---
kind: "section"
citation: "12 U.S.C. § 1743"
title: "12"
title_heading: "Banks and Banking"
number: "1743"
heading: "Insurance of mortgages"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/1743"
units:
  - "Chapter 13 — National Housing"
  - "Subchapter VI — War Housing Insurance"
---

# §1743. Insurance of mortgages

- (a) **Additional authorization; advances during construction—** In addition to [mortgages](/usc/12/1736.md?p=a) insured under [section 1738 of this title](/usc/12/1738.md), the [Secretary](/usc/12/1715z–22a.md?p=4) is authorized to insure [mortgages](/usc/12/1736.md?p=a) as defined in [section 1736 of this title](/usc/12/1736.md) (including advances on such [mortgages](/usc/12/1736.md?p=a) during construction) which are eligible for insurance as hereinafter provided.
- (b) **Eligibility requirements—** To be eligible for insurance under this section a [mortgage](/usc/12/1736.md?p=a) shall meet the following conditions:
  - (1) The mortgaged property shall be held by a [mortgagor](/usc/12/1736.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 such [mortgagor](/usc/12/1736.md?p=b) to be regulated or restricted as to rents or sales, charges, capital structure, rate of return, and methods of operation. The [Secretary](/usc/12/1715z–22a.md?p=4) may make such contracts with, and acquire for not to exceed $100 stock or interest in any such [mortgagor](/usc/12/1736.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 shall be paid for out of the General Insurance Fund, and shall be redeemed by the [mortgagor](/usc/12/1736.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) Preference or priority of opportunity in the occupancy of the mortgaged property for veterans of World War II and their immediate families, and for hardship cases as defined by the [Secretary](/usc/12/1715z–22a.md?p=4), shall be provided under such regulations and procedures as may be prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4).
  - (3) The [mortgage](/usc/12/1736.md?p=a) shall involve a principal obligation in an amount—
    - (A) not to exceed $5,000,000; and
    - (B) not to exceed 90 per centum of the amount which the [Secretary](/usc/12/1715z–22a.md?p=4) estimates will be the necessary current cost of the completed property or project, including the land; the proposed physical improvements; utilities within the boundaries of the property or project; architects’ fees; taxes and interest accruing during construction; and other miscellaneous charges incidental to construction and approved by the [Secretary](/usc/12/1715z–22a.md?p=4): Provided, That such [mortgage](/usc/12/1736.md?p=a) shall not in any event exceed the amount which the [Secretary](/usc/12/1715z–22a.md?p=4) estimates will be the cost of the completed physical improvements on the property or project, exclusive of off-site public utilities and streets, and organization and legal expenses: And provided further, That the principal obligation of the [mortgage](/usc/12/1736.md?p=a) shall not, in any event, exceed 90 per centum of the [Secretary](/usc/12/1715z–22a.md?p=4)’s estimate of the replacement cost of the property or project on the basis of the costs prevailing on December 31, 1947, for properties or projects of comparable quality in the locality where such property or project is to be located; and
    - (C) not to exceed $8,100 per family unit for such part of such property or project as may be attributable to dwelling use.

  The [mortgage](/usc/12/1736.md?p=a) shall provide for complete amortization by periodic payment within such term as the [Secretary](/usc/12/1715z–22a.md?p=4) shall prescribe, and shall bear interest (exclusive of premium charges for insurance) at not to exceed 4½ per centum per annum on the amount of the principal obligation outstanding at any time. 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/12/1736.md?p=a) upon such terms and conditions as he may prescribe and the [mortgage](/usc/12/1736.md?p=a) may provide for such release.

