/25b.md?p=a-3) 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 any properties that the [Secretary](#b-11-E) 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](/cfr/24/part291-subpartE.md), 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](#b-2) before the property becomes a [qualified HUD property](#b-2). - (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](/usc/12/1821.md?p=w-2-B) whose primary purpose is to promote community development by providing housing opportunities for low-income [families](/usc/12/1715z–1.md?p=j-2-A). - (B) **Cost recovery basis—** The term “cost recovery basis” means, with respect to any sale of a [residential property](#b-11-D) by the [Secretary](#b-11-E), 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](#b-11-E) shall establish; and (ii) the costs incurred by the [Secretary](#b-11-E) in connection with such property during the period beginning on the date on which the [Secretary](#b-11-E) [acquires](/usc/12/1467a.md?p=a-1-J) title to the property and ending on the date on which the sale is consummated. - (C) **Multifamily housing project—** The term “[multifamily housing project](/usc/12/1701z–11.md?p=b-1)” has the meaning given the term in [section 1701z–11 of this title](/usc/12/1701z–11.md). - (D) **Residential property—** The term “residential property” means a property that is a [multifamily housing project](/usc/12/1701z–11.md?p=b-1) or a [single family property](#b-11-G). - (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 fixtures, loose or missing steps or railings, and no elevator; or - (v) has severe maintenance problems, [including](/usc/12/25b.md?p=a-3) 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](/usc/12/1715z–1.md?p=j-2-A) residence. - (H) **Substandard—** The term “substandard” means, with respect to a [multifamily housing project](/usc/12/1701z–11.md?p=b-1), that 25 percent or more of the dwelling units in the project have [severe physical problems](#b-11-F). - (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](/usc/42/5302.md?p=a). - (J) **Unoccupied—** The term “unoccupied” means, with respect to a [residential property](#b-11-D), that the [unit of general local government](#b-11-I) 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](#b-11-E) 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](#b-11-E) shall issue such final regulations as are necessary to carry out this subsection. # §1715z–12. Single-family mortgage insurance on Hawaiian home lands - (a) **One- to four-family residence; eligibility—** The [Secretary](/usc/12/1715z–22a.md?p=4), subject to such conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe, may insure under any provision of this subchapter that authorizes such insurance, a [mortgage](/usc/12/1707.md?p=a) covering a property upon which there is located a one- to four-[family](/usc/12/1715z–1.md?p=j-2-A) residence, without regard to any limitation in this chapter relating to marketability of title or any other limitation in this chapter that the [Secretary](/usc/12/1715z–22a.md?p=4) determines is contrary to promoting the availability of such insurance on [Hawaiian home lands](#d-2), if— - (1) the [mortgage](/usc/12/1707.md?p=a) is executed by a [native Hawaiian](#d-1) on property located within [Hawaiian home lands](#d-2) 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](/usc/12/1707.md?p=d) of Hawaii adopted under section 4 of the Act entitled “An Act to provide for the admission of the [State](/usc/12/1707.md?p=d) 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](/usc/12/1707.md?p=b); and - (3) the Department of [Hawaiian Home Lands](#d-2) of the [State](/usc/12/1707.md?p=d) of Hawaii (A) is a comortgagor; (B) guarantees to reimburse the [Secretary](/usc/12/1715z–22a.md?p=4) for any [mortgage](/usc/12/1707.md?p=a) insurance claim paid in connection with a property on [Hawaiian home lands](#d-2); or (C) offers other security acceptable to the [Secretary](/usc/12/1715z–22a.md?p=4). - (b) **Construction advances—** Notwithstanding any other provision of this chapter, the [Secretary](/usc/12/1715z–22a.md?p=4) may, with respect to [mortgages](/usc/12/1707.md?p=a) eligible for insurance under [subsection (a)](#a), insure and make commitments to insure advances made during construction if the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) using the authority contained in this section shall be the obligation of the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10). The [mortgagee](/usc/12/1707.md?p=b) shall be eligible to receive the benefits of insurance as provided in [section 1710 of this title](/usc/12/1710.md) with respect to [mortgages](/usc/12/1707.md?p=a) insured pursuant to this section, except that all references in [section 1710 of this title](/usc/12/1710.md) to [section 1709 of this title](/usc/12/1709.md) shall be construed to refer to the section under which the [mortgage](/usc/12/1707.md?p=a) 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](#d-2) 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](/usc/12/1707.md?p=d) of Hawaii adopted under section 4 of the Act entitled “An Act to provide for the admission of the [State](/usc/12/1707.md?p=d) 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](/usc/12/1707.md?p=d) of Hawaii adopted under section 4 of the Act entitled “An Act to provide for the admission of the [State](/usc/12/1707.md?p=d) 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](#d-2) 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](/usc/12/1707.md?p=a) under this section. # §1715z–13. Single family mortgage insurance on Indian reservations - (a) **One- to four-family residence; eligibility—** The [Secretary](/usc/12/1715z–22a.md?p=4), subject to such special conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe, may insure under any provision of this subchapter that authorizes such insurance, a [mortgage](/usc/12/1707.md?p=a) covering a property upon which there is located a one- to four-[family](/usc/12/1715z–1.md?p=j-2-A) residence, without regard to any limitation in this chapter relating to marketability of title or any other limitation in this chapter that the [Secretary](/usc/12/1715z–22a.md?p=4) determines is contrary to promoting the availability of such insurance on Indian reservations if the [mortgage](/usc/12/1707.md?p=a) (1) is executed by an [Indian tribe](#i-1) and the property is located on [trust or otherwise restricted land](#i-2); or (2) is executed by a [member](/usc/12/1426a.md?p=g-1) of an [Indian tribe](#i-1) who will use the property as a principal residence and the property is on [trust or otherwise restricted land](#i-2). - (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](/usc/12/1707.md?p=a) covering a property upon which there is located a one- to four-[family](/usc/12/1715z–1.md?p=j-2-A) residence— - (1) the [Secretary](/usc/12/1715z–22a.md?p=4) may insure and make commitments to insure under this subchapter pursuant to this section advances made during construction where the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) based on the appraised value or replacement cost, as appropriate, of a one- to four-[family](/usc/12/1715z–1.md?p=j-2-A) [owner](/usc/12/4146.md?p=2)-occupied residence contained in this subchapter shall apply in the case of all [mortgages](/usc/12/1707.md?p=a) insured pursuant to this section without regard to whether the residences are [owner](/usc/12/4146.md?p=2)-occupied where the residences are owned by the tribe; and - (3) - (A) the [Secretary](/usc/12/1715z–22a.md?p=4) may require an [Indian tribe](#i-1), 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](/usc/12/1715z–22a.md?p=4) of the Interior or pledge grants under title I of the Housing and Community Development Act of 1974 [[42 U.S.C. 5301](/usc/42/5301.md) et seq.] or any other Federal grant program administered by the [Secretary](/usc/12/1715z–22a.md?p=4) of Housing and Urban Development to be used to reimburse the [Secretary](/usc/12/1715z–22a.md?p=4) for any [mortgage](/usc/12/1707.md?p=a) insurance claims paid in connection with residences insured pursuant to this section; or - (B) in the case of an individual Indian [mortgagor](/usc/12/1707.md?p=b), the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) may not refuse to insure a [mortgage](/usc/12/1707.md?p=a) under this section to an individual home purchaser because there is no distributed tribal or trust [fund](/usc/12/4702.md?p=10) income attributable to that purchaser. - (d) **Availability of tribal eviction procedures—** Before making any commitment to insure a [mortgage](/usc/12/1707.md?p=a) under this section with respect to property located on [trust or otherwise restricted land](#i-2), the [Secretary](/usc/12/1715z–22a.md?p=4) shall require a showing by the tribe that it has adopted eviction procedures to be used in the event of a [default](/usc/12/1467a.md?p=e-7-A). - (e) **Assumption of mortgage—** A [mortgage](/usc/12/1707.md?p=a) insured under this section may be assumed, subject to [credit](/usc/12/5481.md?p=7) 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](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) using the authority contained in this section shall be the obligation of the Mutual [Mortgage](/usc/12/1707.md?p=a) Insurance [Fund](/usc/12/4702.md?p=10). The [mortgagee](/usc/12/1707.md?p=b) shall be eligible to receive the benefits of insurance as provided in [section 1710 of this title](/usc/12/1710.md) with respect to [mortgages](/usc/12/1707.md?p=a) insured pursuant to this section, except that all references in [section 1710 of this title](/usc/12/1710.md) to [section 1709 of this title](/usc/12/1709.md) shall be construed to refer to the section under which the [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4) shall make information regarding the status and payment history of loans insured under this section available to local [credit](/usc/12/5481.md?p=7) [bureaus](/usc/12/5481.md?p=2) and prospective creditors. Prior to accepting assignment of a [mortgage](/usc/12/1707.md?p=a), the [Secretary](/usc/12/1715z–22a.md?p=4) shall require [mortgagees](/usc/12/1707.md?p=b) to submit documentation that [mortgagors](/usc/12/1707.md?p=b) 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](/usc/12/1710.md), a [mortgagee](/usc/12/1707.md?p=b) under this section shall be entitled to receive the benefit of insurance under this section in the case of a [mortgage](/usc/12/1707.md?p=a) which is more than 90 days in [default](/usc/12/1467a.md?p=e-7-A) upon conveyance of the lease