---
kind: "section"
citation: "12 U.S.C. § 1738"
title: "12"
title_heading: "Banks and Banking"
number: "1738"
heading: "Insurance of mortgages"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/1738"
units:
  - "Chapter 13 — National Housing"
  - "Subchapter VI — War Housing Insurance"
---

# §1738. Insurance of mortgages

- (a) **Relief of housing shortage; eligibility; limitations on time and amount—** In order to assist in relieving the acute shortage of housing which now exists and to increase the supply of housing accommodations available to veterans of World War II at prices within their reasonable ability to pay, the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized, upon application by the [mortgagee](/usc/12/1736.md?p=b), to insure as hereinafter provided any [mortgage](/usc/12/1736.md?p=a) 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/12/1736.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/12/1736.md?p=a) insured under this subchapter shall not exceed $6,150,000,000 except that with the approval of the President such aggregate amount may be increased to not to exceed $6,650,000,000: Provided further, That no [mortgage](/usc/12/1736.md?p=a) shall be insured under this section after April 30, 1948, except (A) pursuant to a commitment to insure issued on or before April 30, 1948, or (B) a [mortgage](/usc/12/1736.md?p=a) given to refinance an existing [mortgage](/usc/12/1736.md?p=a) insured under this section and which does not exceed the original principal amount and unexpired term of such existing [mortgage](/usc/12/1736.md?p=a), and no [mortgage](/usc/12/1736.md?p=a) shall be insured under [section 1743 of this title](/usc/12/1743.md) after March 1, 1950, except (i) pursuant to a commitment to insure issued on or before March 1, 1950, or (ii) a [mortgage](/usc/12/1736.md?p=a) given to refinance an existing [mortgage](/usc/12/1736.md?p=a) insured under [section 1743 of this title](/usc/12/1743.md) and which does not exceed the original principal amount and unexpired term of such existing [mortgage](/usc/12/1736.md?p=a): Provided further, That no [mortgage](/usc/12/1736.md?p=a) shall be insured under [section 1743 of this title](/usc/12/1743.md) unless the [mortgagor](/usc/12/1736.md?p=b) certifies under oath that in selecting tenants for the property covered by the [mortgage](/usc/12/1736.md?p=a) he will not discriminate against any family by reason of the fact that there are children in the family, and that he will not sell the property while the insurance is in effect unless the purchaser so certifies, such certifications to be filed with the [Secretary](/usc/12/1715z–22a.md?p=4); and violation of any such certification shall be a misdemeanor punishable by a fine of not to exceed $500: And provided further, That the [Secretary](/usc/12/1715z–22a.md?p=4) shall, in his discretion, have power to require the availability for rental purposes of properties covered by [mortgages](/usc/12/1736.md?p=a) insured under this subchapter, in such instances and for such periods of time as he may prescribe.

  Notwithstanding the first proviso of this subsection, [mortgages](/usc/12/1736.md?p=a) may be insured under sections [1744](/usc/12/1744.md) and [1746](/usc/12/1746.md) of this title if the aggregate amounts of principal obligations of [mortgages](/usc/12/1736.md?p=a) insured under said sections plus the aggregate amount of principal obligations of [mortgages](/usc/12/1736.md?p=a) insured under [section 1745 of this title](/usc/12/1745.md) do not exceed the limitation contained in said [section 1745](/usc/12/1745.md) upon the aggregate amount of principal obligations of [mortgages](/usc/12/1736.md?p=a) insured pursuant to said section.

  Notwithstanding the second proviso of this subsection, [mortgages](/usc/12/1736.md?p=a) otherwise eligible for insurance under [section 1743 of this title](/usc/12/1743.md) may be hereafter insured thereunder if the application for such insurance was received by the Department of Housing and Urban Development on or before March 1, 1950, and for such purpose the aggregate amount of principal obligations authorized to be insured under [section 1743 of this title](/usc/12/1743.md) is increased by not to exceed $500,000,000.