- (c) **Payments; default; insurance benefits for mortgagee; value of mortgage; foreclosure of mortgage—** The failure of the [mortgagor](/usc/12/1736.md?p=b) to make any payment due under or provided to be paid by the terms of a [mortgage](/usc/12/1736.md?p=a) insured under this section shall be considered a default under such [mortgage](/usc/12/1736.md?p=a), and if such default continues for a period of thirty days, the [mortgagee](/usc/12/1736.md?p=b) 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](/usc/12/1736.md?p=a) so in default; (2) all claims of the [mortgagee](/usc/12/1736.md?p=b) against the [mortgagors](/usc/12/1736.md?p=b) or others, arising out of the [mortgage](/usc/12/1736.md?p=a) transaction; (3) all policies of title or other insurance or surety bonds or other guaranties and any and all claims thereunder; (4) any balance of the [mortgage](/usc/12/1736.md?p=a) loan not advanced to the [mortgagor](/usc/12/1736.md?p=b); (5) any cash or property held by the [mortgagee](/usc/12/1736.md?p=b), or to which it is entitled, as deposits made for the account of the [mortgagor](/usc/12/1736.md?p=b) and which have not been applied in reduction of the principal of the [mortgage](/usc/12/1736.md?p=a) indebtedness; and (6) all records, documents, books, papers, and accounts relating to the [mortgage](/usc/12/1736.md?p=a) transaction. Upon such assignment, transfer, and delivery the obligation of the [mortgagee](/usc/12/1736.md?p=b) to pay the premium charges for [mortgage](/usc/12/1736.md?p=a) insurance shall cease, and the [Secretary](/usc/12/1715z–22a.md?p=4) shall, subject to the cash adjustment provided for in [section 1739(c) of this title](/usc/12/1739.md?p=c), issue to the [mortgagee](/usc/12/1736.md?p=b) debentures having a total face value equal to the value of the [mortgage](/usc/12/1736.md?p=a), and a certificate of claim as hereinafter provided. For the purposes of this subsection, the value of the [mortgage](/usc/12/1736.md?p=a) shall be determined in accordance with rules and regulations prescribed by the [Secretary](/usc/12/1715z–22a.md?p=4), by adding to the amount of the original principal obligation of the [mortgage](/usc/12/1736.md?p=a) which was unpaid on the date of default, the amount the [mortgagee](/usc/12/1736.md?p=b) may have paid for (A) taxes, special assessments, and water rates, which are liens prior to the [mortgage](/usc/12/1736.md?p=a); (B) insurance on the property; and (C) reasonable expenses for the completion and preservation of the property and any [mortgage](/usc/12/1736.md?p=a) insurance premiums paid after default; less the sum of (i) an amount equivalent to 1 per centum of the unpaid amount of such principal obligation on the date of default; (ii) any amount received on account of the [mortgage](/usc/12/1736.md?p=a) after such date; and (iii) any [net income](/usc/12/1441a–1.md?p=4) received by the [mortgagee](/usc/12/1736.md?p=b) from the property after such date: Provided, That the [mortgagee](/usc/12/1736.md?p=b) in the event of a default under the [mortgage](/usc/12/1736.md?p=a) 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 such property from the [mortgagor](/usc/12/1736.md?p=b) after default, 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](/usc/12/1736.md?p=a) 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](/usc/12/1736.md?p=b) against the [mortgagor](/usc/12/1736.md?p=b) or others, arising out of the [mortgage](/usc/12/1736.md?p=a) 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](/usc/12/1736.md?p=b) to pay the premium charges for insurance shall cease and the [mortgagee](/usc/12/1736.md?p=b) shall be entitled to receive the benefits of the insurance as provided in this subsection, except that in such event the 1 per centum deduction, set out in (i) hereof, shall not apply.
- (d) **Certificates of claim; amount—** The certificate of claim issued by the [Secretary](/usc/12/1715z–22a.md?p=4) to any [mortgagee](/usc/12/1736.md?p=b) in connection with the insurance of [mortgages](/usc/12/1736.md?p=a) under this section shall be for an amount determined in accordance with subsections (e) and (f) of [section 1739 of this title](/usc/12/1739.md), except that any amount remaining after the payment of the full amount under the certificate of claim shall be retained by the [Secretary](/usc/12/1715z–22a.md?p=4) and credited to the General Insurance Fund.
- (e) **Debentures; date of issuance; interest—** Debentures issued under this section shall be issued in accordance with the provisions of [section 1739](/usc/12/1739.md) (d) of this title except that such debentures shall be dated as of the date of default as determined in [subsection (c)](#c) of this section, and shall bear interest from such date.
- (f) **Applicability of other provisions—** The provisions of [section 1713(k) of this title](/usc/12/1713.md?p=k) shall be applicable to [mortgages](/usc/12/1736.md?p=a) insured under this section, except that, as applied to such [mortgages](/usc/12/1736.md?p=a), the reference therein to [subsection (g)](#g) shall be construed to refer to [subsection (c)](#c) of this section.
- (g) **Mortgages in connection with sale of property under subchapter I, II, VIII, or X—** The [Secretary](/usc/12/1715z–22a.md?p=4) shall also have power to insure under this subchapter or subchapter I, II, VIII, or X any [mortgage](/usc/12/1736.md?p=a) executed in connection with the sale by him of any property acquired under any of such subchapters without regard to limitations upon eligibility, time, or aggregate amount contained therein.