agreement and the [mortgage](/usc/12/1707.md?p=a) documents. - (3) In the event that any [default](/usc/12/1467a.md?p=e-7-A) is cured, the [Secretary](/usc/12/1715z–22a.md?p=4) shall seek to reinstate the loan with the [mortgagee](/usc/12/1707.md?p=b) or another [mortgagee](/usc/12/1707.md?p=b). For purposes of this paragraph, the [Secretary](/usc/12/1715z–22a.md?p=4) may provide appropriate financial incentives to reinstate the loan commensurate with sound management of the General Insurance [Fund](/usc/12/4702.md?p=10). - (4) If the [Secretary](/usc/12/1715z–22a.md?p=4) determines that a [mortgagor](/usc/12/1707.md?p=b) is not making a good-faith effort to cure a [default](/usc/12/1467a.md?p=e-7-A), and that trust [fund](/usc/12/4702.md?p=10) or tribal income is available under [subsection (b)(3)(B)](#b-3-B), the [Secretary](/usc/12/1715z–22a.md?p=4) shall commence proceedings for the garnishment of the [mortgagor](/usc/12/1707.md?p=b)’s distributed share of tribal or trust [fund](/usc/12/4702.md?p=10) 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](/usc/12/221a.md?p=a) court. - (5) If the [Secretary](/usc/12/1715z–22a.md?p=4) determines such action is necessary to protect the General Insurance [Fund](/usc/12/4702.md?p=10) from undue loss, the [Secretary](/usc/12/1715z–22a.md?p=4) may initiate foreclosure proceedings with respect to any [mortgage](/usc/12/1707.md?p=a) acquired under this subsection. Such proceeding may take place in a tribal court, a court of competent jurisdiction, or Federal [district](/usc/12/221a.md?p=a) court. Any such court shall have jurisdiction to convey to the [Secretary](/usc/12/1715z–22a.md?p=4) the remaining life of a lease on the real property and to order eviction of the delinquent [mortgagor](/usc/12/1707.md?p=b). - (h) **Premium charge for insurance; report to Congress—** In the administration of this section, the [Secretary](/usc/12/1715z–22a.md?p=4) shall establish a premium charge for insurance that will be sufficient to cover the full costs of the [mortgage](/usc/12/1707.md?p=a) insurance program under this section, except that such charge may not exceed 3 percent per annum of the principal amount of the [mortgage](/usc/12/1707.md?p=a) outstanding at any time. Not later than September 30, 1984, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1709.md). In the event such premiums are not sufficient to cover the full costs of the [mortgage](/usc/12/1707.md?p=a) insurance program under this section, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) of the Interior because of its status as such an entity, or that was an eligible recipient under [chapter 67](/usc/31/chstV-ch67.md) 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](/usc/12/1715z–22a.md?p=4) of the Interior, over which an [Indian tribe](#i-1) is recognized by the United States as having governmental jurisdiction; (B) land held in trust for the benefit of any [Indian tribe](#i-1) or individual or held by any [Indian tribe](#i-1) 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](/usc/43/1601.md) et seq.] or any other land acquired by Alaska natives pursuant to statute by virtue of their unique status as Alaska natives. # §1715z–13a. Loan guarantees for Indian housing - (a) **Authority—** To provide access to sources of private financing to [Indian](#l-3) [families](/usc/12/1715z–1.md?p=j-2-A), [Indian housing authorities](#l-5), and [Indian tribes](#l-8), who otherwise could not [acquire](/usc/12/1467a.md?p=a-1-J) housing financing because of the unique legal status of [Indian](#l-3) lands, the [Secretary](#l-6) may guarantee not to exceed 100 percent of the unpaid principal and interest due on any loan eligible under [subsection (b)](#b) made to an [Indian](#l-3) [family](#l-1), [Indian housing authority](#l-5), or [Indian tribe](#l-8). - (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](#l-3) [families](/usc/12/1715z–1.md?p=j-2-A), [Indian housing authorities](#l-5), or [Indian tribes](#l-8). - (2) **Eligible housing—** The loan shall be used to construct, [acquire](/usc/12/1467a.md?p=a-1-J), refinance, or rehabilitate 1- to 4-[family](#l-1) dwellings that are [standard housing](#l-7) and are located on [trust land](#l-9) or land located in an [Indian](#l-3) or Alaska Native area. - (3) **Security—** The loan may be secured by any collateral authorized under existing Federal law or applicable [State](/usc/12/1707.md?p=d) or tribal law. - (4) **Lenders—** The loan shall be made only by a lender approved by and meeting qualifications established by the [Secretary](#l-6), except that loans otherwise insured or guaranteed by an [agency](/usc/12/1422.md?p=12) of the Federal Government or made by an organization of [Indians](#l-3) 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](/usc/12/1707.md?p=b) approved by the [Secretary](#l-6) of Housing and Urban Development for [participation](/usc/12/2206a.md?p=a-1) in the single [family](#l-1) [mortgage](/usc/12/1707.md?p=a) insurance program under title II of the National Housing Act [[12 U.S.C. 1707](/usc/12/1707.md) et seq.]. - (B) Any lender whose housing loans under [chapter 37](/usc/38/chptIII-ch37.md) of title 38 are automatically guaranteed pursuant to section 1802(d)[^1] of such title. - (C) Any lender approved by the [Secretary](#l-6) of Agriculture to make guaranteed loans for single [family](#l-1) housing under the Housing Act of 1949 [[42 U.S.C. 1441](/usc/42/1441.md) et seq.]. - (D) Any other lender that is supervised, approved, regulated, or insured by any [agency](/usc/12/1422.md?p=12) 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](#l-6) to be reasonable, which may not exceed the rate generally charged in the area (as determined by the [Secretary](#l-6)) for home [mortgage](/usc/12/1707.md?p=a) loans not guaranteed or insured by any [agency](/usc/12/1422.md?p=12) 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](#l-6) 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](#l-6) shall provide. - (c) **Certificate of guarantee—** - (1) **Approval process—** Before the [Secretary](#l-6) approves any loan for guarantee under this section, the lender shall submit the application for the loan to the [Secretary](#l-6) for examination. If the [Secretary](#l-6) approves the loan for guarantee, the [Secretary](#l-6) shall issue a certificate under this paragraph as evidence of the guarantee. - (2) **Standard for approval—** The [Secretary](#l-6) may approve a loan for guarantee under this section and issue a certificate under this paragraph only if the [Secretary](#l-6) determines there is a reasonable prospect of repayment of the loan. - (3) **Effect—** A certificate of guarantee issued under this paragraph by the [Secretary](#l-6) 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](/usc/12/5481.md?p=7) of the United States is pledged to the payment of all amounts agreed to be paid by the [Secretary](#l-6) as security for such obligations. - (4) **Fraud and misrepresentation—** This subsection may not be construed to preclude the [Secretary](#l-6) from establishing defenses against the original lender based on fraud or material misrepresentation or to bar the [Secretary](#l-6) 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. - (5) **Trailing documents—** - (A) **In general—** The [Secretary](#l-6) may issue a certificate of guarantee under this subsection for a loan involving a security interest in [Indian](#l-3) [trust land](#l-9) before the [Secretary](#l-6) receives the trailing documents required by the [Secretary](#l-6) from the [Bureau](/usc/12/5481.md?p=2) of [Indian](#l-3) Affairs, [including](/usc/12/25b.md?p=a-3) the final certified title status report showing the recordation by the [Bureau](/usc/12/5481.md?p=2) of [Indian](#l-3) Affairs of the [mortgage](/usc/12/1707.md?p=a) relating to the loan, if the originating lender agrees to indemnify the [Secretary](#l-6) for any losses that may result when— - (i) a claim payment is presented to the [Secretary](#l-6) due to the [default](/usc/12/1467a.md?p=e-7-A) of the borrower on the loan; and - (ii) the required trailing documents are outstanding. - (B) **Termination of indemnification agreement—** An indemnification agreement between an originating lender and the [Secretary](#l-6) described in [subparagraph (A)](#c-5-A) shall only terminate upon receipt by the [Secretary](#l-6) of the trailing documents described in that subparagraph in a form and manner that is acceptable to the [Secretary](#l-6). - (C) **Rule of construction—** Nothing in this paragraph shall be construed as authorizing the [Bureau](/usc/12/5481.md?p=2) of [Indian](#l-3) Affairs to delay the issuance of a final certified title status report and recorded [mortgage](/usc/12/1707.md?p=a) relating to a loan closed on [Indian](#l-3) [trust land](#l-9). - (d) **Guarantee fee—** The [Secretary](#l-6) 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](#l-6) 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](#l-6) shall establish the amount of the fees and premiums by publishing a notice in the Federal Register. The [Secretary](#l-6) shall [deposit](/usc/12/5301.md?p=18-A) any fees and premiums collected under this subsection in the [Indian](#l-3) Housing Loan [Guarantee Fund](#l-2) established under [subsection (i)](#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](/usc/12/25b.md?p=a-3) the security given for the loan, may be sold or assigned by the lender to any [financial institution](/usc/12/1715k.md?p=h-1-C) subject to examination and supervision by an [agency](/usc/12/1422.md?p=12) of the Federal Government or of any [State](/usc/12/1707.md?p=d) or the District of Columbia. - (g) **Disqualification of lenders and civil money penalties—** - (1) **In general—** If the [Secretary](#l-6) determines that any lender or holder of a guarantee certificate under [subsection (c)](#c) has failed to maintain adequate accounting records, to adequately service loans guaranteed under this section, to exercise proper [credit](/usc/12/5481.md?p=7) or underwriting judgment, or has engaged in practices otherwise detrimental to the interest of a borrower or the United States, the [Secretary](#l-6) 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](#l-6) determines that any lender or holder of a guarantee certificate under [subsection (c)](#c) has intentionally failed to maintain adequate accounting records, to adequately service loans guaranteed under this section, or to exercise proper [credit](/usc/12/5481.md?p=7) or underwriting judgment, the [Secretary](#l-6) 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](/usc/12/1735f–14.md)] with respect to [mortgagees](/usc/12/1707.md?p=b) and lenders under such Act. - (3) **Payment on loans made in good faith—** Notwithstanding paragraphs [(1)](#g-1) and [(2)](#g-2), the [Secretary](#l-6) 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](/usc/12/1467a.md?p=e-7-A) by the borrower on a loan guaranteed under this section, the holder of the guarantee certificate shall provide written notice of the [default](/usc/12/1467a.md?p=e-7-A) to the [Secretary](#l-6). 