12usc1708

§ 1708

TITLE 12—BANKS AND BANKING

1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’.
1941—Subsec. (a). Act Mar. 28, 1941, § 4(a)(1), struck
out ‘‘district, or Territory’’.
Subsec. (d). Act Mar. 28, 1941, § 4(a)(2), added subsec.
(d).
1938—Subsec. (a)(2). Act Feb. 3, 1938, struck out ‘‘upon
which there is located a dwelling for not more than
four families which is used in whole or in part for residential purposes, irrespective of whether such dwelling
has a party wall or is otherwise physically connected
with another dwelling’’ after ‘‘executed’’.
Subsec. (c). Act Feb. 3, 1938, added subsec. (c).
IMPROVEMENT OF FINANCING FOR MULTIFAMILY
HOUSING
Pub. L. 102–550, title V, subtitle C, Oct. 28, 1992, 106
Stat. 3794, as amended, which related to improvement
of financing for multifamily housing and was formerly
set out as a note under this section, was transferred or
omitted as follows:
Section 541 of Pub. L. 102–550 was transferred and is
set out as a note under section 1701 of this title;
Section 542 of Pub. L. 102–550 was transferred to section 1715z–22 of this title;
Section 543 of Pub. L. 102–550 was omitted from the
Code;
Section 544 of Pub. L. 102–550 was transferred to section 1715z–22a of this title.

§ 1708. Federal Housing Administration operations
(a) Mutual Mortgage Insurance Fund
(1) Establishment
Subject to the provisions of the Federal
Credit Reform Act of 1990 [2 U.S.C. 661 et seq.],
there is hereby created a Mutual Mortgage Insurance Fund (in this subchapter referred to as
the ‘‘Fund’’), which shall be used by the Secretary to carry out the provisions of this subchapter with respect to mortgages insured
under section 1709 of this title. The Secretary
may enter into commitments to guarantee,
and may guarantee, such insured mortgages.
(2) Limit on loan guarantees
The authority of the Secretary to enter into
commitments to guarantee such insured mortgages shall be effective for any fiscal year only
to the extent that the aggregate original principal loan amount under such mortgages, any
part of which is guaranteed, does not exceed
the amount specified in appropriations Acts
for such fiscal year.
(3) Fiduciary responsibility
The Secretary has a responsibility to ensure
that the Mutual Mortgage Insurance Fund remains financially sound.
(4) Annual independent actuarial study
The Secretary shall provide for an independent actuarial study of the Fund to be conducted annually, which shall analyze the financial position of the Fund. The Secretary
shall submit a report annually to the Congress
describing the results of such study and assessing the financial status of the Fund. The
report shall recommend adjustments to underwriting standards, program participation, or
premiums, if necessary, to ensure that the
Fund remains financially sound. The report
shall also include an evaluation of the quality
control procedures and accuracy of informa-

Page 538

tion utilized in the process of underwriting
loans guaranteed by the Fund. 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.
(5) Quarterly reports
During each fiscal year, the Secretary shall
submit a report to the Congress for each calendar quarter, which shall specify for mortgages that are obligations of the Fund—
(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 are identified and mitigated by adjustments to underwriting standards, program participation, or premiums, and the financial soundness of the Fund 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 required under paragraph
(4), the Secretary determines that the Fund is
not meeting the operational goals established
under paragraph (7) or there is a substantial
probability that the Fund will not maintain
its established target subsidy rate, the Secretary may either make programmatic adjustments under this subchapter as necessary to
reduce the risk to the Fund, or make appropriate premium adjustments.
(7) Operational goals
The operational goals for the Fund are—
(A) to minimize the default risk to the
Fund and to homeowners by among other actions instituting fraud prevention quality
control screening not later than 18 months
after July 30, 2008; and
(B) to meet the housing needs of the borrowers that the single family mortgage insurance program under this subchapter is designed to serve.
(b) Advisory Board
There is created a Federal Housing Administration Advisory Board (‘‘Board’’) that shall review operation of the Federal Housing Administration, including the activities of the Mortgagee Review Board, 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

