---
kind: "section"
citation: "12 U.S.C. § 1715z–19"
title: "12"
title_heading: "Banks and Banking"
number: "1715z–19"
heading: "Equity skimming penalty"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/1715z-19"
units:
  - "Chapter 13 — National Housing"
  - "Subchapter II — Mortgage Insurance"
---

# §1715z–19. Equity skimming penalty

- (a) **In general—** Whoever, as an owner, agent, or manager, or who is otherwise in custody, control, or possession of a multifamily project or a 1- to 4-family residence that is security for a [mortgage](/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 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 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 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 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).

## Source credit

(June 27, 1934, ch. 847, title II, § 254, as added Pub. L. 100–242, title IV, § 416(b), Feb. 5, 1988, 101 Stat. 1908; amended Pub. L. 105–65, title V, § 552, Oct. 27, 1997, 111 Stat. 1412.)

## Notes

### Editorial Notes

### Amendments

1997—Pub. L. 105–65 amended section generally. Prior to amendment, section read as follows: “Whoever, as an owner, agent, or manager, or who is otherwise in custody, control, or possession of property that is security for a mortgage note that is insured, acquired, or held by the Secretary pursuant to section 1709, 1713, 1715e, 1715k, 1715l(d)(3), 1715l(d)(4), 1715n(f), 1715v, 1715w, 1715y, 1715z–1, 1715z–3(c), 1715z–6, 1715z–7, 1715z–9, 1743, or 1748h–2 of this title, or subchapter IX–B of this chapter, or is made pursuant to section 1701q of this title, willfully uses or authorizes the use of any part of the rents, assets, proceeds, income or other funds derived from property covered by such mortgage note during a period when the mortgage note is in default or the project is in a nonsurplus cash position as defined by the regulatory agreement covering such property, for any purpose other than to meet actual or necessary expenses that include expenses approved by the Secretary if such approval is required under the terms of the regulatory agreement, shall be fined not more than $250,000 or imprisoned not more than 5 years, or both.”