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](#l-6)) and upon a final order by the court authorizing foreclosure and submission to the [Secretary](#l-6) of a claim for payment under the guarantee, the [Secretary](#l-6) shall pay to the holder of the certificate the pro rata portion of the amount guaranteed (as determined pursuant to [subsection (e)](#e)) plus reasonable fees and expenses as approved by the [Secretary](#l-6). The [Secretary](#l-6) 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](#l-6). - (ii) **No foreclosure—** Without seeking foreclosure (or in any case in which a foreclosure proceeding initiated under [clause (i)](#h-1-A-i) continues for a period in excess of 1 year), the holder of the guarantee may submit to the [Secretary](#l-6) a request to assign the obligation and security interest to the [Secretary](#l-6) in return for payment of the claim under the guarantee. The [Secretary](#l-6) may accept assignment of the loan if the [Secretary](#l-6) determines that the assignment is in the best interests of the United States. Upon assignment, the [Secretary](#l-6) shall pay to the holder of the guarantee the pro rata portion of the amount guaranteed (as determined under [subsection (e)](#e)). The [Secretary](#l-6) shall be subrogated to the rights of the holder of the guarantee and the holder shall assign the obligation and security to the [Secretary](#l-6). - (B) **Requirements—** Before any payment under a guarantee is made under [subparagraph (A)](#h-1-A), the holder of 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](/usc/12/2605.md?p=i-3) loans in [default](/usc/12/1467a.md?p=e-7-A), as determined by the [Secretary](#l-6). 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](#l-6) shall then take such action to collect as the [Secretary](#l-6) determines appropriate. - (2) **Limitations on liquidation—** In the event of a [default](/usc/12/1467a.md?p=e-7-A) by the borrower on a loan guaranteed under this section involving a security interest in restricted [Indian](#l-3) land, the [mortgagee](/usc/12/1707.md?p=b) or the [Secretary](#l-6) shall only pursue liquidation after offering to transfer the account to an eligible tribal [member](/usc/12/1426a.md?p=g-1), the [tribe](#l-8), or the [Indian housing authority](#l-5) serving the [tribe](#l-8) or [tribes](#l-8). If the [mortgagee](/usc/12/1707.md?p=b) or the [Secretary](#l-6) subsequently proceeds to liquidate the account, the [mortgagee](/usc/12/1707.md?p=b) or the [Secretary](#l-6) 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](#l-3) Housing Loan [Guarantee Fund](#l-2) for the purpose of providing loan guarantees under this section. - (2) **Credits—** The [Guarantee Fund](#l-2) shall be credited with— - (A) any amounts, claims, notes, [mortgages](/usc/12/1707.md?p=a), contracts, and property acquired by the [Secretary](#l-6) under this section, and any collections and proceeds therefrom; - (B) any amounts appropriated under [paragraph (7)](#i-7); - (C) any guarantee fees collected under [subsection (d)](#d); and - (D) any interest or earnings on amounts invested under [paragraph (4)](#i-4). - (3) **Use—** Amounts in the [Guarantee Fund](#l-2) shall be available, to the extent provided in appropriation Acts, for— - (A) fulfilling any obligations of the [Secretary](#l-6) with respect to loans guaranteed under this section, [including](/usc/12/25b.md?p=a-3) the costs (as such term is defined in [section 661a of title 2](/usc/2/661a.md)) 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](#l-6) for loans which are guaranteed under this section or held by the [Secretary](#l-6); - (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](#l-6) holds or owns pursuant to this section. - (4) **Investment—** Any amounts in the [Guarantee Fund](#l-2) determined by the [Secretary](#l-6) 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](#l-6) 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](#l-6) 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](#l-2) are or have been made available in appropriation Acts to cover the costs (as such term is defined in [section 661a of title 2](/usc/2/661a.md)) 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)](#i-5-A) and [(B)](#i-5-B), the [Secretary](#l-6) 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](#l-2) under [paragraph (2)(A)](#i-2-A) shall be liabilities and obligations of the [Guarantee Fund](#l-2). - (7) **Authorization of appropriations—** There are authorized to be appropriated to the [Guarantee Fund](#l-2) 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](#l-6) 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 degrees 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](/usc/12/1707.md?p=d), or National code; - (4) contain a plumbing system that— - (A) uses a properly installed system of piping; - (B) [includes](/usc/12/25b.md?p=a-3) 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](/usc/12/1707.md?p=d); - (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](/usc/12/1707.md?p=d), or National code; - (6) be not less than— - (A) - (i) 570 square feet in size, if designed for a [family](#l-1) of not more than 4 [persons](/usc/12/5481.md?p=19); - (ii) 850 square feet in size, if designed for a [family](#l-1) of not less than 5 and not more than 7 [persons](/usc/12/5481.md?p=19); and - (iii) 1020 square feet in size, if designed for a [family](#l-1) of not less than 8 [persons](/usc/12/5481.md?p=19), or - (B) the size provided under the applicable locally adopted standards for size of dwelling units; except that the [Secretary](#l-6), upon the request of a [tribe](#l-8) or [Indian housing authority](#l-5), may waive the size requirements under this paragraph; and - (7) conform with the energy performance requirements for new construction established by the [Secretary](#l-6) under section 526(a) of the National Housing Act [[12 U.S.C. 1735f–4(a)](/usc/12/1735f–4.md?p=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](/usc/42/4321.md) 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](/usc/25/4101.md) et seq.); and - (2) be subject to the regulations promulgated by the [Secretary](#l-6) to carry out section 105 of the Native American Housing Assistance and Self-Determination Act of 1996 ([25 U.S.C. 4115](/usc/25/4115.md)). - (l) **Definitions—** For purposes of this section: - (1) The term “family” means 1 or more [persons](/usc/12/5481.md?p=19) maintaining a household, as the [Secretary](#l-6) shall by regulation provide. - (2) The term “Guarantee Fund” means the [Indian](#l-3) Housing Loan Guarantee Fund established under [subsection (i)](#i). - (3) The term “Indian” means [person](/usc/12/5481.md?p=19) recognized as being Indian or Alaska Native by an [Indian tribe](#l-8), the Federal Government, or any [State](/usc/12/1707.md?p=d). - (4) The term “Indian area” means the area within which an [Indian housing authority](#l-5) or [Indian tribe](#l-8) 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](#l-3); 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](#l-8) independent of [State](/usc/12/1707.md?p=d) law; or - (ii) by operation of [State](/usc/12/1707.md?p=d) law providing specifically for housing authorities for [Indians](#l-3), [including](/usc/12/25b.md?p=a-3) regional housing authorities in the [State](/usc/12/1707.md?p=d) of Alaska. The term [includes](/usc/12/25b.md?p=a-3) tribally designated housing entities under the Native American Housing Assistance and Self-Determination Act of 1996 [[25 U.S.C. 4101](/usc/25/4101.md) 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)](#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](#l-3), [including](/usc/12/25b.md?p=a-3) any Alaska Native village or regional or village [corporation](/usc/12/2277a.md?p=2) as defined in or established pursuant to the Alaska Native Claims Settlement Act [[43 U.S.C. 1601](/usc/43/1601.md) et seq.], that is recognized as eligible for the special programs and services provided by the United States to [Indians](#l-3) because of their status as [Indians](#l-3) pursuant to the [Indian](#l-3) Self-Determination and Education Assistance Act of 1975 [[25 U.S.C. 5301](/usc/25/5301.md) et seq.]. - (9) The term “trust land” means land title to which is held by the United States for the benefit of an [Indian](#l-3) or [Indian tribe](#l-8) or title to which is held by an [Indian tribe](#l-8) subject to a restriction against alienation imposed by the United States. # §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](/usc/12/1422.md?p=12) or department of the government of the [State](/usc/12/1707.md?p=d) 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](#a-6) [family](#a-3), the [Department of Hawaiian Home Lands](#a-1), the [Office of Hawaiian Affairs](#a-7), and private nonprofit or private for-profit organizations experienced in the planning and development of affordable housing for [Native Hawaiians](#a-6). - (3) **Family—** The term “family” means one or more [persons](/usc/12/5481.md?p=19) maintaining a household, as the [Secretary](/usc/12/1715z–22a.md?p=4) shall by regulation provide. - (4) **Guarantee Fund—** The term “Guarantee Fund” means the [Native Hawaiian](#a-6) Housing Loan Guarantee Fund established under [subsection (j)](#j). - (5) **Hawaiian Home Lands—** The term “Hawaiian Home Lands” means lands that— - (A) have the status of [Hawaiian Home Lands](#a-5) 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](/usc/12/1707.md?p=d) 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](/usc/12/1707.md?p=d) 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](/usc/12/1707.md?p=d) of Hawaii. - (b) **Authority—** To provide access to sources of private financing to [Native Hawaiian](#a-6) [families](/usc/12/1715z–1.md?p=j-2-A) who otherwise could not [acquire](/usc/12/1467a.md?p=a-1-J) housing financing because of the unique legal status of the [Hawaiian Home Lands](#a-5) or as a result of a lack of access to private financial markets, the [Secretary](/usc/12/1715z–22a.md?p=4) 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). - (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](#a-6) [family](#a-3); - (B) the [Department of Hawaiian Home Lands](#a-1); - (C) the [Office of Hawaiian Affairs](#a-7); or - (D) a private [nonprofit organization](/usc/12/1821.md?p=w-2-B) experienced in the planning and development of affordable housing for [Native Hawaiians](#a-6). - (2) **Eligible housing—** - (A) **In general—** The loan will be used to construct, [acquire](/usc/12/1467a.md?p=a-1-J), or rehabilitate not more than 4-[family](#a-3) dwellings that are standard housing and are located on [Hawaiian Home Lands](#a-5) for which a housing plan described in [subparagraph (B)](#c-2-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](/usc/12/1715z–22a.md?p=4) under [section 4223 of title 25](/usc/25/4223.md); and - (ii) provides for the use of loan guarantees under this section to provide affordable homeownership housing on [Hawaiian Home Lands](#a-5). - (3) **Security—** The loan may be secured by any collateral authorized under applicable Federal or [State](/usc/12/1707.md?p=d) law. - (4) **Lenders—** - (A) **In general—** The loan shall be made only by a lender approved by, and meeting qualifications established by, the [Secretary](/usc/12/1715z–22a.md?p=4), [including](/usc/12/25b.md?p=a-3) any lender described in [subparagraph (B)](#c-4-B), except that a loan otherwise insured or guaranteed by an [agency](/usc/12/1422.md?p=12) of the Federal Government or made by the [Department of Hawaiian Home Lands](#a-1) 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](/usc/12/1715z–22a.md?p=4): - (i) Any [mortgagee](/usc/12/1707.md?p=b) approved by the [Secretary](/usc/12/1715z–22a.md?p=4) for [participation](/usc/12/2206a.md?p=a-1) in the single [family](#a-3) [mortgage](/usc/12/1707.md?p=a) insurance program under title II of the National Housing Act [[12 U.S.C. 1707](/usc/12/1707.md) et seq.]. - (ii) Any lender that makes housing loans under [chapter 37](/usc/38/chptIII-ch37.md) of title 38 that are automatically guaranteed under [section 3702(d) of title 38](/usc/38/3702.md?p=d). - (iii) Any lender approved by the [Secretary](/usc/12/1715z–22a.md?p=4) of Agriculture to make guaranteed loans for single [family](#a-3) housing under the Housing Act of 1949 [[42 U.S.C. 1441](/usc/42/1441.md) et seq.]. - (iv) Any other lender that is supervised, approved, regulated, or insured by any [agency](/usc/12/1422.md?p=12) 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)](#e) and service charges, if any) at a rate agreed upon by the borrower and the lender and determined by the [Secretary](/usc/12/1715z–22a.md?p=4) to be reasonable, but not to exceed the rate generally charged in the area (as determined by the [Secretary](/usc/12/1715z–22a.md?p=4)) for home [mortgage](/usc/12/1707.md?p=a) loans not guaranteed or insured by any [agency](/usc/12/1422.md?p=12) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) shall provide. - (d) **Certificate of guarantee—** - (1) **Approval process—** - (A) **In general—** Before the [Secretary](/usc/12/1715z–22a.md?p=4) approves any loan for guarantee under this section, the lender shall submit the application for the loan to the [Secretary](/usc/12/1715z–22a.md?p=4) for examination. - (B) **Approval—** If the [Secretary](/usc/12/1715z–22a.md?p=4) approves the application submitted under [subparagraph (A)](#d-1-A), the [Secretary](/usc/12/1715z–22a.md?p=4) shall issue a certificate under this subsection as evidence of the loan guarantee approved. - (2) **Standard for approval—** The [Secretary](/usc/12/1715z–22a.md?p=4) may approve a loan for guarantee under this section and issue a certificate under this subsection only if the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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)](#d-3-A) shall be incontestable in the hands of the bearer. - (C) **Full faith and credit—** The full faith and [credit](/usc/12/5481.md?p=7) of the United States is pledged to the payment of all amounts agreed to be paid by the [Secretary](/usc/12/1715z–22a.md?p=4) as security for the obligations made by the [Secretary](/usc/12/1715z–22a.md?p=4) under this section. - (4) **Fraud and misrepresentation—** This subsection may not be construed— - (A) to preclude the [Secretary](/usc/12/1715z–22a.md?p=4) from establishing defenses against the original lender based on fraud or material misrepresentation; or - (B) to bar the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4), to cover expenses and probable losses. - (3) **Deposit—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall [deposit](/usc/12/5301.md?p=18-A) any fees collected under this subsection in the [Native Hawaiian](#a-6) Housing Loan [Guarantee Fund](#a-4) established under [subsection (j)](#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](/usc/12/25b.md?p=a-3) the security given for the loan, may be sold or assigned by the lender to any [financial institution](/usc/12/1715k.md?p=h-1-C) subject to examination and supervision by an [agency](/usc/12/1422.md?p=12) of the Federal Government or of any [State](/usc/12/1707.md?p=d) or the District of Columbia. - (h) **Disqualification of lenders and civil money penalties—** - (1) **In general—** - (A) **Grounds for action—** The [Secretary](/usc/12/1715z–22a.md?p=4) may take action under [subparagraph (B)](#h-1-B) if the [Secretary](/usc/12/1715z–22a.md?p=4) determines that any lender or holder of a guarantee certificate under [subsection (d)](#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](/usc/12/5481.md?p=7) 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](/usc/12/1715z–22a.md?p=4) that a holder of a guarantee certificate under [subsection (d)](#d) has failed to carry out an activity described in [subparagraph (A)(i)](#h-1-A-i) or has engaged in practices described in [subparagraph (A)(ii)](#h-1-A-ii), the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) may impose a civil monetary penalty on a lender or holder of a guarantee certificate under [subsection (d)](#d) if the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/5481.md?p=7) or underwriting judgment. - (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](/usc/12/1735f–14.md)] with respect to [mortgagees](/usc/12/1707.md?p=b) and lenders under that Act. - (3) **Payment on loans made in good faith—** Notwithstanding paragraphs [(1)](#h-1) and [(2)](#h-2), if a loan was made in good faith, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1467a.md?p=e-7-A) on the loan, the holder of the guarantee certificate shall provide written notice of the [default](/usc/12/1467a.md?p=e-7-A) to the [Secretary](/usc/12/1715z–22a.md?p=4). - (ii) **Payment—** Upon providing the notice required under [clause (i)](#i-1-A-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](/usc/12/1715z–22a.md?p=4)). - (bb) **Payment—** Upon a final order by the court authorizing foreclosure and submission to the [Secretary](/usc/12/1715z–22a.md?p=4) of a claim for payment under the guarantee, the [Secretary](/usc/12/1715z–22a.md?p=4) shall pay to the holder of the certificate the pro rata portion of the amount guaranteed (as determined pursuant to [subsection (f)](#f)) plus reasonable fees and expenses as approved by the [Secretary](/usc/12/1715z–22a.md?p=4). - (cc) **Subrogation—** The rights of the [Secretary](/usc/12/1715z–22a.md?p=4) shall be subrogated to the rights of the holder of the guarantee. The holder shall assign the obligation and security to the [Secretary](/usc/12/1715z–22a.md?p=4). - (II) **No foreclosure—** - (aa) **In general—** Without seeking foreclosure (or in any case in which a foreclosure proceeding initiated under [clause (i)](#i-1-A-i) continues for a period in excess of 1 year), the holder of the guarantee may submit to the [Secretary](/usc/12/1715z–22a.md?p=4) a request to assign the obligation and security interest to the [Secretary](/usc/12/1715z–22a.md?p=4) in return for payment of the claim under the guarantee. The [Secretary](/usc/12/1715z–22a.md?p=4) may accept assignment of the loan if the [Secretary](/usc/12/1715z–22a.md?p=4) determines that the assignment is in the best interest of the United States. - (bb) **Payment—** Upon assignment, the [Secretary](/usc/12/1715z–22a.md?p=4) shall pay to the holder of the guarantee the pro rata portion of the amount guaranteed (as determined under [subsection (f)](#f)). - (cc) **Subrogation—** The rights of the [Secretary](/usc/12/1715z–22a.md?p=4) shall be subrogated to the rights of the holder of the guarantee. The holder shall assign the obligation and security to the [Secretary](/usc/12/1715z–22a.md?p=4). - (B) **Requirements—** Before any payment under a guarantee is made under [subparagraph (A)](#i-1-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](/usc/12/1715z–22a.md?p=4) shall then take such action to collect as the [Secretary](/usc/12/1715z–22a.md?p=4) determines to be appropriate. - (2) **Limitations on liquidation—** - (A) **In general—** If a borrower [defaults](/usc/12/1467a.md?p=e-7-A) on a loan guaranteed under this section that involves a security interest in restricted Hawaiian Home Land property, the [mortgagee](/usc/12/1707.md?p=b) or the [Secretary](/usc/12/1715z–22a.md?p=4) shall only pursue liquidation after offering to transfer the account to another eligible Hawaiian [family](#a-3) or the [Department of Hawaiian Home Lands](#a-1). - (B) **Limitation—** If, after action is taken under [subparagraph (A)](#i-2-A), the [mortgagee](/usc/12/1707.md?p=b) or the [Secretary](/usc/12/1715z–22a.md?p=4) subsequently proceeds to liquidate the account, the [mortgagee](/usc/12/1707.md?p=b) or the [Secretary](/usc/12/1715z–22a.md?p=4) shall not sell, transfer, or otherwise dispose of or alienate the property described in [subparagraph (A)](#i-2-A) except to another eligible Hawaiian [family](#a-3) or to the [Department of Hawaiian Home Lands](#a-1). - (j) **Hawaiian Housing Loan Guarantee Fund—** - (1) **Establishment—** There is established in the Treasury of the United States the Hawaiian Housing Loan [Guarantee Fund](#a-4) for the purpose of providing loan guarantees under this section. - (2) **Credits—** The [Guarantee Fund](#a-4) shall be credited with— - (A) any amount, claims, notes, [mortgages](/usc/12/1707.md?p=a), contracts, and property acquired by the [Secretary](/usc/12/1715z–22a.md?p=4) under this section, and any collections and proceeds therefrom; - (B) any amounts appropriated pursuant to [paragraph (7)](#j-7); - (C) any