Page 539

TITLE 12—BANKS AND BANKING

shall, in all other respects, be subject to the provisions of the Federal Advisory Committee Act.
(1) The Advisory Board shall be composed of
15 members to be appointed from among individuals who have substantial expertise and
broad experience in housing and mortgage
lending of whom—
(A) 9 shall be appointed by the Secretary;
(B) 3 shall be appointed by the Chairman
and Ranking Minority Member 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 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 shall
include—
(A) not less than 4 persons with distinguished private sector careers in housing finance, lending, management, development
or insurance;
(B) not less than 4 persons with outstanding reputations as licensed actuaries, experts in actuarial science, or economics related to housing;
(C) not less than 4 persons with backgrounds of leadership in representing the interests of housing consumers;
(D) not less than 1 person 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 with a background of leadership representing rural
housing interests.
(3) Members of the Advisory Board shall be
selected to ensure, to the greatest extent practicable, geographical representation or every
region of the country.
(4) Not more than 8 members of the Advisory
Board may be from any one political party.
(5) Membership of the Advisory Board shall
not include any person who, during the previous 24-month period, was required to register
with the Secretary under section 3537b(c) 1 of
title 42 or employed a person for purposes that
required such person to so register.
(6) Of the members of the Advisory Board
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 is empowered to confer with, request information of, and make
recommendations to the Federal Housing
Commissioner.
The
Commissioner
shall
promptly provide the Advisory Board with
such information as the Board determines to
be necessary to carry out its review of the activities and policies of the Federal Housing
Administration.
(8) The Board shall, not later than December
31 of each year, submit to the Secretary and
1 See

References in Text note below.

§ 1708

the Congress a report of its assessment of the
activities of the Federal Housing Administration, including the soundness of underwriting
procedures, the adequacy of information systems, the appropriateness of staffing patterns,
the effectiveness of the Mortgagee Review
Board, 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’s recommendations for improvement and include any minority views.
(9) The Board 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.
The Board shall elect a chair, vice-chair and
secretary and adopt methods of procedure. The
Board may establish committees and subcommittees as needed.
(10) Subject to the provisions of Section 7 of
the Federal Advisory Committee Act, all
members of the Board may be compensated
and shall be entitled to reimbursement from
the Department for traveling expenses incurred in attendance at meetings of the Board.
(11) The Board shall terminate on January 1,
1995.
(c) Mortgagee Review Board
(1) Establishment
There is established within the Federal
Housing Administration the Mortgagee Review Board (‘‘Board’’). The Board is empowered to initiate the issuance of a letter of reprimand, the probation, suspension or withdrawal of any mortgagee found to be engaging
in activities in violation of Federal Housing
Administration requirements or the nondiscrimination requirements of the Equal
Credit Opportunity Act [15 U.S.C. 1691 et seq.],
the Fair Housing Act [42 U.S.C. 3601 et seq.], or
Executive Order 11063.
(2) Composition
The Board shall consist of—
(A) the Assistant Secretary of Housing/
Federal Housing Commissioner;
(B) the General Counsel of the Department;
(C) the President of the Government National Mortgage Association;
(D) the Assistant Secretary for Administration;
(E) the Assistant Secretary 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 discloses
that a basis for an administrative action
against a mortgagee exists, the Board shall
take one of the following administrative actions:
(A) Letter of reprimand
The Board may issue a letter of reprimand
only once to a mortgagee without taking ac-

§ 1708

TITLE 12—BANKS AND BANKING

tion under subparagraphs 2 (B), (C), or (D) of
this section. A letter of reprimand shall explain the violation and describe actions the
mortgagee should take to correct the violation.
(B) Probation
The Board may place a mortgagee on probation for a specified period of time not to
exceed 6 months for the purpose of evaluating the mortgagee’s compliance with Federal Housing Administration requirements,
the Equal Credit Opportunity Act [15 U.S.C.
1691 et seq.], the Fair Housing Act [42 U.S.C.
3601 et seq.], Executive Order 11063, or orders
of the Board. During the probation period,
the Board may impose reasonable additional
requirements on a mortgagee including supervision of the mortgagee’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 may issue an order temporarily
suspending a mortgagee’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’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), a suspension shall
be effective upon issuance by the Board if
the Board 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 may extend the suspension for an additional 6
months if it determines the extension is in
the public interest. If the Board and the
mortgagee agree, these time limits may be
extended. During the period of suspension,
the Federal Housing Administration shall
not commit to insure any mortgage originated by the suspended mortgagee.
(D) Withdrawal
The Board may issue an order withdrawing
a mortgagee if the Board has made a determination of a serious violation or repeated
violations by the mortgagee. The Board
shall determine the terms of such withdrawal, but the term shall be not less than
1 year. Where the Board has determined that
the violation is egregious or willful, the
withdrawal shall be permanent.
(E) Settlements
The Board may at any time enter into a
settlement agreement with a mortgagee to
resolve any outstanding grounds for an ac2 So

in original. Probably should be ‘‘subparagraph’’.