- (b) **Eligibility requirements—** To be eligible for insurance under this section a [mortgage](/usc/12/1736.md?p=a) shall—
  - (1) have been made to, and be held by, a [mortgagee](/usc/12/1736.md?p=b) approved by the [Secretary](/usc/12/1715z–22a.md?p=4) as responsible and able to service the [mortgage](/usc/12/1736.md?p=a) properly;
  - (2) involve a principal obligation (including 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 90 per centum of the [Secretary](/usc/12/1715z–22a.md?p=4)’s estimate of the value (as of the date the [mortgage](/usc/12/1736.md?p=a) is accepted for insurance), except that as to applications received by the [Secretary](/usc/12/1715z–22a.md?p=4) on or before March 31, 1948, the [mortgage](/usc/12/1736.md?p=a) may involve a principal obligation in an amount not to exceed 90 per centum of the [Secretary](/usc/12/1715z–22a.md?p=4)’s estimate of the necessary current cost (including the land and such initial service charges and such appraisal, inspection, and other fees as the [Secretary](/usc/12/1715z–22a.md?p=4) shall approve); of a property, urban, suburban, or rural, upon which there is located a dwelling designed principally for residential use for not more than four families in the aggregate, which is approved for [mortgage](/usc/12/1736.md?p=a) insurance prior to the beginning of construction. The principal obligation of such [mortgage](/usc/12/1736.md?p=a) shall in no event, however, exceed—
    - (A) $5,400 if such dwelling is designed for a single-family residence, or
    - (B) $7,500 if such dwelling is designed for a two-family residence, or
    - (C) $9,500 if such dwelling is designed for a three-family residence, or
    - (D) $12,000 if such dwelling is designed for a four-family residence:
    - (A) $8,100 if such dwelling is designed for a single-family residence, or
    - (B) $12,500 if such dwelling is designed for a two-family residence, or
    - (C) $15,750 if such dwelling is designed for a three-family residence, or
    - (D) $18,000 if such dwelling is designed for a four-family residence.
  - (3) have a maturity satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4) but not to exceed twenty-five years from the date of the insurance of the [mortgage](/usc/12/1736.md?p=a);
  - (4) contain complete amortization provisions satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4);
  - (5) bear interest (exclusive of premium charges for insurance) at not to exceed 4 per centum per annum on the amount of the principal obligation outstanding at any time;
  - (6) provide, in a manner satisfactory to the [Secretary](/usc/12/1715z–22a.md?p=4), for the application of the [mortgagor](/usc/12/1736.md?p=b)’s periodic payments (exclusive of the amount allocated to interest and to the premium charge which is required for [mortgage](/usc/12/1736.md?p=a) insurance as herein provided) to amortization of the principal of the [mortgage](/usc/12/1736.md?p=a); and
  - (7) contain such terms and provisions with respect to insurance, repairs, alterations, payment of taxes, default reserves, delinquency charges, foreclosure proceedings, anticipation of maturity, additional and secondary liens, and other matters as the [Secretary](/usc/12/1715z–22a.md?p=4) may in his discretion prescribe.
- (c) **Premium charges; payments; acceptance for insurance; preferences; adjustments and refunds—** The [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to fix a premium charge for the insurance of [mortgages](/usc/12/1736.md?p=a) under this subchapter but in the case of any [mortgage](/usc/12/1736.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 1½ per centum per annum of the amount of the principal obligation of the [mortgage](/usc/12/1736.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/12/1736.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 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/12/1736.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/12/1736.md?p=a). If the [Secretary](/usc/12/1715z–22a.md?p=4) finds, upon the presentation of a [mortgage](/usc/12/1736.md?p=a) for insurance and the tender of the initial premium charge and such other charges as the [Secretary](/usc/12/1715z–22a.md?p=4) may require, that the [mortgage](/usc/12/1736.md?p=a) complies with the provisions of this subchapter, such [mortgage](/usc/12/1736.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/12/1736.md?p=a) shall be accepted for insurance under this subchapter unless the [Secretary](/usc/12/1715z–22a.md?p=4) finds that the project with respect to which the [mortgage](/usc/12/1736.md?p=a) is executed is an acceptable risk in view of the shortage of housing referred to in this section. In the event that the principal obligation of any [mortgage](/usc/12/1736.md?p=a) accepted for insurance under this subchapter is paid in full prior to the [maturity date](/usc/12/1736.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/12/1736.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/12/1736.md?p=b) would otherwise have been required to pay if the [mortgage](/usc/12/1736.md?p=a) had continued to be insured under this subchapter until such [maturity date](/usc/12/1736.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/12/1736.md?p=b) for the account of the [mortgagor](/usc/12/1736.md?p=b) all, or such portion as he shall determine to be equitable, of the current unearned premium charges theretofore paid. The [Secretary](/usc/12/1715z–22a.md?p=4) shall prescribe such procedures as in his judgment are necessary to secure to veterans of World War II, and their immediate families, and to hardship cases as defined by the [Secretary](/usc/12/1715z–22a.md?p=4), preference or priority of opportunity to purchase or rent properties covered by [mortgages](/usc/12/1736.md?p=a) insured under this subchapter.
- (d) **Conclusiveness of insurance contract as to 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 [mortgage](/usc/12/1736.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/12/1736.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/12/1736.md?p=b).