guarantee fees collected under [subsection (e)](#e); and - (D) any interest or earnings on amounts invested under [paragraph (4)](#j-4). - (3) **Use—** Amounts in the [Guarantee Fund](#a-4) shall be available, to the extent provided in appropriations Acts, for— - (A) fulfilling any obligations of the [Secretary](/usc/12/1715z–22a.md?p=4) with respect to loans guaranteed under this section, [including](/usc/12/25b.md?p=a-3) the costs (as that term is defined in [section 661a of title 2](/usc/2/661a.md)) 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](/usc/12/1715z–22a.md?p=4) for loans which are guaranteed under this section or held by the [Secretary](/usc/12/1715z–22a.md?p=4); - (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](/usc/12/1715z–22a.md?p=4) holds or owns pursuant to this section. - (4) **Investment—** Any amounts in the [Guarantee Fund](#a-4) determined by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) 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](#a-4) are or have been made available in appropriations Acts to cover the costs (as that term is defined in [section 661a of title 2](/usc/2/661a.md)) 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)](#j-5-A) and [(B)](#j-5-B), the [Secretary](/usc/12/1715z–22a.md?p=4) 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](#a-4) under [paragraph (2)(A)](#j-2-A) shall be liabilities and obligations of the [Guarantee Fund](#a-4). - (7) **Authorization of appropriations—** There are authorized to be appropriated to the [Guarantee Fund](#a-4) 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](/usc/12/1715z–22a.md?p=4) 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)](#k-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)](#k-2-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](/usc/12/25b.md?p=a-3) 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](/usc/12/1707.md?p=d); - (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](/usc/12/1707.md?p=d), 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](/usc/12/1715z–22a.md?p=4), upon request of the [Department of Hawaiian Home Lands](#a-1) may waive the size requirements under this paragraph; and - (vi) conform with the energy performance requirements for new construction established by the [Secretary](/usc/12/1715z–22a.md?p=4) under section 526(a) of the National Housing Act [[12 U.S.C. 1735f–4(a)](/usc/12/1735f–4.md?p=a)], unless the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/42/2000d.md) et seq.) or of the Fair Housing Act [[42 U.S.C. 3601](/usc/42/3601.md) 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](#a-2) on the basis that the entity serves [Native Hawaiian](#a-6) [families](/usc/12/1715z–1.md?p=j-2-A) or is a [Native Hawaiian](#a-6) [family](#a-3). # §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](/usc/12/1707.md?p=a) risk-sharing program designed to test the feasibility of entering into risk-sharing contracts with private [mortgage](/usc/12/1707.md?p=a) insurers and with [insured community development financial institutions](#e) in order to reduce Government risk and administrative costs, and to speed [mortgage](/usc/12/1707.md?p=a) processing. The [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) and loans insured by the [Secretary](/usc/12/1715z–22a.md?p=4) under this subchapter in such region during the preceding fiscal year. - (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](/usc/12/1715z–22a.md?p=4) is authorized, in providing [mortgage](/usc/12/1707.md?p=a) insurance with respect to one- to four-[family](/usc/12/1715z–1.md?p=j-2-A) dwellings under sections [1709(b)](/usc/12/1709.md?p=b), [1715y](/usc/12/1715y.md), and [1715z–10](/usc/12/1715z–10.md)[^1] of this title, to enter into risk-sharing contracts with private [mortgage](/usc/12/1707.md?p=a) [insurance companies](/usc/12/1841.md?p=q) which have been determined to be qualified insurers under [section 1717(b)(2)(C) of this title](/usc/12/1717.md) and with [insured community development financial institutions](#e). Such contracts shall require private [mortgage](/usc/12/1707.md?p=a) [insurance companies](/usc/12/1841.md?p=q) and [insured community development financial institutions](#e) to— - (1) assume a secondary percentage of loss on any [mortgage](/usc/12/1707.md?p=a) insured pursuant to section [1709(b)](/usc/12/1709.md?p=b), [1715y](/usc/12/1715y.md), or [1715z–10](/usc/12/1715z–10.md) of this title covering a one- to four-[family](/usc/12/1715z–1.md?p=j-2-A) 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](/usc/12/1715z–22a.md?p=4);[^2] - (2) perform or delegate underwriting, [credit](/usc/12/5481.md?p=7) approval, appraisal, inspection, commitment, claims processing, property disposition, or other functions as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) with a private [mortgage](/usc/12/1707.md?p=a) insurer or [insured community development financial institution](#e) 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](/usc/12/1715z–22a.md?p=4) may prescribe pursuant to regulations. Pursuant to a contract under this section, a private [mortgage](/usc/12/1707.md?p=a) [insurance company](/usc/12/1841.md?p=q) or [insured community development financial institution](#e) shall endorse loans for risk-sharing and take such other actions on behalf of the [Secretary](/usc/12/1715z–22a.md?p=4) and in the [Secretary](/usc/12/1715z–22a.md?p=4)’s name as the [Secretary](/usc/12/1715z–22a.md?p=4) may authorize. - (d) **Mortgages offered for inclusion by Secretary—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall require any private [mortgage](/usc/12/1707.md?p=a) [insurance company](/usc/12/1841.md?p=q) or [insured community development financial institution](#e) participating in the program under this section to provide risk-sharing for those [mortgages](/usc/12/1707.md?p=a) offered by the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1834a.md?p=j-4), as such term is defined in [section 4702 of this title](/usc/12/4702.md) that is an [insured depository institution](/usc/12/24a.md?p=g-2) (as such term is defined in [section 1813 of this title](/usc/12/1813.md)) or an [insured credit union](/usc/12/1829c.md?p=a-6) (as such term is defined in [section 1752 of this title](/usc/12/1752.md)). # §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](/usc/12/4146.md?p=2) of a multifamily rental housing project is required to obtain the approval of the [Secretary](/usc/12/1715z–22a.md?p=4) for prepayment of the [mortgage](/usc/12/1707.md?p=a), the [Secretary](/usc/12/1715z–22a.md?p=4) shall not accept an offer to prepay the [mortgage](/usc/12/1707.md?p=a) on such project or permit a termination of an insurance contract pursuant to [section 1715t of this title](/usc/12/1715t.md) unless— - (1) the [Secretary](/usc/12/1715z–22a.md?p=4) has determined that such project is no longer meeting a need for rental housing for [lower income families](#c) in the area; - (2) the [Secretary](/usc/12/1715z–22a.md?p=4) (A) has determined that the tenants have been notified of the [owner](/usc/12/4146.md?p=2)’s request for approval of a prepayment; (B) has provided the tenants with an opportunity to comment on the [owner](/usc/12/4146.md?p=2)’s request; and (C) has taken such comments into consideration; and - (3) the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1707.md?p=b) may foreclose the [mortgage](/usc/12/1707.md?p=a) on, or [acquire](/usc/12/1467a.md?p=a-1-J) by deed in lieu of foreclosure, any [eligible low-income housing](/usc/12/4146.md?p=2) project (as such term is defined in [section 4119 of this title](/usc/12/4119.md)) only if the [mortgagee](/usc/12/1707.md?p=b) also conveys title to the project to the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/42/1437a.md?p=b-2). # §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](/usc/12/1715z–22a.md?p=4) may insure under any provision of this subchapter a [mortgage](/usc/12/1707.md?p=a) involving property upon which there is located a dwelling designed principally for occupancy by one to four [families](/usc/12/1715z–1.md?p=j-2-A), where the [mortgage](/usc/12/1707.md?p=a) provides for periodic adjustments by the [mortgagee](/usc/12/1707.md?p=b) in the effective rate of interest charged. Such interest rate adjustments may be accomplished through adjustments in the monthly payment amount, the outstanding principal balance, or the [mortgage](/usc/12/1707.md?p=a) term, or a combination of these factors, except that in no case may any extension of a [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1715z–22a.md?p=4), information on which is readily accessible to [mortgagors](/usc/12/1707.md?p=b) 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](/usc/12/1707.md?p=a). - (b) **Written explanation of mortgage features—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall require that the [mortgagee](/usc/12/1707.md?p=b) make available to the [mortgagor](/usc/12/1707.md?p=b), at the time of loan application, a written explanation of the features of an adjustable rate [mortgage](/usc/12/1707.md?p=a) consistent with the disclosure requirements applicable to variable rate [mortgages](/usc/12/1707.md?p=a) secured by a principal dwelling under the Truth in Lending Act [[15 U.S.C. 1601](/usc/15/1601.md) et seq.]