Page 540

tion. 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 by a mortgagor, by a seller or
by the Federal Housing Administration;
(iv) actions to collect sums of money
wrongfully or incorrectly paid by the
mortgagee to a third party;
(v) indemnification of the Federal Housing Administration for mortgage insurance claims on mortgages 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.
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 shall issue a written notice to
the mortgagee at least 30 days prior to taking
any action against the mortgagee under subparagraph (B), (C), or (D) of paragraph (3). The
notice shall state the specific violations which
have been alleged, and shall direct the mortgagee to reply in writing to the Board within 30
days. If the mortgagee fails to reply during
such period, the Board may make a determination without considering any comments of the
mortgagee.
(B) If the Board takes action against a mortgagee under subparagraph (B), (C), or (D) of
paragraph (3), the Board shall promptly notify
the mortgagee in writing of the nature, duration, and specific reasons for the action. If,
within 30 days of receiving the notice, the
mortgagee requests a hearing, the Board shall
hold a hearing on the record regarding the violations within 30 days of receiving the request.
If a mortgagee fails to request a hearing within such 30-day period, the right of the mortgagee to a hearing shall be considered waived.
(C) In any case in which the notification of
the Board does not result in a hearing (including any settlement by the Board and a mortgagee), any information regarding the nature
of the violation and the resolution of the action shall be available to the public.
(5) Publication
The Secretary shall establish and publish in
the Federal Register a description of and the
cause for administrative action against a
mortgagee.
(6) Cease-and-desist orders
(A) Whenever the Secretary, upon request of
the Mortgagee Review Board, determines that
there is reasonable cause to believe that a
mortgagee is violating, has violated, or is
about to violate, a law, rule or regulation or
any condition imposed in writing by the Secretary or the Board, and that such violation
could result in significant cost to the Federal
Government or the public, the Secretary may

Page 541

TITLE 12—BANKS AND BANKING

issue a temporary order requiring the mortgagee 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 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. Such order shall remain effective and enforceable for a period not
to exceed 30 days pending the completion of
proceedings of the Board 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 shall provide the mortgagee
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 has
been served with a temporary cease-and-desist
order, the mortgagee may apply to the United
States district court for the judicial district in
which the home office of the mortgagee is located, or the United States District 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, 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 may apply to the
United States district court, or the United
States court of any territory, within the jurisdiction of which the home office of the mortgagee 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 approved under this chapter;
(B) a lender or a loan correspondent approved under subchapter I of this chapter;
(C) a branch office or subsidiary of the
mortgagee, lender, or loan correspondent; or
(D) a director, officer, employee, agent, or
other person participating in the conduct of
the affairs of the mortgagee, lender, or loan
correspondent.
(8) Report required
The Board, in consultation with the Federal
Housing Administration Advisory Board, shall
annually recommend to the Secretary such
amendments to statute or regulation as the
Board determines to be appropriate to ensure
the long term financial strength of the Federal Housing Administration fund and the adequate support for home mortgage credit.

§ 1708

(9) Prohibition against limitations on mortgagee review board’s power to take action
against mortgagees
No State 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 of its power to
take any action authorized under paragraphs
(3) and (6) of this subsection against any mortgagee.
(d) Limitations on participation in origination
and mortgagee approval
(1) Requirement
Any person or entity that is not approved by
the Secretary to serve as a mortgagee, as such
term is defined in subsection (c)(7), shall not
participate in the origination of an FHA-insured loan except as authorized by the Secretary.
(2) Eligibility for approval
In order to be eligible for approval by the
Secretary, an applicant mortgagee shall not
be, and shall not have any officer, partner, director, principal, manager, supervisor, loan
processor, loan underwriter, or loan originator
of the applicant mortgagee who is—
(A) currently suspended, debarred, under a
limited denial of participation (LDP), or
otherwise restricted under part 25 of title 24
of the Code of Federal Regulations, 2 Code of
Federal Regulations, part 180 as implemented by part 2424, or any successor regulations to such parts, or under similar provisions of any other Federal agency;
(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;
(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 or that demonstrate
irresponsibility;
(E) convicted of, or who has pled guilty or
nolo contendre 3 to, a felony related to participation in the real estate or mortgage
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 Licensing Act of 2008 (12
U.S.C. 5101 et seq.) or any applicable provision of State law; or
(G) in violation of any other requirement
as established by the Secretary.
(3) Rulemaking and implementation
The Secretary shall conduct a rulemaking to
carry out this subsection. The Secretary shall
3 So

in original. Probably should be ‘‘contendere’’.