## Source credit

(June 27, 1934, ch. 847, title VI, § 603, as added Mar. 28, 1941, ch. 31, § 1, 55 Stat. 56; amended Sept. 2, 1941, ch. 410, 55, Stat. 686; May 26, 1942, ch. 319, §§ 1–4, 14(b), 56 Stat. 301, 305; Mar. 23, 1943, ch. 21, § 1, 57 Stat. 42; Oct. 15, 1943, ch. 259, § 1, 57 Stat. 571; June 30, 1944, ch. 334, 58 Stat. 648; Mar. 31, 1945, ch. 48, § 1, 59 Stat. 47; May 22, 1946, ch. 268, § 10(a)–(d), 60 Stat. 212, 213; June 30, 1947, ch. 163, title I, § 2, 61 Stat. 193; Aug. 5, 1947, ch. 495, § 1, 61 Stat. 777; Dec. 27, 1947, ch. 525, § 1, 61 Stat. 945; Mar. 31, 1948, ch. 165, § 1(a)–(c), 62 Stat. 101; Aug. 10, 1948, ch. 832, title I, § 101(a), (k)(2), 62 Stat. 1268, 1273; Mar. 30, 1949, ch. 42, title III, § 304, 63 Stat. 29; July 15, 1949, ch. 338, title II, § 201(3), 63 Stat. 421; Aug. 30, 1949, ch. 524, 63 Stat. 681; Oct. 25, 1949, ch. 729, § 1(4), 63 Stat. 905; Apr. 20, 1950, ch. 94, title I, §§ 119, 122, 64 Stat. 57, 59; Pub. L. 90–19, § 1(a)(1), (3), (4), (n), May 25, 1967, 81 Stat. 17, 19.)

## Notes

### Editorial Notes

### Amendments

1967—Pub. L. 90–19, § 1(a)(3), substituted “Secretary” for “Commissioner” wherever appearing in subsecs. (a), (b)(1), (2), (b)(2)(D), (b)(3), (4), (6), (7), (c), and (d).

Subsec. (a). Pub. L. 90–19, § 1(a)(1), (n), substituted “Department of Housing and Urban Development” for “Federal Housing Administration” and “by” for “in any field office of” after “received”, in third par., respectively.

Subsec. (b)(2). Pub. L. 90–19, § 1(a)(4), substituted “Secretary’s” for “Commissioner’s” wherever appearing.

1950—Act Apr. 20, 1950, § 122, substituted “Commissioner” for “Administrator” wherever appearing.

Subsec. (a). Act Apr. 20, 1950, § 119, added last two pars.

1949—Subsec. (a). Joint Res. Oct. 25, 1949, substituted “$6,150,000,000” for “$5,750,000,000” and “$6,650,000,000” for “$6,150,000,000” in first proviso, and extended section to “March 1, 1950” by substituting the same for “October 31, 1949” in second proviso.

Act Aug. 30, 1949, extended section from “August 31, 1949” to “October 31, 1949”.