. - (c) **Number of mortgages and loans—** The aggregate number of [mortgages](/usc/12/1707.md?p=a) and loans insured under this section in any fiscal year may not exceed 30 percent of the aggregate number of [mortgages](/usc/12/1707.md?p=a) and loans insured by the [Secretary](/usc/12/1715z–22a.md?p=4) under this subchapter during the preceding fiscal year. - (d) **Adjustable rate mortgage with initial fixed rate of interest—** - (1) The [Secretary](/usc/12/1715z–22a.md?p=4) may insure under this subsection a [mortgage](/usc/12/1707.md?p=a) that meets the requirements of [subsection (a)](#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](/usc/12/1707.md?p=a) term; - (B) shall be adjusted by the [mortgagee](/usc/12/1707.md?p=b) 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)](#b) shall be required for a [mortgage](/usc/12/1707.md?p=a) insured under this subsection. # §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](/usc/12/1715z–22a.md?p=4) may insure, under any provision of this subchapter providing for insurance of [mortgages](/usc/12/1707.md?p=a) on properties upon which there is located a dwelling designed principally for occupancy by one to four [families](/usc/12/1715z–1.md?p=j-2-A), a [mortgage](/usc/12/1707.md?p=a) secured by a first lien on such a property or on the stock allocated to a dwelling unit in a residential cooperative housing [corporation](/usc/12/2277a.md?p=2), which— - (1) provides for the [mortgagee](/usc/12/1707.md?p=b) to share in a predetermined percentage of the property’s or stock’s [net appreciated value](#b); - (2) bears interest at a rate which meets criteria prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4); - (3) provides for amortization over a period of not to exceed 30 years, but the actual term of the [mortgage](/usc/12/1707.md?p=a) (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](/usc/12/1707.md?p=a) and any contingent deferred interest as the [Secretary](/usc/12/1715z–22a.md?p=4) may provide; and - (4) meets such other conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may require by regulation. - (b) **Payment of mortgagee’s share of net appreciated value; “net appreciated value” defined—** The [mortgagee](/usc/12/1707.md?p=b)’s share of a property’s or stock’s net appreciated value shall be payable upon sale or transfer (as defined by the [Secretary](/usc/12/1715z–22a.md?p=4)) of the property or stock or payment in full of the [mortgage](/usc/12/1707.md?p=a), 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](/usc/12/1707.md?p=b)’s selling costs) exceeds the value of the property or stock at the time the commitment to insure is issued (with adjustments for [capital](/usc/12/51c.md) improvements stipulated in the loan contract). If there has been no sale or transfer at the time the [mortgagee](/usc/12/1707.md?p=b)’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](/usc/12/1715z–22a.md?p=4) and provided for in the [mortgage](/usc/12/1707.md?p=a). - (c) **Entitlement of mortgagee upon default—** In the event of a [default](/usc/12/1467a.md?p=e-7-A), the [mortgagee](/usc/12/1707.md?p=b) shall be entitled to receive the benefits of insurance in accordance with [section 1710(a) of this title](/usc/12/1710.md?p=a), but such insurance benefits shall not include the [mortgagee](/usc/12/1707.md?p=b)’s share of [net appreciated value](#b). The term “original principal obligation of the mortgage” as used in [section 1710 of this title](/usc/12/1710.md) shall not include the [mortgagee](/usc/12/1707.md?p=b)’s share of [net appreciated value](#b). - (d) **Inapplicability of State constitution, statute, etc., limiting or prohibiting increases in outstanding loan balance—** [Mortgages](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=d) constitution, statute, court decree, common law, rule, or public policy limiting or prohibiting increases in the outstanding loan balance after execution of the [mortgage](/usc/12/1707.md?p=a). - (e) **Encouraged use of insurance by low and moderate income families—** In carrying out the provisions of this section, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) shall prescribe adequate [consumer](/usc/12/5481.md?p=4) protections and disclosure requirements with respect to [mortgages](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) and loans insured under this section and [section 1715z–10(c)](/usc/12/1715z–10.md)[^1] of this title in any fiscal year may not exceed 10 percent of the aggregate number of [mortgages](/usc/12/1707.md?p=a) and loans insured by the [Secretary](/usc/12/1715z–22a.md?p=4) under this subchapter during the preceding fiscal year. # §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](/usc/12/1715z–22a.md?p=4) may insure, under any provision of this subchapter providing for insurance of [mortgages](/usc/12/1707.md?p=a) on properties [including](/usc/12/25b.md?p=a-3) 5 or more [family](/usc/12/1715z–1.md?p=j-2-A) units, a [mortgage](/usc/12/1707.md?p=a) secured by a first lien on the property that (1) provides for the [mortgagee](/usc/12/1707.md?p=b) to share in a predetermined percentage of the property’s [net appreciated value](#b); and (2) meets such other conditions, [including](/usc/12/25b.md?p=a-3) limitations on the rate of interest which may be charged, as the [Secretary](/usc/12/1715z–22a.md?p=4) may require by regulation. - (b) **Payment of mortgagee’s share of net appreciated value; term of mortgage; repayment; “net appreciated value” defined—** The [mortgagee](/usc/12/1707.md?p=b)’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](/usc/12/1715z–22a.md?p=4)) of the property, whichever occurs first. The term of the [mortgage](/usc/12/1707.md?p=a) shall not be less than 15 years, and shall be repayable in equal monthly installments of principal and fixed interest during the [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=a) which will not be completely amortized during the [mortgage](/usc/12/1707.md?p=a) term, the principal obligation of the [mortgage](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=b)’s selling costs) exceeds the actual project cost after completion, as approved by the [Secretary](/usc/12/1715z–22a.md?p=4). If there has been no sale or transfer at the time the [mortgagee](/usc/12/1707.md?p=b)’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](/usc/12/1715z–22a.md?p=4) and provided for in the [mortgage](/usc/12/1707.md?p=a). - (c) **Entitlement of mortgagee upon default—** In the event of a [default](/usc/12/1467a.md?p=e-7-A), the [mortgagee](/usc/12/1707.md?p=b) shall be entitled to receive the benefits of insurance in accordance with [section 1713 of this title](/usc/12/1713.md), but such insurance benefits shall not include the [mortgagee](/usc/12/1707.md?p=b)’s share of [net appreciated value](#b). The term “original principal face amount of the mortgage” as used in [section 1713 of this title](/usc/12/1713.md) shall not include the [mortgagee](/usc/12/1707.md?p=b)’s share of [net appreciated value](#b). - (d) **Maximum percentage of net appreciated value; disclosure requirements—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall establish by regulation the maximum percentage of [net appreciated value](#b) which may be payable to a [mortgagee](/usc/12/1707.md?p=b) as the [mortgagee](/usc/12/1707.md?p=b)’s share. The [Secretary](/usc/12/1715z–22a.md?p=4) shall also establish disclosure requirements applicable to [mortgagees](/usc/12/1707.md?p=b) making [mortgage](/usc/12/1707.md?p=a) loans pursuant to this section, to assure that [mortgagors](/usc/12/1707.md?p=b) are informed of the characteristics of such [mortgages](/usc/12/1707.md?p=a). - (e) **Inapplicability of State constitution, statute, etc., limiting or prohibiting increases in outstanding loan balance—** [Mortgages](/usc/12/1707.md?p=a) 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](/usc/12/1707.md?p=d) constitution, statute, court decree, common law, rule, or public policy limiting or prohibiting increases in the outstanding loan balance after execution of the [mortgage](/usc/12/1707.md?p=a). - (f) **Number of dwelling units—** The number of dwelling units included in properties covered by [mortgages](/usc/12/1707.md?p=a) insured pursuant to this section in any fiscal year may not exceed 5,000. # §1715z–19. Equity skimming penalty - (a) **In general—** Whoever, as an [owner](/usc/12/4146.md?p=2), agent, or manager, or who is otherwise in custody, [control](/usc/12/24a.md?p=g-1), or possession of a multifamily project or a 1- to 4-[family](/usc/12/1715z–1.md?p=j-2-A) residence that is security for a [mortgage](/usc/12/1707.md?p=a) note that is described in [subsection (b)](#b), willfully uses or authorizes the use of any part of the rents, assets, proceeds, income, or other [funds](/usc/12/4702.md?p=10) derived from property covered by that [mortgage](/usc/12/1707.md?p=a) note for any purpose other than to meet reasonable and necessary expenses that include expenses approved by the [Secretary](/usc/12/1715z–22a.md?p=4) if such approval is required, in a period during which the [mortgage](/usc/12/1707.md?p=a) note is in [default](/usc/12/1467a.md?p=e-7-A) or the project is in a nonsurplus cash position, as defined by the regulatory agreement covering the property, or the [mortgagor](/usc/12/1707.md?p=b) has failed to comply with the provisions of such other form of regulatory [control](/usc/12/24a.md?p=g-1) imposed by the [Secretary](/usc/12/1715z–22a.md?p=4), shall be fined not more than $500,000, imprisoned not more than 5 years, or both. - (b) **Mortgage notes described—** For purposes of [subsection (a)](#a), a [mortgage](/usc/12/1707.md?p=a) note is described in this subsection if it— - (1) is insured, acquired, or held by the [Secretary](/usc/12/1715z–22a.md?p=4) pursuant to this chapter; - (2) is made pursuant to [section 1701q of this title](/usc/12/1701q.md) ([including](/usc/12/25b.md?p=a-3) property still subject to [section 1701q](/usc/12/1701q.md) program requirements that existed before November 28, 1990); or - (3) is insured or held pursuant to [section 1715z–22 of this title](/usc/12/1715z–22.md), but is not reinsured under [section 1715z–22 of this title](/usc/12/1715z–22.md). # §1715z–20. Insurance of home equity conversion mortgages for elderly homeowners - (a) **Purpose—** The purpose of this section is to authorize the [Secretary](/usc/12/1715z–22a.md?p=4) to carry out a program of [mortgage](#b-4) insurance designed— - (1) to meet the special needs of [elderly homeowners](#b-1) 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](#b-3) to permit the conversion of a portion of accumulated home equity into liquid assets; and - (2) to encourage and increase the involvement of [mortgagees](/usc/12/1707.md?p=b) and participants in the [mortgage](#b-4) markets in the making and [servicing](/usc/12/2605.md?p=i-3) of [home equity conversion mortgages](#b-3) for [elderly homeowners](#b-1). - (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](/usc/12/1715z–22a.md?p=4) may prescribe. - (2) The terms “[mortgagee](/usc/12/1707.md?p=b)”, “[mortgagor](/usc/12/1707.md?p=b)”, “[real estate](/usc/12/1707.md?p=g),”[^1] and “[State](/usc/12/1707.md?p=d)” have the meanings given such terms in [section 1707 of this title](/usc/12/1707.md). - (3) The term “home equity conversion mortgage” means a [first mortgage](#b-5) which provides for future payments to the [homeowner](#b-1) based on accumulated equity and which a housing creditor (as defined in [section 3802(2) of this title](/usc/12/3802.md?p=2)) is authorized to make (A) under any law of the United States (other than [section 3803 of this title](/usc/12/3803.md)) or applicable [agency](/usc/12/1422.md?p=12) regulations thereunder; (B) in accordance with [section 3803 of this title](/usc/12/3803.md), notwithstanding any [State](/usc/12/1707.md?p=d) constitution, law, or regulation; or (C) under any [State](/usc/12/1707.md?p=d) constitution, law, or regulation. - (4) **Mortgage.