§ 1708

TITLE 12—BANKS AND BANKING

implement this subsection not later than the
expiration of the 60-day period beginning upon
May 20, 2009, by notice, mortgagee 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 Association initiates proceedings that could lead to
withdrawing the mortgagee from participating
in the program, the initiating agency shall—
(A) within 24 hours notify the other agency
in writing of the action taken;
(B) provide to the other agency the factual
basis for the action taken; and
(C) if a mortgagee 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
Association shall—
(A) conduct and complete its own investigation;
(B) provide written notification to the other
agency of its decision, including the factual
basis for its decision; and
(C) if a mortgagee 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 has taken any discretionary action to suspend or revoke the approval of any mortgagee to participate in any
mortgage insurance program under this subchapter, the Secretary shall provide prompt notice of the action and a statement of the reasons
for the action to—
(1) the Secretary of Veterans Affairs;
(2) the chief executive officer of the Federal
National Mortgage Association;
(3) the chief executive officer of the Federal
Home Loan Mortgage Corporation;
(4) the Secretary of Agriculture;
(5) if the mortgagee is a national bank, or a
subsidiary or affiliate of such a bank, the
Comptroller of the Currency;
(6) if the mortgagee is a State bank that is
a member of the Federal Reserve System or a
subsidiary or affiliate of such a bank, or a
bank holding company or a subsidiary or affiliate of such a company, the Board of Governors of the Federal Reserve System;
(7) if the mortgagee is a State bank that is
not a member of the Federal Reserve System
or is a subsidiary or affiliate of such a bank,
the Board of Directors of the Federal Deposit
Insurance Corporation; and
(8) if the mortgagee is a Federal or State
savings association or a subsidiary or affiliate
of a savings association, the Director of the
Office of Thrift Supervision.
(g) Appraisal standards
(1) The Secretary shall prescribe standards for
the appraisal of all property to be insured by the
4 So

in original. Probably should be ‘‘paragraph’’.

Page 542

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 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
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 Examination Council
shall include the Secretary or his designee.
(3) DIRECT ENDORSEMENT PROGRAM.—
(A) Any mortgagee that is authorized by the
Secretary to process mortgages as a direct endorsement mortgagee (pursuant to the singlefamily home mortgage direct endorsement
program established by the Secretary) may
contract with an appraiser chosen at the discretion of the mortgagee for the performance
of appraisals in connection with such mortgages. Such appraisers may include appraisal
companies organized as corporations, partnerships, or sole proprietorships.
(B) Any appraisal conducted pursuant to
subparagraph (A) shall be conducted by an individual who complies with the qualifications
or standards for appraisers established by the
Secretary 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 (including any company organized as a corporation, partnership, or sole
proprietorship) and who meets the qualifications or standards for appraisers and inclusion
on appraiser fee panels established by the Secretary, shall be eligible for assignment to conduct appraisals for mortgages 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 described in subparagraph (A)
who is offered an appraisal assignment in connection with a mortgage under this subchapter, the person utilizing the appraiser
may contract directly with the appraisal company employing the appraiser for the furnishing of the appraisal services.
5 So

in original. Probably should be ‘‘and’’.

