---
kind: "section"
citation: "12 U.S.C. § 1735f–19"
title: "12"
title_heading: "Banks and Banking"
number: "1735f–19"
heading: "Partial payment of claims on defaulted mortgages and in connection with mortgage restructuring"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/1735f-19"
units:
  - "Chapter 13 — National Housing"
  - "Subchapter V — Miscellaneous"
---

# §1735f–19. Partial payment of claims on defaulted mortgages and in connection with mortgage restructuring

- (a) **Defaulted mortgages—** Notwithstanding any other provision of law, if the [Secretary](/usc/12/1715z–22a.md?p=4) is requested to accept assignment of a [mortgage](/usc/12/1707.md?p=a) insured by the [Secretary](/usc/12/1715z–22a.md?p=4) that covers a [multifamily housing](/usc/12/1715z–22a.md?p=1) project (as such term is defined in [section 1701z–11(b) of this title](/usc/12/1701z–11.md?p=b)) or a health care facility (including a nursing home, intermediate care facility, or [board](/usc/12/1861.md?p=b-3) and care home (as those terms are defined in [section 1715w of this title](/usc/12/1715w.md)), a hospital (as that term is defined in [section 1715z–7 of this title](/usc/12/1715z–7.md)), or a group practice facility (as that term is defined in [section 1749aaa–5 of this title](/usc/12/1749aaa–5.md))) and the [Secretary](/usc/12/1715z–22a.md?p=4) determines that partial payment would be less costly to the Federal Government than other reasonable alternatives for maintaining the low-income character of the project, or for keeping the health care facility operational to serve community needs, the [Secretary](/usc/12/1715z–22a.md?p=4) may request the [mortgagee](/usc/12/1707.md?p=b), in lieu of assignment, to—
  - (1) accept partial payment of the claim under the [mortgage](/usc/12/1707.md?p=a) insurance contract; and
  - (2) recast the [mortgage](/usc/12/1707.md?p=a), under such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may determine.
- (b) **Existing mortgages—** Notwithstanding any other provision of law, the [Secretary](/usc/12/1715z–22a.md?p=4), in connection with a [mortgage](/usc/12/1707.md?p=a) restructuring under section 514 of the Multifamily Assisted Housing Reform and Affordability Act of 1997, may make a one time, nondefault partial or full payment of claim under one or more [mortgage](/usc/12/1707.md?p=a) insurance contracts, which shall include a determination by the [Secretary](/usc/12/1715z–22a.md?p=4) or the participating administrative entity, in accordance with the Multifamily Assisted Housing Reform and Affordability Act of 1997, of the market value of the project and a restructuring of the [mortgage](/usc/12/1707.md?p=a), under such terms and conditions as are permitted by section 517(a) of such Act.
- (c) **Repayment—** As a condition to a partial claim payment under this section, the [mortgagor](/usc/12/1707.md?p=b) shall agree to repay to the [Secretary](/usc/12/1715z–22a.md?p=4) the amount of such payment and such obligation shall be secured by a second [mortgage](/usc/12/1707.md?p=a) on the property on such terms and conditions as the [Secretary](/usc/12/1715z–22a.md?p=4) may determine.

## Source credit

(June 27, 1934, ch. 847, title V, § 541, as added Pub. L. 103–233, title I, § 101(e), Apr. 11, 1994, 108 Stat. 357; amended Pub. L. 105–65, title II, § 210, title V, § 523(b), Oct. 27, 1997, 111 Stat. 1366, 1406; Pub. L. 106–74, title II, § 213(a), Oct. 20, 1999, 113 Stat. 1073.)

## Notes

### Editorial Notes

### References in Text

The Multifamily Assisted Housing Reform and Affordability Act of 1997, referred to in subsec. (b), is title V of Pub. L. 105–65, Oct. 27, 1997, 111 Stat. 1384. Sections 514 and 517(a) of the Act are set out as a note under section 1437f of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title of 1997 Amendment note set out under section 1701 of this title and Tables.

### Amendments

1999—Pub. L. 106–74, § 213(a)(1), substituted “defaulted mortgages and in connection with mortgage restructuring” for “multifamily housing projects and health care facilities” in section catchline.

Subsec. (b). Pub. L. 106–74, § 213(a)(2), substituted “partial or full payment of claim under one or more mortgage insurance contracts” for “partial payment of the claim under the mortgage insurance contract”.

1997—Pub. L. 105–65, § 210(1), inserted “and health care facilities” after “housing projects” in section catchline.

Subsec. (a). Pub. L. 105–65, § 523(b)(1), substituted “Defaulted mortgages” for “Authority” in heading.

Pub. L. 105–65, § 210(2)(B), inserted “or for keeping the health care facility operational to serve community needs,” after “character of the project,” in introductory provisions.

Pub. L. 105–65, § 210(2)(A), which directed the insertion, in introductory provisions, of “or a health care facility (including a nursing home, intermediate care facility, or board and care home (as those terms are defined in section 1715w of this title), a hospital (as that term is defined in section 1715z–7 of this title), or a group practice facility (as that term is defined in section 1749aaa–5 of this title))” after “section 1701z–11(b) of this title”, was executed by inserting the language after “section 1701z–11(b) of this title)” to reflect the probable intent of Congress.

Subsecs. (b), (c). Pub. L. 105–65, § 523(b)(2), (3), added subsec. (b) and redesignated former subsec. (b) as (c).