—** The term “mortgage” means a [first mortgage](#b-5) or first lien on [real estate](/usc/12/1707.md?p=g), in fee simple, a first or subordinate mortgage or lien on all stock allocated to a dwelling unit in a residential cooperative housing [corporation](/usc/12/2277a.md?p=2), or a [first mortgage](#b-5) 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](/usc/12/1715z–22a.md?p=4), beyond the actuarial life expectancy of the [mortgagor](/usc/12/1707.md?p=b) 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](/usc/12/1707.md?p=g) or a first or subordinate lien on all stock allocated to a dwelling unit in a residential cooperative housing [corporation](/usc/12/2277a.md?p=2), under the laws of the [State](/usc/12/1707.md?p=d) in which the [real estate](/usc/12/1707.md?p=g) or dwelling unit is located, together with the [credit](/usc/12/5481.md?p=7) instruments, if any, secured thereby. - (c) **Insurance authority—** The [Secretary](/usc/12/1715z–22a.md?p=4) may, upon application by a [mortgagee](/usc/12/1707.md?p=b), insure any [home equity conversion mortgage](#b-3) eligible for insurance under this section and, upon such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe, make commitments for the insurance of such [mortgages](#b-4) prior to the date of their execution or disbursement to the extent that the [Secretary](/usc/12/1715z–22a.md?p=4) determines such [mortgages](#b-4)— - (1) have promise for improving the financial situation or otherwise meeting the special needs of [elderly homeowners](#b-1); - (2) will include appropriate safeguards for [mortgagors](/usc/12/1707.md?p=b) to offset the special risks of such [mortgages](#b-4); and - (3) have a potential for acceptance in the [mortgage](#b-4) market. - (d) **Eligibility requirements—** To be eligible for insurance under this section, a [mortgage](#b-4) shall— - (1) have been originated by a [mortgagee](/usc/12/1707.md?p=b) approved by the [Secretary](/usc/12/1715z–22a.md?p=4); - (2) have been executed by a [mortgagor](/usc/12/1707.md?p=b) who— - (A) qualifies as an [elderly homeowner](#b-1); - (B) has received adequate counseling, as provided in [subsection (f)](#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](/usc/12/2605.md?p=i-3) the [mortgage](#b-4); - (ii) funding the loan underlying the [mortgage](#b-4); or - (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](/usc/12/1715z–22a.md?p=4), of all costs charged to the [mortgagor](/usc/12/1707.md?p=b), [including](/usc/12/25b.md?p=a-3) costs of estate planning, financial advice, and other services that are related to the [mortgage](#b-4) but are not required to obtain the [mortgage](#b-4), which disclosure shall clearly [state](/usc/12/1707.md?p=d) which charges are required to obtain the [mortgage](#b-4) and which are not required to obtain the [mortgage](#b-4); and - (D) meets any additional requirements prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4); - (3) be secured by a dwelling that is designed principally for a 1- to 4-[family](/usc/12/1715z–1.md?p=j-2-A) residence in which the [mortgagor](/usc/12/1707.md?p=b) 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](#b-4); - (5) provide for a fixed or variable interest rate or future sharing between the [mortgagor](/usc/12/1707.md?p=b) and the [mortgagee](/usc/12/1707.md?p=b) of the appreciation in the value of the property, as agreed upon by the [mortgagor](/usc/12/1707.md?p=b) and the [mortgagee](/usc/12/1707.md?p=b); - (6) contain provisions for satisfaction of the obligation satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4); - (7) provide that the [homeowner](#b-1) shall not be liable for any difference between the net amount of the remaining indebtedness of the [homeowner](#b-1) under the [mortgage](#b-4) and the amount recovered by the [mortgagee](/usc/12/1707.md?p=b) from— - (A) the net sales proceeds from the dwelling that are subject to the [mortgage](#b-4) (based upon the amount of the accumulated equity selected by the [mortgagor](/usc/12/1707.md?p=b) to be subject to the [mortgage](#b-4), as agreed upon by the [mortgagor](/usc/12/1707.md?p=b) and [mortgagee](/usc/12/1707.md?p=b)); or - (B) the insurance benefits paid pursuant to [subsection (i)(1)(C)](#i-1-C); - (8) contain such terms and provisions with respect to insurance, repairs, alterations, payment of taxes, [default](/usc/12/1467a.md?p=e-7-A) reserve, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe; - (9) provide for future payments to the [mortgagor](/usc/12/1707.md?p=b) based on accumulated equity (minus any applicable fees and charges), according to the method that the [mortgagor](/usc/12/1707.md?p=b) shall select from among the methods under this paragraph, by payment of the amount— - (A) based upon a line of [credit](/usc/12/5481.md?p=7); - (B) on a monthly basis over a term specified by the [mortgagor](/usc/12/1707.md?p=b); - (C) on a monthly basis over a term specified by the [mortgagor](/usc/12/1707.md?p=b) and based upon a line of [credit](/usc/12/5481.md?p=7); - (D) on a monthly basis over the tenure of the [mortgagor](/usc/12/1707.md?p=b); - (E) on a monthly basis over the tenure of the [mortgagor](/usc/12/1707.md?p=b) and based upon a line of [credit](/usc/12/5481.md?p=7); or - (F) on any other basis that the [Secretary](/usc/12/1715z–22a.md?p=4) considers appropriate; - (10) provide that the [mortgagor](/usc/12/1707.md?p=b) may convert the method of payment under [paragraph (9)](#d-9) to any other method during the term of the [mortgage](#b-4), except that in the case of a fixed rate [mortgage](#b-4), the [Secretary](/usc/12/1715z–22a.md?p=4) may, by regulation, limit such convertibility; and - (11) have been made with such restrictions as the [Secretary](/usc/12/1715z–22a.md?p=4) determines to be appropriate to ensure that the [mortgagor](/usc/12/1707.md?p=b) does not [fund](/usc/12/4702.md?p=10) any unnecessary or excessive costs for obtaining the [mortgage](#b-4), [including](/usc/12/25b.md?p=a-3) any costs of estate planning, financial advice, or other related services. - (e) **Disclosures by mortgagee—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall require each [mortgagee](/usc/12/1707.md?p=b) of a [mortgage](#b-4) insured under this section to make available to the [homeowner](#b-1)— - (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](/usc/12/1715z–22a.md?p=4) as responsible and able to provide the information required by [subsection (f)](#f); - (2) at least 10 days prior to loan closing, a statement informing the [homeowner](#b-1) that the liability of the [homeowner](#b-1) under the [mortgage](#b-4) is limited and explaining the [homeowner](#b-1)’s rights, obligations, and remedies with respect to temporary absences from the home, late payments, and payment [default](/usc/12/1467a.md?p=e-7-A) by the lender, all conditions requiring satisfaction of the loan obligation, and any other information that the [Secretary](/usc/12/1715z–22a.md?p=4) 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](#b-1) under the loan secured by the [mortgage](#b-4), 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](#b-4) to the [homeowner](#b-1) 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](#b-4)) for not less than 2 projected loan terms, as the [Secretary](/usc/12/1715z–22a.md?p=4) shall determine, which shall include— - (A) the cost for a short-term [mortgage](#b-4); and - (B) the cost for a loan term equaling the actuarial life expectancy of the [mortgagor](/usc/12/1707.md?p=b). - (f) **Counseling services and information for mortgagors—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall provide or cause to be provided adequate counseling for the [mortgagor](/usc/12/1707.md?p=b), as described in [subsection (d)(2)(B)](#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](/usc/12/1715z–22a.md?p=4) within 12 months of July 30, 2008. The protocols shall require a qualified counselor to discuss with each [mortgagor](/usc/12/1707.md?p=b) information which shall include— - (1) options other than a [home equity conversion mortgage](#b-3) that are available to the [homeowner](#b-1), [including](/usc/12/25b.md?p=a-3) other housing, social service, health, and financial options; - (2) other home equity conversion options that are or may become available to the [homeowner](#b-1), such as sale-leaseback financing, deferred payment loans, and property tax deferral; - (3) the financial implications of entering into a [home equity conversion mortgage](#b-3); - (4) a disclosure that a [home equity conversion mortgage](#b-3) may have tax consequences, affect eligibility for assistance under Federal and [State](/usc/12/1707.md?p=d) programs, and have an impact on the estate and heirs of the [homeowner](#b-1); and - (5) any other information that the [Secretary](/usc/12/1715z–22a.md?p=4) may require. The [Secretary](/usc/12/1715z–22a.md?p=4) shall consult with [consumer](/usc/12/5481.md?p=4) groups, industry representatives, representatives of counseling organizations, and other interested parties to identify alternative approaches to providing [consumer](/usc/12/5481.md?p=4) information required by this subsection that may be feasible and desirable for [home equity conversion mortgages](#b-3) insured under this section and other types of reverse [mortgages](#b-4). The [Secretary](/usc/12/1715z–22a.md?p=4) may, in lieu of providing the [consumer](/usc/12/5481.md?p=4) education required by this subsection, adopt alternative approaches to [consumer](/usc/12/5481.md?p=4) 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](#b-4) 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](/usc/12/1454.md?p=a-2) for a 1-[family](/usc/12/1715z–1.md?p=j-2-A) residence. - (h) **Administrative authority—** The [Secretary](/usc/12/1715z–22a.md?p=4) may— - (1) enter into such contracts and agreements with Federal, [State](/usc/12/1707.md?p=d), and local [agencies](/usc/12/1422.md?p=12), public and private entities, and such other [persons](/usc/12/5481.md?p=19) as the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) determines to be appropriate; and - (3) establish, by notice or [mortgagee](/usc/12/1707.md?p=b) letter, any additional or alternative requirements that the [Secretary](/usc/12/1715z–22a.md?p=4), in the [Secretary](/usc/12/1715z–22a.md?p=4)’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](/usc/12/1715z–22a.md?p=4) shall