Page 543

§ 1708

TITLE 12—BANKS AND BANKING

(5) ADDITIONAL APPRAISER STANDARDS.—Beginning on July 30, 2008, any appraiser chosen or approved to conduct appraisals for mortgages
under this subchapter shall—
(A) be certified—
(i) by the State in which the property to be
appraised is located; or
(ii) by a nationally recognized professional
appraisal organization; and
(B) have demonstrated verifiable education
in the appraisal requirements established by
the Federal Housing Administration under
this subsection.
(h) Use of name
The Secretary shall, by regulation, require
each mortgagee approved by the Secretary for
participation in the FHA mortgage insurance
programs of the Secretary—
(1) to use the business name of the mortgagee that is registered with the Secretary in
connection with such approval in all advertisements and promotional materials, as such
terms are defined by the Secretary, relating to
the business of such mortgagee in such mortgage insurance programs; and
(2) to maintain copies of all such advertisements and promotional materials, in such
form and for such period as the Secretary requires.
(June 27, 1934, ch. 847, title II, § 202, 48 Stat. 1248;
Feb. 3, 1938, ch. 13, § 3, 52 Stat. 10; June 3, 1939,
ch. 175, § 5, 53 Stat. 805; Apr. 20, 1950, ch. 94, title
I, § 122, 64 Stat. 59; Pub. L. 90–19, § 1(a)(3), May 25,
1967, 81 Stat. 17; Pub. L. 101–235, title I, § 142, Dec.
15, 1989, 103 Stat. 2030; Pub. L. 101–625, title III,
§ 322, Nov. 28, 1990, 104 Stat. 4134; Pub. L. 102–550,
title V, §§ 502, 518, 519, Oct. 28, 1992, 106 Stat. 3778,
3792; Pub. L. 105–65, title V, § 551, Oct. 27, 1997, 111
Stat. 1412; Pub. L. 106–377, § 1(a)(1) [title II,
§ 209(c)], Oct. 27, 2000, 114 Stat. 1441, 1441A–25;
Pub. L. 110–289, div. A, title IV, § 1404, div. B,
title I, §§ 2116(1), (3), 2118(a), July 30, 2008, 122
Stat. 2810, 2832, 2833; Pub. L. 111–22, div. A, title
II, § 203(a), (b), May 20, 2009, 123 Stat. 1643.)
REFERENCES IN TEXT
The Federal Credit Reform Act of 1990, referred to in
subsec. (a)(1), is title V of Pub. L. 93–344, as added by
Pub. L. 101–508, title XIII, § 13201(a), Nov. 5, 1990, 104
Stat. 1388–609, which is classified generally to subchapter III (§ 661 et seq.) of chapter 17A of Title 2, The
Congress. For complete classification of this Act to the
Code, see Short Title note set out under section 621 of
Title 2 and Tables.
The Federal Advisory Committee Act, referred to in
subsec. (b), is Pub. L. 92–463, Oct. 6, 1972, 86 Stat. 770, as
amended, which is set out in the Appendix to Title 5,
Government Organization and Employees.
Section 3537b(c) of title 42, referred to in subsec.
(b)(5), was in the original ‘‘section 112(c) of the Department of Housing and Urban Development Reform Act of
1989’’, meaning section 112 of Pub. L. 101–235, which does
not contain a subsec. (c), but enacted section 13 of the
Department of Housing and Urban Development Act,
which was classified to section 3537b of title 42 prior to
repeal by Pub. L. 104–65, § 11(b)(1), Dec. 19, 1995, 109 Stat.
701, and which contained a subsec. (c) relating to registration with the Secretary.
The Equal Credit Opportunity Act, referred to in subsec. (c)(1), (3)(B), is title VII of Pub. L. 90–321, as added
by Pub. L. 93–495, title V, § 503, Oct. 28, 1974, 88 Stat.
1521, as amended, which is classified generally to sub-