Act July 15, 1949, extended section from “June 30, 1949” to “August 31, 1949”.

Act Mar. 30, 1949, extended section from “March 30, 1949” to “June 30, 1949”.

1948—Subsec. (a). Act Aug. 10, 1948, struck out “$5,350,000,000” and inserted in lieu thereof “$5,750,000,000 except that with the approval of the President such aggregate amount may be increased to not to exceed $6,150,000,000”, and struck out the second proviso and inserted in lieu thereof the present second proviso.

Act Mar. 31, 1948, increased the insurance authorization from $4,950,000,000 to $5,350,000,000, and provided for an extension from Mar. 31, 1948, to Apr. 30, 1948.

Subsec. (b)(2). Act Mar. 31, 1948, changed the emergency necessary current-cost formula to the appraised- value formula.

Subsec. (c). Act Aug. 10, 1948, struck out of next to last sentence “and a mortgage on the same property is accepted for insurance at the time of such payment”.

1947—Subsec. (a). Act Dec. 27, 1947, increased the mortgage obligation from $4,000,000,000 to $4,450,000,000, and increased the amount of obligation from $4,200,000,000 to $4,950,000,000 with the President’s approval.

Act Aug. 5, 1947, increased mortgage obligation from $2,800,000,000 to $4,000,000,000 and the amount of obligation from $3,800,000,000 to $4,200,000,000 with the President’s approval.

Act June 30, 1947, extended limitation dates in second proviso from June 30, 1947, to Mar. 31, 1948.

1946—Subsec. (a). Act May 22, 1946, amended provisions generally, and among other changes, increased the mortgage obligation from $1,800,000,000 to $2,800,000,000, and extended the limitation date from July 1, 1946, to June 30, 1947.

Subsec. (b)(2). Act May 22, 1946, amended provisions generally, and among other changes, inserted proviso.

Subsec. (b)(5). Act May 22, 1946, lowered interest rate from 5 to 4 per centum and struck out provision allowing Administrator to increase the rate in certain cases.

Subsec. (c). Act May 22, 1946, substituted “shortage of housing” for “emergency” in third sentence and amended last sentence.

1945—Subsec. (a). Act Mar. 31, 1945, increased the limit of obligations from $1,700,000,000 to $1,800,000,000 and extended the limitation date from 1945 to 1946.

1944—Subsec. (a). Act June 30, 1944, substituted “$1,700,000,000” for “$1,600,000,000” and inserted the provision contained in cl. (B).

1943—Subsec. (a). Act Oct. 15, 1943, substituted “$1,600,000,000” for “$1,200,000,000” and “July 1, 1945” for “July 1, 1944”.

Act Mar. 23, 1943, substituted “$1,200,000,000” for “$800,000,000” and “July 1, 1944” for “July 1, 1943”.

1942—Act May 21, 1942, § 14(b), substituted “War” and “war” for “Defense” and “defense” wherever occurring.

Subsec. (a). Act May 26, 1942, § 1, substituted “$800,000,000” for “$300,000,000”, among other changes.

Subsec. (b)(2). Act May 26, 1942, § 2, increased limitations on amount of obligations.

Subsec. (b)(3). Act May 26, 1942, § 3, substituted “twenty-five” for “twenty”.

Subsec. (c). Act May 26, 1942, § 4, amended subsec. (c).

1941—Subsec. (a). Act Sept. 2, 1941, substituted “$300,000,000” for “$100,000,000”.

### Statutory Notes and Related Subsidiaries

### Effective Date of 1949 Amendment

Amendment by act July 15, 1949, effective June 30, 1949, see section 202 of that act, set out as a note under section 1703 of this title.

### Inflation Safeguards

Act Dec. 27, 1947, ch. 525, § 2, 61 Stat. 945, provided: “Title VI of the National Housing Act, as amended [this subchapter], shall be employed to assist in maintaining a high volume of new residential construction without supporting unnecessary or artificial costs. In estimating necessary current cost for the purposes of said title, the Federal Housing Commissioner shall therefore use every feasible means to assure that such estimates will approximate as closely as possible the actual costs of efficient building operations.”