take any action necessary— - (A) to provide any [mortgagor](/usc/12/1707.md?p=b) under this section with [funds](/usc/12/4702.md?p=10) to which the [mortgagor](/usc/12/1707.md?p=b) is entitled under the insured [mortgage](#b-4) or ancillary contracts but that the [mortgagor](/usc/12/1707.md?p=b) has not received because of the [default](/usc/12/1467a.md?p=e-7-A) of the party responsible for payment; - (B) to obtain repayment of disbursements provided under [subparagraph (A)](#i-1-A) from any source; and - (C) to provide any [mortgagee](/usc/12/1707.md?p=b) under this section with [funds](/usc/12/4702.md?p=10) not to exceed the limitations in [subsection (g)](#g) to which the [mortgagee](/usc/12/1707.md?p=b) is entitled under the terms of the insured [mortgage](#b-4) or ancillary contracts authorized in this section. - (2) Actions under [paragraph (1)](#i-1) may include— - (A) disbursing [funds](/usc/12/4702.md?p=10) to the [mortgagor](/usc/12/1707.md?p=b) or [mortgagee](/usc/12/1707.md?p=b) from the Mutual [Mortgage](#b-4) Insurance [Fund](/usc/12/4702.md?p=10); - (B) accepting an assignment of the insured [mortgage](#b-4) notwithstanding that the [mortgagor](/usc/12/1707.md?p=b) is not in [default](/usc/12/1467a.md?p=e-7-A) under its terms, and calculating the amount and making the payment of the insurance claim on such assigned [mortgage](#b-4); - (C) requiring a subordinate [mortgage](#b-4) from the [mortgagor](/usc/12/1707.md?p=b) at any time in order to secure repayments of any [funds](/usc/12/4702.md?p=10) advanced or to be advanced to the [mortgagor](/usc/12/1707.md?p=b); - (D) requiring a subrogation to the [Secretary](/usc/12/1715z–22a.md?p=4) 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](/usc/12/1715z–22a.md?p=4) may not insure a [home equity conversion mortgage](#b-3) under this section unless such [mortgage](#b-4) 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](/usc/12/1715z–22a.md?p=4). For purposes of this subsection, the term “homeowner” [includes](/usc/12/25b.md?p=a-3) the spouse of a homeowner. [Section 1647(b) of title 15](/usc/15/1647.md?p=b) and any implementing regulations issued by the [Board](/usc/12/221a.md?p=a) of Governors of the Federal Reserve System shall not apply to a [mortgage](#b-4) insured under this section. - (k) **Insurance authority for refinancings—** - (1) **In general—** The [Secretary](/usc/12/1715z–22a.md?p=4) may, upon application by a [mortgagee](/usc/12/1707.md?p=b), insure under this subsection any [mortgage](#b-4) given to refinance an existing [home equity conversion mortgage](#b-3) insured under this section. - (2) **Anti-churning disclosure—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall, by regulation, require that the [mortgagee](/usc/12/1707.md?p=b) of a [mortgage](#b-4) insured under this subsection, provide to the [mortgagor](/usc/12/1707.md?p=b), 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](/usc/12/1707.md?p=b)’s principal limit as measured by the estimated initial principal limit on the [mortgage](#b-4) to be insured under this subsection less the current principal limit on the [home equity conversion mortgage](#b-3) that is being refinanced and insured under this subsection. - (3) **Waiver of counseling requirement—** The [mortgagor](/usc/12/1707.md?p=b) under a [mortgage](#b-4) insured under this subsection may waive the applicability, with respect to such [mortgage](#b-4), of the requirements under [subsection (d)(2)(B)](#d-2-B) (relating to third party counseling), but only if— - (A) the [mortgagor](/usc/12/1707.md?p=b) has received the disclosure required under [paragraph (2)](#k-2); - (B) the increase in the principal limit described in [paragraph (2)](#k-2) exceeds the amount of the total cost of refinancing (as described in such paragraph) by an amount to be determined by the [Secretary](/usc/12/1715z–22a.md?p=4); and - (C) the time between the closing of the original [home equity conversion mortgage](#b-3) that is refinanced through the [mortgage](#b-4) insured under this subsection and the application for a refinancing [mortgage](#b-4) insured under this subsection does not exceed 5 years. - (4) **Credit for premiums paid—** Notwithstanding [section 1709(c)(2)(A) of this title](/usc/12/1709.md?p=c-2-A), the [Secretary](/usc/12/1715z–22a.md?p=4) may reduce the amount of the single premium payment otherwise collected under such section at the time of the insurance of a [mortgage](#b-4) refinanced and insured under this subsection. The amount of the single premium for [mortgages](#b-4) refinanced under this subsection shall be determined by the [Secretary](/usc/12/1715z–22a.md?p=4) based on the actuarial study required under [paragraph (5)](#k-5). - (5) **Actuarial study—** Not later than 180 days after December 27, 2000, the [Secretary](/usc/12/1715z–22a.md?p=4) 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](#b-4) refinanced and insured under this subsection; - (B) the establishment of a single national limit on the benefits of insurance under [subsection (g)](#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](/usc/12/1715z–22a.md?p=4) may establish a limit on the origination fee that may be charged to a [mortgagor](/usc/12/1707.md?p=b) under a [mortgage](#b-4) insured under this subsection, except that such limitation shall provide that the origination fee may be fully financed with the [mortgage](#b-4) and shall include any fees paid to correspondent [mortgagees](/usc/12/1707.md?p=b) approved by the [Secretary](/usc/12/1715z–22a.md?p=4). - (l) **Funding for counseling—** The [Secretary](/usc/12/1715z–22a.md?p=4) may use a portion of the [mortgage](#b-4) insurance premiums collected under the program under this section to adequately [fund](/usc/12/4702.md?p=10) the counseling and disclosure activities required under [subsection (f)](#f), [including](/usc/12/25b.md?p=a-3) counseling for those [homeowners](#b-1) who elect not to take out a [home equity conversion mortgage](#b-3), provided that the use of such [funds](/usc/12/4702.md?p=10) 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](/usc/12/1715z–22a.md?p=4) may insure, upon application by a [mortgagee](/usc/12/1707.md?p=b), a [home equity conversion mortgage](#b-3) upon such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may prescribe, when the [home equity conversion mortgage](#b-3) will be used to purchase a 1- to 4-[family](/usc/12/1715z–1.md?p=j-2-A) dwelling unit, one unit of which the [mortgagor](/usc/12/1707.md?p=b) will occupy as a primary residence, and to provide for any future payments to the [mortgagor](/usc/12/1707.md?p=b), based on available equity, as authorized under [subsection (d)(9)](#d-9). - (2) **Limitation on principal obligation—** A [home equity conversion mortgage](#b-3) insured pursuant to [paragraph (1)](#m-1) shall involve a principal obligation that does not exceed the dollar amount limitation determined under [section 1454(a)(2) of this title](/usc/12/1454.md?p=a-2) for a 1-[family](/usc/12/1715z–1.md?p=j-2-A) residence. - (n) **Requirements on mortgage originators—** - (1) **In general—** The [mortgagee](/usc/12/1707.md?p=b) and any other party that [participates](/usc/12/2206a.md?p=a-1) in the origination of a [mortgage](#b-4) to be insured under this section shall— - (A) not [participate](/usc/12/2206a.md?p=a-1) in, be associated with, or employ any party that [participates](/usc/12/2206a.md?p=a-1) in or is associated with any other financial or insurance activity; or - (B) demonstrate to the [Secretary](/usc/12/1715z–22a.md?p=4) that the [mortgagee](/usc/12/1707.md?p=b) or other party maintains, or will maintain, firewalls and other safeguards designed to ensure that— - (i) individuals participating in the origination of the [mortgage](#b-4) shall have no involvement with, or incentive to provide the [mortgagor](/usc/12/1707.md?p=b) with, any other financial or insurance product; and - (ii) the [mortgagor](/usc/12/1707.md?p=b) shall not be required, directly or indirectly, as a condition of obtaining a [mortgage](#b-4) under this section, to purchase any other financial or insurance product. - (2) **Approval of other parties—** All parties that [participate](/usc/12/2206a.md?p=a-1) in the origination of a [mortgage](#b-4) to be insured under this section shall be approved by the [Secretary](/usc/12/1715z–22a.md?p=4). - (o) **Prohibition against requirements to purchase additional products—** The [mortgagor](/usc/12/1707.md?p=b) or any other party shall not be required by the [mortgagee](/usc/12/1707.md?p=b) 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)](#c), except for title insurance, hazard, flood, or other peril insurance, or other such products that are customary and normal under [subsection (c)](#c), as determined by the [Secretary](/usc/12/1715z–22a.md?p=4). - (p) **Study to determine consumer protections and underwriting standards—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall conduct a study to examine and determine appropriate [consumer](/usc/12/5481.md?p=4) protections and underwriting standards to ensure that the purchase of products referred to in [subsection (o)](#o) is appropriate for the [consumer](/usc/12/5481.md?p=4). In conducting such study, the [Secretary](/usc/12/1715z–22a.md?p=4) shall consult with [consumer](/usc/12/5481.md?p=4) advocates ([including](/usc/12/25b.md?p=a-3) recognized experts in [consumer](/usc/12/5481.md?p=4) protection), industry representatives, representatives of counseling organizations, and other interested parties. - (r) **[^2] Limitation on origination fees—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall establish limits on the origination fee that may be charged to a [mortgagor](/usc/12/1707.md?p=b) under a [mortgage](#b-4) insured under this section, which limitations shall— - (1) be equal to 2.0 percent of the maximum claim amount of the [mortgage](#b-4), 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](/usc/12/1707.md?p=b); and - (B) the impact on the reverse [mortgage](#b-4) market; - (2) be subject to a minimum allowable amount; - (3) provide that the origination fee may be fully financed with the [mortgage](#b-4); - (4) include any fees paid to correspondent [mortgagees](/usc/12/1707.md?p=b) approved by the [Secretary](/usc/12/1715z–22a.md?p=4); - (5) have the same effective date as [subsection (m)(2)](#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](/usc/12/5481.md?p=4) Price Index of the [Bureau](/usc/12/5481.md?p=2) 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.