chapter IV (§ 1691 et seq.) of chapter 41 of Title 15, Commerce and Trade. For complete classification of this
Act to the Code, see Short Title note set out under section 1601 of Title 15 and Tables.
The Fair Housing Act, referred to in subsec. (c)(1),
(3)(B), is title VIII of Pub. L. 90–284, Apr. 11, 1968, 82
Stat. 81, as amended, which is classified principally to
subchapter I (§ 3601 et seq.) of chapter 45 of Title 42, The
Public Health and Welfare. For complete classification
of this Act to the Code, see Short Title note set out
under section 3601 of Title 42 and Tables.
Executive Order 11063, referred to in subsec. (c)(1),
(3)(B), is set out as a note under section 1982 of Title 42.
The effective date of this sentence, referred to in subsec. (c)(9), is the date of enactment of Pub. L. 111–22,
which enacted par. (9) and was approved May 20, 2009.
The S.A.F.E. Mortgage Licensing Act of 2008, referred
to in subsec. (d)(2)(F), is title V of div. A of Pub. L.
110–289, July 30, 2008, 122 Stat. 2810, also known as the
Secure and Fair Enforcement for Mortgage Licensing
Act of 2008, which is classified generally to chapter 51
(§ 5101 et seq.) of this title. For complete classification
of this Act to the Code, see Short Title note set out
under section 5101 of this title and Tables.
CODIFICATION
Section 1709(s) of this title, which was transferred
and redesignated as subsec. (e) of this section by Pub.
L. 110–289, div. B, title I, § 2116(3), July 30, 2008, 122 Stat.
2832, was based on act June 27, 1934, ch. 847, title II,
§ 203(s), as added Pub. L. 101–235, title I, § 135, Dec. 15,
1989, 103 Stat. 2028; amended Pub. L. 108–386, § 8(b), Oct.
30, 2004, 118 Stat. 2231; Pub. L. 110–289, div. B, title I,
§ 2116(2), July 30, 2008, 122 Stat. 2832.
AMENDMENTS
2009—Subsec. (c)(2)(E). Pub. L. 111–22, § 203(a)(1)(A), inserted ‘‘and’’ after semicolon at end.
Subsec. (c)(2)(F). Pub. L. 111–22, § 203(a)(1)(B), substituted ‘‘or their designees.’’ for ‘‘; and’’.
Subsec. (c)(2)(G). Pub. L. 111–22, § 203(a)(1)(C), struck
out subpar. (G), which read as follows: ‘‘the Director of
the Enforcement Center; or their designees.’’
Subsec. (c)(9). Pub. L. 111–22, § 203(a)(2), added par. (9).
Subsecs. (d) to (g). Pub. L. 111–22, § 203(b)(1), (2), added
subsec. (d) and redesignated former subsecs. (d) to (f) as
(e) to (g), respectively.
Subsec. (h). Pub. L. 111–22, § 203(b)(3), added subsec.
(h).
2008—Subsec. (a). Pub. L. 110–289, § 2118(a), amended
subsec. (a) generally. Prior to amendment, text read as
follows: ‘‘There is created a Mutual Mortgage Insurance Fund (hereinafter referred to as the ‘Fund’), which
shall be used by the Secretary as a revolving fund for
carrying out the provisions of this subchapter with respect to mortgages insured under section 1709 of this
title as hereinafter provided, and there shall be allocated immediately to such Fund the sum of $10,000,000
out of funds made available to the Secretary for the
purposes of this subchapter.’’
Subsec. (e). Pub. L. 110–289, § 2116(3), transferred subsec. (s) of section 1709 of this title and redesignated it
as subsec. (e) of this section. See Codification note
above. Former subsec. (e) redesignated (f).
Subsec. (e)(3)(B). Pub. L. 110–289, § 2116(1)(A), made
technical amendment to reference in original act which
appears in text as reference to ‘‘this subsection’’.
Subsec. (e)(5). Pub. L. 110–289, § 1404, added par. (5).
Subsec. (f). Pub. L. 110–289, § 2116(1)(B), redesignated
subsec. (e) as (f).
2000—Subsec. (c)(2)(E). Pub. L. 106–377, § 1(a)(1) [title
II, § 209(c)(1)], struck out ‘‘and’’ at end.
Subsec. (c)(2)(F). Pub. L. 106–377, § 1(a)(1) [title II,
§ 209(c)(2)], which directed substitution of ‘‘and’’ for ‘‘or
their designees.’’, was executed by inserting ‘‘and’’
after semicolon to reflect the probable intent of Congress, because the phrase ‘‘or their designees.’’ appeared at end of par. (2) and did not appear in subpar.
(F).