## Source credit

(June 27, 1934, ch. 847, title VI, § 608, as added May 26, 1942, ch. 319, § 11, 56 Stat. 303; amended Mar. 31, 1945, ch. 48, § 2, 59 Stat. 47; May 22, 1946, ch. 268, § 10(f), (g), 60 Stat. 214; Aug. 10, 1948, ch. 832, title I, § 101(b), (c), 62 Stat. 1269; Apr. 20, 1950, ch. 94, title I, § 122, 64 Stat. 59; Sept. 1, 1951, ch. 378, title II, § 206, 65 Stat. 303; Pub. L. 89–117, title XI, § 1108(q), Aug. 10, 1965, 79 Stat. 506; Pub. L. 90–19, § 1(a)(3), (4), May 25, 1967, 81 Stat. 17.)

## Notes

### Editorial Notes

### References in Text

The General Insurance Fund, referred to in subsecs. (b) and (d), was established by section 1735c of this title.

### Amendments

1967—Pub. L. 90–19, § 1(a)(3), substituted “Secretary” for “Commissioner” wherever appearing in subsecs. (a), (b)(1), (2), (3)(B), following (C), (c), (d), and (g).

Subsec. (b)(3)(B). Pub. L. 90–19, § 1(a)(4), substituted “Secretary’s” for “Commissioner’s”.

1965—Subsecs. (b)(1), (d). Pub. L. 89–117, § 1108(q)(1), substituted “General Insurance Fund” for “War Housing Insurance Fund”.

Subsec. (f). Pub. L. 89–117, § 1108(q)(2), struck out provisions that, as applied to mortgages insured under this section, all references in section 1713(k) of this title to the “Housing Fund” shall be construed to refer to the “War Housing Insurance Fund”.

1951—Subsec. (g). Act Sept. 1, 1951, inserted references to subchapters I, VIII and X of this chapter.

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

1948—Subsec. (b). Act Aug. 10, 1948, inserted second proviso in par. (3)(B), substituted “$8,100 per family unit” for “$1,500 per room” and struck out proviso relating to authority to increase “$1,500” to “$1,800” per room.

1946—Subsec. (b)(2). Act May 22, 1946, substituted “Preference or priority of opportunity in the occupancy of the mortgaged property for veterans of World War II and their immediate families, and for hardship cases as defined by the Administrator, shall be provided under such regulations and procedures as may be prescribed by the Administrator” for “The mortgaged property shall be designed for rent for residential use by warworkers”.

Subsec. (b)(3). Act May 22, 1946, substituted “necessary current cost” after “estimates will be the” for “reasonable replacement cost” in par. (B), and increased mortgage per room from $1,350 to $1,500 and inserted proviso in par. (C).

Subsec. (c). Act May 22, 1946, inserted “and any mortgage insurance premiums paid after default” before semicolon in cl. (C) of third sentence.

1945—Subsec. (g). Act Mar. 31, 1945, inserted provisions empowering Commissioner to insure mortgages without regard to any limitations upon time or aggregate amount contained in this subchapter.

### Statutory Notes and Related Subsidiaries

### Construction of Act May 26, 1942, With Ex. Ord. No. 9070, Consolidating National Housing Agency

Act May 26, 1942, ch. 319, § 12, 56 Stat. 305, provided that nothing contained in act May 26, 1942, was to be construed to supersede or be inconsistent with the provisions of Ex. Ord. No. 9070, Feb. 24, 1942.