§ 1709

TITLE 12—BANKS AND BANKING

Subsec. (c)(2)(G). Pub. L. 106–377, § 1(a)(1) [title II,
§ 209(c)(3)], added subpar. (G).
1997—Subsec. (c)(3)(C). Pub. L. 105–65 inserted after
first sentence ‘‘Notwithstanding paragraph (4)(A), a
suspension shall be effective upon issuance by the
Board if the Board determines that there exists adequate evidence that immediate action is required to
protect the financial interests of the Department or the
public.’’
1992—Subsec. (b)(11). Pub. L. 102–550, § 502, added par.
(11).
Subsec. (c)(3)(C). Pub. L. 102–550, § 518, inserted ‘‘temporarily’’ after ‘‘order’’, ‘‘(i)’’ after ‘‘Administration
if’’, ‘‘(ii)’’ after ‘‘violations and’’, and ‘‘, and for not
longer than 1 year. The Board may extend the suspension for an additional 6 months if it determines the extension is in the public interest. If the Board and the
mortgagee agree, these time limits may be extended’’
after ‘‘6 months’’.
Subsec. (c)(6)(D). Pub. L. 102–550, § 519(1), struck out
subpar. (D) which read as follows: ‘‘For purposes of this
paragraph, the term ‘mortgagee’ means a mortgagee, a
branch office or subsidiary of a mortgagee, or a director, officer, employee, agent, or other person participating in the conduct of the affairs of such mortgagee.’’
Subsec. (c)(7), (8). Pub. L. 102–550, § 519(2), added par.
(7) and redesignated former par. (7) as (8).
1990—Subsec. (e)(3), (4). Pub. L. 101–625 added pars. (3)
and (4).
1989—Pub. L. 101–235 substituted ‘‘Federal Housing
Administration operations’’ for ‘‘Mutual Mortgage Insurance Fund’’ in section catchline, designated existing
provisions as subsec. (a) and inserted heading, and
added subsecs. (b) to (e).
1967—Pub. L. 90–19 substituted ‘‘Secretary’’ for ‘‘Commissioner’’ wherever appearing.
1950—Act Apr. 20, 1950, substituted ‘‘Commissioner’’
for ‘‘Administrator’’ wherever appearing.
1939—Act June 3, 1939, substituted ‘‘created’’ for ‘‘create’’.
1938—Act Feb. 3, 1938, inserted ‘‘with respect to mortgages insured under section 1709 of this title’’.
CHANGE OF NAME
Committee on Banking, Finance and Urban Affairs of
House of Representatives treated as referring to Committee on Banking and Financial Services of House of
Representatives by section 1(a) of Pub. L. 104–14, set
out as a note preceding section 21 of Title 2, The Congress. Committee on Banking and Financial Services of
House of Representatives abolished and replaced by
Committee on Financial Services of House of Representatives, and jurisdiction over matters relating to
securities and exchanges and insurance generally transferred from Committee on Energy and Commerce of
House of Representatives by House Resolution No. 5,
One Hundred Seventh Congress, Jan. 3, 2001.
EXPANDED REVIEW OF FHA MORTGAGEE APPLICANTS
AND NEWLY APPROVED MORTGAGEES
Pub. L. 111–22, div. A, title II, § 203(g), May 20, 2009, 123
Stat. 1648, provided that: ‘‘Not later than the expiration of the 3-month period beginning upon the date of
the enactment of this Act [May 20, 2009], the Secretary
of Housing and Urban Development shall—
‘‘(1) expand the existing process for reviewing new
applicants for approval for participation in the mortgage insurance programs of the Secretary for mortgages on 1- to 4-family residences for the purpose of
identifying applicants who represent a high risk to
the Mutual Mortgage Insurance Fund; and
‘‘(2) implement procedures that, for mortgagees approved during the 12-month period ending upon such
date of enactment—
‘‘(A) expand the number of mortgages originated
by such mortgagees that are reviewed for compliance with applicable laws, regulations, and policies;
and
‘‘(B) include a process for random reviews of such
mortgagees and a process for reviews that is based

Page 544

on volume of mortgages originated by such mortgagees.’’

§ 1709. Insurance of mortgages
(a) Authorization
The Secretary is authorized, upon application
by the mortgagee, to insure as hereinafter provided any mortgage 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 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 shall comply with the following:
(1) Have been made to, and be held by, a
mortgagee approved by the Secretary as responsible and able to service the mortgage
properly.
(2) Involve a principal obligation (including
such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve) in an amount—
(A) not to exceed the lesser of—
(i) in the case of a 1-family residence, 115
percent of the median 1-family house price
in the area, as determined by the Secretary; and in the case of a 2-, 3-, or 4-family 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 for a
2-, 3-, or 4-family residence, respectively,
bears to the dollar amount limitation determined under such section for a 1-family
residence; or
(ii) 150 percent of the dollar amount limitation determined under the sixth sentence of such section 1454(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 may not be less than
the greater of: (I) the dollar amount limitation in effect under this section for the area
on October 21, 1998; or (II) 65 percent of the
dollar amount limitation determined under
the sixth sentence of such section 1454(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 of Management and Budget; and the median 1-family
house price for an area shall be equal to the
median 1-family 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) of
the last paragraph of section 1703(a) of this
title) therein.